#5150 - Morguard Investment V. De Savoye - Conflict of Laws BCL

Morguard Investment v. De Savoye

Facts

The respondents, Morguard Investments Limited and Credit Foncier Trust Company, became mortgagees of land in Alberta in 1978. The appellant, Douglas De Savoye, who then resided in Alberta, was originally guarantor but later took title to the land and assumed the obligation of mortgagor. Shortly afterwards he moved to British Columbia, and he has not resided or carried on business in Alberta since. The mortgages fell into default and the respondents brought action in Alberta. The appellant was served with process in the action by double registered mail addressed to his home in British Columbia pursuant to orders for service by the Alberta court in accordance with the rules for service outside its jurisdiction. There are rules to the same effect in British Columbia.

The appellant took no steps to appear or to defend the action. There was no clause in the mortgage by which he agreed to submit to the jurisdiction of the Alberta court, and he did not attorn to its jurisdiction.

The respondents obtained judgments nisi in the foreclosure action. At the expiry of the redemption period, they obtained "Rice orders" against the appellant. Under these orders, a judicial sale of the mortgaged properties to the respondents took place and judgment was entered against the appellant for the deficiencies between the value of the property and the amount owing on the mortgages. The respondents then each commenced a separate action in the British Columbia Supreme Court to enforce the Alberta judgment for the deficiencies.

Holding

However that may be, there is really no comparison between the interprovincial relationships of today and those obtaining between foreign countries in the 19th century. Indeed, in my view there never was, and the courts made a serious error in transposing the rules developed for the enforcement of foreign judgments to the enforcement of judgments from sister provinces. The considerations underlying the rules of comity apply with much greater force between the units of a federal state, and I do not think it much matters whether one calls these rules of comity or simply relies directly on the reasons of justice, necessity and convenience to which I have already adverted.

These arrangements themselves speak to the strong need for the enforcement throughout the country of judgments given in one province. But that is not all. The Canadian judicial structure is so arranged that any concerns about differential quality of justice among the provinces can have no real foundation. All superior court judges — who also have superintending control over other provincial courts and tribunals — are appointed and paid by the federal authorities. And all are subject to final review by the Supreme Court of Canada, which can determine when the courts of one province have appropriately exercised jurisdiction in an action and the circumstances under which the courts of another province should recognize such judgments.

For present purposes it is sufficient to say that, in my view, the application of the underlying principles of comity and private international law must be adapted to the situations where they are applied, and that in a federation this implies a fuller and more generous acceptance of the judgments of the courts of other constituent units of the federation. In short, the rules of comity or private international law as they apply between the provinces must be shaped to conform to the federal structure of the Constitution.

Foreign court appropriately exercised jurisdiction – “real and substantial connection”

A similar approach should, in my view, be adopted in relation to the recognition and enforcement of judgments within Canada. As I see it, the courts in one province should give full faith and credit, to use the language of the United States Constitution, to the judgments given by a court in another province or a territory, so long as that court has properly, or appropriately, exercised jurisdiction in the action. I referred earlier to the principles of order and fairness that should obtain in this area of the law.

Traditional grounds fall within “real and substantial connection”: The question that remains, then, is: When has a court exercised its jurisdiction...