Ontario Court of Appeal Rules Ricochet Judgments Not Available at Common Law – Trial, Appeals and Compensation

Insight

The Ontario Court of Appeal recently considered the circumstances in which an Ontario court will recognize and enforce a judgment from another Canadian province that has itself recognized and enforced a foreign judgment.1
HMB is the first Canadian decision to consider the availability of “ricochet judgments” at common law, and emphasizes the care plaintiffs must take in choosing the appropriate province(s) to commence recognition and of execution.

Background

The appellant, HMB Holdings Limited (“HMB”), owned a hotel in Antigua and Barbuda that was severely damaged by Hurricane Luis in September 1995. The Antiguan government expropriated the property in 2007, resulting in disputes lasting several years before several levels of justice. concerning the valuation of the property. In May 2014, the Judicial Committee of the Privy Council ruled that the defendant, the Attorney General of Antigua and Barbuda (“Antigua”), should pay HMB approximately US$26.6 million, plus interest (the “judgment of the Privy Council”).2 Only a portion of the judgment debt has been paid.

In October 2016, HMB filed an action in the Supreme Court of British Columbia to recognize and enforce the Privy Council judgment under the Court Jurisdiction and Transfer of Proceedings Act.3 Antigua did not defend the action and HMB obtained a default judgment for approximately C$30 million (the “BC Judgment”) to settle the outstanding judgment debt.

In May 2018, HMB filed for registration of the British Columbia judgment in Ontario under the Reciprocal Enforcement of Judgments Act.4 She failed at first instance and on appeal to the Ontario Court of Appeal.4and the Supreme Court of Canada.6

In May 2019, HMB filed a new action seeking recognition and enforcement of the British Columbia judgment at common law.

The decision of the motions judge

Antigua sought summary judgment to dismiss the action,seven arguing that there was no real and substantial connection between British Columbia and the Privy Council judgment for the purposes of HMB’s recognition and enforcement proceedings.

Antigua also argued that it was an abuse of process for HMB to bring an action for recognition and enforcement of the BC judgment in Ontario, rather than directly seeking enforcement of the Privy Council judgment. Noting that this action was commenced five years after the Privy Council judgment was issued, Antigua argued that a ricochet judgment would allow HMB to avoid the two-year limitation period imposed by Ontario.

The Motions Judge granted Antigua’s motion on the first ground, finding that there was no evidence of a real and substantial connection between British Columbia and the subject matter of the litigation and that , therefore, the British Columbia judgment was not enforceable in Ontario.

The decision of the Ontario Court of Appeal

The Ontario Court of Appeal found that the motion judge erred in focusing on the existence of a real and substantial connection between British Columbia and the original litigation, concluding that the test common law relating to the recognition and enforcement of original foreign judgments does not apply to the recognition and enforcement of judgments by ricochet.8

Writing for the Court, Justice Favreau confirmed that as a general rule, Ontario courts will recognize and enforce judgments from another jurisdiction as long as the originating jurisdiction had a real and substantial connection to the claim or defendant. and that none of the obstacles to recognition and enforcement are present – ​​for example, if the foreign judgment was obtained by fraud, if the foreign court violated the rules of natural justice or if the recognition and enforcement of the judgment foreigner would be contrary to public order.9

However, Justice Favreau noted that different considerations come into play in an action for recognition and enforcement of a judgment by ricochet:

  1. Courtesy is not in question. While recognition and enforcement actions require the local court to show deference and respect for judgments rendered by a foreign court, such concerns do not arise when reviewing judgments by ricochet. Recognition and enforcement procedures are local in scope, determined by the legislative and procedural choices made by each province with regard to the enforcement of judgments in its jurisdiction.

  2. Recognition and enforcement actions require review of local laws. The purpose of a recognition and enforcement action is to assist the plaintiff to enforce the foreign judgment – for example, by giving him access to assets seizable in the jurisdiction. The role of the local court is to facilitate enforcement in accordance with its own law, by requiring a review of local law (including the applicable statute of limitations) to determine whether assets in the jurisdiction should be made available to satisfy the judicial debt.

The Court noted that recognition of the British Columbia judgment in Ontario would allow HMB to circumvent Ontario’s own recognition and enforcement rules and would deprive Antigua of valid defenses that would have been available in an action in recognition and execution of the initial judgment. In this case, Favreau J. appeared to favor Antigua’s argument that an action by the HMB to enforce the Privy Council judgment would have been statute-barred under Ontario law, and a judgment by ricochet would thereby deprive Antigua of the defense it would otherwise have had if HMB sought recognition and enforcement of the Privy Council judgment in Ontario.

Carry

Ricochet judgments are not available at common law in Ontario. Without a statutory registration mechanism, Ontario courts will not recognize or enforce a recognition and enforcement judgment made in another province. Although the original recognition and enforcement judgment may be relevant,ten the plaintiff must still seek recognition and enforcement of the original judgment in Ontario in accordance with the usual test by showing that the foreign court has duly assumed jurisdiction over the dispute and that no defense to recognition and enforcement arises applied.

Footnotes

1. HMB Holdings Limited v. Antigua and Barbuda2022 ONCA 630[H.M.B.].

2. The Attorney General v. HMB Holdings Ltd,
[2014] United KingdomPC 5
.

3. SBC 2003, c. 28.

4. HMB Holdings Ltd. vs. Antigua and Barbuda (Attorney General)2019 ONSC 1445; see also RSO 1990, c. R.5 [REJA] (the
REJA allows a judgment creditor to apply in Ontario to have a judgment rendered by the court of a reciprocating jurisdiction registered with the Superior Court of Justice).

5. HMB Holdings Limited v. Antigua and Barbuda2020 ONCA 12.

6. HMB Holdings Ltd. vs. Antigua and Barbuda2021 SCC 44.

seven. HMB Holdings Ltd. vs. Attorney General of Antigua and Barbuda2021 ONSC 2307.

8. HMB, above note 1 at paragraphs 36, 48.

9. HMB, above note 1 at paragraph 31.

10. For example, the doctrines of res judicataissue estoppel or abuse of process may simplify the second recognition and enforcement proceeding by preventing the defendant from arguing that the real and substantial connection test is not met.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

Comments are closed.