Court of Appeal Upholds Dismissal of Recognition Action Based on Limitation Period

Andrew Ottaway, B.A. (Hons.), LL.B.Appeals, Appellate Advocacy, Business Litigation, Civil Litigation, Commercial and Contract Litigation, Cross-Border Litigation, Enforcement of Foreign Judgments, Injunction & Specific Performance, Mareva Injunction, Of Interest to US Counsel0 Comments

In Grayson Consulting Inc. v. Lloyd, 2019 ONCA 79, the plaintiff obtained default judgment in South Carolina dated August 20, 2014 default judgment in the amount of US $451,435,577.37 against the defendant.   The plaintiff sought a Mareva injunction (i.e. a freezing order). Although the Court initially granted the injunction, the Court later set aside the injunction in response to the defendant’s motion arguing that the Ontario proceedings were commenced outside the limitation period.  See our blog on the motion decision here.

On appeal, the Court of Appeal reiterated the applicable test from Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44, being: (i) the basic two-year limitation period applies to a proceeding on a foreign judgment; and (ii) the limitation period begins to run when the time to appeal the foreign judgment has expired or, if an appeal is taken, the date of the appeal decision, unless the claim on the foreign judgment was not “discovered” until a date later than the appeal decision.

Among other arguments, the plaintiff argued that the claim was not “discovered” until it had actual knowledge that the defendant had exigible assets within Ontario.  The Court of Appeal disagreed. The Court of Appeal, agreeing with the motion judge, stated that the plaintiff was under an obligation to conduct itself with due diligence with respect to seeking enforcement opportunities against the defendant.  When the plaintiff obtained the default judgment in South Carolina, it already had enough information about the defendant’s connection to Ontario that it ought to have investigated whether the plaintiff had assets in Ontario as soon as the South Carolina judgment become final (i.e. after the appeal period passed).  As the Ontario proceedings were commenced more than two years after the South Carolina judgment became final, the proceedings were limitation barred. The Court of Appeal dismissed the appeal.

The lawyers at Gilbertson Davis LLP have experience with proceedings to recognize foreign judgments, including U.S. judgments, as well as experience with urgent remedies such as Mareva injunctions.  Please contact us for an initial consultation.  


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About the Author
Andrew Ottaway, B.A. (Hons.), LL.B.

Andrew Ottaway, B.A. (Hons.), LL.B.

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