In September 2022, the Court of Appeal for Ontario (ONCA) released an important decision regarding the enforceability of “ricochet” judgments at common law, HMB Holdings Ltd. v. Antigua and Barbuda.[1] The enforceability of ricochet judgments refers to the enforceability of a judgment from another jurisdiction, which itself enforces ajudgment from yet another jurisdiction.
This same case had previously made its way to the Supreme Court of Canada (SCC) on the related issue of whether this type of judgment could be registered under the Reciprocal Enforcement of Judgments Act (Ontario) (REJA). That statute permits the registration and enforcement of judgments between Canadian provinces. In the prior proceeding, the SCC upheld the lower court rulings refusing registration under the REJA.[2] This new ONCA decision arises out of a plaintiff’s second attempt to get the same British Columbia judgment recognized in Ontario, this time under the common law.
Key takeaway
There is no common law basis for seeking the recognition and enforcement of judgments from other provinces that are themselves enforcing foreign judgments (ricochet judgments). A party seeking to enforce a foreign judgment in more than one province should pursue recognition and enforcement of the underlying foreign judgment in each province where it seeks to enforce against assets.
Background: Initial judgment and recognition in British Columbia
In May 2014, the Judicial Committee of the Privy Council granted judgment in favour of HMB Holding Ltd. (HMB) against Antigua and Barbuda (Antigua) to compensate HMB for the expropriation of a beachfront property in 2007 (the Privy Council Judgment).[3]
HMB sought to enforce the Privy Council Judgment in Canada more than two years after it was issued. In October 2016, HMB brought a common law action to enforce the Privy Council Judgment in British Columbia. Antigua did not defend the action or attorn to British Columbia, and HMB obtained default judgment in 2017 (the BC Judgment). HMB was able to proceed in British Columbia in 2016 because the 10-year applicable limitation period under British Columbia’s Limitation Act had not yet expired. By contrast, under Ontario’s Limitations Act, 2002, the two-year applicable limitation period had expired in May 2016, thereby limiting HMB’s ability to enforce the Privy Council Judgment directly in Ontario.
Enforcement efforts in Ontario
HMB brought an application to register the BC Judgment in Ontario pursuant to the REJA[4]. That application was unsuccessful, as were both of HMB’s appeals to the ONCA and SCC.
In May 2019, HMB commenced a separate action seeking to recognize and enforce the BC Judgment in Ontario pursuant to common law. Antigua brought a motion for summary judgment to dismiss the action. The motion judge dismissed the action on the basis that there was no substantial connection between BC and the underlying action in Antigua.
The ONCA affirmed the motion judge’s decision and concluded that the action should be dismissed, but for different reasons. According to the ONCA, the underlying principle is really whether the court has the legal authority to recognize and enforce ricochet judgments between Canadian jurisdictions at common law. The ONCA recognized that there are a handful of cases where Canadian courts have permitted ricochet judgments but that those cases do not directly address the court’s legal authority for doing so at common law. The ONCA’s answer to this question was that Canadian courts do not have this authority at common law.
The ONCA held that “[w]hile comity requires respect for the jurisdiction that granted the original judgment, the concern over comity does not arise in the same way with respect to recognition and enforcement judgments.” The ONCA further found that approaching ricochet judgments as original judgments would deprive defendants of valid defences that could have been raised if the recognition and enforcement were originally sought in Ontario. In this particular case, when HMB sought enforcement of the Privy Council Judgment, the limitation period had expired in Ontario but not in British Columbia. Recognizing the BC Judgment in Ontario would, therefore, deprive Antigua of a limitations defence that would have been available if enforcement of the Privy Council Judgment had been directly commenced in Ontario.
Finally, the ONCA noted that it would be up to the Ontario Court to decide whether limitations or other defences would apply if HMB were to pursue direct recognition and enforcement of the Privy Council Judgment in Ontario. It made no finding regarding whether those defences would apply but confirmed that denying Antigua the opportunity to assert those defences by backdoor enforcement of the Privy Council Judgment by recognizing the BC Judgment was not appropriate. The more appropriate process would be to seek recognition and enforcement of the foreign judgment in each province individually under the laws and procedures of that province.
Conclusion
In this decision, the ONCA has provided helpful guidance and much-needed clarity regarding how the courts will treat ricochet judgments. This is an important decision to consider when crafting a strategy for the recognition and enforcement of a foreign judgment in Canada. It also serves as a reminder not to delay when a judgment may require enforcement in a foreign country.
For more information, please reach out to the authors, Chloe Snider, Laurie Livingstone and Camila Maldi
[1] 2022 ONCA 630.
[2] See our previous blog on that case here: https://www.commerciallitigationblog.com/hmb-holdings-v-antigua-supreme-court-grants-leave-in-case-that-will-impact-foreign-judgment-enforcement/
[3] The Attorney General (Appellant) v HMB Holdings Limited (Respondent) (Antigua and Barbuda), [2014] UKPC 5, online: http://www.bailii.org/uk/cases/UKPC/2014/5.html
[4] Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5
