Enforcing USA Judgments in Ontario
Ontario courts do not automatically recognize or enforce court orders from outside Canada. So, what do you do when you have a judgment from a court in a state in the United States of America (“USA”), but the defendant has assets in Ontario? You must obtain an order in Ontario to legally recognize and enforce the judgment in Ontario.
The litigation lawyers at Walker Law regularly assist USA clients who wish to enforce their judgments. This blog introduces you to the general legal test that must be met to enforce your USA judgment in Ontario.
Enforcing Reciprocal Jurisdictions vs. Enforcing USA Judgments in Ontario
The process for the USA is not to be confused with the process for other Canadian provinces, otherwise known as “reciprocal jurisdictions”. A more streamlined process is available for reciprocal jurisdictions. If the judgment is not from a reciprocal jurisdiction (for example a USA state), then a common-law test that has been developed delineated by the Supreme Court of Canada is applied.
Walker Law previously brought an application for an order to enforce a judgment from the New Brunswick Court of Queen’s Bench (now King’s Bench) under the Reciprocal Enforcement of Judgments Act[1] (the “Act”). Pursuant to the Act, where a judgment has been granted in a court in a reciprocating state, the judgment creditor may apply to the Superior Court of Justice within six years of the date of the judgment to have the judgment registered with the Superior Court. All provinces and territories of Canada fall under the Act except for Québec. Because New Brunswick was a reciprocating state, the order was a relatively straightforward one to have enforced in Ontario.
Please click here to review the order.
The Legal Test for USA Judgments
When a party in Ontario seeks to enforce a judgment from a foreign country, such as the USA, they must go through a common law recognition process and bring their own application in the Superior Court of Justice.
Since the Supreme Court first articulated these principles in Morguard Investments Ltd. v. De Savoye[2] (“Morguard”), courts have adopted the general rule that they are to recognize and enforce legitimate judicial acts from other jurisdictions as a matter of comity.[3] In the recent case of Dish v. Shava, 2018 ONSC, the Court delineated three factors that must be satisfied for the recognition and enforcement of a foreign judgment:
- The originating court had proper jurisdiction to issue the judgment, in that it had a real and substantial connection with the subject matter or the defendant;
- The judgment must be final and conclusive; and
- The defences of fraud, public policy or lack of natural justice, should not be available to the defendant.[4]
Factor #1: Jurisdiction and Real and Substantial Connection
In Morguard, the Supreme Court first articulated the “real and substantial connection” test. Initially applied only to interprovincial judgments, the test was extended to foreign judgments in Beals v. Saldanha, 2003 SCC 72 (“Beals”).[5] In Beals, the Supreme Court held that “the “real and substantial connection” test requires that a significant connection exist between the cause of action and the foreign court”.[6]
For example, in Beals the Supreme Court held that when the appellants bought and sold land in Florida, they brought themselves within the jurisdiction of Florida law, opening the door for the plaintiffs to obtain a court order in Florida. This was enough to satisfy the real and substantial connection test.
However, not all cases are as straightforward as buying and selling land in a certain jurisdiction. As a result, the common law has developed four presumptive connecting factors that entitle a court to assume jurisdiction over a dispute:
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the defendant is domiciled or resident in the province;
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the defendant carries on business in the province;
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the tort was committed in the province; and
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a contract connected with the dispute was made in the province.[7]
These factors are not rigid. Courts will look to connections that give rise to a relationship with the forum that is similar in nature to the ones that result from the listed factors. Courts will apply the principles of comity, order, and fairness to serve as tools to establish the strength of the relationship with a particular place.[8]
It is important to note that the real and substantial connection test applies only to the original court (for example, in the case of Beals, the USA court), and not the Ontario court. There is no need to demonstrate a real and substantial connection between the dispute and the enforcing court.[9]
Factor #2: Final and Conclusive Judgments
The order obtained in the USA must also be final and conclusive. This means that there is a final judgment, not an interim decision.
Finality is crucial for three reasons.
- First, the domestic court knows precisely what it is agreeing to recognize and enforce.
- Second, finality removes the risk of injustice if there is an order that is subsequently changed but had begun to be enforced in a different jurisdiction.
- Third, finality removes the risk of undermining public confidence that might arise if the domestic court were to issue a recognition order and permit its enforcement, only to have the actual foreign order disappear.[10]
Factor #3: No Defences
The defences of fraud, public policy, and lack of natural justice are an important factor in the analysis of whether or not a judgment from the USA should be recognized and enforced in Ontario.
To rely on fraud as a defence, the defendant must show that the relevant facts could not have been discovered with reasonable diligence before the foreign judgment was issued.[11] The defendant has the burden of demonstrating fraud in order to prevent the recognition and enforcement of the USA judgment in Ontario. Fraud is a very complex topic, and we suggest that you contact the fraud litigation department at Walker Law to learn more.
The public policy defence turns on whether the foreign law is contrary to our view of basic morality. This is intended to be narrowly construed. “The public policy defence is not meant to bar enforcement of a judgment rendered by a foreign court with a real and substantial connection to the cause of action for the sole reason that the claim in that foreign jurisdiction would not yield comparable damages in Canada.”[12] Most USA jurisdictions are not contrary to the Canadian principles of public policy.
The natural justice defence, when raised against the enforcement of a foreign judgment, focuses solely on the fairness of the procedure used in the foreign court, not on whether the decision itself was correct. This defence is only available where the foreign process falls short of basic Canadian standards of fairness, such as judicial independence and ethical rules governing participants in the legal system.[13]
The commercial litigation lawyers at Walker Law can assist you with assessing whether a defendant could successfully raise any of these defences.
Unless the judgment is from a Canadian province or territory (other than Québec), enforcing a foreign judgment in Ontario requires bringing an application and meeting the common law requirements. We encourage you to contact the debt collection lawyers at Walker Law to assist you with recognizing and enforcing your USA judgment. Our experienced commercial litigation lawyers provide tailored cross-border legal services to help clients navigate the complexities of international judgment enforcement.
[1] R.S.O. 1990, c.R.5..
[2] 1990 CanLII 29 (SCC), [1990] 3 SCR 1077
[4] Dish v. Shava, 2018 ONSC 2867 (CanLII), at para 11
[5] 2003 SCC 72.
[6] Beals, para 32.
[7] Club Resorts Ltd. v. Van Breda, 2012 SCC 17 (CanLII), [2012] 1 SCR 572 at para. 90.
[8] Ibid. at para. 97.
[9] Chevron Corp. v. Yaiguaje, 2015 SCC 42 at para. 75.
[10] Cavell Insurance Company, Re, 2006 CanLII 16529 (ON CA)
[11] Ibid. at para 52.
[12] Ibid. at para. 76
[13] Ibid. at paras 64-65.
Short Description: Foreign judgments from the US aren’t automatically enforceable in Ontario. A legal process is required, including proving jurisdiction, finality, and fairness.
Tags: Civil Litigation Law, Commercial Litigation Law, Debt Recovery