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CIVIL PROCEDURE - Judgments and orders - Enforcement - Registering of judgments or orders

Tuesday, March 27, 2018 @ 8:50 AM  


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Appeal by the plaintiff from a decision setting aside an ex-parte order obtained by the appellant registering a US judgment for enforcement against the respondent in BC and declining to allow the judgment to be registered de novo. The respondent had advanced loans to three BC companies incorporated by N in furtherance of a Ponzi scheme she carried on through US companies. The BC companies were dissolved for failure to make required filings. There was no evidence that any of these companies carried on any business aside from bringing in funds for use in the Ponzi scheme. The US companies went bankrupt. The US Bankruptcy Court appointed the appellant as trustee in bankruptcy of the US companies. The appellant rejected the respondent’s proof of claim and took the position that by filing it, he had attorned to the jurisdiction of the US court. The appellant then filed an Adversary Complaint in the bankruptcy proceeding against several defendants, including the respondent. He served the respondent via registered mail. The respondent never received the document. The appellant was aware throughout that the respondent was never served. At the ex parte desk order application, the appellant tendered in support an affidavit deposing that the respondent had been served with the Adversary Complaint. The respondent filed a defence and eventually judgment was entered against him in the District Court. In setting aside the ex-parte order, the chambers judge found that the appellant had provided inaccurate information when he represented that the respondent had been served with the originating process. The judge refused to register the US judgment on a de novo basis on the ground that the US judgment was based on a consolidation order that did not include the BC companies and also inferred that the respondent’s right to counsel had been impacted when the US judge required the respondent to choose between discharging his lawyer familiar with the case or instruct his US counsel to accept service.

HELD: Appeal allowed. The chambers judge did not err in finding that full and frank disclosure was not made regarding service but erred in not allowing the judgment to be registered de novo. The chambers judge mischaracterized the US Court’s ruling which did not interfere with the respondent’s choice of counsel. The choice put to the respondent by the US judge was clearly not intended to force him to choose a different attorney, but to ensure that the respondent was either properly before the Court or that he ceased participating in the proceeding. The respondent’s attempts to take part through counsel while at the same time objecting to improper service, venue or jurisdiction could not continue. The chambers judge also erred in concluding that the consolidation order did not include the BC companies. The Order was approved and contained no term dismissing the BC companies from the consolidation. All the evidence before the Bankruptcy Court and District Court with respect to the BC Companies was that they were simply vehicles used to take in funds from Canadian “investors” and that those funds were taken by N and used in her scheme without regard for separate corporate entities. The purpose of the Consolidation Order was to combine the assets and liabilities of all of the participating entities into a single pool that would be made available to all the creditors of all the entities.

Kriegman v. Dill, [2018] B.C.J. No. 399, British Columbia Court of Appeal, M.V. Newbury, L. Fenlon and G. Dickson JJ.A., March 9, 2018. Digest No. TLD-March262018006