- 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.