On July 25, 2008, the US Plaintiff obtained Default Judgment (“Default Judgment 1”) in Pennsylvania against the Defendant’s companies for the balance of an unpaid purchase contract for railway equipment (the “Debt”). Default Judgment 1 was endorsed by the Alberta Court on September 10, 2008. During the examination in aid of execution, it was discovered that the Defendant had used the funds from the resale of the railway equipment for personal investments and to pay gambling debts.

In 2011, the Plaintiff obtained Default Judgment (“Default Judgment 2”) in Pennsylvania against the Defendant personally for the Debt, alleging fraud, misappropriation and conversion. The Defendant had been automatically assigned into bankruptcy prior to the Plaintiff obtaining the Default Judgment 2. The Court considered whether Default Judgment 2 was enforceable in Alberta and whether it survived the bankruptcy of the Defendant.

The first stage of assessing whether a foreign Judgment is enforceable in Alberta is whether (i) there is a real and substantial connection between the foreign jurisdiction and either the subject matter of the litigation or a party to it, or (ii) the party attorned to the foreign jurisdiction.

Nixon J. held that a series of emails from the Defendant indicating an intent to defend the Claim in Pennsylvania were insufficient to demonstrate attornment. Notice of intent to defend is not binding on a Defendant, especially when he has not yet retained counsel. The Court went on to consider whether there was a real and substantial connection to the jurisdiction of Pennsylvania.

The Court reviewed a number of decisions governing the test for a real and substantial connection, and also referred to the factors listed at Rule 11.25(3) which establish a real and substantial connection for service ex juris. The Court held that there was insufficient evidence to establish that the Defendant or his companies carried on business in Pennsylvania, such that a presumptive connecting factor existed. Moreover, the actions upon which Default Judgment 2 was based did not occur in Pennsylvania; the conversion and misappropriation of funds alleged in order to pierce the corporate veil, occurred in Alberta. Furthermore, it was not sufficient to establish a real and substantial connection where the damage occurred in the jurisdiction but the alleged wrongdoing occurred outside of the jurisdiction.

The Court further held that Default Judgment 2 did not survive bankruptcy because there was no clear finding that the Defendant obtained the property by deceit.