The Court of Appeal for British Columbia rejected an effort to overturn a lower court decision, which granted an application from the U.S. Securities and Exchange Commission (SEC), seeking to enforce a U.S. court order. That order requires a B.C. man to pay US$30 million in connection with an alleged securities fraud.
Last June, the Supreme Court of British Columbia granted summary judgement against a West Vancouver resident, Fred Sharp, enabling the SEC to enforce a default judgment that it secured against him in a U.S. district court in Massachusetts. The judgment required him to disgorge the proceeds of an alleged securities fraud scheme.
In early 2022, the U.S. district court entered a final default judgement against Sharp, granting the SEC’s demand for disgorgement and prejudgment interest, totalling almost US$30 million, stemming from an alleged illegal share-sale scheme that ran between 2010 and 2019. As part of those proceedings, the U.S court issued an asset freeze order that applied to dozens of bank accounts in Canada, among other things.
Then, in July 2022, the SEC applied to the courts in B.C. seeking to enforce the U.S. court’s order. In 2024, the B.C. courts granted the order in a summary judgment, concluding that there was no genuine issue for trial.
Among other things, the lower court judge rejected Sharp’s arguments challenging the Massachusetts court’s jurisdiction, and claiming that he wasn’t properly served with notice of the action.
The B.C. court found that the U.S. court “clearly” had jurisdiction, given that one of the companies involved in the scheme operated in the state that the alleged fraud took place, and there were victims of the scheme in the state. It also found that the SEC attempted to serve Sharp through multiple means — including email and numerous couriers — on many occasions. The regulator presented evidence that Sharp was attempting to evade service.
On appeal, Sharp sought to overturn that ruling and its findings that the court in Massachusetts had jurisdiction in the case, and that Sharp was properly served in that action.
According to the appeal court’s decision, Sharp argued that the lower court judge erred by placing the burden on him to prove that the case required a trial — and, by finding that there was no need for a trial.
Ultimately, the appeal court dismissed the challenges, ruling that there was no reviewable error in the judge’s findings.
To start, the appeal court found that the lower court didn’t reverse the burden of proof.
“The judge’s reasons make it evident that the SEC bore the burden to establish there were no triable issues in the case before her, and that she was satisfied that the SEC had met this burden,” the appeal court said.
Beyond the burden issue, it also upheld the lower court’s finding that the case was suitable for summary judgement.
“There was uncontroverted evidence establishing a real and substantial connection between the subject matter of the action and the jurisdiction of Massachusetts, and the appellant received service in a manner according with the minimum standards of fairness in Canadian law such that the appellant was aware of the case to meet and was given an opportunity to defend himself,” the appeal court said.
“In my view Mr. Sharp has failed to identify a reviewable error in the judge’s conclusion that there were no triable issues in relation to his breach of natural justice defence,” it said.