Monday, 21 May 2012

A Foreign Restraining Order Cannot Ground a CPL

In the globalized world of business litigation, it is not unusual to run into a multi-jurisdictional case.  For example, while the main proceedings may take place in in U.S., a defendant may reside or have assets in B.C.  A common issue in such proceedings is enforcement of foreign orders (not necessarily monetary judgments) against B.C. residents and/or their assets.  In Rissman v. Chen, 2012 BCSC 715, the court explained that one enforcement avenue not available in such cases is the use of a CPL against a B.C. property to enforce a foreign injunction against disposition of asset.

In this case, the plaintiff sued the B.C.-resident defendant in Massachusetts state court and obtained an order enjoining the defendant from transferring or encumbering any property, wherever located, unless proceeds were paid into escrow.  Armed with this order, the plaintiff brought a B.C. action, seeking recognition and enforcement of the Massachusetts order against any B.C. property and a CPL against the defendant's house.

On the defendant's application to cancel the CPL, the court found that the foreign order and the action to enforce it could not ground a CPL because, simply, there was no claim for any interest in land:
[12]         The plaintiff in this action does not claim to have any proprietary or ownership interest in the land in question. The notice of civil claim merely alleges that the defendant has such an interest and the plaintiff seeks to limit the defendant’s ability to deal with that interest. The action does not arise from any dealings with respect to that land. It arises from a debt claim against a defendant who happens to own land in British Columbia.
[13]         Success in this action would not give the plaintiff any registrable or ownership interest in the land. It would not force the defendant to divest himself of any interest in the land in favour of the plaintiff. ... this action does not even carry the possibility of a monetary judgment that might subsequently be registered against the property and form the basis of execution proceedings. It would only require the defendant comply with the Massachusetts injunction, which requires that, should he decide to sell or encumber the property, a portion of the proceeds is to be posted as security for the plaintiff’s debt claim, subject to further order of the Massachusetts Court.
The court also refused to grant the plaintiff a Mareva injunction, finding that there was no evidence that the defendant was planning to sell the property or otherwise remove assets from the jurisdiction.