Hart and Smith later joined forces with Bret Hart, Jim Neidhart, and Brian Pillman to form a new form of the Hart Foundation, a heel faction which feuded with Stone Cold Steve Austin and other American wrestlers. This created an interesting rift between American fans, where the Hart Foundation were vilified, and Canadian fans, who revered the Hart Foundation. Smith and Owen dropped the World Tag Team Titles to Austin and Michaels, and lost the final match in a tournament for the vacant Tag Team Titles to Austin and Dude Love.  Smith then started a feud with Ken Shamrock for the European Title, and eventually lost the European Title to Shawn Michaels at the British Pay-per-view event One Night Only. Smith was booked in the main event to defend the belt against Michaels. However, Michaels convinced Vince McMahon that he should win, as it would create build-up not only for his impending rematch with Bret Hart, but also for a rematch against Smith at the next British pay-per-view.  Smith reluctantly agreed, and fans at the event, who gave Smith an ovation, voiced their displeasure by viciously booing Michaels and littering the ring with garbage.  This marks the only time Smith lost on a WWF card in the United Kingdom. After the 1997 Survivor Series which became famous for the Montreal Screwjob in which Vince McMahon changed the finish of Bret Hart's match and had him lose the WWF title to Michaels (who was also in on it) despite Hart not actually submitting when Michaels had him in a Sharpshooter, Smith, along with Bret Hart and Neidhart, left the WWF for WCW.