Enforcing UK Judgments in Ontario

 The Convention between Canada and the United Kingdom For The Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters, 1984, [the “Convention”] [1] [2]   applies to judgments rendered by the Federal Court of Canada and all reciprocating common law provinces and territories. In Ontario, the Convention is called the Reciprocal Enforcement of Judgments (U.K.) Act, RSO 1990, c R.6 [“REJUKA”] which is the only bi-lateral enforcement convention to which Ontario is a party. REJUKA does not apply to the following types of orders or judgments:

(a) orders for the periodic payment of maintenance;

(b) the recovery of taxes, duties or charges of a like nature or the recovery of a fine or penalty;

(c) judgments given on appeal from decisions of tribunals other than courts;

(d) judgments which determine

(i) the status or legal capacity of natural persons;

(ii) custody or guardianship of infants;

(iii) matrimonial matters;

(iv) succession to or the administration of the estates of deceased persons;

(v) bankruptcy, insolvency or the winding up of companies or other legal persons;

(vi) the management of the affairs of a person not capable of managing his own affairs.

REJUKA provides for a “simple and rapid” procedure for registration of the UK judgment, without having to commence a civil action on the original debt. Article IV sets out the various grounds for refusal or setting aside registration of the UK judgment. Article V deals with establishing jurisdiction of the UK court in granting the original UK judgment.

The relative ease of enforcing UK judgments under REJUKA is highlighted in the Court of Appeal for Ontario decision in Tarlo Lyons v. Gauthier, 2012 ONCA 39 (CanLII) (S.C.C. application for leave to appeal denied, (34723) , July 12, 2012). The appeal panel’s brief endorsement reads:

[1]               The appellant raises three arguments.  First, he says that the English process denied him natural justice, both in the registration of the default judgment and in the refusal to set it aside.

[2]               We do not agree.  The appellant had ample opportunity to be heard, had he complied with the English rules of court.  Natural justice requires no more.  Nor do we view the refusal to set it aside on the basis of a paper record only as raising a breach of natural justice.  We cannot say that, had the same set of events unfolded here, it would have constituted a clear denial of our principles of natural justice.

[3]               Second, the appellant says the denial of an adjournment constitutes a breach of his right to natural justice.  Again we disagree.  In our view, whether to grant or deny an adjournment request is quintessentially an exercise of judicial discretion.  We see nothing in these circumstances that would require a different result under our principles of natural justice.

[4]               Third, the appellant agrees that the absence of reasons for not setting aside the costs order accompanying the default judgment denied him natural justice.  The extent, if at all, to which the costs order was put in issue by the appellant before Master Fontaine is obscure at best on this record.  We cannot say that this was a live issue before her that required reasons.  The basis for this argument cannot be established.

[5]               We therefore see no error in the reasons of the application judge.  The appeal is dismissed.  Costs to the respondent on a partial indemnity basis fixed at $11,000 inclusive of disbursements and applicable taxes.

In Cavell Insurance Co. (Re),[3] the Ontario Court of Appeal considered whether finality was an absolute requirement for recognition and enforcement of an order under REJUKA [4] In Cavell, the respondent, Cavell Insurance Company Limited (“Cavell”), a subsidiary of a British company, was registered in Ontario to accept property and casualty reinsurance business. In 1993, it stopped carrying on business in Canada, which comprised less than 7.5 per cent of its total operations. Cavell brought an application in the Chancery Division of the High Court of Justice in the United Kingdom for approval of a scheme of arrangement under s. 425 of the Companies Act, 1985 (U.K.), 1985, c. 6. On December 20, 2004 the U.K. court granted an initial order in the application, ordering Cavell to convene a meeting of its creditors affected by the scheme, and providing for the location and notice to be given for the meeting. Cavell then brought an application in Ontario to enforce the U.K. order, which Farley J. granted by issuing an order recognizing the U.K. order and adding a number of terms to “implement” that order. On February 17, 2005 Justice Farley issued a second order continuing his earlier order with several further conditions.  Justice Farley’s orders were based upon both REJUKA [5]and the rules of private international law.

The Canadian insurers’ appeal was dismissed. Goudge, J.A., writing for the unanimous Ontario Court of Appeal panel[6] agreed with the appellants’ argument that REJUKA and Rule 73 of the Ontario Rules of Civil Procedure could not serve as a basis for the recognition in Ontario of the U.K. order of December 20, 2004. However, the Ontario Court of Appeal noted that the principles of “real and substantial connection” and “order and fairness” espoused in Morguard and Beals were “fundamental considerations for a court to properly determine whether to recognize a foreign judgment pursuant to private international law”.[7]

In rejecting the appellant’s argument that the UK Order was not final, the Court of Appeal remarked that although traditionally finality was a requirement to the recognition to a foreign judgment, the lack of finality did not have any preclusive effect on recognition in the case at bar:

In my view, if the U.K. order of December 20, 2004 is recognized, each of these purposes will nonetheless be served. That order obviously does not finally decide the substantive issue affecting the appellant and the respondent Cavell, because it does not approve the scheme of arrangement. It merely commences the procedure which may lead to the U.K. court ultimately doing so.

Second, recognition of the U.K. order presents little if any risk of injustice to the appellant. The order does not require the appellant to pay money, or indeed to do anything. If it is subsequently amended, even to the point of cancelling the meeting altogether, this does not infringe on the appellant in any meaningful way.

Finally, because of the nature of the order and the terms of its recognition, I think there is little risk of undermining public confidence if the procedure initiated by the U.K. order is changed following its recognition by the Ontario court. The U.K. order merely commences a procedure that is supervised by that court. It would be unsurprising for that court to issue subsequent orders providing further guidance for that procedure. Moreover, a term of the recognition order is that the Ontario court must be kept advised of any such changes and that Cavell must seek such further orders of the Ontario Court as are necessary as a result. The Ontario court is therefore not put in the position of issuing a recognition order whose foreign foundation may disappear.

The Ontario Court of Appeal also confirmed that the U.K. Order reflected the principles of comity and reciprocity based upon strong policy reasons. With respect to comity, Goudge, J.A. observed that the U.K. court has long been accorded respect by the Ontario jurisdiction and the U.K. statutory process was quite familiar to Ontario courts. Given that there existed analogous procedures in Canadian commercial litigation legislation[8], a recognition order would facilitate active participation of the parties involving a statutory procedure necessarily reaching across national boundaries.[9] Justice Goudge further held that reciprocity was also served through the Canada Business Corporations Act and the Ontario Business Corporations Act, which provide court procedures for the approval of solvent schemes of arrangement. An Ontario court would expect such approvals to be recognized by a U.K. court if involving U.K. residents. The Court of Appeal noted that fairness would be enhanced rather than diminished by the U.K. Order, given that the conditions imposed included added notice provisions and the required video link, simplifying participation in the U.K. statutory procedure. The risk that Canadian parties would be unable to participate would thus be avoided.[10]

On the issue of the finality requirement, the Ontario Court of Appeal held:

…in an age where the rules of private international law are evolving to accommodate the increasingly transnational nature of commerce, I see no reason why this result should be precluded by those rules just because the foreign order to be recognized is not final. In my view the want of finality carries with it no substantive effect that should deny recognition. I would therefore conclude that the appellant’s finality argument fails.[11][12]

[1] Reciprocal Enforcement of Judgements (U.K.) Act, R.S.O. 1990, c. R-6 (as am.)

[2] See ,Janet Walker, Castel & Walker, CANADIAN CONFLICT OF LAWS, (6th ed.) Vol. 1, §14.2, Markham: Lexis Nexis-Butterworths, 2006)(rel. 3-3/2006 Pub. 5911 §14.27-14-95-14-96 for a summary of the relevant provisions.

[3]Cavell Insurance Co. (Re), [2006] O.J. No. 1998, LCNF/ 2006-052 (Ont. C.A.) per M. Rosenberg, S.T. Goudge and J.M. Simmons JJ.A., May 23, 2006. (unreported) [hereinafter “Cavell”]

[4]REJUKA,supra note 1.

[5]REJUKA, supra, note 1 ;Cavell per Goudge, J.A. at ¶22.

[6] Rosenberg and Simmons, JJ.A., concurring.

[7]Cavell, at ¶38.

[8]E.g. statutory jurisdiction to recognize certain foreign insolvency proceedings includes the Bankruptcy and Insolvency Act, R.S.C. 1985 c. B-3, sections 267-275 and Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, section 18.6, neither of which was held to apply in this case; Cavell, at ¶ 53.

[9]Cavell, at ¶48.

[10] The Ontario Court of Appeal acknowledged that conditions attached to U.K. Order not only recognized it, but also established jurisdiction of the U.K. court to carry on the statutory procedure authorized by s. 425 of the U.K. Companies Act, 1985 and provided that the Ontario court would co-ordinate with and support that procedure to the extent it affected interests in Ontario. Also, the conditions of the recognition order that entitled an affected party to return to the Ontario court to seek the court’s further assistance and requiring the U.K. evaluator to reach a commutation value applying the Office of the Superintendent for Financial Institutions (OSFI) rules also served the objective of fairness for those affected by the recognition order. ¶’s 50-51.

[11]Cavell, at ¶54.

[12] Cf. Society of Lloyd’s v. Saunders, [2001] 210 D.L.R.4th 519 (upholding an application for enforcement of a foreign (U.K.) judgment, notwithstanding an assumed breach by Lloyd’s of the prospectus requirements of the Ontario Securities Act when soliciting “names” in Ontario).

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One Response to “Enforcing UK Judgments in Ontario”

  1. Report #2: Has UKSC ‘dissed’ the Supreme Court of Canada? « Charon QC's UK Law Tour Says:

    […] Notably,  the Reciprocal Enforcement of Judgements (U.K.) Act, R.S.O. 1990, c. R-6 (as am.) excludes judgments which determine bankruptcy, insolvency or the winding up of companies or other legal persons. See my previous post: Enforcing UK Judgments in Ontario. […]

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