- a two-year limitation period applies to a proceeding on a foreign judgment; and
- the limitation period begins to run, at the earliest, when the time to appeal the foreign judgment has expired or, if an appeal is taken, the date of the appeal decision.
The court held that the time may be longer if the claim was
not “discovered” within the meaning of section 5 of the Limitations Act,
2002 (“Limitations Act”) until a date later than the appeal decision.
In this case, the plaintiff had obtained a judgment against
the defendant on January 24, 2013 in the New Jersey Superior Court in the
amount of US$115,248. The defendant’s appeal to the Appellant Division of
the court was dismissed on July 17, 2014.
The plaintiff brought an application in the Ontario Superior
Court of Justice based on the New Jersey judgment. The application was
commenced more than two years after the New Jersey judgment was rendered but
less than two years after the dismissal of the appeal. The appellant, in
the Court of Appeal, pleaded that the application was time-barred because it
was commenced more than two years after the New Jersey judgment. The
application judge rejected this position and granted judgment in favour of the
respondent.
The Ontario Court of Appeal (Chief Justice Strathy and
Justices Pardu and D. M. Brown) dismissed the appeal but considered two issues:
- whether no limitation period applies to a proceeding on a foreign judgment because it falls under section 16(1)(b) of the Limitations Act; or
- whether, if there is a two year limitation period, the time does not begin to run until appeal rights in the foreign jurisdiction have been exhausted.
The decision of the court was delivered by the Chief
Justice. The court began its analysis by stating that the correct
approach to resolving the two questions raised on the appeal begins and ends
with provisions of the Limitations Act, which is a comprehensive and exhaustive
scheme for dealing with limitation periods.
Justice Strathy explained the purposes of statutes of
limitation. He held that such statutes reflect public policy about
efficiency and fairness in the justice system. They promote finality and
certainty in legal affairs so that potential defendants are not exposed
indefinitely for past acts. They ensure the reliability of evidence
because evidence becomes unreliable with the passage of time and limitation
periods promote diligence because they encourage litigants to pursue claims
with reasonable dispatch. This latter justification was related to this case.
The Chief Justice explored former Limitations Act in
Ontario, the history of Limitations Act and the “new” Limitations Act.
He reviewed section 16(1)(b) of the Limitations Act that
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 the court”.
The issue is whether that section applied to a proceeding on
a foreign judgment. The court held that it did not. After a lengthy
discussion about what section 16(1)(b) applied to, Justice Strathy held that
the common feature was the concept of enforceability. Section 16(1)(b) of
the Limitations Act applies to court orders and to other orders that are
enforceable in the same way as a court order. That common thread
did not extend to foreign judgments. Domestic judgments are directly
enforceable in Ontario by means of the execution procedures in rule 60 of the Rules
of Civil Procedure, including writs of seizure and sale, garnishment or the
appointment of a receiver. In contract, a foreign judgment creates a debt
obligation in which a proceeding in Ontario must be brought first. In
other words, a foreign judgment is one step removed from being an order of an
Ontario court for the purposes of section 16(1)(b) of the Limitations
Act.
Justice Strathy held that there were good reasons for giving
different treatment for limitations purposes to Ontario judgments and foreign
judgments, including the principle of territorial sovereignty. In
addition, a foreign judgment debtor has some limited defences to the
recognition and enforcement of the foreign judgment. Accordingly, he
concluded that section 16(1)(b) of the Limitations Act did not apply to
proceedings of foreign judgments.
The Court of Appeal did agree with the application’s judge
with respect to the two year limitation period.
It held that the question of a judgment’s finality in the
foreign jurisdiction is not relevant to statutory limitation periods to
commence a proceeding on a foreign judgment but to the conditions that a
foreign judgment creditor must satisfy to succeed on the proceeding. The
test under the Limitations Act is not whether the judgment is final it is when
the claim is discovered, a fact that is ascertained through the application of
section 5(1) of the Limitations Act aided by the presumption in section 5(2).
Section 5(1) provides that a claim is discovered on the
earlier of the day on which the claimant first knew that having regard to the
nature of the injury or damage a proceeding would be an appropriate means to
seek to remedy it. Cases have held that the legislature added the words
“appropriate means” as an element of discoverability. Appropriate means
legally appropriate. Appropriateness must be assessed on the facts of
each case.
In the usual case, it would not be legally appropriate to
commence a legal proceeding on a foreign judgment in Ontario until the time to
appeal the judgment in the foreign jurisdiction has expired or all appeal
remedies have been exhausted.
Such an approach is consistent with other cases, it avoids
the risk of multiplicity of proceedings by not requiring the judgment creditor
to commence a proceeding on a foreign judgment in Ontario before all
proceedings in the foreign jurisdiction had run their course. It furthers
the purpose of the Limitations Act by deterring the unnecessary litigation that
may result from commencing an Ontario proceeding on a foreign judgment that is
subsequently overturned.
The Court of Appeal held that the foregoing approach to
discoverability does not preclude a foreign judgment creditor seeking such
relief as an interim Mareva injunction or a stay of execution pending the
appeal.
Regards,
Blair
No comments:
Post a Comment