Mamma Mia!: Ontario appeal court upholds $600,000 Italian judgment against an Ontario lawyer

Miguel Cabrera
Congratulations to Triple Crown winner Miguel Cabrera

IJA Brigade member Antonin Pribetić comments today on a recent Ontario case on recognition and enforcement of an Italian judgment. His piece is cross-posted at The Trial Warrior.

Today’s decision of the Court of Appeal for Ontario, Sincies Chiementin S.p.A. v. King, 2012 ONCA 653, upholds a summary judgment, enforcing a foreign judgment issued by an Italian court in Rome on October 1, 2001, against Ontario lawyer Gregory P. King (“King”), for the liquidated sum of US $600,000 plus interest, currency appreciation and costs.

In a per curiam endorsement, the panel (comprised of MacPherson, Armstrong and Blair JJ.A.), rejected King’s argument that the motion judge erred by finding that there was a ‘real and substantial connection’ between King’s alleged misconduct and Italy.

The appeal, originally scheduled to be heard on May 30, 2011,was adjourned pending the decision of the Supreme Court of Canada in Charron Estate and a companion case. The Supreme Court of Canada rendered its decision on April 18, 2012 under the style Club Resorts Ltd. v. Van Breda, 2012 SCC 17 (see my previous analysis here).

On the issue of whether the Italian court had subject-matter jurisdiction over King, the appeal panel held:

[7] [ellipsis] as the appellant acknowledges in his factum, Van Breda “simplified and clarified the law.” Although parts of the eight-pronged test from Muscutt were jettisoned, there is really very little difference between this court’s analysis in Charron Estate and the Supreme Court of Canada’s decision in Van Breda with respect to the core factors to be considered.

[8] In Van Breda, Lebel J. fashioned a list of four specific connecting factors that lead to a presumption that a court has jurisdiction. The third factor is that a tort was committed in the court’s territorial jurisdiction.

[9] In this case, the Civil Court of Rome carefully considered, on its own accord because King did not attorn to the jurisdiction, the question of whether a tort had been committed in Italy. The court concluded that, with regard to “extra-contractual action” (i.e. the tort claim), the tort was committed, and damage resulted, in Italy.

Practitioners should take note that the modified “real and substantial connection” test applies equally to enforcement of foreign judgments. However, there remains some conceptual confusion regarding the front-end (assuming jurisdiction) and back-end (recognition and enforcement).

A one-size-fits-all approach to jurisdictional analysis remains problematic. Using the same factors for jurisdiction simpliciter (i.e. whether an Ontario court should assume jurisdiction over a foreign defendant in an action brought in Ontario) to whether a foreign court has properly asserted personal and/or subject-matter jurisdiction over an Ontario defendant, puts the proverbial domestic cart before the foreign horse. The Supreme Court of Canada in Beals v. Saldanha neither explicitly endorsed nor tacitly approved this analytical approach. Moreover, the enumerated grounds for establishing a rebuttable presumption of jurisdiction under Ontario Rule 17.02 are unlikely to be functionally equivalent in the foreign court rules of procedure. Recall that Italy is civil law jurisdiction. The Ontario Court of Appeal remains unwilling to undertake a proper comparative law analysis, noting:

[10] In our view, a Canadian court should be very cautious in its scrutiny of the decision of a foreign court in determining whether a tort has been committed in its jurisdiction. In short, the Civil Court of Rome is better placed than us to determine its own laws.

[11] Once it is determined that a tort has been committed in the foreign jurisdiction, it brings the case within the third connecting factor from Van Breda, and a real and substantial connection is presumptively established.

[12] Here, the motion judge properly concluded that since there was a real and substantial connection between the subject matter of the action and the Italian court, the Italian judgment should be recognized and enforced in Ontario. Under Beals, at paras. 28-29, the principles of comity and reciprocity inform a Canadian judge’s determination of whether a foreign judgment should be enforced. The motion judge, at para. 189, was keenly aware of this:

Were the situation reversed, so that Sincies was a Canadian corporation with head offices in Ontario and all of the other facts discussed applying, and King as an Italian lawyer who assumed the same role he had in fact assumed in our case, I have no doubt that an Ontario court would have readily assumed jurisdiction [ellipsis] I see no reason why principles of comity and reciprocity should not be recognized in the circumstances of this particular case and foreign judgment.

[13] Further, the motion judge was cognizant of the principles of order and fairness that underlie the modern concept of private international law, and concluded, at para. 186:

‘It is not unfair that a professional who operates on a worldwide basis should be subject to foreign jurisdictions. [King] voluntarily entered into a solicitor/client relationship with a company he knew to be based in Italy, to whom he expected to give advice and from which he knew he would receive instructions, whatever dealings and transactions might occur as a result and wherever they might occur.’

We agree with this analysis. The appellant knew that his advice would be received and acted on in Italy, as the evidence indicates it was. He is a sophisticated party who should have expected to be called to account in Italy.

In my view, procedural justice requires that the foreign court explain how and why it took jurisdiction in the original instance; namely:

  • consented-based jurisdiction (by attornment, submission, agreement); or
  • personal jurisdiction (by physical presence, carrying on business or proof of valid service under the Ontario rules), or
  • assumed jurisdiction (under the foreign court’s conflict of laws rules).

The last bullet-point is critical. One approach would involve the Ontario court taking judicial notice of the foreign court’s conflict of laws rules gleaned from the foreign court’s written reasons. Although more cumbersome and less cost-effective, an alternative approach would require the plaintiff to prove the foreign law by affidavit evidence from a duly qualified expert in the procedural law of the foreign jurisdiction.

Finally, the appeal panel gave short shrift to King’s impeachment defence of denial of natural justice, concluding:

[15] [ellipsis] In our view, the motion judge was correct to conclude that the respondent’s actions did not deny the appellant the opportunity to participate in the Italian litigation had he wished to do so. While the word ‘fraud’ was not used in the writ, the material facts going to the appellant’s alleged conduct were clear in the writ. Further, the correspondence from King to the Italian Trustee in Bankruptcy that the appellant contends ought to have been submitted to the Italian court by the respondent contains the appellant’s response to the fraud allegations, demonstrating full well that he knew what allegations he was facing. The reality is that the Italian court proceeding was not an ex parte hearing; it proceeded as a default proceeding only because the appellant did not choose to appear in his own defence.

[16] Finally, the appellant submits that the motion judge erred in concluding that there was no fraud perpetrated by the respondent (by failing to disclose relevant information) on the Italian court.

[17] We do not accept this submission. After a careful and extended analysis, the motion judge concluded that “the Trustee and Giardina [the Trustee’s counsel] did not mislead the court. Nor can I conclude that either of the Trustee or Giardina abused their positions as officers of the court.” We agree with this conclusion.

Notably, the appeal decision does not refer to any limitation period or laches defences. In the motion judge’s decision in Venezia/Sincies v. King, 2010 ONSC 6453 (Ont. SCJ), the defence of laches appears not to apply in circumstances where the foreign judgment creditor delays in notifying the Ontario judgment debtor of the foreign judgment:

[203] The Defendant complained that the Trustee took five years to inform him of the Italian judgment. I fail, however, to see how that is a breach of natural justice or that it is contrary to public policy. The bringing of the present application does not offend any limitation period. What was the prejudice to the Defendant arising from this timing issue, apart from having to face a properly obtained foreign judgment at all? There was no breach of natural justice or public policy arising from this issue. The likely deterioration of evidence through passage of time is as much or more the fault of the Defendant as a result of his decision not to appear before the Italian court. [emphasis added]

It is noteworthy that in Lax v. Lax, 2004 CanLII 15466, (2004), 70 O.R. (3d) 520, 239 D.L.R. (4th) 683 (ON C.A.), the Court of Appeal for Ontario held that the limitation period to enforce a foreign judgment was six years from the date of the foreign judgment (now 2 years under the Limitations Act, 2002):

[29] In summary, a foreign judgment cannot be enforced in Ontario except by first suing on the judgment to obtain a domestic judgment against the debtor. That action must be brought within six years from when the cause of action arose, which is the date of the foreign judgment. However, if the debtor was not in Ontario on the date of the judgment, then the six years does not commence until the debtor returns to Ontario.1 Once the domestic judgment is obtained, it can be enforced in the usual way and is subject to the twenty-year limitation period.

Ultimately, for Mr. King, the failure to challenge the Italian court’s jurisdiction at first instance, proved fatal.

If there were a retainer agreement that contained an exclusive jurisdiction clause in favour of Ontario, would the result have been different?

Photo credit: Cbl62

  1. The footnote from the judgment in Lax v. Lax reads: “No issue was raised on the appeal whether s. 48 applies only to a person who returns to Ontario after leaving Ontario or whether it also applies to a person who comes to Ontario for the first time after the cause of action arose.”

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