Cavell Insurance wind-up lands in Ontario Appeal Court

The wind-up of the reinsurance business of Cavell Insurance Company became the centre of a recent Ontario Court of Appeal judgment concerning the enforcement of foreign court orders.
The Ontario Appeal Court decision upheld a U.K. court order, even though the U.K. order did not meet a traditional requirement: typically, only the final judgment of a foreign court for the payment of a sum of money will be enforced in Canada.
In an article for the law firm Affleck Greene Orr LLP, author Kenneth Dekker noted Ontario’s highest court “relaxed” the traditional rules for recognition and enforcement of a foreign court’s order.
The U.K. order was far from “final” in the matter of Cavell Insurance Company. It merely covened the first in what would be a series of meetings for Cavell’s creditors in a long process to wind up Cavell’s worldwide reinsurance business.
“One of Cavell’s Canadian creditors/policyholders, Pilot Insurance Company, objected to the enforcement of an order that was not final,” Dekker noted. “In addition, Pilot said that the U.K. order should not be enforced because Pilot had not been properly served with notice of the U.K. proceedings and because the U.K. court lacked a sufficiently real and substantial connection to the case to assume jurisdiction.”
Ontario’s Appeal Court ruled otherwise. It argued the three objectives served by enforcing a court’s final orders were in this case served by enforcing the U.K. court’s non-final order.
“It was clear what exactly the court was recognizing and the risk of injustice from its enforcement was minimal, given that the order simply convened a meeting of creditors and did not compel Pilot to pay anything or do anything,” Dekker wrote.
“Finally, the U.K. order was being recognized on terms requiring Cavell to advise the Ontario court of any changes to the procedures imposed by the U.K. court and to seek such further orders of the Ontario court that might be necessary as a result. As such, there was little risk of issuing a recognition order where its foreign foundation [the non-final U.K. order] may disappear [as a result of future modifications].”