Stuck at the Border: New Challenges To the Registration of Judgments

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Having spent two of the last three weekends in Las Vegas and San Francisco, I got to thinking about cross-border legal issues. I know that’s pathetic, but bear with me.

British Columbia is one of several provinces with reciprocating jurisdictions in the US for the enforcement of judgments. (In BC, this arises pursuant to Part II of the Court Order Enforcement Act, RSBC 1996, c.78). Rather than commence a new action on the foreign judgment, a judgment from a reciprocating jurisdiction can be registered in BC, and it becomes enforceable as if it was a BC judgment. This is a valuable tool for judgment enforcement as the judgment debtor is only allowed to raise a few defences to the registration of the judgment.

For many years BC practitioners have gone merrily along under the notion that a judgment granted in a non-reciprocating US jurisdiction could be registered in a reciprocating US jurisdiction (since all US jurisdictions, like all provinces with the exception of Quebec, reciprocate with one another) and then the judgment could be registered in BC. Simple, easy, no fuss. This practice was recognized in a 1996 BC Supreme Court decision Hickman v. Kaiser as a “jurisdictional convenience”. In that case, a judgment from Texas (non-reciprocating) was registered in Idaho (reciprocating) and then registered in BC. The underlying rationale at play there, was, I think, that if the original judgment can be registered in a reciprocating state, why should a BC court to look behind that registration?

All was well for those of us who seek to enforce foreign judgments, until a 2008 decision of the BC Court of Appeal. In Owen v. Rocketinfo Inc. a judgment from Nevada (non-reciprocating) was registered in California (reciprocating) and then registered in BC. The Court held that Hickman was not determinative of the issue, so it did not need to expressly overrule the decision. I can tell you that this comes as something of a surprise to those of us who practise in the area because we all gave our clients advice about enforcing judgments based on the decision in Hickman.

The Court looked at the definition of the word “judgment” in s.28 of the Act and decided that since the reciprocating jurisdiction (in this case, California) was not the “original court”, then, the judgment from California could not be registered in BC. The rationale became, essentially, that you shouldn’t be able to do through the back door what you can’t do through the front door.

While that might give the decision some surface appeal, this seems to me to be an overly technical approach to the situation. We hear and read long soliloquies from the courts about mutual respect, deference to each other’s decisions and judicial comity. There are more and more cross-border transactions so this issue is bound to come up with increasing frequency. The Court of Appeal had a chance to demonstrate real and effective judicial comity and recognize the validity and easy enforceability of the California judgment — and it wasted that opportunity.

Is this the beginning of a new era of judicial protectionism where the enforcement of decisions of courts of competent jurisdiction become bogged down in needless procedural wrangling? With access to justice and the costs of litigation being political hot-button issues, one can only hope the Court of Appeal will not continue much further down this path.

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Comments

  1. That BCCA decision is an interesting development but I wonder if it’s hugely important. Some considerations:

    i) Few provinces have reciprocal enforcement of judgment agreements with foreign states, and not very many states when they do. Ontario has none (except through the Canada – UK convention for judgments from the UK), and we are not unique in that respect.

    ii) Frankly, it does seem rather odd to be able to do indirectly what one cannot do directly. There may be good reasons why a state has not reciprocated with BC (or another province) for administrative enforcement of each other’s judgments.

    iii) It would be more important if the same practice were carried out, and the same decision made about the practice, for support orders. I suspect that far more jurisdictions have direct arrangements for reciprocal enforcement of support orders than they have for civil judgments.

    iv) Since the Morguard decision and its descendants, it has become very easy to enforce an American judgment simply by suing on it in the Canadian court. There are few defences beyond showing that the US court did not have a real and substantial connection with the case. So it’s a bit more expensive than simply registering the US judgment with the court (or even two courts, one in the US and another here), but not much more expensive, and not with much more doubt about the outcome.

    v) One could urge one’s government to adopt the Uniform Foreign Judgments Act to have a simple administrative process available. The Alberta Law Reform Institute recently recommended that the suite of uniform statutes on judgument enforcement be adopted in its province, including the foreign judgments statute.

  2. There is a Manitoba/Ontario example. In Girsberger v. Kresz [1999] 7 W.W.R. 761, 135 Man. R. (2d) 34, affirmed, [2000] 1 W.W.R. 101 (Man. Q.B., Jewers J.; Man. C.A., Scott C.J.M., Philp & Lyon JJ.A.), the plaintiff obtained a judgment (including punitive damages) in Illinois. He brought this judgment for enforcement in Manitoba. He was denied summary enforcement so he brought it for enforcement in Ontario where it was enforced. He then brought the Ontario judgment to Manitoba for (reciprocal) enforcement. The defendant was held to have attorned to the jurisdiction of the Ontario court. The Ontario judgment was enforced and the defences that the defendant could have made had it been directly enforced were now unavailable (¶ 31). The issue of punitive damages was ignored. An appeal was dismissed in three short paragraphs. In Girsberger v. Kresz [No. 2] (2000), 50 O.R. (3d) 157 (Ont. C.A., Finlayson, Labrosse & Weiler JJ.A.),the defendant, having lost in the Manitoba courts, returned to Ontario to try to get the Ontario judgment set aside. The thin reed on which this attempt depended was that the original Ontario judgment did not comply with the Courts of Justice Act (s. 121) and that the plaintiff was seeking to have the judgment amended. The principal ground relied on by the defendant was that the plaintiff’s application was out of time. The defendant’s argument was rejected and all his efforts were in vain; his application was dismissed and the plaintiff’s claim to have the judgment amended was granted. A further appeal was dismissed on the ground that the defendant’s argument was hopeless.

  3. Yes John, but Gilbert Kennedy at UBC argued strongly for legislated arrangements and when he was Deputy AG of British Columbia took it on himself to negotiate a much larger range of reciprocity agreements than Ontario which had limited its agreements to maintenance and custody orders. Some of the BC agreements were quite bold by the standards of the time. See the latter parts of (1957) 35 Can Bar Rev. 123, RECOGNITION OF JUDGMENTS IN PERSONAM: THE MEANING OF RECIPROCITY, by GILBERT D. KENNEDY

  4. For legislated arrangements, there is the Uniform Enforcement of Judgments Conventions Act that allows conventions on the (reciprocal if desired) enforcement of judgments to be added to a schedule by regulation. This seemed like a good idea when it was adopted in the late 1990s, when Canada had just signed a bilateral convention with France (not yet ratified and increasingly unlikey to be) and appeared likely to enter into similar agreements with other EU countries at least.

    Now that the urgency seems to have disappeared from such arrangements, at least with Europe, Ontario may end up repealing its version of the Uniform Act. (Support orders are subject to the Interjurisdictional Support Orders Act and maybe in the not-so-distant future the 2007 Hague Convention on Recovery of Child Support and other forms of Family Maintenance.)

    The main barrier to such arrangements about civil judgments with the US is the fear of having to enforce their egregious jury awards. The Uniform Foreign Judgments Act has a protective clause in it to help avoid such a risk.

    I think my other points above are still valid:

    * it’s very easy to enforce foreign, esp. American, judgments in Canada (and that risk about egregious awards has not gone away under the spawn of Morguard, so far as I know – perhaps there’s an overriding public policy defence available, but if it didn’t work in Beals v Saldhana, it’s a pretty narrow remedy), and

    * shipping judgments from one jurisdiction to another in order to find the ones with reciprocal enforcement by administrative action may well be illegitimate.