TMR Energy Ltd. v. State Property Fund of Ukraine (F.C.A.) [2005] 3 F.C. 111
Date: 20050124
A-497-04
Citation: 2005 FCA 28
CORAM: DÉCARY J.A.
BETWEEN:
TMR ENERGY LIMITED, a duly constituted
legal person incorporated under the laws of Cyprus
Appellant (Applicant)
and
STATE PROPERTY FUND OF UKRAINE,
an organ of the State of Ukraine
Respondent (Respondent)
and
ANTK ANTONOV
Respondent (Intervener)
and
STATE OF UKRAINE
Respondent (Intervener)
Heard at Toronto, Ontario, on Monday, January 10 and Tuesday, January 11, 2005.
Judgment delivered at Ottawa, Ontario, on January 24, 2005.
REASONS FOR JUDGMENT BY: DÉCARY J.A.
CONCURRED IN BY: NADON J.A.
SEXTON J.A.
Date: 20050124
A-497-04
Citation: 2005 FCA 28
CORAM: DÉCARY J.A.
BETWEEN:
TMR ENERGY LIMITED, a duly constituted
legal person incorporated under the laws of Cyprus
Appellant (Applicant)
and
STATE PROPERTY FUND OF UKRAINE,
an organ of the State of Ukraine
Respondent (Respondent)
and
ANTK ANTONOV
Respondent (Intervener)
and
STATE OF UKRAINE
Respondent (Intervener)
REASONS FOR JUDGMENT
[1] In an Order dated September 22, 2004, Martineau J. granted the respondents' motions under rule 399 and set aside an order made ex parte by Prothonotary Morneau. He found that the Prothonotary did not have jurisdiction to grant an application brought under rule 327 of the Federal Court Rules, 1998 for registration, recognition and enforcement of a foreign arbitral award. He went on to conclude that the prothonotary's order was a nullity, that "such a fundamental jurisdictional error cannot be saved or cured under the de facto officer doctrine, Rule 56, Rule 399, or for any reason invoked by TMR", and "that all proceedings occurring subsequent to and in furtherance of said order" were "null and void and of no force and effect."
[2] In a parallel Order dated the same day, Martineau J. denied the request made by the appellant TMR Energy Limited (TMR) for an ex parte order nunc pro tunc (or de bene esse) registering, recognizing, and enforcing the award on the basis of the record as it then was at the time the original application was made to the Court, that is on January 15, 2003. The judge was of the view that TMR had not fully disclosed to the Prothonotary the impediments to the registration, recognition and enforcement of the award. His Order was made "without prejudice to TMR's right to re-present its original application or present a fresh application..., provided that the notice of application be served on the judgment debtor in the manner specified in section 9 of the State Immunity Act."
[3] TMR appealed the two orders in Files A-496-04 (the second order) and A-497-94 (the first order). The appeals were consolidated and heard together. The reasons that follow will dispose of both appeals, the original being filed in A-496-04, copy in A-497-04.
The facts
[4] A brief recital of the relevant facts and proceedings is warranted at this stage.
[5] On May 30, 2002, the Arbitration Institute of the Stockholm Chamber of Commerce (the Institute) renders a Final Arbitral Award (the Award) in favour of TMR against the respondent the State Property Fund of Ukraine (SPF). The Award is for a total sum of some 40 million dollars U.S.
[6] It appears from the record (A.B. vol. 1, pp. 42 and 128) that TMR had also joined the State of Ukraine as a respondent separate entity in the same proceeding before the Institute, but had eventually discontinued that proceeding without prejudice.
[7] On January 15, 2003, TMR files ex parte, in Montreal, a "Notice of Application for Registration of Foreign Arbitral Award" under Rules 327 and 328 of the Federal Court Rules (as they were then referred to), the Award being that "granted against the State Property Fund of Ukraine." The Notice of Application names as respondent "State Property Fund of Ukraine," whom it describes in the style of cause as "an organ of the State of Ukraine" (A.B. vol. 1, p. 29).
[8] In the material filed in support of the Notice of Application, TMR alleges that SPF is "an organ of the State of Ukraine" (A.B. vol. 1, p. 35) whose Canadian address is believed to be the Embassy of Ukraine, in Canada. A French and a Swedish lawyer state in their respective affidavits that they "know of no impediment to the registration, recognition or enforcement of the Final Arbitral Award" (A.B. vol. 1, pp. 131 and 295). A Canadian lawyer makes the same statement in an affidavit, but only on the basis of the two affidavits referred to above (A.B. vol. 1, p. 37). Two letters emanating from TMR and addressed to SPF, dated respectively June 14, 2002 and July 1, 2002, are also filed, in which TMR puts SPF on notice that
In the event we do not receive payment in the above indicated time frame, we would be left with no choice but to instruct our attorneys to take all appropriate measures in Ukraine and in all jurisdictions where the State of Ukraine has assets in order to obtain compulsory enforcement of the Final Award ...
[A.B. vol. 1, p. 288]
Before we commence enforcement proceedings in various jurisdictions on the assets of the State of Ukraine to satisfy the Final Award ...
[Ibid., p. 290]
[9] The application is referred by the Registry to a prothonotary. On January 17, 2003, Prothonotary Morneau, after hearing from counsel for TMR, grants the ex parte application in the following terms:
HAVING READ the Applicant's ex parte Notice of Application for Registration, Recognition, and Enforcement of Foreign Arbitral Award under Rules 327 and 328 of the Federal Court Rules, 1998, and the material in support thereof and having heard representations by counsel for the Applicant, it is ordered that:
1. The Final Arbitral Award granted against the State Property Fund of Ukraine by the arbitral tribunal constituted pursuant to the rules of the Arbitration Institute of the Stockholm Chamber of Commerce, on 30 May 2002, is hereby registered, recognized and shall be enforceable as any other judgment of this Court. However, unless the Court orders otherwise, execution shall not be issued for 60 days following service of this Order;
2. The State Property Fund of Ukraine must pay to the Applicant the sum of $56,363,127.57 CDN, being the equivalent of $36,711,475.00 USD, in damages;
3. The State Property Fund of Ukraine must pay to the Applicant the sum of $3,963,170.35 CDN, being the equivalent of $2,546,533.67 USD, in interest accruing until 31 December 2002;
4. The State Property Fund of Ukraine must pay to the Applicant the sum of $1,535,300 CDN, being the equivalent of $1,000,000 USD, as the Applicant's arbitration costs;
5. The State Property Fund of Ukraine must pay to the Applicant the sum of $397,773.40 CDN, being the equivalent of _277,426, as the Arbitrators' fees and expenses;
6. The State Property Fund of Ukraine must pay to the Applicant the sum of $775.50 CDN, being the equivalent of 5,000 Swedish Kroner, as the Arbitrators' fees and expenses;
7. The State Property Fund of Ukraine must pay to the Applicant the sum of $551.17 CDN, being the equivalent of $359 USD, as the Arbitrators' fees and expenses;
8. The State Property Fund of Ukraine must pay to the Applicant, as per the terms of the Final Arbitral Award, interest at a rate equivalent to the one-month LIBOR rate plus 5% on the sum of $30,545,045 USD, from 1 January 2003 up to payment;
9. The grand total amounts to $62,260,697.99 CDN plus the interest calculated under para. 8;
With costs and post-registration interest on the sum of $11,401,720.05 CDN at the rate set out in the Interest Act, s. 3 (5%), against the State Property Fund of Ukraine.
[10] The Prothonotary's Order, as required therein, is served on SPF on March 4, 2003. Even though not so required, TMR attempts, on January 22, 2003, to serve the Order on the State of Ukraine through the offices of the Canadian Department of Foreign Affairs and International Trade. TMR is, however, advised by the Department on July 2, 2004 that the State of Ukraine had refused, some time in February 2003, to be served with the Order:
As explained to you earlier, since the Order was not an originating document (s. 9) nor an order arising from an originating document served under the "State Immunity Act" (s. 10) it could not be served in accordance with the method set out in the "State Immunity Act."
[A.B. vol. 2, p. 420]
[11] SPF does not appeal the Prothonotary's Order.
[12] On June 11, 2003, TMR makes a request for a writ of seizure and sale directed to the Sheriff of any county of any province in Canada and/or to the bailiff of the Province of Quebec. According to the summary of the recorded entries, the request was made "to seize the State of Ukraine further to the registration of the Foreign Arbitral Award" but a draft was prepared by Prothonotary Morneau with respect to the "Respondent 'State Property Fund of Ukraine, an organ of the State of Ukraine' tel qu'indiqué sur le projet de Bref ci-joint" (Suppl. A.B., Tab 3, pp. 121, 122).
[13] On June 11, 2003, a writ of seizure and sale is issued by the Registry in Montreal with respect to the property of the respondent, the respondent being referred to in the style of cause as "State Property Fund of Ukraine, an organ of the STATE of UKRAINE" (Suppl. A.B., Tab 4, p. 71).
[14] On June 27, 2003, counsel for TMR sends the following letter to a sheriff in St. John's, Newfoundland:
As per our telephone conversation of this morning please find herewith original Order from the Federal Court of Canada.
I confirm to you that the Respondent was served on March 4th, 2003 with an official translation in Ukrainian of the said Court Order and that, since then, the Respondent is aware of the proceedings instituted in Canada and of the fact that the above-referred Order is now executable on any of its property.
I also confirm to you that based on information available the property to be seized is "property used or intended for a commercial activity" as per the meaning of section 12(1)(b) of the State Immunity Act and that therefore it is not immuned from attachment and execution as per section 12 of the Act.
[Suppl. A.B., Tab 5, p. 78]
[15] On June 27, 2003, the Sheriff issues the following Notice of Seizure:
To: STATE PROPERTY OF UKRAINE AN ORGAN OF THE STATE OF UKRAINE
KUTUZOVA ST. 18/9 KIEV, 252133, UKRAINE
In the action of: T-60-03 Registration Number: 2003003306
Creditors
TMR ENERGY LIMITED / OGILVY RENAULT
Debtors
STATE PROPERTY FUND OF UKRAINE /
AN ORGAN OF THE STATE OF UKRAINE
TAKE NOTICE THAT TO SATISFY THE CLAIM(S) AGAINST YOU AS DETAILED ON THE ACCOMPANYING ENFORCEMENT DEBT REPORT, WE HAVE BEEN INSTRUCTED BY TMR ENERGY LIMITED TO SEIZE THE FOLLOWING:
Description: "Antonov -124-100 Aircraft" Serial No. 19530501005
Location: Goose Bay Airport, NL
Other Details: Property of the State of Ukraine
[Suppl. A.B., Tab 6, p. 68]
The aircraft seized on June 28, 2003 is owned by the State of Ukraine, but is operated by Aviation Scientific Technical Complex Name OP (Antk) Antonov (Antonov).
[16] On July 4, 2003, the Sheriff issues a Notice of Sale of Property. The sale is to be made on August 18, 2003 (Suppl. A.B., Tab 6, p. 69).
[17] As a result of a Notice of Objection filed by SPF and of a Notice of Third Party Claim filed by Antonov on July 11, 2003, the Sheriff, on July 17, 2003, finds both notices "to be effective" and informs the "Creditor" that it "may apply to a court of competent jurisdiction to dispute an objection or a claim within 15 days ...," failing which "the property shall be released from seizure" (Suppl. A.B., Tab 7, pp. 103 to 109).
[18] On July 18, 2003, Antonov serves a Notice of Motion in the Federal Court for an order setting aside the Notice of Seizure on the grounds, essentially, that the property seized was not the property of the judgment debtor SPF, that to permit the seizure would be to reintroduce the State of Ukraine, against which arbitration proceedings had been discontinued, as a judgment debtor and that neither the State of Ukraine nor Antonov was served with the Prothonotary's Order dated January 17, 2003 (Suppl. A.B. vol., Tab 9).
[19] On August 1, 2003, pursuant to the Sheriff's notice, TMR serves a Notice of Motion in the Federal Court Trial Division to dispute the Notice of Objection and the Notice of Third Party Claim. The motion also seeks to determine whether the State of Ukraine is a judgment debtor and to validate the seizure of the aircraft (Suppl. A.B., Tab 10).
[20] On August 8, 2003, SPF serves a Notice of Motion for an order setting aside the ex parte Order of Prothonotary Morneau issued on January 17, 2003 on the grounds, inter alia, that the Award was not yet enforceable, that the Federal Court had no jurisdiction ratione materiae and that Canada was not the appropriate forum (Suppl. A.B., Tab 11).
[21] The motion served by TMR on August 1, 2003 is heard by Prothonotary Tabib in August and September 2003. Both SPF and Antonov appear at the hearing, the latter as an intervener.
[22] On December 23, 2003 (2003 FC 1517), Prothonotary Tabib grants TMR's motion, finds that the State of Ukraine is the judgment debtor under the Award and validates the seizure of the aircraft.
[23] On January 15 and 16, 2004, SPF and Antonov file an appeal from the Order of Prothonotary Tabib. On January 19, 2004, the State of Ukraine seeks leave to intervene in the appeal. Motions for directions filed by SPF and the State of Ukraine are heard by the case management judge, Martineau J., on February 19, 2004. The day before, i.e. on February 18, 2004, counsel for Antonov had informed Martineau J. that he intended to argue that Prothonotary Morneau lacked authority to issue the Order of January 17, 2003.
[24] On March 11, 2004, Martineau J. orders, inter alia, that "the new jurisdictional issue be raised by way of a motion under Rule 399 to set aside the order made by Prothonotary Richard Morneau on January 17, 2003" (A.B. vol. 2, p. 602).
[25] On March 24, 2004, the State of Ukraine serves a Notice of Motion under rule 399 for an order declaring that Prothonotary Morneau had no jurisdiction by reason of section 3 of the State Immunity Act and by reason of the lack of jurisdiction of a prothonotary to make orders in an application under rules 327 and 328 (A.B. vol. 2, p. 381).
[26] Also on March 24, 2004, SPF serves a Notice of Motion for an order declaring that Prothonotary Morneau's Order was issued without jurisdiction (A.B. vol. 2, p. 383).
[27] Also on March 24, 2004, Antonov serves a Notice of Motion under rule 399 for an order declaring that Prothonotary Morneau's Order was issued without jurisdiction (A.B. vol. 2, p. 387).
[28] On June 23, 2004, at a case management conference, Martineau J. directs that, at the hearing on the "new jurisdictional issue," he does not want to hear arguments regarding state immunity or the Federal Court's jurisdiction. He also directs TMR to file a motion for "protective measures" in the eventuality that he would grant the motion challenging the authority of Prothonotary Morneau.
[29] On July 7, 2004, TMR serves its motion for protective measures in which it seeks different orders, including an order nunc pro tunc registering, recognizing and enforcing the Award "as of 17 January 2003 on the basis of the record as it then was" (A.B. vol. 2, p. 390).
[30] Hearings are held with respect to the motions served by SPF, the State of Ukraine and Antonov on March 24, 2004 (the rule 399 motions) and with respect to the TMR motion served on July 7, 2004 (the nunc pro tunc motion) in August 2004. On September 22, 2004, Martineau J. issues the Orders which are impugned in these appeals and which have been referred to in paragraphs 1 and 2 of these reasons.
The rule 399 motions (File A-497-04)
[31] Rule 399 allows the Court to set aside or vary an order that was made ex parte if the party against whom the order is made discloses a prima facie case why the order should not have been made. It is not clear to me on what basis Antonov, and to a lesser extent the State of Ukraine, against neither of whom Prothonotary Morneau's Order of January 17, 2003 had been issued, were invited by Martineau J. to file a motion under rule 399, but nothing turns on this as SPF was a proper party applicant.
[32] I will deal first with TMR's argument that SPF's motion was made out of time. Rule 399 sets no time limit for the filing of the motion. As noted, however, by Hugessen J. in Blueberry River Indian Band and Doig River Indian Band v. Canada (Minister of Indian Affairs and Northern Development) et al (1999), 189 F.T.R. 111 at 116, "that is not to say that rule 399 establishes an endless open reason for attacks upon judgments. Quite the contrary. The public interest in the stability and finality of the judicial process ... all lend weight to the case law which holds that motions of this sort must be brought with reasonable diligence."
[33] In the case at bar, Prothonotary Morneau's Order was served on SPF in March 2003. The issue of the Prothonotary's authority was first raised in February 2004 and the rule 399 motions were served in March 2004. A period of twelve months thus elapsed, during which SPF had multiple occasions, if one was needed, to raise the issue, including when it served its first rule 399 motion on August 8, 2003 (see para. 20, supra). In normal circumstances, this lengthy delay would have been fatal to SPF. But these are not normal circumstances. The issue could obviously have been raised earlier and I am not insensitive to the suggestion made by TMR that the attack on the authority of Prothonotary Morneau is a strategical afterthought springing from Prothonotary Tabib's decision to uphold the seizure of the aircraft. The fact is, however, that the case was still very much alive when the issue was finally raised, that the issue was raised the very first time the case went to a judge, that the issue of the nullity of the Prothonotary's Order could probably have been raised at that time by the judge himself, that TMR itself could have raised it from the start, when it first appeared before Prothonotary Morneau, and that the motion was filed at that late time at the very invitation of Martineau J. We are dealing here with an important jurisdictional issue. The Award is yet to be enforced. A fresh application for registration, recognition and enforcement of the Award under rule 327 may yet be made and disposed of by the proper authority. All in all, I am prepared to entertain SPF's rule 399 motion. The argument with respect to tardiness may be better addressed when we reach the issue of costs.
[34] Turning now to the merit of the appeal, I agree with Martineau J. that a prothonotary does not have the authority to dispose of an application for registration, recognition or enforcement of a foreign judgment brought under rules 326 to 334. I also agree with him that the Prothonotary's Order cannot be cured by the application of rule 56 which deals with non-compliance with the Rules nor by the de facto doctrine.
The authority of the prothonotary
[35] An examination of the powers of the prothonotaries has recently been done by this Court in First Canadians' Constitution Draft Committee, the United Korean Government (Canada) v. Canada, 2004 FCA 93. While it is true, as noted in First Canadians', that the jurisdiction of prothonotaries has been greatly expanded over time, the fact is that this expansion has essentially been circumscribed to pre-trial proceedings (except injunctions) and post-judgment proceedings and is by law limited to the powers determined by the rules committee of the Federal Court. There is no longer any provision in the Rules whereby prothonotaries are empowered to act on the mere consent of the parties (see former rule 336).
[36] Subsection 12(1) of the Federal Courts Act provides for the appointment of prothonotaries "who are ... necessary for the efficient performance of the work of the Court that, under the Rules, is to be performed by them." Subsection 12(3) then goes on to specify that "the powers, duties and functions of the prothonotaries shall be determined by the Rules." Rule 2 defines "Court" as including "a prothonotary acting within the jurisdiction conferred under the Rules ..." (my emphasis). Paragraph 46(1)(h) of the Federal Courts Act states by whom and the manner in which powers are to be vested in prothonotaries:
|
46. (1) Subject to the approval of the Governor in Council and subject also to subsection (4), the rules committee may make general rules and orders ... (h) empowering a prothonotary to exercise any authority or jurisdiction, subject to supervision by the Federal Court, even though the authority or jurisdiction may be of a judicial nature; |
46. (1) Sous réserve de l'approbation du gouverneur en conseil et, en outre, du paragraphe (4), le comité peut, par règles ou ordonnances générales : [...] h) donner pouvoir aux protonotaires d'exercer une autorité ou une compétence - même d'ordre judiciaire - sous la surveillance de la Cour fédérale;
|
[37] The general powers, duties and functions of prothonotaries are set out in rule 50. Rule 50(1) states that
A prothonotary may hear, and make any necessary orders relating to, any motion under these Rules other than a motion...
[there follows a list of twelve exceptions, none of which is applicable here]
[my emphasis]
Rules 50(2) and 50(3) give prothonotaries the power to hear certain actions in which the amount claimed does not exceed $50,000. Rules 266, 383 and 387 expressly recognize the role of prothonotaries in pre-trial conferences, case management and dispute resolution conferences.
[38] To understand the jurisdiction of prothonotaries under the Federal Court Rules, 1998, it is important to distinguish between actions, applications and appeals, which are the only ways allowed by the Rules to commence proceedings, on the one hand, and motions, on the second hand.
[39] Rule 61 provides that proceedings may be commenced as an action, as an application or as an appeal. An "action" is defined in rule 2 as "a proceeding referred to in rule 169" (i.e. in Part 4 of the Rules, which extends from rule 169 to rule 299). An "application" is defined in rule 2 as "a proceeding referred to in rule 300 (i.e. in Part 5 of the Rules, which extends from rule 300 to rule 334). An "appeal" is defined in rule 2 as "a proceeding referred to in rule 335 (i.e. in Part 6 of the Rules, which extends from rule 335 to rule 357).
[40] A motion is not, therefore, a manner to bring proceedings to the Federal Court and "motions" are governed by specific rules found in Part 7 (which extends from rule 358 to rule 371). Rule 24 goes so far as making sure that notices of motion for extension of time to bring an action, an application or an appeal that has not yet commenced are kept in separate files. Even though a "motion" is defined in rule 2 as "a request to the Court under, or to enforce, these Rules," it is clear from the Rules when read in their totality that such "request" does not have the same standing or function as that of actions, applications and appeals and that motions are generally incidental to actions, applications or appeals that have commenced or are about to commence.
[41] When read in that context, it is obvious that rule 50 does not grant to prothonotaries any power with respect to the final disposition of applications and appeals and grants them a limited jurisdiction with respect to the final disposition of actions. As noted by McGillis J. in Vaughan v. Canada, [2000] F.C.J. No. 311 at para. 14, "Rule 50 expanded the jurisdiction of prothonotaries to permit them to hear and make orders relating to any motion, excepted those specifically exempted by the Rules, and to hear certain actions" (my emphasis). And in First Canadians', supra, this Court, in paragraph 9, noted that the "distinction between 'motion' and 'action' was clearly in the mind of the regulator." The same may be said with respect to the distinction between "motion" and "application." An application for registration, recognition or enforcement of a foreign judgment is described as an "application" in rule 300(h) and it is governed by rules 327 to 334, which are found in Part 5 of the Rules. It cannot therefore be disposed of by a prothonotary even though motions pertaining to it may be entertained by the prothonotary.
[42] Whatever might have been the law or practice under the former Rules or whatever might be the practice under the present Rules, a prothonotary does not have the jurisdiction, under the present Rules, to determine an application brought under rules 327 to 334. Jurisdiction is to be found in the Rules of the Court; it cannot be found in mere rules of practice, even more so where such rules of practice are inconsistent with the Rules.
[43] The appellant argues that an application for registration, recognition or enforcement of a foreign judgment does not result in any substantive rights being granted and amounts to a post-judgment proceeding which falls typically within the realm of prothonotaries. I do not agree. The effect of a registration, recognition or enforcement of a foreign judgment order is to give the foreign judgment creditor the same rights as if the judgment had been obtained in Canada; in that sense, the order is a "judgment" rather than a "post-judgment".
[44] I, therefore, find that Prothonotary Morneau did not have jurisdiction to dispose of the application made under rule 327. The appellant suggests, in the event of a finding by the Court of lack of jurisdiction, that rule 56 could save the order made by the prothonotary and that the respondents are out of time, under rule 58, to attack what the appellant describes to be a mere "irregularity." I am prepared to accept that a rule 56 motion was implicitly made by the appellant.
Rule 56 and non-compliance with the Rules
[45] Rules 56 to 60 deal with non-compliance with the Rules. They read as follows:
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Failure to Comply with Rules
56. Non-compliance with any of these Rules does not render a proceeding, a step in a proceeding or an order void, but instead constitutes an irregularity, which may be addressed under rules 58 to 60.
57. An originating document shall not be set aside only on the ground that a different originating document should have been used.
58. (1) A party may by motion challenge any step taken by another party for non-compliance with these Rules.
(2) A motion under subsection (1) shall be brought as soon as practicable after the moving party obtains knowledge of the irregularity.
59. Subject to rule 57, where, on a motion brought under rule 58, the Court finds that a party has not complied with these Rules, the Court may, by order, (a) dismiss the motion, where the motion was not brought within a sufficient time after the moving party became aware of the irregularity to avoid prejudice to the respondent in the motion; (b) grant any amendments required to address the irregularity; or (c) set aside the proceeding, in whole or in part.
60. At any time before judgment is given in a proceeding, the Court may draw the attention of a party to any gap in the proof of its case or to any non-compliance with these Rules and permit the party to remedy it on such conditions as the Court considers just. |
Inobservation des règles
56. L'inobservation d'une disposition des présentes règles n'entache pas de nullité l'instance, une mesure prise dans l'instance ou l'ordonnance en cause. Elle constitue une irrégularité régie par les règles 58 à 60.
57. La Cour n'annule pas un acte introductif d'instance au seul motif que l'instance aurait dû être introduite par un autre acte introductif d'instance.
58. (1) Une partie peut, par requête, contester toute mesure prise par une autre partie en invoquant l'inobservation d'une disposition des présentes règles.
(2) La partie doit présenter sa requête aux termes du paragraphe (1) le plus tôt possible après avoir pris connaissance de l'irrégularité.
59. Sous réserve de la règle 57, si la Cour, sur requête présentée en vertu de la règle 58, conclut à l'inobservation des présentes règles par une partie, elle peut, par ordonnance : a) rejeter la requête dans le cas où le requérant ne l'a pas présentée dans un délai suffisant - après avoir pris connaissance de l'irrégularité - pour éviter tout préjudice à l'intimé; b) autoriser les modifications nécessaires pour corriger l'irrégularité; c) annuler l'instance en tout ou en partie.
60. La Cour peut, à tout moment avant de rendre jugement dans une instance, signaler à une partie les lacunes que comporte sa preuve ou les règles qui n'ont pas été observées, le cas échéant, et lui permettre d'y remédier selon les modalités qu'elle juge équitables. |
[46] The appellant relies essentially on statements made by Lord Denning, Master of the Roll, and by Lord Justice Diplock in Harkness v. Bell's Asbestos and Engineering Ltd., [1966] 3 All E.R. 843 (C.A.). In that case, the applicable limitation statute required that the plaintiff obtain leave of the "court" to bring an action. Leave was granted by a district registrar (similar to a master or a prothonotary) as opposed to a judge in chambers. The English Court of Appeal found that this was an irregularity that could be cured through a rule bearing a close resemblance to our rule 56:
[...] This new rule does away with the old distinction between nullities and irregularities. Every omission or mistake in practice or procedure is henceforward to be regarded as an irregularity which the court can and should rectify so long as it can do so without injustice. It can at last be asserted that "it is not possible... for an honest litigant in Her Majesty's Supreme Court to be defeated by any mere technicality, any slip, any mistaken step in his litigation.
[Lord Denning, M.R. at 845-46]
If [the plaintiff] has followed, as I have no doubt that he has, the intricacies of the interlocutory proceedings in this case, he must have thought that the law is an ass. I am not sure that this judgment will change his opinion, but at any rate he will not feel it to be so unjust an ass as he must previously have felt it to be. It was to remedy just this kind of injustice that the new R.S.C., Ord. 2, r. 1 was made.
[Diplock L.J., at 846]
[47] I pause here to point out that the language used by Lord Denning, "the old distinction between nullities and irregularities," is somehow misleading, at least in a Canadian perspective. The focus should be on whether a given act or omission may be described as a "non-compliance with the Rules," "une inobservation des Règles." For reasons which I will express forthwith, the making by a non-judge of an order which only a judge can make cannot be characterized as a mere "non-compliance with the Rules." It is a matter of lack of jurisdiction. An additional reason to be cautious in adopting Lord Denning's language in interpreting the Federal Courts Rules is that by virtue of rule 59(c), where there is non-compliance with the Rules that constitutes an irregularity for the purposes of rule 56, nullity may still ensue. In Lord Denning's own language, therefore, "irregularity" could, under the Federal Courts Rules, be equated with "nullity" in some circumstances.
[48] Rule 56, in its earlier formulation, was never intended to treat as non-compliance with the Rules an act in excess of jurisdiction by a prothonotary and it has never been interpreted in that fashion. The very concept of "non-compliance" has always been confined to matters of form as opposed to matters of jurisdiction. As observed by McNair J. in C.N.R. v. Canadian Transport Commission, [1988] 2 F.C. 437 (F.C.T.D.) at 449,
Matters of practice and questions of jurisdiction are two separate and distinct things.
[49] One wonders, also, what it is that could be corrected, amended or remedied, and how it could be done under rules 59 and 60, when an order has been made outside jurisdiction. Whether the alleged "irregularity" be that of the Chief Justice or of the Registry in assigning the matter to the Prothonotary or that of the Prothonotary in exercising the jurisdiction, surely one cannot substitute the name of a judge to that of a prothonotary on the Order, nor can a new order be signed by a judge without a de novo hearing of the application. It is the whole exercise which is flawed at its base, both in form and in substance. In these circumstances, I find Lord Denning's statement, when applied to the facts before him, incompatible with the later observations made by Lord Justice Sedley, for the England and Wales Court of Appeal, in Coppard v. Customs and Excise Commissioner, [2003] EWCA Civil 511, para. 13:
13. The one answer to the appeal which in our judgment is unacceptable in principle is that advanced, perhaps more out of hope than out of conviction, by counsel for the Commissioners, Mr. Michael Patchett-Joyce, that the want of authority was a simple error of procedure which by virtue of CPR 3.10 does not of itself invalidate any step taken on the basis of it. It would do little for the rule of law and for constitutional propriety to relegate an issue as important as qualification for judicial office to the realm of procedure.
[My emphasis]
[50] The decision of the English Court of Appeal in Harkness may perhaps be explained by the very exceptional circumstances that led to it and which are not to be found in the present case. There had been no oral hearing of the application for leave, therefore no opportunity to question the authority of the decision-maker. Years had gone by before the flaws in the proceedings had been discovered. The new rule that conferred the authority to a judge rather than to a master had not been circulated or published in such a way as to come to the notice of practitioners. It was far too late to make a fresh application for leave to a judge. "Nothing else would do," said Lord Denning, "so he [the applicant] had to get the registrar's order rectified and treated as good as at that date, April, 1964, or he would surely fail." And, perhaps more importantly, it was not argued that the order, had it been decided by the proper authority, might have been different.
[51] Assuming for the sake of discussion that the lack of authority of the prothonotary could be described as some form of "non-compliance," such non-compliance would be, not with the Rules, but with the Act. As noted by Jerome A.C.J. in Iscar Limited v. Karl Hertel GmbH, [1989] 3 F.C. 479 (F.C.T.D.), at p. 484, the jurisdiction of the prothonotary "springs from subsection 46(1) [of the Federal Court Act]" and "does not originate in our rule or my practice note, but in the Federal Court Act." I might add that the jurisdiction of prothonotaries also springs from subsection 12(3) of the Federal Courts Act, which provides that "the powers, duties and functions of the prothonotaries shall be determined by the Rules." The Chief Justice of the Federal Court, in assigning to the prothonotary a matter over which he has no jurisdiction, or a prothonotary, in exercising an authority he or she does not possess, acts outside of the Rules and fails in reality to comply with the Act.
[52] My interpretation finds support in many decisions rendered by other Canadian courts. In East West Commodities Ltd. (Trustee of) v. Nigeria (Federal Republic) (2003), 20 Alta. L.R. (4th) 190 (Alta. Q.B.), Hutchinson J. found that a default judgment obtained by application to the Master was a nullity as the Master had no authority to deal with such application (para. 2). In finding that the plaintiff had "acted outside of the Rules of Court in making an application for judgment before the Master and not before a judge resulting in an invalid judgment" (para. 22), Hutchinson J. relied on the old decision of the English Court of Appeal in Anlaby v. Praetorius (1888), 20 Q.B.D. 764 (Eng. C.A.), where a default judgment had been entered prematurely and where Lord Justice Fry had stated:
But in the present case we are not concerned with an instance of non-compliance with a rule, nor with an irregularity in acting under any rule. The irregular entry of judgment was made independently of any of the rules; the plaintiff had no right to obtain any judgment at all.
[p. 769]
[53] In Foster v. Chubb Insurance Co. of Canada, 1998 WL 1720674 (Ont. Gen. Div.), 1998 Carswell Ont 2531, Morin J. found that the Master had no jurisdiction to determine a question of law in a motion for summary judgment and he set aside the Master's decision. He granted leave to the defendant to renew its motion for summary judgment before a judge.
[54] In McGrath v. St. Phillip's (1985), 51 Nfld. & P.E.I.R. 276, the Newfoundland Court of Appeal held that the practice which had developed to refer a matter to a Master to determine the measure of damages should be disregarded as a Master had no such authority. The Master's report was declared null and void.
[55] I note that in Prenor Trust Co. of Canada v. Seawood Enterprises Ltd. (1993), 16 C.P.C. (3d) 30, a prothonotary had made an order extending the time within which an application for a deficiency judgment could be filed. The prothonotary had no jurisdiction to issue such an order. A judge in chambers found this was an irregularity but "not one that the court was prepared, in the circumstances, to cure." The Nova Scotia Court of Appeal allowed the appeal on the basis that, subsequent to the prothonotary's order, an order made by a judge on consent had "conclusively resolved the issue of the timelines..." The Court of Appeal does not make any comment on the "irregularity" issue.
[56] I, therefore, reach the conclusion that rule 56 is not applicable. Be that as it may, argues TMR next, the Prothonotary's decision could yet be saved by the "de facto doctrine."
The de facto doctrine
[57] The de facto doctrine imparts validity to the official acts of persons who, in certain circumstances, make decisions under colour of authority. One of the many difficulties I have with this argument in this appeal is that there was no colour of authority to start with. There was, simply, no valid statutory authority under which the prothonotary could be acting. He had proper legal title to his office, there was no irregularity in his appointment, and he was acting as a prothonotary, not as a judge. He was, perhaps, acting pursuant to a mistake i.e. the mistake by whomsoever was induced to assign the file to him rather than to a judge, but he was doing something that only a judge could do and he was not a judge nor purporting to be a judge.
[58] Whatever arguments may be made on the de facto doctrine, no case law has been quoted to us to the effect that a non-judge may be found under the doctrine to have validly performed judicial duties. This case, it seems to me, is easily distinguishable from those cases where a judge duly appointed and qualified to sit exercises an aspect of his or her court's jurisdiction which he or she is not authorized to entertain (see Coppard v. Customs and Excise Commissioner, supra; Fawdry & Co. v. Murfitt, [2002] EWCA Civ. 643, Ct. of App., England and Wales).
[59] In any event, I would not be prepared to hold, on the basis of the de facto doctrine, that parties, which are entitled to have an order made by a judge, do not have at least the right to have the matter determined anew by a judge, albeit retroactively. As I find, for the reasons given below, that the order recognizing and enforcing the Award ought not to have been made ex parte, I would have rejected this first appeal anyway.
[60] I am of the view, therefore, that Prothonotary Morneau had no authority to make the impugned order and that neither rule 56 nor the de facto doctrine can be invoked to save the validity of his order.
[61] In the end, the Prothonotary's order dated January 17, 2003 must be set aside on a rule 399 motion for the simple reason that the ex parte order could not have been made by him as a Prothonotary. I would therefore dismiss appeal A-497-04.
The nunc pro tunc motion (File A-496-04)
[62] Turning to the appeal in File A-496-04, I will assume that Martineau J. had jurisdiction to entertain a nunc pro tunc motion where the order at issue has been found to be null for lack of jurisdiction. I need not decide the matter as I have reached the conclusion that no nunc pro tunc order should issue in any event.
[63] I have found no reviewable error in Martineau J.'s conclusion that "where a motion or application is made ex parte, the moving party or applicant has a duty of full and fair disclosure with respect to all material facts."
[64] TMR chose to make its application under rule 327 ex parte, as it was entitled to do. In so doing, however, TMR assumed a duty of full disclosure of all relevant facts. To start with, rule 329(1)(g) requires an applicant to file an affidavit stating that "having made careful and full inquiries, the applicant knows of no impediment to registration, recognition or enforcement of the foreign judgment." In addition to this regulatory requirement, there is a requirement, at common law, of a high duty of disclosure on the part of applicants on ex parte applications. The principle was well stated by Sharp J. (as he then was), in United States of America v. Friedland, [1996] O.J. No. 4399 (Gen. Div.) at para. 27:
For that reason, the law imposes an exceptional duty on the party who seeks ex parte relief. That party is not entitled to present only its side of the case in the best possible light, as it would if the other side were present. Rather, it is incumbent on the moving party to make a balanced presentation of the facts in law. The moving party must state its own case fairly and must inform the Court of any points of fact or law known to it which favour the other side. The duty of full and frank disclosure is required to mitigate the obvious risk of injustice inherent in any situation where a Judge is asked to grant an order without hearing from the other side.
[65] While stated in the context of ex parte injunctions, which are immediately enforceable, as opposed to ex parte orders such as the one here at issue which are only enforceable sixty days from the date of their service to the other party, this principle applies beyond the realm of ex parte injunctions:
63 With respect to the Judge I do not think this was quite the right way of looking at the matter. As was held by this Court in Brinks Mat Ltd. v. Elcombe [1988] 1 WLR 1350 the Court, notwithstanding proof of material non-disclosure where an injunction was originally obtained on an ex parte application, has still a discretion to continue the injunction or to grant a fresh injunction in its place.
64 This is, however, a discretion which will be exercised with great caution. It will rarely, if ever, be exercised in a case where the material non-disclosure was deliberate, or where it has caused prejudice to the party enjoined by enabling the applicant to obtain interim relief which he would not otherwise have obtained.
65 The reasoning behind the rule which requires full and frank disclosure by an applicant on an ex parte application, is of course that the Court is being asked to grant relief without the person against whom the relief is sought having the opportunity to be heard. Differing from the Judge on this particular point, I do not think that any different considerations arise merely because the order obtained ex parte in the present case was not the grant of an injunction, but an order for the registration of a judgment, application for which the Rules of the Supreme Court require to be made ex parte (see Ord. 71, r. 27). Ord. 71, r. 28(1)(d)(ii) placed on the plaintiff an explicit obligation to inform the Court that the relevant judgment had been satisfied in part, and as the Judge rightly held, its failure so to inform the Court constituted a failure to disclose a material fact.
66 In my judgment the obligation of disclosure imposed on an applicant by Ord. 27, r. 28(1) is no less weighty and serious than the obligation imposed on any ex parte applicant. The duty of full and frank disclosure and the potential consequences of a failure to perform that duty are in my opinion of the same degree as in all other ex parte applications. There is no logical reason for distinguishing different types of ex parte application in this context.
[Landhurst Leasing plc v. Marcq, [1997] E.W.J. No. 1490,
England and Wales Court of Appeal, L.J. Beldam at p. 15]
18 On any ex parte application, the utmost good faith must be observed. That requires full and frank disclosure of all material facts known to the applicant or counsel that could reasonably be expected to have a bearing on the outcome of the application. Because counsel for the applicant is asking the judge to invoke a procedure that runs counter to the fundamental principle of justice that all sides of a dispute should be heard, counsel is under a super-added duty to the court and the other parties to ensure that as balanced a consideration of the issue is undertaken as is consonant with the circumstances.
[Canadian Paraplegic Assn (Newfoundland and Labrador) Inc. v.
Sparcott Engineering Ltd., [1997] N.J. No. 122
(Nfld.Lab. Ct of App.), Green J.A., at para. 18]
[66] In the case at bar, TMR stated in the affidavits supporting its application that it knew "of no impediment to registration, recognition or enforcement of the foreign judgment." Accepting for the sake of discussion that the filing of vague affidavits by two foreign lawyers satisfies the requirement of "careful and full enquiries" imposed by rule 329(1)(g), the fact is that at the time it filed its application, TMR was of the view, and had been for some time, that the judgment debtor under the Award was the State of Ukraine rather that SPF and that its intention was to use the registration in Canada of the Award against SPF in order to enforce the Award against the State of Ukraine in Canada. This information was very much material.
[67] I appreciate that the task of a court enforcing an award should be as "mechanistic" as possible and "that the enforcing court is neither entitled nor bound to go behind the award in question, explore the reasoning of the arbitration tribunal or second-guess its intentions" (Norsk Hydro Asa v. State Property Fund of Ukraine and others, [2002] EWHC 2120 (Comm.), Gross J. at para. 17).
[68] However, where, as here, the judgment creditor describes the judgment debtor in such a way as to create some confusion from which it is planning to seek benefits, the Court has the right to know, before making an ex parte order, that the judgment creditor is already preparing to enforce the Award in Canada against a debtor which is not, properly speaking, the judgment debtor under the Award. Rule 329(1)(g) is clear and mandatory. TMR knew of impediments to the enforcement of the Award. It should have disclosed them to the Court in an outright fashion, if only to alert the Court as to the possible application of the State Immunity Act. The Court would then have been in a position to determine the opportunity of not proceeding ex parte and of having the application served on the State of Ukraine. This is precisely the effect of Martineau J.'s Order and I find no fault with it.
[69] Martineau J.'s refusal to stay the proceedings or issue an interlocutory injunction pending a fresh application under rule 327 has not been seriously challenged by TMR and, in my view, it could not have been.
[70] In the end, I would dismiss the appeal in A-496-04.
Costs
[71] I would grant costs to the respondents in both appeals, but on the basis of one set of costs only.
"Robert Décary"
J.A.
"I agree.
M. Nadon, J.A."
"I agree.
J. Edgar Sexton, J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKETS: A-496-04 / A-497-04
STYLE OF CAUSE: TMR ENERGY LIMITED v. STATE PROPERTY FUND OF UKRAINE and ANTK ANTONOV and STATE OF UKRAINE
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: January 10 and 11, 2005
REASONS FOR JUDGMENT: DÉCARY J.A.
CONCURRED IN BY: NADON J.A.
SEXTON J.A.
DATED: January 24, 2005
APPEARANCES:
|
Mr. Richard Desgagnes Mr. François Fontaine Mr. Azim Hussain Mr. Brian Daley |
FOR THE APPELLANT (APPLICANT) |
|
Mr. George J. Pollock Mr. Louis-Martin O'Neill |
FOR THE RESPONDENT (RESPONDENT) |
|
Mr. Thomas G. Heintzman, Q.C. Mr. David E. Platts |
FOR THE RESPONDENT (INTERVENER) (ANTK ANTONOV) |
|
Mr. Frank Newbould, Q.C. Mr. Lubomir Kozak, Q.C. |
FOR THE RESPONDENT (INTERVENER) (STATE OF UKRAINE) |
SOLICITORS OF RECORD:
|
Ogilvy Renault Montreal, Québec |
FOR THE APPELLANT (APPLICANT) |
|
Davies Ward Phillips & Vineberg LLP Montreal, Quebec |
FOR THE RESPONDENT (RESPONDENT) |
|
McCarthy Tetrault LLP Toronto, Ontario and Montreal, Quebec |
FOR THE RESPONDENT (INTERVENER) (ANTK ANTONOV) |
|
Borden Ladner Gervais LLP Toronto, Ontario |
FOR THE RESPONDENT (INTERVENER) (STATE OF UKRAINE) |