David Barer Appellant v. Knight Brothers LLC, 2019 SCC 13

SUPREME COURT OF CANADA Citation: Barer v. Knight Brothers LLC, 2019 SCC 13, [2019] 1 S.C.R. 573 Appeal Heard: April 24, 2018 Judgment Rendered: February 22, 2019 Docket: 37594 Between: David Barer Appellant and Knight Brothers LLC Respondent Coram: Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ. Reasons for Judgment: (paras. 1 to 93) Gascon J. (Wagner C.J. and Abella, Moldaver, Karakatsanis, Rowe and Martin JJ. concurring) Concurring Reasons: (paras. 94 to 174) Brown J. Dissenting Reasons: (paras. 175 to 287) Côté J. Barer v.

Knight Brothers LLC, 2019 SCC 13, [2019] 1 S.C.R. 573 David Barer Appellant v. Knight Brothers LLC Respondent Indexed as: Barer v. Knight Brothers LLC 2019 SCC 13 File No.: 37594.

2018: April 24; 2019: February 22.

Present: Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ. on appeal from the court of appeal for quebec Private international law — Foreign judgments — Recognition — Personal actions of patrimonial nature — Default judgment rendered by Utah court against Quebec resident sued personally in contractual dispute between corporations — Quebec resident not party to contract but associated with dispute as officer of corporate defendants — Plaintiff seeking to have judgment recognized in Quebec and declared enforceable against Quebec resident — Whether Utah court had jurisdiction over Quebec resident under Quebec rules on indirect international jurisdiction in personal actions of patrimonial nature — Whether burden of proof for establishing jurisdiction rests on party seeking recognition of foreign judgment — Whether Quebec resident submitted to Utah court’s jurisdiction — Whether dispute substantially connected to Utah — Civil Code of Québec , arts. 3155(1), 3164, 3168(3), (4), (6).

B, a Quebec resident, was sued personally in the State of Utah together with two companies he allegedly controlled, CBC and BEC. The suit was brought by Knight, a Utah-based company, which claimed that BEC had a balance owing under a contract between them. Knight argued that B had fraudulently misrepresented that the defendants would pay a certain amount, that the corporate veil of the two companies should be lifted, and that the defendants had been unjustly enriched. B brought a motion to have the claim against him dismissed on a preliminary basis, raising that:

(1) Knight’s claim for fraudulent misrepresentation was barred at law; (2) the Utah court did not have jurisdiction over him personally; and

(3) Knight had failed to show that the corporate veil should be lifted. The Utah court dismissed B’s motion and a default judgment was eventually rendered against all three defendants. Knight then sought to have that decision recognized in Quebec and declared enforceable against B. The Superior Court ruled that the Utah court’s jurisdiction could be recognized on three possible grounds. Two of them related to the contract between Knight and BEC and the promise to pay allegedly made by B. However, the main ground for recognizing the Utah decision was the fact that B had submitted to the Utah court’s jurisdiction.

The Court of Appeal dismissed B’s appeal. Held (C ôté J. dissenting ): The appeal should be dismissed. Per Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Rowe and Martin JJ.: The Utah decision should be recognized and enforced against B in Quebec. B submitted to the Utah court’s jurisdiction in accordance with art. 3168(6) of the Civil Code of Québec (“ C.C.Q. ”) by presenting substantive arguments in his motion to dismiss that, if accepted, would have resolved all or part of the dispute.

This submission suffices to recognize the jurisdiction of the Utah court under the Quebec rules of indirect international jurisdiction. Given that the dispute has a substantial connection with Utah in light of B’s submission to the jurisdiction, art. 3164 C.C.Q. does not bar the recognition of the Utah court’s judgment against him. In accordance with the aim of facilitating the free flow of international trade, art. 3155 C.C.Q. establishes the principle that a decision rendered outside Quebec will generally be recognized and declared enforceable in the province.

This provision lists six exceptions that allow Quebec courts to depart from that general principle and refuse to recognize a foreign decision, the first being where a judgment is rendered by an authority that had no jurisdiction over the dispute under the C.C.Q. With respect to this first exception, Title Four of Book Ten of the C.C.Q. specifies the circumstances in which Quebec courts will recognize foreign jurisdiction. The purpose of these rules is to determine whether it is appropriate to integrate specific decisions rendered outside Quebec into the province’s legal system.

Such recognition of a foreign authority’s jurisdiction by local courts in accordance with the rules prescribed by local law has been referred to as the indirect international jurisdiction of the foreign authority. In personal actions of a patrimonial nature, art. 3168 C.C.Q. lists six situations where Quebec courts may find that a foreign authority has indirect international jurisdiction. The use of the word “only” in the opening sentence of art. 3168 C.C.Q. signals that the grounds enumerated are exhaustive, and the presence of a single ground will suffice to recognize jurisdiction.

Quebec courts must ascertain that the foreign authority had jurisdiction over the matter under the rules of the C.C.Q. This requires them to make a positive finding of jurisdiction; they cannot limit themselves to determining whether the party opposing recognition has satisfactorily proved lack of jurisdiction. An application for recognition and enforcement is a judicial demand giving rise to an adversarial relationship to which the general rules of civil procedure apply.

In this context, parties are not exempted from the requirement imposed by art. 2803 C.C.Q. of proving the facts on which the right to recognition and enforcement is based. The foreign authority’s jurisdiction is one such fact, and the onus is on the party seeking recognition to establish that fact and thus, to prove the facts upon which the foreign authority’s indirect international jurisdiction is based. The jurisdiction of the Utah court in the instant case cannot be established under art. 3168(3) or

(4) C.C.Q. Article 3168(3) C.C.Q. provides that the jurisdiction of a foreign authority is recognized in Quebec if both the injury and the fault that gave rise to the injury occurred in the state where the decision was rendered. For its part, art. 3168(4) C.C.Q. states that a foreign authority’s jurisdiction is recognized where its decision concerns obligations arising from a contract that were to be performed in that state. In this case, the exhibits filed by Knight before the Superior Court were essentially limited to documents reflecting the progress of the proceedings in Utah.

Knight could not rely on the allegations in its own proceedings before the Utah court in order to establish that court’s jurisdiction over B according to the rules of the C.C.Q. It had to adduce evidence before the Quebec enforcing court to meet its burden of establishing the grounds for recognition upon which it was relying. Knight failed to provide any evidence with regard to either art. 3168(3) or (4) insofar as B was personally concerned. Accordingly, the Superior Court could not, on this record, recognize the Utah court’s jurisdiction under either of those subparagraphs.

However, the lower courts were justified to conclude that the ground for recognition under art. 3168(6) C.C.Q. , submission to jurisdiction, was met in this case. Contrary to the grounds under art. 3168(3) and (4), the procedural facts underlying the claim under art. 3168(6) C.C.Q . are all supported by the exhibits filed. Submission has long been recognized in Quebec case law as a basis for a court’s jurisdiction, and is now expressly provided for in art. 3168(6) .

The question of whether the defendant has submitted to the jurisdiction of the foreign authority is assessed in light of the rules of indirect international jurisdiction set out in the C.C.Q . Under Quebec law, submission to jurisdiction can be either explicit or implicit, but it must be clear. After having submitted to the jurisdiction of

an authority, a defendant cannot withdraw its consent. The orderly administration of justice requires that, once jurisdiction has been validly established, the case proceed in the same forum regardless of the changing whims of the parties. Submission to jurisdiction is a question of mixed fact and law, as it involves applying a legal standard to a set of facts, weighing these facts and drawing inferences. Such a determination is not to be overturned absent palpable and overriding error, provided no extricable legal questions have been identified.

A defendant submits to jurisdiction when it presents substantive arguments which, if accepted, would resolve the dispute — or part of the dispute — on its merits. Parties who choose to advance substantive arguments to further their positions in a forum consent to the jurisdiction of that authority. The “save your skin” approach to submission to jurisdiction, whereby a defendant who presents a defence on the merits at the same time as its jurisdictional arguments will not be taken to have submitted to jurisdiction, should be rejected.

In this case, B presented at least one argument pertaining to the merits of the action against him in his motion to dismiss, which, if accepted, would have led to a final conclusion in his favour. The argument that Knight’s fraudulent misrepresentation claim was barred at law could have led the Utah court to conclusively dismiss that claim. Such a ruling would have attracted the authority of res judicata and precluded Knight from asserting that claim in another jurisdiction. B’s argument was thus akin to a defence on the merits for the purposes of submitting to the Utah court’s jurisdiction.

B has also failed to establish that, as a result of Utah procedural law, he had to proceed as he did and present all of his preliminary exceptions together. None of the evidence he adduced before the Superior Court supports that claim, and thus the latter made no palpable and overriding error in determining that submission to jurisdiction was established on the record. B’s submission to jurisdiction under art. 3168(6) C.C.Q. clearly establishes a substantial connection between the dispute and the Utah court.

The substantial connection test is set out in art. 3164 C.C.Q. and establishes the general principle for recognition of foreign authorities’ jurisdiction. It is not necessary to resolve in this case the issue of whether the establishment of a ground for recognition of the foreign authority’s jurisdiction under art. 3168 C.C.Q. always satisfies the requirement for a substantial connection between the dispute and the forum under art. 3164 C.C.Q .

Here, the fact that B participated in the legal proceedings in Utah to the extent of submitting to the Utah court’s jurisdiction suffices amply and raises no question as to whether the dispute is substantially connected with Utah and the Utah court. Per Brown J.: There is agreement with the majority that the appeal should be dismissed, but for different reasons. B has not submitted to the jurisdiction of the Utah court within the meaning of art. 3168(6) C.C.Q. ; rather, the jurisdiction of the Utah court has been established under arts. 3168(4), 3164 and 3139 C.C.Q.

When deciding whether to recognize a foreign decision, Quebec courts must review the evidence submitted to ensure that the foreign authority had jurisdiction under the rules of the C.C.Q. The record placed in the instant case is sufficient to decide whether art. 3168(4) C.C.Q. can support a finding of the Utah court’s jurisdiction. The causes of action asserted by Knight against the three defendants are all so closely connected that they represent different aspects of a single contractual dispute over which the Utah court had jurisdiction pursuant to art. 3168(4) C.C.Q .

Article 3168(4) C.C.Q. deals with jurisdiction based on connections with the subject-matter of the dispute, and not with jurisdiction based on connections with the defendant. All co-defendants are connected to the subject-matter of the dispute, which is contractual by nature, and which falls squarely within the jurisdiction of the Utah court under art. 3168(4) C.C.Q. The fact that B is not a party to the contract does not preclude art. 3168(4) C.C.Q. ’s application, insofar as other provisions of the C.C.Q. , such as arts. 3164 and 3139, confirm that the Utah court had jurisdiction against B personally.

Restricting the application of art. 3168(4) C.C.Q. in such a way would have the impermissible effect of imposing upon a plaintiff the burden of proving, before a Quebec court, its allegations of alter ego or fraud in order to justify the lifting of the corporate veil pursuant to art. 317 C.C.Q. This is impermissible because the question of whether to lift the corporate veil is a substantive legal issue, not a jurisdictional one. Quebec courts cannot review the merits of a case or retry parts thereof under Quebec’s recognition procedure (art. 3158 C.C.Q. ).

Thus, a defendant should not be able to resist recognition and enforcement on the ground that the foreign authority should not have lifted the corporate veil. Further, such a narrow

interpretation of art. 3168(4) is incompatible with the recent decision of Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP , 2016 SCC 30 , [2016] 1 S.C.R. 851, in which the Court stated that a connection between a claim and a contract does not necessarily require that a defendant be a party to the contract. In support of this conclusion, the Court referred by analogy to art. 3139 C.C.Q. , the provision granting jurisdiction to Quebec courts for reasons of administrative convenience.

Article 3139 C.C.Q. provides that if a Quebec authority has jurisdiction to rule on the principal demand, it also has jurisdiction to rule on an incidental demand. Courts must interpret Quebec’s private international law rules as a coherent whole, in accordance with the general principles of

interpretation of the C.C.Q. and the principles of comity, order and fairness which inspire the

interpretation of these rules. Answering the question of whether and on what conditions art. 3139 C.C.Q. can be invoked to establish the jurisdiction of a foreign authority against a particular co-defendant requires interpreting art. 3164 C.C.Q. The scope of these provisions, and their relationship with art. 3168(4), cannot be determined in isolation. According to art. 3164 C.C.Q. , the recognized grounds for establishing the jurisdiction of a foreign authority are essentially those available to Quebec courts as listed under Title Three. This is referred to as the principle of jurisdictional reciprocity, or the mirror principle. Title Three is divided into two Chapters:

Chapter I (“General Provisions”) and

Chapter II (“Special Provisions”). The jurisdiction of a foreign court should be assessed by looking to both Chapters. By referring generally to Title Three, art. 3164 C.C.Q. authorizes a Quebec court to recognize the jurisdiction of a foreign authority on the basis of one of the “General Provisions” situated in

Chapter I of that Title, such as the provision granting jurisdiction for reasons of administrative convenience (art. 3139 C.C.Q. ). Consequently, in personal actions of a patrimonial nature, satisfying the jurisdictional requirement of art. 3168 C.C.Q. may not always be necessary for the purposes of recognition under Quebec law. Though the exclusive language of art. 3168 C.C.Q. may appear to suggest otherwise, it should not be overstated.

Absent the use of the word “only” under art. 3168 C.C.Q. , the mirror effect of art. 3164 C.C.Q. would direct Quebec courts to decide the jurisdiction of a foreign authority by applying one of the subparagraphs of art. 3148 para. 1 C.C.Q . The exclusive language in art. 3168 C.C.Q. indicates that, notwithstanding the mirror principle, art. 3148 C.C.Q. cannot be relied upon to determine the jurisdiction of the foreign authority in such circumstances.

Therefore, art. 3168 C.C.Q. does not preclude a Quebec court from recognizing the jurisdiction of a foreign authority on the basis of one of the “General Provisions” situated in

Chapter I of Title Three.

However, art. 3164 C.C.Q. does not authorize a Quebec court to apply the requirement of a substantial connection between the dispute and the foreign authority so as to reject a foreign court’s exercise of jurisdiction even where one of art. 3168’s jurisdictional criteria is satisfied. Book Ten of the C.C.Q. , stating as it does the private international law of Quebec, encapsulates the requirement of a real and substantial connection.

Thus, a real and substantial connection does not operate as an additional condition to those contained in art. 3168 C.C.Q. ; it is rather given expression by the scheme contained within Book Ten. The view that art. 3164 C.C.Q. requires a substantial connection between the dispute and the forum, even where one of the conditions for jurisdiction of a foreign authority is established under art. 3168 C.C.Q. , finds no support and is inconsistent with the text of art. 3164 C.C.Q.

Any concern for a substantial connection under this provision arises only where the jurisdiction of a foreign authority is established on the provisions of Title Three. Furthermore, art. 3168 C.C.Q. is more restrictive than the mirror provision of art. 3148 C.C.Q. precisely in order to ensure the existence of a substantial connection . However, Quebec courts must still conduct an independent inquiry into the existence of a substantial connection between the dispute and the foreign authority where the court bases its finding of jurisdiction on one of the “General Provisions” in

Chapter I of Title Three.

Article 3139 C.C.Q. is a jurisdiction-granting provision that ensures the efficient use of judicial resources and efficiency in the administration of justice by fostering the joinder of proceedings. The term “incidental demand” in art. 3139 C.C.Q. should be read as including a related or connected claim. Thus, in personal actions of a patrimonial nature, the jurisdiction of a foreign authority over a particular co-defendant can be established in accordance with art. 3139 C.C.Q ., even where that co-defendant is not a party to the contract upon which the foreign authority’s jurisdiction is grounded, if (

a) that foreign authority has jurisdiction over the main contractual dispute pursuant to art. 3168(4) C.C.Q. ; (

b) the claim against the co-defendant is connected to the contract; and (

c) there is a substantial connection between the dispute and the foreign authority’s state pursuant to art. 3164 C.C.Q . In this case, the Utah court had jurisdiction over the main contractual dispute between Knight and BEC under art. 3168(4) C.C.Q. , and the claims of alter ego and fraud made against B personally were clearly connected to the contract. B participated in the legal proceedings in Utah and admitted to having had a key role in dealing with Knight for the performance of a contract to be executed in Utah. Furthermore, the alter ego claim made against B personally is governed by Utah law.

Accordingly, there is a substantial connection between Utah and both the object of the dispute and the parties for the purposes of satisfying art. 3164 C.C.Q . It is in the interests of justice to have connected claims decided together by one forum . The Utah court chose to assert its jurisdiction over all aspects of the case. This choice was open to it, and should be respected in light of the principle of international comity. Per Côté J. (dissenting): The appeal should be allowed.

The Utah court’s jurisdiction cannot be established under art. 3168 C.C.Q. and the dispute is not substantially connected with Utah as required by art. 3164 C.C.Q . As a result, the decision cannot be recognized against B. There is agreement with the majority’s conclusion that Knight did not meet its burden of establishing the Utah court’s jurisdiction over B insofar as arts. 3168(3) and (4) are concerned.

Contrary to cases where a Quebec court is considering its own jurisdiction, in an application to recognize a foreign decision, the general rules of evidence apply, meaning that the allegations will not be accepted as averred and a prima facie showing will not be sufficient. Along with its application, Knight filed documentary evidence that essentially consisted of the pleadings and decisions from the proceedings before the Utah court. None of the documents submitted offered any evidence with regard to a fault committed by B in Utah or a contractual obligation to be performed by him in that state.

The alleged promise to pay and the alter ego allegations against B have yet to be proven in court. B expressly denied those allegations, and no evidence of the alleged promise to pay, its content or its acceptance was adduced at any other time in the Utah proceedings. The decisions of the Utah court filed as evidence are default judgments and contain no findings of fact that may be relied on in the Quebec proceedings to conclude that the foreign authority had jurisdiction.

Given that B is not himself a party to the contract at issue, Knight could not rely on art. 3168(4) C.C.Q . absent evidence that would have allowed the corporate veil to be pierced under Quebec law. Article 3168(4) C.C.Q . cannot be relied on to establish jurisdiction against anyone remotely associated with a contract regardless of whether they are a party to that contract. This provision requires a connection not only with the object of the dispute (i.e. the contract), but also with the defendant (i.e. the person liable for the contractual obligations).

Holding otherwise would render this connecting factor indeterminate and diffuse, such that it would become difficult for litigants to predict with reasonable certainty whether a foreign decision rendered against them may be recognized in Quebec. Thus, where the defendant is not a party to the contract at issue, the plaintiff cannot rely on art. 3168(4) C.C.Q. unless it is shown that the defendant is otherwise personally responsible for the contractual obligations under Quebec law. In practice, it would be insufficient to show that BEC was B’s alter ego.

Knight would have also had to present evidence establishing that B invoked BEC’s juridical personality “so as to dissemble fraud, abuse of right or contravention of a rule of public order” within the meaning of art. 317 C.C.Q . The nature and scope of a connecting factor codified in the C.C.Q. such as the obligations arising from a contract must be determined according to the law of Quebec. In this case, there is no evidence that would justify piercing the corporate veil for jurisdictional purposes.

Requiring such evidence does not amount to an impermissible review of the merits of the case, but rather serves to verify whether the requirements for recognition are met. The Superior Court erred in law in finding that B submitted to the Utah court’s jurisdiction pursuant to art. 3168(6) simply by raising substantive arguments in his motion to dismiss. The test set out by the majority is too strict. It ignores the fact that the defendant’s subjective intent must be taken into account.

A more flexible approach should be adopted, one that allows a defendant wishing to contest the jurisdiction of a foreign authority to argue why the authority lacks jurisdiction without risking being found to have submitted to that jurisdiction. A defendant must be permitted to raise arguments and considerations capable of convincing a foreign authority that it should not assume jurisdiction, and it is unreasonable to suggest that any defendant who does so necessarily submits to the foreign authority’s jurisdiction. This would leave defendants in a “catch-22” situation.

If they attempt to challenge the jurisdiction of a foreign authority, they risk being found by a Quebec court to have submitted to that jurisdiction. If they do not, they will likely be faced with a foreign default judgment which could seriously limit their ability to conduct business (or any other activities) in the foreign jurisdiction. The practical implications are real and serious. On the facts of this case, there is little support for the inference that B submitted to the jurisdiction of the Utah court. While B did make some substantive arguments, they were presented alongside jurisdictional arguments.

Submission to jurisdiction can be either explicit or implicit, but it must be clear. In alleging that the Utah court had jurisdiction over B, Knight bore the burden of proving that B had a choice under Utah procedural law not to proceed as he did when he presented substantive arguments in his motion to dismiss. This

is consistent with the well-established principle that in Quebec, the plaintiff bears the burden of proving the facts upon which the court’sjurisdiction is based. Knight has not met its burden in this regard. There is no evidence in the record to indicate that B had the proceduralchoice not to raise certain substantive arguments at the stage of objecting to jurisdiction. As none of the connecting factors under art. 3168 C.C.Q. is present, there is no need to consider whether the dispute issubstantially connected with the foreign state under art. 3164 C.C.Q.

The wording of art. 3168 C.C.Q. makes clear that in personalactions of a patrimonial nature, the jurisdiction of foreign authorities is recognized only where one of the listed factors is present.However, had it been found that B submitted to the Utah court’s jurisdiction, there would still be no substantial connection between thedispute and Utah under art. 3164 C.C.Q. There will be exceptional circumstances in which a substantial connection will need to be demonstrated under art. 3164C.C.Q. even where one of the connecting factors in art. 3168 C.C.Q. has been met.

Evidence of one of the factors in art. 3168 C.C.Q.being present will generally be sufficient to demonstrate a substantial connection and thus to establish jurisdiction. Nevertheless, this willnot always be the case. Requiring that a substantial connection between the dispute and the foreign state be demonstrated even whereart. 3168 C.C.Q. is engaged is consistent with the language, context and purpose of art. 3164 C.C.Q., as well as with the principle ofcomity and the values of order and fairness underlying the rules of private international law.

Article 3164 C.C.Q. is the first

article and key provision of the

chapter of the C.C.Q. that sets out the rules applicable to thejurisdiction of foreign authorities. It establishes the general principle of reciprocity, or mirror principle, whereby the jurisdiction offoreign authorities is established in accordance with the rules on jurisdiction applicable to Quebec authorities under Title Three. To thatgeneral principle of reciprocity, art. 3164 C.C.Q. adds the further requirement that a dispute be substantially connected with the foreignstate whose authority is seized of the matter.

The reference to Title Three is not meant to limit the application of that fundamentalrequirement, but simply to express the reciprocity principle which serves as the foundation for Title Four. As such, the subsequentprovisions of Title Four, which include art. 3168 C.C.Q., do not displace, or entirely subsume, the requirement of a substantialconnection. The substantial connection requirement is meant to prevent Quebec courts from recognizing a foreign decision where theconnection is so weak that recognition would be inappropriate.

This is one of the exceptional cases in which a separate substantial connection analysis would have been warranted.Specifically, where a defendant is found to have submitted to the jurisdiction of a foreign authority pursuant to art. 3168(6) C.C.Q.,further evidence may be required to establish a substantial connection between the dispute and the forum. This will be the case wheresubmission has been reluctant and largely involuntary, and where the defendant has not presented a defence on the merits but has merelychallenged the foreign authority’s jurisdiction.

Submission does not in itself establish an actual connection between the underlyingdispute and the foreign state, as it is more properly understood as a distinct ground for jurisdiction. Unless there is extensive participationin foreign proceedings, other factors should be considered to determine whether a substantial connection exists. In the present case, themere fact that B made substantive arguments in his motion to dismiss does not establish a substantial connection between the dispute andUtah.

Nor does B’s involvement as President of BEC, or the fact that Utah law may have applied to certain claims made against himpersonally. Further, a substantial connection cannot be presumed on the mere basis that it appears more convenient to recognize a foreigndecision in a given situation, for instance by having a single forum decide related claims. Convenience is not an independent ground forjurisdiction. Finally, and even if we are to assume that art. 3139 C.C.Q. may be relied upon to recognize a foreign decision through themirror effect of art. 3164 C.C.Q., it could not be applied in the instant case.

The action against B is a principal demand, not an incidentaldemand. Additionally, art. 3139 C.C.Q. cannot be relied upon to extend jurisdiction over any related claim. Such a broad

interpretationwould be inconsistent with the text of the provision. Furthermore, it would allow B to do indirectly what cannot be done directly. B doesnot fall within the ambit of art. 3168(4) C.C.Q. because he is not himself a party to the contract.

Article 3139 C.C.Q. cannot be used tocircumvent the requirement of adducing evidence justifying the piercing of the corporate veil in order for art. 3168(4) C.C.Q. to apply. Cases Cited By Gascon J. Considered: Canada Post Corp. v. Lépine, 2009 SCC 16, [2009] 1 S.C.R. 549; Spar Aerospace Ltd. v. American MobileSatellite Corp., 2002 SCC 78, [2002] 4 S.C.R. 205; referred to: Kuwait Airways Corp. v. Iraq, 2010 SCC 40, [2010] 2 S.C.R. 571;Zimmermann inc. v. Barer, 2016 QCCA 260; Cortas Canning and Refrigerating Co. v. Suidan Bros. inc./Suidan Frères inc., [1999]R.J.Q. 1227; Yousuf v.

Jannesar, 2014 QCCA 2096; Mutual Trust Co. v. St-Cyr (1996), (QC CA), 144 D.L.R. (4th)338; Goldberg v. Think Glass Le verre repensé inc., 2016 QCCS 6456; Jules Jordan Video inc. v. 144942 Canada inc., 2014 QCCS3343; Abel Skiver Farm Corp. v. Town of Sainte-Foy, (SCC), [1983] 1 S.C.R. 403; Lavallée v. Imhof, 2018 QCCS 2031;Worthington Corp. v. Atlas Turner inc., (QC CA), [2004] R.J.Q. 2376; Iraq (State of) v. Heerema Zwijndrecht, b.v.,2013 QCCA 1112; Hocking v. Haziza, 2008 QCCA 800; Transax Technologies inc. v. Red Baron Corp. Ltd., 2017 QCCA 626; Shamji v.Tajdin, 2006 QCCA 314; Bank of Montreal v.

Hydro Aluminum Wells Inc., Baird v. Matol Botanical InternationalLtd., (QC CA), [1994] R.D.J. 282; Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416; Society of Lloyd’s v. Alper,2006 QCCS 1203; Vaughan v. Campbell (1855), 5 L.C. Rep. 431; Natha v. Cook, 2016 ABCA 100, 616 A.R. 276; Ward v. NackawicMechanical Ltd., 2015 NBCA 1, 429 N.B.R. (2d) 228; Fleckenstein v. Hutchison, 2009 ABCA 320, 460 A.R. 386; Housen v. Nikolaisen,2002 SCC 33, [2002] 2 S.C.R. 235; St-Jean v. Mercier, 2002 SCC 15, [2002] 1 S.C.R. 491; Alimport (Empresa Cubana Importadora deAlimentos) v.

Victoria Transport Ltd., (SCC), [1977] 2 S.C.R. 858; Bombardier Transportation v. SMC Pneumatics(UK) Ltd., 2009 QCCA 861; International Image Services Inc. v. Ellipse Fiction/Ellipse Programme, Forest FibersInc. v. CSAV Norasia Container Lines Ltd., 2007 QCCS 4794; 171486 Canada Inc. v. Rogers Cantel Inc., (QC CS),[1995] R.D.J. 91; Conserviera S.p.A. v. Paesana Import-Export Inc., LVH Corporation (Las Vegas Hilton) v. Institute Inc. (Teri) v. Chitaroni, MFI Export Finance inc. v. Rother International S.A. de C.V. inc., 2004

16200; Canada (Procureur général) v. St-Julien, 2010 QCCS 2723; Canfield Technologies inc. v. Servi-Metals Canada inc.,G. Van Den Brink B.V. v. Heringer, 1994 CarswellQue 2235; Dorais v. Saudi Arabian General InvestmentAuthority, 2013 QCCS 4498; Ortega Figueroa v. Jenckel, 2015 QCCA 1393; R. v. 1275729 Ontario Inc. (2005),(ON CA), 203 C.C.C. (3d) 501; Birch Hill Equity Partners Management Inc. v. Rogers Communications Inc., 2015 ONSC 7189, 128O.R. (3d) 1; Canada (Attorney General) v. Fairmont Hotels Inc., 2016 SCC 56, [2016] 2 S.C.R. 720; Armoyan v.

Armoyan, 2013 NSCA99, 334 N.S.R. (2d) 204; Canada (Canadian Environmental Assessment Agency) v. Taseko Mines Limited, 2018 BCSC 1034; Bégin v.Bilodeau, (SCC), [1951] S.C.R. 699; Québecor World inc. v. Gravel, Marcoux v. BanqueLaurentienne du Canada, 2011 QCCA 2034; Bil’In (Village Council) v. Green Park International Inc., 2009 QCCS 4151, [2009] R.J.Q.2579; Transcore Linklogistics v. Mike’s Transport and Auto Haul Inc., 2014 QCCA 776; GreCon Dimter inc. v. J.R. Normand inc., 2005SCC 46, [2005] 2 S.C.R. 401; Lapointe Rosenstein Marchand Melançon LLP v.

Cassels Brock & Blackwell LLP, 2016 SCC 30, [2016] 1S.C.R. 851; Insta Holding Limited v. 9247-5334 Québec inc., 2017 QCCS 432. By Brown J. Applied: Lapointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, [2016] 1 S.C.R.851; considered: Spar Aerospace Ltd. v. American Mobile Satellite Corp., 2002 SCC 78, [2002] 4 S.C.R. 205; Canada Post Corp. v.Lépine, 2009 SCC 16, [2009] 1 S.C.R. 549; referred to: Iraq (State of) v. Heerema Zwijndrecht, b.v., 2013 QCCA 1112; Zimmermanninc. v. Barer, 2016 QCCA 260; Cortas Canning and Refrigerating Co. v.

Suidan Bros. inc./Suidan Frères inc., [1999] R.J.Q. 1227;Houle v. Canadian National Bank, (SCC), [1990] 3 S.C.R. 122; Brunette v. Legault Joly Thiffault, s.e.n.c.r.l., 2018 SCC55, [2018] 3 S.C.R. 481; Salomon v. Salomon & Co., [1897] A.C. 22; Marble Point Energy Ltd. v. Stonecroft Resources Inc., 2009QCCS 3478, aff’d 2011 QCCA 141; Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572; GreCon Dimter inc. v. J.R.Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401; Ortega Figueroa v. Jenckel, 2015 QCCA 1393; Society of Composers, Authors and . v.De Savoye, (SCC), [1990] 3 S.C.R. 1077; Muscutt v.

Courcelles (2002), (ON CA), 60 O.R. (3d) 20;Infineon Technologies AG v. Option consommateurs, 2013 SCC 59, [2013] 3 S.C.R. 600; Hocking v. Haziza, 2008 QCCA 800; Labs ofVirginia Inc. v. Clintrials Bioresearch Ltd., (QC CS), [2003] R.J.Q. 1876; McKinnon v. Polisuk, 2009 QCCS 5778;Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416; Droit de la famille — 131294, 2013 QCCA 883; Bourdages v. Québec(Gouvernement du) (Ministère des Transports), 2016 QCCS 5066; Fonds d’assurance responsabilité professionnelle du Barreau duQuébec v. Gariépy, 2005 QCCA 60; Constructions Alcana ltée v.

Cégep régional de Lanaudière, 2006 QCCA 1494; Allard v. Mozartltée, [1981] C.A. 612; CGU v. Wawanesa, compagnie mutuelle d’assurances, 2005 QCCA 320, [2005] R.R.A. 312; Kingsway GeneralInsurance Co. v. Duvernay Plomberie et chauffage inc., 2009 QCCA 926, [2009] R.J.Q. 1237; Insta Holding Limited v. 9247-5334Québec inc., 2017 QCCS 432; Trower and Sons, Ltd. v. Ripstein, (UK JCPC), [1944] A.C. 254; Cornwall ChryslerPlymouth Ltd. v. Lapolla, [1974] C.A. 490; Municipalité du village de St-Victor v. Allianz du Canada, (QC CA),[1996] R.D.J. 123; A S G Industries Inc. v.

Corporation Superseal, (SCC), [1983] 1 S.C.R. 781; E. Hofmann PlasticsInc. v. Tribec Metals Ltd., 2013 QCCA 2112; Poppy Industries Canada Inc. v. Diva Delights Ltd., 2018 QCCA 163; Moran v. PyleNational (Canada) Ltd., (SCC), [1975] 1 S.C.R. 393; CIMA Plastics Corp. v. Sandid Enterprises Ltd., 2011 ONCA589, 341 D.L.R. (4th) 442; Oakley v. Barry (1998), 1998 NSCA 68 158 D.L.R. (4th) 679; O’Brien v. Canada (Attorney c. v.Banro Corp., 2012 SCC 18, [2012] 1 S.C.R. 636; Breeden v. Black, 2012 SCC 19, [2012] 1 S.C.R. 666; Oppenheim forfait GMBH v.Lexus maritime inc., Haaretz.com v.

Goldhar, 2018 SCC 28, [2018] 2 S.C.R. 3. By Côté J. (dissenting) Canada Post Corp. v. Lépine, 2009 SCC 16, [2009] 1 S.C.R. 549; Mutual Trust Co. v. St-Cyr (1996),(QC CA), 144 D.L.R. (4th) 338; Iraq (State of) v. Heerema Zwijndrecht, b.v., 2013 QCCA 1112; Spar Aerospace Ltd. v. AmericanMobile Satellite Corp., 2002 SCC 78, [2002] 4 S.C.R. 205; Aboud v. Eplus Technology Inc., 2005 QCCA 2; Eplus Technology Inc. v.Aboud, [2003] AZ-50402261; Zimmermann inc. v. Barer, 2016 QCCA 260; Lapointe Rosenstein Marchand Melançon LLP v.

CasselsBrock & Blackwell LLP, 2016 SCC 30, [2016] 1 S.C.R. 851; Domaine de l’Orée des bois La Plaine inc. v. Garon, 2012 QCCA 269;Lanoue v. Brasserie Labatt ltée, Coutu v. Québec (Commission des droits de la personne),Cortas Canning and Refrigerating Co. v. Suidan Bros. inc./Suidan Frères inc., [1999] R.J.Q. 1227; 171486 Canada Inc. v. RogersCantel Inc., (QC CS), [1995] R.D.J. 91; Forest Fibers Inc. v. CSAV Norasia Container Lines Ltd., 2007 QCCS 4794;Conserviera S.p.A. v. Paesana Import-Export Inc., Transax Technologies inc. v. Red Baron Corp. Ltd., 2017 QCCA626; Shamji v.

Tajdin, 2006 QCCA 314; Bank of Montreal v. Hydro Aluminum Wells Inc., Club Resorts Ltd. v. VanBreda, 2012 SCC 17, [2012] 1 S.C.R. 572; Morguard Investments Ltd. v. De Savoye, (SCC), [1990] 3 S.C.R. 1077;Hocking v. Haziza, 2008 QCCA 800; Jules Jordan Video inc. v. 144942 Canada inc., 2014 QCCS 3343; GreCon Dimter inc. v. J.R.Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401; Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416; Lamborghini (Canada) inc. v.Automobili Lamborghini S.P.A., (QC CA), [1997] R.J.Q. 58; Haaretz.com v. Goldhar, 2018 SCC 28, [2018] 2 S.C.R.3; Sorel Tracy Terminal Maritime v.

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Cowansville, Que.: Yvon Blais, 2012. Goldstein, Gérald. “Principes généraux et conditions générales de reconnaissance et d’exécution”, dans JurisClasseur Québec — Droit international privé , par Pierre-Claude Lafond, dir. Montréal: LexisNexis, 2012, fascicule 10 (feuilles mobiles mises à jour juin 2018, envoi n o 10). Goldstein, Gérald, et Ethel Groffier. Droit international privé , t. I, Théorie générale . Cowansville, Que.: Yvon Blais, 1998. Goldstein, Gérald, et Ethel Groffier. Droit international privé , t. II, Règles spécifiques . Cowansville, Que.: Yvon Blais, 2003. Goldstein, Gérald, et Jeffrey A. Talpis.

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Ministère de la Justice. Commentaires du ministre de la Justice , t. II, Le Code civil du Québec — Un mouvement de société . Québec: Publications du Québec, 1993. Sabourin, Frédérique. “Compétence internationale relative aux actions personnelles à caractère patrimonial et effets des décisions étrangères”, dans JurisClasseur Québec — Droit international privé , par Pierre-Claude Lafond, dir. Montréal: LexisNexis, 2012, fascicule 25 (feuilles mobiles mises à jour juin 2018, envoi n o 10). Saumier, Geneviève. “The Recognition of Foreign Judgments in Quebec — The Mirror Crack’d?” (2002), 81 Can. Bar Rev. 677.

Talpis, Jeffrey A., and Jean-Gabriel Castel. “Interpreting the rules of private international law”, in Reform of the Civil Code , vol. 5B, Private International Law . Translated by Susan Altschul. Texts written for the Barreau du Québec and the Chambre des notaires du Québec. Montréal: Barreau du Québec, 1993. Talpis, Jeffrey A., et Gérald Goldstein. “Analyse critique de l’avant-projet de loi du Québec en droit international privé” (1988), 91 R. du N . 606. Talpis, Jeffrey A., with the collaboration of Shelley L.

Kath. “If I am from Grand-Mère, Why Am I Being Sued in Texas?” Responding to Inappropriate Foreign Jurisdiction in Quebec-United States Crossborder Litigation . Montréal: Thémis, 2001. Uniform Law Conference of Canada. Uniform Court Jurisdiction and Proceedings Transfer Act (online; archived version: https://www.scc-csc.ca/cso-dce/2019SCC-CSC13_1_eng.pdf ). Walker, Janet. Castel & Walker: Canadian Conflict of Laws , 6th ed. Markham, Ont.: LexisNexis, 2005 (loose-leaf updated 2018, release 71).

Watson, Garry D., and Frank Au. “Constitutional Limits on Service Ex Juris : Unanswered Questions from Morguard ” (2000), 23 Adv . Q. 167. Zajtay, Imre. “L’application du droit étranger: science et fictions” (1971), 23 R.I.D.C. 49. APPEAL from a judgment of the Court of Appeal of Quebec (Vézina, Mainville JJ.A. and Jacques J. ( ad hoc )), 2017 QCCA 597 , [2017] Q.J. No. 3606 (QL), 2017 CarswellQue 2806 (WL Can.), [2017] AZ-51381819 , affirming a decision of Blanchard J., 2016 QCCS 3471 , [2016] Q.J. No. 8724 (QL), 2016 CarswellQue 6725 (WL Can.), [2016] AZ-51308250 . Appeal dismissed, Côté J. dissenting. Leon J.

Greenberg and Frédéric Vachon , for the appellant. Jonathan Franklin and Lazar Sarna , for the respondent. The judgment of Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Rowe and Martin JJ. was delivered by Gascon J. — I.

Overview [ 1 ] This appeal considers the circumstances under which, in an application to recognize and enforce a foreign judgment rendered by default against a person residing in Quebec, that person can be found to have submitted to the foreign authority’s jurisdiction. [ 2 ] The facts of this case illustrate a dilemma that persons doing business outside of their home jurisdiction sometimes face when they are sued abroad before a court that they believe has no jurisdiction over the dispute.

They must decide whether to defend themselves against the foreign lawsuit and try to secure a favourable decision, or whether to abstain from doing so. One motivation for the latter is to avoid being found to have submitted to the foreign jurisdiction by a court of their home jurisdiction that is asked to

recognize and enforce an unfavourable foreign decision. This choice no doubt involves an assessment of the comparative risks and benefits of protecting the assets located in each jurisdiction. Ultimately, it is up to each defendant to determine the best way to approach this conundrum, and each must bear the consequences of the strategy chosen. [ 3 ] The appellant, Mr.

Barer, a Quebec resident, was sued personally together with two companies he allegedly controlled — Central Bearing Corporation Ltd. (“CBC”) and Barer Engineering Company of America (“BEC”) — before the United States District Court, Central Division for the District of Utah (“Utah Court”). The suit was brought by the respondent, Knight Brothers LLC (“Knight”), which claimed that BEC had a balance owing under a contract between them. Knight argued that Mr.

Barer had fraudulently misrepresented that the defendants would pay a certain amount, that the corporate veil of the two companies should be lifted, and that all the defendants had been unjustly enriched. [ 4 ] CBC abstained from presenting any defence, while BEC defended itself on the merits and filed a counterclaim. Mr. Barer took a third approach and presented preliminary arguments in a motion to dismiss. He argued that

(1) Knight’s claim for fraudulent misrepresentation was barred at law; (2) the Utah Court did not have jurisdiction over him personally; and

(3) Knight had failed to show that the corporate veil should be lifted. A Utah judge dismissed Mr. Barer’s motion. [ 5 ] A default judgment was eventually rendered by the Utah Court against all three defendants (“Utah Decision”). Knight then sought to have that decision recognized in Quebec and declared enforceable against Mr. Barer. The Superior Court ruled that the Utah Court’s jurisdiction could be recognized on three possible grounds. Two of them related to the contract between Knight and BEC and the promise to pay allegedly made by Mr. Barer.

However, the main ground for recognizing the Utah Decision was the fact that Mr. Barer had submitted to the Utah Court’s jurisdiction. The Court of Appeal dismissed Mr. Barer’s appeal. [ 6 ] I agree with the courts below that the jurisdiction of the Utah Court must be recognized, and I would dismiss the appeal. By presenting substantive arguments in his motion to dismiss, Mr. Barer submitted to the Utah Court’s jurisdiction in accordance with art. 3168(6) of the Civil Code of Québec (“ C.C.Q . ” or “ Civil Code ”).

This is sufficient in this case to establish any substantial connection that may be required by art. 3164 C.C.Q . II. Background A. The Dispute [ 7 ] Mr. Barer is a resident of Quebec. He is the President and Secretary of CBC, which is based in Montréal, and acting President and Secretary of BEC, which is based in Vermont. In 2007, BEC was awarded a contract to install machinery at a military base located in Utah. In 2008, it subcontracted part of the work to Knight, whose head office is in that state. Knight’s responsibilities included installing a new foundation.

The work was carried out at the military base in 2008 and 2009. [ 8 ] In 2009, a dispute arose as to the amount owed to Knight for the work related to the foundation: a first amount had been specified in the original contract, but Knight had demanded a higher sum in a subsequent purchase order. While BEC argued that it was liable only for the initial amount, Knight alleged that BEC had provided it with incomplete information and was liable for the excess costs. Knight further contended that, at some point, Mr.

Barer had verbally promised to pay the increased price and that it had performed its obligations under the contract relying on that promise. According to Knight, the total revised price for the work performed was US$619,805. B. The Legal Proceedings in Utah [ 9 ] Knight initiated proceedings before the Utah Court against BEC, CBC and Mr. Barer personally for a balance allegedly owing of US$431,160 under the contract between itself and BEC. Knight asserted five causes of action. It claimed that

(1) BEC and CBC had breached the contract; (2) the defendants had been unjustly enriched;

(3) BEC was the alter ego of CBC;

(4) BEC and CBC were the alter egos of Mr. Barer; and

(5) Mr. Barer had fraudulently misrepresented that the defendants would pay the increased price for the foundation work. [ 10 ] The three defendants accepted service of Knight’s complaint and entered their appearance before the Utah Court in April 2010. They all filed a notice of non-opposition when Knight sought to amend its complaint, and they were required to respond by mid-July. From that point on, each defendant pursued a different course of action. [ 11 ] BEC, the party to the contract with Knight, filed an answer, defence and counterclaim.

Its written answer and defence did not raise the issue of jurisdiction but denied the facts underlying Knight’s claim. Its counterclaim alleged that Knight had unlawfully interfered with its property. For its part, CBC presented a motion to allow its counsel to withdraw on the ground that it did not recognize the Utah Court’s jurisdiction and would not participate in the proceedings. As it did not defend itself, it was found in default by a court clerk. Lastly, Mr.

Barer brought a motion to have the claim asserted against him personally dismissed on a preliminary basis before it was heard on its merits. [ 12 ] Mr. Barer raised three arguments in support of his motion:

(1) Knight had failed to state sufficient facts to establish that BEC and CBC were his alter egos; (2) the fraudulent misrepresentation claim was barred by the pure economic loss rule; and (3) the Utah Court did not have personal jurisdiction over him.

The Utah Court dismissed the motion and allowed the case to proceed to trial. [ 13 ] On the question of jurisdiction, the Utah Court found that Knight had supported its alter ego claim with “several exhibits”: (1) “copies of payments made to [Knight] from the common account in [CBC]’s name”; (2) “a certified copy from the Montreal, Canada, Registrar of Companies which show[s] that [CBC] is registered as doing business under the names of [BEC] and [another entity]”; and (3) “an affidavit stating that [Knight]’s information supporting its alter ego and instrumentality claims initially came from an unnamed confidential source — a former employee of the Barer entities” (A.R., vol.

II, at pp. 100-101). The Utah Court stressed that the allegations attributed to that employee and reflected in Knight’s complaint “must be accepted as true for purposes of this motion” (A.R., vol. II, at p. 102). It concluded that Knight had made a prima facie showing of jurisdiction. Since Mr. Barer had not established considerations that “would render jurisdiction unreasonable” (A.R., vol. II, at p. 101), his first argument was rejected. In the

view of the Utah Court, having the entire dispute, including the related alter ego claims, heard in one action furthered the interest of theinternational justice system. [14] On the alter ego issue, the Utah Court, building on its conclusions regarding jurisdiction, found that Knight’sallegations — which had to be assumed to be true on a motion to dismiss — “state a claim for an alter ego claim” (A.R., vol. II, at pp.103-5). Finally, the Utah Court rejected Mr.

Barer’s third argument, namely that Knight had no cause of action because its claim forfraudulent misrepresentation was barred by the pure economic loss rule. It reasoned that though this argument could be raised to bar apurely contractual claim, Knight’s claim was also based on the law of quasi-contracts and unjust enrichment, which are not subject to therule against recovery for pure economic loss. [15] After the dismissal of Mr. Barer’s motion in January 2011, all three defendants were ordered to participate in asettlement conference. In February 2011, Mr.

Barer was also granted an extension to file an answer and defence, but he ultimately neverdid. His failure to file such a response was noted by a court clerk. The settlement conference was held in November 2011. Mr. Barerattended, but his lawyer indicated that he was present to comply with the court order and that this was not a waiver of contestation ofjurisdiction. As for BEC, it participated in some of the proceedings until, in the summer of 2012, the Utah Court granted Knight’s motionfor a default judgment, which was entered by a court clerk against all three defendants for US$431,160, plus interest.

That judgment didnot provide reasons in support of the order. It was later amended to make the defendants jointly and severally liable. III. Judicial History [16] Knight filed an originating application before the Superior Court to have the Utah Decision recognized and declaredenforceable in Quebec against Mr. Barer and CBC. Both jointly filed a defence, which was followed by Knight’s answer to plea andultimately by an amended defence. Knight filed 18 exhibits, Mr. Barer and CBC, 4. The exhibits included only one affidavit — that ofthe lawyer who represented the defendants in Utah.

As these various steps show, an application for recognition and enforcement is anadversarial judicial proceeding to which the general rules of civil procedure apply, even though the judge hearing such an applicationshould not delve into the merits of the case (Kuwait Airways Corp. v. Iraq, 2010 SCC 40, [2010] 2 S.C.R. 571, at para. 20). A. Superior Court of Quebec [17] In brief reasons delivered orally, the Superior Court granted Knight’s application in recognition and enforcement of ajudgment rendered outside Quebec.

Since Knight had decided against seeking to have the Utah Decision declared enforceable againstCBC, the trial judge was concerned only with Mr. Barer. The judge recognized the Utah Decision, declared it enforceable in Quebec,and ordered Mr. Barer to pay Knight a total of CAN$1,238,283. [18] The judge concluded that Mr. Barer had submitted to the Utah Court’s jurisdiction in accordance withart. 3168(6) C.C.Q. by raising substantive arguments in his motion to dismiss. He found that the evidence presented by Knight inchallenging Mr.

Barer’s motion to dismiss also supported this conclusion; it constituted “sufficient proof under Quebec law that therequirements to grant jurisdiction to the Utah Court over [Mr.] Barer” were satisfied (2016 QCCS 3471, at para. 17 (“Sup. Ct.reasons”)). The judge noted that similar evidence had not been presented before either the Quebec or the foreign courts in the other casesupon which Mr. Barer relied in his submissions, that is, Zimmermann inc. v. Barer, 2016 QCCA 260, and Cortas Canning andRefrigerating Co. v. Suidan Bros. inc./Suidan Frères inc., [1999] R.J.Q. 1227 (Sup. Ct.).

For this reason, he found that these cases did notassist Mr. Barer. [19] The trial judge ended his remarks by stating that art. 3168(3) and (4) C.C.Q. could also have served as a basis forthe jurisdiction of the Utah Court, “in as much as the acceptance of the alleged promise to pay by [Mr.] Barer was received in Utah andthat same was to be performed in that state” (para. 20 (emphasis added)). B. Court of Appeal of Quebec [20] Mr. Barer appealed the Superior Court’s judgment to the Court of Appeal. Knight responded with an application forthe

summary dismissal of the appeal or, alternatively, for the provision of a suretyship. A first panel unanimously dismissed theapplication, simply stating that “[t]he appellant may have a viable appeal” (2016 QCCA 1400, at para. 2 (“C.A. reasons(2016)”)). The panel nevertheless stressed that it was “perhaps dubitante” in dismissing the application and observed that, “as the trialjudge noted, the appellant does appear to have consented to the jurisdiction of the US District Court for the District of Utah as his motionto dismiss raised jurisdictional but also non-jurisdictional grounds” (paras. 2-3).

It therefore ordered Mr. Barer to deposit CAN$25,000 toguarantee the payment of the appeal costs and the judgment amount should his appeal be unsuccessful. [21] On the merits of the appeal, a second panel of the Court of Appeal dismissed Mr. Barer’s appeal in a two-sentencejudgment delivered orally, which stated: “Without endorsing all the reasons of the judge of first instance, we are nevertheless all of theview that there were sufficient elements to allow to conclude as he did.

For these reasons, the appeal is dismissed with costs” (2017QCCA 597, at paras. 1-2 The reasons were silent as to which segments of the judgment below were endorsed and which werenot. IV. Issue [22] The question to resolve in this appeal is whether the lower courts properly recognized the Utah Court’s jurisdictionover the dispute between Knight and Mr. Barer personally.

To answer this question, I will consider the general principles governing therecognition of foreign decisions under the Civil Code, including the applicable burden of proof, before turning to the application of arts.3168(3), 3168(4), 3168(6) and 3164 C.C.Q. relied upon as potential grounds for the Utah Court’s jurisdiction. V. Analysis A. General Principles for the Recognition of Foreign Decisions Under the C.C.Q. and Applicable Burden of Proof

[23] In accordance with the aim of facilitating the free flow of international trade, art. 3155 C.C.Q. establishes theprinciple that a decision rendered outside Quebec will generally be recognized and declared enforceable in the province (G. Goldstein,Droit international privé, vol. 2, Compétence internationale des autorités québécoises et effets des décisions étrangères (Art. 3134 à3168 C.c.Q.) (2012), at para. 3155 550; H. Kélada, Reconnaissance et exécution des jugements étrangers (2013), at p. 41; Canada PostCorp. v. Lépine, 2009 SCC 16, [2009] 1 S.C.R. 549, at para. 22).

Article 3155 C.C.Q. then lists six exceptions that allow Quebec courtsto depart from that general principle and refuse to recognize a foreign decision. The first of these exceptions concerns decisions renderedby an authority that had no jurisdiction over the dispute under the Civil Code: 3155.

A decision rendered outside Québec is recognized and, where applicable, declared enforceable by the Québec authority, except inthe following cases: (1) the authority of the State where the decision was rendered had no jurisdiction under the provisions of this Title; (2) the decision, at the place where it was rendered, is subject to an ordinary remedy or is not final or enforceable; (3) the decision was rendered in contravention of the fundamental principles of procedure; (4) a dispute between the same parties, based on the same facts and having the same subject has given rise to a decision rendered inQuébec, whether or not it has become final, is pending before a Québec authority, first seized of the dispute, or has been decided in athird State and the decision meets the conditions necessary for it to be recognized in Québec; (5) the outcome of a foreign decision is manifestly inconsistent with public order as understood in international relations; (6) the decision enforces obligations arising from the taxation laws of a foreign State. [24] The framework established by art. 3155 C.C.Q. has been described as creating a presumption of validity in favour ofthe foreign decision, a presumption that is rebutted when a Quebec court holds that one of the listed exceptions applies (Ministère de laJustice, Commentaires du ministre de la Justice, vol.

II, Le Code civil du Québec — Un mouvement de société (1993), at p. 2015; H. P.Glenn, “Recognition of Foreign Judgments in Quebec” (1997), 28 Can. Bus. L.J. 404, at p. 406; Yousuf v. Jannesar, 2014 QCCA 2096,at paras. 18-20 Mutual Trust Co. v. St-Cyr (1996), (QC CA), 144 D.L.R. (4th) 338 (C.A.), at pp. 347-48).One would expect the onus to be on the party opposing recognition to displace this presumption of validity of the foreign decision and toestablish one of the grounds for denying recognition or enforcement (J. A. Talpis, with the collaboration of S. L.

Kath, “If I am fromGrand-Mère, Why Am I Being Sued in Texas?” Responding to Inappropriate Foreign Jurisdiction in Quebec-United States CrossborderLitigation (2001), at p. 161; Goldberg v.

Think Glass Le verre repensé inc., 2016 QCCS 6456, at para. 23 Jules Jordan Videoinc. v. 144942 Canada inc., 2014 QCCS 3343, at para. 51 Under the general rule governing the allocation of the burden ofproof between parties found in art. 2803 C.C.Q., “a person seeking to assert a right shall prove the facts on which the claim is based”,while a person who argues that a right is null, modified or extinguished bears the burden of proving the facts underlying that position.The burden of proving that an exception applies thus normally falls on the party seeking to rely on the exception (L.

Ducharme, Précisde la preuve (6th ed. 2005), at Nos. 122-23; Abel Skiver Farm Corp. v. Town of Sainte-Foy, (SCC), [1983] 1 S.C.R. 403,at p. 421; Lavallée v. Imhof, 2018 QCCS 2031, at para. 32 [25] Still, some legislative provisions impose that onus of proof on the party seeking recognition of a foreign decision.One example is art. 786 para. 1 of the former Code of Civil Procedure, CQLR, c. C-25 (“former C.C.P.”) (now art. 508 para. 1 of thecurrent Code of Civil Procedure, CQLR, c. C-25.01 (“new C.C.P.”)).

It requires the party seeking recognition to attach to the application“an attestation emanating from a competent foreign public officer stating that the decision is no longer, in the State in which it wasrendered, subject to ordinary remedy and that it is final or enforceable”. The party seeking recognition thus bears the burden ofestablishing — in the manner prescribed — that the foreign decision is final or enforceable, and therefore, that the second exceptionfound in art. 3155 C.C.Q. does not apply.

Similarly, where a foreign decision is rendered by default, art. 3156 C.C.Q. requires the partyseeking recognition to establish that the third exception in art. 3155 C.C.Q. does not apply (see Yousuf, at paras. 20-23, and art. 786 para.2 of the former C.C.P. (now art. 508 para. 2 of the new C.C.P.)). [26] With respect to the first exception in art. 3155 C.C.Q., Title Four of Book Ten of the Civil Code specifies thecircumstances in which Quebec courts will recognize foreign jurisdiction.

The purpose of these rules is not to teach lessons to foreignauthorities about the outer limits of their own jurisdiction, but rather to determine whether it is appropriate to integrate specific decisionsrendered outside Quebec into the province’s legal system.

Such recognition of a foreign authority’s jurisdiction by local courts inaccordance with the rules prescribed by local law has been referred to by many authors as the [translation] “indirect internationaljurisdiction” (“compétence internationale indirecte”) or “indirect jurisdiction” (“compétence indirecte”) of the foreign authority (G.Goldstein, “Compétence internationale indirecte du tribunal étranger”, in JurisClasseur Québec — Droit international privé (loose-leaf),by P.-C. Lafond, ed., fasc. 11, at para. 2; H. P.

Glenn, “Droit international privé”, in La réforme du Code civil (1993), vol. 3, 669, atpara. 125; J. A. Talpis and J.-G. Castel, “Interpreting the rules of private international law”, in Reform of the Civil Code (1993), vol. 5B,at No. 485; see also Mutual Trust, at p. 348).

[27] In personal actions of a patrimonial nature like the one in the instant case, art. 3168 C.C.Q. lists six situations whereQuebec courts will find that a foreign authority has indirect international jurisdiction: 3168.

In personal actions of a patrimonial nature, the jurisdiction of foreign authorities is recognized only in the following cases: (1) the defendant was domiciled in the State where the decision was rendered; (2) the defendant possessed an establishment in the State where the decision was rendered and the dispute relates to its activities in thatState; (3) injury was suffered in the State where the decision was rendered and it resulted from a fault which was committed in that State orfrom an injurious act or omission which occurred there; (4) the obligations arising from a contract were to be performed in that State; (5) the parties have submitted to the foreign authorities the present or future disputes between themselves arising out of a specific legalrelationship; however, renunciation by a consumer or a worker of the jurisdiction of the authority of his place of domicile may not be setup against him; (6) the defendant has submitted to the jurisdiction of the foreign authorities.

This exhaustive enumeration of grounds and the use of the word “only” signal that the recognition of a foreign authority’s indirectinternational jurisdiction requires the party seeking recognition to establish the existence of one of the enumerated grounds. [28] Because of the manner in which they are both structured, arts. 3155(1) and 3168 C.C.Q. may seem to givecontradictory indications as to which party bears the burden of establishing the existence — or absence — of a ground for recognizingjurisdiction. Here, Mr.

Barer argues that Knight, the party seeking recognition of a foreign decision in Quebec, must prove the facts thatjustify the recognition of the Utah Court’s jurisdiction under art. 3168 C.C.Q. For its part, Knight contends that it is incumbent on Mr.Barer, the party opposing recognition, to establish the absence of any grounds for recognition. It stresses that lack of jurisdiction is anexception to the general principle that foreign decisions should be recognized. [29] In my view, Mr. Barer’s approach is the correct one.

Any tension between arts. 3155 and 3168 C.C.Q. dissipateswhen one considers that the foreign authority’s jurisdiction is one of the facts on which an applicant’s claim is based. Indeed, a partyseeking recognition of a foreign decision has no right arising from that decision in Quebec unless the foreign authority had jurisdictionpursuant to the rules of the Civil Code. [30] The indirect international jurisdiction of a foreign authority is therefore best conceptualized as a precondition to therecognition of its decision.

A finding of foreign jurisdiction logically precedes a finding that a foreign judgment is enforceable inQuebec. As Professor Emanuelli puts it: [translation] “[f]or a foreign decision to be recognized in Quebec and to be capable of beingdeclared enforceable in the province, it must have been rendered by an authority that had jurisdiction under the Quebec rules on theinternational jurisdiction of foreign authorities. This is what emerges, a contrario, from article 3155(1) C.C.Q.” (C.

Emanuelli, Droitinternational privé québécois (3rd ed. 2011), at No. 279 (emphasis added; footnote omitted); see also Kélada, at p. 43). In WorthingtonCorp. v. Atlas Turner inc., (QC CA), [2004] R.J.Q. 2376, the Quebec Court of Appeal also opined that [translation]“foreign judgments are recognized in Quebec if they were rendered by a court that had jurisdiction under the Civil Code’s provisions onprivate international law. Articles 3155 and 3164 state this expressly” (para. 16 (emphasis added)). [31] Legislative history further supports this view.

Initially, the legislature had contemplated using express language thatwould place the onus on the defendant in what is now art. 3155 (“unless the defendant proves that”; see draft art. 3133).

However, theNational Assembly did not adopt this wording, but rather changed it to the current “except in the following cases” in order to [translation]“enable Quebec authorities to verify, of their own motion, whether the foreign decision meets the conditions set out in the article” (Sous-commissions des institutions, “Étude détaillée du projet de loi 125 — Code civil du Québec”, Journal des débats, vol. 31, No. 28, 1stSess., 34th Leg., December 3, 1991, at p. 1141 (emphasis deleted)). [32] In fact, in performing its role under art. 3158 C.C.Q. of “verifying whether the decision with respect to whichrecognition or enforcement is sought meets the requirements prescribed in this Title”, the Quebec enforcing court must ascertain that theforeign authority had jurisdiction over the matter under the rules of the Civil Code (Lépine, at para. 24; Zimmermann, at para. 13Iraq (State of) v.

Heerema Zwijndrecht, b.v., 2013 QCCA 1112, at para. 15 Hocking v. Haziza, 2008 QCCA 800, atpara. 39 Again, this is an indication that a finding of jurisdiction precedes a finding of recognition. In this regard, the Quebeccourt must make a positive finding of jurisdiction; it cannot limit itself to determining whether the party opposing recognition hassatisfactorily proved lack of jurisdiction. Nor can the Quebec court rely on the presumption of normality (see C.

Piché, La preuve civile(5th ed. 2016), at Nos. 156 et seq.) to find that the foreign authority had jurisdiction: that authority did not consider the Quebec rulesgoverning indirect international jurisdiction when it rendered its decision. It follows that, in law, the indirect international jurisdiction

requirements imposed by the Civil Code for the recognition of a foreign authority’s jurisdiction over a matter are not satisfied simplybecause the opposing party has failed to prove lack of jurisdiction. [33] The party seeking recognition of a foreign decision thus bears the burden of proving the facts upon which the foreignauthority’s indirect international jurisdiction is based.

This allocation of the burden of proof is in line with the well-established rule thatthe plaintiff in an action before a Quebec court bears the burden of proving the facts upon which the court’s jurisdiction is based when itis challenged by the defendant (Piché, at No. 161; Transax Technologies inc. v. Red Baron Corp. Ltd., 2017 QCCA 626, at para. 13Shamji v. Tajdin, 2006 QCCA 314, at para. 16 Bank of Montreal v. Hydro Aluminum Wells Inc.,(Que. C.A.), at para. 12; Baird v.

Matol Botanical International Ltd., (QC CA), [1994] R.D.J. 282 (C.A.), at p. 283). [34] I add that it would hardly be reasonable to require the parties opposing recognition to bear the burden of establishingthe foreign authority’s lack of indirect international jurisdiction.

Article 3168 C.C.Q. lists six alternative grounds for recognizingjurisdiction in personal actions of a patrimonial nature, but a single one suffices to recognize the jurisdiction of the foreign authority(Emanuelli (2011), at No. 290; Hocking, at para. 187). If defendants were required to prove a lack of indirect international jurisdiction,they would have to disprove each of the six possibilities listed in art. 3168 C.C.Q.

That would place them in the awkward position ofhaving to prove a series of negatives. [35] In this case, Knight relies on three grounds to establish the jurisdiction of the Utah Court under art. 3168 C.C.Q.,namely the grounds set out in the third, fourth and sixth subparagraphs of that article. I will briefly discuss the first two grounds beforeturning to the third and main one. B.

Article 3168(3) and (4) C.C.Q. [36] Article 3168(3) C.C.Q. provides that the jurisdiction of a foreign authority is recognized in Quebec if both the injuryand the fault that gave rise to the injury occurred in the state where the decision was rendered.

For its part, art. 3168(4) C.C.Q. states thata foreign authority’s jurisdiction is recognized where its decision concerns “obligations arising from a contract [that] were to beperformed in that State”. [37] In a short obiter, the Superior Court found that these two subparagraphs “could” justify the recognition of the UtahCourt’s jurisdiction because “the acceptance of the alleged promise to pay by [Mr.] Barer was received in Utah and that same was to beperformed in that state” (Sup. Ct. reasons, at para. 20 (emphasis added)). It is unclear whether the Court of Appeal agreed with thisaspect of the trial judgment.

In my view, Knight did not meet its burden of proof in this regard, and this suffices to conclude that it cannotrely on these two grounds here. [38] In support of its position, Knight argues mainly that in view of art. 3158 C.C.Q., Quebec courts cannot verifywhether there was a promise to pay or whether Mr. Barer, under the alter ego doctrine, was personally bound by the contract betweenKnight and BEC. According to Knight, this was already decided by the Utah Court, and Quebec courts should refrain from questioningthe merits of the Utah Decision.

This position is flawed for three reasons. [39] First, Knight relies on the Utah Court’s preliminary decision denying Mr. Barer’s motion to dismiss in order toestablish a basis for recognizing the Utah Court’s jurisdiction. However, that decision was not final, and is therefore not recognizable inQuebec pursuant to art. 3155(2) C.C.Q. In addition, in this case, Knight seeks recognition of the Utah Decision, namely the final defaultjudgment rendered against Mr. Barer, not the preliminary decision on Mr. Barer’s motion to dismiss.

It is only that default judgment thatis contemplated by art. 3158 C.C.Q., and no reasons were provided in support of it. It is simply an order to pay a sum of money, nothingmore. Finally, the Utah Court’s prima facie findings in its judgment dismissing Mr. Barer’s preliminary motion were based on allegationsdeemed to be true and were made for the sole purpose of deciding whether to allow the case to proceed to trial. [40] To be clear, the fact that the Utah Decision was a default judgment is not a reason to refrain from recognizing andenforcing it in Quebec.

Foreign default judgments can be recognized in Quebec on the same footing as other decisions, as long as therequirements of arts. 3156 C.C.Q. and 786 para. 2 of the former C.C.P. (now art. 508 para. 2 of the new C.C.P.) are met (Yousuf, atparas. 17-19; see also, under the common law, Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416, at para. 31). It is also not arequirement per se that the foreign decision be supported by reasons (G. Goldstein, “Principes généraux et conditions générales dereconnaissance et d’exécution”, in JurisClasseur Québec — Droit international privé (loose-leaf), by P.-C.

Lafond, ed., fasc. 10, atpara. 71; Society of Lloyd’s v. Alper, 2006 QCCS 1203, at paras. 82-87 [41] Still, Knight could not merely rely on the allegations in its own proceedings before the Utah Court in order toestablish that court’s jurisdiction over Mr. Barer according to the rules of the Civil Code. It had to adduce evidence before the Quebecenforcing court to meet its burden of establishing the grounds for recognition of the foreign authority’s jurisdiction listed inart. 3168 C.C.Q. upon which it was relying.

As previously mentioned, an application for recognition and enforcement “is a judicialdemand that gives rise to an adversarial relationship to which the general rules of civil procedure apply” (Kuwait Airways, at para. 20). Inthis context, the parties are not exempted from the requirement imposed by art. 2803 C.C.Q. The applicant must prove the facts on whichits right to recognition and enforcement of the foreign decision is based.

It is the role of the Quebec enforcing court to look at thatevidence to ensure that the foreign authority had jurisdiction under the rules of the Civil Code (Heerema, at para. 15; Zimmermann, atpara. 13; Mutual Trust, at p. 348). [42] In Zimmermann, which coincidentally also involved Mr. Barer and his companies, the Quebec Court of Appealrefused to recognize and enforce against Mr. Barer personally a default judgment rendered by the United States District Court for theDistrict of Vermont against him and BEC.

As in the present case, the party seeking recognition argued that the foreign authority hadaccepted that BEC was Mr. Barer’s alter ego and that Quebec courts could not re-examine that finding. The Court of Appeal rightlyrejected that argument and held that the trial judge had not erred in requiring that evidence be adduced to prove the facts constituting thebasis for recognition of the Vermont court’s jurisdiction (Zimmermann, at para. 20).

Because the party seeking recognition had notadduced evidence that justified lifting the corporate veil, the Court of Appeal refused to recognize the Vermont court’s jurisdiction overMr. Barer personally under art. 3168(4) C.C.Q., as only BEC was a party to the contract involved.

[ 43 ] The trial judge below distinguished the present case from Zimmermann on the basis that “the proof made before the Utah Court for the Motion to dismiss as referred to in the judgment, Exhibit P-4.5, . . . constitutes sufficient proof under Quebec law that the requirements to grant jurisdiction to the

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