Supreme Court of Canada to Decide on Definition of “Carrying on Business”: H.M.B. Holdings Limited v. Antigua and Barbuda
On November 12, 2020, H.M.B. Holdings Limited v. Antigua and Barbuda, 2020 ONCA 12 [HMB Holding] was granted leave by the Supreme Court of Canada (“SCC”). The Judicial Committee of the Privy Council decided in 2014 that Antigua and Barbuda (“Antigua”) owed H.M.B Holdings Limited’s (“HMB”) compensation for expropriating its Antiguan property (“Privy Council Judgement”) (HMB Holding, para 1). After enforcement by British Columbian courts, HMB attempted to enforce the Privy Council judgement in Ontario under the Reciprocal Enforcement of Judgments Act, R.S.O. 1990, c. R.5 [REJA] (HMB Holding, para 3). To determine whether the REJA applied, however, the Court must find that Antigua carried on business in British Columbia.
Under the REJA, a court’s judgment in a “reciprocating state” may apply to any court in Ontario and have the judgement registered in Ontario. However, the Court would not register the judgement if it found Antigua to be “neither carrying on business nor ordinarily resident in the jurisdiction of the original court”(HMB Holding, para 9). In this context, the original court was the British Columbia courts.
Antigua’s relevant activity in British Columbia concerned its “Citizenship by Investment” (“CIP”) program. This program encouraged investments in real estate, business, and Antigua’s National Development fund by offering citizenship to those that made investments (HMB Holding, para 11). The Citizenship Investment Unit (“CIU”), an Antiguan government agency, administers CIP (HMB Holding, para 11).
The CIU appointed four representatives (“CIP Agent”) to provide potential investors with information about the CIP program in British Columbia. CIP Agents had no power to review or approve investment applications (HMB Holding, para 14). The CIU ultimately approves or denies applications. If an application is approved, the CIU may pay the CIP Agents a commission (HMB Holding, para 15).
CIU generally had no link to British Columbia beyond its CIP Agents. It had no office in British Columbia, it did not deal with prospective investors in the province, and it did not trade goods or engage in advertising (HMB Holding, para 17).
Under REJA, a court must find that Antigua carried on business in British Columbia for the British Columbia judgement to register in Ontario. Both parties at trial agreed that “if Antigua did not carry on business in British Columbia, the British Columbia judgment could not be registered in Ontario” (HMB Holding, para 19).
Superior Court of Justice of Ontario
The Superior Court had to determine whether a party was carrying on business in a province was a question of fact (HMB Holding, para 20). The Court noted that active advertising in a jurisdiction and an internet presence could not suffice as carrying on business in a jurisdiction (HMB Holding, para 21). The application judge concluded the Antiguan government didn’t carry on business in British Columbia (HMB Holding, para 22). The CIP Agents carried on their own independent business. The Court found that the only jurisdiction Antigua carried business on was Antigua (HMB Holding, para 22).
The Ontario Court of Appeal (“ONCA”) reviewed two issues:
- Did Antigua carry on business in British Columbia?
- What does the phrase “original judgement” in s.3(g) of REJA refer to — the British Columbia Judgement or the Privy Council Judgement?
At the ONCA, HMB argued that Antigua’s employment of its four agents and the promotion of its program in British Columbia meant that Antigua was carrying on business in British Columbia (HMB Holding, para 24). Antigua relied on jurisprudence to demonstrate that active advertising in a province didn’t constitute carrying on business in that province and that “marketing products through an agency would also not mean that the party retaining the agency was therefore carrying on business in the province” (HMB Holding, para 26).
Ultimately the ONCA found it owed deference to the lower Court’s fact-finding — Antigua did not carry on business in British Columbia. Therefore, there was no reason for intervention absent palpable and overriding error (HMB Holding, para 27).
The Court further stated that this interpretation of “carrying on business” did not deprive someone in HMB’s position of a remedy. HMB had the opportunity to bring a common law action in Ontario when the Privy Council made its order on May 27, 2014. But HMB would have had to bring its Ontario action within the two-year limitation period provided (HMB Holding, para 32).
Because the Majority found Antigua did not meet the threshold of “carrying on business,” it was unnecessary to consider which judgement was the “original judgement” (HMB Holding, para 35).
Justice Nordheimer penned the dissent. He stated that the application judge erred in refusing to register the judgement under the RESA and made a palpable and overriding error (HMB Holding, para 38 – 39). Nordheimer J.A. argued that the requirement to consider whether a party was carrying on business for the purpose of the REJA should be “a very low bar”. Further, this low bar was satisfied by Antigua, which, in essence, sold citizenships in Canada for significant sums of money (HMB Holding, para 43).
The application judge found Antigua was not carrying on business in British Columbia because it lacked a physical presence. However, Nordheimer J.A. noted that “… in this digital age, it is often unnecessary to have any physical presence in order to carry on a business” (HMB Holding, para 44).
Lastly, Nordheimer J.A. defined “original court”, pursuant to the REJA, as the one where the judgement was given (HMB Holding, para 51). Nordheimer J.A. reasoned that the original court was the British Columbia court because HMB sought to register the British Columbia judgement in Ontario (HMB Holding, para 51). However, the application judge interpreted the original court as the Privy Council that determined Antigua must compensate HMB for expropriating HMB’s Antiguan properties.
Potential Implications of this Decision
Although both Courts decided in favour of Antigua, Justice Nordheimer’s dissent makes important points. As our world becomes increasingly digital, especially with momentum from the pandemic, the definition of where a person is “carrying on business” continues to change. The internet allows businesses to sell in any country. In 2021, it is not uncommon that a Canadian living in the U.S. sets up a business selling products from China to consumers in the European Union. This hypothetical business may have a tough time answering where it carries on business.
The SCC’s decision for this case has major implications for other areas of law such as tax and international private law. How the SCC defines “carrying on business” in the context of the REJA may bleed into other areas where the term has significant implications but grapples with adapting to the digital landscape.
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