Supreme Court Judgments

Decision Information

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 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.

 

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