Case information

Private international law — Foreign judgments — Enforcement — Recognition — Contracts — Severance — Judgments and orders — Interest — What approach should Canadian courts take when asked to enforce a foreign judgment that contains an interest rate that is contrary to s. 347 of Canada’s Criminal Code — To what extent must Canadian courts accept the entire content of documents, not relating to an order made, that a litigant describes as being from a foreign court’s file, for the truth of their contents?

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Guilian Li (also known as Gui Lian Li) and her husband Zijie Mei (also known as Zi Jie Mei) live in British Columbia and had business operations in China under a company they owned, Fenghui Ltd. In 2010 and 2012, Tong Wei loaned money to Fenghui Ltd. The 2012 loan was guaranteed by Ms. Li. The company defaulted on its loan payments and the guarantees were not fully honoured. Legal proceedings were initiated in China and a mediated settlement was reached. The settlement stipulated a lump sum payment covering the principle of the loans, interest and expenses for collection. As part of the settlement, it was agreed that any remaining unpaid balance was subject to default interest calculated at a rate of 0.2% of the unpaid balance per day (73% annualized). Two Chinese judgments confirmed the settlement agreement. The loans were not repaid on the date agreed in the settlement. Mr. Wei initiated enforcement proceedings in China and obtained a notice of enforcement against Fenghui Ltd, Ms. Li and Mr. Mei. Enforcement proceedings were then commenced in British Columbia against Mr. Mei and Ms. Li. In two separate decisions, a judge of the Supreme Court of British Columbia gave judgment enforcing the Chinese judgment, with a penalty interest rate of 60% rather than the 73% ordered by the Chinese court. On appeal to the Court of Appeal for British Columbia, a majority agreed with the trial judge’s conclusions that 60% interest was appropriate. Justice Willcock, in dissent, concluded that modifying the penalty interest impermissibly looked at the merits of the contract between the parties and interfered with a foreign judgment.