



COURT OF APPEAL FOR ONTARIO

CITATION: R & G Draper Farms (Keswick) Ltd. v. 1758691
    Ontario Inc.

(ATV Farms), 2014 ONCA 278

DATE: 20140408

DOCKET: C57804

Cronk, Gillese and Strathy JJ.A.

BETWEEN

R & G Draper Farms (Keswick) Ltd.

Appellant

and

1758691 Ontario Inc. c.o.b. ATV Farms

Respondent

Morris Manning, Q.C., for the appellant

J.F. Lalonde, for the respondent

Heard: April 1, 2014

On appeal from the order of Justice W. Matheson of the
    Superior Court of Justice, dated September 13, 2013.

ENDORSEMENT

I.        Introduction

[1]

This litigation arose out of disputes concerning the purchase and sale
    of carrots between two Ontario-based farming concerns.  At the relevant times,
    both parties were members of the Fruit and Vegetable Dispute Resolution
    Corporation (the DRC).  They submitted their disputes to the DRC for
    resolution in accordance with the DRCs mediation and arbitration rules.  By
    order dated December 20, 2011, the arbitrator issued his award and ordered the
    appellant, R & G Draper Farms (Keswick) Ltd. (R & G), to pay
    $58,507.42 to the respondent, 1758691 Ontario Inc. c.o.b. as ATV Farms (ATV).

[2]

R & G applied to the Superior Court of Justice to set aside the
    arbitral award on jurisdictional and other grounds.  By order dated September
    13, 2013, the application judge dismissed the application.

[3]

R & G appeals.  At the conclusion of oral argument on behalf of R
    & G, we dismissed the appeal, with reasons to follow.  These are those
    reasons.

II.       Issues

[4]

R & G advanced four grounds of appeal.  It argued that the
    application judge erred: (1) by holding that the
Arbitration Act, 1991
,
    S.O. 1991, c. 17 (the Act), rather than the
International Commercial
    Arbitration Act
, R.S.O. 1990, c. I.9 (the ICCA), applied to the
    arbitration conducted under the DRC process, with the result that R & Gs
    challenge of the arbitral award was out of time; (2) by failing to extend the
    applicable 30-day time period provided for under the Act; (3) by holding that R
    & G had waived ATVs breach of the DRC rules arising from ATVs inclusion of
    confidential mediation documents in the materials it delivered to the
    arbitrator; and (4) by failing to hold that the arbitrator had no jurisdiction
    to deal with the disputed pricing for the carrots.

III.      Discussion

(1)

Application of the
Arbitration Act

[5]

The appellant accepts that the threshold issue on appeal is whether the
    application judge erred by concluding that the Act governed the conduct of the
    arbitration.  The issue is important because s. 47 of the Act provides for a
    period of 30 days within which a party to an arbitration may appeal or seek to
    set aside or vary the arbitral award.  In contrast, the ICAA provides for a three-month
    time period within which to challenge an arbitral award governed by that
    statute.  There is no dispute that R & Gs application for a declaration
    setting aside the arbitral award was not issued within the 30-day time period
    under the Act, although it was issued within the three-month time period set
    out under the ICAA.

[6]

The application judge held that the Act, rather than the ICAA, applied
    to the arbitration in this case.  The core of her reasoning is set out at
    paras. 43-45 and 48 of her reasons:

[43]    There is no question that the parties both have their
    places of business in Ontario, and have not expressly agreed that the
    subject-matter of the arbitration relates to more than one country.  Nor was
    the place of arbitration outside Ontario.

[44]    Here, the commercial relationship at issue was between
    two Ontario businesses.  Draper Farms sold carrots to ATV Farms to be made into
    carrot chunks, and bought carrot chunks from ATV Farms.  Draper Farms bought
    the carrot chunks for sale to a California purchaser; however, the California
    company was the customer of Draper Farms, not ATV Farms.  The California
    customer was not a party to the purchase and sale agreements that were the
    subject of the Award.  Nor did ATV Farms ship directly to the California
    company; Draper Farms took delivery of the carrot chunks at issue.

[45]    While the involvement of a California company forms
    part of the backdrop to the transactions in dispute in the arbitration, Ontario
    remains the place where the obligations of the commercial relationship between
    ATV Farms and Draper Farms were to be performed.  Ontario also remains the
    place with which the subject-matter of the dispute is most closely connected. 
    I therefore conclude that in this case the ICAA does not apply.

.

[48]    Draper Farms also points to the DRCs own description
    of its inception, arising from NAFTA, and the international nature of its
    mandate.  There is no doubt that there is an international aspect to the
    inception and mandate of the DRC.  However, the ICAA definition of
    international arbitration does not turn on the reasons for or mandate of the
    organization administering the arbitration process.  It focuses on the location
    of the place of business of the parties, the location of the actual
    arbitration, the place where the obligations are performed and the place the
    subject matter of the arbitration is connected with.  Here, all of those
    locations/places are Ontario.

[7]

We agree with the application judges conclusion that the Act applies in
    this case and with her reasoning in support of that conclusion.

[8]

By reason of s. 2(1) of the Act, the Act applies to an arbitration
    conducted under an arbitration agreement unless the application of the Act is
    excluded by law, or the ICAA applies to the arbitration.  In this case, the
    application of the Act is not excluded by any law and, in our view, the ICAA
    did not apply to the arbitration.  The ICAA is directed at international
    commercial arbitrations.  Under the ICAA, an arbitration is international if:

(a)   the
    parties to an arbitration agreement have, at the time of the conclusion of that
    agreement, their places of business in different countries; or

(b)   one of
    the following places is situated outside the country in which the parties have
    their places of business:

(i)      the
    place of arbitration if determined in, or pursuant to, the arbitration
    agreement,

(ii)     any
    place where a substantial part of the obligations of the commercial
    relationship is to be performed or the place with which the subject-matter of
    the

dispute is most closely
    connected; or

(iii)    the

parties

have

expressly agreed that

the

subject-matter

of

the
    arbitration agreement relates to more than one country.

[9]

None of these prerequisites is satisfied in this case.  To the contrary:

(a)   both
    parties have their place of business in Ontario (Keswick and Bradford);

(b)   the carrots were grown by R & G in Ontario;

(c)   the carrots were sold by R & G to ATV;

(d)   ATV
    processed the carrots, and resold them to R & G in Ontario;

(e)   the dispute was arbitrated in Ontario; and

(f)    there
    is no express agreement between the parties that the subject-matter of the
    arbitration relates to more than one country.

[10]

The arbitration,
    therefore, was not an international arbitration within the meaning of the
    ICAA.  As a result, the ICAA did not apply to the arbitration.

[11]

Relying on
Freshway Specialty Foods Inc. v. Fruit and Vegetable Dispute Resolution
    Corp.
(2006), 2 O.A.C. 385 (Div. Ct.), R & G argues before this court,
    as it did before the application judge, that Ontario courts have recognized
    that the ICAA applies to DRC arbitrations.  There are three difficulties with
    this argument.

[12]

First,
Freshway
is distinguishable from this case.  As the application judge observed,
Freshway
did not involve domestic disputants.  Rather, the disputing parties were
    located in British Columbia and Arizona.  Thus, at the time of the arbitration,
    the parties places of business were in different countries.  This was
    sufficient to render the arbitration international in nature under the terms
    of the ICAA, thus triggering the application of that statute.  In the case at
    bar, as we have said, the parties places of business are both in Ontario.

[13]

Second,
    there was evidence before the application judge that the DRC rules were drafted
    with the intent that either the Act or the ICAA could apply to an arbitration
    between DRC members, depending on the specific circumstances of the relevant
    dispute.  This ensures that where the dispute truly involves an international
    commercial matter, the ICAA will govern.  Conversely, there will be cases
    where, as here, the heart of the dispute is domestic in nature, involving
    Ontario-based disputants.  In the latter circumstances, the Act will govern.

[14]

Finally,
    s. 2(1) of the Act makes it clear that the application of that statute and the
    ICAA are mutually exclusive.

[15]

We therefore
    conclude that the application judge did not err in holding that the Act applied
    to the arbitration at issue in this case.  Consequently, the 30-day time limit
    established by the Act for an appeal of an arbitral award or an application to
    set aside or vary an arbitral award was operative, and R & Gs application
    was out of time.

(2)

Denial of Extension of Section 47 Time Limit

[16]

R & G
    next contends that if, as we conclude, the Act applied to the arbitration at
    issue here, the application judge erred by failing to exercise her inherent
    discretion to extend the 30-day time period applicable under s. 47 of the Act
    to a challenge of an arbitral award.

[17]

The
    application judge held that she lacked jurisdiction to extend the 30-day time
    limit under the Act.  We agree.

[18]

R & G
    was unable to point to any authority in support of its assertion that the
    application judge had the authority, in the exercise of her discretion, to
    extend the 30-day time period set out under s. 47 of the Act.

[19]

Nor, in
    our view, does the Act contemplate a judicial discretion to extend the s. 47
    time period.  Under s. 37 of the Act, an arbitral award binds the parties to
    the arbitration unless set aside or varied under s. 45 or 46 of the Act. 
    Further, under s. 50(3) of the Act, an arbitral award becomes final within 30
    days unless otherwise set aside or varied.  The Act makes no express provision
    for the extension of the 30-day time period under s. 47.  And s. 50(3) is
    inconsistent with the notion of a residual discretion to extend the 30-day time
    period that governs an application to set aside or vary an arbitral award.

[20]

Finally,
    the Act does contemplate relaxation of time periods stipulated under the Act,
    in certain circumstances: see
e.g.
, s. 39 of the Act.  However, no
    such provision exists under the Act in respect of the s. 47 time period.  This
    also tells against the notion of a residual judicial discretion to extend the
    30-day time period established under s. 47 of the Act.

[21]

In light
    of these considerations, we conclude that the application judge did not err in
    declining to extend the 30-day time period established by s. 47 of the Act.

(3)

Other Grounds of Appeal

[22]

In light
    of our conclusion that the Act and, hence, s. 47 of the Act, applied to the
    arbitration in this case, it is unnecessary to address R & Gs other
    grounds of appeal.  R & Gs challenge to the arbitral award, not having
    been brought within the 30 days provided for under s. 47 of the Act, was
    time-barred.

IV.     Disposition

[23]

For these
    reasons, the appeal is dismissed.  ATV is entitled to its costs of the appeal,
    fixed in the total amount of $7,825, inclusive of disbursements and all
    applicable taxes.

E.A. Cronk J.A.

E.E. Gillese J.A.

G.R. Strathy J.A.


