Court refuses to recognize and enforce BC ruling in Ontario at common law

The principles underlying the recognition and enforcement of foreign judgments did not favour recognizing and enforcing a BC court’s decision in Ontario at common law, the Court of Appeal for Ontario has found.

In H.M.B. Holdings Limited v. Antigua and Barbuda, 2022 ONCA 630, H.M.B. Holdings Limited closed the hotel it owned in Antigua and Barbuda after a hurricane severely damaged it in 1995. In 2007, Antigua and Barbuda’s attorney general expropriated the property.

H.M.B. filed a judicial review application challenging the Antiguan government’s authority to expropriate its hotel. The Privy Council’s judicial committee affirmed the expropriation and required the attorney general to pay H.M.B. around US$26.6 million plus interest.

In 2016, H.M.B. brought an action in the Supreme Court of British Columbia to recognize and enforce the Privy Council’s judgment under BC’s Court Jurisdiction and Proceedings Transfer Act. It obtained a default judgment since Antigua and Barbuda’s attorney general did not defend against the suit.

H.M.B. unsuccessfully applied to register the BC judgment in Ontario under Ontario’s Reciprocal Enforcement of Judgments Act (REJA). It then appealed to the Ontario Court of Appeal and the Supreme Court of Canada with no success.

In 2019, H.M.B. filed an action in the Ontario Superior Court of Justice to recognize and enforce the BC judgment under the common law in that province. Antigua and Barbuda’s attorney general moved for summary judgment to dismiss the suit. The motion judge dismissed the action in Ontario based on a lack of real and substantial connection between BC and the underlying action in Antigua and Barbuda.

Ontario Court of Appeal dismisses H.M.B.’s appeal

The appellate court ruled that it should not recognize and enforce the BC judgment in Ontario at common law because the common-law test for recognition and enforcement of original foreign judgments was inapplicable to the recognition and enforcement of ricochet judgments, also known as derivative judgments.

The motion judge’s focus on whether there was a real and substantial connection between BC and the original dispute in Antigua and Barbuda or between BC and the parties to decide whether the BC judgment should be recognized and enforced in Ontario was an error in principle and was not in line with the original focus of the BC Supreme Court’s inquiry, the appellate court said.

Instead, the focus of the BC court’s inquiry was whether the Privy Council’s judgment should be recognized and enforced in that province, which involved addressing the following issues using BC’s law:

• whether the Privy Council had jurisdiction over the dispute or the parties under the Court Jurisdiction and Proceedings Transfer Act;
• whether the attorney general was properly served with the claim;
• whether the attorney general had defences to a judgment for recognition and enforcement in BC

The appellate court said that the issue of comity did not arise, as between BC and Ontario, when considering whether the Ontario court should enforce the BC judgment.

The court then discussed the possible precedents for the legal viability of ricochet judgments. No Ontario judgments have directly tackled the issue of the availability of ricochet judgments, except for the decisions of the Superior Court and the appellate court regarding the registration of the BC judgment under the REJA, the Court of Appeal found.

In this matter, the REJA was inapplicable, so the appellate court said the only available mechanism was an action for recognition and enforcement at common law. The common-law principles on recognizing and enforcing foreign judgments would apply to determine whether to recognize and enforce a recognition and enforcement decision from another jurisdiction, not the jurisprudence relating to registering foreign judgments under the REJA.

Some courts in Canada have determined that the REJA allowed the registration of a recognition and enforcement judgment. However, the appellate court concluded that these decisions had no bearing on the issue in the present proceeding.