COURT OF APPEAL FOR ONTARIO

DATE: 20061213

DOCKET: C43985

RE:

GUNTHER SLATON, SALLY ENGEL and PROFITABLE PACKAGING CONCEPTS INC. (Plaintiffs (Respondents)) – and – ALPHABYTES COMPUTER CORPORATION and ANTON STEPHENS (Defendants (Appellants))

BEFORE:

WEILER, GOUDGE and CRONK JJ.A.

COUNSEL:

Stephen R. Dyment

for the appellants

Christopher Stanek

for the respondents

HEARD & RELEASED ORALLY:

December 6, 2006

On appeal from the judgment of Justice Donald R. Cameron of the Superior Court of Justice dated June 8, 2005.

E N D O R S E M E N T

[1] In our view, this appeal must be dismissed.

[2] The appellants agreed by consent court order in New York that their claims in the Ontario action, including their set-off claims, would be submitted to binding arbitration in New York and that the Ontario action would be dismissed. When the appellants’ claims were not included in the matters submitted to arbitration, contrary to the terms of the consent order, the appellants took no steps to ensure compliance with the consent order.

[3] Thus, the appellants’ set-off claims not only could have been arbitrated in the New York arbitration, the parties’ consent order contemplated that they would be so determined. Yet the appellants, for reasons of their own, elected to accept the exclusion of these issues from the arbitration.

[4] Moreover, it is undisputed that the appellants’ agent at the time of the New York arbitration informed both the respondents and the arbitrator that the appellants had decided not to pursue their claims against the respondents because they would be “uncollectible”.

[5] The appellants cannot seek to resile now from the legal consequences of these decisions.

[6] We agree with the motion judge that the appellants, as a matter of law, cannot continue with their set-off claims in Ontario. To do so would constitute an abuse of process.

[7] We also agree with the motion judge that it is not open to the appellants, “twelve years after it was first submitted to arbitration, to now hold up enforcement [of the New York judgment] pending defence by way of counterclaim which [the appellants] had agreed to submit to arbitration” simply because the Ontario action technically is still pending.

[8] It is also far too late, in our opinion, to now assert for the first time that the arbitrator lacked jurisdiction to entertain the appellants’ claims. There is no suggestion that such a jurisdictional argument was raised before the New York arbitrator, nor do the motion judge’s reasons indicate that it was pursued before him.

[9] Accordingly, for the reasons given, the appeal is dismissed.

[10] The respondents are entitled to their costs of this appeal, fixed in the total amount of $6,364.99, inclusive of disbursements and G.S.T.

“K. M. Weiler J.A.”

“S. T. Goudge J.A.”

“E.A. Cronk J.A.”