Fraud going to jurisdiction

Lang v. Lapp, 2010 BCCA 517 dealt with an appeal from an order recognizing and enforcing a judgment of the Superior Court for the State of California. The defendants argued fraud going to jurisdiction and fraud on the merits as a defence. The Court found fraud going to jurisdiction may be raised at any time, even without producing new evidence that was not before the foreign court. The Court held:

IV. The Fraud Defence

[17] The fraud defence has a long and somewhat clouded history. The basic principle is that any judgment, domestic or foreign, is open to attack on the basis that it was obtained by fraud. In the domestic context, English law developed the requirement that fraud must be based on evidence newly discovered since trial. In the foreign judgment context, English law took a different approach and permitted allegations of fraud even though no newly discovered evidence is produced and even though fraud might have been or was alleged in the foreign proceeding. This was laid down in Abouloff v. Oppenheimer (1882), 10 Q.B.D. 295 (C.A.), and appears to remain the law in England today: see Dicey, Morris & Collins on the Conflict of Laws, 14th ed. (London: Sweet & Maxwell, 2006) at 622-24.

[18] Canadian law took a different approach in Jacobs v. Beaver Silver Cobalt Mining Co. (1908), 17 O.L.R. 496. In order to reconcile competing rules that judgments based on fraud are impeachable and that foreign judgments should not be examined on the merits, the Ontario Court of Appeal held that:

... the fraud relied on must be something collateral or extraneous, and not merely the fraud which is imputed from alleged false statements made at the trial, which were met by counter-statements by the other side, and the whole adjudicated upon by the Court and so passed on into the limbo of estoppel by the judgment. This estoppel cannot, in my opinion, be disturbed except upon the allegation and proof of new and material facts, or newly discovered and material facts which were not before the former Court and from which are to be deduced the new proposition that the former judgment was obtained by fraud. [Emphasis added.]

This is the origin of the distinction between intrinsic and extrinsic fraud. In a manner akin to res judicata, if an issue was adjudicated or should have been raised before the foreign court it should not be relitigated on the merits. Thus, to support an allegation of fraud on the foreign court, the domestic court will require something extrinsic to the foreign proceedings, that is new evidence or evidence not discoverable through due diligence.

[19] In Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416, the Supreme Court of Canada abandoned the intrinsic / extrinsic nomenclature, preferring the categories of fraud going to jurisdiction and fraud on the merits. However, strictly speaking the concepts are not analogous. The intrinsic / extrinsic distinction is an evidentiary requirement whereas the new categories relate to the subject matter of the fraud. The evidentiary requirement captured by the concept of extrinsic fraud continues to apply to fraud on the merits.

[20] Fraud going to jurisdiction is an exception to the generally applicable new evidence or due diligence requirement. According to the text Castel & Walker: Canadian Conflict of Laws, vol. 1., 6th ed. (Markham, Ont.: LexisNexis, 2005) loose‑leaf updated 2010, release 19 at 14-42, the exception exists because facts that relate to jurisdiction are so fundamental that they should always be open to attack. This principle was set out by the Supreme Court of Canada in Powell v. Cockburn, [1977] 2 S.C.R. 218, and again in Beals. These cases are binding precedent and the proposition that fraud going to jurisdiction can always be raised, even without satisfying the due diligence requirement, must be accepted as settled law. Though no due diligence requirement applies it should be remembered that "[e]ven within the limited area of what might be termed jurisdictional fraud there should be great reluctance to make a finding of fraud for obvious reasons", Powell at 234.