Application of the appropriate means test in an action to enforce a foreign judgment

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In Grayson Consulting Inc v Lloyd, 2019 ONCA 79, the Court of Appeal considered when a proceeding would be an “appropriate means to remedy a loss” in the context of a claim commenced to enforce a foreign judgment where a Mareva injunction had also been granted.

Grayson obtained default judgment against the respondent in South Carolina on August 20, 2014 (“SC Judgment”). While certain appeals were taken against certain other defendants in the initial action (final appellate decision took effect on March 29, 2016) no appeal was taken from the SC Judgment. In December 2017, Grayson commenced proceedings in Ontario in respect of the SC Default Judgment and also obtained a Mareva injunction against the defendant. The defendant successfully brought a motion to set aside the Mareva injunction, wherein it was held that the action to enforce the SC Judgment was commenced outside the time period prescribed by the Limitations Act, 2002

Grayson appealed. It claimed that the motions judge made two errors in setting aside the Mareva injunction: (1) he incorrectly held that the limitation period for an action to enforce the default judgment began to run once the appeal period had expired; and (2) he erred in holding that Grayson ought to have known that Lloyd had exigible assets in Ontario as of the date of the SC Default Judgment.

The Court of Appeal dismissed the appeal. It clarified that reference to whether proceedings “have run their course” was made in respect of the status of the foreign proceedings as between the foreign judgment creditor and the foreign judgment debtor, not as between the foreign judgment creditor and any other party to the foreign litigation. Thus, the fact that an appeal by others who were also parties to the South Carolina litigation that the defendant was involved in proceeded after the issuance of the SC Judgment was inconsequential to the commencement of the limitation period. Accordingly, because neither Grayson nor Lloyd appealed the SC Judgment, the time under the Limitations Act, 2002 began to run upon the expiry of this 30-day appeal period.

With respect to the second ground, the Court of Appeal agreed with the motions judge – that Grayson was in possession of enough information about the defendant’s real and substantial connection to Ontario that it ought to have taken investigatory steps once the SC Judgment became final, or shortly thereafter. Indeed, Grayson knew that Lloyd lived and worked in Ontario. The Court held that “one would expect a reasonable judgment creditor to take prompt steps to enforce a judgment in the jurisdiction where the judgment debtor resides when the time to appeal the foreign judgment expires or, if an appeal is taken, when the appeal is decided.” Accordingly, when the 30-day period to appeal the SC Judgment expired, a proceeding to enforce the judgment in Ontario was an “appropriate means” to remedy Grayson’s loss pursuant to s. 5(1)(a)(iv) of the Limitations Act, 2002. Since the enforcement proceeding was statute-barred it was appropriate for the Mareva injunction to be set aside on the basis that Grayson had failed to demonstrate a strong prima facie case.

Co-authored by Stuart Ruffolo