Two-Year Limitation Period Applies to Enforcing Foreign Judgments in Ontario

In  Commission de la Construction du Québec v. Access Rigging Services Inc., 2010 ONSC 5897 (S.C.J.) [“Access Rigging“] the Ontario court confirmed that the two-year limitation period under the Limitations Act, 2002, S.O. 2002, c. 24 applies to the enforcement of foreign judgments.  In Access Rigging, the plaintiff brought an application to enforce a judgment from Quebec. The court noted that Quebec is not a member of the Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5, which provides a six-year limitation period on the enforcement of judgments from reciprocating provinces. The applicant originally sued in Quebec and obtained a default judgment in November 2005 for the grand total of $9,792.94 for amounts paid under an employment plan.  

Maclean J. held that the two-year limitation period under the Limitations Act, 2002 applied:

[13]           Here, there is no indication the legislature meant to include foreign judgments within the scope of section 16(1)(b) of the Limitations Act.  When theLimitations Act is read as a whole, it is clear that one of the purposes of the Act is to simplify an otherwise complex prior scheme of limitations.  Generally, theAct introduced a consistent two-year limitations scheme, with of course the saving provision of deemed knowledge.  There was no specific exemption for a foreign judgment.  It would have been simple to indicate such in s. 16 if that had been the legislature’s wish.  This was not done, and clearly at common law, an order within the meaning of such an act referred to domestic judgments only (see Lax v. Laxsupra).  Therefore, it is this Court’s view that the two-year limitation applies as set forth in the Limitations Act.  If another approach were to be taken, clearly it would be doing exactly what Feldman J.A. cautioned against, that is, changing a wording of the Act without a legislative change.  It is this Court’s view that to increase the limitation period above two years would require a direct change from the legislature.  For those reasons the Application is dismissed on the basis of the limitation having been run against the Applicant.

[14]           With regard to the argument that this should be an action, clearly a foreign judgment may now be enforced by an application and it is questionable that any real distinction now exists for turning this into an action.  With respect to the discoverability aspect, it is clear on these facts that the Applicant should have been aware of the knowledge of the Respondent well within the two-year period and for those reasons the Application is dismissed in both cases.

The Access Rigging case has been widely criticized as wrongly decided. For example, in Watson & McGowan’s Ontario Civil Practice-Annual Survey of Recent Developments in Civil Procedure (Westlaw), the learned authors note,

This decision is very troubling, and the authors suggest that it should not be the final word on the issue of enforcing foreign judgments. As argued by the applicant in this case, s. 16(1)(b) of the Limitations Act, 2002 provides that there is no limitation period in respect of a proceeding to enforce an order of a court, or any other order that may be enforced in the same way as an order of a court. The court noted that there is no indication that the legislature meant to include foreign judgments in the scope of s. 16(1)(b) and that there is no specific exemption for a foreign judgment within the Limitations Act, 2002. However, the Reciprocal Enforcement of Judgments Act is set out in the s. 19 schedule to the Limitations Act, 2002 (i.e., the explicit exemptions to the Limitations Act, 2002).

It is noteworthy that in Lax v. Lax, 2004 CanLII 15466, (2004), 70 O.R. (3d) 520, 239 D.L.R. (4th) 683 (ON C.A.), the Court of Appeal for Ontario held that the limitation period to enforce a foreign judgment was six years from the date of the foreign judgment (now 2 years under the Limitations Act, 2002):

[29]         In summary, a foreign judgment cannot be enforced in Ontario except by first suing on the judgment to obtain a domestic judgment against the debtor. That action must be brought within six years from when the cause of action arose, which is the date of the foreign judgment. However, if the debtor was not in Ontario on the date of the judgment, then the six years does not commence until the debtor returns to Ontario.[3] Once the domestic judgment is obtained, it can be enforced in the usual way and is subject to the twenty-year limitation period.

Footnote 3 above from the judgment in Lax v. Lax reads:

“[3] No issue was raised on the appeal whether s. 48 applies only to a person who returns to Ontario after leaving Ontario or whether it also applies to a person who comes to Ontario for the first time after the cause of action arose.”

Take note of the subsequent endorsement in  Lax v. Lax, 2004 CanLII 48647 (ON CA)  where the Court of Appeal dealt with a rehearing on the discoverability issue under s. 48 of the old Limitations Act:

[1]         On the rehearing, counsel for the appellants agreed that section 48 is in issue in this case and that that the discoverability principle applies to s. 48.  However, the appellants argued that on the facts disclosed by the record, together with the proposed fresh evidence tendered on the appeal, the discoverability principle had no application because the respondent knew or ought to have known, through the knowledge of her California lawyer, that the appellants lived in Ontario at the relevant time.  In making this submission the appellants relied heavily on the declaration of the respondent’s California lawyer, a declaration made contemporaneously with the California judgment, and included in the appellants’ proposed fresh evidence.

[2]         This argument was fully presented on the original appeal.  At paras. 37–41 of the reasons, the panel addressed this argument.  We found no basis to interfere with the trial judge’s decision that there was a genuine issue for trial regarding:

•        the extent and dates of the appellants’ residence in Toronto at the relevant times;

•        the knowledge of the respondent and her California lawyer regarding the appellants’ whereabouts; and

•        the actions of the appellants in concealing that information, including their address, from the respondent. (See Boulton v. Langmuir(1897), 24 O.A.R. 618 at 624 and 627).

[3]               For example, we note that though in one document the appellants claimed to be living in Ontario, in another they claimed to be living in Mexico or Ontario, and in yet another claimed to be living in Israel.  In short, as counsel for the respondent pointed out, even after June 1992, the appellants were moving from place to place.   Whether, in these circumstances, the respondent knew or ought to have known the appellants were living in Ontario before November 1995 (which was 6 years before the respondent issued her Ontario claim) raises an issue that should be tried.  That is what we concluded last April.  We see no grounds to reconsider that conclusion.

In fact, the issue of whether domestic limitation periods apply to non-residents was resolved over half a century ago by the Ontario Court of Appeal in Clemens v. Brown, (1958), 13 D.L.R. (2d) 488 at 491 (Ont. C.A.), per Schroeder, J.A., aff’d on other grounds,  22 D.L.R. (2d) 545, [1960] S.C.R. vii at 491 (S.C.C.). Clemens v. Brown was an Ontario case that involved a plaintiff who sued in 1956 to recover certain shares allegedly converted and invalidly endorsed to the defendant in 1943.  The plaintiff did not learn of the transfer and delivery of the shares until 1950. The defendant pleaded s. 51 of the 1950 Limitations Act (the predecessor to s.48 of the penultimate Ontario Limitations Act). Justice Walter Schroeder, speaking for the unanimous Court of Appeal held that:

“The words ‘after the return of the absent person to Ontario,’ suggest that this section does not apply to a defendant who was not ordinarily resident in Ontario when the cause of action arose.” [emphasis added]

 See also, Castel & Walker, Canadian Conflict of Laws (6th Ed.) Vol. 1 (Toronto, Canada: LexisNexis, looseleaf), at § 6.8, p. 6-32, note 3, J-G Castel, “Procedure and the Conflict of Laws”, (1970), 16 McGill L. J. 603 at 614-615, fn. 41-42.

The prevailing view that provincial tolling statutes should not apply to non-resident defendants reinforces the well-established conflict-of-laws principles of personal jurisdiction, comity, reciprocity, and the constitutional limits of extraterritorial application of Canadian law on foreign parties. (See also, my previous post: Foreign arbitral awards subject to provincial limitation periods, Supreme Court of Canada rules: Yugraneft Corp. v. Rexx Management Corp.)

Since expiry of a limitation period (also known as prescription) is another available defence to the enforcement of a foreign judgment, it is important for plaintiff’s counsel to determine whether or not the defendant resided in Ontario when the cause of action arose (i.e. when the foreign judgment became final and conclusive), and if the defendant was a non-resident, to also plead the denial in reply.

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