SHN Grundstuecksverwaltungsgesellschaft MBH & Co. Seniorenresidenz Hoppegarten-Neuenhagen KG v. Hanne, 2012 ABQB 624

Court of Queen ’ s Bench of Alberta Citation: SHN Grundstuecksverwaltungsgesellschaft MBH & Co. Seniorenresidenz Hoppegarten-Neuenhagen KG v. Hanne, 2012 ABQB 624 Date: 20121012 Docket: 0701 08188 Registry: Calgary Between: SHN Grundstuecksverwaltungsgesellschaft MBH & Co. Seniorenresidenz Hoppegarten- Neuenhagen KG, also known as SHN Grundst ü cksverwaltungsgesellschaft MBH & Co. Seniorenresidenz Hoppegarten-Neuenhagen KG Plaintiff - and - Dr. Juergen Hanne, also known as Dr. J ü rgen Hanne Defendant _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice M.C. Erb _______________________________________________________ [ 1 ] In this

summary trial, the Plaintiff SHN Grundstuecksverwaltungsgesellschaft MBH & Co. Seniorenresidenz Hoppegarten- Neuenhagen KG, also known as SHN Grundstücksverwaltungsgesellschaft MBH & Co. Seniorenresidenz Hoppegarten-Neuenhagen KG (“SHN”) seeks an Order for recognition and enforcement in Alberta of a judgment issued by the Berlin Regional Court of Germany against the Defendant Dr. Juergen Hanne, also known as Dr. Jürgen Hanne (“Dr. Hanne”).

[ 2 ] SHN also seeks recognition and enforcement of the associated costs judgment. The initial judgment was pronounced on November 11, 2002. After lengthy systemic delay, a German appellate court dismissed Dr. Hanne’s appeal on August 31, 2006. SHN brought this action for enforcement in Alberta because Dr. Hanne now resides in Calgary. [ 3 ] The German judgment, including court ordered costs, amounts to ​1,056,800.25, but SHN seeks ​1,756,632.97, which includes an interest component. [ 4 ] Dr.

Hanne opposes enforcement arguing that the test for recognition and enforcement of foreign judgments as prescribed by the Supreme Court of Canada has not been met in this case. Even if the test has been met, he argues that he has valid defences to enforcement in Alberta. [ 5 ] In addition to opposing enforcement of the judgment, Dr. Hanne raises a preliminary issue. He submits that

summary trial proceedings are not appropriate to determine the issue of enforceability because there are credibility issues which a trial judge should resolve upon hearing viva voce evidence. He also argues that the “new” Alberta Rules of Court , Alta. Reg. 124/2010 (“Rules of Court”) are not sufficiently clear on the proper procedure. Background Narrative [ 6 ] The general partner of SHN leased a building to KBN Seniorenresidenz Hoppegarten-Neuenhagen (“KBN”). Dr.

Hanne had an executive managerial role with the general partner and was a majority shareholder in KBN, a corporate entity which was involved in some investments including a seniors’ residence in Berlin. Issues arose over the investments and allegations against Dr. Hanne, a lawyer, resulted in the judgment which SHN now seeks to enforce in Alberta. [ 7 ] SHN filed its action to enforce the judgment here in August 2007. Case management was ordered because of notable difficulties in advancing through the usual interlocutory steps given that most of those to be questioned (other than Dr.

Hanne) reside in Germany and because of translation difficulties in oral examination and with respect to the relevant documentation. By order dated November 3, 2010, a

summary trial date was set for May 4 and 5, 2011. However, the trial was adjourned to accommodate Dr. Hanne’s appeal of an order to compel answers to questions. The Alberta Court of Appeal dismissed the appeal on June 17, 2011, and a new date for the

summary trial was set on a peremptory basis. Deadlines were fixed for the filing of further evidence. The trial took place on June 18 and 19, 2012 and my decision was reserved. Issues [ 8 ] The parties in their submissions disclose the following issues: (a). Is this action suitable for a

summary trial? (b). If this action is suitable for

summary trial, is viva voce evidence required for the proper hearing of the issues? (c). Should the expert reports (Kügel and Hüllen) and the Kügel letter dealing with interest on the German judgment be admitted despite procedural impediments? (d). Has the test for enforcement of foreign judgments in Canada been satisfied? (e). If the test has been satisfied, do any of the three legal defences (fraud, public policy or denial of natural justice) shield Dr. Hanne from enforcement of the judgment in Alberta?

Analysis (a). Is this action suitable for a

summary trial? [ 9 ]

Part 7 of the Alberta Rules of Court “Resolving Claims Without Full Trial” specifically allows, among other things, applications for judgment after an abbreviated hearing by way of a

summary trial. The enabling rule provides the following: Rule 7.5

(1) A party may apply to a judge for judgment by way of a

summary trial on an issue, a question, or generally. [ 10 ] The case management judge dealt with the preliminary application and left the ultimate decision on appropriateness to the

summary trial judge. [ 11 ] Objections to

summary trial are addressed in Rule 7.8(1) and (3): Rule 7.8(1) The respondent to an application for judgment by way of a

summary trial may object to the application at or before the hearing of the application on either or both of the following grounds:

a) the issue or question raised in the claim, or the claim generally, is not suitable for a

summary trial; (

b) a

summary trial will not facilitate resolution of the claim or any part of it.

(3) The judge must dismiss the objection if, in the judge’s opinion, (

a) the issue or question raised in the claim, or the claim generally, is suitable for a

summary trial, and (

b) the

summary trial will facilitate resolution of the claim or a part of it. [ 12 ] The trial judge is granted certain authority by Rule 7.9 (1) and (2): Rule 7.9(1) After a

summary trial, the judge may (

a) dismiss the application for judgment, or (

b) grant the application and give judgment in favour of a party, either on an issue or generally.

(2) Judgment must be granted after a

summary trial unless (

a) the application is dismissed, (

b) on the evidence before the judge, the judge is unable to find the facts necessary to decide the issues of fact or law, or (

c) the judge is of the opinion that it would be unjust to decide the issues on the basis of the

summary trial.

[13] In addition to arguments about the test for enforcement in Canada, Dr. Hanne submits that SHN’s application for

summarytrial should be dismissed because viva voce evidence is necessary to determine the issues, the translation of documents from Germany isunreliable and the German court system is so different in kind from the Canadian common law system as to be more or lessincomprehensible without expert evidence. The expert evidence that is before this Court, he submits, is in conflict and a conventionalcivil trial including the usual array of pre-trial steps is required to reconcile them. [14] SHN relies on the pre 2010 Alberta Rules of Court, Alta Reg 390/1968 case for assistance in determining what this Courtshould consider in deciding whether

summary trial proceedings are suitable. In particular, the Alberta Court of Appeal’s decision in J.N.v G.J.K., 2004 ABCA 394, 361 AR 177, sets out the two basic considerations at para 40: The test for whether a

summary trial is appropriate is twofold: 1) can the court decide disputed questions of fact on affidavits or by anyof the other proceedings authorized by the Rules for a

summary trial? 2) would it be unjust to decide the issues in such a way? See rule158.6(1)(

a) and Bank of Montreal v. Lysyk et al. (2003), 2003 ABQB 186 , 334 A.R. 308; 2003 ABQB 186, at para. 4. [15] With respect to the suggestion that the old and relatively new rules create a difficulty, it is clear that the case law arising fromcourt consideration of the previous Rules of Court may be considered. Graesser J., in Bonsma v Tesco Corp., 2011 ABQB 620 observedat para 27: I do not see that the new Rules have done anything to make the previous case law inapplicable to the determination as to suitability. Ifanything, with the foundational rules emphasizing proportionality, efficiency, economy and expedience, processes like

summary trialsshould be encouraged. Nevertheless, the process must still be suitable and likely to facilitate resolution of the claim. [16] The courts have fleshed out the two basic requirements for suitability of a case for

summary trial.

In Pecek v Fedun, (2007),ABQB 133, 2007 ABQB 133 , 427 AR 356 at para 6,Wachowich C.J., relied on those factors previously cited in Duff v Oshust,(2005), ABQB 117, 2005 ABQB 117 , 381 AR 386: i. the amount involved; ii. the complexity of the matter; iii. its urgency; iv. any prejudice likely to arise by reason of delay; v. the cost of taking the case forward to a conventional trial in relation to the amount involved; vi. the course of the proceedings; vii. whether all witnesses or only some were (will be) cross-examined in court; viii. whether there is a real possibility that the defendant can bolster its evidence by discovery of the plaintiff's documents andwitnesses; and ix. whether the resolution will depend on findings of credibility. [17] There is nothing before this Court which suggests that the amount of the judgment although substantial would precludesummary trial proceedings.

The issues here have been more cumbersome than complex because of the need for translating documentsfrom German, the quality of which Dr. Hanne has complained about. Surely it is up to him to retain reliable translation services for thosedocuments he seeks to rely upon. Five years have now passed since SHN brought its action to enforce its German judgment. Theproceedings have been protracted and sufficiently difficult as to have required case management. There was no list of possible witnessesother than the parties themselves who would likely testify in a full civil trial other than German lawyers.

A transcript of Dr. Hanne’s ownevidence forms part of the court record. Dr. Hanne describes a somewhat excruciating process in effecting his examination anddifficulties getting answers to questions. This prompted his appeal of the case management judge’s decision on what questions would andwould not be answered. The Alberta Court of Appeal dismissed the appeal having found that the line of questions were not relevant. [18] Similar issues on questioning were raised in these proceedings, but this Court accepts the view of the Court of Appeal and hasno need to look beyond its decision.

[ 19 ] I see little if any likelihood that Dr. Hanne would be able to bolster his evidence by further discoveries which his own counsel appears to have characterized as a fruitless exercise. Further, Dr. Hanne had the opportunity to examine other potential witnesses but elected not to do so. [ 20 ] Dr. Hanne submits that under factor ix credibility issues (in particular conflicting affidavit evidence) which are crucial to his case need to be resolved to ensure the result would not lead to injustice. For that reason, he argues, this case is not suitable for a

summary trial. [ 21 ] The Court of Appeal in J.N. cited Compton Petroleum Corp. v. Alberta Power Ltd. 1999 ABQB 42 , 242 AR 3 for the variety of ways a court may resolve issues of conflicting affidavit evidence in

summary trial proceedings (paras 42 and 43): Credibility findings are often crucial when there is conflicting affidavit evidence. However, rule 158.6 expressly provides that in a

summary trial the judge may grant judgment in the face of conflicting evidence.

In Compton , supra , at para. 14, the court set out a variety of methods used by courts to resolve issues of conflicting affidavit evidence: an inference can be drawn based on common sense; deponents of affidavits can be ordered to be cross-examined in front of the judge; the conflicting evidence does not need to be resolved to decide the case on its merits; there may be other admissible evidence that will make it possible to find the facts necessary for judgment; a witness’ evidence may be weighed in terms of consistency with other evidence.

The court concluded at para. 15 that “given the express language in Alberta’s rule and the ability of the court to order cross-examination of deponents and oral evidence before it” issues of credibility can be tried by way of

summary trial, unless the court is “unable, on the whole of the evidence, to find the facts necessary to decide the issues of fact or law required or if it would be ‘unjust’ to decide those issues on the material before it.” The ability of the court to resolve the issues before it will depend on the nature and quality of the material before it: Compton at p. 16. [ 22 ] It is not clear from Dr. Hanne’s submissions what credibility issues need to be resolved other than the fact that the experts have different views about how the German courts operate.

There is no dispute that the German legal system does not parallel the Canadian common law legal tradition. However, a reading of expert reports does not disclose a significant divergence of opinion given the limited role of this Court to peer behind the German court procedures. In any event, this is not something which requires resolution to determine the issues. [ 23 ] Accordingly, I find that

summary trial is suitable in all of the circumstances of this action and will facilitate the resolution of the issues. (b). Is viva voce evidence required for the proper hearing of the issues? [ 24 ] Oral evidence is required in

summary trial proceedings when it is not possible to determine the legal issues before the court

and where it would render the process unjust. ( Compton at paragraphs 19 and 20) The affidavit evidence in these proceedings sets out the history of this matter in detail, the facts leading up to the litigation as well as details of the litigation process itself. There appears to be no substantial disagreement about what took place. There are also transcripts of the examination of the affiants of some of those affidavits. [ 25 ] In an order dated November 3, 2010, the case management judge fixed December 16, 2010, as the deadline for any applications for admission of viva voce evidence.

No applications were filed. [ 26 ] Since the parties themselves failed to bring an application for such evidence, it can be concluded that they did not believe it was needed. I have no basis on which to order viva voce evidence. (c). Should the expert reports be admitted despite procedural impediments? [ 27 ] SHN objects to two expert reports on the basis that neither is objective. The two reports were provided by Mr. Hüllen, and Ms. Kügel, both lawyers. SHN also objects to Ms. Kügel’s letter which Dr.

Hanne seeks to have admitted into evidence stating that SHN’s claim for interest is statute barred under German law because of a missed limitation date. [ 28 ] The first objection is that neither report is independent and in particular are not arm’s length. Mr. Hüllen is a lawyer who has represented Dr. Hanne in the past, and helped arrange legal counsel (Mr. Giese) for him in the proceedings in the German courts from which the judgments sought to be enforced arise. He also instructed Mr. Giese in the proceedings and reported back to Dr. Hanne who was in Canada at the time. [ 29 ] The objection to Ms.

Kügel’s report is similar. There is no curriculum vitae setting out her qualifications which would establish her expertise in German civil procedure and no arm’s length relationship either. Ms. Kügel practises law in the same firm as Mr. Hüllen. SHN also submits that Ms.

Kügel’s report does not address the procedural deficiencies of the German system but rather, the substantive issues of the German proceedings which are not relevant to the issue of enforcement of the judgment in Alberta. [ 30 ] It is clear that the reports have impediments, but it is this Court’s view that since SHN has had an opportunity to respond and has indeed done so, the question is more one of the weight to be given than one of admissibility. [ 31 ] Accordingly, the reports are admitted in evidence and this Court will determine what weight to give to them.

All of the expert reports provided by both parties address aspects of the substantive and procedural issues. [ 32 ] On Ms. Kügel’s letter, SHN argues that it should not be admitted because it is egregiously late; unsworn and the issue the letter addresses was not raised in Dr. Hanne’s Amended Statement of Defence. [ 33 ] I agree with SHN that there is nothing in the Amended Statement of Defence that raises anything about SHN’s claim for interest on the German judgment being statute barred by a limitation date under German law. Dr. Hanne did not make an application to amendment his Amended Statement of Defence.

Further, Justice Mahoney’s Order establishing a deadline for the filing of any additional evidence of April 16, 2012 should prevail. SHN received the Kügel letter June 11, 2012, one week before the commencement of this

Summary Trial. Accordingly, there is no basis upon which this Court should allow the Kügel letter to be admitted into evidence. It is also too late to raise a new limitations defence considering, in particular, that is not properly pleaded. (d). Has the test for enforcement of foreign judgments in Canada been satisfied? [ 34 ] The Supreme Court of Canada (majority decision) in Beals v Saldanha , 2003 SCC 72 , [2003] 3 SCR 416 at para 37 , sets out what must be considered in proceedings to enforce judgments from jurisdictions outside Canada:

There are conditions to be met before a domestic court will enforce a judgment from a foreign jurisdiction. The enforcing court [...] must determine whether the foreign court had a real and substantial connection to the action or the parties [...] A real and substantial connection is the overriding factor in determination of jurisdiction. The presence of more of the traditional indicia of jurisdiction ( attornment, agreement to submit, residence and presence in the foreign jurisdiction) will serve to bolster the real and substantial connection to the action or parties.

Although such a connection is an important factor, parties to an action continue to be free to select or accept the jurisdiction in which their dispute is to be resolved by attorning or agreeing to the jurisdiction of a foreign court. [Emphasis added] [ 35 ] Once it is held that a foreign court was a court of competent jurisdiction to pronounce a money judgment in personam which meets the requirement of finality, the Court must consider the defences raised which challenge recognition of the foreign judgment for enforcement purposes.

There are three such defences: fraud, public policy and denial of natural justice. [ 36 ] The jurisdiction requirement has been met by the fact that Dr. Hanne attorned to the jurisdiction by having had representative counsel attend the proceedings in both the trial ( Landgericht ) and appellate ( Kammergericht ) courts ( Beals at para 32 ; Spartan Securities Group Ltd. v Cote , 2012 ABQB 9 at paras 44-45 , aff’d 2012 ABCA 278 ). In any event, it must be noted that Dr. Hanne was in Germany when the events occurred and the business was conducted in Germany. [ 37 ] During these proceedings, counsel for Dr.

Hanne conceded that his client had attorned to the jurisdiction of the German courts. [ 38 ] Since jurisdiction is established, the Court must now consider whether the foreign in personam money judgment meets the two following preconditions: (1) whether the judgment is for a fixed sum of money and; (2) whether the judgment is final and conclusive ( Magellan v Miller , 2009 ABCA 124 , 448 AR 331 at para 19 ; Pro Swing Inc. v Elta Golf Inc. , 2006 SCC 52 , [2006] 2 S.C.R. 612 at para 10 ).

In this case, it is not disputed that although the German judgment requires conversion to Canadian currency, it is a liquidated amount together with specific costs orders (trial and appeal). A further appeal appears to have been denied and no additional appeals or complaints were pursued. [ 39 ] Accordingly, subject to Dr. Hanne’s legal defences, the test for enforceability of the German judgment in Canada has been satisfied. (e). Do any of the three legal defences - fraud, lack of natural justice and public policy- shield Dr. Hanne from recognition and enforcement of the judgment in Alberta?

The legal requirements [ 40 ] Generally, even when the jurisdictional requirement of “real and substantial connection” has been met; the foreign judgment meets the requirements of finality and conclusiveness as well as being a liquidated claim for a definite sum of money, the defences of fraud, public policy and denial of natural justice may be raised to contest the recognition and enforcement of a foreign judgment. The burden of proof reposes with the party seeking to impeach the judgment of the foreign court. [ 41 ] Counsel for Dr.

Hanne argues that the factual difficulties which occurred during the trial and appeal process in Germany give rise to all three defences, because it is a matter of how the defences are characterized and the facts applied. [ 42 ] Success on any of the three defences would have the effect of rendering the German judgment against Dr. Hanne unenforceable in Canada, and in Alberta specifically. Fraud as a Defence [ 43 ] While fraud is a defence to enforceability, there is also a concern that it may be improperly used to attempt a relitigation of

the issues previously tried and decided upon. For that reason caution has been advised in the application of the defence of fraud, inparticular that it should be interpreted narrowly (Beals at para 44). [44] Dr.

Hanne alleges fraud in two ways – on jurisdiction of the issuing court and on the merits of the case. [45] In considering fraud, the court in Beals conducted a review of the historic distinction between intrinsic (going to the merits)and extrinsic (going to jurisdiction) fraud, in this way: Courts have drawn a distinction between “intrinsic fraud” and “extrinsic fraud” in an attempt to clarify the types of fraud that can vitiatethe judgment of a foreign court.

Extrinsic fraud is identified as fraud going to the jurisdiction of the issuing court or the kind of fraud thatmisleads the court, foreign or domestic, into believing that it has jurisdiction over the cause of action. Evidence of this kind of fraud, ifaccepted, will justify setting aside the judgment. On the other hand, intrinsic fraud is fraud which goes to the merits of the case and tothe existence of a cause of action.

The extent to which evidence of intrinsic fraud can act as a defence to the recognition of a judgmenthas not been as clear as that of extrinsic fraud. [46] Fraud related to jurisdiction can always be raised. However, where it is relied upon to defeat enforceability, it must not go tothe “merits of a foreign judgment” unless the “allegations are new and not the subject of prior adjudication” (Beals at para 51): The historic description of and the distinction between intrinsic and extrinsic fraud are of no apparent value and, because of their abilityto both complicate and confuse, should be discontinued.

It is simpler to say that fraud going to jurisdiction can always be raised before adomestic court to challenge the judgment. On the other hand, the merits of a foreign judgment can be challenged for fraud only where theallegations are new and not the subject of prior adjudication.

Where material facts not previously discoverable arise that potentiallychallenge the evidence that was before the foreign court, the domestic court can decline recognition of the judgment. [47] Fraud related to jurisdiction was very recently addressed by Finch C.J. in Lang v Lapp, 2010 BCCA 517, 11 BCLR. (5th) 280at para 20: Fraud going to jurisdiction is an exception to the generally applicable new evidence or due diligence requirement.

According to the textCastel & Walker: Canadian Conflict of Laws, vol. 1., 6th ed. (Markham, Ont.: LexisNexis, 2005) loose-leaf updated 2010, release 19 at14-42, the exception exists because facts that relate to jurisdiction are so fundamental that they should always be open to attack. Thisprinciple was set out by the Supreme Court of Canada in Powell v. Cockburn, (SCC), [1977] 2 S.C.R. 218, and again inBeals. These cases are binding precedent and the proposition that fraud going to jurisdiction can always be raised, even withoutsatisfying the due diligence requirement, must be accepted as settled law.

Though no due diligence requirement applies it should beremembered that “[e]ven within the limited area of what might be termed jurisdictional fraud there should be great reluctance to make afinding of fraud for obvious reasons”, Powell at 234. [48] Dr. Hanne presents five written arguments in support of the defence of fraud regarding both jurisdiction and on the merits ofthe case, as follows: [t]he German Courts demonstrated what could only be construed as a level of fraud against Dr. Hanne in the circumstances: 1. The Landgericht demonstrated its bias against Dr.

Hanne when it describes him under the heading “Facts of the Case” as “theDefendant whose whereabouts are unknown at present and who is searched for with an international arrest warrant...” There was no suchevidence before the Court unless Dr. Bröcker-Meub submitted such evidence on behalf of SHN. Nevertheless, Dr. Hanne wasrepresented by counsel before the Landgericht. In any event, the statement was simply not true. 2. The Landgericht admitted into evidence allegations of Criminal proceedings having been brought against Dr. Hanne.

Theimportance of admitting that evidence was that it allowed SHN to avoid the impact of the normal limitation date for bringing its actionagainst Dr. Hanne. It also associated Dr. Hanne with an element of criminality that could only have created a bias against him. That bias

was originally generated by Dr. Bröcker-Meub when he reported Dr. Hanne to the Public Prosecutor and then convinced both theLandgericht and the Kammergericht that the Public Prosecutor, the office charged with administering Criminal Law in Germany, had afile on Dr. Hanne. 3. As noted above, no Criminal prosecution was ever launched against Dr. Hanne in this matter. Moreover, even if one had been,there would have had to have been a conviction entered against Dr. Hanne before such evidence would have been considered to berelevant and admissible in Alberta (see

Section 26 of the Alberta Evidence Act, R.S.A. 2000, c. A-18) (Tab 6). In fact, there was noprosecution. Dr. Hanne was not advised of any file being opened against him by the Public Prosecutor in this matter. There was certainlyno conviction of Dr. Hanne with respect to anything connected to the SHN claim. 4. The Appeal Court, the Kammergericht, accepted into evidence documents which should have been submitted to the Trial Court,the Landgericht. As noted, these documents were available to SHN before the Trial.

Clearly, these documents would not have beenadmitted into evidence by an Alberta or Canadian Court. (Palmer v. The Queen, (SCC), [1980] 1 SCR 759, Tab 6) 5. What is worse is that the additional documents submitted by Dr. Bröcker-Meub to the Kammergericht to convince it to dismissDr. Hanne’s Appeal were done so on the basis of a “legal hint” given to Dr. Bröcker-Meub by the Kammergericht Judge, not on Dr.Bröcker-Meub’s initiative. This legal hint was given to Dr. Bröcker-Meub more than three years after the Landgericht decision. [49] In reply, counsel for SHN submits that since Dr.

Hanne did not plead the particulars of fraud in his Amended Statement ofDefence contrary to the provisions of the Alberta Rules of Court and for that reason, he should not be permitted to argue this defence inthese

Summary Trial proceedings. Rule 13.7 provides: A pleading must give particulars of any of the following matters that are included in the pleading: (

b) fraud; [50] SHN urges this Court to limit new and material facts to those which a defendant could not have discovered and brought to theattention of the foreign court through the exercise of reasonable diligence (Beals). SHN also submits that the first three points Dr. Hanneraises in his allegations of fraud could have been raised before the Kammergericht and therefore have no merit. In addition, SHN arguesthat points 4 and 5, although argued under the defence of fraud, do not speak to fraud but relate to natural justice. [51] On his first point, Dr.

Hanne submits that the Landgericht demonstrated its bias against him when the Court stated that the“Defendant whose whereabouts are unknown at present and who is searched for with an international arrest warrant...” as a fact of thecase. [52] Counsel for Dr. Hanne submits that the fraud perpetrated on Dr. Hanne arose when the German counsel for SHN, faced thelikelihood that it could not proceed against him because of a limitations problem, then himself made a claim for a criminal prosecution inorder to overcome it.

He explained that in Germany, bankruptcy is a type of quasi criminal offence which when raised before theGerman Court has the effect of extending the limitation period for proceedings in the civil courts. This process, unknown in Canadianlaw, has amounted to a fraud on the German trial and appellate courts. At no time did the prosecution proceed and it had no effect otherthan getting SHN around the limitation issue it faced. [53] Counsel for Dr.

Hanne also argues that his client’s expert’s opinion on German Court procedure states that this should nothave been permitted and had the illusion of a criminal offence not been permitted, the limitation period would have applied, the casewould not have proceeded, and a judgment would not have been entered. [54] He stated that although the issue was brought to the attention of both courts, nothing arose from it. [55] First, I agree with SHN that points 4 and 5 raised by Dr. Hanne in this case relate to natural justice which will be addressed

later in this judgment. [ 56 ] As SHN pointed out, the Amended Statement of Defence does not provide any particulars of fraud. Nonetheless, I conclude that even if such particulars were included in Dr. Hanne’s pleadings, the defence of fraud would fail. [ 57 ] Regarding the first point raised by Dr. Hanne under the defence of fraud, even if I accepted that the trial judge was in fact biased toward him, this issue could have been raised on appeal before the German Court. In any event, nothing turned on this point. [ 58 ] On Dr.

Hanne’s second and third points, there is no evidence sufficiently convincing that the German courts were misled into believing that they had jurisdiction over the action. For instance, it is clear in the German appellate Court judgment at pages 10 and 11 that the limitations issue was specifically raised before it; the fact that the courts did not rule in his favour or took no new steps to do something about it, does not support a finding that the court was misled or a fraud was visited upon it.

Denial of Natural Justice as a Defence [ 59 ] The defence of denial of natural justice will defeat recognition of the judgment and its enforcement, if Dr. Hanne demonstrates that the German proceedings were “contrary to Canadian notions of fundamental justice” ( Beals at para 59 ). This defence is “restricted to the form of the foreign procedure, to due process, and does not relate to the merits of the case” ( Beals at para 64 ). This Court must be satisfied that minimum standards of fairness have been accorded to Dr.

Hanne by the German legal system ( Beals at para 60 ). [ 60 ] In Beals (paras 62 and 65 ), the Court, defined fair process and provided examples of what is usually meant by “natural justice”: Fair process is one that, in the system from which the judgment originates, reasonably guarantees basic procedural safeguards such as judicial independence and fair ethical rules governing the participants in the judicial system. This determination will need to be made for all foreign judgments. Obviously, it is simpler for domestic courts to assess the fairness afforded to a Canadian defendant in another province in Canada.

In the case of judgments made by courts outside Canada, the review may be more difficult but is mandatory and the enforcing court must be satisfied that fair process was used in awarding the judgment. This assessment is easier when the foreign legal system is either similar to or familiar to Canadian courts. In Canada, natural justice has frequently been viewed to include, but is not limited to, the necessity that a defendant be given adequate notice of the claim made against him and that he be granted an opportunity to defend. [ 61 ] It is not disputed that in both the German trial and appellate proceedings, Dr.

Hanne was represented by counsel. It is not in dispute that Dr. Hanne had adequate notice of the proceedings. Nothing happened during either the trial or appeal which could not have been addressed at that time. Nothing happened during the appeal that could not have been the subject of a complaint leading to a further appeal. Nothing happened at either court that was outside the German rules of procedure. [ 62 ] In addition to what he raised under the defence of fraud, Dr. Hanne argues that there are several aspects of the German proceedings which support his argument that he was denied natural justice.

He submits that the appellate Court should not have opened up the case for further submissions by giving a “legal hint”, long after the trial and shortly before issuing its judgment. [ 63 ] The legal hint from the German appellate Court was that if more evidence was not provided on the breach of trust issue, Dr. Hanne’s appeal would succeed. This led to the Court allowing both parties to file further materials. Counsel for Dr. Hanne noted that Mr. Bröcker-Meub, who represented SHN at both German proceedings saw the Court’s legal hint as an unusual occurrence. In Mr. Bröcker- Meub’s opinion, the hint favoured SHN.

Counsel for Dr. Hanne argued that the hint was an indication of bias against Dr. Hanne in favour of SHN.

[ 64 ] Regarding Mr. Münch’s opinion that SHN submitted new materials to the appellate Court too late, SHN argues that there is no merit to that position. SHN submits that each time the appellate Court requested materials from SHN within particular time frames, SHN responded on time. SHN further notes that the last submissions prior to the August 24, 2006, appellate hearing were made on August 14, 2006, by Dr.

Hanne. [ 65 ] SHN submits that the legal hint for more materials by the appellate Court was not only acceptable, the appellate Court was obliged to admit new materials because they concerned an aspect that the trial Court had recognizably failed to see or had held to be insignificant (ss 139, 529 and 531(2) of the ZPO (German Code of Civil Procedure). SHN argues that the appellate Court sought further information because it was not satisfied that the breach of trust issue had been adequately addressed by the trial judge. [ 66 ] On the merits of the German case, Dr.

Hanne argues that the breach of trust or what Dr. Hanne’s expert, Mr. Münch, described as an “act of disloyalty”, was not proven. Relying on Mr. Münch’s and Ms. Kügel’s expert opinions, Dr. Hanne submits that in any event

an act of disloyalty is recognized in German law towards individual shareholders, not towards an entity such as a general partner. For that reason, Dr. Hanne argued that the claimant in the German action did not have a right to proceed against him. He further argued that under German law, it is the individual limited partner(

s) not a limited partnership itself which may bring a claim such as the one against Dr. Hanne. He argues that claims against Dr. Hanne involving criminality, in particular, would have to have been brought by an individual not by SHN. [ 67 ] Dr. Hanne also contends that the appeal was heard by a single judge, and not the usual panel of three. Under German law a single appellate judge can preside with the consent of the parties. He argues that he did not give his written consent. [ 68 ] SHN submits that, contrary to what Dr.

Hanne alleges, there is documentation from the German appellate Court indicating that the parties consented to the composition of the court -- one judge only. SHN argues that, in any event, Dr. Hanne could have made a further appeal in the German proceedings based on having not consented. [ 69 ] Based on the Münch’s expert opinion, Dr.

Hanne argues further that it is contrary to the Canadian principle of natural justice for a civil court in Germany to review an ongoing criminal court file or to examine a factual element of a criminal offence. [ 70 ] SHN addresses the role of criminal proceedings in civil cases under German law by first noting that based on the Mueller expert opinion, the fact of a criminal proceeding or criminal conviction is not binding on a civil court under German law, but that a civil court may conclude on its own that a criminal offence was committed. Mr.

Mueller, SHN’s expert witness, has been an Attorney-at-law in the Republic of Germany since January of 1998 and has been a Practitioner of Foreign Law in British Columbia since April 2004. [ 71 ] Mr. Mueller disagrees with Mr.

Münch’s opinion that it is problematic that “a civil court is obliged within the framework of an action for damages to examine [...] the satisfaction of a factual element of a criminal offence and to assess its own competence if the plaintiff supports its action upon this” because “in a normal case the criminal courts exclusively decide on the realisation of a factual element for a criminal offence”. To the contrary, Mr. Mueller opines in his written report: Under German law, the content or the result of criminal proceedings or criminal convictions is not binding on a civil court.

A civil court has to decide in its own capacity if a criminal offence was committed if relevant and does not have an obligation to inquire about the status of criminal proceedings that deal with the same facts of the case or parts. Hence it is for any civil court normal and not problematic at all to assess if a criminal offence was committed.

In this matter, the Landgericht Berlin and the Kammergericht decided that the prerequisites of §266 StGB were met. [ 72 ] In this regard, SHN concludes that there was no breach of natural justice and that the German appellate Court acted appropriately by referring to criminal proceedings. [ 73 ] Dr. Hanne submits that proof was available on a number of points that he had raised, but that the German courts chose not to

call the witnesses who supported his defence. He argues that this was an error of law. In addition, Dr. Hanne submits that SHN did not establish a damages claim against him and should have accepted new evidence on damages. [ 74 ] SHN points out a contradiction in Dr. Hanne’s position. On the one hand, Dr.

Hanne criticizes the appellate Court for requesting and admitting further evidence on breach of trust and on the other hand, criticizes the Court for not requesting and admitting evidence to support his defence. [ 75 ] Further, SHN argues that the appellate judgment contains a detailed calculation of damages suffered by SHN and that, in any event, the court’s decision as to whether new evidence should be admitted with respect to damages is discretionary. [ 76 ] Relying on his expert reports, Dr.

Hanne disagrees with the German courts with respect to the limitations issue and submits that SHN was out of time when it sued him. [ 77 ] SHN argues that the only defence applicable in this case is the allegation that Dr. Hanne was denied natural justice, but that there has been no such denial. Even if Dr. Hanne thought he was being denied natural justice, he could have appealed the German appellate Court’s decision. SHN submits that Dr. Hanne cannot raise deficiencies for the first time in Alberta when he had the opportunity to raise them in Germany.

For instance, if SHN was the wrong claimant, there is no reason why this could not have been raised in the German courts. [ 78 ] What follows is a review of the issues Dr. Hanne raises in support of his claim that he was denied natural justice by the German courts which if proven would be a complete defence to recognition and enforceability of the judgment in Alberta. [ 79 ] Generally, counsel for Dr.

Hanne argued that the German trial judge set a biased tone for the whole case when he stated in his judgment that: “The Defendant whose whereabouts are unknown at present and who is searched for with an international arrest warrant [...]”. [ 80 ] In my opinion, the fact that the trial judge mistakenly thought that Dr. Hanne had somewhat of an international fugitive status did not affect the fairness of the trial as this had no impact on the conclusions drawn by the trial judge.

In any event, there was a subsequent appeal where this mistake could have been corrected. [ 81 ] As noted by the experts, Münch and Mueller, it is clear that the German appellate Court did not grant leave to appeal its judgment. However, as Mr. Mueller explained in his report, sections 543, 544 and 547 of the ZPO , provided recourse to Dr. Hanne who could have lodged a complaint against the refusal to grant leave. Dr. Hanne did not lodge a complaint and therefore he did not further challenge the foreign judgment. [ 82 ] With respect to the legal hint issue, it is important to note that Dr.

Hanne was given the opportunity and indeed, provided replies and materials to respond to the appellate Court’s question too. In fact, Dr. Hanne was the last one to submit materials before the appellate Court. It cannot be said that there was unfairness to Dr. Hanne when both parties were given equal ability to file materials and to reply. I conclude that minimum standards of fairness have been met. [ 83 ] Dr. Hanne also raises concerns about the limitations issue facilitated by a criminal charge that went unprosecuted and a claim that the claimant was the wrong party in the lawsuit.

The appellate Court was alive to these issues. On the latter point, I agree with SHN that if Dr. Hanne believed that the claimant was the wrong party, his counsel could have raised this as early as the pre-trial stage or certainly at the trial and later at the appellate court levels. In light of the written judgment of the appellate Court, it is clear that the Court was alive to that issue. [ 84 ] Dr. Hanne also raised concerns about the fact a single judge and not the usual panel of three heard his appeal.

[ 85 ] Experts for both Dr. Hanne and SHN reach the same conclusion that consent of the parties was required for a single judge to hear the appeal. Dr. Hanne submits that written consent was necessary and that there is no evidence on the court file that he provided it or that his lawyer did so on his behalf.

Section 527 of the ZPO refers to consent but there is no requirement for “written” consent. It was Mr. Mueller’s opinion that the appellate Court “transferred the dispute to a single judge in accordance with §527(1) and

(4) ZPO and that both parties consented to such procedure”. [ 86 ] While it is doubtful that “written” consent was required, surely Dr. Hanne’s counsel could have raised the issue as a preliminary matter before the appellate Court if he believed no consent was given. In any event, Dr. Hanne did not appeal this further. [ 87 ] Dr. Hanne also submits that he was denied natural justice because the appellate Court refused to receive further evidence on damages.

In its judgment, the appellate Court appears to have carefully considered the evidence proffered on damages and then exercised its discretion not to admit new evidence. This exercise of discretion is not contrary to Canadian notions of fundamental justice. [ 88 ] The last issue relates to the connection between the criminal and the civil proceedings. [ 89 ]

Section 823 of the BGB (German Civil Code) addresses liability in damages (in force at the relevant time) and provides: 823

(1) A person who, intentionally or negligently, unlawfully injures the life, body, health, freedom, property or another right of another person is liable to make compensation to the other party for the damage arising from this.

(2) The same duty is held by a person who commits a breach of a statute that is intended to protect another person. If, according to the contents of the statute, it may also be breached without fault, then liability to compensation only exists in the case of fault. [ 90 ] In his report, Mr.

Münch offers this opinion: Irrespective of the assessment of the criminal prosecution proceedings a civil court is obliged within the framework of an action for damages according to §823 Par. 2 BGB to examine the satisfaction of a factual element of a criminal offence and to assess its own competence if the plaintiff supports its action upon this. [ 91 ] Mr. Münch suggests that it is contrary to the principle of natural justice for a civil court in Germany to review a criminal court file if that file was ongoing or had not been concluded and to examine a factual element of a criminal offence. In his report Mr.

Münch concludes that to examine a factual element of a criminal offence is problematic: “This is stipulated by law even if it is problematic, since in a normal case the criminal courts exclusively decide on the realisation of a factual element for a criminal offence.” [ 92 ] In this case, the German courts drew their own conclusion on the breach of trust issue (ss. 823 of the BGB and 266 of the German Criminal Code). I reiterate that Dr. Hanne was represented by counsel who acted for him during the trial and appellate proceedings. As pointed out by Mr.

Mueller, the content of criminal proceedings or criminal convictions is not binding on a civil court. I conclude that

section 823 of the BGB shows a high degree of judicial independence and that in this case minimum standards of fairness have been applied. [ 93 ] In

summary, after reviewing the parties’ briefs, expert reports and evidence submitted and considering the Beals decision, I find Dr. Hanne was not denied natural justice in this case. It is well established that the German legal system does not follow the common law approach of Canadian provinces such as Alberta.

However, the difference in the two systems and the differing applicable rules of evidence and procedure are not per se sufficient to support a claim of denial of natural justice unless it is shown that the German proceedings were contrary to Canadian notions of fundamental justice and that minimum standards of fairness have not been applied ( Beals at para 59 ff). Although the procedure is quite obviously different from what happens in similar cases in Canada, it must be said that the German process in Dr.

Hanne’s case “ reasonably guarantee[d] basic procedural safeguards such as judicial independence and fair ethical rules governing the participants”. It is clear that even if the alleged breaches of German civil procedure had been proven in this case, they would not have been sufficiently significant to amount to a breach of natural justice. Accordingly, Dr. Hanne has not proven his defence that he was denied natural justice. It is a minimum standard of fairness which applies ( Beals at para 60 ) and I see no evidence that such a standard was denied Dr. Hanne by the German legal system.

Public Policy as a Defence [ 94 ] The defence of public policy is intended to prevent the enforcement of foreign judgments which are contrary to the Canadian concept of justice. The focus is on whether the laws of the foreign jurisdiction are repugnant ( Beals at para 71 ). In Beals , the Supreme Court provides a framework for the inquiry on the question of how this defence would assist a defendant seeking to block the enforcement of a foreign judgment. Enforcement of a foreign judgment that is founded on a law contrary to the fundamental morality of the Canadian legal system would be prohibited.

Public policy considerations also protect against the enforcement of a judgment rendered by a foreign court proven to be corrupt or biased ( Beals at para 72 ). [ 95 ] Counsel for Dr. Hanne conceded that his knowledge is too limited to be able to assert that German law is “contrary to the fundamental morality of the Canadian legal system” but referring to Beals at para 72 , he submits that the German courts in this case were in fact biased against Dr.

Hanne. [ 96 ] SHN concedes that the German legal system is very different than our common law system, but adds that it is not morally repugnant. [ 97 ] In all the facts and circumstances of this case, there is no evidence before this Court that substantiates that the German courts were corrupted or biased. The public policy defence is without merit. Conclusion [ 98 ] I find that this action is appropriate for

summary trial; viva voce evidence was not required for the proper hearing of the issues and the test for enforcement of foreign judgments in Alberta has been satisfied and the defences raised by Dr. Hanne are without merit. Disposition [ 99 ] Accordingly, there will be an Order recognizing and enforcing the German judgment in Alberta in the total amount of the Canadian equivalent of ​1,056,800.25 and interest thereon which includes: (

i) Judgment of the German Regional Court, dated November 11, 2002, for ​1,022,583.70 plus interest; (ii) the order for costs of the German Regional Court, dated November 29, 2002 (and the subsequent order for correction dated January 13, 2003) in the amount of ​21,582.25 and interest thereon; and (iii) Costs Decision of the German Appeal Court, dated September 26, 2006, for ​12, 634.30 and interest thereon. [ 100 ] If the parties cannot agree with respect to the calculation of interest, they may seek an order within 30 days. Costs may be spoken to if necessary. Heard on the 18 th day of June, 2012 to the 19 th day of June, 2012.

Dated at the City of Calgary, Alberta this 12 th day of October, 2012. M.C. Erb J.C.Q.B.A. Appearances: A. Culos and S.D Petriuk for the Plaintiff D.A. McDermott, Q.C. For the Defendant