Date: 20021113
Docket: A-595-02
Neutral citation: 2002 FCA 444
Present: THE HON. MR. JUSTICE SEXTON
BETWEEN:
SASKATCHEWAN WHEAT POOL
Appellant
and
ARMONIKOS CORPORATION LTD.
Respondent
Dealt with in writing without appearance of parties.
Order delivered at Ottawa, Ontario, on November 13, 2002.
REASONS FOR ORDER BY: SEXTON J.A.
[1] Armonikos Corporation Ltd., ("Armonikos") the respondent in the appeal, commenced an action in the Trial Division for a declaration that the ship ARMONIKOS was chartered to the Saskatchewan Wheat Pool ("SWP") by the respondent for a voyage from Thunder Bay to Spain and secondly for a declaration that the charterparty contained a London arbitration clause. After a trial before the Honourable Madame Justice Dawson she issued Reasons for Judgment on July 18, 2002 in which she concluded that Armonikos was entitled to the declarations claimed and she further concluded that these proceedings should be stayed in favour of London arbitration on the issues of damages, interest and costs. She further directed counsel for Armonikos to prepare a draft judgment to implement her conclusions.
[2] Although it is not entirely clear from the materials filed on this motion, it appears that counsel for Armonikos failed to provide a draft judgment as requested and accordingly Dawson J. issued a direction on September 26, 2002 directing counsel to file such judgment within ten days.
[3] Judgment was eventually issued by Dawson J. on October 21, 2002.
[4] On August 29, 2002, nearly two months before judgment was issued on October 21, 2002, Armonikos' London counsel instituted arbitration proceedings in England by appointing a Mr. David Aikman as arbitrator for Armonikos. Mr. Aikman further gave notice that he would act as the sole arbitrator to determine the quantum of damages unless SWP appointed an arbitrator within seven days.
[5] The London counsel for Armonikos insisted on proceeding despite repeated statements from counsel for SWP that it was premature under the Federal Court Rules to institute arbitration proceedings because no judgment had been filed with the Court Registry.
[6] London counsel rejected these submissions and attempted to proceed with the arbitration procedures in any event.
[7] On September 25, 2002, SWP attempted to file Notice of Appeal from the decision of Dawson J. but the Court Registry refused to accept the Notice of Appeal for filing because the judgment had not been filed.
[8] On October 2, 2002, Mr. Justice Isaac of this Court confirmed the decision of the Registry Officer who had refused to accept the Notice of Appeal. Isaac J.A. stated "the Notice of Appeal should not be accepted for filing until a judgment has been filed. Section 27 of the Federal Court Act is clear that an appeal is from a judgment. Paragraph 74 of the reasons of Dawson J. suggests that counsel for the parties are to attend to the preparation of the draft judgment".
[9] Subsequent to the filing of the judgment SWP has filed a Notice of Appeal in this Court from the judgment of Dawson J.
[10] SWP has brought a motion to stay the judgment of Dawson J., to declare the arbitration proceedings instituted by English counsel for Armonikos as premature and to stay any and all arbitration proceedings pursuant to the judgment of Dawson J. pending the outcome of the appeal of the judgment.
Analysis
[11] I agree with the conclusion reached by Isaac J.A. that the Notice of Appeal which SWP had attempted to file was premature because the judgment had not been issued and filed. For the same reason, it is my conclusion, that the arbitration proceedings which English counsel commenced were also premature. The decision of Dawson J. only became effective once the judgment was issued and filed. It would appear that Armonikos seeks to take advantage of its own failure to proceed to obtain the finalization of the judgment in an expeditious manner.
Stay
[12] The test for granting a stay pending appeal has been established by the Supreme Court of Canada in RJR-Macdonald Inc. v. Canada (Attorney-General), [1994] 1 S.C.R. 311. The Court indicated there was a three-fold test: (a) there must be a serious issue to be tried; (b) the applicant must show that irreparable harm will result if a stay is not granted; and (c) that the balance of convenience favours granting a stay.
[13] In the RJR-Macdonald case the Court provided guidance as to how to assess whether or not there was a serious issue to be tried. The Court indicated that the threshold was a low one and that if the judge hearing the case concluded that the application was neither vexatious nor frivolous then the judge should proceed to consider the second and third tests even if it was unlikely that the applicant for the stay was unlikely to succeed.
[14] SWP alleges that no contract was entered into with Armonikos and that the evidence before the Trial Judge could not support such a finding.
[15] It is not clear to me that this appeal is frivolous and vexatious and it would appear that SWP has succeeded in satisfying the requirements of the first test.
[16] SWP argues that it would suffer irreparable harm in three ways. First, that Armonikos has instituted arbitration proceedings which have reached a stage such that SWP has been deprived of its ability to select its arbitrator as it was entitled to do and that SWP has thereby been prejudiced by Armonikos premature institution of the arbitration proceedings. Secondly, SWP says that London counsel for Armonikos made unfounded allegations of improper conduct against SWP in a letter to their arbitrator. Thirdly, SWP says that if Armonikos obtains an award and successfully executes on the award, that SWP may not be able to recover any awards paid to Armonikos which is a Maltese corporation with no assets in Canada.
[17] I am satisfied that SWP may well suffer irreparable harm by reason of the first and third arguments presented in this connection.
[18] The third test requires a weighing of the balance of convenience.
[19] SWP submits that the balance of convenience favours the granting of a stay because it will enable the parties to avoid the cost and effort that will be expended in arbitration proceedings in the event the appeal is successful. SWP also indicates it is willing to post security for Armonikos' damages and has indicated that it is prepared to proceed expeditiously with the appeal.
[20] It appears to me that the balance of convenience favours the granting of a stay for the reasons advanced by SWP.
[21] Armonikos claims security as follows:
i. Estimated taxable costs/Trial - $17,160 in fees and $8409 in disbursements.
ii. Estimated taxable costs/Appeal - $4,400 in fees and $1,500 in disbursements.
iii. Award on account of damages - $229,524.95 (Plaintiff's claim in the amount of US $147,443.28 x $$1.5567.
iv. Interest in the total amount of $56,233.61 calculated on the award at the rate of 7% calculated over three and a half years as of April 20, 2000.
v. The sum of $38,813.12 representing 80% of Jackson Parton's fees ( £ 14,950 x 80% x $2.4319) plus all of the arbitrator's fees ( £ 4,000 x $2.4319).
[22] It is my view that security should be fixed in an amount equal to $317,227.56. This figure is arrived at by allowing items i through iv claimed by Armonikos. It is my view that no security should be filed relating to the fees of the London counsel or arbitrators because the institution of this arbitration was premature and it is not possible at this time to know whether an arbitration will proceed at all.
Conclusion
[23] An order will issue, (1) staying the judgment of the Honourable Madame Justice Dawson dated October 21, 2002 pending the outcome of the appeal of that judgment; (2) declaring that the arbitration proceedings instituted by Armonikos were premature; (3) ordering that SWP provide security in the amount of $317,227.56. Security will take the form either of a cash deposit, a confirmed, irrevocable and unconditional letter of credit or some other form of acceptable bank guarantee. (4) SWP is to prosecute the appeal as expeditiously as possible. (5) The costs of this application are reserved to the panel hearing the appeal.
"J. EDGAR SEXTON"
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-595-02
STYLE OF CAUSE: SASKATCHEWAN WHEAT POOL v. ARMONIKOS CORPORATION LTD.
MOTION DEALT WITH IN WRITING WITHOUT APPEARANCE OF PARTIES
REASONS FOR ORDER : SEXTON J.A.
DATED: November 13, 2002
WRITTEN REPRESENTATIONS BY:
Mr. William M. Burris FOR THE APPELLANT
Mr. George J. Pollack FOR THE RESPONDENT
SOLICITORS OF RECORD:
Bull, Housser & Tupper FOR THE APPELLANT
Vancouver, B.C.
Davis, Ward Phillips & Vineberg FOR THE RESPONDENT
Montreal, Que.
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