Executive Summary: Key Legal and Evidentiary Issues

• Atlas Conglomerate sought enforcement in British Columbia of a Florida default judgment arising from NFT Technologies' partial payment breach of a fixed-price contract.

• NFT's counsel withdrew from the Florida proceedings due to non-payment of legal fees, and NFT failed to retain new counsel by the court-ordered deadline.

• The defendant argued the Florida judgment violated Canadian principles of natural justice because corporate parties cannot self-represent under Florida procedural rules.

• Evidence showed NFT received shareholder loans totaling $100,000 in June 2024 but prioritized other expenses over legal representation.

• Public policy defence was raised, claiming the prohibition on corporate self-representation was contrary to the Canadian view of basic morality, but the court noted BC also limits corporate self-representation.

• Both defences were rejected, and the Florida judgment was declared enforceable in British Columbia.

Background of the dispute

Atlas Conglomerate of Ridiculous Proportions LLC. initiated proceedings in Florida against NFT Technologies Inc. relating to an alleged breach of a fixed-price contract where only partial payment was made by the defendant. NFT was initially represented by counsel who filed a defence on its behalf. However, on June 10, 2024, the Florida court granted a motion to withdraw filed by NFT's counsel. The motion cited irreconcilable differences as the reason for the withdrawal, which appears to have been non-payment of fees.

The Florida proceedings and default judgment

On June 10, 2024, the Florida court advised NFT through its executive chairman, Wayne Lloyd, that NFT could not, as a corporate party, be self-represented in the proceedings. The court set July 8, 2024, as the date by which NFT should retain new counsel and file a notice to that effect with the court. NFT did not comply with that court direction and was thus deemed to be in default pursuant to Federal Rule 55. The plaintiff then filed a motion for default judgment, which was ultimately granted in part on December 12, 2024. The court awarded the plaintiff US $127,500 in compensatory damages plus interest, as agreed upon in the contract. Part of the claim, related to full indemnity costs, was denied, and the court also denied the plaintiff's request for declaratory and equitable relief.

NFT's financial situation and priorities

Mr. Lloyd, NFT's Executive Chairman, deposed that NFT could not retain new counsel, since it did not have sufficient funds to do so. However, other parts of Mr. Lloyd's affidavit revealed that NFT was subsisting in June 2024 on shareholder loans, including an advance of $100,000 from a particular shareholder on June 12, 2024. Of that amount, $75,000 was required to pay a premium for director and officer insurance. The remaining amount was, according to Mr. Lloyd, used to pay other essential expenses. In May 2024, the lawyers representing NFT in the Florida action were owed slightly more than $20,000 and advised NFT by email on May 9, 2024, that they required a substantial payment in order to continue acting for NFT. The court noted there was no evidence of any effort made by NFT to work out an arrangement with its counsel in May 2024, to secure some further representation, limited or otherwise.

The enforcement action in British Columbia

Atlas Conglomerate filed a notice of civil claim in the Supreme Court of British Columbia on January 28, 2025, seeking judgment for the amount due and owing on the Florida judgment plus accrued interest. In its notice of application on the summary trial, the plaintiff sought a declaration that the Florida order is recognized and capable of enforcement in British Columbia, judgment for the Canadian currency equivalent of US $159,193.13 (or alternatively CAD $220,291.45), contractual interest at 18% per annum, and contractual special costs on a full indemnity basis. NFT opposed the application but conceded that the matter was suitable for summary trial. The defendant relied on two defences identified in Beals v. Saldanha, 2003 SCC 72: breach of fundamental justice and public policy.

Analysis of the natural justice defence

The court examined whether NFT was denied natural justice by being required to retain counsel. Justice Tammen agreed that the absolute proscription impeded NFT's ability to defend the action by choosing to self-represent, but found it did not completely take away the right to defend the action. The Florida procedural rules did not prevent NFT from participating in the litigation, but rather required that it do so through counsel. The court emphasized that in the Florida action, NFT did not seek an extension of the deadline to retain counsel, nor did it pursue other potential dispensation. More importantly, the court was not persuaded that NFT was so impecunious that it was wholly unable to retain counsel to continue defending the Florida action. There was no evidence that further advances from shareholders were unavailable to NFT in June 2024, and based on the evidence of Mr. Lloyd, it appeared clear that NFT viewed other expenses as having greater priority than the retention of counsel in Florida.

Analysis of the public policy defence

NFT also submitted that the requirement that it be represented by counsel in Florida was contrary to Canadian principles of natural justice, arguing that the Florida court was creating and enforcing a requirement that ran contrary to Canada's basic view of morality. The court rejected this argument, noting that there is no absolute right to corporate self-representation in BC. The BC Court of Appeal has described the ability of a corporation to be represented by other than a member of the bar as "a matter of discretion or indulgence by the court," and one which should be exercised rarely and with caution, citing Atlantic Chemicals Trading of North America Inc. v. Morizon Holdings Ltd., 2005 BCCA 456. The court also distinguished the case NFT relied upon, 2538520 Ontario Limited v. Eastern Platinum Limited, 2025 BCSC 1096, noting that case involved a closely held company where the individual claimed to be the sole shareholder and controlling mind. NFT at the material time was not a closely held company; indeed, in 2024, NFT was a publicly traded company, trading on the NEO Exchange.

The ruling and outcome

Justice Tammen ruled in favor of Atlas Conglomerate of Ridiculous Proportions LLC., declaring that the Florida judgment is recognized and capable of enforcement in British Columbia. The court awarded the plaintiff the amount in Canadian funds which is the equivalent of the amount outstanding on the Florida judgment. At the time the notice of application was filed in July, that amount was US $159,193.13, though the court noted that amount has since increased because of accrued interest. If counsel cannot agree on the appropriate amount, they may settle the amount before the Registrar. However, the court declined to award post-judgment interest at the contractual rate, instead ordering interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79. The court also declined to award full indemnity costs pursuant to the contractual terms, noting that the plaintiff was unsuccessful in that claim in Florida, and instead awarded the plaintiff costs of the proceeding at Scale B.