A Physical Presence in Canada is Needed to Enforce Foreign Judgement Against a Party

The Supreme Court of Canada in H.M.B. Holdings Ltd. v. Antigua and Barbuda, recently considered whether foreign judgment creditors can seize assets in Canada when the party does not have an actual presence in Canada. There, the connection in British Columbia (B.C.) contracted with businesses in B.C. that were to pay a finder’s fee to the judgment debtor. The judgment creditor sought to enforce the judgment under Ontario’s Reciprocal Enforcement of Judgments Act (REJA). The REJA prevents the enforcement of judgments if the judgment debtor is not “carrying on business” in B.C.

The Supreme Court determined that inquiry into “carrying on business” is a fact-based inquiry into whether there is some direct or indirect presence in the jurisdiction, coupled with a degree of business activity sustained for a period of time. Some kind of physical presence, direct or indirect, is required. The court reasoned that some form of maintenance of physical premises is compelling and a virtual presence falls short. The court listed a number of non-exhaustive indicia and found that those indicia were lacking here. The foreign judgment therefore could not be enforced.

The decision in H.M.B. Holdings shows the limits to pursuing assets of the judgment debtor held by third parties through the REJA, which could include accounts receivable owed to the judgment creditor. Creditors could consider other enforcement options, such as under the Hague Convention. This case illustrates the need to understand the law in the foreign jurisdiction and to be flexible in judgment recovery approaches.