Boardwalk Regency Corp. v. Maalouf
6 O.R. (3d) 737
[1992] O.J. No. 26
Action No. 754/88
ONTARIO
Court of Appeal for Ontario,
Lacourcire, Carthy and Arbour JJ.A.
January 10, 1992
[QL Ed. note: In the paper version, the judgment of the Ontario Court of Appeal dated January 10, 1992 and supplementary reasons concerning pre-judgment and post-judgment interest dated March 3, 1992 were published together at 6 O.R. (3d) 737. The supplementary reasons begin on page 758. The two decisions have been separated in the online version to enable linking to citators. The following headnote was published on the combined case and applies to both decisions.]
Contracts — Illegality — Cheque given to New Jersey casino operator for gambling debt incurred in New Jersey — Gambling lawful in New Jersey — Casino operator obtaining judgment in New Jersey — Enforcement of foreign judgment based on gambling debt not contrary to public policy — Gaming Act, R.S.O. 1980, c. 183.
Judgments and orders — Foreign judgment — Enforceability — Whether public policy precluding enforcement of foreign judgment — Enforcement of foreign judgment based on gambling debt not contrary to public policy — Gaming Act, R.S.O. 1980, c. 183, ss. 1, 4, 5. B Corp., which operated a gambling casino in Atlantic City, New Jersey, lent money to the respondent who incurred a gambling debt at the casino. The respondent failed to repay and dishonoured a cheque representing a debt of $43,000. B Corp. obtained a default judgment in New Jersey and brought an action in Ontario on the New Jersey judgment. The action was dismissed, the trial judge holding that the Ontario Gaming Act represented a public policy against gambling that precluded enforcement of the foreign judgment. B Corp. appealed.
Held, the appeal should be allowed.
Per Carthy J.A.: It was clear that the parties intended to be bound by the laws of New Jersey which was the proper law of the contract. This made the Ontario Gaming Act irrelevant unless it showed a public policy which precluded enforcement of a properly founded foreign judgment. Where foreign judgments are not enforced on grounds of public policy, the reason is the community sense of a morality that would not countenance the conduct no matter how legal it may have been where it occurred. An important element of the sense of morality is what the community has consensually determined is not to be tolerated as found in the Criminal Code. As for gambling, in 1969, the Criminal Code was amended to permit the federal or the provincial government to conduct lottery schemes encompassing gaming enterprises generally. The Gaming Act could not be interpreted as establishing a moral policy when the same government licenses the conduct. It would be inconsistent to decree that gaming activity that may be licensed in Ontario has moral integrity while what is licensed and regulated by New Jersey does not. An Ontario court could not say that a foreign judgment founded upon a contract related to gambling is tainted by immorality and should be refused enforcement. Accordingly, the New Jersey judgment should be enforced.
Per Lacourcire J.A.: The proper law governing B Corp.’s action was the law of New Jersey. The Ontario Gaming Act did not apply to foreign agreements and did not express a public policy so as to preclude the enforcement in Ontario of a judgment obtained where the debt was legally incurred. The foreign judgment should not be declared unenforceable on grounds of public policy unless its enforcement would violate conceptions of essential justice and morality. Since the 1970 amendments to the Criminal Code, gambling has been decriminalized to a large extent and there had been a significant increase in various forms of legitimate gambling in the Province of Ontario and elsewhere in Canada where governments have promoted gambling activities and derived substantial revenue. There is nothing to indicate that the general Canadian public would be offended by the enforcement of foreign judgments for gambling debts incurred in jurisdictions where commercial gambling is licensed and legal. In accordance with the Canadian community standard, the participation in licensed gambling abroad and the enforcement of a foreign judgment based on a gambling debt incurred in a licensed and regulated casino are neither immoral nor unjust.
Per Arbour J.A. (dissenting): Contracts valid under foreign law should be enforced unless it would be contrary to our conception of essential justice or morality to do so or unless enforcement would be an affront to the local social order. This is embodied in the concept of public policy. The involvement of government in gambling in Canada was not conclusive as to the morality of gambling generally and did not preclude refusing to enforce foreign gambling debts on grounds of public policy. The concept of public interest or public policy should not be construed solely in moral terms. In any event, it is unnecessary to resolve the morality debate since, in Canadian terms, the issue is not so much whether the gambling operations conducted by B Corp. are immoral, but whether they are criminal. If conducted in Ontario, B Corp.’s business would constitute operating a common gaming house and would be prohibited under the Criminal Code. It is against public policy to enforce a foreign judgment which allows for the recovery of a debt incurred in the context of an activity which, although legal where it took place, is criminal here.
Cases referred to
Block Brothers Realty Ltd. v. Mollard (1981), 27 B.C.L.R. 17, 122 D.L.R. (3d) 323 (C.A.); Boardwalk Regency Corp. v. Newman (1987), 15 C.P.C. (2d) 102 (Ont. Dist. Ct.); Boardwalk Regency Corp. v. Portelance, Ont. Dist. Ct., April 12, 1988; Canadian Acceptance Corp. v. Matte (1957), 9 D.L.R. (2d) 304, 22 W.W.R. 97 (Sask. C.A.); Desert Palace Inc. v. Zigdon, B.C. Co. Ct., Hardinge Co. Ct. J., April 6, 1987 [summarized at 5 A.C.W.S. (3d) 210]; Fender v. St. John-Mildmay, [1938] A.C. 1, [1937] 3 All E.R. 402, 53 T.L.R. 885, 81 Sol. Jo. 549, 106 L.J.K.B. 641, 157 L.T. 340 (H.L.); Harold Meyers Travel Service v. Magid (1977), 16 O.R. (2d) 1, 77 D.L.R. (3d) 32 (C.A.); Intercontinental Hotels Corp. (Puerto Rico) v. Golden, 203 N.E.2d 210; M & R Investment Co. v. Marsden (1987), 63 O.R. (2d) 509 (Dist. Ct.); Moulis v. Owen, [1907] 1 K.B. 746, 76 L.J.K.B. 396, 96 L.T. 596, 23 T.L.R. 348, 51 Sol. Jo. 306 (C.A.); R. v. Furtney (1991), 66 C.C.C. (3d) 498, 129 N.R. 241, 48 O.A.C. 21 (S.C.C.); Resorts International Hotel Inc. v. Auerbach, Que. Prov. Ct., September 23, 1986, affd Que. C.A., December 10, 1991; Saxby v. Fulton, [1909] 2 K.B. 208, [1908-10] All E.R. Rep. 857, 78 L.J.K.B. 781, 101 L.T. 179, 25 T.L.R. 446, 53 Sol. Jo. 397 (C.A.); Socit Anonyme des Grands Etablissements de Touquet Paris-Plage v. Baumgart, [1927] All E.R. Rep. 280, 96 L.J.K.B. 789, 136 L.T. 799, 43 T.L.R. 278 (K.B.)
Statutes referred to
Bills of Exchange Act, R.S.C. 1985, c. B-4, ss. 159-60 Constitution Act, 1867, s. 91 para. 27
Courts of Justice Act, 1984, S.O. 1984, c. 11, ss. 131, 139(3)
Criminal Code, 1892, S.C. 1892, c. 29 [ss. 197-205] Criminal Code, R.S.C. 1985, c. C-46, Part VII, ss. 172 [am. R.S.C. 1985, c. 19 (3rd Supp.), s. 6], 197, 197(2)(b), 201(1), 204 [am. R.S.C. 1985, c. 47 (1st Supp.), s. 1; am. 1989, c. 2, s. 1], 207 [am. R.S.C. 1985, c. 27 (1st Supp.), s. 31; rep. & sub. R.S.C. 1985, c. 52 (1st Supp.), s. 3], 207(1)(a)
Criminal Law Amendment Act, 1968-69, S.C. 1968-69, c. 38, s. 9 [amending s. 168 of the Criminal Code, S.C. 1953-54, c. 51]
Gaming Act, 1388 (12 Ric. 2, Eng.), c. 6
Gaming Act, 1710 (9 Ann., Eng.), c. 19
Gaming Act, R.S.O. 1980, c. 183 (now R.S.O. 1990, c. G.2), ss. 1, 4, 5
Authorities referred to
“An Annotation on Gaming and Betting Debts in Ontario” (1922), 68 D.L.R. 237
Beare, Margaret E., “Current Law Enforcement Issues in Canadian Gambling” in Campbell and Lowman, Gambling in Canada, p. 178
Campbell, Colin S., and John Lowman, eds., Gambling in Canada: Golden Goose or Trojan Horse? (Burnaby, B.C.: Simon Fraser University, First National Symposium on Lotteries and Gambling, 1988), p. xx
Castel, Jean Gabriel, Canadian Conflict of Laws, 2nd ed. (Toronto: Butterworths, 1986) para. 91 (pp. 153-55), para. 156 (p. 251), para. 404 (pp. 532-34), para. 405 (pp. 534-35), para. 406 (pp. 535-38), para. 428 (pp. 556-57), paras. 446-48 (pp. 575-78)
Cheshire and North Private International Law, 11th ed. by P.M. North and J.J. Fawcett (London: Butterworths, 1987), p. 485
Dicey and Morris on the Conflict of Laws, 11th ed. by Lawrence Collins (London: Stevens & Sons, 1987), vol. 2, pp. 1347-48
Eadington, “Issues and Trends in World Gambling”, in Campbell and Lowman, Gambling in Canada, p. 22
Hogg, Peter W., Constitutional Law of Canada, 2nd ed. (Toronto: Carswell, 1985), pp. 399-402
Osborne, Judith A., and Colin S. Campbell, “Recent Amendments to Canadian Lottery and Gaming Laws: The Transfer of Power Between Federal and Provincial Governments” (1988), 26 Osgoode Hall Law Journal 19, pp. 23-24
Rafferty, Nicholas, “The Effect of Ontario’s Gaming Laws on Foreign Gambling Transactions” (1990), 5 B.F.L.R. 233
Singer, Charles, “The Ethics of Gambling”, in Campbell and Lowman, Gambling in Canada, p. 275
APPEAL from a judgment of the High Court of Justice (1988), 68 O.R. (2d) 753, 43 B.L.R. 83, 59 D.L.R. (4th) 760, dismissing an action to enforce a foreign judgment based on a gambling debt.
W.L.N. Somerville, Q.C., and Mary Margaret Fox, for appellant.
Mark B. Koreen and M. Reid, for respondent.
CARTHY J.A.:–The respondent, a resident of Ontario, borrowed money and built up a gambling debt at the appellant’s casino in Atlantic City, New Jersey, failed to honour a cheque representing the ultimate debt of $43,000, permitted a default judgment to be entered in New Jersey, and now resists an action on that judgment in Ontario. The trial judge, in a judgment reported at (1988), 68 O.R. (2d) 753, 59 D.L.R. (4th) 760 (H.C.J.), found that the Ontario Gaming Act, R.S.O. 1980, c. 183 (now R.S.O. 1990, c. G.2), and particularly ss. 1, 4 and 5, represent a public policy in Ontario discouraging gambling, and accordingly that the action based upon the New Jersey judgment should be dismissed. The appellant says that the loan agreement was not a wagering agreement within s. 4 of the Gaming Act, that the proper law of the contract is that of New Jersey and s. 1 of the Act therefore has no application, and, finally, that it is not contrary to public policy in Ontario to enforce the New Jersey judgment. The respondent takes the contrary position on each of these three issues. For convenience of reference I will here set out the relevant sections of the Gaming Act:
1. Every agreement, note, bill, bond, confession of judgment, cognovit actionem, warrant of attorney to confess judgment, mortgage or other security, or conveyance, the consideration for which, or any part of it, is money or other valuable thing won by gaming, or by playing at cards, dice, tables, tennis, bowls or other game, or by betting on the sides or hands of the players, or for reimbursing or repaying any money knowingly lent or advanced for such gaming or betting, or lent or advanced at the time and place of the game or play to a person so gaming, playing, or betting, or who, during the game or play, so plays, games or bets, shall be deemed to have been made, drawn, accepted, given or executed for an illegal consideration. C. . . . .
4. Every contract or agreement by way of gaming or wagering is void, and no suit shall be brought or maintained for recovering any sum of money or valuable thing alleged to be won upon a wager, or that has been deposited in the hands of any person to abide the event on which a wager has been made, but this section does not apply to a subscription or contribution, or agreement to subscribe or contribute for or towards any plate, prize, or sum of money to be awarded to the winner of any lawful game, sport, pastime or exercise.
5. Any promise, express or implied, to pay any person a sum of money paid by him under or in respect of a contract or agreement rendered void by section 4, or to pay a sum of money by way of commission, fee, reward or otherwise in respect of such a contract or agreement, or of any services in relation thereto or in connection therewith, is void, and no action shall be brought or maintained to recover any such sum of money.
It might be thought that an Act with roots traceable for centuries through English statute law would have surrounding it a well developed and consistent theme of application by the courts. That is certainly not the case. Judgments can be found going in every direction, usually on somewhat different facts from previous authorities, and it is difficult to identify any comprehensive and consistent principle. On the present facts there is no authority that is binding on this court and, rather than seek to rationalize from everything that has been said on the subject, I prefer to approach the issues armed only with some simple principles that seem appropriate in the year 1991.
A few further facts are needed before turning to the issues. The respondent visited the casino regularly over a two-year period, arranging credit from time to time, against which he signed counter cheques at the tables to receive playing chips. Eventually, the outstanding debt was $40,000 and a cheque was written by the respondent in that amount to consolidate earlier cheques. That cheque was not honoured but in the meantime a further $10,000 credit was extended and lost in wagering, and then a repayment of $7,000 was made, leaving a balance owing of $43,000 (U.S.). This became an obligation under the judgment in New Jersey of $48,805 (U.S.) including interest.
Proper law of the contract
There is no doubt in my mind that these parties intended to be bound by the laws of New Jersey. The only connection to Ontario was that the cheques were drawn on an Ontario branch of a Canadian bank. On the other hand, the parties were in New Jersey, the purpose of the transaction related to New Jersey, and it would take clear words to overcome the inference that they chose not to be bound by the laws of a jurisdiction which questions the legality of the consideration for the transaction. See in this respect Jean Gabriel Castel, Canadian Conflict of Laws, 2nd ed. (Toronto: Butterworths, 1986), paras. 404 (pp. 532-34) and 406 (pp. 535-38), and Saxby v. Fulton, [1909] 2 K.B. 208, [1908-10] All E.R. Rep. 857 (C.A.), at pp. 231-32 K.B., pp. 865-66 All E.R.
Public policy and enforcement of judgments
Having found that the proper law of the contract was New Jersey, the Ontario Gaming Act becomes irrelevant in any consideration of the issues unless it stands as a representation of public policy which prevents enforcement of a properly founded foreign judgment. It is not necessary to determine whether s. 4 applies to an arrangement which is not a wager but an accommodation to permit a wager, or applies to a cheque given after the wagering was ended. Nor is it necessary to decide whether the consideration was illegal under s. 1. These sections do not reach into the New Jersey litigation and the only question is whether there is any basis in the language of the sections to refuse to enforce a judgment, the factual basis for which was credit being extended in association with gaming. The trial judge found that the legislature has declared a public policy saying, in effect, “we do not like gambling and do not like to encourage persons to lend money for that purpose”.
There is no doubt that public policy can be a basis for denying recovery under a foreign judgment. At common law a foreign judgment will not be recognized or enforced in Canada if its recognition or, as the case may be, enforcement, would be contrary to public policy. See Castel, Conflict of Laws, para. 156 (p. 251). However, the mere existence of the Gaming Act and its apparent restraints upon gambling contracts is not necessarily a reflection of public policy. The Act does not purport to have extra-territorial effect. The legal issue to be addressed is whether the language of the Gaming Act, apart from its direct impact on domestic contracts, is to be taken as an expression by the legislature which bears the mantle of public policy to the point of making it offensive to participate in enforcement of the foreign judgment. It cannot be every statutory statement or prohibition which raises this defence or little would be left of the principle of comity underlying conflict of laws jurisprudence.
In passing I observe that in Harold Meyers Travel Service v. Magid (1977), 16 O.R. (2d) 1, 77 D.L.R. (3d) 32, this court gave a very narrow reading to the Gaming Act and held that s. 1 had no application to an agreement between the gambler and a third party to repay what the third party paid to the casino. The present case is different because the agreement was made between the gambler and the casino for “reimbursing . . . money knowingly lent or advanced for such gaming”, and thus falls squarely within the language of s. 1. However, in treating the Act as penal and giving it a restricted interpretation, the court was certainly not treating the Act as representing a broad statement of provincial policy intended to label as discreditable any conduct associated with gambling anywhere.
The Saskatchewan Court of Appeal accurately summarized the public policy concerns which may stand in the way of enforcement of foreign contracts or judgments. In Canadian Acceptance Corp. v. Matte (1957), 9 D.L.R. (2d) 304, 22 W.W.R. 97, at p. 312 D.L.R., p. 105 W.W.R., Martin C.J.S. states:
In Dicey’s Conflict of Laws, 6th ed., pp. 19-20, the learned author states: “English courts refuse to give legal effect to transactions, even when governed by foreign law, which our tribunals hold to be immoral. Thus a promise made in consideration of future illicit cohabitation, or an agreement which, though innocent in itself, is intended by the parties to promote an immoral purpose, or a promise obtained through what our courts consider duress or coercion, champertous contracts and contracts in restraint of trade are according to English law based on an immoral consideration. Such a promise or agreement, therefore, even were it valid under the law of the country which governs the contract, will not be enforced by English judges.”
The cases cited in support of this statement are Robinson v. Bland (1760), 2 Burr. 1077 at p. 1084, 97 E.R. 717; Kaufman v. Gerson, supra, and Grell v. Levy, supra. The authorities referred to warrant the conclusion that the “law and policy” of the lex fori is limited in its application to cases where the lex loci contractus conflicts with what are deemed in England to be essential public or moral interests; in such cases the lex loci contractus cannot be enforced under the lex fori, although the contract may have been valid under the law of the contract.
To emphasize the care which courts must exercise in relying upon public policy as a ground for refusing enforcement, I refer to the speech of Lord Atkin in Fender v. St. John- Mildmay, [1938] A.C. 1, [1937] 3 All E.R. 402 (H.L.), at pp. 11-12 A.C., p. 407 All E.R., where, after quoting from earlier authorities as to the dangers of judges expounding public policy he says:
On the other hand, it fortifies the serious warning illustrated by the passages cited above that the doctrine should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds. I think that this should be regarded as the true guide. In popular language, following the wise aphorism of Sir George Jessel cited above, the contract should be given the benefit of the doubt.
The common ground of all expressed reasons for imposing the doctrine of public policy is essential morality. This must be more than the morality of some persons and must run through the fabric of society to the extent that it is not consonant with our system of justice and general moral outlook to countenance the conduct, no matter how legal it may have been where it occurred. If that be so, the Gaming Act must be viewed in the context of the community’s sense of morality. An important element of that sense of morality is what the community has consensually determined is not to be tolerated, as found in the Criminal Code, R.S.C. 1985, c. C-46. The Gaming Act may reflect that general morality or may, upon analysis, appear to have a very narrow focus related to recovery of debts with no present relevance as a moral statement.
If this case concerned enforcement of a judgment based upon a contract relating to the corruption of children, our instinctive moral repugnance would find confirmation in s. 172 [am. R.S.C. 1985, c. 19 (3rd Supp.), s. 6] of the Criminal Code, declaring such corruption a criminal offence. It is not so easy with gaming laws because of the history of their development and the unique form they take in the Criminal Code. In an article entitled “Recent Amendments to Canadian Lottery and Gaming Laws: The Transfer of Power Between Federal and Provincial Governments” (1988), 26 Osgoode Hall Law Journal 19, Judith A. Osborne and Colin S. Campbell describe the background to our present legislation. It is founded in English statute law rather than the common law, and one of the earliest of these is a statute of 1388 prohibiting all games except archery [Gaming Act, 1388 (12 Ric. 2, Eng.), c. 6]. It is said that this prohibition was occasioned by the fear of Richard II that his skilled archers were losing their talents by spending time playing games of dice. This general prohibition, in revised form, was incorporated in the Criminal Code of 1892 [Criminal Code, 1892, S.C. 1892, c. 29, ss. 197-205].
In 1956, a joint committee of both Canadian Houses of Parliament recommended new gaming laws emphasizing supervision and control by workable laws in order to avoid abuses such as had been experienced under alcohol prohibition laws. In other words, the prohibitions against gambling were seen as not being consonant with the public perception of morality. In 1969, the Criminal Code was amended [Criminal Law Amendment Act, 1968-69,
S.C. 1968-69, c. 38, s. 9, amending s. 168 of the Criminal Code, S.C. 1953-54, c. 51] to permit the federal or the provincial government to conduct lottery schemes (encompassing gaming enterprises generally). (See the present s. 207(1)(a).) Then, in what the authors characterize as a political contract, the federal government divested itself of the power in 1985, leaving the provinces as the sole licensors. The authors summarize at pp. 23-24:
For present purposes, it is sufficient to say that since 1969, the gaming provisions of the Code have been unique. Criminal laws generally conform to a pattern of prohibition plus sanction, with legally recognized excuses and justifications. With gaming, however, while there is a prohibition plus a sanction, these do not apply to a broad range of provincially regulated exemptions.
The broad range of power to license and control vested in the Lieutenant Governor in Council by ss. 204 [am. R.S.C. 1985, c. 47 (1st Supp.), s. 1; am. 1989, c. 2, s. 1] and 207 [am. R.S.C. 1985, c. 27 (1st Supp.), s. 31; rep. & sub. R.S.C. 1985, c. 52 (1st Supp.), s. 3] of the Criminal Code is undoubted. No question of constitutionality arises in the present case (and, in any event, was resolved in R. v. Furtney, S.C.C., released September 26, 1991 [now reported 66 C.C.C. (3d) 498, 129 N.R. 241], and the only question is how this development of the law and its application reflect social morality.
Returning to the example of corrupting children, it is unimaginable to consider an amendment to make this an offence only if not licensed by a provincial body or conducted at an annual fair, but that very fact makes the point that the morality of gambling as a part of our social fibre is very different from other offences in the Criminal Code. In 1991 $10 bets were made at blackjack tables at the Canadian National Exhibition. Those participating cannot be generally viewed as engaged in an immoral venture, although some persons may so view it. If money is loaned by a friend to enable another to play the games, which is inevitable in any gaming situation, is that to be considered immoral? The provincial legislature may bar recovery of the loan, but the statute doing so can hardly be interpreted as establishing a moral policy when the same government licenses the opportunity.
In my view, activities occurring in an enterprise licensed by the State of New Jersey cannot carry a different colour of morality. The federal parliament would be inconsistent in decreeing that what is licensed by Ontario or under the auspices of an annual exhibition has moral integrity, while what is licensed and regulated by New Jersey does not.
It is, therefore, my conclusion that an Ontario court cannot say that a judgment founded upon a contract related to gambling is tainted by immorality and should be refused enforcement.
I find comforting support for this approach to the issue in a judgment of the New York Court of Appeals, Intercontinental Hotels Corp. (Puerto Rico) v. Golden, 203 N.E.2d 210, and particularly in the observations of Burke J. at pp. 212 and 213:
[3, 4] Public policy is not determinable by mere reference to the laws of the forum alone. Strong public policy is found in prevailing social and moral attitudes of the community. In this sophisticated season the enforcement of the rights of the plaintiff in view of the weight of authority would not be considered repugnant to the “public policy of this State”. It seems to us that, if we are to apply the strong public policy test to the enforcement of the plaintiff’s rights under the gambling laws of the Commonwealth of Puerto Rico, we should measure them by the prevailing social and moral attitudes of the community which is reflected not only in the decisions of our courts in the Victorian era but sharply illustrated in the changing attitudes of the People of the State of New York. The legalization of pari-mutuel betting and the operation of bingo games, as well as a strong movement for legalized off-track betting, indicate that the New York public does not consider authorized gambling a violation of “some prevalent conception of good morals [or], some deep- rooted tradition of the common weal” (Loucks v. Standard Oil Co., supra, p. 111, 120 N.E. p. 202).
The trend in New York State demonstrates an acceptance of licensed gambling transactions as a morally acceptable activity, not objectionable under the prevailing standards of lawful and approved social conduct in a community. Our newspapers quote the odds on horse races, football games, basketball games and print the names of the winners of the Irish Sweepstakes and the New Hampshire lottery. Informed public sentiment in New York is only against unlicensed gambling, which is unsupervised, unregulated by law and which affords no protection to customers and no assurance of fairness or honesty in the operation of the gambling devices.
Accordingly, I would allow the appeal with costs, set aside the trial judgment and in its place award judgment to the plaintiff in an amount in Canadian currency equivalent to $48,920 (U.S.) as of the date of the trial judgment, pursuant to the terms of s. 131 of the Courts of Justice Act, 1984, S.O. 1984, c. 11, plus trial costs. Section 139(3) of that Act limits interest on the judgment to that provided for in the foreign judgment. While this section addresses itself to post- judgment interest it seems sensible that where, as here, the judgment of the foreign court makes no provision for interest there should be none, before or after judgment. It may be that there is provision in New Jersey law apart from the judgment for post-judgment interest. If so, the court may be addressed in writing.
LACOURCIRE J.A. (concurring):–I have had the benefit of reading the reasons prepared by my two colleagues who arrive at different conclusions with respect to the disposition of this appeal. While I agree with the reasons of my colleague, Mr. Justice Carthy, I find it necessary to further analyze some issues, particularly the public policy involved in the enforcement of the underlying debt or of the default judgment of the Superior Court of New Jersey against the respondent, in respect of a gaming or wagering agreement. Apart from the issue of public policy involved in the enforcement, the authenticity of the judgment and the jurisdiction of the foreign tribunal have not been questioned.
Few Canadian courts have dealt with the enforceability, in a Canadian province, of a debt resulting from loans made by a casino, licensed and operated in the United States, to a Canadian visitor for the purpose of gaming at the casino. In the reported trial level decisions reviewed by my colleagues, the Ontario courts have generally refused to enforce foreign gambling debts on grounds of public policy, whereas some Quebec and British Columbia courts have not objected to the enforcement of foreign gambling debts on that ground.
Let me say at the outset that I am in full agreement with Carthy J.A. that the appellant’s action is governed by the proper law of the contract, in this case, the law of New Jersey. It follows that the Gaming Act, R.S.O. 1980, c. 183 (now R.S.O. 1990, c. G.2), as amended, which was never intended to apply to gaming transactions in other jurisdictions and cannot be given extra-territorial effect, is not applicable. It matters not, in my opinion, whether the statute renders the gaming agreement void or whether it merely prevents recovery on the security given, since the Gaming Act applies only to domestic, as opposed to foreign, agreements. Furthermore, the Act does not express public policy so as to preclude the enforcement in Ontario of a judgment obtained in the State of New Jersey, where the debt was legally incurred originally. The Gaming Act would unconstitutionally trench on criminal law if it represented an attempt to control morality: see R. v. Furtney, a judgment of the Supreme Court of Canada, released September 26, 1991 [now reported 66 C.C.C. (3d) 498, 129 N.R. 241], at p. 15 of the reasons [pp. 507-08 C.C.C., p. 255 N.R.].
I find it unnecessary to express any firm opinion on the appellant’s alternative claim based on the cheque drawn on a Canadian bank. However, I do not think that the mode of payment, by cheque, would affect the action based on the underlying debt, which is governed by the proper law of the contract, the lex loci contractus: see ss. 159-160 of the Bills of Exchange Act, R.S.C. 1985, c. B-4, which govern the validity and interpretation of a negotiable instrument, and Jean Gabriel Castel, Canadian Conflict of Laws, 2nd ed. (Toronto: Butterworths, 1986), paras. 446-448 (pp. 575-78). In any event, even if the alternative claim based on the cheque should fail on the basis of the majority judgment in Moulis v. Owen, [1907] 1 K.B. 746, 76 L.J.K.B. 396 (C.A.), in my opinion, there is nothing to prevent recovery of the underlying debt in the present case: see Saxby v. Fulton, [1909] 2 K.B. 208, [1908-10] All E.R. Rep. 587 (C.A.), which stands for the proposition expressed in the three line K.B. headnote:
Money lent in a foreign country for the purpose of being used by the borrower for gaming, the game not being illegal by the law of that country, may be recovered in the English Courts.
See also Socit Anonyme des Grands Etablissements de Touquet Paris-Plage v. Baumgart, [1927] All E.R. Rep. 280, 96 L.J.K.B. 789 (K.B.) and Harold Meyers Travel Service v. Magid (1977), 16 O.R. (2d) 1, 77 D.L.R. (3d) 32 (C.A.). I adopt what was said by the learned authors in Cheshire and North Private International Law, 11th ed. by P.M. North and J.J. Fawcett (London: Butterworths, 1987) at p. 485: Incongruous though it may seem, one result of drawing the distinction between a security and the contract in respect of which it has been given is that a person, who receives an English cheque in payment of a gambling loan made in a country where gambling is lawful, may disregard the cheque and successfully maintain an action on the loan. His possession of an unenforceable security does not preclude him from recovering the money on the alternative ground. Subject therefore to policy considerations, I am of the opinion that the action based on the debt underlying the cheque could be successfully pursued in Ontario.
The policy issue
In my opinion, the respondent has not satisfied the burden of showing that the enforcement of the contract or of the New Jersey judgment would be contrary to public policy. I agree that the foreign judgment should not be declared unenforceable on grounds of public policy unless its enforcement would violate conceptions of essential justice and morality. I am here referring to domestic public policy as well as national public policy at the international level. Where the foreign law is applicable, Canadian courts will generally apply that law even though the result may be contrary to domestic law. Professor Castel’s discussion of public policy regarding the application of foreign law or the enforcement of a foreign judgment is helpful in this respect (Castel, Conflict of Laws, para. 91 (pp. 153-55)):
Canadian courts will not recognize or enforce a foreign law or judgment or a right, power, capacity, status or disability created by a foreign law that is contrary to the forum’s stringent public policy or “essential public or moral interest” or “our conception of essential justice and morality.”
It is almost impossible to give a precise definition of public policy; nor can a general statement be made about its scope. Evidence of public policy can be found in the total body of the constitutional and statute law as well as the case law of the forum, since it will reflect the local sense of justice and public welfare. It is not enough to deny recognition of the claim that the local law on the same point differs from the foreign law.
In the conflict of laws, public policy must connote more than local policy as regards internal affairs. It is true that internal and external public policy stem from the national policy of the forum but they differ in many material respects. Rules affecting public policy and public morals in the internal legal sphere need not always have the same character in the external sphere. Also, there should be a difference of intensity in the application of the notion of public policy depending upon whether the court is asked to recognize a foreign right or legal relationship or to create or enforce one based on some foreign law. Public policy is relative and in conflicts cases represents a national policy operating on the international level.
If foreign law is to be refused any effect on public policy grounds, it must at least violate some fundamental principle of justice, some prevalent conception of good morals, or some deep-rooted tradition of the forum.
. . . . .
In the absence of legislation establishing the stringency of public policy, it is for the courts to define its precise limits according to their judgment and good conscience.
(Emphasis added; footnotes omitted)
In this appeal, this court is not directly concerned with the ethics of gambling, the regrettable social consequences of excessive or compulsive gambling, or the effectiveness of the New Jersey regulation of casinos. Neither are sympathy for the respondent, whose gambling intoxication resulted in ruinous losses, nor lack of sympathy for gambling casino operators, relevant considerations.
It would be anomalous and, it seems to me, contrary to the international aspect of national policy in this regard, to conclude that Part VII of the Criminal Code, R.S.C. 1985, c. C- 46, reflects a policy applicable on the international level. This would be the result of refusing to give effect to the law of New Jersey on grounds of public policy. It cannot be said that the enforcement of a debt, valid by the law of New Jersey, which is the proper law of the contract, would violate any fundamental principle of justice or the Canadian conception of good morals. I must assume that a sovereign country or state which licenses casino operations has enacted regulations and controls for the general protection of participants and of society. The essential question to be resolved is whether the Gaming Act, which is inapplicable, nonetheless effectively represents public policy, and whether the strictures of the Criminal Code against gaming houses reflect the public policy issue.
It has been submitted, on behalf of the respondent, that the social morality has not been tested for commercial gambling. In my view, this submission is based on a misconstruction of the recommendations flowing from the 1956 Parliamentary report referred to by Carthy J.A. The report had recommended that, since gambling was like drinking, it should be treated similarly — by control. The means used to control the urge for gambling was to limit gambling by licensing, generally for charitable purposes. However, there is no basis for saying that public morality is reflected by the imposition or the methods of control. The licensing controls delegated by Parliament to the Attorney General of the province or his nominee represent a justifiable way in which to channel and satisfy the demand for gambling. The policy of the government of Canada, as reflected in Part VII of the Criminal Code, is to prohibit the operation of common gaming or common betting houses and other unlawful forms of wagering, while providing a broad category of exemptions from and exceptions to the provisions creating criminal liability.
For more than 20 years since the 1970 amendments to the Criminal Code [Criminal Law Amendment Act, 1968-69, S.C. 1968-69, c. 38, s. 9, amending the Criminal Code, S.C. 1953-54, c. 51, s. 168], there has been a significant increase in various forms of legitimate gambling in this province and everywhere in Canada. Governments not only have condoned gambling activities, but also have actively promoted and derived substantial revenue from them. Charities and public- spirited social clubs have also benefited. Since the amendment to the Criminal Code, gambling has been de- criminalized to a large extent and legalized gambling has become, on the basis of provincial statistics, a multi-billion dollar industry: see Colin S. Campbell and John Lowman, eds., Gambling in Canada: Golden Goose or Trojan Horse? (Burnaby, B.C.; Simon Fraser University, First National Symposium on Lotteries and Gambling, 1988). This court takes judicial notice of the fact that a large number of Canadians participate in games of chance, even though other Canadians disapprove of such activities.
It should be pointed out that the distinction between commercial gambling for profit, on the one hand, and government licensed and regulated gambling activities for charitable or desirable social purposes, on the other hand, is not an all- encompassing distinction. Section 197(2)(b) of the Criminal Code exempts, from the definition of common gaming house, a gaming house “occupied and used by an incorporated genuine social club” under the authority of a provincial licence, without any mention of charitable purposes. The social club exemption is clearly dependent only on the bona fides of the club and its compliance with the requisite licence issued by the Attorney General of the province. Thus, gaming houses could, theoretically, be licensed in Ontario, although it is improbable that licensing of casinos would be extended at this time. While provincial licensing has been limited generally for charitable purposes, it is clear that pari-mutuel betting on horse racing and off-track betting are, as a rule, purely commercial enterprises.
The ethics or morality of licensed gambling abroad, and the recovery of gambling debts incurred in jurisdictions where gambling is legal, are best left to a community standard. There is nothing to indicate that the general Canadian public would be offended by the enforcement of foreign judgments for debts incurred in jurisdictions where commercial gambling is licensed and legal. Consequently, I am satisfied that, in accordance with the Canadian community standard, the participation in licensed gaming abroad, and the enforcement of a foreign judgment based on a gaming debt incurred in a licensed and regulated casino, are neither immoral nor unjust: see Professor Nicholas Rafferty’s helpful comment on the trial judgment under appeal in the “The Effect of Ontario’s Gaming Laws on Foreign Gambling Transactions” (1990), 5 B.F.L.R. 233. In my opinion, the contemporary Canadian community standard of morality would prefer that personal responsibility be attached to Canadians who engage in licensed gaming activities abroad and that these citizens not be sheltered from enforcement proceedings when debts result.
Disposition
I am, therefore, of the view that the learned trial judge erred in concluding that the agreement between the parties, or the enforcement of the New Jersey judgment, would contravene the public policy of Ontario. For reasons given by Carthy J.A. and these additional reasons, I would allow the appeal and dispose of it as he proposed.
ARBOUR J.A. (dissenting):–I have had the advantage of reading the reasons of my colleague Mr. Justice Carthy and, like him, I have come to the conclusion that this case rests on the question of whether it is against public policy in Ontario to enforce a New Jersey judgment granted to the appellant for monies lent to the respondent for the purpose of enabling him to gamble at the appellant’s casino in Atlantic City. With respect, however, I have reached a different conclusion on that issue.
The facts were substantially admitted by the respondent and were summarized as follows by the trial judge [(1988), 68 O.R. (2d) 753, 59 D.L.R. (4th) 760 (H.C.J.), at p. 755 O.R., p. 762 D.L.R.]:
The plaintiff is an American Corporation operating a casino in Atlantic City which is known as “Caesars”. The defendant, a Toronto businessman, went to that casino on numerous occasions on “junkets” over a two-year period in 1981 and 1982. The defendant applied to the plaintiff for credit which was extended to him. The arrangements permitted the defendant to gamble at the casino and to sign counter cheques or “markers”. The defendant gambled and lost heavily. He paid most of these losses.
This action is for the sum of $43,000 which is admittedly unpaid. The New Jersey judgment in the amount of $48,805 is for that amount, but includes interest.
On April 24, 1982, the defendant gave the plaintiff a cheque for $40,000 and, in return, received some of his counter cheques and markers totalling that amount. The plaintiff agreed to hold the cheque for some time, probably 90 days, to allow the defendant to make arrangements to see the cheque would be honoured. The cheque was eventually deposited on July 24 or 25, 1982. Between April 24 and that time the defendant applied for additional credit on two occasions and was refused. When the defendant’s cheque was deposited, the defendant again asked for credit and an additional $10,000 credit was given. He used markers or counter cheques again and lost that $10,000 by the end of July. The total amount owing then was $50,000. The defendant made a $7,000 payment reducing the debt to the amount now claimed.
The appellant commenced an action in Ontario for non-payment of the $40,000 cheque which had been drawn on an Ontario branch of a Canadian bank and, in the alternative, for satisfaction of a judgment obtained in a New Jersey court on the basis of that debt. The action was dismissed.
The defence raised was that both the cheque and the judgment were based on a gambling debt and were therefore unrecoverable by virtue of the Gaming Act, R.S.O. 1980, c. 183 (now R.S.O. 1990, c. G.2), as amended. The relevant sections of that Act are as follows:
1. Every agreement, note, bill, bond, confession of judgment, cognovit actionem, warrant of attorney to confess judgment, mortgage or other security, or conveyance, the consideration for which, or any part of it, is money or other valuable thing won by gaming, or by playing at cards, dice, tables, tennis, bowls or other game, or by betting on the sides or hands of the players, or for reimbursing or repaying any money knowingly lent or advanced for such gaming or betting, or lent or advanced at the time and place of the game or play to a person so gaming, playing, or betting, or who, during the game or play, so plays, games or bets, shall be deemed to have been made, drawn, accepted, given or executed for an illegal consideration. C. . . . .
4. Every contract or agreement by way of gaming or wagering is void, and no suit shall be brought or maintained for recovering any sum of money or valuable thing alleged to be won upon a wager, or that has been deposited in the hands of any person to abide the event on which a wager has been made, but this section does not apply to a subscription or contribution, or agreement to subscribe or contribute for or towards any plate, prize or sum of money to be awarded to the winner of any lawful game, sport, pastime or exercise.
5. Any promise, express or implied, to pay any person a sum of money paid by him under or in respect of a contract or agreement rendered void by section 4, or to pay a sum of money by way of commission, fee, reward or otherwise in respect of such a contract or agreement, or of any services in relation thereto or in connection therewith, is void, and no action shall be brought or maintained to recover any such sum of money.
The history of the provisions of the Gaming Act, which embodies some of the content of various English statutes, is conveniently traced in “An Annotation on Gaming and Betting Debts in Ontario” (1922), 68 D.L.R. 237, which was cited with approval by this court in Harold Meyers Travel Service v. Magid (1977), 16 O.R. (2d) 1, 77 D.L.R. (3d) 32 per Brooke J.A. I note at the outset that the author of that “Annotation” remarked that the Ontario Gaming Act was evidently intended to deal with gaming and betting debts without encroaching upon the exclusive federal legislative power over criminal law and bills of exchange.
Section 1 of the Gaming Act is distinctly different than its English ancestor in that the Ontario provision deems both the agreement and the security given for repaying money lent for gambling to have been entered into for an illegal consideration (Harold Meyers Travel Service, supra, at p. 2 O.R., p. 33 D.L.R.). In contrast, the Statute of Anne of 1710 [Gaming Act, 1710 (9 Ann., Eng.), c. 19], drafted in somewhat similar language, contained the important distinction that it purported to void only the security, not the agreement itself, for the lending or repaying of money lent for gambling. Much of the English case law is concerned with the distinction (Moulis v. Owen, [1907] 1 K.B. 746, 76 L.J.K.B. 396 (C.A.); Saxby v. Fulton, [1909] 2 K.B. 208, [1908-10] All E.R. Rep. 857 (C.A.), per Buckley L.J. at pp. 228-29 K.B., pp. 863-64 All E.R.; Socit Anonyme des Grands Etablissements de Touquet Paris- Plage v. Baumgart, [1927] All E.R. Rep. 280, 96 L.J.K.B. 789 (K.B.)).
Though the distinction between the agreement and the security is not maintained under the Ontario statute, the conflict of law principle which follows that distinction is equally applicable in both jurisdictions. The validity of a negotiable instrument payable in England but issued abroad for payment or security for a gambling debt incurred abroad is governed by English law and thus unenforceable in England (Moulis v. Owen, supra; Dicey and Morris on the Conflict of Laws, 11th ed.
Lawrence Collins (London: Stevens & Sons, 1987), vol. 2, at pp. 1347-48). Insofar as the action in this case is based on the cheque, which is drawn on a Canadian bank and payable in Ontario, I see no reason to depart from the English authorities. I would hold that the Gaming Act applies and that recovery is barred by the provisions of s. 1 of the Act (Jean Gabriel Castel, Canadian Conflict of Laws, 2nd ed. (Toronto: Butterworths, 1986), at para. 428 (p. 557)).
However, the action on the New Jersey judgment, or on the debt itself, is governed by the law of the contract and thus escapes the provisions of the Gaming Act. (Dicey and Morris; Castel, Conflict of Laws, at paras. 404 and 405 (pp. 532-35)). The Gaming Act does not have extra-territorial application and therefore does not stand in the way of recovery in Ontario for a debt validly incurred under New Jersey law.
This brings me to the central issue in this case of whether the enforcement of the New Jersey judgment is against public policy in Ontario. Even if legally entered into in a foreign jurisdiction, contracts will not be enforced by Ontario courts if they are contrary to public policy or morality (Castel, Conflict of Laws, para. 428 (p. 556)). Of course, the burden is on the respondent resisting the application of the foreign law to show that its application is contrary to Ontario public policy. Generally, the doctrine of public policy should be applied sparingly and with caution (Canadian Acceptance Corp. v. Matte (1957), 9 D.L.R. (2d) 304, 22 W.W.R. 97 (Sask. C.A.);
Block Brothers Realty Ltd. v. Mollard (1981), 27 B.C.L.R. 17, 122 D.L.R. (3d) 323 (C.A.)). Craig J.A. remarked in that case that defining public policy is a perplexing task which involves many variables and subjective factors. I agree that contracts valid under foreign law, and, even more so, contracts valid in another Canadian jurisdiction, should be enforced unless it would be contrary to our conception of essential justice or morality to do so, or unless enforcement would be an affront to the local social order. This is embodied in the concept of public policy.
This concept of public interest or public policy should not, however, be construed solely in moral terms. There has been a legitimate difference of opinion expressed in recent years, as to whether contemporary Canadian moral standards are so offended by gambling that it would be against public policy to enforce a foreign judgment for a gambling debt. Hardinge Co. Ct. J. in Desert Palace Inc. v. Zigdon, a judgment of the County Court of Vancouver, B.C., delivered April 6, 1987 [summarized at 5 A.C.W.S. (3d) 210], expressed the view shared by my colleague Justice Carthy that contemporary morality accommodates gambling. Quesnel J. expressed the same view in Resorts International Hotel Inc. v. Auerbach, an unreported judgment of the Quebec Provincial Court released September 23, 1986. This decision was upheld by the Quebec Court of Appeal on December 10, 1991. Madame Justice Mailhot considered whether the requirements of public policy constitute a bar to the procedure for exemplification of foreign judgment in view of article 1927 of the Civil Code of Lower Canada which, not unlike the Ontario Gaming Act, denies a right of action for gaming or betting debts. She and Rothman J.A. concluded that it does not.
The opposite conclusion has been reached by the trial judge in this case. Although not specifically approached in moral terms, in three other Ontario decisions courts have refused to enforce similar foreign gambling-based contracts on grounds of public policy (Boardwalk Regency Corp. v. Newman (1987), 15 C.P.C. (2d) 102 (Ont. Dist. Ct.); M & R Investment Co. v. Marsden (1987), 63 O.R. (2d) 509 (Dist. Ct.); Boardwalk Regency Corp. v. Portelance, an unreported decision of the District Court of Ontario, released April 12, 1988).
It is helpful, in my view, to examine the question of public policy in terms somewhat broader than the moral acceptability of various forms of gambling practices. In 1988, a symposium on lotteries and gambling was held at Simon Fraser University, the proceedings of which have been published in the form of a report entitled Gambling in Canada: Golden Goose or Trojan Horse? (Colin S. Campbell and John Lowman, eds.). In the introduction, the editors remark that there has been little public debate in Canada over gambling, in contrast to the detailed public attention given to “vices” such as prostitution, pornography and the non-medical use of drugs, and express their surprise over this state of affairs in view of what they term the morally controversial nature of the subject- matter.
In the wake of an expansion of legal gambling, still relatively limited in Canada, other countries, such as Great Britain, Australia and the United States, have undertaken some review of the social costs arising from increased accessibility to legal gambling. These include pathological and compulsive gambling, particularly among minorities, women and the relatively poor (Campbell and Lowman, Gambling in Canada, p. xx), as well as organized crime and the corruption of public officials (Eadington, “Issues and Trends in World Gambling” in Campbell and Lowman, Gambling in Canada, p. 22).
It is helpful to draw a second distinction between government-run and charitable gambling allowed under the Criminal Code, R.S.C. 1985, c. C-46, and for-profit commercial gambling of the sort at issue in this case. The world trends that have produced an expansion of legalized gambling have not translated in Canada into an acceptance of commercial or private sector gambling, but merely into a legalization of regulated gambling activities for charitable or religious fund- raising purposes and as a means for governments to generate funds for cultural, recreational or sporting activities. This, in itself, may explain the current moral tolerance towards activities that are linked historically and today in the Criminal Code to morality concerns, such as keeping a common gaming house and keeping a common bawdy house.
In “Current Law Enforcement Issues in Canadian Gambling” in Campbell and Lowman, Gambling in Canada, p. 178, Margaret E. Beare writes:
Moral arguments about the nature of gambling, ethical arguments that question the propriety of government involvement, and criminological arguments about the relationship between gambling and criminal activities, all tend to give way to the realization that significant funds are being raised for all sorts of “good” causes via this voluntary (if not necessarily victimless) activity.
I cannot accept the argument that the involvement of government in gambling, or, more to the point, government’s virtual monopoly over legal organized gambling in Canada, is conclusive as to the morality of gambling generally and thus sufficient reason to decline to invoke public policy as a bar to enforcement of foreign gambling debts. In “The Ethics of Gambling” in Campbell and Lowman, Gambling in Canada, p. 275, Charles Singer addresses ethical issues arising in the context of commercial gambling. In reference to the facts of this case, I need only mention what Singer refers to as “the ethics of excess” and “the ethics of inducement”. The respondent’s evidence in this case is that during 1981-82 he attended the appellant’s casino in Atlantic City about 100 times and lost about half a million dollars. That money came from his business in Toronto. The appellant was extending credit to the respondent as part of its operation of the casino, as a way of doing business. These facts test the morality of commercial gambling and it is on these facts that we are asked to deny recovery to the appellant on grounds of public policy.
In my opinion, it is unnecessary to resolve the morality debate since, in Canadian terms, the issue is not so much whether the gambling operations conducted by the appellant are immoral, but whether they are criminal. If conducted in Ontario, the appellant’s business would constitute operating a common gaming house and would therefore be prohibited under s. 197 and s. 201(1) of the Criminal Code. The appellant is seeking to recover in the Ontario courts money advanced to the respondent for the purpose of engaging in an activity which, if conducted in Ontario, would be criminal. I have no difficulty in concluding that it is against public policy in this jurisdiction to enforce a foreign judgment which allows for the recovery of a debt incurred in the context of an activity which, although legal where it took place, is criminal here.
Ultimately I find little assistance, in determining the public policy issue, in discussing the morality of an activity that is proscribed under criminal sanction. Absent a challenge to Parliament’s legislative competence, I assume that s. 201(1) of the Criminal Code was validly enacted by Parliament by virtue of its criminal law power under s. 91 (para. 27) of the Constitution Act, 1867. In order to have been validly enacted under the criminal law power, the prohibition against keeping a common gaming house must be viewed as serving a valid public purpose, such as the protection of public peace, order, security or morality, or the proscription of undesirable commercial practices, any of which may serve as a foundation for the federal exercise of the criminal law power (Peter W. Hogg, Constitutional Law of Canada, 2nd ed. (Toronto: Carswell, 1985), at pp. 399-402). The provisions of the Gaming Act must be read in that context and the English authorities must be received with caution for this additional reason.
Many of the cases to which we have been referred stress the fact that betting or gaming was not illegal at common law, or that the activity which took place in a foreign jurisdiction was not illegal under English law, but was only denied a remedy. In Saxby v. Fulton, supra, the plaintiff was a friend of one Brook, since deceased, and was suing Brook’s executrix to recover money that he had advanced to Brook for the purpose of gambling at the roulette tables of Monte Carlo. The Court of Appeal found that the debt was recoverable in England. The words of Buckley L.J. stand in sharp contrast to the present case [p. 227 K.B., p. 863 All E.R.]:
Two propositions lie at the root of this case. The first is that the contract of loan was made at Monte Carlo and that the money was advanced for a purpose which at that place is legal. The second, which is of cardinal importance, is that by the common law of England gaming and wagering are not per se illegal. There are many statutes (some of them were recently considered by this Court in Hyams v. Stuart King) which make certain gaming contracts and securities given in connection with gaming void and render the consideration for the contract illegal, but there is no principle of common law and no statute which makes betting or wagering in itself illegal. Coming then to the question of public policy, I cannot see that it is contrary to public policy for the English Courts to recognize a debt contracted for the purpose of wagering abroad in a place where such wagering was legal.
In my opinion, it is incorrect to suggest that since the appellant was carrying on a licensed gambling operation in New Jersey, a similar licensed operation on his part in Ontario would be neither illegal nor criminal. The fact is that under existing Canadian criminal law, the operations conducted by the appellant in New Jersey could not be licensed in Ontario and, therefore, if carried on here, would not escape criminal sanction. Section 207 of the Criminal Code exhaustively governs the circumstances where provincial licensing is available so as to exempt from criminal liability. In substance, s. 207 provides that it is lawful:
(1)for the government of a province to conduct and manage a lottery scheme;
(2)for a charitable or religious organization, pursuant to a licence issued by the government of a province, to conduct and manage a lottery scheme;
(3)for the board of an annual fair or exhibition, previously designated for such purpose, to obtain a licence to do so,
(4)for any person, pursuant to a licence issued by the province, to conduct and manage a lottery if the value of each prize does not exceed $500 and the ticket does not exceed $2.
There is no suggestion in this case that the appellant could lawfully operate its casino in Ontario pursuant to the licensing scheme in place to exempt from criminal liability. In that sense, it is incorrect to suggest that since it is only unlicensed gambling that is criminal in Canada, and since the appellant was conducting a licensed operation in New Jersey, its conduct should not be viewed as offensive to public policy. The proper characterization of the appellant’s conduct is that it was engaged in an activity that it could not carry out lawfully in Ontario. There is no scheme available in Ontario for the licensing of commercial gambling of the type practised by the appellant in this case.
The Gaming Act declares void a contract or agreement entered into in Ontario by way of gaming or wagering; it also prohibits recovery of money won upon a wager (s. 4). Yet, betting or gaming is not, in itself, illegal or criminal in Ontario. It would not be sound public policy, in my opinion, to permit recovery of a debt incurred outside Ontario under circumstances that would be criminal under the same circumstances in Ontario, and yet to deny recovery for gambling debts legally incurred here. To decide otherwise, in my opinion, is to force Ontario public policy, as expressed in part in the Criminal Code, to yield to foreign law.
For these reasons, I would dismiss the appeal.