Enforcing Foreign Judgments in Canada

It is often said that winning a court judgment for money owed is only half the battle.   If the debtor is recalcitrant and does not have easily located assets, collecting the money awarded by the court may be difficult.   That can be particularly challenging when the court that made the award is in a different country than where the debtor’s assets are located.

Canadian common law, emanating from the Supreme Court of Canada, encourages a “generous and liberal approach to the recognition and enforcement of foreign judgments”, as stated in Chevron Corp. v. Yaiguaje, 2015 SCC 42:

[43]   Canadian law recognizes that the purpose of an action to recognize and enforce a foreign judgment is to allow a pre-existing obligation to be fulfilled; that is, to ensure that a debt already owed by the defendant is paid.

In its earlier decision in Beals v. Saldanha, 2003 SCC 72, the Supreme Court upheld the enforcement in Canada of what appears to have been an outrageously large damage award from Florida.   Some Canadians had sold a building lot in Florida for $8000, but there was an error in its description.  This led to a  US$210,000 damages award against them by a Florida jury, which they ignored.  With interest, it grew to C$800,000, which the Supreme Court ordered them to pay.

Nevertheless, enforcement is not automatic nor always quick and easy.  The party seeking to enforce it first has to go to court in Canada to have the foreign judgment recognized.  Complicating this is the fact that there is no clear legislation on the general enforcement of foreign judgments.  Two court decisions in Ontario in recent years have come to quite contradictory conclusions about a significant procedural question, namely whether an action or an application is required.  I would argue that the more recent one, the 2020 decision by Justice Koehnen in JGB Collateral, is the correct one.

Reciprocal Enforcement of Judgments Statutes

Most of the common law provinces and territories have a statute entitled Reciprocal Enforcement of Judgments or something similar.   It provides that, “when a judgment has been given in a court in a reciprocating jurisdiction, the judgment creditor may apply” to have the judgment registered in the local court.   That will usually lead, with a minimum of effort, to an automatic court order allowing the judgment to be enforced locally, e.g., by the sheriff in the municipality where the debtor has property.

The problem is that the list of reciprocating jurisdictions, which is set by regulation in each province, is quite short.   For example, Alberta’s Reciprocating Jurisdictions Regulation, Alta Reg 344/1985, lists eleven other provinces and territories (but not Quebec), along with Australia and four states of the United States.

British Columbia’s Court Order Enforcement Act, RSBC 1996 has a somewhat longer list of reciprocating jurisdictions:  eleven other provinces and territories (but not Quebec),  several states in Australia, five states of the United States, plus Austria, Germany and the UK.

Ontario has reciprocal agreements with eleven other provinces and territories (but not Quebec), plus the United Kingdom (using a stand-alone statute for the latter).

A 2012 Decision Rules that an Action is Needed

In Ontario and most other provinces, the rules of court require a court proceeding to commence either as an action, with a statement of claim, or as an application, with a notice of application.  An application is somewhat simpler and generally involves fewer procedural steps.  Therefore, it would usually be preferable where it is an option.

In 2012, a Quebec law firm had a relatively small claim of $7,496 against an Ontario client who had not paid his bill.  It obtained judgment against him in a Quebec court.  It then came to Ontario to seek to enforce the judgment, and filed an application with the Ontario court.

Kane J. rejected the application, in Noël et Associés, S.E.N.C.R.L. v. Sincennes, 2012 ONSC 3770 (CanLII), ruling that it should proceed by way of an action, and in the Small Claims Court, on account of its size.   The rationale was that Quebec is not a reciprocating jurisdiction, and therefore the claim needs to be re-established in Ontario:

[19] An application requesting a declaration to recognize and permit enforcement of a foreign judgment misstates the nature of the rights sought to be enforced. It is the Ontario judgment obtained on the promise to pay the Quebec judgment which is enforced against the debtor, not the foreign Quebec judgment.

Kane J. did recognize that there had been some conflicting decisions, and therefore the application was dismissed without costs.   The prevailing view in Ontario following this decision was that it was necessary to proceed by way of an action in order to enforce a foreign judgment.

A 2020 Decision Allows Enforcement by Application

The more recent case of JGB Collateral LLC v. John Rochon and Donna Jean Hewitt Rochon, 2020 ONSC 1732 (CanLII), involved a claim for a much larger amount of money, more than US$6.7 million.   The applicant was claiming on account of a New York State judgment for a loan in default, where the Rochons had given a personal guarantee.

The respondents argued that they had been denied natural justice due to a conflict by the lawyers who obtained the American judgment on behalf of JGB.  Justice Koehnen rejected this argument on the grounds that the respondents could have raised this defence in the New York proceeding, but failed to do so.

Having disposed of that argument, there were no material facts in dispute.   Therefore, Justice Koehnen also rejected the argument, based on the Noel case above, that JGB was not entitled to proceed by way of application.  His rationale is that proceeding by application is the typical route when there are no facts in dispute:

[21]    The respondents have advanced no principled reason why a proceeding to recognize and enforce foreign judgment should not be capable of the same procedural choices as any other claim.  Where there are no material facts in dispute, there is no reason why the relief sought should not proceed by way of application.  Even if the proceeding  were commenced by way of action, it would still be open to the plaintiff to move for summary judgment, a procedure largely similar to an application.

Therefore, in Ontario we now have two decisions from the Superior Court that are in disagreement with each other on the question of how to proceed to obtain recognition of a foreign judgment.  The respondents in this case did not appeal, and therefore the Court of Appeal will not have an opportunity to weigh in on the subject.   Justice Koehnen’s interpretation of the Rules appears to be more consistent with other jurisprudence.  It is likely to be followed in future cases.

This article was first published on The Lawyer’s Daily.

This article is for general information purposes and you should seek specific advice for your particular case.  An earlier version of this article was originally published by The Lawyer’s Daily, (www.thelawyersdaily.ca) a division of LexisNexis Canada.