Pro Swing Inc. v. Elta Golf Inc.

Pro Swing Inc. v. Elta Golf Inc.
Collection
Supreme Court Judgments
Date
2006-11-17
Neutral citation
2006 SCC 52
Report
[2006] 2 SCR 612
Case number
30529
Judges
McLachlin, Beverley; Bastarache, Michel; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise
On appeal from
Ontario
Subjects
International law
Notes
SCC Case Information: 30529
Decision Content
SUPREME COURT OF CANADA
Citation: Pro Swing Inc. v. Elta Golf Inc., [2006] 2 S.C.R. 612, 2006 SCC 52
Date: 20061117
Docket: 30529
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