ONTARIO – The common-law test for recognition and enforcement of original foreign judgments does not apply to the recognition and enforcement of ricochet judgments, namely, a judgment of a foreign court that is then enforced in a jurisdiction with which the original judgment has no connection.
H.M.B. Holdings Limited v. Antigua and Barbuda
2022 ONCA 630 (CanLII) September 2, 2022
ONCA (Fairburn A.C.J.O., Thorburn and Favreau JJ.A.)
Editor’s Note
On November 4, 2021, the Supreme Court dismissed an appeal involving the same parties, which we reported as Case #018E. In H.M.B. Holdings Ltd. v. Antigua and Barbuda, 2021 SCC 44, the SCC upheld the decision of the Ontario Court of Appeal refusing to register a judgment of the BC Superior Court under s. 3(b) of the Ontario Reciprocal Enforcement of Judgments Act (“REJA”) on the basis that the Defendant, Antigua and Barbuda was not carrying on business in BC and there were insufficient connections between BC and the judgment debtor to warrant registration.
The present appeal deals with the issue of whether an Ontario court should recognize and enforce a judgment from the Supreme Court of British Columbia, which itself recognized and enforced a foreign judgment issued by the Judicial Committee of the Privy Council (the “Privy Council”). This situation is sometimes referred to as a “ricochet judgment”, a “derivative judgment” or a “judgment on a judgment”. [para. 1]
The difference between the present appeal and the appeal dismissed by the SCC is that the present action was not based on an attempt to enforce under REJA but just a common law enforcement action. The application judge in the present case, Pollak J. dismissed the action for enforcement on the basis that she found no real and substantial connection between British Columbia and the underlying action in Antigua and Barbuda. [para. 3]
In the ONCA, Favreau J.A., writing for the Court, stated that the common-law test for the recognition and enforcement of foreign judgments does not contemplate the viability of ricochet judgments. [para. 24] and [para. 48]
Referring to Chevron Corp. v. Yaiguaje, 2015 SCC 42, Favreau J.A. noted that the SCC reaffirmed that the real and substantial connection test applies to the recognition and enforcement of foreign judgments by Canadian courts. [para. 28] Specifically, the SCC addressed whether a defendant must be present or have assets in the jurisdiction as a precondition to recognizing and enforcing a judgment in that jurisdiction. In that context, the court held that “there is no need to probe the relationship between the enforcing forum and the action or the defendant”. Instead, the enforcing court has jurisdiction over the defendant as long as there was effective service on the defendant against whom recognition and enforcement is sought. [para. 28]
Interestingly, Favreau J.A. held that it was an error in principle for the application judge in this case to focus on whether there was a real and substantial connection between British Columbia and the original dispute in Antigua and Barbuda, or between British Columbia and the parties, for the purpose of deciding whether the BC Judgment should be recognized and enforced in Ontario. This does not accord with the original focus of the court’s inquiry in British Columbia. [para. 36]
Rather, in British Columbia, the focus of the inquiry was whether the Privy Council Judgment should be recognized and enforced in British Columbia. In deciding that issue, the British Columbia court had to consider: (1) whether the Privy Council had jurisdiction over the dispute or the parties pursuant to the Court Jurisdiction and Proceedings Transfer Act; (2) whether Antigua was properly served with the claim; and (3) whether Antigua had any defences to a judgment for recognition and enforcement in British Columbia, such as a limitation-period defence. These issues had to be decided in accordance with the law in British Columbia. [para. 36]
Favreau J.A. noted that in Chevron, the SCC explained that a court’s authority to recognize and enforce a judgment from another jurisdiction does not depend on the enforcing court’s jurisdiction over the subject matter of the dispute or the parties. Rather, the purpose of recognizing and enforcing a judgment from another jurisdiction is to assist the plaintiff in realizing on the foreign judgment – for example, by accessing assets in the jurisdiction where recognition and enforcement is sought. At this stage, the inquiry is local in nature and the focus is on whether the enforcing court should allow recognition and enforcement of the foreign judgment in its local jurisdiction. [para. 35]
Favreau J.A. noted that H.M.B. argued that there are precedents for ricochet judgments in Canada. Favreau J. A. held that the cases H.M.B. relied on did not support its position on this appeal, primarily because they dealt with whether recognition and enforcement of judgments from one province can be registered in another province under the REJA or similar legislation. They did not deal with the issue of whether a recognition and enforcement judgment from one province can be recognized and enforced in another province pursuant to an action at common law. [para. 49].
The Court also noted that there are no decisions from the SCC dealing with this issue. [para. 50] Favreau J.A. referred to the H.M.B. SCC decision to note that the majority of the court stated that “[i]t is an open question” whether a recognition and enforcement judgment of one province’s court could be registered in another province: at para. 25. The SCC majority stated that this “open question” depended on the interpretation of the word “judgment” in the REJA, and that there is conflicting jurisprudence on the issue: at para. 25. The majority further stated that, given its conclusion that the BC Judgment was barred by s. 3(b) of the REJA, it did not have to resolve this broader issue. [para. 51]
The reference to earlier ricochet judgments is in the footnotes to the decision:
[4] While there is one other decision from Ontario involving a ricochet judgment, the legal availability of ricochet judgments was not discussed in any detail; rather, the case was decided on procedural grounds, regarding the application of a limitation period: see Tracy v. The Iranian Ministry of Information and Security, 2016 ONSC 3759, 400 D.L.R. (4th) 670, at paras. 172-78, aff’d in part, 2017 ONCA 549, 415 D.L.R. (4th) 314, at paras. 121-29, leave to appeal refused, [2017] S.C.C.A. No. 359. In that case, the plaintiffs obtained various judgments from the United States, had those judgments recognized and enforced in Nova Scotia and then sought registration of those Nova Scotia judgments in Ontario pursuant to the REJA. The trial judge refused to set aside the recognition and enforcement orders. However, the trial judge did not assess the merits of whether ricochet judgments were available to the plaintiffs; instead, he reached his conclusion on the basis that the defendant had missed the deadline to bring its motion to set aside the recognition and enforcement orders. The Court of Appeal affirmed the trial judge’s conclusion on the same basis.
Editor’s Note
The ONCA unanimously dismissed the appeal on the basis that the common law remedy of enforcement of a foreign judgment was not intended to apply to ricochet judgments. In effect, the ONCA held that Pollak J. erred in law but reached the correct result. However, the basis for reaching this conclusion is not entirely clear.
The unanswered question, which is in fact referred to the Court of Appeal’s decision, is why H.M.B. did not take steps in Ontario directly to enforce the Privy Council judgment. Did it have to do with the longer appeal period in BC and the possibility that the claim would be barred by the two-year limitation period in Ontario?
Favreau J.A. notes this decision should not be should not be taken as a determination that the two-year limitation period for recognition and enforcement of the Privy Council Judgment has expired. Ultimately, if H.M.B. chooses to pursue a common-law action for direct recognition and enforcement of the Privy Council Judgment in Ontario, it will be for the court in that context to decide the limitation period issue, including whether discoverability may play a role in deciding that issue. [para. 47]