ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 97-CU-122206
DATE: 20140703
B E T W E E N:
CJSC “Sanokr-Moskva”
plaintiff/Respondent
- and -
Tradeoil Management Inc.
Defendant/Appellant
Harvey S. Dorsey, for the Plaintiff/Respondent
Scott Turton, for the Defendant/Appellant
HEARD: June 24, 2014
C. J. BROWN J.
REASONS FOR DECISION
[1] The defendant appeals the Order of Master Muir dated December 4, 2013, which granted the plaintiff leave to amend its statement of claim regarding enforcement of a Russian arbitration award pursuant to the International Commercial Arbitration Act.
[2] Default judgment had been obtained in the action, but was subsequently set aside by Low J in 2010. The plaintiff moved thereafter to amend its claim as regards relief related to enforcement of the arbitration award.
[3] The motion to amend the statement of claim was heard by the Master on December 4, 2013. He carefully analyzed the action, claim and draft amended claim and found that the amendments did not add a new claim after the limitation date, as argued by the defendant, but rather particularized the claim already pled, which in its original form had pled the material facts of the claim relating to the recognition, enforcement and payment of the arbitration award granted in Russia, although the claim for relief did not include a claim for recognition or enforcement of the arbitration award. He concluded that no new cause of action was pled, that the amounts originally claimed were consistent with the amounts claimed in the draft amended claim and that, in the original claim, reference had been made to the arbitration and the award granted, which took place in Russia as regards the claims for recognition, enforcement and payment of the arbitration award, at paragraphs 4, and 13-17 of the original claim.
[4] Master Muir found that the proposed amendments in the fresh as amended statement of claim "do not constitute a new cause of action", but rather "simply provide particulars of allegations already pled or additional facts upon which the original right of action is based. He relied on Ascent Inc. v Fox 40 International Inc., [2009] O.J. No. 2964 as regards what constitutes a new cause of action. Based on the case law, he found that a “new cause of action is not asserted if the amendments simply plead an alternative claim for relief arising out of the same facts previously pled and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon which the original right of action is based”. He referenced paragraphs 4 and 13-17 of the original statement of claim concerning the arbitration award, as set forth above at paragraph 3. He found that a generous reading of the original statement of claim made it clear that the plaintiff was seeking to enforce the arbitration award.
[5] The appellant submits that the Master was wrong in law in his finding. The appellant spent a significant amount of time on this issue in his submissions. It is the position of the appellant that the Endorsement of Low J, setting aside the default judgment granted by the Registrar is determinative of the issue on appeal in this matter. The appellant submits that, in that decision, Low J found that the statement of claim was not properly pleaded, and therefore no claim could be maintained.
[6] Citing paragraphs 23 and 24 of the decision, the appellant maintains that Low J explicitly held that there was no claim. Those paragraphs relied on by the appellant are as follows:
In my view there has not been a properly pleaded claim for enforcement of the foreign arbitration award and I am not satisfied that the registrar had jurisdiction to sign judgment to enforce an arbitration award by a foreign tribunal on the strength only of its existence having been alleged in the body of the pleading.
There is no claim in the prayer for relief for either recognition or enforcement of the foreign arbitration award.
[7] In that case, Low J was dealing with whether default judgment was properly granted by the registrar or whether it should be set aside pursuant to Rule 19.09(1). Low J observed that default judgment can be set aside where it was irregularly obtained or where the defendant seeks to have the default judgment set aside to permit it to defend the case on the merits.
[8] She held as follows:
"A judgment signed by the registrar is regular only if it is both substantially correct and procedurally without deficiency. Because the judgment is the ultimate adverse consequence to the defendant and because a judgment signed by a registrar confers the benefit of judgment to the plaintiff without the plaintiff having to show any proof by way of evidence that he is entitled to the relief, the judgment must be substantially and procedurally unimpeachable to be regular.… I am satisfied that the signing of the judgment by the registrar in the case was irregular."
[9] Low J noted that the claim in the notice of action was for "fuel oil sold and delivered to the defendant and for expenses owing arising from the delivery of fuel oil to the defendant, and further pursuant to an arbitration conducted by the International Commercial Arbitrary Court of the Trade and Industry Chamber of the Russian Federation, in accordance with a contract dated May 31st, 1994". Further the prayer for relief claimed judgment in the sum of $1,062,432.38 US. She found that there was no claim in the prayer for relief for either recognition or enforcement of the foreign arbitration award and that while some generosity is given to drafters of pleadings in the context of motions to strike for failure to disclose a cause of action, such generosity should not be given where the plaintiff seeks to obtain judgment by the administrative act of the registrar's pen, rather than following a hearing. She further found, based on the UNCITRAL Model Law on International Commercial Arbitration adapted by the United Nations Commission on International Trade Law, Articles 35 and 36, that certain procedural aspects of the Code were required for enforcement of the foreign arbitration award, including a requirement that the party relying on an award or applying for the enforcement shall supply the duly authenticated original award or a duly certified copy and the original arbitration agreement to the opposing party. She found that this had not been done. Accordingly, she found additionally that the registrar, in the circumstances, did not have jurisdiction to sign default judgment, and allowed the motion to set aside default judgment.
[10] I do not agree with the appellant's submission that based on Low J’s finding that the procedural aspects were not followed, no claim existed. Nor do I accept the appellant’s argument that based on her finding that because the claim was not properly pleaded for enforcement of the foreign arbitration award by the administrative act of the registrar' s signing default judgment without the benefit of a hearing, it flows that the action was extinguished and the statement of claim cannot be amended.
[11] I note that while Low J's decision dealt with setting aside the administrative granting of default judgment, the motion before the Master dealt with amending the statement of claim. I find that Low J did determine the statement of claim to be deficient, such that the registrar should not have signed default judgment, given the ultimate adverse consequence to the defaulting party and benefit to the moving party, without the need of a hearing. The tests and the concerns behind setting aside default judgment signed by a registrar in amending the claim are different from the test for amending a claim.
[12] I agree with the position of the respondent that the decision of Low J was limited to the fact that there was no claim for enforcement of the arbitration award in the prayer for relief. I do not find the comments by Low J in her decision to set aside the registrar' s granting of default judgment to be inconsistent with the Master's finding.
[13] It is the position of the respondent as regards the endorsement of Low J. setting aside the default judgment granted by the Registrar, that she observed that the Russian arbitration award was referenced in the body of the original statement of claim. The respondent maintains that her decision was limited to the fact that there was no claim for enforcement of the arbitration award in the prayer for relief. I agree. I do not find the decision of Low J to set aside the Registrar's granting of default judgment to be inconsistent with the Master's finding. I do not find that her decision had the effect of extinguishing the claim.
[14] A Master’s decision should not be interfered with unless the Master made an error of law, exercised his or her discretion on the wrong principles, or misapprehended evidence such that there was a palpable and overriding error: Zeitoun v. Economical Insurance Group (2008), 2008 20996 (ON SCDC), 91 O.R. (3d) 131 (Div. Ct.) at para. 40; aff’d 2009 ONCA 415, 96 O.R. (3d) 639.
[15] Where a master has erred in law, the standard of review is correctness where there is an error of fact or in the exercise of discretion, it must be established that the discretion was based on a wrong principle or that there was a palpable or overriding error in the assessment: Zeitoun v. Economical Insurance Group, supra, at para. 41; also Hough v. Amer Sports Canada Inc., 2012 ONSC 4281, [2012] O.J. No. 3543 at paras. 5-6.
[16] It is the position of the appellant that the standard of review in this case is one of correctness, as the question is a matter of law alone, namely whether the amendment to the statement of claim raised a new cause of action, in which case, the cause of action was barred by the limitation period. The respondent maintains that the question is one of mixed fact and law, such that the Master's decision is accorded deference and can only be set aside if there is a palpable and overriding error.
[17] In this case, I have carefully analyzed the Master's decision, as well as that of Low J and have reviewed the relevant pleadings. I have further reviewed the relevant case law. I do not find, based on the Master's decision and the case law applicable to this appeal, that the Master was wrong in law, but find that his decision was correct. If the respondent' s view that the issue in this matter is one of mixed fact and law, I am also of the view that the Master did not exercise his discretion on the wrong principles or misapprehend the evidence such that there is a palpable and overriding error which would permit me to set aside his decision. I find no grounds on which to set aside his decision.
[18] Accordingly, I uphold the decision of Master Muir in this matter.
Carole J. Brown J.
Date: July 3, 2014
COURT FILE NO.: 97-CU-122206
DATE: 20140703
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CJSC “Sanokr-Moskva”
plaintiff/Respondent
- and -
Tradeoil Management Inc.
Defendant/Appellant
REASONS FOR DECISION
C. J. Brown J.
Released: July 3, 2014