Wang v. Luo, 2022 ONSC 5544

CITATION: Wang v. Luo, 2022 ONSC 5544

DIVISIONAL COURT FILE NO.: 271/19

DATE: 2022 10 04

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

SWINTON, LEDERER, LeMAY JJ.

BETWEEN:

FENG WANG

Applicant (Respondent in appeal)

– and –

BEN LUO

Respondent (Appellant)

E. Choi, for the Applicant (Respondent in appeal)

C. Cuttress, for the Respondent (Appellant)

HEARD at Toronto (by videoconference): September 27, 2022

LeMay J.

1This is an appeal from the decision of Leiper J. dated April 16th, 2019 recognizing and enforcing an arbitral award made by the China International Economic and Trade Arbitration Commission (“CIETAC”) on September 5th, 2017. At the conclusion of the Appellant’s argument the Court dismissed the appeal with reasons to follow. These are those reasons.

Background

2The Appellant, Ben Luo, was a commission salesperson with Big Lobster Sea Food Inc. In January of 2016, the Respondent, Feng Wang contacted the Appellant in order to purchase some lobster. They ultimately agreed on the terms of a contract to ship approximately 1,000 pounds of live lobster to China in time for Chinese New Year that year. The contract between the parties included a clause that stated:

All disputes arising from the execution of this agreement shall be settled through friendly consultations. In case no settlement can be reached, the case in dispute shall then be submitted to the Foreign Trad [sic] Arbitration Commission of the China Council for the Promotion of International Trade for Arbitration in accordance with its Provisional Rules of Procedure. The decision made by this commission shall be final and binding upon both parties. Arbitration fees shall be borne by the losing party unless otherwise awarded.

3The lobster was not shipped, and the parties ended up having a dispute both about why the lobster was not shipped and who was responsible for the non-shipment. The Respondent began an action in the Small Claims Court in Toronto. That action proceeded to a settlement conference on October 26th, 2016, where it was not resolved. After the settlement conference, the Deputy Judge endorsed the record that the matter “may” proceed to trial. However, the Respondent decided to use the arbitration clause under the contract and no further steps were taken by either side to bring the matter to trial in the Small Claims Court.

4Instead, the Respondent commenced an arbitration proceeding before CIETAC. The parties agree that CIETAC is the successor to the Foreign Trade Arbitration Commission which is the entity referred to in the provision of the contract set out above. CIETAC conducted a lengthy process. The Appellant did not participate and was not represented. On September 5th, 2017, CIETAC issued an award assessing damages payable by the Appellant in the Respondent’s favour.

5Counsel for the Respondent sought to enforce the CIETAC award in Small Claims Court. On March 22nd, 2018, the Small Claims Court determined, correctly, that it did not have jurisdiction to enforce the CIETAC award. The jurisdiction to enforce foreign arbitration awards in Ontario is vested in the Superior Court. See the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sched. 5, s. 3. Subsequently, the Small Claims Court action was dismissed for delay on May 28th, 2018.

6Counsel for the Respondent brought an application in the Superior Court to enforce the CIETAC award. That application proceeded before Leiper J. on April 16th, 2019. After reviewing the materials and hearing the arguments of the parties, the Application judge issued an order directing that the award be enforced. That decision has been appealed and the key issue before the Court is whether the Application judge erred in enforcing the CIETAC award in Ontario. Her decision is challenged by the Appellant on the grounds that the Respondent (i.e. the Plaintiff in the Small Claims Court) attorned to the jurisdiction of the Small Claims Court, thus vitiating the arbitration clause and that the Appellant did not receive proper notice of the CIETAC proceedings.

7In his oral submissions, Counsel for the Appellant argued that the parties were not ad idem on the arbitration clause and that, in the alternative, the arbitration clause was unconscionable.

8Counsel for the Respondent submitted that these arguments had not been advanced before the Application judge and, therefore, should be dismissed on the basis that they were being raised for the first time before this Court.

Attornment

9The Appellant argues that, by commencing the Small Claims Court action, the Respondent has foregone reliance on the arbitration clause and, as put by counsel, “attorned” to the jurisdiction of the Small Claims Court such that it took on the exclusive jurisdiction to hear, consider and decide the dispute. In support of this proposition, the Appellant’s counsel has referred us to a number of cases. We have reviewed those cases, and none of them support the proposition that, on the facts of this case, the Respondent (being the Plaintiff) attorned to the jurisdiction of the Small Claims Court or that the jurisdiction was exclusive. Attornment normally applies to situations where the Defendant acts in acceptance of the Court or Tribunal’s jurisdiction when the Defendant would not otherwise be subject to that jurisdiction.

10The cases that the Appellant relies on are all distinguishable from the facts of the case before us. Two examples will illustrate the point. First, the decision in Granville Shipping Co. v. Pegasus Lines Ltd. S.A., 1996 4027 (FC), [1996] F.C.J. No. 481, [1996] 2 F.C. 853 is founded on the terms of the arbitration agreement struck by the parties. Pursuant to that agreement, the time for a referral to arbitration had expired by the time the summary judgment motion, the proceeding before the Court, was brought. In Granville, there was also the complicating feature of a counterclaim which is not present in this case.

11Second, the decision in Farough v. Financial Control Industries Inc., 2007 BCPC 351, is distinguishable due to the language in British Columbia’s International Commercial Arbitration Act, S.B.C. 1986, c. 14. Section 8 of that Act allows for a stay of a Court action to be granted as long as the motion for the stay is brought “before delivery of any pleadings or taking any other step in the proceedings.” The Ontario legislation has no such provision.

12Other cases support a different interpretation. In Legacy Leather International Inc. v. Ward, [2006] O.J. No. 3014, 2006 63694 (Ont. S.C.J.), Lax J. held that the fact that a party had filed a response to a pleading and had agreed to a timetable did not amount to a waiver of the arbitration clause. In Serratore v. 1634394 Ontario Ltd., 2009 67421 (Ont. S.C.J.), MacKenzie J. applied the reasoning in Legacy and stated (at para. 16):

In the instant case, there is no evidence to suggest that the plaintiff or the defendant “knew” of the arbitration clause, in the sense that they directed their minds to it, or had unequivocal or conscious intentions to abandon or waive the rights to arbitrate set out in the Agreement.

13The same reasoning can be applied to this case. There was no evidence before the Application judge to suggest that the Respondent (Plaintiff in the Small Claims Court action) had an unequivocal or conscious intention to abandon or waive the right to arbitration.

14Counsel for the Appellant argued that there was an obligation on the part of the Respondent to take the Small Claims Court matter to trial. This argument is inconsistent with the endorsement that was made at the end of the settlement conference. The Deputy Judge stated that the matter “may” be taken to trial. There was no obligation to go to trial. Similarly, there was no obligation on the part of the Respondent to obtain a stay of the Small Claims Court action.

15For these reasons we reject the Appellant’s position on this issue.

Notice of the CIETAC Proceeding

16Counsel for the Appellant argues that his client was never given notice of the CIETAC proceeding. The Appellant provided no evidence in his Affidavit in the Application materials or elsewhere that would support this submission. To the contrary, the CIETAC award that was part of the Record before the Application judge demonstrated that, as part of its procedure, CIETAC attempted to serve the Applicant on several occasions, as follows:

• February 22nd, 2017- both the Appellant and the Respondent were served with the notice of arbitration and the arbitration rules by express mail service. According to the arbitration decision, the Appellant signed for these documents on February 27th, 2017.
• March 20th, 2017- a notice of hearing scheduled for April 24th, 2017 was sent to the Appellant and the Respondent. The Respondent did not sign for this document.
• May 2nd, 2017- a notice of postponement of the hearing to June 5th, 2017 was sent to the Respondent by notary service. Notary service is not defined in either the CIETAC award or in the materials that were before the Application judge.
• July 11th, 2017- after the hearing was held, a notice was sent by notarial service to the Appellant providing documentation that was submitted at the hearing and inviting the Appellant to seek an oral hearing and or comment on the document. No response was provided to this request by the Respondent.

17This chronology was all set out in the CIETAC award, which was properly proven before the Application judge. In addition, the Appellant’s address is set out in the contract for the lobster, the original Small Claims Court proceeding and in these proceedings. That address has not changed.

18As a result, the Application Judge’s conclusion that there was no basis to refuse to recognize the award under Article 5 of the Convention is amply supported by the record that was before her.

The Other Arguments

19In addition to attornment and lack of notice, counsel for the Appellant argued that the parties were not ad idem on the arbitration provision and that agreeing to an enforcement mechanism before CIETAC was unconscionable and should be set aside on that basis. These arguments can both be dealt with briefly.

20The parties have a signed agreement. There is no basis on the record before us to conclude otherwise. We also note that the issue that the parties were not ad idem on various provisions of the contract has never been raised before this appeal. There is no merit to this claim.

21The unconscionability claim can also be dismissed for the same reasons. Counsel for the Appellant argued that the arbitration clause was unconscionable, inter alia, because of the costs for the Appellant to fly to Beijing to participate in an arbitration hearing. The problem with this argument is that there was no evidence before the Application judge to show the costs of a flight to Beijing, how often the Appellant went to Beijing on business or whether CIETAC could conduct hearings remotely. In other words, there was no evidence to support the unconscionability claim.

Disposition and Costs

22The Application judge made no errors of law nor any palpable and overriding errors of fact. For the foregoing reasons, the appeal was dismissed.

23The Respondent, as the successful party, seeks costs on a partial indemnity scale of $9,831.97. For a matter that falls within the jurisdiction of the Small Claims Court this is too high. The Appellant proposes that there should be no award of costs. His client sought to correct what he continues to submit were errors in the proceeding that needed to be addressed. There were no such errors. The Respondent is entitled to costs on a scale that takes into account his success on the appeal and the fact that the proceeding fits within the financial jurisdiction of the Small Claims Court.

24For the foregoing reasons, costs to the Respondent are fixed in the sum of $4,000.00 inclusive of HST and disbursements.

LeMay J.

I agree _______________________________

Swinton J.

I agree _______________________________

Lederer J.