Foreign judgments not subject to limitation periods, Ontario Court rules

Salvador Dali, Melting Clock

Salvador Dali, Melting Clock

In a ground-breaking decision, Mr. Justice Newbould in PT ATPK Resources TBK (Indonesia) v. Diversified Energy and Resource Corporation et al., 2013 ONSC 5913 (Ont. S.C.J.-Commercial List) (“ATPK”) held that truly foreign judgments (i.e. non-inter-provincial judgments or U.K. judgments subject to the Reciprocal Enforcement of Judgments (U.K.) Act,  RSO 1990, c R.6 (as am.) (REJUKA)) are not subject to any limitation period for recognition and enforcement purposes.

In ATPK, the applicant, PT ATPK RESOURCES TBK (Indonesia) (“ATPK”) applied for “registration” and enforcement against Hopaco Properties Limited (“Hopaco”) of two judgments of the High Court of the Republic of Singapore. Of course, “registration” is a misnomer, since Canada and Singapore have not entered into any bi-lateral enforcement treaty, such that recognition or enforcement is governed under traditional Canadian conflict of laws principles.

The first judgment dated June 18, 2010 was declaratory: it declared that Hopaco held certain shares of ATPK in trust for ATPK and that ATPK had equitable title to the shares held in nominee accounts in Singapore (the “share judgment”). The shares were ordered to be reconstituted and delivered up to ATPK and that Hopaco was to provide an accounting to ATPK and disgorgement of all profits or benefits derived, with interest.. The judgment was initially set aside, but later reinstated by further order on August 17, 2010. On January 6, 2011 a cost order of SGD 250,131.23 was made against Hopaco in the action, which remains unpaid. The second judgment dated December 6, 2011 ordered Hopaco to pay to ATPK approximately 110 B Indonesian dollars (approximately Cdn $10 million), (the “money judgment”), which  Hopaco’s counsel in argument conceded was enforceable.

ATPK has also sued Diversified Energy and Resource Corporation (“DEAR”) for a declaration that it holds 85,845,072 shares of ATPK in trust for ATPK. ATPK moved for summary judgment on this claim and DEAR brought a cross-motion for dismissal based on a limitations issue, or, alternatively, for a stay on forum non conveniens grounds, failing which it moved for security for costs.

Newbould J. dismissed Hapaco preliminary objection that ATPK should have proceeded by way of a statement of claim. Although not cited by the court, the decision in Nuvex Ingredients Inc. v. Snack Crafters Inc,.(2005) 74 O.R. (3d) 397 at 400, [2005] O.T.C. 47, (2005) 6 C.P.C. (6th) 166, (2005) 136 A.C.W.S. (3d) 646 (Ont. S.C.J.) stands for the proposition that where REJUKA does not apply, a foreign judgment from a jurisdiction may be enforced by action or by application.

Justice Newbould held that the share judgment should be recognized and enforced: Hapaco had attorned to the Singapore court; the share judgment was not superceded by the money judgment; and the terms of the share judgment were clear and unambiguous (citing  Pro Swing Inc. v. ELTA Golf Inc.2004 CanLII 870 (ON CA), (2004), 71 O.R. (3d) 566 (C.A.) at paras. 10 and 11; affirmed 2006 SCC 52 (CanLII), [2006] 2 S.C.R. 612) (at paras. 12-22). The request for declaratory relief in respect of conversion and equitable title to the shares was denied (at para. 23). The court further held that ATPK was entitled to a judgment against Hopaco pursuant to section 121 of the Courts of Justice Act for payment of an amount in Canadian currency sufficient to purchase the equivalent of the money judgment and order for costs (at para. 24-25).

With regard to ATPK’s motion for summary judgment against DEAR and ATPK’s contention that the share judgment was binding in rem against DEAR, Justice Newbould held:

[31]           It is not clear to me that the judgment is a judgment in rem binding on DEAR, which was not a party to it. The share judgment adjudged in paragraph 2 that Hopaco held the shares of ATPK received by it as trustee for ATPK. It did adjudge in paragraph 5 that ATPK had equitable title to the defendants’ ( there were 5 defendants, including Hopaco) shares of ATPK identified in paragraph 28 of the statement of claim in the Singapore action, including 85,845,072 shares held in a nominee account in Singapore. That nominee account was a DEAR account holding the ATPK shares that it had acquired from Hopaco in 2008. Paragraphs 24 and 28 of the Singapore statement of claim asserted that the shares were disposed of by Hopaco in breach of an implied or constructive trust due to the fact that Hopaco had not paid for the shares. It did not plead that DEAR acquired its ATPK shares from Hopaco knowing of any breach of implied or constructive trust.

[32]           What the Singapore share judgment does therefore is to adjudge that ATPK has equitable title to ATPK shares acquired by DEAR two years before thejudgment and held by a broker for DEAR. Can ATPK say in Ontario that based on that Singapore judgment in an action to which for some reason DEAR was not made a party, it is not open to DEAR to assert that it acquired the shares earlier in good faith for fair market value and that the Singapore should not be binding on it? In his factum, Mr. Illion provided no authorities whatsoever to support that assertion.

[38]           I do not look at this issue with rose coloured glasses, as I understand that Mr. Shah, adjudged in the Singapore action to be the alter ego of Hopaco, was a director of DEAR at the time of the share exchange in 2008. However, I am not persuaded on the material before me that ATPK has made out a case for summaryjudgment that it is the owner of the ATPK shares held by DEAR.

Most significantly, Newbould held that the DEAR action was not statute-barred and accepted ATPK’s argument that there was no limitation period by virtue of section 16 (1)(b) of the Limitations Act which provides:

16(1) There is no limitation period in respect of,

. . . . .

(b) 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; . . .

 Newbould expressly declined to follow Commission de la Construction du Québec v. Access Rigging Services Inc., 2010 ONSC 5897 (S.C.J.) [“Access Rigging”] which held, in obiter, that the two-year limitation period under the Limitations Act, 2002, S.O. 2002, c. 24 applied to the enforcement of foreign judgments: See my previous post here, where I noted that 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.).

See also my post about the British Columbia’s new Limitation Act (Bill 34)  which imposes a ten (10) year limitation period for all orders or judgments—whether domestic or foreign.

The court notes:

 [42]           Section 4 of the Limitations Act proscribes actions more than two years after the date on which the claim was discovered, and section 5 provides that a claim is discovered when the person first knew that an “injury, loss or damage had occurred”. Knowledge of a judgment, in this case knowledge of the Singapore share judgment on which ATPK bases its claim, would not appear to fall within knowledge of “injury, loss or damage”. It makes sense in these circumstances for section 16(1)(b) to provide that there is no limitation period in respect of a proceeding to enforce a court order.

[43]           Section 2 of the Limitations Act states that the Act applies to “claims pursued in court proceedings”. I see no reason to read section 16(1)(b) to not apply to a claim pursued to enforce a foreign judgment, or put another way, to limit the section to an Ontario court order. This is particularly so in light of the direction of the Supreme Court of Canada in Beal and Pro Swing that principles of comity should be observed in the recognition of foreign judgments. If the Limitations Act stated clearly that section 16(1)(b) did not apply to a foreign judgment, that would be one thing, but it does not.

[44]            I recognize that absent discoverability issues, if the claim by ATPK against DEAR was not based on the Singapore share judgment but rather on a claim for breach of trust, the limitation provisions of section 4 and 5 of the Limitations Act would likely apply. But the statement of claim does not contain such a claim.

[45]           If the two year limitation period were applicable to the Singapore share judgment, I would not give effect to the argument of ATPK that it would not commence until the last appeal period had expired. Knowledge of the judgment on which the claim is being made was known at the latest by the time the appeal from the order reversing it had been successful. It is arguable that ATPK first knew of the share judgment when it was first rendered on June 10, 2010, but whether that would be the appropriate date I need not decide. [emphasis added]

Finally, the court held that Ontario was forum non conveniens and refused to aside an interim ex parte interlocutory injunction order granted by Campbell J. restraining DEAR from dealing with any of shares of ATPK held by DEAR. Security for costs of $3,500 were ordered to be posted by ATPK within 30 days, without prejudice to DEAR bring a further motion for costs on proper material for any future work, returnable in Master’s court.

Implications

If the ATPK decision withstands appellate review, it establishes a strong precedent that foreign judgments are not subject to a limitation period for recognition and enforcement purposes.  There is no principled basis to distinguish domestic and foreign orders and judgments in respect of limitation periods. . Notably, the six-year limitation period for registration of UK judgments under REJUKA is expressly retained in the Schedule appended to the Limitations Act, 2002. Based upon statutory interpretation and a purposive reading of the Limitations Act, 2002, if the Ontario legislature intended to impose a limitation period for foreign judgments, or, conversely, intended to distinguish between foreign judgments and domestic judgments, it would have done so.

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