Hurdles To Recognition and Enforcement Of Foreign Judgments

Sabrina Saltmarsh, B.A. (Hons), J.D.Commercial, Cross-Border Litigation, Debt and Enforcing Judgments, Enforcement of Foreign Arbitral Awards, Enforcement of Foreign Judgments, Interjurisdictional Disputes, International Litigation, International Sale of Goods, International Sale of Goods Arbitrator, International Trade Fraud, International Traders, Jurisdictional Challenges, Letters Rogatory, Of Interest to US Counsel, Offshore, Request for International Judicial Assistance0 Comments

In the recent Ontario Court of Appeal decision of H.M.B. Holdings Limited v. Antigua and Barbuda, 2020 ONCA 12, the Court of Appeal rendered a split (2-1) decision regarding the recognition of a foreign judgment which muddies the waters on the analysis to be applied to s.3(b) of the Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5 (REJA)

Original Judgment:

In this case H.M.B. Holdings Limited (HMB) was successful in obtaining judgment on February 26, 2014, against Antigua and Barbuda from the Judicial Committee of the Privy Council (the JCPC), which is the highest court of appeal for certain British territories and Commonwealth countries including Antigua and Barbuda. The case related to damages sought by HMB due to the expropriation of resort lands by the Antiguan government. The case has garnered some media attention because of the manner in which the lands were expropriated.

HMB then brought a common law action to enforce the JCPC judgment in the province of British Columbia, Canada, and the British Columbia Supreme Court granted HMB’s action. HMB then applied pursuant to REJA to register the British Columbia judgment in Ontario.

The Ontario Superior Court Ruling:

The application was dismissed by the Superior Court of Ontario on a finding by the Honourable Justice Perell, J. that pursuant to s.3(b) of REJA Antigua and Barbuda were not carrying on business in British Columbia, the Superior Court relied on the definition of “carrying on business” as set out in the Supreme Court of Canada decision in Club Resorts Ltd. v. Van Breda, 2012 SCC 17 [2012] 1 S. C.R. 572., (Van Breda). Justice Perell also found pursuant to s.3(c) of REJA, that had HMB brought a direct action to enforce the judgment of the JCPC in Ontario, the Antiguan government would have had a limitations-period defence to the action since in Ontario, the basic two-year limitation period applies to an action to recognize and enforce a foreign judgment.

Issues on Appeal:

On appeal the Court of Appeal for Ontario considered the requirements under REJA for registration of a foreign judgment, particularly sections:

2.(1) which states that where a judgment has been given in a court in a reciprocating state, the judgment creditor may apply to any court in Ontario having jurisdiction over the subject-matter of the judgment, or, despite the subject-matter, to the Superior Court of Justice at any time within six years after the date of the judgment to have the judgment registered in that court, and on any such application the court may, subject to this Act, order the judgment registered; and

3. which states that no judgment shall be ordered to be registered under this Act if it is shown to the registering court that,

(a) the original court acted without jurisdiction; or

(b) the judgment debtor, being a person who was neither carrying on business nor ordinary resident within the jurisdiction of the original court, did not voluntarily appear or otherwise submit during the proceedings to the jurisdiction of that court; or

(c) the judgment debtor would have a good defence if an action were brought on the original judgment.

The Court Of Appeal’s Majority Ruling:

In the majority opinion given by the Honourable Justice Pardue J.A. (with the Honourable Justice Simmons J.A. agreeing), the Court of Appeal upheld the Superior Court decision in finding that an assessment of whether a judgment debtor is carrying on business within the jurisdiction of the original court, is a finding of fact and as such considerable deference should be given to the lower court ruling absent a palpable and overriding error.

The majority ruling also held that the lower court judge did not err in applying the legal test for what constitutes carrying on business. The ruling held that such a finding did not deprive HMB of bringing the action within the applicable limitation period in Ontario.

The Court Of Appeal’s Dissenting Opinion:

The Honourable Justice Nordheimer J.A. of the Court of Appeal disagreed with the conclusion reached by the majority, providing a dissenting opinion. Justice Nordheimer found that Antigua and Barbuda was carrying on business in British Columbia and that the lower court had made a palpable and overriding error in concluding otherwise.

Justice Nordheimer also found that the lower court erred in applying the definition of “carrying on business” in Van Breda and failing to follow the Supreme Court of Canada’s decision in Chevron Corp v. Yaiguaje, 2015 SCC 42 [2015], (Chevron) which made it clear that Van Breda did not apply in the case of enforcement of foreign judgments, as it was a case about jurisdiction at first instance. Justice Nordheimer reasoned in dissent that the threshold under REJA in considering whether a party is carrying on business in the jurisdiction should be a very low bar consistent with the policy intention of REJA to adopt a generous and liberal approach to the recognition and enforcement of foreign judgments.

Justice Nordheimer also took issue with the lower courts interpretation of “original judgment” pursuant to s.3(g) of REJA. Justice Nordheimer reasoned in dissent that the original judgment refers to the judgment that is sought to be registered, and found the lower court’s ruling was inconsistent in this respect.

Conclusion:

Despite the clarity provided by the Supreme Court of Canada in Chevron on the application of Van Breda to the recognition and enforcement of foreign judgments,  the Court of Appeal’s ruling in this case seems to raise questions on the standard to be applied for “carrying on business” under s.3(b) of REJA. It is unclear whether a more restrictive and narrow approach will be taken in such an analysis as was upheld by the majority in this case, or whether a liberal approach is more appropriate, consistent with the dissenting opinion of Justice Nordheimer and the legislative intent of REJA.

Do you need help with registering a foreign judgment in Ontario? The lawyers at Gilbertson Davis have experience in representing parties seeking to register foreign judgments in Ontario.


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About the Author
Sabrina Saltmarsh, B.A. (Hons), J.D.

Sabrina Saltmarsh, B.A. (Hons), J.D.

Practitioner in a broad range of business and civil litigation matters including commercial, real estate and condo disputes. Experienced at all levels of Ontario Courts. Bio | Contact

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