Ontario Appeal Court Enforces German Foreign Judgment

Today’s decision from the Court of Appeal for Ontario in Strassle Informationssysteme Holdings GmbH v. Sieber, 2010 ONCA 604 (“Strassle“) confirms the narrow scope of impeachment defences to enforcement of a foreign judgment and the difficulty in filing fresh evidence on appeal.

In Strassle, the plaintiff moved for summary judgment before O’Connell, J. of the Ontario Superior Court of Justice for an Order permitting the plaintiff to enforce in Ontario, a judgment and cost orders obtained in the Federal Republic of Germany against the Defendant Helmut J. Sieber.

The Agreement stipulated jurisdiction and place of performance as Stuttgart, Germany, with German law as the applicable law.

The Defendant refused to complete the transaction, alleging misrepresentations, following due diligence.

The Defendant had the benefit of local German counsel and present in Germany when the cause of action arose, chose not to file a defence or have counsel appear, having been advised (through counsel) of the hearing date. As a result, default judgment was issued and entered.

The Stuttgart Court held that the Defendant had breached the Agreement and assessed damages against him. The Defendant appealed, offering, according to the Judgment of the Stuttgart Regional Court, no grounds for the appeal. The Defendant’s local counsel stated that he did not have sufficient information for making a statement on his client’s behalf. The Reasons of the Regional Appeal Court made it clear in the judgment that this appeal was dismissed on its merits, after the Defendant’s counsel was permitted to file evidence and make oral submissions as to the misrepresentations, i.e. deceit, false balance sheet, and transfer of substantial sums of monies from other companies to Telemap.

The foregoing submissions were rejected by the Appeal Court after having considered the defences as they related to contractual breaches. Subsequently, cost orders were made against the Defendant, which with the judgment, were deemed final and conclusive orders of the Federal Republic of Germany.

O’Connell, J. noted that “there is no doubt that the Defendant attorned to the German court. He simply did not appear having been advised of the court date. He had retained counsel and was present in Germany.” (at para. 8). He further observed that the German court had heard and determined judgment based on the submissions and the evidence filed. (para. 9).

The motion judge rejected the defendant’s impeachment defence of fraud, finding that the German judgment was enforceable in Ontario, noting:

“[10]In my view, the fraud the Defendant alleges is one that may relate to the merits of his claim, and is not an extrinsic fraud which would have deprived him of an adequate opportunity to present his case. Likewise, in my view, there are no new facts which could not have been discovered by due diligence prior to the initial hearing which gave rise to the default judgment. Here he was given the opportunity in the appeal. Likewise, his allegations that Bankruptcy process was used to perpetrate a fraud, has no merit. as that process was approved by the German court and dismissed, and as the bankruptcy proceedings are irrelevant to the claim against Sieber.”

In a motion before Spence J., the Defendant sought to set aside O’Connell J.’s 2003 order on the basis that a mutual release signed in 2001 in a separate action in Ontario precluded O’Connell J.’s order enforcing the German judgments. In a brief decision, Spence J. concluded that “the release does not apply to release Strassler’s [the respondent’s] claims.”

The Defendant’s further appeal to the Ontario Court of Appeal was similarly rejected.

In a per curiam endorsement, MacPherson, Gillese and MacFarland JJ.A.note that:

“[5] We agree with the motion judge’s decision. The language of the release in question does not support the argument that it was intended to extinguish the respondent’s enforcement claim as it extends only to the parties to a separate piece of litigation commenced in 1998 to which the respondent was never a party.

[6] The appellant attempts to overcome this result by tendering as fresh evidence a settlement agreement concluded alongside the release on which he relies.

In declining to admit the appellant’s fresh evidence, the Court of Appeal writes,

“[7] We would not admit this agreement as fresh evidence. The simple fact is that the respondent asked the appellant to include this agreement in its motion material that was before Spence J. and the appellant refused on the basis that, as expressed in an e-mail from the appellant’s previous counsel, “my client has determined that the settlement agreement is not relevant, nor germane to the release”. It would be unfair to permit the appellant, with new counsel, to advance precisely the opposite position on this appeal.

[8] Moreover, we observe that the tendered material does not meet at least two of the four Palmer criteria – the material was available to the appellant at the time of the hearing before the motion judge and the wording in the Settlement Agreement would not reasonably be expected to have affected the result on the motion below.

[9] We do not accept that a proper interpretation of the words “amongst”, “affiliates” and “releasing all obligations” would have affected the motion judge’s interpretation of the release because the respondent was not a party to the relevant actions and, in the circumstances, would not be encompassed by the word “affiliates”.

[10] In light of this conclusion, the other issues raised by the appellant need not be addressed.

[11] The appeal is dismissed.”

While there is no explicit discussion of the Supreme Court of Canada’s decision in Beals v. Saldanha, the Strassle decision is helpful authority in respect of alternative attempts to impeach a foreign judgment; namely, on the grounds of release, waiver, accord and satisfaction, none of which apply ex post facto and are properly within the jurisdiction of the court granting the original judgment.

This entry was posted on September 20, 2010 at 9:03 pm and is filed under conflict of laws, foreign judgments, recognition and enforcement. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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