Spartan Securities Group, Ltd., Carl Dilley, Scott Reynolds, Victor Silva, A. Richard McCann, Island Capital Management, LLC v. The Black Diamond Fund, LLLP, 2012 ABQB 9

Court of Queen ’ s Bench of Alberta Citation: Spartan Securities Group, Ltd. v. Cote, 2012 ABQB 9 Date: 20120105 Docket: 1101 01469 Registry: Calgary Between: Spartan Securities Group, Ltd., Carl Dilley, Scott Reynolds, Victor Silva, A. Richard McCann, Island Capital Management, LLC and The Black Diamond Fund, LLLP Applicants - and - Cam Cote Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice C.M. Jones _______________________________________________________ I.

Introduction [ 1 ] On June 11, 2010, a judgment (the “Florida Judgment”) was entered by the United States District Court, Middle District of Florida, Tampa Division (the “Florida Court”). This application deals with enforcement of the Florida Judgment in Alberta. The Applicants (as defined herein) seek an Order for judgment against Mr. Cameron Cote (“Mr. Cote”, also referred to herein as the “Respondent” or the “Defendant”) in an amount comprising, in the aggregate: 1. the amount of the Florida Judgment; 2. pre-judgment interest; and 3. fees and disbursements. [ 2 ] Mr.

Cote asserts that it would be a breach of natural justice to grant the relief sought by the Applicants or, in the alternative, that if the relief sought by the Applicants is ordered, such order should be stayed, pending determination of:

(

a) whether the Applicants ’ seizure of certain assets (the “ Seizure ” ) has satisfied the Applicants ’ judgment; and (

b) the damages alleged to have been incurred by Mr. Cote and others arising from the Seizure and whether such damages (together with damages which may have arisen as a result of alleged wrongful interference with the business operations of Mr. Cote and others) should be set off against the Applicants ’ judgment. II. Facts [ 3 ] The following facts are relevant to this application. [ 4 ] The Florida Judgment was entered jointly and severally against Mr.

Cote and Cactrus Drink Systems Inc. ( “ Cactrus Nevada ” , also referred to herein as a “ Defendant ” ) in favour of Spartan Securities Group Ltd., Carl Dilley, Scott Reynolds, Victor Silva, A. Richard McCann, Island Capital Management LLC and The Black Diamond Fund LLP (collectively, the “ Applicants ” , also referred to herein as the “ Plaintiffs ” ). [ 5 ] Mr.

Cote was the President, CEO and sole Director of Cactrus Nevada. [ 6 ] The Florida Judgment devolved from an action (the “ Florida Action ” ) brought by the Applicants to recover funds advanced by them in respect of an investment opportunity. [ 7 ] As noted in the complaint attached as Exhibit “ A ” to the Affidavit of Carl Dilley dated January 25, 2011 (the “ Dilley Affidavit ” ), the Applicants alleged that the Florida Court had jurisdiction to hear the Florida Action.

This assertion was based on: 1. application of federal securities laws of the United States; and 2. “ subject matter ” jurisdiction arising from (

a) diversity of citizenship between the parties and (

b) the amount of the claim exceeding US $75,000. [ 8 ] The Applicants alleged that the proper venue was the Middle District of Florida because the events giving rise to their claim occurred in that District. They alleged that Mr. Cote and Cactrus Nevada induced the Applicants to invest in a proposal that would result in the issue of stock and debt of Cactrus Nevada. [ 9 ] Mr. Cote challenged the jurisdiction of the Florida Court to hear the Florida Action. Attached as Exhibit “ B ” to the Dilley Affidavit is a document entitled “ Motion to Dismiss Under Rule 12(

b) For Lack of Jurisdiction Over Cam Cote and Adoption of Defendant Cactrus Motion and Grounds for Dismissal ” (the “ Dismissal Motion ” ). Mr. Cote alleged in the Dismissal Motion that the Florida Court had no personal jurisdiction over him because he was always acting in his role as President of Cactrus Nevada and not in his personal capacity. [ 10 ] Mr. Cote ’ s challenge to the Florida Court ’ s jurisdiction was dismissed. Attached as Exhibit “ C ” to the Dilley Affidavit is an Order of the Florida Court (the “ April 24, 2009 Order ” ).

That Order determined that the Applicants ’ allegations were sufficiently detailed to raise a claim to relief that was “ plausible on its face ” and “ above the speculative level ” . The Florida Court also held that Mr. Cote had offered no evidence to refute the Applicants ’ assertions that he was not subject to its jurisdiction. [ 11 ] Mr. Cote subsequently filed an “ Answer and Affirmative Defenses to Complaint ” . This document is attached as Exhibit “ D ” to the Dilley Affidavit. The Applicants assert in their brief that this document is the equivalent of a Statement of Defence, as it would be

referred to in Alberta. They allege that filing this document amounts to attornment to the jurisdiction of the Florida Court. I note from the provisions of this document that Mr. Cote continued to deny the jurisdiction of Florida Court over him personally, while acknowledging that the Florida Court may have “ subject matter ” jurisdiction. [ 12 ] Mr. Cote attended at proceedings in the Florida Court on March 19, 2010. The Florida Court issued an order (the “ March 19, 2010 Order ” ) in respect of those proceedings. The March 19, 2010 Order provided, inter alia , as follows: (

a) Defendants shall comply fully and completely with Plaintiffs ’ request for production of documents on or before April 2, 2010 ; (

b) Defendants shall provide full and complete answers to Plaintiffs ’ interrogatories on or before April 2, 2010 ; (

c) Defendants ’ failure to comply with (

a) and (

b) will result in entry of a default final judgment upon proper motion by Plaintiffs; and (

d) Until Defendants cause new counsel to file a notice of appearance on their behalf, all future notices, pleadings, and orders, including a copy of the March 19, 2010 Order, shall be served on Defendants at Mr. Cote ’ s address, being 5 Riverview Circle, Cochrane, Alberta, Canada, T4C 1K2. [Emphasis in original.] [ 13 ] In Questioning on his Affidavit on March 24, 2011 (the “ Cote Questioning ” ), Mr. Cote acknowledged receiving a copy of the March 19, 2010 Order. [ 14 ] Following issuance of the March 19, 2010 Order, the parties entered into settlement negotiations and scheduled a mediation.

This mediation was scheduled for May 14, 2010 but was cancelled by the Applicants. Apparently, Florida law requires this to be done formally and the Applicants ’ Florida counsel sent a document called “ Plaintiff ’ s Motion to Cancel or Postpone Mediation Scheduled for May 14, 2010 ” (the “ Motion to Cancel Mediation ” ). In his Affidavit sworn March 21, 2011 (the “ Cote Affidavit ” ), Mr. Cote acknowledges receiving this document by email. [ 15 ]

Section 10 of the Motion to Cancel Mediation states as follows: Moreover, Plaintiffs anticipate filing a renewed motion for sanctions against Defendants, seeking the entry of final judgment against Cactrus and Mr. Cote, within the next twenty-four hours . [Emphasis added.] [ 16 ] Mr. Cote represented during the Cote Questioning and continues to take the position on this application that he did not read the Motion to Cancel Mediation carefully and, in particular, he did not read

section 10. [ 17 ] On May 14, 2010, the Applicants filed a pleading entitled “ Plaintiffs ’ Renewed Motion for Sanctions and Motion for Entry of Default Final Judgment Against Defendants Cactrus Drink Systems, Inc. and Cam Cote ” (the “ Motion for Sanctions and Default Final Judgment ” ). [ 18 ] Upon hearing the Motion for Sanctions and Default Final Judgment on May 14, 2010, the Florida Court issued: (

a) An order directing the Defendants to appear personally before the Florida Court on June 4, 2010 (the “ June 4, 2010 Hearing ” ) to show cause why default judgment should not be entered against them (the “ Show Cause Order ” ); and (

b) a Notice of Hearing: Show Cause Hearing scheduled Friday, June 4, 2010 (the “ Hearing Notice ” ).

[ 19 ] Email notices received from the Florida Court by the Applicants ’ Florida counsel indicate that the Hearing Notice and notification of the granting of the Show Cause Order were sent by the Florida Court to Mr. Cote at his Canadian address. Mr.

Cote denies receiving these notifications. [ 20 ] At the June 4, 2010 Hearing, the Florida Court issued an order granting the Applicants ’ Motion for Sanctions and Default Final Judgment (the “ June 4, 2010 Order ” ). [ 21 ] The Florida Court entered judgment in favour of the Plaintiffs (the “ Judgment in a Civil Case ” ) on June 7, 2010. [ 22 ] The Florida Court entered the Florida Judgment against the Plaintiffs on June 11, 2010. [ 23 ] Mr. Cote claims to have received by mail copies of the Motion for Sanctions and Default Judgment and the Show Cause Order on or about June 26, 2010. [ 24 ] Mr.

Cote claims to have received by mail copies of the June 4, 2010 Order, the Judgment in a Civil Case and the Florida Judgment in or around the first week of July 2010. [ 25 ] Pursuant to a Stipulation of Facts Agreed to by the Parties, the parties are agreed that the application before this Court is to proceed on these factual assumptions: (

a) that the Motion for Sanctions and Default Final Judgment and the Show Cause Order were first received by Mr. Cote on June 26, 2010; and (

b) that the June 4, 2010 Order, the Judgment in a Civil Case and the Florida Judgment were received by Mr. Cote in or around the first week of July 2010. [ 26 ] Mr. Cote received an email from the Applicants ’ Florida counsel on or about June 10, 2010 (the “ June 10, 2010 Email ” ). That email attached a draft of the Florida Judgment. [ 27 ] In response to the June 10, 2010 Email, Mr. Cote sent an email to the presiding Judge of the Florida Court on June 10, 2010. He asked that the Florida Judgment be set aside on the basis that he had had no notice of the June 4, 2010 Hearing.

He received no reply from the Florida Court. [ 28 ] Mr. Cote acknowledges receiving, together with the documents referred to in para. 24 above, a document entitled Civil Appeals Jurisdiction Checklist. Paragraph 2.(

a) of that document states that a notice of appeal must be filed within thirty days after the entry of the order or judgment appealed from, thus alerting Mr. Cote to the appeal period. [ 29 ] The Respondents, in their brief, acknowledge that Mr. Cote “ ...was aware that he could have appealed the final judgment and wished to do so, but he was not able to do so because he could not afford the $63,000.00 bond. ” [ 30 ] One of the Applicants, Carl Dilley, effected seizure of certain patents (the “ Patents ” ).

The Patents were owned by Cactrus Drink Systems Inc., which was registered as an Alberta company ( “ Cactrus Alberta ” ).Cactrus Alberta appears to be a different entity from Cactrus Nevada, Mr. Cote ’ s co-defendant against which the Florida Judgment was entered.

[ 31 ] The Applicants take the position that the Patents were not owned by Mr. Cote or Cactrus Nevada and cannot, therefore, be said to have been seized in partial or full satisfaction of the Florida Judgment. However, no explanation was provided by the Applicants regarding the reason for the Seizure. [ 32 ] Mr. Cote does not dispute that the Patents are owned by Cactrus Alberta. Rather, he appeared during the Cote Questioning to be uncertain regarding whether the Florida Judgment was entered against Cactrus Alberta or Cactrus Nevada. [ 33 ] Mr.

Cote asserts that the Court on this application should also deal with the Seizure and the consequential wrongful interference with his economic relations. However, there is no evidence before the Court on this application with respect to any security arrangements potentially applicable to the Patents, to the Seizure process, including where it should have been effected and what notice needed to have been given, and to the application (or non-application) of the provisions of the Civil Enforcement Act , RSA 2000, c-15 (the “ CEA ” ). III. Applicants ’ Argument A.

Breach of Natural Justice [ 34 ] The Applicants argue that registration of the Florida Judgment in Alberta is not a breach of natural justice because: 1. through his actions, Mr. Cote attorned to the jurisdiction of the Florida Court; 2. the Florida Court had jurisdiction to issue the Florida Judgment because the common law tests for enforcement of a foreign judgment in Alberta are satisfied; and 3. even if this Court accepts Mr. Cote ’ s assertions in paras. 23 and 24 above regarding the dates upon which he first received the documents referred to therein: (

a) he knew or ought to have known that the Applicants were about to take further steps towards recovery; (

b) he received notice of the Florida Judgment the day before it was to be entered; and (

c) he did not appeal the Florida Judgment. B. Seizure of Patents [ 35 ] The Applicants argue that the circumstances surrounding the Seizure should not interfere with enforcement of the Florida Judgment in Alberta because: 1. there is no credible evidence to suggest that the value of the Patents exceeds the value of the Florida Judgment; 2. Mr. Cote has taken no steps to extinguish the Florida Judgment on the basis that it was satisfied by the Seizure;

3. the Patents were not owned by Mr. Cote or by Cactrus Nevada and, for that reason, recognition in Alberta of the Florida Judgment should be de-coupled from consideration of the effect of the Seizure on the Applicants ’ ability to seek such recognition; 4. any steps taken to address alleged wrongful seizure of the Patents should take place in the United States because Cactrus Nevada, the debtor under the Florida Judgment, is a United States corporation; and

Section 46 of the CEA affords Mr. Cote an opportunity to object to seizure of the Patents and any such objection properly should be brought after the Florida Judgment is entered in Alberta. IV. Respondent ’ s Argument A. Breach of Natural Justice [ 36 ] Mr.

Cote argues that enforcement of the Florida Judgment in Alberta is a breach of natural justice because: 1. he did not receive notice of the June 4, 2010 Hearing in time to appear and make representations; 2. the requirement to post a bond in the amount of US $63,000 in order to launch an appeal in respect of the Florida Judgment effectively denied him that right, given his financial circumstances; and 3. the Applicants ’ actions warrant a stay of enforcement of the Florida Judgment. B. Seizure of Patents [ 37 ] Mr.

Cote argues that the circumstances surrounding the Seizure should preclude enforcement of the Florida Judgment in Alberta because: 1. he should have received notice of the Seizure;

Section 46 of the CEA is not available to him in these circumstances if the Patents are not owned by Cactrus Nevada; and 3. the validity of the Seizure and its implications for the Florida Judgment should be dealt with in any proceedings to enforce the Florida Judgment in Alberta. V. Discussion A. Breach of Natural Justice

[38] Before considering possible defences, it is necessary to consider the basis upon which enforcement of a foreign judgment willbe granted by this Court. The analysis proceeds in two stages. In the first stage, the Court examines whether either (

i) there is a “real andsubstantial connection” between the foreign jurisdiction and either the subject matter of the litigation or the party to it, or (ii) the partyattorned to the foreign jurisdiction. Assuming satisfaction of either or both of (

i) and (ii), the second stage of the analysis then requiressatisfaction of the following three conditions: 1. the foreign judgment must be an in personam judgment; 2. the foreign judgment must be for a fixed sum; and 3. the foreign judgment must be “final”. [39] Confirmation of the need to satisfy these three requirements as part of the second stage analysis may be found at para. 19 ofthe decision of the Alberta Court of Appeal in Magellan Morada Investment Limited Partnership v. David B. Miller, John W.C. Willockand Marianne Willock, 2009 ABCA 124 (“Magellan”). 1.

The First Stage [40] Is there a real and substantial connection between Florida and either the subject matter of the Florida Action or Mr. Cote?Alternatively, did Mr. Cote attorn to the jurisdiction of the Florida Court? Indeed, is the determination of a real and substantialconnection between Florida and Mr. Cote conceptually distinct from a determination of whether Mr. Cote attorned to the jurisdiction ofthe Florida Court or is the latter a determinant of the former? [41] Several decisions are helpful in understanding the scope of the first stage analysis. In Skaggs Companies Inc. v.

MegaTechnical Holdings Ltd. and Mega Technical Holdings Ltd. Operating as Mega-Tech, 2000 ABQB 480 (“Skaggs”) Master Funduk notesthe following at paras. 17 and 18: The common law rules on the recognition of foreign judgments against a non-resident recognize the foreign court's jurisdiction over thenon-resident if the non-resident has in some fashion submitted to the foreign court's jurisdiction. The common methods of submission areby entering an appearance in the foreign lawsuit or by contractually agreeing to the foreign court's jurisdiction. Both are not necessary.Either will suffice.

The “substantial connection” test is irrelevant where the defendant has submitted to the foreign court's jurisdiction ... [42] This quote suggests that there are two alternative methods by which the first stage test may be met. Thus, if this Court findsthat Mr. Cote attorned to the jurisdiction of the Florida Court, it need not find there to be a “real and substantial connection” betweenFlorida and either the subject matter of the Florida Action or Mr. Cote. [43] The decision of the Supreme Court of Canada in Beals v.

Saldanha 2003 SCC 72 , [2003] 3 S.C.R. 416 approachesthe first stage analysis somewhat differently. Speaking for the majority of the Court, Major, J. articulates the following principles: 1. Subject to the legislature’s adopting a different approach by statute, the “real and substantial connection” test should apply to theenforcement and recognition of foreign judgments [para. 28];

2. The “real and substantial connection” test articulated by the Supreme Court of Canada in Morguard Investments Ltd. v. DeSavoye, (SCC), [1990] 3 S.C.R. 1077 (“Morguard”) in connection with recognition of interprovincial judgments shouldapply to recognition of foreign judgments [para. 19]; 3. As articulated in Morguard, recognition of another province’s judgment requires that other court to have properly exercisedjurisdiction in the action.

Properly exercising jurisdiction requires there to have been either a real and substantial connection with thesubject matter of the action or a real and substantial connection with the party against whom the foreign judgment is sought to beenforced [para. 23]. This observation suggests, as was articulated in Skaggs, that the first stage requirement for a real and substantialconnection may be satisfied if the party (in this case, Mr.

Cote) attorned to the jurisdiction of the Florida Court, even if the subject matterof the Florida Action might not, from the perspective of an Alberta court, otherwise have been viewed as having a real and substantialconnection with Florida. 4. Individuals who carry on business in a foreign jurisdiction should be required to defend themselves there when an action iscommenced [para. 25]; 5. Foreign default judgments should be enforceable to no lesser extent than judgments after trial, unless there is unfairness or someother compelling reason not to enforce them [para. 31]; 6.

The “real and substantial connection” test requires that a significant connection exists between the cause of action and the foreigncourt. Furthermore, a defendant can reasonably be brought within the embrace of a foreign jurisdiction’s law where he or she hasparticipated in something of significance or was actively involved in that foreign jurisdiction [para. 32]; 7. A real and substantial connection is the overriding factor in the determination of jurisdiction.

The presence of the traditionalindicia of jurisdiction (attornment, agreement to submit, residence and presence in the foreign jurisdiction) will serve to bolster the realand substantial connection to the action or parties. Although such a connection is an important factor, parties to an action continue to befree to select or accept the jurisdiction in which their dispute is to be resolved by attorning or agreeing to the jurisdiction of the foreigncourt [para. 37]; and 8. As stated in J.-G. Castel and J.

Walker, Canadian Conflict of Laws, 5th ed., loose-leaf updated May 2003, Issue 5 (Toronto:Butterworths, 2002) at p. 14-10 [para. 34]: For the recognition or enforcement in Canada of a foreign judgment in personam, the foreign court must have had jurisdiction accordingto Canadian rules of conflict of laws. [44] I conclude from these principles in Beals that, for the purposes of the first stage analysis, a real and substantial connectionwith the subject matter of the action is not a requirement, provided the party against whom the foreign judgment is sought to be enforcedhas effectively attorned to the jurisdiction of the foreign court.

Conversely, for purposes of that analysis, attornment is not required toestablish the required degree of “real and substantial connection” provided there is a real and substantial connection with the subjectmatter of the action. [45] On the issue of attornment, I note the comments of Fraser C.J.A. at para. 5 of Magellan, where she noted that taking steps todefend a foreign action constitutes attornment to that jurisdiction.

In the same vein, the Supreme Court of Canada held in Beals at para.34 that the party in that case had attorned to the jurisdiction of the Florida court when he entered a defence to the action. [46] What indicia of real and substantial connection exist in this situation? First, as noted at para. 8 of the Applicants’ brief, theApplicants were resident in Florida. Second, the terms of the April 24, 2009 Order dismissing Mr.

Cote’s challenge of the Florida Court’sjurisdiction reflect a reasoned approach to the determination of the trial court’s grounds for determining if, at the initial stages of theaction, it had a basis for asserting jurisdiction over Mr. Cote. The Florida Court reviewed the Plaintiffs’ detailed allegations regarding theextent of Mr. Cote’s participation in the alleged fraudulent scheme and concluded that Mr. Cote had advanced no evidence to refute thePlaintiffs’ assertions. Third, Mr. Cote did not appeal that order; and fourth, as noted above, when Mr.

Cote’s challenge to the FloridaCourt’s jurisdiction was dismissed, he filed an “Answer and Affirmative Defenses to Complaint”. The Applicants assert in their brief thatthis document was the equivalent of a Statement of Defence, as it would be referred to in Alberta. The Respondent does not challenge

that assertion in his brief. [47] I am satisfied that: (

a) the action had a real and substantial connection with Florida, based both on there being a real and substantial connection betweenFlorida and the subject matter of the action and on Mr. Cote’s actions in defending the Florida Action; and (

b) the Florida Court properly assumed jurisdiction over the Florida Action. Accordingly, the requirements of the first stage analysis have been satisfied. 2. The Second Stage [48] The second stage analysis requires the Court to be satisfied that: 1. the foreign judgment is an in personam judgment; 2. the foreign judgment is for a fixed sum; and 3. the foreign judgment is “final”. [49] Does the Florida Judgment satisfy these requirements? Quoting the decision in Four Embarcadero Center v.

Kalen (1988), (ON SC), 65 O.R. (2d) 551, Master Funduk notes at para. 28 of Skaggs that: “...a default judgment so long as itremains unreversed is to be treated as final...”. [50] I note from the terms of the Florida Judgment that judgment was granted jointly and severally against Cactrus Nevada andMr. Cote for a fixed sum representing actual damages and pre-judgment interest in the amount of US $628,331.70.

Those terms alsoinclude the following statement: It is the intent of this Court and ordered that this final judgment be the final judgment entered in this matter, disposing of all claimsasserted by or against all parties. [51] In addition, it is apparent that the Florida Judgment is an in personam judgment. The Florida Court clearly concluded that Mr.Cote was personally involved in the matters in question. By contrast, in Magellan, the Court of Appeal questioned whether one party wasinvolved in the matter or was brought into the action solely by virtue of her status as another party’s wife.

No such issue arises here. [52] Accordingly, I conclude that the requirements of the second stage analysis have been satisfied. Mr. Cote has not, in pleadingsor in oral argument, disputed this conclusion. 3. Defences to the Enforcement of the Final Judgment [53] Having satisfied the requirements of the first and second stages, the Florida Judgment must be given effect in Alberta unless adefence to its enforcement may be successfully advanced. As noted in Beals, those defences are fraud, public policy and breach ofnatural justice. The application before me addressed only breach of natural justice.

As has been stated in numerous decisions, the defence

of natural justice relates to the form of the foreign procedure and to due process, and does not relate to the merits of the case. [ 54 ] Mr. Cote argues that natural justice has been breached because he did not receive notice in time to appear at the June 4, 2010 Hearing and because he would have been required to post a bond of US $63,000 to appeal the Florida Judgment.

In Beals , Major J. offers the following guidelines in assessing the merits of this defence: 1. a party seeking to impugn a foreign judgement must prove, to a civil standard, that the foreign proceedings were contrary to Canadian notions of fundamental justice [para. 59]; 2. the domestic court must be satisfied that minimum standards of fairness have been applied to the defendants by the foreign court [para. 61]; 3. the burden of establishing unfairness rests with the party opposing recognition of the foreign judgment [para. 61]; 4. this Court must be satisfied that fair process was used in awarding the judgment [para. 63]; 5. the defence of natural justice is restricted to the form of the foreign procedure, to due process, and does not relate to the merits of the case.

It is limited to the procedure by which the foreign court arrived at its judgment [para. 64]; and 6. 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 [para. 65]. [ 55 ] In Beals , the majority of the Supreme Court of Canada determined that there was no breach of natural justice.

Having been personally served with originating pleadings and having attorned to the jurisdiction of the Florida court, the appellants in that action were, in the view of the majority, “ responsible for gaining knowledge of Florida procedure in order to discover the particularities of that legal system. ” [ 56 ] In the case at hand, Mr. Cote: 1. does not allege failure on the part of the Applicants to serve him with documentation which commenced the Florida Action.

He engaged Florida counsel, challenged the jurisdiction of the Florida Court and when his challenge was dismissed, filed what appears to constitute a defence; 2. appeared at the March 19, 2010 Hearing and was served with a copy of the March 19, 2010 Order. That Order directed service of further pleadings at his Alberta address. Admittedly, that Order does not specifically state that service at that address may effected by mail (as opposed to personal service).

However, as noted above, the Supreme Court of Canada is of the view that, having been personally served with originating pleadings and having attorned to the jurisdiction of the Florida court, the party becomes “ responsible for gaining knowledge of Florida procedure in order to discover the particularities of that legal system ” ; 3. was aware that failure to comply with the directions in the March 19, 2010 Order would result in entry of

summary judgment against him; 4. was aware that the Applicants intended to bring an application for

summary judgement against him before that application was initiated;

5. being aware that the Applicants intended to bring a further action for

summary judgement, did not engage Florida counsel for thepurpose of receiving timely notification of such action; and 6. received notice of the Florida Judgment prior to the date of its issue and, while sending an email to the Florida Court requestingthat its judgment be set aside for want of notice to him, did not pursue a formal appeal of the Florida Judgment as was his right. [57] Though Mr. Cote disputes having received them in time, the Florida Court on May 14, 2010 issued the Show Cause Orderand the Hearing Notice, both relating to the June 4, 2010 Hearing, in accordance with its procedure.

As noted above, the Florida Courtappears to have mailed the Show Cause Order and the Hearing Notice to Mr. Cote at the address he provided. It is important to note thatsimply mailing a “non-commencement” document to a party to litigation would not, under the Alberta Rules of Court, be sufficientunless the mailing required the recipient to acknowledge receipt in writing. See Rule 11.23(1) and the definition of “recorded mail” inAppendix A to the Rules. However, as noted by Shannon J., in LaPierre v.

Andrew (1983), (AB KB), 45 AR 220 atpara. 10: The principle that emerges from such cases is that a defective form of service can be deemed to be good and sufficient if it can beestablished that the document came to the attention of the party being served and as a consequence he acquired knowledge of the generalnature of the claim being pressed against him. [58] Under the circumstances, it would seem unreasonable to allow Mr.

Cote to assert that he was denied fundamental justicewhen he was aware that service would be effected upon him by mail and he had advance notice that the Applicants were likely to pursuedefault judgment against him. [59] Under the circumstances, I find that the defence of breach of natural justice is not available to Mr. Cote. Even using theparties’ agreed assumptions that (

i) he did not receive the Motion for Sanctions and Default Judgment and the Show Cause order untilJune 26, 2010, and (ii) he did not receive the June 4, 2010 Order, the Judgment in a Civil Case and the Florida Judgment until the firstweek of July 2010, I conclude that Mr. Cote was not deprived of his right to fundamental justice and his defence based on breach ofnatural justice fails.

He knew or ought to have known that the Applicants were about to pursue default judgment against him, he did notavail himself of the opportunity to ensure that he would receive timely notice of any subsequent proceedings to be taken against him andhe chose not to appeal the Florida Judgment. B. Seizure of Patents [60] Mr. Cote asserts that seizure of the Patents must be considered in this Court’s determination of whether to enforce the FloridaJudgment.

He argues that enforcement of the Florida Judgment and seizure of the Patents are inextricably intertwined and should beconsidered together. [61] While he acknowledges that the Patents were not owned by either him or Cactrus Nevada, he asserts that the Seizure haswrongfully interfered with his economic relations.

He argues these are appropriate circumstances in which this Court should expand itsexamination of the merits of enforcing the Florida Judgment in Alberta to consider the question of whether the Seizure was wrongful,gives rise to an action in Alberta and warrants set off of damages arising from the Seizure against amounts owing by virtue of the FloridaJudgment. [62] He asserts that, at the very least, enforcement of the Florida Judgment should be stayed, pending a determination of whetherhe and Cactrus Alberta have suffered damages as a consequence of the Seizure.

In support of this assertion, he points to para. 27 ofMagellan, wherein the Court of Appeal states: Accordingly, while an enforcing court should not delve into the merits of the foreign judgement, and indeed is not entitled to do so, itmay be necessary to consider broader issues, such as the effect of the requested order. Such an approach is in keeping with the SupremeCourt’s trend away from the mechanical application of rules governing the recognition of foreign judgements: see for example Pro Swingand Morguard.

[63] With respect, I believe the Court of Appeal was discussing the need to consider the intricacies of the foreign action to confirmthat the foreign judgement satisfied the requirement that the judgment be an in personam judgement against the defendant. As I foundabove, no such uncertainty arises in Mr. Cote’s situation. [64] Mr. Cote further disputes the Applicants’ assertion that s. 46 of the CEA is available to him to mitigate the effects ofenforcing the Florida Judgment in Alberta.

He notes that the Patents were owned by Cactus Alberta and not by him or Cactrus Nevada.He argues that any “offset” contemplated by s. 46 of the CEA is of no value to him if the Patents do not belong to either him or CactrusNevada. [65] Mr. Cote has not satisfied the Court that the Seizure should be a consideration in this matter if, as he appears to acknowledge,the Patents were not owned by either or both of him and Cactrus Nevada. To the extent that Mr.

Cote, Cactrus Alberta or Cactrus Nevadahas incurred damages as a consequence of the Seizure, those claimants presumably are entitled to commence an action in support of theirassertions. Such assertions would include arguments regarding appropriate parties to any such action, appropriate forum and applicablelaw, none of which was advanced by Mr. Cote during this application. VI. Conclusions [66] The Applicants seek judgment in Alberta in the amount of US $633,985.30, representing the aggregate of the followingamounts awarded by the Florida Court: 1. US $520,000.00 - actual damages 2.

US $108,331.70 - pre-judgment interest 3. US $5,303.60 - an amount awarded by the Florida Court in an Order datedMarch 31, 2010; and 4. US $350.00 - Applicants’ taxable costs US $633.985.30 [67] The Applicants further submit that this amount should be converted to Canadian dollars as of the date of the FloridaJudgment, being June 11, 2010. They point to Skaggs as this Court’s authority to grant this request. [68] In Skaggs, however, Master Funduk did not direct conversion to Canadian dollars effective as of the date of the foreignjudgment.

Rather, at para. 41, he ordered conversion effective as of the date of his judgment. In support of that conversion date, he notedthe decision in Salzburger Sparkasse v. Total Plastics Service Inc. (1988), (BC SC), 27 B.C.L.R. (2d) 333 (S.C.). [69] In the result, I direct that: 1. the Florida Judgment be entered in Alberta in the amount of US $633,985.30, converted to Canadian dollars at the rate ofexchange prevailing at the end of the day which is the date of this judgment; 2. pre-judgment interest is hereby awarded the Applicants from June 11, 2010 up to and including the date of this judgment.

Suchinterest shall be applied to the principal amount in Canadian dollars determined under 1.; and

3. subject to the Court ’ s review and approval of a bill of costs to be submitted by the Applicants, the Applicants shall have their costs on the appropriate column based on the Canadian currency amount determined in accordance with 1. Heard on the 22 nd day of November, 2011. Dated at the City of Calgary, Alberta this 5 th day of January, 2012. C.M. Jones J.C.Q.B.A. Appearances: Jennifer Biernaskie McLennan Ross LLP for the Applicants Larry S. Heald Barrister & Solicitor for the Respondent