In the last issue of the Transportation Lawyer the modern principles of judicial comity¹ were considered primarily in relation to the assumption by a domestic court of jurisdiction over a foreign defendant. ² Such assumption of jurisdiction is the correlative aspect of the central issue of judicial comity, that is: the recognition and enforcement of a foreign judgment by a local court against a person within its jurisdiction. Such recognition of a foreign judgment depends primarily upon the foreign tribunal having assumed jurisdiction over the non-resident defendant in accordance with the local rules for the proper assumption of such jurisdiction.

      The correlative nature and logical connection of the issues of i) the proper assumption of jurisdiction over a foreign defendant, and ii) the recognition and enforcement of foreign judgments is neatly summed-up in the opinion of La Forest, J., in Morgard:

      I should observe that if this court thinks it inherently       reasonable for a court to exercise jurisdiction under       circumstances like those described in which there is a "real       and substantial connection" between the jurisdiction and the       wrong doing, as in Moran v Pyle National (Canada) Ltd., [1975       1 S.C.R. 393.-ED.], it would be indeed if it did not also       consider it reasonable for the courts of another province to       recognize and enforce that courts judgment.³

      The Morgard case involved the question of the recognition in British Columbia of a judgment of the Alberta court of Queen's Bench against the appellant DeSavoye, for the deficiency resulting from the judicial sale of mortgaged Alberta properties, owned by DeSavoye. In the very recent decision of the Supreme Court of Canada in Beals v Saldanha⁴ the court, for the first time, ruled on the applicability of the "real and substantial" connection test to the recognition and enforcement of a foreign judgment. The judgment in issue was the judgment of the twelfth judicial circuit court in Sarasota, Florida.

      Incidentally, the Beals decision will fall among the Canadian lawyer's "top ten reasons why not to get sued in the U.S." mentioned in the last issue. Florida judgment is described by Binnie, J. (in his descent), as follows:

      In 1981, the appellants bought an empty lot in a Florida real       estate subdivision near Sarasota for U.S. $4,000.00. It was       described as Lot 2. They did not build. They didn't even visit       it. They just paid the municipal taxes. In 1983, they thought       they had sold it to the respondents for U.S. $8,000.00.       Despite the fact that all of the closing documentation referred       to Lot 2, the respondents (who say they didn't "catch" the       reference to Lot 2 in the closing document) eventually claimed       that they had intended to purchase the Lot next door - Lot 1-       and that they had been falsely and fraudulently induced to       buy Lot 2 by the appellants and a Florida real estate agent       called O'Neill.

      No doubt the Florida courts had jurisdiction over the ensuing       dispute. The land was located in that jurisdiction. The       appellant thought to have anticipated, and probably did       anticipate, that disputes over Florida land would be decided       by Florida courts. However, they could not fairly anticipate       that this pedestrian real estate deal gone sour would       eventually explode into a Florida judgment against them said       to be worth in excess of $800,000.00 Canadian dollars at the       time of the trial in Ontario in November 1998 with interest       continuing to run for the past five years at 12% per annum,       producing an ultimate Cafka-esqu judgment with an apparent       value of over $1,000,000.00 Canadian dollars.

      It would be an understatement to say that the majority judgment, recognizing and enforcing the Florida judgment, and the separate lengthy descending opinions of Binnie and LeBelle, J. J., are absorbing reading.⁵

      Previously the principle annunciated in Morgard had been applied by the Supreme Court only to the enforcement of inter-provincial judges, as was the case in Morgard. However, some provincial courts had approved and applied the "real and substantial" connection test in relation to foreign judgments⁶. The "real and substantial connection" test holds that a foreign tribunal may properly assume jurisdiction over a foreign defendant only if that foreign tribunal has a real and substantial connection with either the subject matter of the action or the defendant. The subject matter of the action will satisfy the test even in the absence of such a connection with the defendant⁷.

      The Morgard decision had established that the proper exercise for jurisdiction depends upon two principles, First, there must be "order and fairness" and judicial restraint in the exercise of jurisdictions. Second, there must be a "real and substantial connection" with either the subject matter of the action or the defence. In Morgard, LaForest, J., held that the foreign judgment for which recognition is sought must be the judgment of the court in true fair process and with properly restrained jurisdiction, in fairness to the defendant.

¹

²

³Investments Ltd. v DeSavoye [1990] 3 S.C.R. 1077 at 1107

⁴2003 S.C.C. 72 (December 18, 2003)

⁵The judgment can be conveniently found at http://www.lexum.umontreal.ca/csc-scc/en

⁶

⁷Beals, supra, note to at paragraph 23 citing Morgard, supra note?

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Michael F. Smith


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