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PRIL - Real and Substantial Connection (2). Reference re iGaming Ontario
In Reference re iGaming Ontario (Ont CA, 2025) the Ontario Court of Appeal considered a 'reference' [under CJA 8 'References to Court of Appeal'] regarding whether "legal online gaming and sports betting [would] remain lawful under the Criminal Code if its users were permitted to participate in games and betting involving individuals outside of Canada".
Here the court considers the 'real and substantial connection' standard (or test) - key to deciding international venue issues, and a candidate for resolving this reference issue:1. The origins and scope of the RSC family of tests
[117] The Supreme Court summarized the origins and scope of the RSC test in Sharp v. Autorité des marchés financiers, 2023 SCC 29, 487 D.L.R. (4th) 467, at paras. 104-23. It stated that the RSC test is best described as a family of tests, recognizing that the same formula of words “involves different considerations in each of the varying contexts in which the formula is employed”: at para. 118.
[118] The first branch of the RSC family of tests was developed in the area of private international law or conflicts of laws. In Morguard Investments Ltd. v. De Savoye, 1990 CanLII 29 (SCC), [1990] 3 S.C.R 1077, the Supreme Court explained that the court of one province should recognize the judgment of the court of another Canadian province where there is a real and substantial connection between that court and the subject matter of the litigation. Versions of this test were applied in Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416, to determine that Canadian courts should enforce judgments from courts outside Canada where there is a real and substantial connection between the cause of action and the foreign court, and in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, where the Supreme Court identified a non-exhaustive list of rebuttable presumptive connecting factors between the subject matter of the litigation and the forum to determine when a Canadian court could assume jurisdiction over the tort claims of its residents injured abroad.
[119] A second branch of the RSC family of tests was recognized in Unifund. In Unifund and the cases following it, the test was applied to determine when an otherwise valid provincial law can apply to extraterritorial persons or activities without offending the restriction against extraterritorial provincial legislation under s. 92 of the Constitution Act, 1867. In Unifund, the issue was whether a reimbursement provision of Ontario’s Insurance Act, R.S.O. 1990, c. I.8, with respect to statutory accident benefits paid to Ontario residents under their policy in respect of a British Columbia motor vehicle accident, could be constitutionally applied to the British Columbia insurer of the at-fault driver. The Supreme Court ruled that provincial regulatory legislation can apply to out-of-province defendants where there is a “sufficient connection” among the enacting jurisdiction, the subject matter of the legislation, and the individual or entity sought to be regulated by it, subject to the principles of order and fairness that underlie our federal arrangements, which are applied flexibly according to the subject matter of the legislation: at para. 56. There are two steps to the Unifund test: first, assess and weigh the relevant connections; and second, apply the principles of order and fairness: see Sharp, at paras. 126-35.
[120] A version of the RSC test has also been applied to discern “the presumptively intended reach of federal legislation”: Sharp, at para. 110. In SOCAN, the Supreme Court considered whether provisions of the Copyright Act, R.S.C. 1985, c. C-42, applied to communications with international participants. Recognizing that comity among independent nation states lacks the constitutional status it enjoys among the provinces of Canada and does not limit Parliament’s legislative competence, the Supreme Court nonetheless held that, “in the absence of clear words to the contrary … Parliament [does] not intend its legislation to receive extraterritorial application”: at para. 55. The Supreme Court stated that “[t]he applicability of [the] Copyright Act to communications that have international participants will depend on whether there is a sufficient connection between this country and the communication in question for Canada to apply its law consistent with the ‘principles of order and fairness … that ensure security of [cross-border] transactions with justice’”: SOCAN, at para. 57, citing Morguard, at p. 1097. Similarly, in Libman v. The Queen, 1985 CanLII 51 (SCC), [1985] 2 S.C.R. 178, in the context of determining the reach of certain offences in the Criminal Code, and whether a transnational crime, which took place partly in Canada, could be prosecuted in Canada, the Supreme Court held that it was sufficient that there was a “real and substantial link” between the offence and this country: at pp. 212-13.
[121] The courts have also adopted a variation of the RSC test when determining whether provincial legislation is unconstitutional by reason of extraterritoriality. That matter is not a question of the application of a valid provincial or federal law but, rather, asks whether the law itself is beyond the legislative jurisdiction of the province. In British Columbia v. Imperial Tobacco Canada Ltd., 2005 SCC 49, [2005] 2 S.C.R. 473, the Supreme Court considered the constitutionality of legislation that created a civil cause of action permitting the British Columbia government to seek compensation for tobacco-related health care costs. The first step in the analysis was to identify the pith and substance of the subject legislation and a head of power in s. 92 of the Constitution Act, 1867 under which it could fall. The second step was to determine whether the legislation respected the territorial limits on provincial legislative competence mandated by s. 92. The Supreme Court observed that where the pith and substance of a law is related to an intangible matter, it is appropriate to look to the relationships among the enacting territory, the subject matter of the legislation, and the persons made subject to it to determine whether the law has a “meaningful connection” to the enacting province, and whether it pays respect to the legislative sovereignty of other territories: at paras. 36-38. See also Sanis Health Inc. v. British Columbia, 2024 SCC 40, 497 D.L.R. (4th) 571, at para. 85.
2. The RSC test does not apply
[122] From this brief overview of the existing applications of the RSC family of tests, certain features are apparent. First, as the Supreme Court explains in Sharp, the RSC tests operate differently depending on their context. Typically, the court will examine the connection among the extraterritorial person, the enacting jurisdiction, and the subject matter of its legislation. In each case, the connecting factors must be considered and weighed. “[T]here is no single standard defining what constitutes a sufficient connection: whether there is a sufficient connection depends largely on context”: Ontario College of Pharmacists v. 1724665 Ontario Inc. (Global Pharmacy Canada), 2013 ONCA 381, 363 D.L.R. (4th) 724, at para. 68.
[123] Second, underlying the RSC test is respect for the legislative and operational authority of other jurisdictions, whether they are other provinces or nations. The RSC test in turn reflects the concern for territorial limitations on legislative or regulatory authority, reflecting the requirements of order and fairness underlying Canadian federal arrangements under the Constitution, and in the case of the reach of federal legislation and regulation, international principles of comity: see Imperial Tobacco, at para. 27; and SOCAN, at para. 60. This underscores the origins of the test, which lie in principles of private international law founded on respect for interprovincial and interstate comity: Beals, at paras. 27-28. For example, in SOCAN, after examining the relevant connecting factors, the Supreme Court reviewed the relevant international treaties and directives, and the approaches to the reach of copyright laws in the United States, Australia and France, before determining that “the conclusion that Canada could exercise copyright jurisdiction in respect of both transmissions originating here and transmissions originating abroad but received here is not only consistent with our general law, but with both national and international copyright practice”: at para. 76 (citations omitted; emphasis in original).
[124] The AGO submits that this court should apply the RSC test as articulated and applied in Unifund. However, the Unifund line of cases does not involve the statutory interpretation of the phrase “in that province”. Rather, these cases concern the constitutional limits on a province when regulating extra-provincial parties and activities. What is at issue in this reference is not the scope of Ontario’s legislative authority – that is, whether it could, absent the Criminal Code restrictions on lottery schemes, enact laws concerning internet gaming that can have effect outside of Ontario. Rather, the question is whether Ontario will conduct and manage the Proposed Model “in that province” in accordance with s. 207(1)(a) of the Criminal Code, notwithstanding the international components of the Proposed Model.
[125] The AGO also advocates for the adoption of the RSC test by pointing to what it describes as the “intangible” or “incorporeal” nature of internet gaming. The AGO says that the RSC test makes sense because it has been applied in other cases involving intangible subjects, cases such as SOCAN and Imperial Tobacco.
[126] While the AGO is correct that SOCAN is an example of a case where the RSC test was employed to determine whether communications occurred in Canada, the test was not used in the way the AGO proposes. There are two parts to the Supreme Court’s analysis in SOCAN. First, the court determined the scope of federal jurisdiction over copyright, which engaged the RSC test. Second, the court considered whether Canada intended to impose liability on every participant in an internet communication with a real and substantial connection. The court said this was a “different issue” that was a question of statutory interpretation of the Copyright Act and did not engage the RSC test: at para. 53. That is, in SOCAN, the RSC test was used to determine the permitted scope of federal jurisdiction over copyright, given the absence of constitutional limits on the extraterritorial application of federal laws. Applying a common law limit to the presumptive scope of federal laws is a very different form of analysis than interpreting a statutory restriction on the geographic scope of a government’s authority.
[127] In Imperial Tobacco, the context for the application of the “meaningful connection” test was a determination of whether the pith and substance of a law exceeded the legislative jurisdiction of a province. Here, what is at issue is not the territorial limits on Ontario’s ability to legislate, but the interpretation of a federal restriction on Ontario’s permitted ability to conduct a lottery scheme in compliance with the Criminal Code. In this reference, there is no suggestion that the federal Parliament does not have legislative authority under its criminal law power to prohibit or restrict gaming in Ontario and the other provinces and territories.
[128] We do not accept the argument that the RSC test should apply here because versions of that test have been applied in cases involving intangibles. Those applications occurred in specific contexts that are different from the context in which the reference questions arise. The reference before this court does not depend on Ontario’s constitutional authority to legislate; it depends on the correct interpretation of a provision of the Criminal Code. As the Federal Court of Appeal noted in CSIS, at para. 68, when it refused to interpret a restriction that limited CSIS’s mandate to actions “within Canada” in accordance with the RSC test, the considerations that govern the interpretation of a federal statutory restriction are very different from the intended use of the RSC test.
[129] Finally, the AGO has not explained how the RSC test could be applied in this reference. Even if we were persuaded that the RSC test would otherwise be appropriate, it is not clear what factors should be considered and what elements would constitute a real and substantial connection sufficient to anchor the Proposed Model to Ontario’s conduct and management of the current iGaming Scheme.
[130] Instead, the AGO states that the Proposed Model would be lawful under the Criminal Code “because it would be sufficiently connected to the province: it would be conducted and managed by the province; it would be authorized by the provincial legislature; and it could only be accessed by individuals in the province. Permitting players in Ontario to pool liquidity with players outside of Canada would not undermine this connection” (emphasis added). Essentially, the AGO relies on Ontario’s operation of the current iGaming Scheme to ground a real and substantial connection to its conduct and management of the international aspects of the Proposed Model.
[131] As the foregoing discussion demonstrates, that is not the way the RSC test has been applied. In Unifund, the Supreme Court evaluated the strength of the connections among the province, the subject matter of the legislation and the individual or entity sought to be regulated by it, followed by a consideration of the principles of order and fairness applied flexibly to the extraterritorial elements. A similar set of considerations was identified in Imperial Tobacco: at para. 36.
[132] The RSC test in Unifund requires the court to examine the connection between the provincial scheme and the extra-provincial person or aspect to which that scheme is extended. To apply that test in the present context would require an assessment of the connection between Ontario’s conduct and management of the Proposed Model and the international elements – specifically the participation of players in other jurisdictions. We have been supplied with insufficient information to undertake such an examination. . Sinclair v. Venezia Turismo
In Sinclair v. Venezia Turismo (SCC, 2025) the Supreme Court of Canada dismissed an appeal, this from an Ontario Court of Appeal ruling that held that an Ontario lawsuit relating to a tort case largely centred in Italy was out of the Ontario court's jurisdiction:
Here the court considers the 'real and substantial connection' test:(2) The Real and Substantial Connection Test
[43] In order to assume jurisdiction over a claim, a court must be satisfied that there is a real and substantial connection between the circumstances giving rise to the claim and the forum in which it is brought (Moran v. Pyle National (Canada) Ltd., 1973 CanLII 192 (SCC), [1975] 1 S.C.R. 393, at pp. 407‑8; Morguard Investments Ltd. v. De Savoye, 1990 CanLII 29 (SCC), [1990] 3 S.C.R. 1077, at pp. 1108‑10; Hunt v. T&N plc, 1993 CanLII 43 (SCC), [1993] 4 S.C.R. 289, at pp. 325 and 328; Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416, at paras. 23 and 28; Tolofson v. Jensen, 1994 CanLII 44 (SCC), [1994] 3 S.C.R. 1022, at p. 1054; Van Breda, at paras. 22‑50 and 67).
[44] The real and substantial connection test seeks to mitigate the jurisdictional overreach that can arise when the connection between the forum, the subject matter of the dispute, and the defendant is not sufficient for a court to assume jurisdiction (Van Breda, at para. 99). Just as Canadian law requires proof of a real and substantial connection to a foreign jurisdiction to recognize foreign judgments, comity dictates that Canadian courts not decide matters without a real and substantial connection here (see Beals, at paras. 28 and 34‑38).
[45] In setting out rules for establishing whether a real and substantial connection exists, courts should bear in mind the objectives of order and fairness. Orderly conflict of laws rules ensure that parties can “predict with reasonable confidence whether a court will assume jurisdiction in a case with an international or interprovincial aspect” (Van Breda, at para. 73). But, in the search for certainty and predictability in access to justice, courts must be careful not to exclude fairness. Fair conflict of laws rules also provide parties with “protection against being pursued in jurisdictions having little or no connection with the transaction or the parties” (Morguard, at p. 1108).
[46] As LeBel J. noted in Van Breda, balancing order and fairness can be a challenge. The presumptive connecting factors intend to reconcile fairness with the “need for security, stability and efficiency in the design and implementation of a conflict of laws system” (para. 73). They provide an orderly framework that prevents jurisdictional questions from being decided entirely on an ad hoc, case‑by‑case basis, while simultaneously allowing for flexibility and growth.
[47] Writing for a unanimous Court, LeBel J. in Van Breda, at para. 90, set out four factors that presumptively allow a court to assume jurisdiction over a dispute in tort cases:(a) the defendant is domiciled or resident in the province;
(b) the defendant carries on business in the province;
(c) the tort was committed in the province; and
(d) a contract connected with the dispute was made in the province. [48] LeBel J. explained that this list is not exhaustive and can be reviewed over time but that the factors, when made out, warrant presumptive effect. The onus rests on the plaintiff to establish that one or more of the listed factors exist: “If the plaintiff succeeds in establishing this, the court might presume, absent indications to the contrary, that the claim is properly before it under the conflicts rules and that it is acting within the limits of its constitutional jurisdiction . . .” (Van Breda, at para. 80, citing J. Walker, “Reforming the Law of Crossborder Litigation: Judicial Jurisdiction”, consultation paper for the Law Commission of Ontario (March 2009), at pp. 19‑20 (online); see also para. 91).
[49] Once the plaintiff has established one of the presumptive connecting factors, the defendant may rebut the presumption of jurisdiction by showing that the factor does not, in the circumstances of the case, point to a real relationship between the dispute and the forum (Van Breda, at para. 95). If the defendant fails to rebut the presumption, the court must accept jurisdiction over the dispute.
[50] The assessment of whether a presumptive connecting factor has been established is concerned with the existence of a connection between the jurisdiction and the dispute, whereas the assessment of whether the presumption has been rebutted is concerned with the strength of that connection. I am in agreement with my colleague in dissent on this point (para. 204). The two stages of the analysis taken together provide an opportunity for a court to holistically assess the extent to which a real and substantial connection exists, as required by Van Breda. . Castillo v. Xela Enterprises Ltd.
In Castillo v. Xela Enterprises Ltd. (Ont CA, 2024) the Court of Appeal considered an appeal of a contempt finding, here where the contemnor (the one being in contempt) sworn a key Declaration in Guatemala.
Here the court discusses the 'real and substantial connection' test:Analysis
(1) Did the motion judge err in law by holding that the court had territorial jurisdiction to find the appellant in contempt based on his Declaration that was not made in Canada but in Guatemala?
[55] The appellant submits that because the court found that the contemptuous conduct by the appellant was making the Declaration in Guatemala, the court did not have territorial jurisdiction to make the contempt finding against him. The appellant relies on the Supreme Court of Canada’s decision in Libman v. The Queen, 1985 CanLII 51 (SCC), [1985] 2 S.C.R. 178, at pp. 199, 212-13, 1985 CanLII 51, at paras. 42, 73-76.
[56] In Libman, the Supreme Court set out the test for determining when a Canadian court may take jurisdiction over a criminal offence that occurred in whole or in part outside Canada. LaForest J. summarized the test at pp. 212-12 (para. 74):As I see it, all that is necessary to make an offence subject to the jurisdiction of our courts is that a significant portion of the activities constituting that offence took place in Canada. As it is put by modern academics, it is sufficient that there be a “real and substantial link” between an offence and this country, a test well-known in public and private international law. [57] He concluded at p. 213 (para. 76):Just what may constitute a real and substantial link in a particular case, I need not explore. There were ample links here. The outer limits of the test may, however, well be coterminous with the requirements of international comity. [58] The test also applies to a finding of civil contempt: see Canada (Human Rights Commission) v. Canada Liberty Net, [1998] 1 S.C.R. 626, at p. 670, 1998 CanLII 818, at para. 52.
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