Lanfer v. Eilers

2020 BCSC 1325 Lanfer v. Eilers

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Lanfer v. Eilers, 2020 BCSC 1325 Date: 20200909 Docket: S127364 Registry: Kelowna Between: Christiane Lanfer, Inge Otten, Christine Lanfer and Hermann Lanfer Plaintiffs And Kerstin Eilers Defendant Before: The Honourable Mr. Justice Hori Reasons for Judgment Counsel for the Plaintiffs: C. Watson Counsel for the Defendant: J. Keeley Place and Date of Trial/Hearing: Kelowna, B.C. June 29 and July 3, 2020 Place and Date of Judgment: Kelowna, B.C. September 9, 2020 Introduction [1] The plaintiffs obtained a judgment in Germany that ordered the defendant to return certain real property located in Kelowna, British Columbia, to the plaintiffs (the "German Judgment"). The plaintiffs seek to register the German Judgment in British Columbia and to have the registrar of land titles convey the Kelowna property to them. [2] In this application, the plaintiffs seek the relief claimed in their notice of civil claim pursuant to Rule 9-6 (Summary Judgment) or Rule 9-7 (Summary Trial) of the Supreme Court Civil Rules. [3] The defendant applies to strike out the plaintiffs' notice of civil claim as disclosing no reasonable cause of action and to cancel the certificate of pending litigation that the plaintiffs have registered against title to the property. [4] I will decide the issues raised by these applications under Rule 9-7 (Summary Trial)

rather than under Rule 9-6 (Summary Judgment) or Rule 9-5 (Striking Pleadings) because: a) the facts relevant to these applications are not in dispute, and the facts presented by the parties are sufficient to decide the issues; b) the issues are suitable for disposition by summary trial; and c) the summary trial process provides the broadest scope for adjudicating the issues. Background Facts [5] The plaintiff Christiane Lanfer is the first wife of Josef Ferdinand Lanfer, who died on September 16, 2015. The plaintiffs Inge Otten, Christine Lanfer and Hermann Lanfer are the children of Christiane Lanfer and Josef Lanfer. In 1997, Josef Lanfer and Christiane Lanfer entered into an inheritance contract in which Josef Lanfer agreed to appoint the plaintiffs as his heirs (the "Inheritance Contract"). [6] The defendant is the daughter of Hildegard Sedlaczek. Hildegard Sedlaczek was in a common-law relationship with Josef Lanfer from approximately 1980 until his passing in 2015. [7] In 2011, Josef Lanfer transferred real property located in Kelowna, British Columbia to Hildegard Sedlaczek. The property has a legal description of: PID 008-153-914 Lot 1 Section 23 Township 24 Similkameen Division Yale District Plan 18996 (the "Property") [8] Hildegard Sedlaczek then transferred the Property to the defendant in February 2014. [9] In September 2016, the plaintiffs commenced an action

against the defendant in the District Court of Oldenburg in Germany. In that action, the plaintiffs claimed to be entitled to the Property based on the terms of the Inheritance Contract. [10] The German District Court determined that it had jurisdiction to adjudicate on the effect of the Inheritance Contract and pronounced the German Judgment in favour of the plaintiffs on October 13, 2017. The English translation of the German Judgment provides that: The Defendant is ordered to return the real property Lot 1 Section 23 Township 28 Similkameen Divisions Yale District Plan 18996, PID 008-153-914 (384 Braeloch Rd., Kelowna, British Columbia, Canada) in exchange for payment of 21,864.00 EUR to the Plaintiffs, to agree to transfer ownership to the Plaintiff of the first part, the Plaintiff of the second part, and the Plaintiff of the third part as to a share of 3/10 respectively, and to the Plaintiff of the fourth part as to a share of 1/10, and to consent to the corresponding registrations as owners in the Register of the Land Title Office Kamloops. [11] The defendant appealed the German Judgment of the District Court to the Regional Court of Oldenburg. The Regional Court dismissed the appeal on February 2, 2019. The defendant then appealed further to the German Supreme Court. The Supreme Court dismissed the defendant's appeal on September 4, 2019. [12] Shortly after the German

Supreme Court dismissed her appeal, the defendant entered into a contract of purchase and sale by which the Property was sold to a third party purchaser. The sale did not close as a result of the defendant's failure to complete the sale. However, there are discussions ongoing between the defendant and the third party purchaser to renew their agreement for the purchase of the Property. The third party purchaser has commenced an action against the defendant for specific performance of the agreement. [13] On September 20, 2019, the defendant mortgaged the Property to a lender as security for a loan. The mortgage is in default. The lender has issued a foreclosure petition claiming in excess of $1 million as the amount due and owing under the mortgage loan. [14] The plaintiffs commenced this action on April 16, 2020. The plaintiffs registered a certificate of pending litigation against the Property on April 21, 2020. [15] In this action, the plaintiffs seek the following orders: a) an order registering the German Judgment in the Supreme Court of British Columbia; and b) an order that, upon the provision of proof satisfactory to the registrar of titles, that the sum of €21,864 has been paid by the plaintiffs to the defendant, the registrar of titles shall convey the lands from the defendant to the plaintiff Christiane Lanfer as to 3/10, the plaintiff Inge Otten as to 3/10, the

plaintiff Christine Lanfer as to 3/10, and the plaintiff Hermann Lanfer as to 1/10, as tenants in common, in fee simple, free and clear of any estate, right, title, interest, equity of redemption, and other claims of the defendant, but subject to the reservations, provisos, exceptions and conditions expressed in the original grant(s) thereof from the Crown, and charges that rank in priority to the interests of the plaintiffs. [16] The defendant does not take issue with any of the background facts. The defendant resists this application on the basis that there is a long-standing legal principle that the court in British Columbia will not recognize and register a foreign judgment that directly affects title to or declares an interest in land located within British Columbia. Analysis The Traditional Rules [17] The traditional common law rule for enforcing a foreign judgment in Canada is stated in Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52 at para.

10. The traditional rule is that in order to be recognized and enforced in Canada, a foreign judgment must be: a) for a debt or definite sum of money (other than taxes, fines or other penalties); and b) final and conclusive. [18] The Supreme Court of Canada in Pro Swing held that: 13 It is significant that, under the traditional common law rule, the recognition and enforcement of a money judgment does not require an interpretation of the foreign law, nor does it reach deeply into the structure of the domestic court's justice system, since the money obligation created by the foreign judgment is sufficient evidence to enforce it in the Canadian justice system. [19] The recognition and enforcement of a foreign money judgment in Canada is limited under the traditional rule to judgments that are: a) rendered by a court of competent jurisdiction (Pro Swing at para. 11); b) obtained without fraud (Beals v. Saldanha, 2003 SCC 72 at para. 43); c) the result of proceedings that comply with the Canadian concept of natural justice (Beals at para. 59); and d) not contrary to public policy (Beals at para. 71). [20] The defendant in this case concedes that the German courts had the jurisdiction to issue the German Judgment. Further, the defendant does not allege that the German Judgment was obtained by fraud, that it was the result of proceedings in which she was denied natural justice, or that it is contrary to public policy. [21] The defendant relies on the principle that a foreign judgment relating to or affecting an interest in real property in Canada will not be recognized or enforced in Canada. [22] The unwillingness of Canadian courts to enforce foreign judgments related to or affecting an interest in real property is established in Duke v. Andler, [1932] S.C.R.

734. In Duke, a California court considered a contract for the purchase of real property in British Columbia. All parties to the contract and all parties involved in the action were residents of California. [23] In Duke, the purchaser of the British Columbia property obtained conveyance documents without payment of the purchase price and registered title to the British Columbia property in his name. The purchaser then conveyed the property to his wife who placed a mortgage on the property. The vendors brought an action in California against the purchaser and his wife seeking to recover the British Columbia property. [24] The California court ordered the defendants to: . . . execute, acknowledge and deliver, and cause to be recorded and registered according to the forms and laws of British Columbia, Dominion of Canada within thirty (30) days of notice of entry hereof, a deed of conveyance of the said "Victoria Property" to [the plaintiffs] . . . (Duke at 736). [25] The California court further ordered that in the event of the failure or refusal of the defendants to convey the British Columbia property: George E. Gross, Clerk of this Court, be, and he is hereby, appointed as Commissioner of this Court; and said George E Gross, as such Commissioner, is hereby ordered and empowered to make, execute and deliver such deed, and cause the same to be so recorded and registered, and to

do and perform any and all other acts as may be necessary or proper, to effect and perfect a conveyance of said "Victoria Property" to the plaintiffs. . . (Duke at 737). [26] When the defendants refused to execute the conveyance documents as ordered by the California court, the clerk of the California court executed a conveyance pursuant to the terms of the order. The plaintiffs then commenced an action in the Supreme Court of British Columbia for a declaration that they were the owners of the British Columbia property and for an order that they be registered as owners in fee simple of the property, subject to the mortgage placed on the property by the purchaser's wife. [27] The Supreme Court of Canada held that the California judgment should not be enforced by the courts of British Columbia because the courts of a foreign country have no jurisdiction to adjudicate upon the title or the right to the possession of any immovable property not situated in that country. The result in Duke was that the Supreme Court of Canada refused to recognize and enforce the California judgment because it sought to deal with the title and with the rights to lands situated outside the jurisdiction of the California court. Is Duke Distinguishable? [28] The plaintiffs seek to distinguish the facts in Duke from the facts in this case. The plaintiffs submit that because the California order in Duke

included a provision that the clerk of the court execute documents to convey the British Columbia property back to the vendors, it was an order dealing with an interest in land situate in British Columbia. Therefore, according to the plaintiffs, the order in Duke was a judgment affecting title to land in British Columbia (a judgment in rem), which the plaintiffs could not enforce in British Columbia because it was outside the jurisdiction of the California court. [29] The plaintiffs submit that the German Judgment in this case is a judgment in personam, which only requires the defendant to convey the title to the Property. Unlike in Duke, the German Judgment does not empower a German official to effect the transfer of property in British Columbia. As a result, the plaintiffs argue that the German Judgment does not declare or vest title to lands in British Columbia but is a judgment in personam against the defendant, which can be recognized and registered in this province. [30] I do not accept that the absence of an order empowering a foreign official to execute conveyance documents would have led to a different conclusion in Duke. The California order considered in Duke both: a) required the purchaser and his wife to execute and register the documents necessary to re-convey the British Columbia property back to the vendors (the "In Personam Order"); and b) empowered the clerk

of the court to execute the documents necessary to convey the British Columbia property back to the vendors if the purchaser and his wife failed or refused to re-convey the property (the "In Rem Order"). [31] If the Supreme Court of Canada in Duke considered that the In Rem Order was objectionable but not the In Personam Order, then the Supreme Court of Canada would have recognized and registered the In Personam Order but not the In Rem Order. [32] I reach this conclusion based on the nature of the relief sought by the plaintiff in Duke. The relief sought by the plaintiff is summarized by Smith J. at 737-738: The plaintiffs then brought the present action in the Supreme Court of British Columbia for a declaration that, by virtue of the conveyance referred to, or, alternatively, by virtue of the conveyance and the judgment referred to, and in the further alternative by virtue of the judgment alone, the plaintiffs are the owners of and entitled to be registered as owners in fee simple of the Victoria property in question, subject to the mortgage of $30,000 and interest, mentioned above. There is the further claim that the court, in the exercise of its jurisdiction to implement the judgment of the Superior Court of the State of California, do vest the property in the plaintiffs. [33] Therefore, by virtue of the relief sought, the Supreme Court of Canada could have registered the

In Personam Order and then exercised its jurisdiction to implement the order by vesting the property in the plaintiffs. However, the Court declined to do so on the basis that the courts of any country have no jurisdiction to adjudicate on the right and title to lands not situate in that country. [34] Regardless of whether the German Judgment is characterized as in personam or in rem, the effective enforcement of the order would result in the transfer of real property. In Duke, the Supreme Court of Canada rejected the notion that such a result should flow from a foreign judgment. The plaintiffs are asking the Court to ultimately convert a foreign in personam order to an in rem order that the German Court would have had no jurisdiction to make. This is what the Court in Duke refused to do. [35] The Duke decision is binding authority on this issue. The plaintiffs have not persuaded me that it is distinguishable on the basis they propose. Therefore, if Duke is still good law, then I am bound by it to refuse the plaintiffs' application. Is Duke Good Law? [36] The plaintiffs also seek to avoid the effect of Duke by arguing that it is no longer good law. The plaintiffs submit that subsequent decisions of the Supreme Court of Canada have effectively reversed the legal principles expressed in Duke. In particular, the plaintiffs rely upon Pro Swing. [37] The plaintiff in Pro Swing sought

to enforce a consent decree and contempt order issued by a court in Ohio against an Ontario company, Elta Golf Inc. The consent decree enjoined Elta from purchasing, marketing, selling or using golf clubs or components bearing the Pro Swing trademark. The Ohio court found that Elta had violated the consent decree and issued an order of contempt. [38] Pro Swing sought an order in Ontario recognizing and enforcing the consent decree and the contempt order. Elta resisted Pro Swing's action on the basis that the Ohio orders did not meet the common law requirement that they be final orders in personam for a fixed sum of money. [39] The Supreme Court of Canada in Pro Swing acknowledged the traditional common law rule for recognizing and enforcing a foreign judgment but held that ". . . the time is ripe to revise the traditional common law rule that limits the recognition and enforcement of foreign orders to final money judgments." However, the Court cautioned that ". . . such a change must be accompanied by a judicial discretion enabling the domestic court to consider relevant factors so as to ensure that the orders do not disturb the structure and integrity of the Canadian legal system" (Pro Swing at para. 15). [40] The Pro Swing case is distinguishable in that the order in Pro Swing did not directly or indirectly affect title to real property. Furthermore, the Supreme Court of

Canada refused to recognize and enforce the orders in Pro Swing owing to the many problems with the orders. The Court was not satisfied that the need to recognize the foreign orders pursuant to the concept of comity outweighed the requirement to protect the integrity of the Canadian judicial system and our domestic values. [41] The parties in this action have not located any cases in which a Canadian court considered the registration of a foreign order affecting title to real property in Canada. I am mindful of the need to proceed cautiously in implementing any change in the traditional common law rule with respect to recognition and enforcement of foreign judgments (Pro Swing at para. 17) and that incremental, intuitive, coherent development is necessary (Pro Swing at para. 19). [42] I am not aware of any decision in Canada that has either rejected or criticized the reasoning in Duke. The plaintiffs' submission that Duke is no longer good law comes from the article by Elizabeth Edinger, "Is Duke v. Andler Still Good Law in Common Law Canada?", (2011) 51:1 Canadian Business Law Journal 52. As I stated earlier in these reasons, the decision in Duke is binding and, as such, I am bound to follow it. [43] In any event, it is my view that the reasoning in Duke continues to be sound. Justice Smith starts the analysis by referring to Dicey's Conflict of Laws (4th ed.) and stating the

general rule as follows at 739: The courts of a foreign country have no jurisdiction--(1) to adjudicate upon the title, or the right to possession, of any immovable not situate in such country; or (2) (semble) to give any redress for injury in respect of any immovable not situate in such country. . . . This rule is merely an application of a more general principle that no court ought to give a judgment the enforcement whereof lies beyond the court's power, and especially if it would bring the court into conflict with the admitted authority of a foreign sovereign, or what is the same thing, the jurisdiction of a foreign court. [44] Justice Smith then recognizes the long line of cases in which the English courts enforced rights affecting real property in foreign countries if those rights were based on contract, fraud or trust and the defendant resided in England. Justice Smith held that in those cases the courts were acting in personam. [45] On the other hand, with respect to real property, Smith J. states at 741: In Henderson v. Bank of Hamilton (1), in this court it is pointed out that courts of equity held that where personal equities existed between parties over whom they had jurisdiction, though such equities might have reference to lands situate without the jurisdiction, they would give relief by a decree operating not directly upon the lands, but strictly in personam, and

that such decrees would have been unenforceable in the foreign jurisdiction, and might have brought the courts decreeing them into collision with the former, within whose local jurisdiction the lands were situated. . . . The title to real property therefore must be determined by the standard of the laws relating to it of the country where it is situated. The grounds upon which, and the circumstances under which a conveyance would be set aside under the law of California may differ from those under which it would be set aside under the law of British Columbia. The conveyance from the appellant G.E. Duke to his wife, the appellant, Margaret E. Duke, could only be set aside in British Columbia by virtue of the statute law of that province, and the courts of one country are not presumed to know the laws of another country. [46] Judgments affecting the title to or possession of real property should stand on a different footing from judgments enforcing rights as between individuals. Each country is defined by reference to its geographical boundaries and the land within those boundaries. Each country is entitled to exclusive jurisdiction over the land within its boundaries and no other country is entitled to encroach on that jurisdiction. Therefore, it is logical to require that decisions affecting the title to or possession of real property be made in accordance with the laws of the

country where the property is situated. [47] Individuals are not restricted to one country. They must abide by the laws of the country in which they are resident or in which they have a presence. Accordingly, it is logical that any court with jurisdiction over the individuals may make decisions affecting their individual rights or entitlements in accordance with the laws of that jurisdiction. [48] Based on the foregoing analysis, I have concluded that Duke is still good law in British Columbia. Additional Considerations [49] The notion of comity is what justifies the recognition and enforcement of foreign judgments. It is the recognition by one nation, within its territory, of the legislative, executive or judicial acts of another nation. Pro Swing applied the concept of comity in the following way at para. 27: Comity is a balancing exercise. The relevant considerations are respect for a nation's acts, international duty, convenience and protection of a nation's citizens. Where equitable orders are concerned, courts must take care not to emphasize the factor of respect for a nation's acts to the point of imbalance. An equitable order triggers considerations of both convenience for the enforcing state and protection of its judicial system. [50] In addition, the Court in Pro Swing suggests the following considerations specific to the recognition and enforcement of equitable

orders at para. 30: [30] . . . In considering the order it is asked to enforce, the domestic court should instead scrutinize the impact of the order. Relevant considerations may thus include the criteria that guide Canadian courts in crafting domestic orders, such as: Are the terms of the order clear and specific enough to ensure that the defendant will know what is expected from him or her? Is the order limited in its scope and did the originating court retain the power to issue further orders? Is the enforcement the least burdensome remedy for the Canadian justice system? Is the Canadian litigant exposed to unforeseen obligations? Are any third parties affected by the order? Will the use of judicial resources be consistent with what would be allowed for domestic litigants? [51] Balancing comity with the need to maintain the integrity of the Canadian judicial system and respect our domestic values leads me to conclude that the recognition of the German Judgment in this case is not appropriate for the following reasons: a) the defendant does not reside in British Columbia or have any personal presence here, which makes the recognition and registration of an in personam judgment against her an ineffective order; b) the orders sought by the plaintiffs in this action affect title to land in British Columbia over which the German court has no jurisdiction; c) the plaintiffs are not

without a remedy in Germany against the defendant for failing to comply with the German Judgment; and d) a third party mortgagee and a third party purchaser will be affected by an order recognizing the German Judgment. [52] Therefore, based upon the foregoing, I must dismiss the plaintiffs' summary trial application and the plaintiffs' action. Cancellation of the Certificate of Pending Litigation [53] The defendant applies for an order cancelling the certificate of pending litigation filed against the Property. [54] Since I have dismissed the underlying claim for an interest in land, s. 254 of the Land Title Act, R.S.B.C. 1996, c. 250 applies. Section 254 of the Land Title Act provides: Cancellation of certificate of pending litigation if action dismissed 254 If an action in respect of which a certificate of pending litigation is registered has been dismissed, the registrar must cancel the registration as provided in the regulations, or, on (a) application, and (b) production of a certificate of the registrar of the court that issued the certificate of pending litigation, endorsed by the registrar of the Court of Appeal, certifying that (i) the action has been dismissed and that the time limited for appeal has expired and no notice of appeal has been filed with the registrar of the Court of Appeal, or (ii) a notice of appeal has been filed and has been finally disposed of, and

the dismissal of the action has not been set aside by the Court of Appeal or the Supreme Court of Canada. [55] There is a process established by the Land Title Act to cancel the certificate of pending litigation once the action is dismissed. Therefore, the defendant is required to follow that process. Costs [56] The defendant submits that she is entitled to special costs of the action because the plaintiffs commenced this litigation for an improper purpose. The defendant submits that by commencing this action when they did, the plaintiffs intended to hold up a sale of the Property to a third party purchaser in order to gain a tactical advantage. [57] The evidence does not persuade me that the plaintiffs had an improper motivation in commencing this litigation. To conclude that the purpose was to hold up the sale of the Property to a third party purchaser would be mere speculation and conjecture. [58] It is equally as likely that the plaintiffs commenced this action to protect their interest in the Property. [59] Therefore, I deny the defendant's application for special costs. However, the defendant will have her costs of the action at Scale B. "Hori J."