Last week, the Supreme Court of Canada issued a decision on the reciprocal enforcement of foreign judgments in Canada, clarifying the meaning of “carrying on business” under the relevant legislation.
Company Obtains Enforcement of Foreign Judgment in British Columbia
In 2007, Antigua, a country comprised of several islands in the Caribbean, expropriated property owned by a private company incorporated in Antigua pursuant to the country’s Land Acquisition Act. Litigation ensued, and in May 2014, the Judicial Committee of the Privy Council ordered Antigua to compensate the company for the expropriation.
Over two years later, in October 2016, the company brought a common law action in British Columbia to enforce the Privy Council Judgment in that province. Antigua did not defend the action.
As a result, in April 2017, the company obtained a default judgment for the enforcement of the Privy Council Judgment against Antigua in the British Columbia Supreme Court.
Company Seeks Reciprocal Enforcement of Judgment in Ontario
One year later, in May 2018, the company commenced an application in Ontario to enforce the British Columbia Judgment by having it registered under Ontario’s Reciprocal Enforcement of Judgments Act (“REJA”).
Antigua opposed the application. It submitted that while it had contracts with four “Authorized Representatives” with businesses, premises and employees in British Columbia for the purposes of its Citizenship by Investment Program (“CIP”), it did not have a physical presence in the province and it was therefore not “carrying on business” for the purposes of REJA.
Judge Rules Registration of Judgment Precluded Because Antigua was not Carrying on Business in British Columbia
When the company sought to enforce the British Columbia Judgment in Ontario pursuant to the REJA, Antigua resisted the application on the basis of both ss. 3(b) and 3(g) of the legislation. Those sections read:
Conditions of registration
3. No judgment shall be ordered to be registered under this Act if it is shown to the registering court that…
(b) the judgment debtor, being a person who was neither carrying on business nor ordinarily 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…
(g) the judgment debtor would have a good defence if an action were brought on the original judgment.
The application judge accepted Antigua’s arguments and dismissed the company’s application, finding that s. 3(b) of the REJA precluded the registration of the British Columbia judgment because Antigua was not “carrying on business” in British Columbia, which requires a physical presence in the jurisdiction and the CIP did not qualify did not constitute a business activity.
The application judge also held that the registration of the British Columbia judgment was precluded by s. 3(g) of the REJA, which bars registration if “the judgment debtor would have a good defence if an action were brought on the original judgment”. The application judge concluded that “original judgment” referred to the first-instance Privy Council Judgment on the merits, not the British Columbia Judgment, which was a derivative of a judgment of a non-reciprocating jurisdiction.
The company appealed to the Ontario Court of Appeal.
Court of Appeal affirms Analysis of the Application Judge, Appeal Dismissed
On appeal, the company challenged the application judge’s approach to both ss. 3(b) and 3(g).
However, a majority of the Court of Appeal for Ontario affirmed the application judge’s analysis of “carrying on business” under s. 3(b) of the REJA and dismissed the appeal on that basis. It found that the application judge had not erred in summarizing or applying the legal test for what constitutes carrying on a business and that his factual finding that Antigua was not carrying on business in British Columbia was entitled to deference. Because the court had disposed of the appeal under s. 3(b), it did not address the issue of s. 3(g).
The company appealed to the Supreme Court of Canada.
Supreme Court of Canada Finds Application Judge Correctly Applied the Reciprocal Enforcement of Judgments Act
The majority of the Supreme Court of Canada dismissed the appeal, finding that the application judge had correctly interpreted and applied the relevant provisions of the REJA. It explained that the “carrying on business” set out in s. 3(b) has been given a generous and liberal interpretation by the courts below consistent with the Court’s jurisprudence. It, therefore, held that there had been no error in the conclusion that Antigua was not carrying on business in British Columbia.
Carrying on Business in a Jurisdiction Requires Direct or Indirect Presence in the Jurisdiction, Supreme Court States
While the court noted that the REJA does not define “carrying on business” for the purposes of s. 3(b), it explained that the concept has a long history in common law. The court stated that to determine whether a defendant is carrying on business in a jurisdiction, the court must inquire into whether it has some direct or indirect presence in the jurisdiction, accompanied by a degree of business activity that is sustained for a period of time. Whether or not a corporation is carrying on business is a question of fact assessed in reference to a number of indicia. Some kind of actual presence, whether direct or indirect, is required. The court found that physical presence in the form of maintenance of physical premises will be compelling, but a virtual presence that falls short of an actual presence will not suffice.
In the result, the court, therefore, dismissed the appeal.
For Assistance Enforcing Foreign Judgments, Contact Baker & Company in Toronto
Where legal disputes cross borders, individuals or businesses may need to enforce a foreign judgment in an Ontario court or a court in another Canadian province or territory. This can occur across a wide range of legal disputes including those involving corporate & commercial law, expropriation law, real estate law, employment law, wills & estates law, and hotel law. If you are involved in a cross-border or international dispute and have received a judgment in a foreign jurisdiction that you wish to have enforced in Ontario or elsewhere in Canada, contact the highly skilled corporate commercial lawyers at Baker & Company. We rely on more than 30 years of business law experience to ensure our clients’ rights are protected. Call us at 416-777-0100 or contact us online for a consultation.