On December 18, 2003, the Supreme Court of Canada released its judgment in Beals v. Saldanha. The Court’s decision clarifies the ability of a plaintiff to enforce a foreign judgment in Canada.
Background
The appellants were residents of Ontario. In 1981 they purchased a building lot in Florida for $4,000. They sold the lot several years later to the respondents for $8,000. As a result of an error on title, several lawsuits were commenced in Florida by the respondents against the appellants.
Although the appellants were served with notice of the Florida lawsuits, they did not file a defence. They were then noted in default and served with notice of a jury trial. The appellants, still residing in Ontario, did not attend the trial. In their absence, a Florida jury awarded the respondents $260,000 in damages, plus interest. Relying on legal advice obtained in Ontario, the appellants did not seek to set aside the award or appeal.
In 1993, the respondents applied to enforce the judgment in Canada. By the time the application was heard in 1998, the jury award, with interest, was in excess of $800,000. The trial judge dismissed the application to enforce the foreign judgment. This decision was overturned by the Ontario Court of Appeal, which allowed the respondents to enforce the Florida judgment.
Issue
On appeal to the Supreme Court of Canada, the question before the Court was whether or not the foreign judgment could be enforced in Ontario against the appellants.
Decision
In a 6-3 majority decision, the Supreme Court of Canada determined that the foreign judgment was enforceable in Ontario.
The majority held that the first question to be resolved was whether the appellants had a “real and substantial” connection to the foreign jurisdiction. A “real and substantial” connection to a foreign jurisdiction requires a significant connection between the cause of action (i.e. the lawsuit) and the foreign court. The Court concluded that, since the appellants had purchased property in Florida, a real and substantial connection had been established.
Having established a real and substantial connection, the Court then examined whether any defences were available to the appellants to oppose enforcement of the judgment.
The Court found that there was no evidence that the judgment had been obtained by fraud. Similarly, there was no evidence of a denial of natural justice, as the appellants had full knowledge of the Florida legal proceedings and chose not to defend against them. Finally, there was no public policy reason to refuse enforcement of the judgment against the appellants.
As a result, the Florida judgment was enforceable against the appellants’ assets in Ontario.
In view of this decision, Canadian employers faced with lawsuits in foreign jurisdictions should seek legal advice as soon as they receive notice of the lawsuit. A failure to respond to the lawsuit may have costly repercussions.
Beals v. Saldanha 2003 SCC 72, December 18, 2003.