Noël et Associés, S.E.N.C.R.L. v. Sincennes

112 O.R. (3d) 138
2012 ONSC 3770

Ontario Superior Court of Justice,
Kane J.

July 4, 2012

Conflict of laws -- Foreign judgments -- Holder of foreign judgment from non-reciprocating state for payment of money not entitled to seek enforcement by way of application under rule 14.05(3) (h) of Rules of Civil Procedure -- Holder required to bring action -- Proceeding should be brought in Small Claims Court rather than in Superior Court of Justice where foreign judgment is for payment of money in amount within monetary jurisdiction of Small Claims Court -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 14.05(3)(h).

The applicant, a Quebec law firm, sued the respondent, an Ontario resident, in Quebec and obtained judgment for the unpaid balance of its legal fees for services rendered to the defendant. The applicant then brought an application in the Superior Court of Justice under rule 14.05(3) (h) of the Rules of Civil Procedure for a declaration that the Quebec judgment was enforceable and could be executed upon in Ontario.

Held, the application should be dismissed.

The Quebec foreign judgment created a debt owing by the respondent based upon his implied promise to pay the amount of the foreign judgment. The holder of a foreign judgment from a non-reciprocating state for the payment of money is not entitled to seek the enforcement of that judgment in Ontario by way of an application under rule 14.05(3) (h) for declaratory relief. The matter should proceed by action. Moreover, where, as here, the foreign judgment is for the payment of money in an amount within the monetary jurisdiction of the Small Claims Court, the proceeding should be brought in that court and not in the Superior Court of Justice.

APPLICATION for a declaration that the foreign judgment was enforceable in Ontario.

Cases referred to
Commission de la Construction du Québec v. Access Rigging Services Inc. (2010), 104 O.R. (3d) 313, [2010] O.J. No. 5055, 2010 ONSC 5897, 7 C.P.C. (7th) 365 (S.C.J.);
Nuvex Ingredients Inc. v. Snack Crafters Inc. (2005), 74 O.R. (3d) 397, [2005] O.J. No. 220, [2005] O.T.C. 47, 6 C.P.C. (6th) 166, 136 A.C.W.S. (3d) 646 (S.C.J.), not folld
Lax v. Lax (2004), 2004 15466 (ON CA), 70 O.R. (3d) 520, [2004] O.J. No. 1700, 239 D.L.R. (4th) 683, 186 O.A.C. 20, 50 C.P.C. (5th) 266, 3 R.F.L. (6th) 387, 130 A.C.W.S. (3d) 850 (C.A.), consd

Other cases referred to
Ali v. Schrauwen, [2011] O.J. No. 1671, 2011 ONSC 2158, 18 C.P.C. (7th) 425 (S.C.J.);
Godard v. Gray (1870), L.R. 6 Q.B. 139;
Graves v. Avis Rent a Car System Inc., [1993] O.J. No. 2771, 21 C.P.C. (3d) 391, 43 A.C.W.S. (3d) 1094 (Gen. Div.);
Henderson v. Henderson (1844), 6 Q.B. 288;
Livesley v. E. Clemens Horst Co., 1924 18 (SCC), [1924] S.C.R. 605, [1924] S.C.J. No. 40, [1925] 1 D.L.R. 159;
McGinty v. Toronto Transit Commission, [1996] O.J. No. 320 (Div. Ct.);
Morguard Investments Ltd. v. De Savoye, 1990 29 (SCC), [1990] 3 S.C.R. 1077, [1990] S.C.J. No. 135, 76 D.L.R. (4th) 256, 122 N.R. 81, [1991] 2 W.W.R. 217, J.E. 91-123, 52 B.C.L.R. (2d) 160, 46 C.P.C. (2d) 1, 15 R.P.R. (2d) 1;
Rutledge v. United States Savings and Loan Co. (1906), 1906 37 (SCC), 37 S.C.R. 546, [1906] S.C.J. No. 31;
Shoppers Trust Co. v. Mann Taxi Management Ltd. (1993), 1993 5487 (ON SC), 16 O.R. (3d) 192, [1993] O.J. No. 2368, 42 A.C.W.S. (3d) 995 (Gen. Div.)

Statutes referred to
Courts of Justice Act, R.S.O. 1990, c. C.43, s. 23(1) (a), (2) [as am.]
Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5 [as am.]

Rules and regulations referred to
Rules of Civil Procedure, rules 14.02, 14.05(3) (h), 76, 76.02

Authorities referred to
Castel, Jean-Gabriel, and Janet Walker, Canadian Conflict of Laws, 5th ed. (Toronto: Butterworths, 2002-2004)
Walker, Janet, Canadian Conflict of Laws, 6th ed. (Markham, Ont.: LexisNexis, 2005-)

Sylvie Labbé, for applicant.
No one appearing for respondent.

KANE J.: -- Nature of Proceeding

[1] The applicant Quebec law firm in November 2011 obtained a default judgment in the Province of Quebec in the amount of $7,496 against the respondent, who resides in the Province of Ontario. In the Quebec action, Noël et Associés S.E.N.C.R.L. sought and obtained judgment for the unpaid balance of its legal fees for services rendered to Mr. Sincennes.

[2] Having obtained a Quebec judgment in this amount, the applicant thereupon commenced this application. Mr. Sincennes has filed no reply. He neither attended nor was represented upon the return of this application.

[3] In this application, the moving party seeks (a) an order recognizing the validity of the above Quebec judgment issued by the Cour du Québec ("Quebec judgment"); and (b) a declaratory order that the Quebec judgment is enforceable and may be executed upon in the Province of Ontario.

Issues

[4] The issues raised in this application are (1) is the holder of a foreign judgment for the payment of money entitled to seek the enforcement of that judgment in Ontario by way of declaratory relief in an application under rule 14.05(3) (h) of the Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194 or, should the matter proceed by action; and (2) where the foreign judgment is for the payment of money in an amount within the monetary jurisdiction of the Ontario Small Claims Court, should the proceeding be brought in the Small Claims Court or the Superior Court of Justice?

Applicant's Position

[5] The applicant submits that there is Ontario authority supporting its position that rule 14.05(3)(h) permits the use of an application seeking declaratory relief to permit the holder of a foreign judgment to seek recognition and enforcement of the foreign judgment in Ontario.

[6] The Supreme Court in Morguard Investments Ltd. v. De Savoye, 1990 29 (SCC), [1990] 3 S.C.R. 1077, [1990] S.C.J. No. 135 held that the courts in one province should give full faith and credit to the judgments given in another province or territory as long as that court has appropriately exercised jurisdiction in the action. The Supreme Court rejected the argument that a foreign judgment may not be enforced in another province unless the defendant had attorned to the jurisdiction of the foreign court.

[7] The Court of Appeal in Lax v. Lax (2004), 2004 15466 (ON CA), 70 O.R. (3d) 520, [2004] O.J. No. 1700 (C.A.) dealt with the applicability of a limitation period and the enforcement of a foreign judgment. In considering that issue, the court considered the nature of an action to enforce a judgment debt for the payment of money. I will return to this decision below.

[8] The court in Commission de la Construction du Québec v. Access Rigging Services Inc. (2010), 104 O.R. (3d) 313, [2010] O.J. No. 5055, 2010 ONSC 5897 (S.C.J.) dealt with the determination of the appropriate limitation period in a proceeding brought by application in Ontario to enforce a foreign judgment obtained in Quebec for the payment of money. After determining that the Ontario enforcement proceeding was commenced beyond the applicable Ontario limitation period and should therefore be dismissed, the court in obiter stated that enforcement of the foreign judgment could be brought in Ontario by application and need not be brought by action.

[9] This court in an earlier decision of Nuvex Ingredients Inc. v. Snack Crafters Inc. (2005), 2005 1413 (ON SC), 74 O.R. (3d) 397, [2005] O.J. No. 220 (S.C.J.) directly considered the use of an application under rule 14.05(3) (h) to enforce a foreign judgment for a debt owing. That court held that the foreign judgment creditor could proceed in Ontario to recover the debt either by way of action or application so long as an application, considering the nature of the relief requested and surrounding circumstances, is otherwise available.

[10] The applicant cited other decisions of this court where declaratory relief in applications was granted under rule 14.05(3)(h) to the holders of foreign judgments for money owing. These other decisions, however, contain no analysis of the issues in this case.

Analysis

Availability of application

[11] Enforcement in Ontario of Quebec foreign judgments for money owing frequently arises due to the proximity of these two provinces. A similar judgment obtained in any other province within Canada, as a reciprocating jurisdiction, may, after registration of the judgment in Ontario under the Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5, be enforced as if that judgment had been obtained in Ontario, without the need to commence a new proceeding.

[12] Quebec is not a reciprocating state. A Quebec judgment may not be registered in and enforced here as if obtained in Ontario. The holder of that Quebec judgment must commence an Ontario proceeding.

[13] The availability of an application requires consideration as to the nature of the rights held by the Quebec judgment holder seeking Ontario enforcement.

[14] The court in Lax, supra, confirms that Canadian courts, as in Rutledge v. United States Savings and Loan Co. (1906), 1906 37 (SCC), 37 S.C.R. 546, [1906] S.C.J. No. 31 and Livesley v. E. Clemens Horst Co., 1924 18 (SCC), [1924] S.C.R. 605, [1924] S.C.J. No. 40, at pp. 609 and 610 S.C.R., have, for limitations purposes, traditionally treated a foreign judgment as an action upon a simple contract debt.

[15] The court in Lax, supra, quotes from J.G. Castel and Janet Walker in Canadian Conflict of Laws, 5th ed. (Toronto: Butterworths, 2002-2004) that a foreign judgment is regarded as creating a debt between the parties, which is said to be based on the foreign judgment debtor's implied promise to pay the amount of the foreign judgment. The court in Lax held that unlike a judgment from a reciprocating state, an action must be brought to enforce the debt created by a foreign judgment of a non-reciprocating state.

[16] The same authors in the 6th edition of the Canadian Conflicts of Laws (Markham, Ont.: LexisNexis, 2005-), para. 14.3, state that a foreign judgment is usually enforced by commencing an action for the amount of the judgment debt and then seeking summary judgment based upon the foreign judgment. A foreign judgment in a subsequent Ontario debt action based on that foreign judgment is not examinable on the merits, whether for an error of fact or law: see Henderson v. Henderson (1866), Q.B. 288 and Godard v. Gray (1870), L.R. 6 Q.B. 139. Alternatively, it is stated that the proceeding may be brought by application where the provincial rules permits.

[17] The above Ontario decisions in Commission de la Construction du Québec, supra, and Nuvex, supra, held that the broad wording of rule 14.05(3)(h) permits the use of an application to obtain declaratory relief to recognize and enforce a foreign judgment for debt owing in Ontario. With respect, this court disagrees.

[18] The Quebec foreign judgment creates a debt owing by Mr. Sincennes based upon the debtor's implied promise to pay the amount of the foreign judgment. This refines and limits the issue in the subsequent Ontario proceeding.

[19] An application requesting a declaration to recognize and permit enforcement of a foreign judgment misstates the nature of the rights sought to be enforced. It is the Ontario judgment obtained on the promise to pay the Quebec judgment which is enforced against the debtor, not the foreign Quebec judgment.

[20] Rule 14.05(3)(h), as relied upon in this and other decisions, is broadly worded:

14.05(3) A proceeding may be brought by application where the rules authorize the commencement of a proceeding by or where the relief claimed is, @7 . . . . . (h) in respect of any matter where it is unlikely that there will be any material facts in dispute.

[21] Ontario courts in recent years have liberally interpreted the availability of applications under rule 14.05(3)(h). The issue remains, however, that the foreign judgment creditor is commencing proceedings to obtain an Ontario judgment based on a promise to pay a foreign judgment. The Quebec judgment is not itself being enforced in Ontario.

[22] The expansive interpretation by the courts of rule 14.05(3)(h) is not limitless, however, and must be read within the context of rule 14.02, which states that every proceeding shall be by action, as opposed to an application, except where a statute or the Rules of Civil Procedure provide otherwise.

[23] I have been referred to no authority that a proceeding in Ontario to recover judgment for debt owing may be brought by application under rule 14.05(3)(h).

[24] Rule 76.02 creates a mandatory simplified procedure for actions in which the claim is exclusively a monetary claim of $100,000 or less. Noël et Associés presents such a claim but chooses instead to proceed by application. Failure to proceed by a simplified procedure under Rule 76 exposes the claimant to adverse cost consequences.

[25] Focusing solely upon the broad wording of rule 14.05(3)(h) ignores the Ontario remedy being requested as well as rules 14.02 and 76.02.

[26] The above analysis leads to the conclusion that a proceeding to recover judgment on a promise to pay the amount of a foreign judgment from a non-reciprocating state should be brought by action, not application.

Superior Court or Small Claims Court Action

[27] Section 23(1) (a) of the Courts of Justice Act, R.S.O. 1990, c. C.43 states that the Small Claims Court "has jurisdiction over any action for the payment of money where the amount claimed does not exceed the prescribed amount".

[28] Twenty-five thousand dollars ($25,000) is the current monetary limit of the Small Claims Court.

[29] The Rules of Civil Procedure, including rule 76.02, do not prohibit an action for a debt below $25,000 being brought in the Superior Court of Justice. This court, however, doubts that the Province of Ontario would intentionally duplicate and incur the costs of parallel court systems up to the level of $25,000. Most actions for the recovery of debt below that limit, however, are presumably brought in the Small Claims Court.

[30] Section 23(2) of the Courts of Justice Act states that where the only claim is for the payment of money up to $25,000, such an action commenced in the Superior Court may be transferred to the Small Claims Court on consent, by motion or pursuant to the inherent jurisdiction of a Superior Court Judge: see McGinty v. Toronto Transit Commission, [1996] O.J. No. 320 (Div. Ct.), at para. 15. This court has repeatedly held that such actions should customarily be transferred to the Small Claims Court: see Shoppers Trust Co. v. Mann Taxi Management Ltd. (1993), 1993 5487 (ON SC), 16 O.R. (3d) 192, [1993] O.J. No. 2368 (Gen. Div.); Graves v. Avis Rent a Car System Inc., [1993] O.J. No. 2771, 21 C.P.C. (3d) 391 (Gen. Div.); and Ali v. Schrauwen, [2011] O.J. No. 1671, 2011 ONSC 2158 (S.C.J.), para. 2. The direction in these decisions places into context the jurisdiction of this court and the right of claimants to present their claim in the Superior Court where the sole remedy is judgment for debt owing below $25,000.

[31] Decisions directing claims limited to $25,000 or less to the Small Claims Court conform with the numerous civil justice reviews, task-force studies and reform projects aimed at simplifying and reducing the length, complexity and cost of civil proceedings in order to access the Ontario civil justice system in the most timely and cost effective manner. Justice Osborne, in the 2006 Civil Justice Reform Project, adopted proportionality as a guiding principle in his review. Proportionality was defined as the time and expense of a proceeding being proportionate to the amount in dispute and the importance of the issues at stake.

[32] The repeated conclusions and recommendations to simplify and reduce the length and cost of civil proceedings in Ontario refine and qualify the right of a party to choose their forum as a determining factor.

[33] Filing costs and delay times for the hearing of motions and trials are more favourable in the Small Claims Court. Monetary claims, such as the present claim to recover judgment for some $7,500 based on a promise to pay the amount of a foreign judgment, should not be brought in this court.

[34] Proceedings in Ontario for debt owing in the amount of $25,000 or less, based on a foreign judgment from a non- reciprocating state, should be brought by action in the Small Claims Court.

[35] For the above reasons, this application is dismissed without costs.

Application dismissed.