Foreign judgment against Antigua cannot be enforced in Ontario, SCC rules

A foreign judgment against a Caribbean country cannot be enforced in Ontario since the judgment was made in a jurisdiction where the country does not carry on business, the Supreme Court of Canada ruled on today. The decision clarifies what "carrying on business" means in the context of foreign judgments and private international law.

In H.M.B. Holdings Ltd. v. Antigua and Barbuda, the Supreme Court found that s. 3(b) of Ontario’s Reciprocal Enforcement of Judgments Act (REJA) — which allows a judgment from another province or territory to be registered for enforcement in Ontario — barred the appellant from registering the British Columbia judgment in Ontario, because Antigua was not carrying on business in British Columbia, where the judgment had been rendered.

Section 3(b) of the REJA says that an entity must be carrying on business in the jurisdiction where the judgment was rendered, while s. 3(g) states a judgment may only be registered in Ontario if the opposing party would have a good defense if the original judgment were challenged.

In this case, the majority found, s. 3(g) didn’t need to be considered because the requirements for registering a judgment under s. 3(b) had not been satisfied.

Thursday’s decision will apply to other legislation on reciprocal enforcement across Canada.

In 2007, the Caribbean island state of Antigua and Barbuda expropriated waterfront resort property owned by H.M.B. Holdings Limited. The Judicial Committee of the Privy Council ordered Antigua to compensate HMB for the expropriation in a 2014 judgment. In 2016, HMB brought an action in British Columbia to enforce the Privy Council judgment, just over two years after the judgement was made. The company could not have brought the action in Ontario because that province’s limitation period of two years had expired. Antigua did not defend the action and the British Columbia Supreme Court granted default judgment.

HMB then brought an application in Ontario under the Reciprocal Enforcement of Judgments Act, RSO 1990, c. R.5, to recognize the B.C. judgment which Antigua opposed. The Ontario Superior Court of Justice dismissed the application and a subsequent appeal was also dismissed by the Court of Appeal for Ontario, which found that Antigua’s activities in B.C. were minimal and not sufficient to constitute carrying on business.

Just five Supreme Court justices heard the by leave civil appeal in April.

In Thursday’s unanimous ruling, the Supreme Court agreed with Ontario’s appellate court: B.C.’s judgment cannot be enforced in Ontario because Antigua was not carrying on business in that province under the requirements of REJA’s s. 3(b).

“Section 3(b) places two burdens on a judgment debtor seeking to raise this defence” to registration of a judgment, Chief Justice Richard Wagner wrote in his reasons for the majority, with Justices Andromache Karakatsanis, Malcolm Rowe and Nicholas Kasirer agreeing.

“First, the judgment debtor must establish that they were not carrying on business or ordinarily resident in the jurisdiction of the original court. Second, the judgment debtor must also show that they did not voluntarily appear or otherwise submit to the original court’s jurisdiction during the proceedings the judgment creditor brought in that court. If the judgment debtor shows the Ontario court that these two conditions are met, then s. 3(b) bars the registration of the judgment.”

Although Antigua’s Citizenship by Investment (CIP) program had four representatives in B.C., they were all independent businesspeople with little involvement in the program other than sending out information kits to potential investors.

In concluding that Antigua was not carrying on business in British Columbia, the application judge correctly made the following five main findings of fact, the chief justice noted in his reasons:

“(1) Antigua had no physical presence in British Columbia; (2) Antigua did not carry on any sustained business activity in British Columbia; (3) the four Authorized Representatives were not agents or Authorized Agents of Antigua; (4) the four Authorized Representatives were carrying on their own businesses that were independent of the businesses of the Antiguan government; and (5) the CIP had no particular focus on British Columbia or Canada; since its inception, there had been 1,547 applications [from around the world] for the program but only 9 of them had been from persons born in Canada.”

The Supreme Court’s decision in Chevron Corp. v. Yaiguaje, 2015 SCC 42, [2015] 3 S.C.R. 69, which calls for a liberal approach to the recognition and enforcement of foreign judgments, was “helpful in this case to the extent that it clarifies the traditional grounds of jurisdiction,” the majority noted.

In the Chevron case the court followed the approach in Adams v. Cape Industries Plc and explained how the term “carrying on business,” as part of traditional presence-based jurisdiction at common law, should be interpreted in Canada. Writing for the court, Justice Clément Gascon stated that:

“To establish traditional, presence-based jurisdiction over an out-of-province corporate defendant, it must be shown that the defendant was carrying on business in the forum at the time of the action. Whether a corporation is “carrying on business” in the province is a question of fact. In Wilson, in the context of statutory registration of a foreign judgment, the Alberta Court of Appeal was asked to assess whether a company was carrying on business in the jurisdiction. It held that to make this determination, the court must inquire into whether the company has “some direct or indirect presence in the state asserting jurisdiction, accompanied by a degree of business activity which is sustained for a period of time”. These factors are and always have been compelling indicia of corporate presence; as the cases cited in Adams v. Cape Industries Plc., [1990] 1 Ch. 433 [Ch. Div.], at pp. 467-68, per Scott J., demonstrate, the common law has consistently found the maintenance of physical business premises to be a compelling jurisdictional factor. LeBel J. accepted this in Van Breda when he held that “carrying on business requires some form of actual, not only virtual, presence in the jurisdiction, such as maintaining an office there [emphasis added].”

In separate concurring reasons, Justice Suzanne Côté agreed with Justice Wagner’s analysis under s. 3(b) of the REJA and with dismissing the appeal, but believed that the REJA applies to derivative judgments as well, which the majority had not felt necessary to determine.

The application judge had concluded that the original judgment was that of the Judicial Committee of the Privy Council, and that B.C.’s judgment was therefore a derivative of a judgment of a non-reciprocating jurisdiction.

“In my view, a judgment resulting from a common law action that recognizes a foreign judgment (‘recognition judgment’), such as the British Columbia Judgment in this case (S.C., No. S169831, April 7, 2017 (‘B.C. Judgment)), falls squarely within the broad definition of ‘judgment’ in s. 1(1) of the REJA, provided that the recognition judgment was rendered in a reciprocating jurisdiction,” Justice Côté wrote.