On November 12, 2020, the Supreme Court of Canada granted leave to appeal in HMB Holdings Limited v Antigua and Barbuda.[1] The future decision of the Supreme Court will likely have a significant impact on the law of foreign judgment enforcement in Canada. The Court is likely to address what it means to “carry on a business” in a province (in particular for a foreign state), and whether parties may avoid bars to enforcement (namely expired limitations periods) by having a foreign judgment recognized in one province (with a longer limitation period) and then having that province’s recognition decision enforced in another province.
Judgment and enforcement efforts outside Ontario
In 2014, the Judicial Committee of the Privy Council granted judgment in favour of HMB Holdings Limited (HMB) against Antigua and Barbuda (Antigua) to compensate HMB for the expropriation of a breach front property by Antigua in 2007 (the Privy Council Judgment).[2]
HMB sought to enforce the Privy Council Judgment in Canada. HMB successfully brought a common law action to enforce the Privy Council Judgment in British Columbia (the BC Judgment) because the applicable 10-year limitation period under the British Columbia Limitation Act had not yet expired. By contrast, under the Ontario Limitations Act, 2002 the applicable two-year limitation period had expired, limiting HMB’s ability to enforce the Privy Council Judgment directly in Ontario.
Enforcement efforts in Ontario
HMB then brought an application in Ontario to enforce the BC Judgment under the Reciprocal Enforcement of Judgments Act [REJA]. Justice Perell dismissed the application based on subsections 3(b) and (g) of REJA, which provide:
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.
First, Justice Perell concluded that Antigua did not carry on a business in British Columbia under section 3(b). Antigua’s activity in British Columbia had consisted of contracts with “Authorized Representatives” who had businesses, premises, and employees in British Columbia and were paid finders fees for directing applicants to apply for citizenship under its “Citizenship by Investment” Program. However, Antigua had no physical presence in British Columbia, and the Authorized Representatives were not its agents. Further, the Citizenship by Investment Program was a government program, not a business activity.[3]
Justice Perell also held that subsection 3(g) of REJA would bar enforcement in Ontario. The “original judgment” under subsection 3(g) was the Privy Council Judgment, not the BC Judgment. HMB was attempting to enforce a “ricochet judgment”, since the BC Judgment was derivative of a judgment of a non-reciprocating jurisdiction with Antigua. Permitting registration would allow a party to circumvent the Ontario limitation periods that apply to the enforcement of a foreign judgment.[4]
HMB appealed. It argued that the judge erred in in applying the criteria for “carrying on a business”, and in concluding that “original judgment” under subsection 3(g) of REJA meant the Privy Council Judgment.
A majority of the Court of Appeal declined to opine on whether governmental activity such as Antigua’s could be ever be said to amount to “business”, but found no error in the finding that Antigua did not carry on business in British Columbia.[5] This conclusion did not deprive parties like HMB of a remedy, provided they bring an enforcement application (in Ontario) within the applicable limitation period. Accordingly, it was unnecessary to consider whether registration of a “ricochet judgment” was contrary to REJA’s legislative objectives.[6]
Justice Nordheimer dissented. First, the requirement that a party carry on business in the province does not apply to the recognition and enforcement of foreign judgments. Secondly, there is a very low bar for finding a party was “carrying on a business” in a province for the purposes of REJA. Antigua was carrying on a business by hiring individuals to sell citizenship and generate revenue. A physical presence in a province should not be required under REJA in today’s digital age. Justice Nordheimer also concluded that any governmental projects with a commercial aspect should be included in the meaning of “carrying on a business”. There was no reason to interpret that phrase in a manner that would render governments immune from REJA.[7]
Justice Nordheimer would have also enforced the BC Judgment under subsection 3(g) of REJA on the basis that “original judgment” under that subsection referred to the BC Judgment[8]. The majority did not address this issue.
Takeaways
On appeal, the Supreme Court has an opportunity to provide clarity on three important issues that will be of interest to judgment creditors looking to enforce a foreign judgment in Canada:
- The meaning of “carrying on a business” and how to apply this test in the context of foreign judgment enforcement, particularly where the debtor is a state. The Supreme Court may update the factors relevant to this inquiry in light of Justice Nordheimer’s conclusion that the lack of a physical presence in a jurisdiction should not carry significant weight. This is especially timely given the exponential growth of digital commerce as a result of COVID-19.
- Whether the activities of a foreign government can constitute carrying on business in a province for the purpose of section 3(b) of REJA. Justice Nordheimer’s admonition that the application judge’s decision under subsection 3(b) of REJA would render governments immune under REJA will almost certainly require consideration.
- The meaning of “original judgment” under subsection 3(g) of REJA. Justice Perell’s concerns regarding ricochet judgments raise issues regarding the potential to unfairly extend limitations periods and permit enforcement long after a debtor considers the matter statute-barred. This will likely require balancing considerations of fairness to the debtor with the policy underlying the law of foreign judgment enforcement and limitations periods generally.
[1] 2020 ONCA 12 [HMB CA], leave to appeal to SCC granted 2020 CanLII 87103 (SCC).
[2] 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>.
[3] 2019 ONSC 1445at paras 35, 43 and 52-54.
[4] Ibid at paras 69-70 and 89.
[5] HMB CA, supra note 1 at paras 17 and 25.
[6] Ibid at paras 32 and 35.
[7] Ibid at paras 41-44 and 49.
[8] Ibid at paras 51 and 54.
