Executive Summary: Key Legal and Evidentiary Issues

• The court considered whether a foreign default judgment from Nevada could be enforced in British Columbia over the defendants' objections.
   
• Notice became a central issue, since the plaintiff never personally served the defendants with the originating complaint.
   
• Justice Ormiston found the defendants had actual or imputed knowledge of the action through their former counsel's filings.
   
• Criminal interest concerns arose because the combined default rate and late fee exceeded Canada's 35% threshold under section 347 of the Criminal Code.
   
• Evidence about the defendants' claimed efforts to set aside the Nevada judgment was found unreliable and internally inconsistent.
   
• Post-judgment interest raised a separate notice question, since the plaintiff could not prove proper service of the notice of entry of judgment.
   

Facts of the case

The plaintiff, 5YP, LLC, sought to enforce a default judgment obtained in Nevada against the defendants, Heather Patterson and Sean McQuillan. The judgment stemmed from a promissory note the defendants signed on December 22, 2015, under which they borrowed $320,299.41 USD from the plaintiff to help finance the purchase of a Nevada property for $340,000 USD. Monthly payments of $2,040 were to begin on January 26, 2016. The defendants made one payment before missing the second, triggering default. Following a notice of breach, the property was foreclosed on and sold at a trustee's auction on August 1, 2016, for $134,123.16. In October 2016 the defendants sued the plaintiff in Nevada alleging wrongful foreclosure and related claims, then voluntarily dismissed that action in January 2017. The plaintiff filed its own complaint on January 24, 2017, but never personally served the defendants. Defendants' counsel nonetheless acknowledged awareness of the complaint in a March 1, 2017 filing opposing consolidation of the two actions, before withdrawing as counsel later that month and providing the defendants' last known Vancouver address to the court. After an unsuccessful attempt at personal service in April 2017, a Nevada judge authorized substitutional service by mail and publication. The defendants were noted in default in May 2018, and the plaintiff obtained default judgment on September 25, 2018.

Policy and legislative provisions at issue

Enforcement of the foreign judgment turned on section 347 of the Criminal Code, which defines a criminal rate of interest as one exceeding 35% annually and includes fees, fines, or penalties charged for advancing credit within that definition. The promissory note itself provided for an 8% interest rate that rose to 25% on default, along with a separate late-charge clause stating that a payment more than five days overdue could attract "a late charge of 20% of the payment owing." Because the Nevada judgment combined the 25% default rate with a $63,637.88 late fee calculated on that same 20% basis, the aggregate exceeded the 35% Canadian ceiling. The Nevada judgment also specified that post-judgment interest of $152.30 per day would run "from the date of Notice of Entry of Judgment by Default," a term that became significant once the plaintiff's proof of when that notice was actually given came into question.

Reasoning and analysis

Justice Ormiston first found the application suitable for summary trial, noting the parties' submissions did not require a full trial to resolve the factual disputes raised. On jurisdiction, the court held that a real and substantial connection between the defendants and Nevada — where they purchased the property, retained counsel, and initiated litigation — was sufficient, and that service on their Vancouver address under court order gave the British Columbia court authority to proceed. On the notice issue, the court weighed Mr. McQuillan's shifting affidavit evidence, which claimed no knowledge of the Nevada complaint, against the documentary record, including his own former counsel's March 1, 2017 statement acknowledging the defendants' awareness of the action. Cross-examination revealed inconsistencies in Mr. McQuillan's evidence, and the court preferred the independent documentary evidence, concluding the defendants had been made aware of the case they had to meet. Regarding the defendants' claim that they were actively challenging the Nevada judgment, the court found this undermined by an affidavit from a Nevada lawyer showing no such motion had been filed since February 2024. On the interest rate, the court applied the four-factor test from Transport North American Express Inc. v New Solutions Financial Corp., 2004 SCC 7, concluding there was no loan sharking or illegal purpose, that the defendants had some sophistication as former political candidates, and that no unjustified windfall would result from notionally severing the illegal portion of the interest. The court therefore excised the $63,637.88 late fee interest while allowing the 25% default rate, which falls below the criminal threshold, to stand. On post-judgment interest, the court found the plaintiff's evidence did not establish that notice of entry of judgment was given in September 2018 as claimed, since the certificate of service on record instead showed service of the default judgment application on August 15, 2018. Given Mr. McQuillan's own concession that the defendants learned of the judgment in February 2025, the court fixed February 28, 2025, as the date post-judgment interest began to run.

Ruling and overall outcome

The plaintiff succeeded in enforcing the Nevada judgment, though on modified terms. Justice Ormiston ordered the defendants jointly and severally liable for $299,117.93 USD in principal and pre-judgment interest at 25% per annum, this being the deficiency judgment amount with the $63,637.88 criminal-rate late fee interest excluded. The defendants were also ordered to pay post-judgment interest at $152.30 USD per day, running from February 28, 2025, pursuant to the Court Order Interest Act, RSBC 1996, c 79, until payment in full, and $1,381.60 USD for solicitor's costs as set out in the Nevada judgment. Costs of the enforcement application itself were awarded to the plaintiff on the ordinary scale, with the amount not specified in the reasons.