SUPREME
COURT OF CANADA
Between:
Pro Swing Inc.
Appellant
and
Elta Golf Inc.
Respondent
Coram:
McLachlin C.J. and Bastarache, LeBel, Deschamps, Fish, Abella and
Charron JJ.
Reasons for
Judgment:
(paras. 1 to 65)
Dissenting
Reasons:
(paras. 66 to 123)
|
Deschamps J. (LeBel, Fish and Abella JJ. concurring)
McLachlin C.J. (Bastarache and
Charron JJ. concurring)
|
______________________________
Pro Swing Inc. v. Elta Golf Inc., [2006] 2 S.C.R.
612, 2006 SCC 52
Pro Swing Inc. Appellant
v.
Elta Golf Inc. Respondent
Indexed as: Pro Swing Inc. v. Elta Golf
Inc.
Neutral citation: 2006 SCC 52.
File No.: 30529.
2005: December 15;
2006: November 17.
Present: McLachlin C.J. and Bastarache, LeBel,
Deschamps, Fish, Abella and Charron JJ.
on appeal from the court of appeal for ontario
Private international law — Foreign judgments — Recognition and enforcement of
foreign non‑monetary judgments — Whether common law should be
changed to permit enforcement of foreign non‑monetary
judgments — Considerations relevant to recognition and enforcement of
such judgments or orders.
Pro Swing manufactures and sells customized gold
clubs and golf club heads. It owns the Trident trademark in the
U.S. Elta Golf carries on business in Ontario, and it offered for
sale on its Website goods bearing marks which resembled Trident. Pro Swing
filed a complaint in Ohio for trademark infringement. The parties entered into
a settlement agreement, which was endorsed by a consent decree of the
U.S. District Court. The decree enjoined Elta Golf from purchasing,
marketing or selling golf clubs or golf club components bearing the Trident
mark or confusingly similar variations. In 2002, Pro Swing brought a
motion for contempt of court alleging that Elta Golf had violated the
consent decree, and a contempt order was issued. Pro Swing then filed in
the Ontario Superior Court of Justice a motion for recognition and enforcement
of the consent decree and the contempt order. The motions judge held that non‑money
foreign judgments can be enforced and declared the consent decree valid and
enforceable in Ontario. She also found that the contempt order was
restitutionary in nature and that parts of that order were duplicative of the
consent decree and were not final, and concluded that the portions not
offending the finality requirement could be severed. She recognized the
severed portions of the contempt order and declared them to be enforceable.
The Court of Appeal set aside the motions judge’s decision, concluding that
both foreign orders were not enforceable in Ontario because they were ambiguous
in respect of material matters, in particular on the critical issue of the
scope of the extraterritorial application of these orders.
Held (McLachlin C.J.
and Bastarache and Charron JJ. dissenting): The appeal should be dismissed.
Per LeBel, Deschamps,
Fish and Abella JJ.: The traditional common law rule that limits the
recognition and enforcement of foreign orders to final money judgments should
be changed. Such a change requires a cautious approach and must be
accompanied by a judicial discretion enabling the domestic court to consider
relevant factors so as to ensure that the orders do not disturb the structure
and integrity of the Canadian legal system. A departure from the common law
rule will necessarily affect both commercial activity and judicial assistance
in an era of large‑scale cross‑border commerce, e‑commerce
and cross‑border litigation and will open the door to equitable orders
such as injunctions, which are key to an effective modern‑day remedy. In
contemplating considerations specific to the recognition and enforcement of
equitable orders, courts can draw the relevant criteria from other foreign
judicial assistance mechanisms based on comity. For present purposes, it is
sufficient to underscore the need to incorporate the very flexibility that
infuses equity. Consequently, the conditions for recognition and enforcement
can be expressed generally as follows: the judgment must have been
rendered by a court of competent jurisdiction and must be final, and it must be
of a nature that the principle of comity requires the domestic court to
enforce. Comity does not require receiving courts to extend greater judicial
assistance to foreign litigants than it does to its own litigants, and the discretion
that underlies equitable orders can be exercised by Canadian courts when
deciding whether to enforce one. [14-16] [30-31]
Here, the consent decree and the contempt order are
not enforceable in Ontario. These orders are problematic from many points of
view. The contempt order is quasi‑criminal in nature, and a Canadian
court will not enforce a penal order, either directly or indirectly. While the
U.S. distinguishes between civil and criminal contempt orders, in Canada,
a contempt order is first and foremost a declaration that a party has acted in
defiance of a court order. Consequently, a motion for contempt of court cannot
be reduced to a way to put pressure on a defaulting debtor or a means for an
aggrieved party to seek indemnification. The gravity of a contempt order in
Canada is underscored by the criminal law protections afforded to the person
against whom such an order is sought and by the sanction that person faces,
which could include imprisonment. The “public law” element of a declaration of
contempt and the opprobrium attached to it eclipse the impact of a simple
restitutionary award. Furthermore, when faced with the need to interpret the
law, the receiving court must ensure that no conflict results from the nature attributed
to the order after the enforcement judgment is rendered. In the case of a
contempt order, because of the different approaches in the U.S. and
Canada, the conflict is real. Courts should not expose litigants to
consequences to which they would not be exposed under the foreign law. Aware
of their limitations, receiving courts should use their discretion to refrain
from enforcing orders that subject Canadian litigants to unforeseen
obligations. [34-36] [49-51] [62]
If injunctive relief is to be enforced, its
territorial scope has to be specific and clear. Here, the intended territorial
scope of the injunctive relief in the consent decree is uncertain. In the
absence of explicit terms making the settlement agreement a worldwide
undertaking, the consent decree cannot be said to clearly apply worldwide.
Moreover, the contempt order imposes an obligation to account for all sales,
even sales that may fall outside the scope of Pro Swing’s trademark
protection. To interpret the contempt order as applying outside the
U.S. would offend the principle of territoriality. Extraterritoriality
and comity cannot serve as a substitute for a lack of worldwide trademark
protection. [25] [56-58] [62]
On the issue of the appropriate remedy and the use of
judicial resources, it is unclear that recognition and enforcement of the
judgment is the appropriate tool amongst the various judicial assistance
mechanisms or that the matter is an appropriate one for lending judicial
assistance in the form requested. Letters rogatory might have been a more
useful means to obtain the evidence required by the American judge to finalize
the damage award in the contempt proceeding in the U.S. Further, a court
may also consider whether the matter merits the involvement of the Canadian
court. Here, there is a concern that the judicial machinery could be deployed
only to find that Pro Swing’s debtor is insolvent. When the circumstances
give rise to legitimate concerns about the use of judicial resources, the
litigant bears the burden of reassuring the court that the matter is worth
going forward with. [45-47] [62]
Finally, there are public policy concerns regarding
parts of the contempt order inasmuch as it requires the disclosure of personal
information that may prima facie be protected from disclosure. Courts
should be mindful of the quasi‑constitutional nature of the protection of
personal information. [59-60]
Accordingly, in the case at bar, to refuse to enforce
the consent decree and the contempt order is an appropriate exercise of
equitable discretion and amounts to allowing the Ohio court to continue the
proceedings with the judicial assistance of the Ontario courts, but to a lesser
extent than has been requested. [63]
Per McLachlin C.J.
and Bastarache and Charron JJ. (dissenting): The common law
should be extended to permit the enforcement of foreign non‑money
judgments in appropriate circumstances. The common law must evolve in a
way that takes into account the important social and economic forces that shape
commercial and other kinds of relationships. That evolution must take
place both incrementally and in a principled way, taking into account, in the context
of foreign non‑money judgments, the underlying principles of comity,
order and fairness. [66] [78-79]
A court enforcing a foreign judgment is enforcing the
obligation created by that judgment. In principle, it should not look beyond
the judgment to the merits of the case. While different non‑money
remedies and different circumstances will raise different considerations, for
the purposes of this case, there are three categories of restrictions on the
recognition and enforcement of foreign non‑money judgments that should be
considered. First, with respect to the general requirements for enforcement, a
foreign non‑money judgment will not be enforced if the issuing court did
not properly take jurisdiction, or if fairness considerations render such
enforcement inadvisable or unjust. The existing defences of fraud, public
policy and natural justice are designed to guard against unfairness in its most
recognizable forms. Second, courts should decline to enforce foreign non‑money
orders that are not final and clear. Where finality is concerned, a foreign
order must establish an obligation that is complete and defined; as regards
clarity, an order must be sufficiently unambiguous to be enforced. A decision
not to enforce on the grounds of lack of finality or clarity would have to be
based on concerns apparent on the face of the order or arising from the factual
or legal context. Mere speculation would not suffice. Third, Canadian courts
will not enforce a foreign penal law or judgment, either directly or
indirectly. [87-92] [95-101]
Here, the motions judge’s decision should be
restored. Elta Golf conceded that the general requirements for
enforcement are met. The consent decree and the portions of the contempt order
the motions judge held to be enforceable in Ontario were final. The
orders were complete and in no need of future elaboration. The hypothetical
possibility of the need for future court supervision should not preclude the
recognition of a foreign order. The orders were also sufficiently clear. In
particular, an examination of the content of the consent decree and the
contempt order reveals no ambiguities about their extraterritorial
application. Lastly, while foreign criminal contempt orders are clearly penal
and cannot be enforced by Canadian courts, the same should not be said of
foreign civil contempt orders. A distinction between civil and criminal
contempt exists in Canada and there is nothing penal about the contempt order
in this case. The terms of the order are designed to reinforce the consent
decree and to provide Pro Swing with restitution for Elta Golf’s
violations. The motions judge found that the contempt order was
restitutionary in nature, not penal. That conclusion is unassailable.
[104-116]
While parts of the contempt order may raise privacy
concerns, to bring up this issue at this stage when it was never argued before
this or any other court would amount to an inappropriate transformation of the
proceedings. In any event, if the offending parts of the contempt order
cannot be enforced for public policy reasons, they can be severed. The public
policy issue therefore should not determine the outcome of this
appeal. [121]
Cases Cited
By Deschamps J.
Applied: Morguard
Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; considered: Beals
v. Saldanha, [2003] 3 S.C.R. 416, 2003 SCC 72; referred
to: Doucet‑Boudreau v. Nova Scotia (Minister of Education),
[2003] 3 S.C.R. 3, 2003 SCC 62; Unifund Assurance Co. v.
Insurance Corp. of British Columbia, [2003] 2 S.C.R. 63,
2003 SCC 40; Hunt v. T&N plc, [1993]
4 S.C.R. 289; Hilton v. Guyot, 159 U.S. 113 (1895);
Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc., [1992]
2 S.C.R. 1065; Gompers v. Bucks Stove & Range Co.,
221 U.S. 418 (1911); P.-A.P. v. A.F., [1996]
R.D.J. 419; Westfair Foods Ltd. v. Naherny (1990), 63 Man. R.
(2d) 238; Amchem Products Inc. v. British Columbia (Workers’
Compensation Board), [1993] 1 S.C.R. 897; District Court of
the United States, Middle District of Florida v. Royal American Shows, Inc.,
[1982] 1 S.C.R. 414; Zingre v. The Queen, [1981]
2 S.C.R. 392; Re International Association of Machinists &
Aerospace Workers and Qantas Airways Ltd. (1983), 149 D.L.R.
(3d) 38; Aetna Financial Services Ltd. v. Feigelman, [1985]
1 S.C.R. 2; Society of Composers, Authors and Music Publishers of
Canada v. Canadian Assn. of Internet Providers, [2004]
2 S.C.R. 427, 2004 SCC 45; United States v. Burns,
[2001] 1 S.C.R. 283, 2001 SCC 7; H.J. Heinz Co. of
Canada Ltd. v. Canada (Attorney General), [2006] 1 S.C.R. 441,
2006 SCC 13; Lavigne v. Canada (Office of the Commissioner of
Official Languages), [2002] 2 S.C.R. 773, 2002 SCC 53; Dagg
v. Canada (Minister of Finance), [1997] 2 S.C.R. 403; Barrick
Gold Corp. v. Lopehandia (2004), 71 O.R. (3d) 416.
By McLachlin C.J. (dissenting)
Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; Hunt v. T&N plc, [1993]
4 S.C.R. 289; Beals v. Saldanha, [2003]
3 S.C.R. 416, 2003 SCC 72; R. v. Salituro, [1991]
3 S.C.R. 654; Uniforêt Pâte Port‑Cartier Inc. v. Zerotech
Technologies Inc., [1998] 9 W.W.R. 688; Barrick Gold
Corp. v. Lopehandia (2004), 71 O.R. (3d) 416; Tolofson v.
Jensen, [1994] 3 S.C.R. 1022; Doucet‑Boudreau v.
Nova Scotia (Minister of Education), [2003] 3 S.C.R. 3,
2003 SCC 62; United Nurses of Alberta v. Alberta (Attorney
General), [1992] 1 S.C.R. 901; Vidéotron Ltée v. Industries
Microlec Produits Électroniques Inc., [1992] 2 S.C.R. 1065; Lavigne
v. Canada (Office of the Commissioner of Official Languages), [2002]
2 S.C.R. 773, 2002 SCC 53.
Statutes and Regulations Cited
Canada
Evidence Act, R.S.C. 1985, c. C‑5,
ss. 4 , 46 .
Civil
Code of Québec, S.Q. 1991, c. 64,
art. 3155(2).
Evidence
Act, R.S.O. 1990, c. E.23, s. 60.
Personal
Information Protection and Electronic Documents Act,
S.C. 2000, c. 5, s. 7(3) (c).
Rules of
Civil Procedure, R.R.O. 1990, Reg. 194,
r. 60.11.
Authors Cited
Berryman, Jeff. “Cross‑Border
Enforcement of Mareva Injunctions in Canada” (2005), 30 Adv. Q. 413.
Black, Vaughan. “Enforcement of
Foreign Non‑money Judgments: Pro Swing v. Elta” (2006),
42 Can. Bus. L.J. 81.
Briggs, Adrian. “Crossing the
River by Feeling the Stones: Rethinking the Law on Foreign
Judgments” (2004), 8 SYBIL 1.
British Columbia. British
Columbia Law Institute. Report on the Enforcement of Non‑money
Judgments from Outside the Province. Vancouver: The Institute,
1999.
Castel, Jean‑Gabriel, and
Janet Walker. Canadian Conflict of Laws, vol. 1,
6th ed. Markham, Ont.: LexisNexis Butterworths, 2005 (loose‑leaf
updated March 2006, release 3).
Dicey and Morris on the
Conflict of Laws, vol. 1, 13th ed. under
the general editorship of Lawrence Collins. London: Sweet
& Maxwell, 2000.
Hanbury & Martin Modern
Equity, 17th ed. by Jill E. Martin. London:
Sweet & Maxwell, 2005.
MacDonald, Ken. “A New Approach
to Enforcement of Foreign Non‑Monetary Judgments” (2006), 31 Adv. Q. 44.
Sharpe, Robert J. Injunctions
and Specific Performance, 2nd ed. Aurora, Ont.: Canada Law
Book, 1992 (loose‑leaf updated November 2005, release 13).
Spry, I. C. F. The
Principles of Equitable Remedies: Specific Performance, Injunctions,
Rectification and Equitable Damages, 6th ed. Canada: Carswell, 2001.
Talpis, Jeffrey, and Joy Goodman.
“A comity of errors”, Law Times, vol. 14, No. 2,
January 20, 2003, p. 7.
Uniform Law Conference of Canada. Uniform
Law Conference of Canada: Commercial Law Strategy.
Ottawa: The Conference, 2005 (loose‑leaf).
Walker, Janet. “Beals v.
Saldanha: Striking the Comity Balance Anew” (2002), 5 Can. Int’l
Law. 28.
APPEAL from a judgment of the Ontario Court of Appeal
(Moldaver, Gillese and Blair JJ.A.) (2004), 71 O.R. (3d) 566, [2004]
O.J. No. 2801 (QL), setting aside an order of Pepall J. (2003),
68 O.R. (3d) 443, 30 C.P.R. (4th) 165, [2003] O.J.
No. 5434 (QL). Appeal dismissed, McLachlin C.J. and Bastarache and
Charron JJ. dissenting.
Raymond F. Leach and Janet A. Allinson, for the appellant.
No one appeared for the respondent.
The judgment of LeBel, Deschamps, Fish and
Abella JJ. was delivered by
1
Deschamps J. — Modern-day
commercial transactions require prompt reactions and effective remedies. The
advent of the Internet has heightened the need for appropriate tools. On the
one hand, frontiers remain relevant to national identity and jurisdiction, but
on the other hand, the globalization of commerce and mobility of both people
and assets make them less so. The law and the justice system are servants of
society, not the reverse. The Court has been asked to change the common law.
The case for adapting the common law rule that prevents the enforcement of
foreign non-money judgments is compelling. But such changes must be made
cautiously. Although I recognize the need for a new rule, it is my view that
this case is not the right one for implementing it.
I. Background and Judicial History
2
The appellant, Pro Swing Inc., manufactures and sells customized golf
clubs and golf club heads. It owns the Trident trademark in the U.S. On April
27, 1998, Pro Swing filed a complaint against eight defendants for trademark
infringement in the United States District Court for the Northern District of
Ohio Eastern Division (“Ohio court”). The respondent, Elta Golf Inc., an
Ontario resident, was named as a defendant. In the action, Pro Swing alleged
that Elta was offering and selling golf clubs or golf club heads on its Web
site under the infringing trademark Rident. On July 6, 1998, in Ontario, Mr.
Frank Lin, as president of Elta, signed a declaration in which he stated that
he now knew of Pro Swing’s trademark. He declared that he had three golf clubs
or golf club heads bearing the mark Rident, that he had never sold any and that
he would discontinue advertising and distributing the clubs or club heads. The
declaration was incorporated into a settlement agreement which stated that Pro
Swing relied on the representations of Elta as to the use of Rident on golf
clubs or golf club heads. Elta further represented in the agreement that it
had discontinued marketing or using golf clubs or golf club heads bearing the
mark Trident, Rident, Riden or Trigoal, and it undertook not to purchase, sell
or use club components bearing those marks or a confusingly similar mark
without the authorization of Pro Swing. It also undertook to deliver to Pro
Swing’s counsel any clubs or golf club heads and marketing material in its
possession, and to modify its Web page. On July 28, 1998, a consent decree was
endorsed by Matia J. of the Ohio court (see Appendix A).
3
On December 20, 2002, Pro Swing filed a motion for contempt of court,
alleging that Elta had violated the consent decree by failing to surrender the
items and by advertising and selling club heads. Pro Swing filed a declaration
stating that an investigator had purchased two golf club heads on the Internet,
one bearing the Trident and the other the Rident mark, for delivery in Ohio.
On February 25, 2003, after finding that Elta had violated the consent decree,
Matia J. issued a contempt order (see Appendix B).
4
As the Superior Court judge noted, the orders overlap to a certain
extent ((2003), 68 O.R. (3d) 443). The relevant elements are as follows:
1. an injunction prohibiting Elta from
purchasing, marketing, selling or using golf clubs or components bearing Pro
Swing’s trademark or any confusingly similar variations of it (consent decree,
at para. 7; contempt order, at para. 2);
2. an order that Elta surrender and deliver all
infringing clubs and/or components in its possession, along with any
advertising, packaging, promotional or other materials, to counsel for Pro
Swing (consent decree, at para. 8; contempt order, at para. 6);
3. an order for an accounting of all infringing
golf clubs and/or components sold since the consent decree (contempt order, at
para. 3);
4. an order for compensatory damages based on
profits derived through sales of infringing goods since the consent decree
(contempt order, at para. 4);
5. an order for costs and attorney’s fees
against Elta (contempt order, at para. 5);
6. an order that Elta provide the names of and
contact information for the suppliers and purchasers of infringing goods, and
that it pay the costs of a corrective mailing (contempt order, at paras. 7 and
8); and
7. an order that Elta recall all counterfeit
and infringing goods (contempt order, at para. 9).
5
In June 2003, Pro Swing filed in the Ontario Superior Court of Justice a
motion for recognition and enforcement of the consent decree and the contempt
order. Elta objected that the two judgments could not be recognized or
enforced because they did not meet the common law requirements of being final
judgments in personam for a fixed sum of money and that the contempt
order was excluded from recognition and enforcement because it was
quasi-criminal in nature.
6
While acknowledging that the traditional common law rule required that
the judgment be for a fixed sum of money, the Superior Court judge found that
the latest jurisprudence opened the way for a relaxation of the rule. She
found it clear from the terms of the consent decree that extraterritorial
application was intended. She declared the consent decree valid and enforceable
in Ontario. On the contempt order, she was of the view that it was
restitutionary in nature and engaged a dispute between private parties. She
found that parts of the contempt order were duplicative of the consent decree
and were not final, and concluded that the portions not offending the finality
requirement could be severed. She recognized paras. 3, 7, 8 and 9 of the
contempt order and declared them to be enforceable.
7
Elta appealed the Superior Court’s judgment, asking for its reversal.
Pro Swing cross-appealed, asking for recognition and enforcement of the entire
contempt order. The Court of Appeal stated that it was inclined to agree that
the “time is ripe for a re-examination of the rules governing the recognition
and enforcement of foreign non-monetary judgments” ((2004), 71 O.R. (3d) 566,
at para. 9), quoting the following passage from Morguard Investments Ltd. v.
De Savoye, [1990] 3 S.C.R. 1077, at p. 1098:
The world has changed since the above rules
[concerning the recognition and enforcement of foreign judgments] were
developed in 19th century England. Modern means of travel and communications
have made many of these 19th century concerns appear parochial. The business
community operates in a world economy and we correctly speak of a world
community even in the face of decentralized political and legal power.
Accommodating the flow of wealth, skills and people across state lines has now
become imperative. Under these circumstances, our approach to the recognition
and enforcement of foreign judgments would appear ripe for reappraisal.
8
However, the Court of Appeal found that the orders were not
“sufficiently certain in [their] terms” to be enforced, giving as an example
the issue of extraterritoriality it qualified as critical. The Court of Appeal
also noted that Pro Swing could have taken action in Ontario based on the
settlement agreement, or for infringement of its trademark rights if such
rights extended to Canada. As well, the court was of the view that Pro Swing
could have instituted proceedings to obtain the information it required to
provide to the Ohio judge the proposed damage award contemplated in the
contempt order. The Court of Appeal allowed the appeal and dismissed the cross-appeal.
Pro Swing was granted leave to appeal to this Court.
9
Two issues are raised in this appeal: whether foreign non-money
judgments can be recognized and enforced, and whether such a change to the
existing common law rule entails additional considerations reflecting the new
needs created by expanding judicial assistance to foreign countries and
litigants in this way. This last issue is not formally raised by the
appellant, but it is inherently linked to the departure from the traditional
rule. To allow for the recognition and enforcement of non-money orders will
open the door to a number of equitable orders. The crux of this issue is to
determine the considerations relevant to the recognition and enforcement of
such orders.
II. Traditional Common Law Rule
10
The traditional common law rule is clear and simple. In order to be
recognizable and enforceable, a foreign judgment must be “(a) for a debt, or
definite sum of money (not being a sum payable in respect of taxes or other
charges of a like nature or in respect of a fine or other penalty); and (b)
final and conclusive, but not otherwise” (Dicey and Morris on the Conflict
of Laws (13th ed. 2000), vol. 1, Rule 35, at pp. 474-75 (footnotes
omitted)). Similarly, J.‑G. Castel and J. Walker, in Canadian Conflict
of Laws (6th ed. (loose-leaf)), at para. 14.6, state that “[a] foreign
judgment in personam given by a court of competent jurisdiction is
enforceable provided that it is final and conclusive, and for a definite sum of
money.”
11
The foreign judgment is evidence of a debt. All the enforcing
court needs is proof that the judgment was rendered by a court of competent
jurisdiction and that it is final, and proof of its amount. The enforcing
court then lends its judicial assistance to the foreign litigant by allowing
him or her to use its enforcement mechanisms. Professor Vaughan Black explains
the consequences of the recognition and enforcement of a money judgment at
common law in “Enforcement of Foreign Non‑money Judgments: Pro Swing
v. Elta” (2006), 42 Can. Bus. L.J. 81, at p. 89:
That is, [the Canadian court] always uses its own rules on such matters
as the availability of garnishment, the effect of garnishment on employment,
the effect of a payment into court, the date of conversion from a foreign
currency into the local money, and the proper procedures for seizure and
attachment. Likewise, even when enforcing a money judgment from [a foreign
court, the Canadian court] employs its own exemptions legislation, its own
rules for controlling competition among judgment creditors, and its own rules
on post‑judgment interest. In short, when a Canadian court recognizes a
foreign judgment that says that the defendant must pay the plaintiff a sum of
money, that foreign judgment is simply evidence of a debt. The
recognizing court goes about collection (or limiting collection) of that debt
in its own way. [Emphasis in original.]
12
As this Court confirmed in Beals v. Saldanha, [2003] 3
S.C.R. 416, 2003 SCC 72, absent evidence of fraud or of a violation of natural
justice or of public policy, the enforcing court is not interested in the
substantive or procedural law of the foreign jurisdiction in which the judgment
sought to be enforced domestically was rendered.
13
It is significant that, under the traditional common law rule, the
recognition and enforcement of a money judgment does not require an
interpretation of the foreign law, nor does it reach deeply into the structure
of the domestic court’s justice system, since the money obligation created by
the foreign judgment is sufficient evidence to enforce it in the Canadian
justice system. Care must thus be taken not to lose sight of the limited
impact the common law rule has on our justice system. Judicial assistance under
the new rule will move beyond triggering mechanisms necessary to collect a debt.
The separation of judicial systems is thus likely to be altered, since a
domestic court enforcing a foreign non‑money judgment may have to
interpret and apply another jurisdiction’s law. Professor Black illustrates
this by way of the following example (at p. 89):
A [foreign court] might issue an injunction which spells out in great
detail what, when and how a defendant must do (or refrain from doing)
something. If [a Canadian court] recognizes such an injunction then the courts
in [the foreign country] have been permitted to reach deeply into the
enforcement regime of [Canada]. It is the original [foreign order] (albeit
confirmed by [a Canadian court]) that will control what the defendant must and
must not do in [Canada]. Of course, if the defendant in [Canada] fails to
comply with the order then any contempt proceedings in [Canada] will be
conducted in accordance with [Canadian] procedure. But apart from that, when [a
Canadian court] agrees to enforce an injunction issued by a court in [a foreign
country], then [the foreign country] is dictating and controlling the
enforcement process in [Canada], something that does not occur when [the
Canadian court] enforces a foreign money judgment.
14
To depart from the fixed-sum component of the traditional common law
rule will open the door to equitable orders such as injunctions, which are key
to an effective modern-day remedy. The recognition and enforcement of
equitable orders will require a balanced measure of restraint and involvement
by the domestic court that is otherwise unnecessary when the court merely
agrees to use its enforcement mechanisms to collect a debt.
15
I agree that the time is ripe to revise the traditional common law rule
that limits the recognition and enforcement of foreign orders to final money
judgments. However, such a change must be accompanied by a judicial discretion
enabling the domestic court to consider relevant factors so as to ensure that
the orders do not disturb the structure and integrity of the Canadian legal system.
III. Case for Changing the Common Law Rule
16
I have read the Chief Justice’s reasons, and I agree that there is a
compelling rationale for a change in the common law requirement. However, it
must be recognized that a departure from the common law rule will necessarily
affect both commercial activity and judicial assistance in an era of
large-scale cross‑border commerce, e‑commerce and cross‑border
litigation.
17
For these reasons, it is important to bear in mind the need to proceed
cautiously in implementing any change. Professor Black recognizes that the
principles of comity, order and fairness articulated in Morguard favour
the recognition and enforcement of foreign non‑money judgments, but he
tempers his observation by noting the need to develop a careful and nuanced
approach that attends to the features of non‑money orders. In the same
vein, Professor Jeff Berryman, in “Cross-Border Enforcement of Mareva
Injunctions in Canada” (2005), 30 Adv. Q. 413, underscores the fact that
equitable remedies are context-dependent and subject to amendment at the time
of enforcement; he maintains that they do not lend themselves well to simply
being endorsed by Canadian courts.
18
On a more general note, a number of law professors and practitioners
have commented on the enforcement of foreign judgments and have insisted on the
need to adapt the possible defences and to redefine the approach to comity to
ensure that foreign judgments do not conflict with domestic law. Professor
Adrian Briggs, in “Crossing the River by Feeling the Stones: Rethinking the Law
on Foreign Judgments” (2004), 8 SYBIL 1, comments positively on the Morguard
test as applied to international law but questions whether the acceptance of
new bases of jurisdictional competence should entail the development of new
defences tailored specifically to them. Similarly, Professor Jeffrey Talpis and
Joy Goodman, in “A comity of errors”, Law Times, vol. 14, No. 2, January
20, 2003, at p. 7, suggest that the public policy defence should be widened to
allow a court to refuse to enforce a judgment that is manifestly unreasonable
under the law of the domestic forum. Finally, Professor Janet Walker, in “Beals
v. Saldanha: Striking the Comity Balance Anew” (2002), 5 Can. Int’l Law.
28, stresses that the “requirements of comity as they are reflected in the
rules for enforcing foreign judgments are changing along with the circumstances
in which they operate” (p. 29).
19
In summary, most of the commentators are not against finding new ways to
adjust the law to suit modern realities, but they insist on the need for a
cautious approach. As Briggs puts it, at p. 22: “It cannot be right to make
radical changes to [jurisdiction] while supposing that this has no impact on
the [defences]. . . . [I]ncremental, intuitive, coherent, development is what
common law does best, and is how the common law conflict of laws works best.”
20
Morguard has led the way to developing the common law to better
serve the interests of all litigants, foreign and domestic. The need to move
towards a rule more flexible than a total bar is compelling. However, the
change must be made having regard to issues that the old rule was not concerned
with. The instant case provides an opportunity to consider how the rule against
enforcing non-monetary judgments can be changed in the context of equitable
orders, like injunctions, and how the specific nature of such orders makes it
necessary to view enforcement from a new perspective.
IV. Nature of Equitable Judgments
21
A change in the traditional common law rule will be as important as was
the passage, for the purpose of establishing jurisdiction over a defendant,
from the service or attornment of the defendant requirement to the real and
substantial connection test. The latter test is flexible and its formulation
has allowed it to be applied in various and evolving circumstances. Similarly,
the change from the traditional common law rule to the recognition and
enforcement of foreign non-money judgments should be accompanied by the incorporation
of flexible factors that reflect the specific, and varied nature of equitable
orders.
22
At common law, the typical remedy is an award for damages. However, a
wide range of equitable remedies are available, and they take various forms.
Their commonality is that they are awarded at the judge’s discretion. Judges
do not apply strict rules, but follow general guidelines illustrated by such
maxims as “Equity follows the law”, “Delay defeats equities”, “Where the
equities are equal the law prevails”, “He who comes to equity must come with
clean hands” and “Equity acts in personam” (Hanbury & Martin Modern
Equity (17th ed. 2005), at paras. 1-024 to 1-036, and I. C. F. Spry, The
Principles of Equitable Remedies: Specific Performance, Injunctions,
Rectification and Equitable Damages (6th ed. 2001), at p. 6). The
application of equitable principles is largely dependent on the social fabric.
As Spry puts it:
. . . the maxims of equity are of significance, for they reflect the
ethical quality of the body of principles that has tended not so much to the
formation of fixed and immutable rules, as rather to a determination of the
conscionability or justice of the behaviour of the parties according to
recognised moral principles. This ethical quality remains, and its presence
explains to a large extent the adoption by courts of equity of broad general
principles that may be applied with flexibility to new situations as they
arise. [p. 6]
23
The traditional rule does not leave any room for discretion as regards
such considerations or forms of relief. In contrast, equitable orders are
crafted in accordance with the specific circumstances of each case. The most
relevant equitable remedies for the purposes of the present case are specific
performance, that is, an order by the court to a party to perform its
contractual obligations, and the injunction, that is, an order to a party to do
or refrain from doing a particular act.
24
Despite their flexibility and specificity, Canadian relief orders are
fashioned following general guidelines. The terms of the order must be clear
and specific. The party needs to know exactly what has to be done to comply
with the order. Also, the courts do not usually watch over or supervise
performance. While the specificity requirement is linked to the claimant’s
ability to follow up non-performance with contempt of court proceedings,
supervision by the courts often means relitigation and the expenditure of
judicial resources. This factor is discussed by R. J. Sharpe, in Injunctions
and Specific Performance (2nd ed. (loose-leaf)), at para. 7.480:
From this perspective, the supervision concern
differs from other criteria determining the availability of specific relief.
It is based not upon the weighing of relative advantage and disadvantage to the
parties but rather on the weighing of the advantage of doing justice by
granting specific relief against the general cost to society of having justice
administered. By way of contrast to specific relief, damage awards do hold
certain advantages. A money judgment is final and enforcement is left to the
administrative rather than the judicial machinery of the court. The cost of
enforcement is largely borne by the parties. A decree for specific performance
does involve a substantially higher risk that further judicial resources will
be required. The more complex or extended the performance, the more likely
further proceedings will be needed to ascertain whether the defendant has
complied with his or her obligations. This fear of extended and complex
litigation and the need for repeated requests for judicial intervention may be
seen as a legitimate concern. The cost to society of providing the resources
necessary to implement specific performance decrees is properly considered by
the court when weighing the advantages the specific relief might otherwise
offer.
Doucet-Boudreau
v. Nova Scotia (Minister of Education), [2003] 3 S.C.R. 3, 2003 SCC 62, a
case in which the judge retained jurisdiction to supervise compliance with an
order enjoining the Government of Nova Scotia to use its best efforts to
provide French language facilities and programs, demonstrates the possible
extent of judicial involvement where injunctive relief is ordered. This burden
on the judicial system may be justified in the context of the constitutional
protection afforded to linguistic minorities, but may not be warranted when the
cost is not proportionate to the importance of the order. The Latin maxim de
minimis non curat praetor conveys the long-established rule that claims
will be entertained only if they are important enough to warrant the
expenditure of public resources.
25
Equally important concerns can be raised by other types of orders, like
anti-suit injunctions, and search or freezing orders. The question of their
territorial scope is highly relevant. In Unifund Assurance Co. v. Insurance
Corp. of British Columbia, [2003] 2 S.C.R. 63, 2003 SCC 40, and Hunt v.
T&N plc, [1993] 4 S.C.R. 289, the Court refused to give
extraterritorial effect to provincial statutes. The frontiers of the foreign
state are the very reason why its judgments need to be recognized and enforced
abroad. Should the orders not be assessed to ensure that their form is
compatible with domestic law? Under the traditional rule, the issue of clarity
and specificity is not a concern, but if injunctive relief is to be enforced,
its territorial scope has to be specific and clear. Canadian residents should
not be made subject to unforeseen obligations from a foreign court or to orders
in a form unknown to Canadian courts. This issue goes not to the jurisdiction
of the foreign court, but either to the framing of new conditions for
recognition and enforcement or to new defences.
V. Considerations Particular to Equitable
Orders
26
Under the traditional common law rule, courts have relied on the notion
of comity to justify the recognition and enforcement of foreign judgments. But
it is worth noting that in Morguard, the Court took a balanced approach
to comity. In that case, La Forest J. first referred to (at p. 1096):
. . . the real nature of the idea of comity, an idea based not simply
on respect for the dictates of a foreign sovereign, but on the convenience, nay
necessity, in a world where legal authority is divided among sovereign states
of adopting a doctrine of this kind.
He adopted the
more complete formulation of the concept of comity (at p. 1096) developed by
the U.S. Supreme Court in Hilton v. Guyot, 159 U.S. 113 (1895), at
p. 164:
. . . the recognition which one nation allows within its territory to
the legislative, executive or judicial acts of another nation, having due
regard both to international duty and convenience, and to the rights of its own
citizens or of other persons who are under the protection of its laws.
27
Comity is a balancing exercise. The relevant considerations are respect
for a nation’s acts, international duty, convenience and protection of a
nation’s citizens. Where equitable orders are concerned, courts must take care
not to emphasize the factor of respect for a nation’s acts to the point of
imbalance. An equitable order triggers considerations of both convenience for
the enforcing state and protection of its judicial system. I mention these two
considerations because they will be of particular relevance in the present
case.
28
Under the traditional rule, once the jurisdiction of the enforcing court
is established, the petitioner must show that he or she meets the conditions
for having the judgment recognized and enforced. In the case of an equitable
order, it is at this stage that considerations specific to the particular
nature of such orders should be contemplated. If the particular concerns raised
by equitable orders are considered by the judge at the stage of determining
whether the order is suitable for enforcement, they will not ordinarily need to
be raised again at the defence stage. The traditional defences relating to the
merits or to procedure, which are summarized in Beals, should not be
different for equitable orders than for common law judgments. However, there
might be other considerations, such as laches, that would make it inequitable
to enforce a foreign judgment. Such considerations should not generally entail
revisiting the merits of the case.
29
The present case does not require the consideration of defences
particular to the nature of equitable orders. Thus, I do not have to expand on
Major J.’s dictum in Beals that the evolution of private
international law may require the creation of new defences (para. 42). The
existing defences do not need to be broadened for the purposes of the case at
bar. Similarly, the finality requirement, which is indispensable, although more
complex in the context of an equitable order than in that of a common law
order, could be the object of further commentary. However, these topics need
not be fully addressed in the present case. Revisiting the defences and
defining the finality requirement in the context of equitable orders are better
left for another day.
30
In contemplating considerations specific to the recognition and
enforcement of equitable orders, courts can draw the relevant criteria from
other foreign judicial assistance mechanisms based on comity. Forum non
conveniens and letters rogatory are mechanisms that, like the enforcement
of foreign judgments, rely on comity. For these mechanisms, as for the
enforcement of equitable orders, the balancing exercise of comity requires a
careful review of the relief ordered by the foreign court. This review ensures
that the Canadian court does not extend judicial assistance if the Canadian
justice system would be used in a manner not available in strictly domestic
litigation. It could be tempting to use form over substance as the distinctive
criterion. However, the distinction between form and substance can sometimes be
elusive or even misleading. In considering the order it is asked to enforce,
the domestic court should instead scrutinize the impact of the order. Relevant
considerations may thus include the criteria that guide Canadian courts in
crafting domestic orders, such as: Are the terms of the order clear and
specific enough to ensure that the defendant will know what is expected from
him or her? Is the order limited in its scope and did the originating court
retain the power to issue further orders? Is the enforcement the least
burdensome remedy for the Canadian justice system? Is the Canadian litigant
exposed to unforeseen obligations? Are any third parties affected by the
order? Will the use of judicial resources be consistent with what would be
allowed for domestic litigants?
31
The evolution of the law of enforcement does not require me, at this
point, to develop exhaustively the criteria a court should take into account.
As cases come up, appropriate distinctions can be drawn. For present purposes,
it is sufficient to underscore the need to incorporate the very flexibility
that infuses equity. However, the conditions for recognition and enforcement
can be expressed generally as follows: the judgment must have been rendered by
a court of competent jurisdiction and must be final, and it must be of a nature
that the principle of comity requires the domestic court to enforce. Comity
does not require receiving courts to extend greater judicial assistance to
foreign litigants than it does to its own litigants, and the discretion that
underlies equitable orders can be exercised by Canadian courts when deciding
whether or not to enforce one.
VI. Application to the Case at Bar
A. Preliminary Comments
32
I reviewed the facts at the beginning of these reasons and need not
expand on them save to mention the peculiar circumstances in which the case
proceeded in this Court. Elta’s factum was due on September 7, 2005. On
October 17, 2005, Elta’s attorney filed a notice of withdrawal and on October
26, Mr. Frank Lin, who signed the 1998 declaration for Elta, informed the
Registrar that the company’s “financial circumstances” did not permit it to
incur further legal fees. He confirmed the information by fax on a sheet of
paper bearing no letterhead. The hearing proceeded ex parte, a
circumstance that could not have been foreseen when leave was granted.
33
Since equity is about ethics and the prevention of unconscionable
conduct, it may be tempting to spring into action to remedy conduct by Elta
that looks like blatant defiance of the law and the judicial system. However,
care must be taken to ensure that the law and the justice system are not harmed
by engaging them too quickly in a manner that accommodates only one aspect of
comity. Three issues are relevant to determining whether the orders rendered
in this case meet the conditions for recognition and enforcement. The first,
raised by Elta, relates to the quasi-criminal nature of a contempt order, the
second to the burden on the judicial system and the third to the
extraterritorial nature of the orders. In addition, I feel bound to say a few
words concerning the public policy defence. While it might have been possible
to resolve some of the issues had Elta appeared before the Court, its absence,
and the reasons given for its absence, reinforce my conclusion that the
circumstances do not lend themselves well to the recognition and enforcement of
the orders.
B. Quasi-Criminal Nature of the Contempt
Order
34
It is well established that Canadian courts will not enforce a penal
order, either directly or indirectly (Castel and Walker, at para. 8.3). This
point is pertinent only to the recognition and enforcement of the contempt
order. The Superior Court judge reasoned that the contempt order was
restitutionary in nature and engaged a dispute between private parties (para.
17). This narrow view of contempt of court conflicts with Matia J.’s finding
that, “[b]ased upon these violations, Elta Golf is in contempt of this Court”
(A.R., at p. 102), and with this Court’s finding in Vidéotron Ltée v.
Industries Microlec Produits Électroniques Inc., [1992] 2 S.C.R. 1065:
The penalty for contempt of court, even when it is used to enforce a
purely private order, still involves an element of “public law”, in a sense,
because respect for the role and authority of the courts, one of the
foundations of the rule of law, is always at issue. [p. 1075]
In Vidéotron,
the Court opted for a unified approach to the nature of the contempt of court
order, thus setting aside the distinction between the civil and criminal
aspects that prevails in the United States: Gompers v. Bucks Stove &
Range Co., 221 U.S. 418 (1911), at p. 441.
35
In Canadian law, a contempt order is first and foremost a declaration
that a party has acted in defiance of a court order. Consequently, a motion for
contempt of court cannot be reduced to a way to put pressure on a defaulting
debtor or a means for an aggrieved party to seek indemnification. The gravity
of a contempt order is underscored by the criminal law protections afforded to
the person against whom such an order is sought. Not only is that person not
compellable (Vidéotron, at p. 1078) but he or she is not competent to
act as a witness for the prosecution: Canada Evidence Act, R.S.C. 1985,
c. C-5, s. 4 ; P.-A.P. v. A.F., [1996] R.D.J. 419 (C.A.). The
significance of a contempt order is also evident from the sanction faced by the
offender. In Canada, an individual in contempt of court can be committed to
jail (see Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r.
60.11) or may face the imposition of any other sanction available for a
criminal offence, such as a fine or community service: Westfair Foods Ltd.
v. Naherny (1990), 63 Man. R. (2d) 238 (C.A.). Thus, both the process used
to issue a declaration of contempt and the sanction bear the imprint of
criminal law.
36
The “public law” element of a declaration of contempt and the opprobrium
attached to it eclipse the impact of a simple restitutionary award. As a
matter of principle, the quasi-criminal nature of the contempt order precludes
the enforcement of such orders in Canada.
37
The Superior Court judge did not acknowledge the differences between the
Canadian and American views on contempt. She ignored the declaration of
contempt, expunged the duplicative parts from the contempt order and declared
only the new injunctive relief to be recognizable and enforceable. I am not
satisfied that it was appropriate to reconfigure the order in this way.
38
The reconfiguration led the court to attribute to the contempt order a
nature different from the usual nature of such orders in Canada. To sidestep
the difficulty by severing the order hardly addresses the argument based on the
quasi-criminal nature of the order and is a course to be avoided. Severance
requires the receiving court to consider the merits of the order and risks
affecting its substance. Even if severance does not distort the purpose of the
order, it tests the limits of the enforcing court’s familiarity with the
foreign law, a topic discussed below.
39
Because of their criminal component, contempt orders should not be
enforceable in Canada. I note, on this issue, that according to K. MacDonald,
in “A New Approach to Enforcement of Foreign Non-Monetary Judgments” (2006), 31
Adv. Q. 44, at p. 56, citing the Restatement of the Law
(Third): The Foreign Relations Law of the United States (1987), Part IV,
ch. 8, § 481, the U.S. courts, while allowing the recognition of judgments
granting injunctions, will not generally enforce such orders. According to
this view, neither the consent decree nor the reconfigured contempt order would
be enforced in the U.S.
C. Integrity of the Justice System
40
In choosing a remedy, a court of equity must consider whether the remedy
is appropriate. Such is the case when deciding whether to issue an injunction.
Judicial economy is one of the many considerations the court must evaluate. In
private international law, this concern is addressed in the principle of
comity. As mentioned above, comity concerns not only respect for a foreign
nation’s acts, international duty and convenience, but also the protection of a
nation’s citizens and domestic values.
41
In Amchem Products Inc. v. British Columbia (Workers’ Compensation
Board), [1993] 1 S.C.R. 897, the Court recognized that prejudice to a party
is relevant to the choice of forum. Similarly, if a plaintiff has a choice
between courses of action and one of these is less burdensome for the receiving
court, he or she can rightly be asked to take the less burdensome one.
42
On the issue of the use of judicial resources, the Court of Appeal
stated that the denial of recognition and enforcement did not leave Pro Swing
without a remedy. It in fact mentioned two other possible courses of action for
Pro Swing to take: a separate action and letters rogatory. The first would be
burdensome for Pro Swing and would not give full faith and credit to the Ohio
judgment. However, letters rogatory should have been considered.
43
Letters rogatory are used to obtain evidence in the form of testimony,
statements or documents for use in proceedings before foreign courts: Canada
Evidence Act, s. 46 , and Ontario Evidence Act, R.S.O. 1990, c. E.23,
s. 60. This form of judicial assistance, like the recognition and enforcement
of foreign orders and forum non conveniens, rests on the
principle of comity: District Court of the United States, Middle District of
Florida v. Royal American Shows, Inc., [1982] 1 S.C.R. 414.
44
Letters rogatory are allowed by virtue of s. 46 of the Canada
Evidence Act and applicable provincial legislation. One of the requirements
is that a proceeding be pending before the Ohio court: Zingre v. The Queen,
[1981] 2 S.C.R. 392; Re International Association of Machinists &
Aerospace Workers and Qantas Airways Ltd. (1983), 149 D.L.R. (3d) 38 (Ont.
H.C.J.). In this case, the proceeding may be considered to be pending before
the Ohio court because the very reason the order is rendered is to enable Pro
Swing to return before Matia J. to determine the damage award.
45
Subject to their being duly obtained, letters rogatory may be viewed as
a useful means to obtain the evidence required by Matia J. to finalize the
damage award in the contempt proceeding in Ohio. This course of action would
have the benefit of avoiding duplication of the enforcement proceedings in
Ontario with those in Ohio. Moreover, letters rogatory are truly incidental to
the proceedings, which is how the Superior Court judge characterized the parts
of the contempt order she agreed to recognize and enforce.
46
In addition to considering alternate means to reach a particular
outcome, a court may consider whether the matter merits the involvement of the
Canadian court. The receiving court’s willingness to extend its judicial
resources may depend on the importance of the case compared to the damage the
plaintiff would suffer if his or her request were refused. In the present
case, given the facts that the consent agreement was concluded on the basis of
only three golf clubs or golf club heads, that only two golf club heads were
purchased in the investigation and that Elta chose not to appear owing to
“financial circumstances”, there is a concern that the judicial machinery could
be deployed only to find that Pro Swing’s debtor is insolvent.
47
True, it would encourage deceit, fraud and similar misconduct if courts
were systematically to require litigants to demonstrate the damage they would
suffer should enforcement be denied. Nevertheless, when the circumstances give
rise to legitimate concerns about the use of judicial resources, the litigant
bears the burden of reassuring the court that the matter is worth going forward
with.
48
The appropriateness of using local judicial resources is a factor
included in the convenience aspect of the principle of comity. It does not
allow judges to determine whether the order is correct, but provides minimal
protection for our justice system.
D. Familiarity With the Foreign Law
49
I alluded earlier to the problem of interpreting a foreign order in
light of Canadian law, which might be different from the foreign law. When
faced with the need to interpret the law, the receiving court must ensure that
no conflict results from the nature attributed to the order after the
enforcement judgment is rendered.
50
In the case of a contempt order, because of the different approaches in
the U.S. and in Canada, the conflict is real. In the U.S., according to Gompers,
a civil contempt order is remedial only and is issued for the benefit of the
complainant. However, if the same contempt order is recognized and enforced in
Canadian law, it becomes a Canadian contempt order that has a quasi-criminal
nature and exposes the offender to imprisonment.
51
Differences in laws might trigger different obligations. It is
important that the receiving court does not have to venture into uncertain
territory to interpret orders whose terms are based on rules with which the
court is not familiar. Also, courts should not expose litigants to consequences
to which they would not be exposed under the foreign law. Aware of their
limitations, receiving courts should use their discretion to refrain from
enforcing orders that subject Canadian litigants to unforeseen obligations.
E. Extraterritoriality
52
The Superior Court was of the view that the wording of the consent
decree made it clear that extraterritoriality was intended by the parties.
However, the judge did not comment on the contempt order. The Court of Appeal
found both orders unclear as to the scope of their extraterritorial
application. The issue is important both because the transactions were made
over the Internet and because the trademark was protected only in the U.S.
53
Extraterritoriality is a long-recognized concern not only because a law
normally applies solely in the jurisdiction where it is enacted, but also
because courts lack familiarity with foreign justice systems. Courts will tend
to find solutions to limit spheres of conflict. In Hunt, a Quebec
statute was found not to prevent the enforcement of a B.C. order. In Unifund,
an Ontario statute was held not to apply to a B.C. corporation. In Aetna
Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2, the Court was of
the view that a Mareva injunction should have been refused because the
assets in question were not at risk when moved to Quebec.
54
This Court commented on the particular nature of an Internet transaction
in Society of Composers, Authors and Music Publishers of Canada v. Canadian
Assn. of Internet Providers, [2004] 2 S.C.R. 427, 2004 SCC 45. It stated
that “a telecommunication from a foreign state to Canada, or a
telecommunication from Canada to a foreign state, ‘is both here and there’”
(para. 59).
55
Truly, when Mr. Frank Lin signed the declaration stating that he had
three golf clubs or golf club heads in inventory and agreed to surrender them
to Pro Swing’s counsel, he must have understood that an eventual incorporation
of the settlement agreement into a consent decree could bind him to deliver
goods located in Ontario.
56
However, the same extraterritorial application cannot be said of the
orders contained in the consent decree and the contempt order that enjoined him
from purchasing and selling the material. Since the trademark protection is the
one recognized in the U.S. and the Internet transaction took place in both Ohio
and Ontario, the transaction can be said to have occurred in Ohio. The Internet
component does not transform the U.S. trademark protection into a worldwide
one. Whether Elta could, by consent, have agreed to such an extension is a
matter of interpretation. The Superior Court found the terms clear, but the
Court of Appeal found them doubtful. In my view, in the absence of explicit
terms making the settlement agreement a worldwide undertaking, the consent
decree cannot be said to clearly apply worldwide.
57
In addition to prohibiting the purchase and sale of designated material,
the contempt order enjoins Elta “to make an accounting to Pro Swing of all golf
club and/or golf club components it has sold which bear the TRIDENT or RIDENT
marks, or any other confusingly similar designation, since the entry of the
Consent Decree . . . [and to] include a sworn statement of account of all gross
and net income derived from sales of TRIDENT and RIDENT golf clubs or golf club
components . . .”. It imposes an obligation to account for all sales, even
sales that may fall outside the scope of Pro Swing’s trademark protection. To
interpret the contempt order as applying outside the U.S. would offend the
principle of territoriality.
58
Extraterritoriality and comity cannot serve as a substitute for a lack
of worldwide trademark protection. The Internet poses new challenges to
trademark holders, but equitable jurisdiction cannot solve all their problems.
In the future, when considering cases that are likely to result in proceedings
in a foreign jurisdiction, judges will no doubt be alerted to the need to be clear
as regards territoriality. Until now, this was not an issue because judgments
enforcing trademark rights through injunctive relief were, by nature, not
exportable.
F. Public Policy Defence
59
Elta did not raise a public policy defence. However, public policy and
respect for the rule of law go hand in hand. Courts are the guardians of
Canadian constitutional values. They are sometimes bound to raise, proprio
motu, issues relating to public policy. An obvious example of values a
court could raise proprio motu can be found in United States v. Burns,
[2001] 1 S.C.R. 283, 2001 SCC 7. In that case, the Court took Canada’s
international commitments and constitutional values into consideration in
deciding to confirm a direction to the Minister to make a surrender subject to
assurances that the death penalty would not be imposed. Public policy and
constitutional requirements may also be at stake when the rights of
unrepresented third parties are potentially affected by an order. In the case
at bar, over and above the concerns articulated by the Court of Appeal and the
defences raised by Elta, there are, in my view, concerns with respect to parts
of the contempt order inasmuch as it requires the disclosure of personal
information that may prima facie be protected from disclosure.
60
The quasi-constitutional nature of the protection of personal
information has been recognized by the Court on numerous occasions: H.J.
Heinz Co. of Canada Ltd. v. Canada (Attorney General), [2006] 1 S.C.R. 441,
2006 SCC 13, at para. 28; Lavigne v. Canada (Office of the Commissioner of
Official Languages), [2002] 2 S.C.R. 773, 2002 SCC 53, at para. 24; Dagg
v. Canada (Minister of Finance), [1997] 2 S.C.R. 403, at paras. 65‑66.
In Burns, the Court required assurances that our constitutional
protections would be extended to individuals found on Canadian soil; in the
same way, courts should be mindful of the values that merit constitutional or
quasi-constitutional protection. In light of the quasi-constitutional status
attributed to privacy, the order enjoining Elta to provide all credit card
receipts, accounts receivable, contracts, etc. could be problematic. The range
of documents is wide and most of them contain personal information that might
be protected.
61
Because no submissions were made on this point, we do not know if there
is any information or evidence relevant to applicable exceptions. The
documents contain personal information that may prima facie be protected
for the benefit not of the person from whom disclosure is sought, but of the
persons to whom the information belongs. This is but an example of public
policy considerations that judges must consider before agreeing to recognize
and enforce a judgment on a foreign country’s behalf.
G. Summary
62
In summary, the orders are problematic from many points of view. The
contempt order is quasi-criminal in nature and the intended territorial scope
of the injunctive relief in the consent order is uncertain. Moreover, it is
unclear that recognition and enforcement of the judgment is the appropriate
tool amongst the various judicial assistance mechanisms or that the matter is
an appropriate one for lending judicial assistance in the form requested.
Additional concerns relating to the potential violation of privacy rights
should also be addressed.
63
The list of problems is long, too long to use the courts’ equitable
jurisdiction to accommodate Pro Swing. In Barrick Gold Corp. v. Lopehandia
(2004), 71 O.R. (3d) 416 (C.A.), Blair J.A. stated that the courts had the
choice of throwing up their hands in despair or protecting the public against
impugned conduct. In the case at bar, the choice is not as clear, as this is
an instance where a court’s refusal to enforce the orders cannot be equated
with an abdication of its duties. To refuse to enforce the orders is an
appropriate exercise of equitable discretion and amounts to allowing the Ohio
court to continue the proceedings with the judicial assistance of the Ontario
courts, but to a lesser extent than has been requested.
VII. Conclusion
64
Private international law is developing in response to modern
realities. The real and substantial connection test and the enforcement of
equitable relief granted in foreign countries are but two examples of its
evolution. The Internet puts additional pressure on the courts to reach out to
the same extent as the Web. At the same time, courts must be cautious to
preserve their nation’s values and protect its people. The time is ripe to
change the common law rule against the enforcement of foreign non-monetary
judgments, but, owing to problems with the orders the appellant seeks to have
enforced, the Court cannot accede to its request.
65
For these reasons, I would dismiss the appeal.
The reasons of McLachlin C.J. and Bastarache and Charron JJ. were
delivered by
The Chief Justice
(dissenting) —
1. Introduction
66
This case requires the Court to consider whether the common law should
be extended to permit the enforcement of foreign non-money judgments and, if
so, in what circumstances. I would hold that these judgments are enforceable
in appropriate circumstances. On application to these facts, I would conclude
that the motions judge did not err in enforcing parts of the order of an Ohio
court.
2. Facts
67
The appellant, Pro Swing Inc., is the owner of the Trident trademark for
a type of golf club. Its trademark is registered in the United States, where it
carries on business. The respondent, Elta Golf Inc., carries on business in
Toronto, Ontario. In the course of that business, it offered for sale on its Website
goods bearing marks which resembled Trident.
68
In April 1998, Pro Swing filed a complaint against Elta Golf for
trademark infringement and dilution, use of a counterfeit mark, unfair
competition, and deceptive trade practices. The complaint was filed in the
United States District Court for the Northern District of Ohio Eastern
Division.
69
In July 1998, the parties entered into a settlement agreement. It was
endorsed by a consent decree of the court, signed by both parties. The consent
decree acknowledged that Pro Swing was the owner of the Trident trademark and
enjoined Elta Golf from purchasing, marketing, selling or using golf clubs or
golf club components bearing that mark or confusingly similar variations. The
order stated that the court would retain jurisdiction over the parties for
purposes of enforcement and the parties agreed not to contest the jurisdiction
of the U.S. courts in any action to enforce the settlement.
70
In December 2002, Pro Swing learned that Elta Golf was violating the
consent decree and launched a civil contempt proceeding to enforce it and to
obtain compensation for damages sustained. Elta Golf was served but did not
respond. On February 25, 2003, the Ohio court found Elta Golf in contempt of
court and confirmed the injunction. It also awarded compensatory damages to
Pro Swing based on Elta Golf’s profits and ordered Elta Golf to provide an
accounting to the plaintiff for purposes of calculating these damages. Again,
the court ordered Elta Golf to deliver up offending material, provide names and
addresses of suppliers and purchasers to the plaintiff, and recall all
counterfeit and infringing golf clubs or golf club components. Again, the U.S.
court stated it retained jurisdiction to enforce the consent decree and
contempt order. Finally, it awarded Pro Swing costs against Elta Golf subject
to accounting.
71
Elta Golf did not comply with this order. As a result, Pro Swing was
unable to provide the Ohio court with its proposed damage award or costs bill.
3. Legal History
72
In 2003, Pro Swing commenced these proceedings in Ontario, asking the
court to recognize and enter the 1998 consent decree and the 2003 contempt
order. In response, Elta Golf filed a defence arguing that the U.S. orders
could not be recognized and enforced in Canada because they were not final
judgments for a fixed sum of money. Elta Golf raised two principal issues
relating to the two U.S. orders:
1. Is the consent decree of July 28, 1998
unenforceable in Ontario in that it is in the nature of injunctive relief and
not for a fixed sum of money?
2. Is the order of February 25, 2003 unenforceable
in Ontario as it is not in the nature of a final order and is penal in nature?
73
The motions judge, Pepall J., reviewed the jurisprudence and concluded
that there was no reason in principle why non-money judgments of foreign courts
should not be enforced ((2003), 68 O.R. (3d) 443). In her view, the principles
enunciated in Morguard Investments Ltd. v. De Savoye, [1990] 3
S.C.R. 1077, apply equally to monetary and non-money judgments. She noted that
Elta Golf conceded that the 1998 Ohio decree met the general requirements of Morguard.
The only issue was whether the common law requirement of a fixed sum had been
abrogated by Morguard and subsequent decisions. She concluded that it
had not, but that the principles espoused in Morguard permitted the
requirement to be relaxed or removed depending on the circumstances of the
case. As a result, she held that in principle the orders might be enforceable
in Canada. The motions judge then examined whether the orders in question were
final and conclusive. She concluded that the 1998 decree was final and
conclusive, noting that it reflected a settlement between the parties and that
“[b]y its terms, it is clear that extraterritorial application was intended”
(para. 16). By contrast, aspects of the February 2003 order were left
outstanding and could not be enforced. However, the general declaration and
the orders for an accounting and the provision of names, information and
recalled clubs and components were, in her opinion, final and enforceable in
Ontario.
74
Elta Golf appealed, on grounds that the motions judge had erred in
concluding that non-money foreign orders could be enforced. The Court of
Appeal agreed with the motions judge “that the time is ripe for a
re-examination of the rules governing the recognition and enforcement of
foreign non-monetary judgments” ((2004), 71 O.R. (3d) 566, at para. 9).
However, it held that the orders in this case could not be enforced because
they were ambiguous in that “the scope of the extra-territorial application of
the foreign orders is unclear” (para. 11).
75
Pro Swing appeals to this Court. It endorses the view of the law taken
by the courts below that non-money foreign judgments may be enforceable. It
takes issue, however, with the Court of Appeal’s conclusion that the orders in
this case could not be enforced because the extraterritorial application of the
orders was unclear. Elta Golf did not appear on the proceedings before this
Court.
4. Analysis
76
Three questions arise. The first is whether Canadian courts can
recognize and enforce foreign non-money judgments. If the answer to this
question is affirmative, the question arises of when it is appropriate to
recognize and enforce such judgments. Finally, the principles developed must
be applied to the foreign orders at issue to determine whether they can be enforced
in Ontario.
4.1 Recognition of Foreign Non-Money
Judgments
77
The traditional common law position is that foreign judgments are
recognizable and enforceable only if they meet two conditions. First, they
must be for a definite sum of money. Second, they must be final and
conclusive. These requirements ensure that in ordinary cases the merits of
foreign judgments are not considered by an enforcing court. Barring
exceptional concerns, a court’s focus when enforcing a foreign judgment is not
on the substantive and procedural law on which the judgment is based, but
instead on the obligation created by the judgment itself.
78
In Morguard, La Forest J. discussed the need to ensure
that the evolution of the common law keeps pace with the acceleration,
intensification, and nature of cross-border social and economic activity. He
noted:
The world has changed since the above rules were
developed in 19th century England. Modern means of travel and communications
have made many of these 19th century concerns appear parochial. The business
community operates in a world economy and we correctly speak of a world
community even in the face of decentralized political and legal power. Accommodating
the flow of wealth, skills and people across state lines has now become
imperative. Under these circumstances, our approach to the recognition and
enforcement of foreign judgments would appear ripe for reappraisal. [p. 1098]
In Hunt v.
T&N plc, [1993] 4 S.C.R. 289, La Forest J. further described rigidity
in this area of the law as resting on an “outmoded conception of the world that
emphasized sovereignty and independence, often at the cost of unfairness” (pp.
321-22). The common law must evolve in a way that takes into account the
important social and economic forces that shape commercial and other kinds of
relationships.
79
That evolution must take place both incrementally and in a principled
way. Although the enforcement of money judgments across provincial boundaries
raises unique considerations and constitutional dimensions, the underlying
principles of comity, order and fairness must apply both interprovincially and
internationally. As Major J. noted in Beals v. Saldanha, [2003] 3
S.C.R. 416, 2003 SCC 72, “[t]he principles of order and fairness ensure
security of transactions, which necessarily underlie the modern concept of
private international law” (para. 27). These principles do not exclude the
enforcement of non-monetary judgments from another country. At the same time,
comity, which requires respect for the legitimate sovereignty of others and for
the needs created by relationships that “involve a constant flow of products,
wealth and people across the globe”, may favour it: Hunt, at p. 322.
80
A number of law reform agencies have recognized the need for a more
flexible approach to the enforcement of foreign non-money judgments. While the
present case concerns the enforcement of U.S. orders, the common law
prohibition on such enforcement also applies between the Canadian provinces,
reinforcing the need for its reconsideration.
81
At the interprovincial level, proposals for reconsideration of the rule
have been advanced. The Uniform Law Conference of Canada proposed two statutes
that would allow for the enforcement of non-money judgments within Canada: the Uniform
Enforcement of Canadian Decrees Act (1997) and the Uniform Enforcement
of Canadian Judgments and Decrees Act (1997). In an introductory comment
to both proposed statutes, the Uniform Law Conference explained that:
Apart from legislation that addresses particular types of orders, there
is no statutory scheme or common law principle which permits the enforcement in
one province of a non-money judgment made in a different province. This is in
sharp contrast to the situation that prevails with respect to money judgments
which have a long history of enforceability between provinces and states both
under statute and at common law. With the increasing mobility of the population
and the emergence of policies favouring the free flow of goods and services
throughout Canada, this gap in the law has become highly inconvenient. UECJDA
[Uniform Enforcement of Canadian Judgments and Decrees Act] provides a
rational statutory basis for the enforcement of non‑money judgments
between the Canadian provinces and territories.
(Uniform Law Conference of Canada: Commercial Law Strategy (2005
(loose-leaf)), Tab 7, p. 3)
82
The British Columbia Law Institute recommended the adoption of the Uniform
Enforcement of Canadian Judgments and Decrees Act (or, alternatively the
Uniform Enforcement of Canadian Decrees Act) in its Report on the
Enforcement of Non‑money Judgments from Outside the Province (August
1999). The Report cited the following passage from Morguard as an
illustration of the existing deficiencies in Canadian private international
law:
It seems anarchic and unfair that a person should be able to avoid
legal obligations arising in one province simply by moving to another province.
Why should a plaintiff be compelled to begin an action in the province where
the defendant now resides, whatever the inconvenience and costs this may bring,
and whatever degree of connection the relevant transaction may have with
another province? And why should the availability of local enforcement be the
decisive element in the plaintiff’s choice of forum?
(Report, at p. 4; Morguard, at pp. 1102-3)
83
Finally, with respect to all non-Quebec judgments, the Civil
Code of Québec, S.Q. 1991, c. 64, does not distinguish between money
judgments and non-money judgments in its recognition and enforcement
provisions, although the finality requirement has been maintained:
3155. A Québec authority recognizes and,
where applicable, declares enforceable any decision rendered outside Québec
except in the following cases:
.
. .
(2) the decision is subject to ordinary remedy or
is not final or enforceable at the place where it was rendered;
84
These developments establish that the absolute common law ban on the
enforcement of all foreign non-money judgments may no longer be useful and
should be reconsidered.
85
A final question is whether abolition of the rule against recognition
and enforcement of foreign non-money judgments satisfies the principles this
Court has recognized on the development of the common law. As a general rule,
the common law must evolve to take into account societal changes, but that
evolution must proceed incrementally: R. v. Salituro, [1991] 3 S.C.R.
654, at p. 666.
86
The possibility of enforcing foreign non-money judgments would represent
an incremental change in the common law of Canada. The principled approach to
recognition of foreign monetary judgments in cases such as Morguard and Beals
invites application of the same principles to non-money judgments in order
to preserve the consistency and logic of this body of the law. Lower courts
have discussed the need to modify the traditional ban on enforcement of foreign
non-money judgments or have suggested that the law may have already moved in
that direction: Uniforêt Pâte Port‑Cartier
Inc. v. Zerotech Technologies Inc., [1998] 9 W.W.R.
688 (B.C.S.C.); Barrick Gold Corp. v.
Lopehandia (2004), 71 O.R. (3d) 416 (C.A.), at para. 77. Provincial
law reform agencies have done detailed studies on the issue and the Province of
Quebec already permits recognition and enforcement. Loosening the common law
strictures on enforcement is arguably a small and necessary step in the
development of the common law in this area. On the other hand, the matter is
complex and difficult, as attested to by the fact that reform proposals have
not produced legislative reform. Acceptance of the possibility of recognizing
and enforcing foreign non-monetary judgments is an incremental step. At the
same time, care must be taken to ensure that recognition is confined to cases
where it is appropriate and does not create undue problems for the legal system
of the enforcing state or unfair results for the parties. Caution is in order.
87
The time has come to permit the enforcement of foreign non-money orders
where the general principles of Morguard are met and other
considerations do not render recognition and enforcement of the foreign
judgment inadvisable or unjust.
4.2 The Requirements for Enforcement of
Foreign Non-Money Judgments
88
If foreign non-money judgments may sometimes be enforceable, the next
question is when that will be appropriate. This is not a simple matter. As
Professor Vaughan Black cautions, “[a]ny move to enforce foreign non-money
orders requires caution and close attention to the unique features of such
remedies”: “Enforcement of Foreign Non-money Judgments: Pro Swing v. Elta”
(2006), 42 Can. Bus. L.J. 81, at p. 96. Different non-money remedies
and different circumstances will raise different considerations.
89
Before discussing the considerations applicable in this case, it may be
useful to reiterate the theoretical basis for the recognition and enforcement
of foreign judgments. While established in the context of money judgments, the
theory also applies to the enforcement of non-money judgments. The foreign
court order is seen as creating a new obligation on the defendant. In the case
of a money judgment, this is a debt. In the case of a non-money judgment, it
is a different sort of obligation. A court enforcing a foreign judgment is
enforcing the obligation created by that judgment. In principle, it should not
look beyond the judgment to the merits of the case. It enforces the obligation
created by the foreign judgment by its own machinery. As confirmed in Beals,
as long as the foreign court properly has jurisdiction to adjudicate the
dispute, absent evidence of fraud or a judgment contrary to natural justice or
public policy, the enforcing court is not interested in the substantive or
procedural law of the foreign jurisdiction. All the enforcing court needs is
proof of the foreign order; its own legal mechanisms take over from there.
This can be understood as the principle of the separation of judicial systems.
90
The first category of restrictions on the recognition and enforcement of
foreign non-money judgments should flow from the general enforcement
requirements set out in Morguard. These ensure that jurisdiction was
properly taken by the issuing court and that there are no general fairness
considerations that should require the court to hesitate before enforcing the
foreign judgment. As noted in Beals, the existing defences of fraud,
public policy and natural justice are designed to guard against unfairness in
its most recognizable forms. Although designed to apply to money judgments,
these requirements must also be applicable in cases involving non-money
remedies. They are narrowly drawn and limited to particular cases where
unfairness is clear. Both in the case of money and non-money judgments, they
are non-exhaustive and may be supplemented in extraordinary circumstances: Beals,
at paras. 41-42.
91
The second category of restrictions on the recognition and enforcement
of foreign non-money judgments should relate to finality and clarity. These
twin requirements are based on the principles of judicial economy and the
separation of judicial systems, which themselves stem from comity, order and
fairness. Finality and clarity are distinct concepts. The first requires
completeness; the second lack of ambiguity. However, in practice they may
overlap. An order that is not final is likely to be unclear and vice versa.
92
The related requirements of finality and clarity should ensure that the
function of enforcing courts will be limited to enforcement of the obligation
created by the foreign order and will not include re-litigation of the issues
considered by the issuing court. On the level of principle, an attempt to
enforce an order that is not final and clear will almost invariably amount to
the inappropriate assumption of jurisdiction by the enforcing court over the
dispute. It is settled law that the enforcing court does not consider the
merits of the foreign decision, absent fraud, violation of natural justice or
violation of public policy. On the practical level, it may be difficult for
the enforcing court to supervise an incomplete or unclear order. Difficulties
may stem from the enforcing judge’s unfamiliarity with the foreign law and its
procedures or from the cost burden on the enforcing court. An order that is
not final may be changed by the foreign court, with the result that the
enforcing court finds itself enforcing something that is no longer an
obligation in the foreign country. Finally, an enforcing court should not be
obliged to re-litigate foreign disputes or use valuable resources to duplicate
what would be best done in the originating jurisdiction. For these reasons,
courts should decline to enforce foreign non-money orders that are not final
and clear.
93
The related requirements of finality and clarity should thus be
seen as flowing from the theory by which foreign judgments are
enforced. What is enforced, as discussed, is an obligation created by the
foreign court, not the rights or responsibilities that gave rise to it.
Finality and clarity will ensure that this distinction is respected. Requiring
that the order to be enforced be final and clear also makes practical sense.
Where supervision would be particularly difficult for the enforcing court and
where the issuing court could engage in supervision much more efficiently,
judicial economy suggests that it would be appropriate to decline to enforce.
94
The B.C. Supreme Court decision in Uniforêt rejected enforcement
of a foreign non-money order for lack of finality. At issue was the
enforceability of a Quebec arbitration award that ordered Zerotech, a B.C.
company, to give Uniforêt access to documents and allow it to make copies.
After reviewing the judgments in Morguard, Hunt and Tolofson
v. Jensen, [1994] 3 S.C.R. 1022, Clancy J. opined at para. 26 that “[t]here
is no principled reason why judgments other than monetary judgments should not
be recognized and enforced.” Clancy J. nevertheless declined to enforce the
order because it violated the finality requirement in that it was lacking in
precision and would have required variation or addition before it could be
enforced. Clancy J. stated: “If clarification or variation is required,
particulars of how that must be done is a matter to be decided by the
arbitrators or by the Superior Court of Quebec, not by this court” (para. 28).
Similarly, art. 3155(2) of the Civil Code of Québec does not permit
enforcement if the decision “. . . is not final or enforceable at the place
where it was rendered”.
95
Finality demands that a foreign order establish an obligation that is
complete and defined. The obligation need not be final in the sense of being
the last possible step in the litigation process. Even obligations in debt may
not be the last step; orders for interest and costs may often follow. But it
must be final in the sense of being fixed and defined. The enforcing court
cannot be asked to add or subtract from the obligation. The order must be
complete and not in need of future elaboration.
96
Clarity, which is closely related to finality, requires that an order be
sufficiently unambiguous to be enforced. Just as the enforcing court cannot be
asked to supplement the order, so it cannot be asked to clarify ambiguous terms
in the order. The obligation to be enforced must clearly establish what is
required of the judicial apparatus in the enforcing jurisdiction.
97
Clarity means that someone unfamiliar with the case must be able to
ascertain what is required to meet the terms of the order. Sometimes the judge
who made the order is the best person to determine whether its terms have been
fulfilled. For example, Rule 60.11 of the Ontario Rules of Civil Procedure,
R.R.O. 1990, Reg. 194, provides that a contempt order to enforce an order requiring
a party to do an act or refrain from doing an act “may be obtained only on
motion to a judge in the proceeding in which the order to be enforced was
made”. This reflects the view that before finding a person in contempt — a
serious imputation — the judge who made the order should assess the infringing
conduct to be sure that it merits the sanction. This point is taken up by
J.-G. Castel and J. Walker in Canadian Conflict of Laws (6th ed.
(loose-leaf)), vol. 1, who posit that “[i]t stands to reason that the court
that makes an order requiring a party to perform a contract or to deliver goods
may be in a unique position to know whether the terms of the order have been
met” (p. 14-21). A court asked to enforce a foreign judgment of this type
would have to assess whether questions may arise as to what constitutes
compliance with the obligation. If there is a real risk that such questions
may arise, enforcement of the judgment may be inappropriate.
98
Having discussed the requirements of finality and clarity and the
rationale that supports them, I turn to how they may be assessed. A court
should not refuse to enforce a foreign non-monetary judgment merely because
there is a theoretical possibility that questions may arise in the course of
enforcement. The hypothetical possibility that enforcement may require active
supervision is not enough to permit a court to decline enforcement. A decision
not to enforce on the grounds of lack of finality or clarity would have to be
based on concerns apparent on the face of the order or arising from the factual
or legal context. As elsewhere in the law, mere speculation would not suffice.
99
Deschamps J. suggests that the equitable nature of injunctions and other
non-monetary judgments may require Canadian courts to revisit the meaning of
the finality requirement and recognize new defences. She highlights the
potential costs of supervising equitable orders. I agree that judicial economy
is a legitimate consideration (see para. 93). But judicial economy should not
be overemphasized. In recent years, courts have taken an active approach,
imposing orders requiring supervision when necessary. Doucet‑Boudreau
v. Nova Scotia (Minister of Education), [2003] 3 S.C.R. 3, 2003 SCC 62, is
the best-known example, but search orders and freezing orders are part of the
same general trend (see generally R. J. Sharpe, Injunctions and Specific
Performance (2nd ed. (loose-leaf)), at paras. 1.260-1.490).
100
Orders with penal consequences would constitute a third type of restriction
on the enforcement of non-money judgments. It is generally accepted that
Canadian courts will not enforce a foreign penal law or judgment, either
directly or indirectly. As Castel and Walker explain:
A penal law is a law that imposes a punishment for a breach of a duty
to the state — as opposed to a remedial law, which secures compensation for a
breach of a duty owed to a private person. . . . Liability that is
restitutionary in nature and that is not imposed with a view to punishment of
the party responsible is not regarded as penal in nature. [Footnotes omitted;
p. 8-2.]
It is for each
state to impose its own punishments, penalties and taxes, and other states are
not obliged to help them. When we move to penal orders, we move out of the
realm of private international law and into public law. As a result, Canadian
courts will not entertain an action for the enforcement of a foreign penal,
revenue, or other public law, nor will they enforce a foreign judgment ordering
the payment of taxes or penalties that gives effect to the sovereign will of a
foreign power.
101
For the purpose of this case, the three classes of restrictions on
enforcement of non-money judgments discussed above should suffice. It may be
that as the law develops other types of problems will be recognized. However,
that can be left for future cases.
4.3 Application
102
The motions judge granted a declaration that the 1998 consent decree was
valid and enforceable in Canada.
103
More particularly, the motions judge accepted the following terms of the
2003 Ohio contempt order as enforceable in Canada:
1. An accounting by Elta Golf to Pro Swing for
profits on all golf clubs sold bearing the Trident or Rident marks;
2. Provision by Elta Golf to Pro Swing of names
and contact information of Elta Golf’s suppliers of the Trident and Rident golf
clubs;
3. Provision by Elta Golf to Pro Swing of the
names and addresses of each purchaser of the Trident and Rident golf clubs or
components since entry of the Consent Decree;
4. Recall by Elta Golf and delivery to Pro Swing
of all counterfeit and infringing golf clubs or golf club components bearing
Trident or Rident marks or confusingly similar designations.
The motions
judge refused to enforce other parts of the February 2003 order on the ground
that they were not final and conclusive in nature. The issue is whether the
motions judge erred in these conclusions.
104
Elta Golf’s first defence was that all the relief should have been
refused on the ground that foreign non-money judgments are not enforceable at
common law. As discussed above, the common law prohibition on enforcement of
such judgments must be replaced by a principled approach which may permit the
enforcement of foreign non-money judgments in appropriate circumstances. Elta
Golf conceded that the general requirements for enforcement set out in Morguard
are met here. Elta Golf’s argument based on the common law rule against
enforcement should therefore be rejected.
105
Elta Golf’s second defence was that the orders should not be enforced
because they were penal in nature. The motions judge rejected this defence on
the ground that the orders were restitutionary in nature since they engaged a
private dispute between the parties and sought to compensate the wronged
party. In my view, this conclusion is unassailable.
106
I respectfully disagree with Deschamps J.’s characterization of the
contempt order as “penal”. This Court has long maintained a distinction between
civil and criminal contempt orders. In United Nurses of
Alberta v. Alberta (Attorney General), [1992] 1
S.C.R. 901, it was held at p. 943 that “[t]he purpose of criminal contempt was
and is punishment for conduct calculated to bring the administration of justice
by the courts into disrepute. On the other hand, the purpose of civil contempt
is to secure compliance with the process of a tribunal including, but not
limited to, the process of a court” (Sopinka J. dissenting, but not on
this point).
107
Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc.,
[1992] 2 S.C.R. 1065, which Deschamps J. cites as authority for the
“unified approach” to contempt orders, is clearly distinguishable. Vidéotron
dealt with the possibility of imprisonment for contempt under the Quebec Code
of Civil Procedure and the guarantees against compulsory self-incrimination
under the Canadian Charter of Rights and Freedoms and the Quebec
Charter of Human Rights and Freedoms. In my view, Vidéotron stands
for the principle that persons cited for contempt are entitled to
constitutional procedural protections vis-à-vis state coercion. It does
not transform the private, restitutionary or compensatory aspects of a civil
contempt order into public law.
108
Foreign criminal contempt orders are clearly penal and cannot be
enforced by Canadian courts. The same should not be said of foreign civil
contempt orders. When a foreign court issues a contempt order to secure
compliance with a private remedy flowing from a private dispute, the order
does not necessarily contain a “penal” aspect that should preclude enforcement
by Canadian courts. Some foreign orders for “civil” contempt could nevertheless
contain penal elements sufficient to disqualify them from enforcement by
Canadian courts; in other cases, the penal elements could be severable,
allowing Canadian courts to enforce the private elements only. The development
of these principles can be left for future cases.
109
There is nothing penal about the contempt order in this case. The terms
of the order are designed to reinforce the consent decree and to provide Pro
Swing with restitution for Elta Golf’s violations. The motions judge held that
the contempt order was restitutionary rather than penal. The Court of Appeal
did not interfere with this holding, and I see no reason to do so now.
110
The next issue concerns the finality and clarity of the orders held to
be enforceable in Ontario. The motions judge rejected parts of the U.S. order
on this ground, but found other portions sufficiently clear and complete and
thus enforceable. The Court of Appeal reversed this decision, finding that the
orders were too ambiguous:
In our view, the foreign orders in
question are ambiguous in respect of material matters. For example, the
critical issue of the scope of the extra‑territorial application of the
foreign orders is unclear. Do the foreign orders mean that the appellant is
enjoined from purchasing, marketing, selling or using infringing golf clubs
within the jurisdiction of the U.S. District Court, or do they mean that the
appellant is enjoined from doing those things anywhere in the world? [para.
11]
Elta Golf did
not appear before us to defend the Court of Appeal’s conclusion. In my view,
the record supports the findings of the motions judge, and the Court of Appeal
was wrong to reverse her decision.
111
Finality, as discussed above, refers not to whether the order represents
the ultimate step in the proceeding, but rather to whether the order is
incomplete and not in need of future elaboration. This was how the motions
judge understood it: “A domestic court does not wish to be faced with enforcing
a foreign judgment that is later changed” (para. 18).
112
I am satisfied that the portions of the judgment that the motions judge
held to be enforceable in Ontario are final in this sense. The orders for the
accounting and the production of records, names, golf clubs and golf club
components represent complete and finite obligations. It would be impossible
to add more precision. As discussed above, finality does not mean that no
further steps can be taken. Compliance with the order for an accounting and
production of records might lead the United States court to issue an order
quantifying damages, for example. However, this does not detract from the
finality and certainty of the orders as enforced in Canada.
113
If Elta Golf were to refuse to comply with a final order enforceable in
Ontario, the remedy would be an application for an order that Elta Golf is in
contempt of court. In theory, issues could arise as to whether the accounting
or production is complete. This in turn could involve the Ontario courts in
supervising the accounting or production. On the other hand, the prevalence of
cross-border commerce suggests that in the absence of an indication that the
accounting or production of names, records and goods may raise problems, the
order for enforcement of the foreign order should not be refused.
114
Throughout these proceedings, Elta Golf has never suggested that
accounting or production will pose difficulties, and has confined its defence
to more general points. In these circumstances, the hypothetical possibility
of the need for future court supervision should not preclude the recognition of
the foreign order. There is therefore no reason to displace the motions
judge’s conclusions that the portions of the order she accepted were final.
115
The motions judge also found the order to be sufficiently clear.
On the question of its territorial scope, she held: “By its
terms, it is clear that extraterritorial application was intended” (para. 16).
The Court of Appeal disagreed and found that ambiguity in the orders on this
point made them unenforceable. Pro Swing argues that this conclusion is not
supported by the record and that Elta Golf understood that the consent decree
was intended to be enforced extraterritorially. As Elta Golf did not appear
before this Court, we are left to evaluate the Court of Appeal’s conclusion on
the basis of the record and the findings of the motions judge.
116
An examination of the content of the consent decree and the contempt
order reveals no ambiguities about their extraterritorial application. First,
the decree is cast in general terms. There are no explicit limits on the
territory in which it applies, and nothing to suggest such limits were
contemplated. Second, the orders were premised on the operation of an
Ontario-based Website by Elta Golf and so can be seen as pre-supposing
extraterritorial application. Finally, and most compelling, the terms include
the surrender of Elta Golf’s offending inventory and all promotional, packaging
or other materials containing the mark in question or confusingly similar
marks. These terms only make sense if the prohibition was meant to be
universal in application. An outright surrender of inventory and marketing
materials is incompatible with sales of any kind, not simply with sales within
a particular jurisdiction. These considerations undermine the Court of
Appeal’s conclusion that the order was ambiguous.
117
My colleague Deschamps J. acknowledges the extraterritoriality of the
orders requiring Elta Golf to surrender inventory, but she declines to infer
this same extraterritoriality in the orders enjoining Elta Golf from purchasing
and selling the infringing goods. For the injunction to apply
extraterritorially, Deschamps J. would require “explicit terms making the
settlement agreement a worldwide undertaking” (para. 56). There is no need for
such an artificially high standard when a plain reading of the decree makes its
extraterritoriality sufficiently clear.
118
It might be argued that the words “any other confusingly similar
designations” are ambiguous. To be sufficiently clear, however, an order need
not describe in detail every hypothetical violation of its terms. There is no
argument before us that determining confusingly similar designations raises
difficulties in this case. As already noted, enforcement concerns must be
apparent on the face of the order or arise from the factual or legal context.
No such concerns exist here.
119
It may be that the Court of Appeal was concerned that the contempt order
was founded on a violation of a U.S. trademark, raising questions about whether
that trademark extends to Canada. However, this issue is resolved by the terms
of the order itself. As noted above, the order is clearly enforceable in
Canada. None of the restrictions on enforcement apply. The principle of
separation of judicial systems discussed above prevents the court in the
enforcing jurisdiction, Ontario, from entering into the substantive merits of
the case that led to the consent decree. Except in cases of fraud or where a
judgment is contrary to natural justice or public policy, the court considering
the issue of the enforcement of a foreign judgment cannot look behind its
terms: Beals.
120
Finally, I address briefly the public policy concerns raised by
Deschamps J. This Court has upheld the quasi-constitutional nature of privacy
legislation as it applies to federal government authorities: Lavigne v.
Canada (Office of the Commissioner of Official Languages), [2002] 2 S.C.R.
773, 2002 SCC 53, at para. 24. It is unclear whether the same status should be
accorded to legislation governing information collected by private
organizations such as Elta Golf. In this regard, I would note s. 7(3) (c)
of the Personal Information Protection and Electronic Documents Act,
S.C. 2000, c. 5 , which allows private organizations to disclose personal
information without the knowledge or consent of the individual if this
disclosure is “required to comply with a subpoena or warrant issued or an order
made by a court, person or body with jurisdiction to compel the production of
information, or to comply with rules of court relating to the production of
records”.
121
I agree with Deschamps J. that “the order enjoining Elta to provide all
credit card receipts, accounts receivable, contracts, etc. could be
problematic” (para. 60). To raise this issue at this stage however, when it
was never argued before this or any other court, would amount to an
inappropriate transformation of the proceedings. Furthermore, a majority of
this Court has held that the public policy defence should be given a narrow
application: Beals, at para. 75, per Major J. It may be
necessary to revisit this holding in the context of the enforcement of non-monetary
judgments, but it is not necessary to do so here. Finally, if the offending
parts of the contempt order cannot be enforced for public policy reasons, they
can be severed. The public policy issue therefore should not determine the
outcome of this appeal.
122
I conclude that the Court of Appeal erred in holding that the portions
of the orders enforced by the motions judge could not be enforced in Ontario
because of ambiguity about the scope of their extraterritorial application.
5. Conclusion
123
For the foregoing reasons, I would allow the appeal, reverse the
decision of the Court of Appeal and reinstate the decision of the motions
judge.
APPENDIX
A
Consent
Decree
Upon consideration of the parties’ consent to judgment
being entered against defendant Elta Golf Inc. (“ELTA”) in this matter, NOW
THEREFORE, IT IS STIPULATED AND AGREED by and between plaintiff Pro Swing, Inc.
(“PRO SWING”) and defendant ELTA that in connection with the settlement of this
action, ELTA agrees to the following:
1. PRO SWING is the owner of U.S. Trademark
Registration No. 1,941,922 for the mark TRIDENT in international class 28 which
issued on December 19, 1995 (hereinafter referred to as the “MARK”) for use in
conjunction with golf clubs which it sells throughout the United States of
America and overseas;
2. The MARK is valid and through use has come to
identify PRO SWING as the source for golf clubs bearing the MARK;
3. ELTA has previously, without consent of PRO SWING,
used and advertised golf clubs and/or golf club heads bearing the name RIDENT,
a confusingly similar variation of the MARK;
4. ELTA has represented to PRO SWING the nature and
extent of its use and advertising of golf clubs and/or golf club heads bearing
the name RIDENT including the quantities in inventory or purchased from Third
Parties, if any;
5. PRO SWING is, in entering this settlement, relying
upon the representations of ELTA as to its use of RIDENT on golf clubs and/or
golf club heads which representations are material hereto.
6. Each party will bear its own costs and attorney’s
fees. The Court shall retain jurisdiction over the parties for the purpose of
enforcing this consent decree. The parties agree not to contest jurisdiction
in any action in this Court to enforce this settlement.
7. ELTA is enjoined from purchasing, marketing,
selling or using golf clubs or golf club components bearing the MARK or other
confusingly similar variations of the MARK, including but not limited to
RIDENT, RIDEN and/or TRIGOAL, other than on golf clubs or golf club components
purchased by ELTA from PRO SWING or its authorized distributors.
8. Within ten (10) days of execution of this order
ELTA will surrender and deliver to PRO SWING’s counsel, postage prepaid, all
infringing golf clubs and/or golf club components, if any, (TRIDENT, RIDENT,
RIDEN and/or TRIGOAL) in its possession, along with all copies of any
advertising, packaging, promotional or other materials, if any, containing the
MARK or any confusingly similar mark, including but not limited to RIDENT,
RIDEN and/or TRIGOAL.
9. This consent decree is binding upon the parties,
as well as their respective shareholders, directors, officers, employees,
representatives, agents, predecessors, successors, parents, subsidiaries,
affiliates, assigns, and all other related business entities.
In consideration of the foregoing and conditioned upon
compliance by defendant ELTA with the various terms and provisions of the
settlement provided for above, this action shall be discontinued and dismissed
with prejudice only with respect to defendant ELTA.
APPENDIX
B
Contempt
Order
Based upon the foregoing findings and conclusions, IT
IS ORDERED that:
1. The Consent Decree entered on July 31, 1998
remains in full force and effect, and the Court retains jurisdiction to enforce
the Consent Decree and this Order.
2. Elta Golf is again permanently enjoined from
purchasing, marketing, selling or using golf clubs or golf club components
which bear the TRIDENT mark, or any other confusingly similar designations,
including but not limited to RIDENT, RIDEN and/or TRIGOAL, other than golf
clubs or golf club components purchased by Elta Golf from Pro Swing.
3. Elta Golf is to make an accounting to Pro Swing of
all golf clubs and/or golf club components it has sold which bear the TRIDENT
or RIDENT marks, or any other confusingly similar designation, since the entry
of the Consent Decree. Elta Golf shall provide this accounting to Pro Swing
within fourteen (14) days from the date of this Order. The accounting shall
include a sworn statement of account of all gross and net income derived from
sales of TRIDENT and RIDENT golf clubs or golf club components, together with all
business and accounting records relating to these sales, since the entry of the
Consent Decree to present, including but not limited to:
a. records of all sales, credit card receipts,
accounts receivable and contracts for all sales of golf clubs or golf club
components bearing the TRIDENT or RIDENT marks;
b. records of all expenses related to all sales of
golf clubs or golf club components bearing the TRIDENT or RIDENT marks; and,
c. any and all balance sheets, profit and loss
statements, cash flow reports or other accounting reports or summaries.
4. Pro Swing is hereby awarded compensatory damages
based upon the profits derived by Elta Golf through its sales of golf clubs or
golf club components bearing the TRIDENT or RIDENT marks, or any other confusingly
similar designation, since the entry of the Consent Decree. Pro Swing shall
provide its proposed damage award to the Court after Elta Golf’s compliance
with the accounting requirements set forth in Section III(3) of this Order.
5. Pro Swing is hereby awarded costs and attorneys
fees incurred herein. Plaintiff shall submit a cost bill and fee petition
within fourteen (14) days of entry of the money judgment set forth in Section
III(4) of this Order.
6. Elta Golf is to surrender for destruction, all
golf clubs or golf club components which bear the TRIDENT or RIDENT marks, or
any other confusingly similar designation. Elta Golf shall forward these golf
clubs or golf club components to Pro Swing’s counsel (Hahn Loeser & Parks
LLP, 1225 West Market Street, Akron, Ohio 44313-7188) within fourteen (14) days
from the date of this Order.
7. Elta Golf is to provide Pro Swing with the names
and all contact information of Elta Golf’s suppliers of the TRIDENT and RIDENT
golf club components. Elta Golf shall provide this information within fourteen
(14) days from the date of this Order.
8. Elta Golf is to provide Pro Swing with the names
and addresses of each purchaser of the TRIDENT and RIDENT golf clubs or golf
club components sold by Elta Golf since the entry of the Consent Decree. Elta
Golf shall provide this information within fourteen (14) days from the date of
this Order. Elta Golf is to pay Pro Swing the costs of a corrective mailing to
each of these consumers.
9. Elta Golf is to recall all counterfeit and
infringing golf clubs or golf club components which bear the TRIDENT and RIDENT
marks, or any other confusingly similar designation. Elta Golf shall forward
all such golf clubs or golf club components to Pro Swing’s counsel within
fourteen (14) days of the receipt of each of these items.
Appeal dismissed, McLachlin C.J. and Bastarache and Charron JJ. dissenting.
Solicitors for the appellant: Siskind,
Cromarty, Ivey & Dowler, London.