Cao v. Chen: Should the Chinese Judgment be recognized by British Columbia Court? – WriteToLearn Notes

A court enforcing a foreign judgment is enforcing the obligation created by that judgment (Pro Swing Inc. v. Elta Golf Inc. 2006 SCC 52). The principle of the separation of judicial systems reminds us that as long as the foreign court has jurisdiction to adjudicate the dispute, absent evidence of fraud or a judgment contrary to natural justice or public policy, the enforcing court is not interested in the substantive or procedural law of the foreign jurisdiction (para. 89 of Pro Swing Inc. v. Elta Golf Inc. 2006 SCC 52). This article summarizes the reasoning of the Supreme Court of British Columbia on Cao v. Chen2020 BCSC 735 on the matter of the recognition and enforcement of a Chinese judgment on family matters.

Key Facts Related to the Appeal

In 1994, the claimant, Ms. Cao and the respondent, Mr. Chen were married in Weifang, Shandong Province, China. They have three children. Ms. Cao was working full-time when she met Mr. Chen, who was divorced at that time. After meeting him, she left her employment and stayed home to look after their children.

Since May 2007, the claimant, Ms. Cao has been a permanent residence of Canada living in B.C. The respondent, Mr. Chen is a Canadian citizen as of April 2019. 

On September 14, 2009, Mr. Cao and Mr. Chen separated.

By 2012, all of their children were enrolled in schools in British Columbia.

On March 3, 2010, the respondent, Mr. Chen commenced a claim against the claimant, Ms. Cao in the Fangzi District Court, Weifang City, Shandong Province, China.

On January 21, 2013, the Fangzi District Court made the trial judgment on the matters of divorce, custody and child support, division of family assets in China and spousal support.

On January 24, 2013, the claimant, Ms. Cao appealed the trial judgment to the Weifang Intermediate Court of China.

On June 10, 2013, the Weifang Intermediate Court of China dismissed the appeal and upheld the trial judgment.

On June 30, 2014, the respondent, Mr. Chen’s eldest son from his first marriage brought an application seeking to have the Chinese Judgment recognized and given effect by the British Columbia Supreme Court. The Court dismissed this application and directed that the issue of the recognition of the foreign judgment should be dealt with at trial by the trial judge.

In May and November 2019, the Supreme Court of British Columbia held the hearing for the issue on whether the Chinese Judgment should be recognized in Canada 

On May 13, 2020, the Supreme Court of British Columbia recognized the Chinese divorce decree and the Chinese order respecting spousal support. However, the Court did not recognize the Chinese orders respecting custody and child support.

Applicable Law and Regulation (non-exhaustive list)

In Beals v. Saldanha2003 SCC 72, the Supreme Court of Canada affirmed that the “real and substantial connection” test, which was adopted for the recognition and enforcement of interprovincial judgments in Morguard Investments Ltd. v. De Savoye[1990] 3 S.C.R. 1077, applies assessing jurisdictional competence with respect to foreign judgments rendered outside Canada. Once the “real and substantial connection” is found to apply to a foreign judgment, the court would examine the defences of the domestic defendant in contesting the recognition of the foreign judgment. The defences could be on the basis of natural justice, public policy and fraud.

On the defence of natural justice, in Beals, the Supreme Court of Canada requires that the domestic court enforcing a foreign judgment must be satisfied that minimum standards of procedural fairness have been applied to the Canadian defendants by the foreign court. Major J., wrote at para. 62:

[62] Fair process is one that, in the system from which the judgment originates, reasonably guarantees basic procedural safeguards such as judicial independence and fair ethical rules governing the participants in the judicial system. This determination will need to be made for all foreign judgments. Obviously, it is simpler for domestic courts to assess the fairness afforded to a Canadian defendant in another province in Canada. In the case of judgments made by courts outside Canada, the review may be more difficult but is mandatory and the enforcing court must be satisfied that fair process was used in awarding the judgment. This assessment is easier when the foreign legal system is either similar to or familiar to Canadian courts.

[64] 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. The defence is limited to the procedure by which the for- eign court arrived at its judgment. However, if that procedure, while valid there, is not in accordance with Canada’s concept of natural justice, the foreign judgment will be rejected. The defendant carries the burden of proof and, in this case, failed to raise any reasonable apprehension of unfairness.

Section 22 (1) of the Divorce Act provides that if either former spouse was ordinarily resident in the foreign country for at least one year immediately preceding the commencement of the divorce proceedings, the courts in Canada shall recognize the divorce granted by the tribunal or related authority in that foreign country for all purposes of determining the marital status in Canada of the person.

Section 76 of the Family Law Act of British Columbia provides that a court may supersede a valid foreign order where there has been a change in circumstances affecting the best interests of the child and the child is habitually resident in British Columbia.

Art. 42 of the Marriage Law of People’s Republic of China (Art. 1092 of the New Civil Code of P.R.C.) provides that if, at the time of divorce, either party has difficulties in life, the other party who has better financial resources shall render appropriate assistance. The Supreme People’s Court’s interpretation provides that the circumstance under which “either party has difficulties in life” means that it can’t sustain the local basic living level by depending on the personal property and the property divided to him/her at the time of divorce.

Issue to be Discussed

Should the Chinese Judgment (June 10, 2013) be recognized by the British Columbia Court?

Analysis of the Court

A. The Divorce Decree:

In the present case, the evidence supports that the respondent, Mr. Chen was ordinarily resident in China for at least one year immediately prior to the commencement of the divorce proceedings, which would invoke s. 22 (1) of the Divorce Act of Canada.

When the foreign divorce order comes within s. 22 of the Divorce Act, the Court then considers whether there are grounds on which the court should refuse to recognize the validity of the divorce (para. 13 of Pitre v. Nguyen2007 BCSC 1161). In the present case, there is no evidence to support that any of the limited circumstances in which this divorce order should not be recognized applied. Furthermore, both parties agree the Chinese divorce order should be recognized.

Thus, the Court accepts that the divorce granted in the Chinese Judgment should be recognized in British Columbia. 

B. Custody

In the present case, the children are habitually resident in British Columbia.

S. 76 of the Family Law Act of British Columbia gives the Court jurisdiction to supersede the foreign judgment where there has been a change in circumstances affecting the best interests of the child. Furthermore, the respondent, Mr. Chen abandoned his claim to recognize the Chinese Judgment with respect to custody.

Thus, the Court does not recognize the Chinese orders on custody matters. The Court has jurisdiction to make new orders regarding custody under the Family Law Act of British Columbia. 

C. Child Support

First, the child support orders in the Chinese Judgment do not come within the purview of the Interjurisdictional Support Orders Act (“ISOA”) because China is not a “reciprocating jurisdiction”.

Second, the ISOA does not prevent the Court from applying common law principles to the question of whether or not to recognize foreign support orders from non-reciprocating jurisdictions. 

Third, the Court finds it unnecessary to consider the jurisdiction issue because the Court finds that the Chinese child support order was not a final order for the purposes of recognition in Canadian law, and I would decline to recognize it on that basis. A final order is one that cannot be revisited in the court that made the order (para. 144 of Cao v. Chen). However, as the Chinese law expert witness Prof. deLisle’s testimony mentioned, the child support orders, similar to the child custody order, can be revisited in Chinese law under certain changes in circumstances.

D. Spousal Support

The issue is more difficult with respect to spousal support.

First, while Ms. Cao submits that the spousal support order should not be recognized in Canada for being contrary to public policy, the Court finds that the Chinese law regarding spousal support is not so unjust as to offend Canadian sense of justice and basic morality. It is noted that by reading the article 42 of the Marriage Law of China (art. 1090 of the New Civil Code of China), the Court finds that the spousal support in China is actually intended to address the circumstances of the spouses at the time of the divorce.” The spousal support in Chinese law is not intended to reflect the marital standard of living enjoyed by both spouses prior to separation, nor is it aimed at reflecting an equitable distribution of the economic consequences of the marriage. It is not intended to compensate spouses for sacrificing labour force participation to take care of family responsibilities, nor is it awarded for loss of economic opportunity or economic disadvantage resulting from the roles adopted during the marriage” (para. 187 of Cao v. Chen).

On the other hand, in Canada, spousal support is intended to compensate for the non-monetary contributions to the family and for the career sacrifices made that impair one spouse’s earning potential on breakdown of the marriage, while enhancing that of the other spouse by freeing up their time to pursue economic aims (para. 195 of Cao v. Chen).

Unlike Canadian law, there does not appear to be a means of revisiting support based on changing means and needs of the spouses after the spouses have separated under Chinese law.

Although the family laws of Canada and China are different, in China, some of the compensatory principles for awarding spousal support are executed by means of the division of family assets at the time of divorce, which is the primary means of equalizing the financial situation of spouses in Chinese law.

Thus, the Court finds that the Chinese law regarding spousal support is not so unjust as to offend Canadian sense of justice and basic morality. The high bar needed to invoke the public policy defence is not met in the present case. It is noted in an English court decision that the power to disregard foreign law on the basis of public policy is to be exercised ‘exceptionally and with the greatest circumspection’ (paras. 273 – 75 of Kuwait Airways Corporation v. Iraqi Airways Company and others, [2002] U.K.H.L. 19). 

Second, while the claimant, Ms. Cao also submits that the lack of party-driven discovery during the divorce proceeding in China is contrary to natural justice as the discovery process is fundamental to Canadian legal system’s guarantee of a fair hearing, the Court finds that Ms. Cao has had a fair hearing in China. It is noted that in China, one party desires evidence held by another party, it cannot compel the other party to turn over evidence by way of a discovery request. If a party believes that the opposing side is hiding assets, she must provide proof or “clues”. With these clues, the party can apply to the court to request financial institutions to provide the related information. The Commercial Bank Law provides that the financial institutions shall provide the evidence if requested by the court.

Based on the evidence in the present case, the Court finds that albeit in a different form, the Chinese legal system has similar rights and obligations on the parties when it comes to providing evidence and similar consequences for those who fail to comply with the rules to those that we have in place in this jurisdiction. Further, in Wei v. Li2019 BCCA 114, the Court of Appeal for British Columbia suggests that where a party has attorned to the jurisdiction of a foreign court and participated actively in the proceedings, this is sufficient to meet the requirements of natural justice (para. 28 of Wei v. Li). In the present case, Ms. Cao has participated actively with her lawyer in the divorce proceedings in China.

For these reasons, the Chinese Judgment is not contrary to public policy nor to natural justice. As no defences apply, the Chinese Judgment on the matter of spousal support should be recognized in British Columbia.

Conclusion

Dès que le tribunal conclut que le critère du « lien réel et substantiel » s’applique à un jugement étranger, il va examiner la portée des moyens de défense qu’un défendeur canadien peut opposer à la reconnaissance de ce jugement : la fraude, l’ordre public et la justice naturelle. En l’espèce, la Cour suprême de la Colombie-Britannique a reconnu le jugement chinois sur la pension alimentaire pour l’épouse et le divorce. À l’égard de la pension alimentaire pour l’épouse, la Cour conclut que la pension alimentaire pour l’épouse en Chine vise à tenir compte de la situation des époux au moment du divorce. Contrairement à la loi canadienne, en vertu de la loi chinoise, il n’y a pas de moyen de revoir la pension alimentaire en fonction de l’évolution des moyens et des besoins des époux après le divorce. En vertu de la loi chinoise, le partage des biens familiaux est le principal moyen d’égaliser la situation financière des époux. Ainsi, le jugement chinois sur la pension alimentaire pour l’épouse est définitif. Par contre, la Cour n’a pas reconnu le jugement chinois sur la garde d’enfants et la pension alimentaire pour les enfants parce que le jugement rendu sur les deux matières peut être revisité en droit chinois sous certains changements de circonstances et que la Cour de la Colombie-Britannique est compétente pour rendre de nouvelles ordonnances sur les deux matières considérant que les enfants vivent habituellement en Colombie-Britannique.

(Reminder: The purpose of this article is to provide general legal information. It does not contain a full analysis of the law nor does it constitute a legal advice on the points of law discussed. To minimize the legal risk for your business, you must take specific legal advice from a lawyer on any particular matter which concerns you. Thanks for your attention. 😊)