Van Damme v. Gelber et al.

[Indexed as: Van Damme v. Gelber]

Ontario Reports

Court of Appeal for Ontario,

Doherty, Cronk and Lauwers JJ.A.

June 12, 2013

115 O.R. (3d) 470 | 2013 ONCA 388

Case Summary

Civil procedure — Costs — Substantial indemnity — Applicant moving successfully in Ontario for order enforcing New York judgment — Motion judge erring in awarding applicant costs on substantial indemnity basis because of respondent's conduct in New York litigation — Respondent doing nothing in Ontario proceeding that could appropriately attract costs sanction.

Conflict of laws — Foreign judgments — Enforcement — Applicant obtaining judgment in New York requiring respondent to deliver to him painting which was being held in Ontario — Applicant moving successfully in Ontario for order enforcing New York judgment — Respondent's appeal dismissed — Respondent attorning to jurisdiction of New York court by bringing motion for summary judgment in which he advanced substantive defences in addition to challenging jurisdiction of court — Motion judge not erring in exercising his discretion in favour of enforcing New York judgment even though it was order for specific performance. [page471]

The applicant claimed to have entered into an agreement with the defendant through his agent to purchase a particular painting. The respondent refused to deliver the painting, contending that the person who purported to sell it on his behalf had no authority to do so. The applicant brought an action in New York for specific performance, seeking an order requiring the respondent to complete the transaction and deliver the painting, which was located in Ontario. The respondent's motion challenging the jurisdiction of the court was dismissed. The applicant moved for summary judgment on his specific performance claim, and the respondent moved for summary judgment dismissing the claim. The court granted the applicant's motion. The applicant then moved successfully in Ontario for an order enforcing the New York judgment. The motion judge granted the applicant his costs on a substantial indemnity basis. The respondent appealed.

Held, the appeal should be allowed in part.

The respondent attorned to the jurisdiction of the New York court by litigating the merits of the claim in that jurisdiction. On his summary judgment motion, he went far beyond a jurisdictional challenge and advanced substantive defences on the merits. In doing so, he implicitly accepted that the New York court had jurisdiction to decide those issues.

The motion judge did not err in exercising his discretion in favour of enforcing the New York judgment on the basis that it was an order for specific performance. Had the matter been tried in Ontario and had an Ontario court made the same finding as the New York court, specific performance would have been an appropriate remedy having regard to the nature of the property, the nature of the respondent's obligation and the ready availability of the property.

The motion judge erred in principle in imposing costs on a substantial indemnity basis because of his view of the respondent's conduct in the New York litigation. He ought to have focused on the Ontario litigation. Nothing that the respondent did in the Ontario litigation could appropriately attract any kind of costs sanction.

Mid-Ohio Imported Car Co. v. Tri-K Investments Ltd., 1995 2084 (BC CA), [1995] B.C.J. No. 2199, 129 D.L.R. (4th) 181, [1996] 2 W.W.R. 144, 65 B.C.A.C. 98, 13 B.C.L.R. (3d) 41, 34 C.P.C. (3d) 369, 41 C.P.C. (3d) 259, 58 A.C.W.S. (3d) 582 (C.A.), consd

Other cases referred to

Clinton v. Ford (1982), 1982 1906 (ON CA), 37 O.R. (2d) 448, [1982] O.J. No. 3336, 137 D.L.R. (3d) 281, 29 C.P.C. 30, 14 A.C.W.S. (2d) 506 (C.A.); Gourmet Resources International Inc. (Trustee of) v. Paramount Capital Corp., [1991] O.J. No. 2293, 5 C.P.C. (3d) 140, 31 A.C.W.S. (3d) 937 (C.A.); M.J. Jones Inc. v. Kingsway General Insurance Co. (2004), 2004 6211 (ON CA), 72 O.R. (3d) 68, [2004] O.J. No. 3286, 242 D.L.R. (4th) 139, 189 O.A.C. 272, 6 C.P.C. (6th) 121, 132 A.C.W.S. (3d) 835 (C.A.); Pro Swing Inc. v. Elta Golf Inc., [2006] 2 S.C.R. 612, [2006] S.C.J. No. 52, 2006 SCC 52, 273 D.L.R. (4th) 663, 354 N.R. 201, J.E. 2006-2235, 218 O.A.C. 339, 41 C.P.C. (6th) 1, 52 C.P.R. (4th) 321, 152 A.C.W.S. (3d) 70, EYB 2006-111169; Southcott Estates Inc. v. Toronto Catholic District School Board, [2012] 2 S.C.R. 675, [2012] S.C.J. No. 51, 2012 SCC 51, 296 O.A.C. 41, 435 N.R. 41, 2012EXP-3653, J.E. 2012-1952, 351 D.L.R. (4th) 476, 3 B.L.R. (5th) 1, 24 R.P.R. (5th) 1, 220 A.C.W.S. (3d) 348; Wolfe v. Pickar, [2011] O.J. No. 2035, 2011 ONCA 347, 282 O.A.C. 64, 92 C.P.R. (4th) 208, 84 C.C.L.T. (3d) 167, 332 D.L.R. (4th) 157 [page472]

APPEAL from the order of Lederer J., [2012] O.J. No. 5394, 2012 ONSC 6277 (S.C.J.) enforcing a foreign judgment and from a costs order.

Benjamin Zarnett and Julie Rosenthal, for appellant.

Jeff Galway and Max Shapiro, for respondent.

The judgment of the court was delivered by

DOHERTY J.A.: —

I

Overview

[1] The respondent, Alexandre Van Damme ("Van Damme"), obtained judgment in the Supreme Court of New York requiring the appellant Nahum Gelber ("Gelber") to deliver a painting to Van Damme upon payment by Van Damme to Gelber of the amount agreed upon (less certain stipulated deductions) in a contract for the sale of the painting. When Van Damme obtained judgment in New York, the painting was being held in Ontario pursuant to the terms of an order of the Ontario Superior Court of Justice. Van Damme brought a motion in the Ontario proceeding seeking an order recognizing and enforcing the New York judgment in Ontario and a variation of the earlier Ontario order directing that the painting be released to him. Van Damme succeeded on the motion and was awarded costs on a substantial indemnity basis.[^1]

[2] Gelber appeals from the order recognizing and enforcing the New York judgment. He also seeks leave to appeal and, if leave is granted, appeals the cost order made by the motion judge.

[3] I would dismiss the appeal. The appellant attorned to the jurisdiction of the New York court by litigating the merits of the claim in that jurisdiction. That attornment provided a basis upon which an Ontario court could properly recognize the New York judgment. Furthermore, the motion judge did not err by exercising his discretion in favour of enforcing the New York judgment, even though it was not a money judgment, but rather an order for specific performance. [page473]

[4] I do, however, accept the appellant's submission on the cost appeal. Gelber was a defendant on the motion brought by Van Damme to enforce the New York judgment. Van Damme was successful on the motion and was entitled to his costs. However, the scale of those costs should not have been determined by reference to Gelber's conduct in the New York litigation. Van Damme was entitled to his costs on a partial indemnity basis.

II

Background

[5] As I would dispose of this appeal on the basis that Gelber attorned to the jurisdiction of the New York court through his conduct in the litigation in that jurisdiction, it is unnecessary to go into the factual background to this litigation in any detail. A brief outline will suffice.

[6] Gelber is a very successful businessman and philanthropist. He is a Canadian citizen and lives in Monaco. Late in 2006, Gelber was approached about the possibility of selling a very valuable painting that he owned. Van Damme claims to have entered into an agreement through his agent with Gelber's agent in February 2007 to purchase that painting. Gelber, however, refused to deliver the painting, contending that the person who purported to sell the painting on his behalf had no authority to do so.

[7] Van Damme commenced an action for specific performance in New York in June 2007. He sought an order requiring Gelber to complete the transaction and deliver the painting for what Van Damme maintained was the price agreed upon in the contract. In commencing the action in New York, Van Damme relied on the forum selection clause in the contract that Van Damme claimed authorized the sale of the painting to him. That provision read:

This transaction shall be governed by and construed in accordance with the laws of the State of New York without giving effect to its choice of law rules. In the event of a dispute, the parties consent to the exclusive jurisdiction of the state and federal courts sitting in the State of New York . . . The parties hereto consent and submit to the jurisdiction of the state and federal courts sitting in the State of New York.

[8] The painting was hanging in the home of Gelber's son in Toronto. In June 2007, Van Damme commenced an application in the Superior Court of Justice in Ontario for an order preserving the painting and prohibiting its sale or movement outside of Ontario pending the outcome of the New York litigation. Gelber [page474] brought a cross-motion for an order dismissing Van Damme's application. In his cross-motion, Gelber took the position that

Ontario is forum non conveniens and New York is the more appropriate forum in which to resolve the dispute between the parties.

[9] The Ontario application did not proceed to a hearing. The parties consented to an order on terms that prohibited the movement of the painting pending the outcome of the New York proceedings. The consent order also indicated that the order was made without prejudice to any arguments the parties might make contesting the jurisdiction of "any court in the state of New York or elsewhere to hear this matter".

[10] In August 2007, Gelber brought a motion in the New York proceedings challenging the jurisdiction of that court. Gelber maintained that, as he was not a party to or bound by the relevant contract, the forum selection clause in that contract could not give the New York court jurisdiction over him.

[11] The New York court declined to decide jurisdiction as a preliminary matter, but instead ordered Gelber to file his answer (statement of defence) and to proceed with all relevant depositions and discoveries.[^2] Gelber complied with the order and filed an answer in which he challenged the jurisdiction of the New York court, raised many and various substantive defences, and cross-claimed against his co-defendant and alleged agent.

[12] After all depositions and discoveries were completed, Van Damme moved for summary judgment on his specific performance claim. Gelber moved at the same time for summary judgment dismissing the claim. In July 2009, Fried J., of the New York Supreme Court, granted Van Damme's summary judgment motion and denied Gelber's summary judgment motion.

[13] In his motion for summary judgment dismissing the claim, Gelber contended that the action should be dismissed because he was not a party to or bound by the contract which contained the relevant forum selection clause. Fried J. found as a fact that Gelber was a party to the contract and bound by the forum selection clause.

[14] Gelber's summary judgment motion, however, went well beyond the argument that the claim should be dismissed for want of jurisdiction. Gelber advanced several arguments that went to the substantive merits of Van Damme's claim. The [page475] non-jurisdictional arguments advanced by Gelber and rejected by Fried J. included arguments that

the contract relied on by Van Damme was void for lack of mutuality of obligation;

-- Van Damme had abandoned the contract; and

Van Damme had failed to perform his obligations under the contract in a timely fashion.

[15] Between July 2009 and December 2011, Gelber brought a variety of motions for a rehearing and appeals challenging the order granting Van Damme's summary judgment and dismissing his motion for summary judgment. All of the motions and appeals failed. Judgment in Van Damme's favour was eventually entered in the New York Supreme Court in December 2011. After judgment was entered, Gelber instituted further proceedings challenging that judgment. Those appeals were still outstanding when this motion was heard. The last of them was finally dismissed in March 2013. It was common ground at the hearing of this appeal that the New York judgment is final.

III

Arguments

[16] Mr. Zarnett, with his usual clarity, submits that the motion judge erred in holding that the New York court properly took jurisdiction under Canadian conflict of law principles. Mr. Zarnett submits that the jurisdictional claim of the New York court was based on either the forum selection clause in the contract or Gelber's conduct during the New York litigation. He argues that the motion judge was required to make his own assessment on the evidence adduced before him of the applicability of the forum selection clause to Gelber. Mr. Zarnett submits that, instead of making his own inquiry, the motion judge simply accepted the New York court's finding on that issue. In doing so, in Mr. Zarnett's submission, the motion judge failed to determine whether the contract provided a basis for the assertion of in personam jurisdiction over Gelber.

[17] Mr. Zarnett next argues that, insofar as Gelber's conduct in the litigation in New York is relied on as a basis for attornment, the motion judge failed to take into account that Gelber's participation in the litigation was premised on his assertion that the New York court had no jurisdiction. To the [page476] extent that his participation went beyond a bald jurisdictional challenge, that participation was dictated by orders of the New York court. Mr. Zarnett contends that, where one is compelled by court orders to take certain steps in foreign litigation, an Ontario court should not use those steps to find attornment.

[18] Mr. Galway, for Van Damme, in an equally effective argument, accepts that, for Ontario conflict of law purposes, the New York judgment was enforceable in Ontario only if the New York court had jurisdiction over Gelber, either by virtue of the forum selection clause in the contract or by Gelber's conduct in the course of the New York litigation. Mr. Galway, correctly, submits that either basis will suffice for jurisdictional purposes.

[19] Mr. Galway acknowledges that the motion judge was required to make his own determination as to the impact of the forum selection clause on the jurisdiction of the New York court. He contends, however, that the motion judge was entitled to rely on findings of fact made in the New York proceedings and that Gelber was estopped from relitigating those factual issues.

[20] With respect to Gelber's conduct during the New York litigation, Mr. Galway submits that his actions, particularly his motion for summary dismissal, went well beyond a mere challenge to the jurisdiction of the New York court. Mr. Galway argues that Mr. Gelber put the merits in issue in the New York proceedings and, in doing so, clearly attorned to the jurisdiction of that court.

IV

Attornment

[21] Much of the oral argument focused on the forum selection clause and the extent to which the motion judge was bound by, or could rely on, the factual findings made in the New York court, and the interpretation of the forum selection clause made by the New York court. I need not decide those issues. I am satisfied that Gelber attorned to the jurisdiction of the New York court by his conduct in the course of that litigation.

[22] Attornment by participation in court proceedings was recently addressed in Wolfe v. Pickar, [2011] O.J. No. 2035, 2011 ONCA 347, 332 D.L.R. (4th) 157, at para. 44, where Goudge J.A. said:

[W]hen a party to an action appears in court and goes beyond challenging the jurisdiction of the court based on jurisdiction simpliciter and forum non conveniens, [page477] the party will be regarded as appearing voluntarily, thus giving the court consent-based jurisdiction. That is what happened here.

[23] There is also authority for the proposition that, if a party appears in a court to challenge jurisdiction or seek a stay on the basis of forum non conveniens, any additional steps taken by the party pursuant to an order of the court will also not amount to attornment: see Gourmet Resources International Inc. (Trustee of) v. Paramount Capital Corp., [1991] O.J. No. 2293, 5 C.P.C. (3d) 140 (C.A.); M.J. Jones Inc. v. Kingsway General Insurance Co. (2004), 2004 6211 (ON CA), 72 O.R. (3d) 68, [2004] O.J. No. 3286 (C.A.), at paras. 18-31 (per Lang J.A., in Chambers). Giving these cases their widest reasonable reading, Gelber's motion challenging the jurisdiction of the New York court, his filing of a defence, and his conduct of depositions and discoveries did not amount to attornment.

[24] Gelber's conduct in advancing a motion for summary judgment dismissing Van Damme's claims, however, went far beyond his jurisdictional challenge. Nor was that motion precipitated by any court order. Gelber chose to advance substantive defences on the merits. In doing so, he implicitly accepted that the New York court had jurisdiction to decide those issues. That is attornment: see Clinton v. Ford (1982), 1982 1906 (ON CA), 37 O.R. (2d) 448, [1982] O.J. No. 3336 (C.A.), at p. 452 O.R.

[25] Gelber's position is similar to that of the defendants in Mid-Ohio Imported Car Co. v. Tri-K Investments Ltd., 1995 2084 (BC CA), [1995] B.C.J. No. 2199, 13 B.C.L.R. (3d) 41 (C.A.). In that case, the defendants had challenged the jurisdiction of the Ohio court, but had also raised other arguments before that court. The plaintiff was successful in Ohio and sought to enforce the Ohio judgment in British Columbia. The defendants resisted, claiming that by challenging the jurisdiction of the Ohio court, they could not be taken as having attorned to the jurisdiction of that court. Wood J.A., at paras. 15-16, accepted that a defendant does not attorn by challenging jurisdiction. He went on, however, to hold [at para. 16]:

In this case, all respondents who are presently before this court applied for an order that the plaintiff's claim of fraud be struck for lack of particularity. Had the Ohio court ruled in their favour on that application, they would unquestionably have accepted the judgment. In my view, they must equally accept the decision against them, because by combining that application with one that challenged the jurisdiction of the Ohio court, they thereby attorned to that court's jurisdiction over them in the dispute as a whole.

[26] If anything, the case for attornment by Gelber is stronger than the case for attornment by the defendants in [page478] Mid-Ohio Imported Car Co. Gelber did not merely challenge the adequacy of the pleadings in the New York court. He raised and argued the merits of several contract-based defences to the claim brought by Van Damme. I cannot accept Mr. Zarnett's contention that all the arguments advanced by Gelber on his summary judgment motion were advanced in support of his jurisdictional argument. At least three of Gelber's arguments accepted that he was a party to the contract and raised substantive defences based on contract law. Had any of those arguments succeeded, Gelber would no doubt have relied on the outcome of the New York proceedings had Van Damme sought to pursue his claim to the painting in Ontario.

[27] For the reasons set out above, I am satisfied that Gelber attorned to the jurisdiction of the New York court. I would not, however, want to be taken as agreeing with the motion judge's observation that Gelber's position in the Ontario proceedings in 2007 that New York was the appropriate forum in which to litigate the dispute amounted to an attornment to the New York court. Gelber took the position that New York was the appropriate forum in his cross-motion in the Ontario proceedings. The motion and cross-motion were, however, resolved by a consent order that expressly stated that nothing in the order should prejudice any jurisdictional arguments that might be made in New York. Gelber's position in the Ontario proceedings in 2007 that New York was the appropriate forum could have no relevance to whether Gelber, by his conduct in the New York proceeding, attorned to the jurisdiction of the New York court.

V

Should the Motion Judge have Exercised his Discretion Against Enforcement of the Order for Specific Performance?

[28] The appellant also submitted that, even if the motion judge correctly concluded that the New York court had jurisdiction for the purposes of determining whether the order of that court should be enforced in Ontario, he failed to follow the approach to the enforcement of non-money judgments set out in Pro Swing Inc. v. Elta Golf Inc., [2006] 2 S.C.R. 612, [2006] S.C.J. No. 52, 2006 SCC 52. The appellant submits that the motion judge should have considered whether specific performance would have been an appropriate remedy had the claim been brought in Ontario. If specific performance would not have been an appropriate remedy in a domestic lawsuit, the motion [page479] judge should have declined to enforce the New York judgment for specific performance.

[29] The appellant argues that on the evidence, Van Damme acquired the painting solely as an investment. Van Damme's interest was in future profit through the resale of the painting and as such was compensable in damages: see Southcott Estates Inc. v. Toronto Catholic District School Board, [2012] 2 S.C.R. 675, [2012] S.C.J. No. 51, 2012 SCC 51. The appellant maintains that, had the motion judge turned his mind to whether specific performance was a proper remedy, he would have declined to order the enforcement of the New York judgment.

[30] There are two answers to these submissions. First, the motion judge was not asked to refuse to recognize the New York judgment on the basis that specific performance would not be an appropriate remedy had the action been brought in Ontario. While the motion judge was referred to Pro Swing Inc. and the discretion available where the order sought to be enforced is a non-money order, he was not asked to exercise that discretion against enforcement because specific performance was an inappropriate remedy. I find it hard to say that the motion judge erred in principle in the exercise of his discretion by failing to take into account a factor that he was never asked to take into account. Surely, where a judge's order depends on the exercise of his or her discretion, the judge is entitled to look to the parties to identify the factors relevant to the exercise of that discretion. A failure to consider a factor not put forward by either party would, in my view, seldom constitute an error in the exercise of that discretion.

[31] Second, I agree with counsel for the respondent's submission that had this matter been tried in Ontario and had an Ontario court made the same finding as the New York court, specific performance would have been an appropriate remedy having regard to the nature of the property, the nature of Gelber's obligation and the ready availability of the property.

VI

The Cost Order

[32] This court has repeatedly indicated that leave to appeal a cost order should be granted sparingly. I am satisfied, however, that the motion judge made a significant error in principle in awarding costs on a substantial indemnity basis. I would grant leave to appeal and, for the following reasons, would allow the appeal from the cost order. [page480]

[33] The motion judge ordered costs on a substantial indemnity basis and fixed those costs at $94,298.28. He ordered costs on a substantial indemnity basis because, in his view, Gelber had misused the judicial process through his "constant and continuing efforts to keep a proceeding open instead of accepting the determination that had been made and moving on". In making that finding, the motion judge relied on Gelber's conduct in the New York proceedings.

[34] In the Ontario proceeding, Gelber, apart from bringing a cross-motion in 2007 that was determined by a consent order, did nothing other than defend the motion for enforcement of the New York judgment brought by Van Damme. Nothing in the record supports the suggestion that Gelber improperly delayed or complicated the Ontario proceeding. In resisting Van Damme's motion, Gelber made several arguments. Some had little merit and none succeeded. None of the arguments could, however, appropriately attract any kind of cost sanction.

[35] The motion judge erred in principle in imposing costs on a substantial indemnity basis because of his view of Gelber's conduct in the New York litigation. The motion judge should have focused on the Ontario litigation. Had he done so, he would have no doubt concluded that Van Damme, as the successful party, was entitled to his costs, but only on the customary partial indemnity basis.

VII

Conclusion

[36] I would dismiss the appeal from the order recognizing and enforcing the New York judgment. I would grant leave to appeal from the cost order, allow the appeal, set aside the cost order and substitute an order granting Van Damme his costs on a partial indemnity basis. If the parties cannot agree on the amount of those costs, they should be assessed.

[37] Counsel for Van Damme should provide written submissions as to the costs of the appeal within 30 days of the release of these reasons. Those submissions should not exceed five pages. Counsel for Gelber may file written submissions in response to Van Damme's submissions within 15 days of the filing of Van Damme's submissions. Those submissions should also not exceed five pages.

Appeal allowed in part.

Notes

[^1]: The terms of the order were stayed subject to the outcome of certain appeals that were extant in New York at the time the motion judge made his order. Those appeals have been determined in Van Damme's favour.

[^2]: The actual terms of the New York order are not before the court; however, the parties agree that Gelber filed his answer and proceeded with relevant depositions and discoveries pursuant to an order of the New York court.

End of Document