Foreign Judgments, the Common Law and the Constitution:
De Savoye v. Morguard Investments Ltd
H. Patrick Glenn*
The Supreme Court of Canada, in De
Savoye v. Morguard Investments Ltd, has
expanded the grounds for recognition of for-
eign judgments at common law by adopting a
test of whether there was a “real and substan-
tial connection” between the action or dam-
ages suffered and the foreign, adjudicating
jurisdiction. The author examines the histori-
cal, practical and constitutional reasons for the
change, and draws attention to the likely con-
sequences of the decision.
Dans l’arr& De Savoye c. Morguard Invest-
ments Ltd, la Cour supreme du Canada a 61argi
les motifs de reconnaissance des decisions
6trang~res en common law par l’adoption d’un
test de connexit6 (<< lien substantiel et reel >>)
entre l’action ou le dommage encouru et la
juridiction 6trangre. L’auteur examine les jus-
tifications historiques, pratiques et constitu-
tionnelles de cette 6volution et discute des
consequences possibles de cette decision.
* Peter M. Laing Professor of Law, Faculty of Law and Institute of Comparative Law, McGill
University.
McGill Law Journal 1992
Revue de droit de McGill
To be cited as: (1992) 37 McGill L.J. 537
Mode de citation: (1992) 37 R.D. McGill 537
McGILL LAW JOURNAL
[Vol. 37
Canadian courts have not been generous in recognizing foreign judgments,
or even the judgments of the courts of other Canadian provinces. In De Savoye
v. Morguard Investments Ltd’ the Supreme Court of Canada chose to revise in
a significant manner the grounds for recognition of foreign judgments at com-
mon law, and the decision has important implications for both interprovincial
and international litigation. In the future, the jurisdiction of an extra-provincial
court will be recognized if there is a “real and substantial connection” between
the action or damages suffered and the adjudicating jurisdiction.2 It is clear from
the judgment that such a “real and substantial connection” can be established in
many ways, far surpassing the previous and limited grounds for recognition of
foreign jurisdiction. The result will be greater territorial effectiveness of judg-
ments, though this will in itself give rise to a number of attendant problems.
There were three historical and practical reasons for the reluctance of
Canadian courts to recognize extra-provincial judgments. The first was the tra-
ditional bias of both the common and civil law in looking to the defendant’s
location as the natural forum for litigation. Expressed in terms of the sovereign’s
power over the defendant, as evidenced by service of the writ within the juris-
diction, or through the maxim actor sequiturforum rei, the attitude of both legal
traditions was to treat the as yet uncondemned defendant as the favoured party?
Any unjustified bias in this respect, as evidenced by an eventual judgment in
favour of the plaintiff, would be compensated by the resulting ease of execution.
Actions brought outside the defendant’s natural forum should therefore not be
recognized; they required a party presumed innocent to assume a major burden
in resisting a claim, and gave rise to inevitable difficulties of recognition. More-
over, since most jurisdictions limited their own jurisdiction to cases where the
defendant was served or domiciled within their territory, there was no asymme-
try between their own territorial claims and those recognized as appropriate on
the part of foreign tribunals.
These traditional reasons for jurisdictional reticence were considered
appropriate for adoption in the Canadian Confederation in the nineteenth cen-
tury. In his judgment on behalf of the Court, Justice La Forest states that the
1[1990] 3 S.C.R. 1077, 76 D.L.R. (4th) 256 [hereinafter De Savoye cited to S.C.R.]. For com-
mentary on the decision see V. Black & J. Swan, “New Rules for the Enforcement of Foreign Judg-
ments: Morguard Investments Ltd v. De Savoye” (1991) 12 Advocates’ Q. 489; J. Blom, “Conflict
of Laws – Enforcement of Extraprovincial Default Judgment – Real and Substantial Connection:
Morguard Investments Ltd v. De Savoye” (1991) 70 Can. Bar Rev. 733; P. Finkle & S. Coakeley,
“Morguard Investments Limited: Reforming Federalism from the Top” (1991) 14 Dal. L.J. 340; for
comment on the earlier decision of the British Columbia Court of Appeal, see V. Black, “Enforce-
ment of Judgments and Judicial Jurisdiction in Canada” (1989) 9 Oxford J. Legal Stud. 547; J.
Blom, “Conflict of Laws – Enforcement of Extraprovincial Default Judgment – Reciprocity of
Jurisdiction: Morguard Investments Ltd v. De Savoye” (1989) 68 Can. Bar Rev. 359.
2See infra, note 19.
3For the development of the common law tradition based upon personal service within the juris-
diction, see P.M. North & J.J. Fawcett, Cheshire & North’s Private International Law, 11th ed.
(London: Butterworths, 1987) c. 11, esp. at 185-87; for reception in common law Canada, see J.G.
McLeod, The Conflict of Laws (Calgary: Carswell, 1983) at 79-84. On the Roman, canonical and
civilian origins of actor sequitur, see H. Solus & R. Perrot, Droit judiciaire privi, vol. II, La com-
p6tence (Paris: Sirey, 1973) at 288-94.
1992]
FOREIGN JUDGMENTS & THE CONSTITUTION
539
English historical approach was “unthinkingly” adopted by the common law
courts of this country.4 With respect, this language appears to be too harsh.
While Canada had become a country in 1867, the distances between its constit-
uent parts were to be greater than the distances between many European coun-
tries. The Canadian court structure, unlike that of the United States, was not fed-
eralized, and appeals from superior provincial courts of general jurisdiction
could be taken directly to the Judicial Committee of the Privy Council until the
mid-twentieth century, completely bypassing the Supreme Court of Canada.5 No
“full faith and credit clause” was included in the British North America Act,
1867,6 and the federal presence was ensured in judicial matters only through the
federal judicial appointing power and the possibility of creating, by statute,
courts for the better administration of the laws of Canada. These federal powers
came to be very important, but the autonomy of the provincial superior courts
was perhaps the strongest reason for speaking of a Canadian Confederation, as
opposed to Federation, and the political will to ensure a high level of judicial
cooperation and collaboration appears to have been conspicuously lacking. In
contemporary parlance, the institutional structure of nineteenth century Canada
was dominated by a principle of “subsidiarity,” in which only matters incapable
of resolution at the local level could be elevated to a higher level of government
or collaboration. Existing rules of recognition were apparently seen as entirely
appropriate for these circumstances.
The third reason for the disinclination to expand the rules of recognition for
foreign judgments is the universal and practical one that it is easier to begin law-
suits than to end them. A convincing case has thus recently been made that the
dominant consideration in choice of forum is not ease of execution or even
applicable law, but the civil procedure which will be used during the process of
reaching a probable settlement.7 It is more appropriate to think in terms of “set-
tlement shopping” than in terms of “forum shopping.” Rules of domestic juris-
diction had therefore first to be broadened; changing the rules for recognition
of foreign judgments was necessary only for a much smaller number of cases,
those which resisted the settlement process.
At the end of the twentieth century these reasons have lost much, though
not all, of their force. Both common and civil law jurisdictions have seen great
expansion in their grounds of domestic jurisdiction, to facilitate the cause of
plaintiffs.’ The expansion in domestic jurisdiction has been accompanied by a
4Supra, note I at 1095.
5For the statistics relating to such appeals, see J.G. Snell & F. Vaughan, The Supreme Court of
Canada [: History of the Institution (Toronto: The Osgoode Society, 1985) at 180. Appeals from
provincial jurisdictions directly to the Judicial Committee of the Privy Council outnumbered those
from the Supreme Court of Canada to the Judicial Committee until the 1940s.
6Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3 (formerly British North America Act, 1867).
7F.K. Juenger, “Forum Shopping, Domestic and International” (1989) 63 Tulane L. Rev. 553 no-
tably at 573-74.
81n the common law provinces this has occurred through the legislative or rule-making process.
See, for example, Rule 17 of the Ontario Rules of Civil Procedure, 0. Reg. 711/89, providing eigh-
teen grounds of domestic territorial jurisdiction. In Quebec it has been a largely jurisprudential
development. See, for example, Wabasso Ltd v. The National Drying Machinery Co., [1981] S.C.R.
578, 19 C.C.L.T. 177, 38 N.R. 224; Air Canada v. McDonnell Douglas Corp., [1989] 1 S.C.R.
REVUE DE DROIT DE McGILL
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great increase in transborder circulation of goods, services and people, and an
increase in transborder regulatory institutions. In Canada, the Supreme Court
has gradually come to be accepted as a national institution, though still deprived
of a firnm constitutional base. The language of federation has in considerable
measure supplanted that of confederation. The increase in transborder litigation
has yielded more judgments susceptible of extra-provincial enforcement, and
the possibility of such enforcement within Canada has been relied upon by the
Supreme Court as an important reason for discouraging arbitrary seizure of
defendants’ assets prior to judgment.’
The financial difficulties of Mr. De Savoye therefore provided an excellent
occasion for judicial re-statement of the rules for recognition of foreign judg-
ments. De Savoye, while a resident of Alberta, became a guarantor of a mort-
gage debt owed to Morguard Investments and later took title to the lands,
assuming the obligations of mortgagor. He then established residence in British
Columbia and was served there by Morguard, which eventually obtained default
judgments in Alberta against De Savoye for the deficiencies between the value
of the property sold in foreclosure proceedings and the amount owing on the
mortgages. De Savoye had not agreed to submit to the jurisdiction of the Alberta
court. Morguard sued in British Columbia on the Alberta judgments for the defi-
ciencies. After the British Columbia Supreme Court,”0 in a judgment upheld on
appeal by the British Columbia Court of Appeal,” gave judgment on behalf of
Morguard, De Savoye appealed to the Supreme Court, on the grounds that the
common law permitted recognition of a foreign judgment in essentially only
two circumstances: (i) where the defendant was present in the original jurisdic-
tion when the action was commenced there; and (ii) the defendant had volun-
tarily agreed to submit to the jurisdiction of the original jurisdiction.
Speaking for the unanimous Court, 2 La Forest J. describes previous
English and Canadian case law as firmly anchored in a principle of territorial-
ity 3 which has become inappropriate for the modem world. He states that “the
business community operates in a world economy” and that it is correct to speak
of a “world community even in the face of decentralized political and legal
power.”‘ 4 Accommodation of the flow of wealth, skills and people across state
1554. The extent of the shift in thinking is evidenced by the language of Justice La Forest (supra,
note 1 at 1103):
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 what-
ever 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?
These remarks are made, however, in the context of the actual litigation, in which the defendant
had left the jurisdiction in which the cause of action had arisen, to establish himself elsewhere.
9Aetna Financial Services Ltd v. Feigelman, [1985] 1 S.C.R. 2, 15 D.L.R. (4th) 161, commented
on by H. Patrick Glenn, (1986) 64 Can. Bar Rev. 382.
10(1988] 1 W.W.R. 87, 18 B.C.L.R. (2d) 262.
“[1988] 5 W.W.R. 650, 27 B.C.L.R. (2d) 155.
12The Court was composed of Dickson C.J. (Chief Justice at the time of hearing), La Forest,
L’Heureux-Dub6, Sopinka, Gonthier, Cory and McLachlin JJ.
13Supra, note 1 at 1095.
14lbid. at 1098.
1992]
FOREIGN JUDGMENTS & THE CONSTITUTION
lines has therefore become imperative, and more generous rules adopted in the
United States and the European Economic Community have operated “to the
general advantage of litigants.”‘ 5 Such general considerations are reinforced
within Canada by various constitutional and “sub-constitutional” arrangements
(interprovincial mobility, federally appointed judges, a national code of legal
ethics, interprovincial law firms), such that “a regime of mutual recognition of
judgments across the country is inherent in a federation.”‘ 6
Having thus reached the level of “integrating … constitutional arrange-
ments,” Justice La Forest is led to ask whether a “full faith and credit clause”
must be read into the constitution or whether the federal Parliament is empow-
ered to create a legislative regime for the recognition and enforcement of judg-
ments throughout Canada. 7 He declines to “go that far,” however, since the case
had not been argued on that basis, and concludes rather that:
the underlying principles of comity and private international law must be adapted
to the situations where they are applied, and that in a federation this implies a
fuller and more generous acceptance of the judgments of the courts of other con-
stituent units of the federation.’ 8
The general criterion of a “real and substantial connection” between the
original adjudicating jurisdiction and the action or damages suffered should thus
be used as the principal means of identifying foreign judgments susceptible of
local recognition and enforcement. 9 The test of a “real and substantial connec-
tion” had been previously adopted by the House of Lords in Indyka v. Indyka 0
in relation to recognition of foreign divorce decrees.
The choice of the Supreme Court to adapt the rules of the common law as
informed and limited by the constitution appears, with respect, to present clear
advantages over the imposition of constitutional or federal legislative norms. It
allows some (tolerable) diversity in the articulation of provincial rules of juris-
diction and recognition, whether in terms of content or sources of law. Quebec
may therefore codify specific grounds of recognition without seeing a broad
jurisprudential principle given ultimate authority. Other provinces remain enti-
I5lbid.
‘6%bid. at 1100.
7Tbid.
8Ibid. at 1101.
191bid at 1108. La Forest J. refers to the “real and substantial connection” between the damages
suffered by Morguard and the adjudicating jurisdiction (ibid.). In the next paragraph he refers to
the test of a “real and substantial connection with the action (ibid.).” The two formulations could
lead to different results. The “real and substantial connection” test is chosen in preference to that
of “reciprocity,” as developed in the judgment of Seaton J.A. in the British Columbia Court of
Appeal, supra, note 11. The test of reciprocity would call for recognition where the jurisdiction
assumed by the foreign court corresponded with a jurisdiction which would have been assumed
by the local court in similar circumstances. La Forest J. refers to the reciprocity test as not “pro-
viding an answer to the difficulty regarding in personam judgments given in other provinces”
(supra, note 1 at 1104), apparently because it provides no means of limiting overly broad claims
of jurisdiction made by some jurisdictions, and would simply convert such broad claims to local
jurisdiction into equally broad criteria for recognition of foreign judgments.
20[1969] 1 A.C. 33.
McGILL LAW JOURNAL
[Vol. 37
tled to vary or supplement the common law as they consider appropriate. Invo-
cation of an implicit and unarticulated constitutional norm would leave much to
be decided in terms of its content, creating an unnecessary principle of uniform-
ity while leaving a great deal of underlying uncertainty. Most importantly, reli-
ance on the constitution would restrict the effect of more liberal recognition
rules to interprovincial cases, while the reasoning of La Forest J. clearly points
to the extension of such rules to foreign judgments as well. De Savoye has
already been applied in two cases in British Columbia to permit recognition of
U.S. judgments which would have been refused under previous rules.2
The constitution clearly remains relevant, however, to exorbitant provin-
cial claims to jurisdiction and to illiberal efforts to re-structure recognition rules.
La Forest J. states clearly that “if the courts of one province are to be expected
to give effect to judgments given in another province, there must be some limits
to the exercise of jurisdiction against persons outside the province.”2 He cites
with approval the judgment of Gurrin J. of the Quebec Superior Court in
Dupont v. Taronga Holdings Ltd,’ to the effect that “service exjuris must mea-
sure up to constitutional rules.”‘ 4 Present jurisdictional rules of Prince Edward
Island and Nova Scotia, permitting service exjuris upon any defendant within
North America regardless of connection of the case with the province, are
described as “very broad indeed.”‘
In the same manner, according to Justice La Forest, illiberal provincial
efforts to exclude recognition of foreign judgments are subject to constitutional
scrutiny, given the “inherent” necessity of some regime of mutual recognition
of judgments across the country, requiring “a fuller and more generous accept-
ance of the judgments of the courts of other constituent units of the federa-
tion.”’26 The threshold constitutional requirements relating to the conditions of
recognition of extra-provincial judgments may, moreover, extend to foreign
judgments. La Forest J. cites Professors von Mehren and Trautman to the effect
that
[t]he ultimate justification for according some degree of recognition is that if in
our highly complex and interrelated world each community exhausted every pos-
sibility of insisting on its parochial interests, injustice would result and the normal
patterns of life would be disrupted.27
Constitutional scrutiny of conditions of recognition of foreign judgments would
presumably be founded on section 7 of the Canadian Charter of Rights and
Freedoms,” as opposed to limitation of provincial jurisdiction to questions of
21CIarke v. Lo Bianco (1991), 59 B.C.L.R. (2d) 334, 84 D.L.R. (4th) 244 (S.C.); Minkler & Kirs-
chbaum v. Sheppard (1991), 60 B.C.L.R. (2d) 360 (S.C.).
22Supra, note 1 at 1104.
23(1987] R.J.Q. 124, 49 D.L.R. (4th) 335.
24Supra, note 1 at 1109.
251bid. at 1104.
261bid. at 1101.
271bid. at 1096-97, citing A.T. Von Mehren & D.T. Trautman, “Recognition of Foreign Adjudi-
cations: A Survey and a Suggested Approach” (1968) 81 Harv. L. Rev. 1601 at 1603.
28Part I of the Constitution Act, 1982, being Schedule B of the Canada Act 1982 (U.K.), 1982,
c. 11.
1992]
FOREIGN JUDGMENTS & THE CONSTITUTION
543
property and civil rights arising “in the province.” Examples of existing provin-
cial rules precluding enforcement of foreign judgments are found in British
Columbia and Quebec legislation prohibiting recognition of foreign judgments
in asbestos-related cases.29
The prospect of increased territorial effectiveness of judgments will of
course give rise to difficulties of its own. Faced with a greater likelihood of
enforcement, there will be more challenges to original jurisdiction, both on con-
stitutional grounds and on grounds of forum non conveniens. The race to the
courthouse will be accentuated, and more attention will have to be given in the
future to the notion of lis pendens in interprovincial and international cases.
There will also be development of the anti-suit injunction, as recent cases have
already indicated.” All of these problems must simply be dealt with as they
arise. The judgment of Justice La Forest is eloquent testimony to the need for
judicial collaboration in a rapidly shrinking, but litigious, world.
29See the Court Order Enforcement Act, R.S.B.C. 1979, c. 75, s. 41.1(2); the Civil Code of Lower
Canada, art. 8.1; the Quebec Code of Civil Procedure, arts 21.1, 180.1, commented on by H.
Patrick Glenn, “La guerre de l’amiante” (1991) 80 Rev. crit. dr. int. pdv6 41.
30T & Nplc v. Workers’ Compensation Board (1990), 75 D.L.R. (4th) 1, [1991] 1 W.W.R. 243
(B.C.C.A.) (British Columbia residents enjoined from bringing asbestos-related suit in Texas);
Johns-Manville Corp. v. Dominion of Canada General Insurance Co. (30 July 1991), Montr6al
500-09-000372-912, J.E. 91-1251 (C.A.) (asbestos producer enjoined from reliance on injunction
of California court to prevent suit in Quebec by insurer of asbestos producer for interpretation of
insurance contract); Southern Hills Investments Ltd v. Hamilton (1991), [1992] 2 W.W.R. 51
(defendant enjoined from pursuing contempt action in U.S. designed to prevent litigation in
Alberta).
