Enforcing American Judgments in Ontario Canada



Charles B. Wagner and Amelia Yiu

The purpose of this article is to review an American plaintiff's options once he has received judgment in the United States and to address the process of obtaining an Ontario court's recognition and enforcement of the American judgment. Given the historic high level of trade between the United States and Canada it is no surprise that there are commercial disputes resulting in litigation. Where problems sometime arise is in enforcement of the foreign judgments obtained.

Ontario courts will recognize and enforce American judgments against Canadian defendants with assets in Ontario if it is a final (FN1) in personam (FN2) judgment for a definite sum of money given by a court that had jurisdiction to issue the judgment. (FN3) However, the process requires a competent lawyer in Ontario who is familiar with the commercial litigation process. This article will examine the steps a Plaintiff would take to enforce his already obtained American judgment in Ontario.

Americans can go to Ontario's courts and successfully enforce judgments obtained in the USA. In Canada, Ontario courts recognize and enforce foreign judgments if there is a "REAL AND SUBSTANTIAL CONNECTION" between the defendant and the American jurisdiction in which judgment has been obtained unless the defendant can prove that the American judgment was obtained by fraud or in contravention to natural justice or Canadian public policy. Since the goal of American creditors is to enforce these judgments in Canada, it is prudent for the American Attorney commencing the litigation in the USA, at the very beginning of the litigation, to coordinate the process with Canadian lawyers and thereby preempt these defenses. (FN4)

STEP 1 - NOTICE IS THE KEY

As briefly described above there are a number of defenses a Canadian debtor has under the common law. A major defense is that the American judgment offends the principles of natural justice(FN5). Given the similarity of court systems in Ontario and the United States it is almost always the case that Ontario courts find that the principles of natural justice have been followed. The exception to that rule is if the defendant received inadequate notice. The Plaintiff should arrange for personal service of the Defendant with the American originating process in order to preempt that problem regardless of the minimum requirements required for notice in the American jurisdiction.

STEP 2 - BEING ABLE TO ESTABLISH JURISDICTION AND ATTORNMENT

The Supreme Court of Canada in Beals v. Saldanha [2003] 3 S.C.R. 416 (S.C.C.) confirmed that the principles of comity(FN6) must be applied when considering and enforcing judgments of other courts. Ultimately, this means that Ontario will recognize and enforce an American judgment if the American court assumed jurisdiction on the same basis as Ontario would. The determination of the proper exercise of jurisdiction by a court therefore will depend on whether there exists a REAL AND SUBSTANTIAL CONNECTION. According to Justice Stewart in Mill Valley Bamboo Associates, LLC v. D.T.I. Diversified Transportation Inc., Ontario courts define a real and substantial connection as a connection between the subject matter of the action and the territory where the action is brought, between the jurisdiction and the wrongdoing, between the damages suffered and the jurisdiction, as well as with the transaction of the parties and with the action. Ontario courts will accept that the American jurisdiction has a real and substantial connection if the Defendant was carrying on business in the State in question or was ordinarily resident within the jurisdiction. Even if there is no real and substantial connection an Ontario court will accept that the American court has jurisdiction if the defendant voluntarily appeared and submitted to the jurisdiction of the court (attornment).

STEP 3 - APPLICATION TO ONTARIO COURT TO ENFORCE AMERICAN ORDER

There are two options. Most often Ontario lawyers will commence an application (rather than an action) to enforce an American judgment in Ontario. The "action" is used when there are material facts in dispute and the adjudication requires discovery, viva voce evidence etc. In this instance, there are no material facts in dispute. The American judgment is a simple contract debt. The Ontario lawyer will draft a notice of application setting out the order sought, the facts and law relied upon to warrant the order and the evidence being provided to the court by way of affidavit. (FN7 ) This option was successfully used in Nuvex Ingredients Inc. v. Snack Crafters Inc. (2005), 74 O.R. (3d) 397 at 400 (S.C.J.).

The other option is to bring an motion for summary judgment pursuant to Rule 20 of the Rules once proceedings have been commenced such that the creditor may ask the Ontario court to determine that there is no genuine issue for trial. This option was successfully used in Mill Valley Bamboo Associates, LLC v. D.T.I. Diversified Transportation Inc. 2006 CarswellOnt 7424.

  1. A "final" judgment of a United States court "simply requires that the court that pronounced the judgment no longer has jurisdiction to abrogate or vary it." See Oz Optics Ltd. v. Dimensional Communications 2004 CarswellOnt 4551 at para 27.
  2. from Latin for "directed toward a particular person." In a lawsuit in which the case is against a specific individual, that person must be served with a summons and complaint to give the court jurisdiction to try the case, and the judgment applies to that person and is called an "in personam judgment." In personam is distinguished from in rem, which applies to property or "all the world" instead of a specific person. See A Law Dictionary Containing Definitions of the Terms and Phrases of American and English Jurisprudence, Ancient and Modern: And Including the Principal Terms of International, Constitutional, Ecclesiastical, and Commercial Law, and Medical Jurisprudence, with a Collection of Legal Maxims by Henry Campbell Black Edition: 2 Published by West Publishing Co., 1910, pg. 606
  3. See paragraph 15 of Mill Valley Bamboo Associates, LLC v. D.T.I. Diversified Transportation Inc. 2006 CarswellOnt 7424
  4. An excellent paper on this topic can be found in the Annual Review of Civil Litigation 2006,Chapter E., "Thinking Globally, Acting Locally": Recent Trends in the Recognition and Enforcement of Foreign Judgments in Canada Antonin I. Pribetic. For American counsel wanting to research the Canadian perspective on enforcing American judgments in Ontario I refer you to Nuvex Ingredients Inc. v. Snack Crafters Inc. (2005), 74 O.R. (3d) 397 at 400 (S.C.J.), Beals v. Saldanha, [2003] 3 S.C.R. 416 ,FN2.Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077 and Muscutt v. Courcelles (2002), 213 D.L.R. (4th) 577 (Ont. C.A.); additional reasons at (2002), 2002 CarswellOnt 2313 (C.A.).
  5. There are two primary rules underlying the concept of natural justice. Firstly the defendant should be given a hearing before that decision is made. Secondly, the judge should be unbiased.
  6. Comity is the courtesy between nations that obligates their mutual recognition of each other's laws.
  7. In order to enforce the United States judgment the creditor must bring an action or application to have the judgment recognized in an Ontario court pursuant to Rule 14 of the Rules of Civil Procedure R.R.O 1990 Reg. 104 (the "Rules"). The creditor may consider summary judgment pursuant to Rule 20 of the Rules once proceedings have been commenced such that the creditor may ask the Ontario court to determine that there is no genuine issue for trial.

ABOUT THE AUTHOR: Charles B. Wagner & Amelia Yiu
The authors are Toronto lawyers. Their firm, Charles B. Wagner & Associates, is a boutique litigation law firm that has American and other international clients with commercial and estate litigation cases involving Ontario residents.


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