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CASE #018E – H.M.B. Holdings Ltd. v. Antigua and Barbuda
November 22, 2021

CANADA – A B.C. judgment is not enforceable in Ontario because the defendant was not carrying on business in B.C, as required by s. 3(b) of Ontario Reciprocal Enforcement of Judgments Act.

H.M.B. Holdings Ltd. v. Antigua and Barbuda, 2021 SCC 44
Supreme Court of Canada, November 4, 2021
Wagner C.J. and Karakatsanis, Côté, Rowe and Kasirer JJ.

HMB obtained a judgment for damages from the Judicial Committee of the Privy Council (“JCPC”) against the government of the islands of Antigua and Barbuda (“Antigua”) for compensation for expropriation of land in that country. HMB was the owner of a resort that was damaged by a hurricane many years earlier.

HMB commenced action in the British Columbia Supreme Court (“BCSC”) for recognition and enforcement of the JCPC judgment and obtained a BCSC default judgment for more than $30 million plus post-judgment interest. HMB then sought to enforce the judgment in Ontario by registration under the Ontario Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5, s. (“REJA”).

REJA provides for an easy, economical and expedient registration system for the recognition and enforcement in Ontario of a judgment of a court in the other common law provinces and the three territories of Canada. To qualify for registration, the judgment creditor must meet the requirements of REJA s. 3. REJA allows the judgment debtor to resist registration by a motion to the Court if the provisions of REJA s.3 are not met.

The judgment debtor, Antigua, opposed HMB’s registration of the BC judgment in Ontario principally on the ground that under REJA s. 3(b), the judgment creditor must prove that the judgment debtor was carrying on business or ordinarily resident in the jurisdiction of the original court, unless the judgment debtor attorned to the jurisdiction.

Antigua had no physical presence in BC, (para. 6) nor did it carry on any sustained business activity in the province: para. 14. Antigua did have contracts in BC with four authorized representatives, who were in business in BC for the purposes of its Citizenship by Investment Program (“CIP”).

The application judge, Perell J., did not consider these contacts sufficient to meet the definition of “carrying on business” for the purposes of REJA s. 3(b) and refused to permit registration of HMB’s BC judgment in Ontario: 2019 ONSC 1445. The Ontario Court of Appeal agreed, 2-1 (Nordheimer JA dissenting): 2020 ONCA 12.

REJA does not define “carrying on business”. Wagner C.J. pointed out that “carrying on business” is a question of fact that should be interpreted as part of traditional presence-based jurisdiction at common law, in accordance with the clear definition in Chevron Corp. v. Yaiguaje, 2015 SCC 42, namely, “whether the defendant has some direct or indirect presence in the jurisdiction, accompanied by a degree of business activity that is sustained for a period of time”: para. 41. The “generous and liberal approach” to the enforcement of foreign judgments does not modify the test for “carrying on business” in REJA s. 3(b): para. 42.

The SCC identified eight non-exhaustive indicia to assess whether the representatives with whom Antigua dealt in BC were in fact representing Antigua on a permanent basis to qualify as carrying on business or just doing assignments for compensation: para. 37.

The SCC agreed with the findings of fact made by the application judge that:

  1. Antigua had no physical presence in British Columbia.
  2. Antigua did not carry on any sustained business activity in British Columbia.
  3. the four Authorized Representatives were not agents or Authorized Agents  of Antigua.
  4. the four Authorized Representatives were carrying on their own businesses that were independent of the businesses of the Antiguan government: and
  5. the CIP had no particular focus on British Columbia or Canada; since its inception, there had been 1,547 applications for the program but only 9 of them had been from persons in Canada: para. 48-49.

The appeal was dismissed and registration of HMB’s judgment in Ontario was denied.

In concurring reasons on the main appeal, Côté J. pointed out that the SCC should have also considered the issue of the recognition and enforcement of derivative or so-called “ricochet” judgments. In other words, can REJA be used, as happened here, to enforce a judgment from non-reciprocating jurisdiction in one province and then enforced under REJA in another province? para 51-55.

Wagner C.J., held that this issue should be left for consideration in another case, when there was a more complete argument on the issue: para. 25. Côté J. expressed the view that in keeping with the SCC’s approach to removing barriers to access to justice, “ricochet” judgments should be more easily enforceable under REJA: paras. 56-70.

Editor’s Note:

Defences to recognition and enforcement of foreign judgments are narrow and rarely successful in keeping with the liberal and generous approach to enforcing foreign judgments encouraged by the SCC most recently in Chevron Corp. v. Yaiguaje, 2015 SCC 42. para. 42

However, the provisions of a statute, in this case Ontario’s REJA, can be an impediment to enforcement. The provisions of REJA s. 3(b) that limit enforcement against debtors who carry on business or are resident in the original jurisdiction, in this case, in BC, is an indication of legislative intent, going back for decades, that REJA should not be used for for the purpose of finding a more “favourable” enforcement jurisdiction.

JCPC, the final appellate court from the courts of Antigua, rendered its judgment on February 26, 2014: See the Attorney General v HMB Holdings Ltd (Antigua and Barbuda) [2014] UKPC 5. The judgment could also have been registered enforced in Ontario within two years under the Reciprocal Enforcement of Judgments (U.K.) Act, RSO 1990, c R.6.

As noted by Wagner C.J. (para. 4): HMB commenced the enforcement action in B.C. on October 25, 2016. At that time, B.C. had a 10-year limitation period, which was not an impediment to enforcement of the JCPC judgment. However, had HMB commenced its action in Ontario, it would have been time-barred, as it was more than two years after the JCPC judgment.

HMB’s efforts to register its judgment in Ontario by “ricochet” from B.C. would have been successful if not for the hurdle of REJA s. 3(b). As Chief Justice Wagner stated, Canada’s liberal and generous approach to registration of foreign judgments did not go so far as to enable to Court to ignore the meaning of “carrying on business”.

Enforcement by action at common law

In reviewing this case, we wondered why HMB, did not use the parallel route of commencing an action in Ontario without using REJA.

In Chevron Corp. v. Yaiguaje, 2015 SCC 42 , para 3, the SCC held that in an action to recognize and enforce a foreign judgment where the foreign court validly assumed jurisdiction, there is no need to prove that a real and substantial connection exists between the enforcing forum and either the judgment debtor or the dispute.

However, the SCC also held that “to recognize and enforce such a foreign judgment, the only prerequisite is that the foreign court had a real and substantial connection with the litigants or with the subject matter of the dispute, or that the traditional bases of jurisdiction were satisfied”: Chevron Corp. v. Yaiguaje, 2015 SCC 42, para 27.

One might think that “real and substantial connection” is a lower bar than “carrying on business” but that is not clear in the jurisprudence.

In fact, HMB commenced proceedings in Ontario to enforce at common law but was unsuccessful at first instance. In HMB Holdings Ltd. v. Attorney General of Antigua and Barbuda, 2021 ONSC 2307, Justice Pollak dismissed the action on a summary judgment motion on the basis that there was not a sufficient real and substantial connection between the case or the defendant to give the BC Court jurisdiction.

As a result, Justice Pollak dismissed HMB’s common law enforcement action on the basis that the Ontario enforcing court was not bound by the BC’s determination of jurisdiction under the CJPTA and that there was no real and substantial connection with BC of either the litigant or the subject matter of the case.

We understand that an appeal to the Ontario Court of Appeal is pending.

About Us

Arbitration & Business Cases is a blog created by Igor Ellyn and Robin Dodokin in September 2021. Our intention is to provide timely, concise summaries and commentary of Ontario and Canadian case law on arbitration and business matters.

Igor Ellyn,
QC, CS, FCIArb.

iellyn@ellynlaw.com
www.ellynadr.com
416-540-6611
416-365-3750

Robin Dodokin,
FCIArb., Q.Arb., LL.M, Q.Med.

robin@dodokinlaw.com
www.dodokinlaw.com
416-300-6515