The Ontario Court of
Appeal recently recognized and enforced an judgment of a New York court for
specific performance (Van Damme v. Gelber, 2013 ONCA
388).
The defendant in the case, Nahum Gelber is a
very successful businessman and philanthropist. He is a Canadian citizen and
lives in Monaco. Late in 2006, Mr. Gelber was approached about the possibility
of selling a very valuable painting that he owned. The plaintiff, Alexandre Van
Damme claimed to have entered into an agreement through his agent with Mr.
Gelber's agent to purchase the painting. Mr. 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.
Mr. Van Damme
commenced an action for specific performance in New York requiring Mr. Gelber to
complete the transaction and deliver the painting for the price agreed upon in
the contract. Mr. Van Damme relied on the forum selection clause in the
contract that included, "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 and state and
federal courts sitting in the state of New York."
The painting is
hanging in the home of Mr. Gelber's son in Toronto. At the same time he
commenced the action in New York, Mr. Van Damme commenced an application in the
Ontario Superior Court of Justice for an order preserving the painting and
prohibiting its sale or movement outside of Ontario pending the outcome of the
New York litigation. In a cross-motion, Mr. Gelber took the position that
Ontario was forum non conveniens and New York was the more appropriate forum in
which to resolve the dispute between the parties.
The Ontario
application did not proceed to a hearing. The parties agreed to an order that
prohibited the movement of the painting pending the outcome of the New York
litigation. The consent order also provided 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".
Mr. Gelber
subsequently brought a motion in the New York action challenging the
jurisdiction of that court. He maintained that he was not a party to the
relevant contract and therefore was not bound by it or by its forum selection
clause.
The New York court
declined to decide jurisdiction as a preliminary matter but instead ordered
Mr. Gelber to file his statement of defence and to proceed with relevant depositions
and discoveries. Mr. Gelber complied with the order and raised many and various
standard defences. After all depositions and discoveries were completed the
parties both moved for summary judgment in the New York court. The judge
granted Mr. Van Damme's summary judgment motion and denied Mr. Gelber's summary
judgment motion.
Mr. Gelber's summary
judgment motion went well beyond the jurisdiction issue. He advanced several
arguments that went to the substantive merits of Mr. Van Damme's
claim.
Mr. Gelber
subsequently brought a variety of motions for a rehearing and appeals
challenging the New York judgment. All of the motions and appeals failed.
After the judgment was entered, Mr. Gelber instituted further proceedings
challenging the judgment. Those appeals were still outstanding when the Ontario motion
was heard. However, when the matter went before the Court of Appeal, the New York judgment was final.
The Court of Appeal
held that Mr. Gelber had attorned to the jurisdiction of the New York court by his
conduct in the course of that litigation. It cited another decision of the
court (Wolfe v. Pickar, 2011 ONCA 347) where Justice Goudge said,
"When 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, the party will be regarded as appearing voluntarily, thus giving
the court consent-based jurisdiction."
The court held that
Mr. Gelber's conduct in advancing his motion for summary judgment dismissing Mr.
Van Damme's claims went far beyond his jurisdictional challenges. Mr. Gelber
chose to advance substantive defences on the merits. In doing so he implicitly
accepted that the New York court has jurisdiction to decide those issues. He
raised and argued the merits of several contract-based defences to the claim
brought by Mr. Van Damme.
The Ontario Court of Appeal also held that the fact that
the New York judgment was a judgment for specific performance, as opposed to a
money judgment, was not a bar to enforcing it here. The court held that 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 Mr. Gelber's obligation and the ready availability
of the property.
Regards,
Blair
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