Lethbridge College v. Canadian International Academy of Business and Technology Corporation (CIABT), 2013 ABQB 72

Court of Queen ’ s Bench of Alberta Citation: Lethbridge College v.

Canadian International Academy of Business and Technology Corporation (CIABT), 2013 ABQB 72 Date: 20130205 Docket: 1206 00575 Registry: Lethbridge Between: Lethbridge College Applicant - and - Canadian International Academy of Business and Technology Corporation carrying on business as CIABT (collectively “ CIABT ” ), Waseem Abbas, Jatinder Singh Arora, Pankaj Kumar Behal, Srikanth Reddy Bejjanski, Rahul Bewal, Prashant Bhandari, Srikanth Bokka, Rashpal Kaur Brar, Fanjie Cai, Sagar Arvind Chaudhary, Huan Chen, Yixuan Cheng, Hardeep Singh Chhina, Vinay Kumar Chinthala, Praveen Cingu, Harsh Rajeshbhai Dalal, Kenneth Dean, Samikkumar Pravinchandr Desai, Sawan Ashokbhai Detroja, Aditya Devulapalli, Mithilesh Rajendra Kum Gajjar, Nimitt Zaverbhai Gamit, Narinder Kaur Grewal, Harmanjeet Harmanjeet, Ravi Hooda, Yujun Ji, Amitkumar Veljibhai Jivani, Kulwinder Kaur Johal, Palak Pravinchandr Joshi, Manpreet Singh Kalsi, Navpreet Kaur Kalsi, Arjun Raj Kambam, Rajender Kanchu, Harpreet Kaur, Karanjit Kaur, Jaya Trinath Kumar Kothala, Balram Krishan, Wai Choi Lam, Yuhang Li, Qianhui Liang, Ting Ting Liu, Yuanchen Liu, Guobin Lu, Bhargav Mistri, Azharuddin Mohammed, Abdul Sayeed Mohammed, Zahed Sajid Mohammed, Zubairullah Mohammed, Abdul Manzoor Mohammed, Venkata Krishna Teja Nallagorla, Yuan Zhi Nan, Kalpesh Kumar Kanubhai Narola, Rahul Narwal, Adarsh Deepak Neelam, Durga Prasad Nemala, Shiva Rama Krishna Nerella, Mehulkumar Shantilal Padsala, Xin Pan, Nirav Pandit, Hiren Kishorbhai Parekh, Mohammed Soheb Parmar, Bhavinkumar Dasharathbha Patel, Deepak Arvindbhai Patel, Harshit Mukesh Patel, Jaymin Jayantibhai Patel, Jinal Narendrakuma Patel, Kinjalben Ghanshyambha Patel, Ronakkumar Bharatbhai Patel, Vishalkumar Pravinbhai Patel, Yash Jayeshkumar Patel, Ankitkumar Pankajbhai Patel, Jashumatiben Govindbhai Patel, Saumil Ashokkumar Patel, Manan Mahendrakuma Patel, Miravkumar Bipinbhai Patel, Deniskumar Jagjeevan Prajapati, Nirav Surendrabhai Prajapati, Hemendrasinh Pukhrajsinh Purohit, Musfiqur Rahman, Ramandeep Kaur Rai, Gulkaran Singh Randhawa, Mohammed Abdul Raqeeb, Aneesh Reddy Ravula, Dilip Repaka, Baljeet Singh Saini, Nitin Saini, Bilal Salman, Srinivasarao Samineni, Paramjit Singh Sandhu, Kartheek Sanivada, Manish Rameshchandr Savant, Shamsuzzaman Shamsuzzaman, Honey Sharma, Amarjet Singh, Gurdev Singh, Harjinder Singh, Ravinder Singh, Tejinder Singh, Gaganeep Singh, Gurpreet Singh, Lakhvinder Singh, Manjit Singh, Paramjit Singh, Ramandeep Singh, Tajinder Singh, Gurbhej Singh, Varinder Pal Singh, Jashanpreet Singh Sohi, Mohmedbashir Soneji, Sipei, Song, Sourabh Sourabh, Gagandeep Srahnu, Amit Suthar, Shahpal Tahir, Hoang Long Tran, Mohmedshafi Valora, Jatin Vig, Jabirhusen Imtiyazali, Vohra, Yue Wang, Jagdeep Singh Warraich, Yuan Hui Ye, Zongxia Yin, Kazi Ata Yousuf, Xiao Yan Zheng, Deng Zhilong (collectively “ LC Students ” )

Respondents And Between: Canadian International Academy of Business and Technology Corporation Carrying on Business As CIABT (collectively “ CIABT ” ) Cross Applicant - and - Lethbridge College Cross Respondent _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice J.H.

Langston _______________________________________________________ Background [ 1 ] The Lethbridge College (LC) and the Toronto based Canadian International Academy of Business and Technology (CIABT) entered a Contract dated August 8, 2009, for the delivery of a two-year diploma program in Business Administration, by LC at CIABT (the Contract). [ 2 ] Differences arose between the contracting parties which resulted in two steps being taken. The first occurred on August 10, 2012, when CIABT purported to invoke the dispute resolution provisions contained within

Article 10 of the Contract. The second occurred on August 16, 2012, when LC filed a Statement of Claim naming CIABT and 126 students as Defendants in an action alleging that CIABT is indebted to LC for an amount in excess of $224,000.00, representing unpaid fees for students who had attended the LC program.

The Statement of Claim further alleges that CIABT distributed LC program materials without consent, failed to provide adequate educational facilities, failed to provide adequate teaching services, misrepresented to individuals that they were students of LC without complying with the LC prerequisites for acceptance for registration as a student of the LC, and used the LC name and logo on various websites and documents without the authority or consent of LC. [ 3 ] LC seeks a declaration determining what rights the students taking the LC diploma program at CIABT and other individuals misled by CIABT have against CIABT and potentially LC.

LC seeks to trace the tuition fees taken by CIABT. It further seeks an Order that CIABT account for and disgorge all profits and other benefits received by CIABT.

[ 4 ] A further remedy sought by LC is an Order waiving the applicability of the Arbitration Agreement, or in the alternative, a Declaration that the Court of Queen’s Bench of Alberta act as both arbitrator and as a Justice of the Court of Queen’s Bench, as required, to comply with

Section 8 of the Judicature Act , RSA 2000, c J-2.

LC further seeks a Declaration or Order settling all matters between the parties. [ 5 ] In its pleadings LC indicates it is not claiming any damages or costs against the students taking the LC diploma program at CIABT. [ 6 ] On August 27, 2012, LC made application for an Injunction prohibiting CIABT from using the LC name and logo without express written authorization and prohibiting CIABT from communicating to any individual that the individual has been accepted as a student of LC unless LC has confirmed, in writing, that that individual has in fact been accepted as a student by LC.

LC further made application requiring CIABT to provide information on tuitions received from individuals who believed they had been registered for the fall 2012 semester at LC. [ 7 ] In its filed materials LC argued that CIABT had no authority to use the LC name and logo and had used the name and logo in making representations to persons knowing that those representations were false.

LC took the position that the misrepresentations and other improper actions of CIABT caused LC to suffer irreparable loss and damages including damage to its name, brand and good will. [ 8 ] On August 31, 2012, CIABT made application for an Order that the action as defined in the Statement of Claim filed on August 16, 2012, be stayed pursuant to provisions of the Arbitration Act , RSA 2000 c A-43.

In the alternative CIABT sought an Order that the action be stayed or struck on the basis that Ontario is the forum conveniens while Alberta is the forum non-conveniens. [ 9 ] CIABT advanced the argument that it was not attorning to this jurisdiction. [ 10 ] LC filed a further Application on August 31, 2012, which mirrors the relief sought in the Statement of Claim. The Application seeks a Declaration that this Court has jurisdiction simpliciter to adjudicate all of the claims.

It further seeks an Order waiving the applicability of the arbitration clause as between LC and CIABT, or in the alternative, a Declaration that this Court act as both arbitrator and as a Justice of the Court of Queen’s Bench as required to comply with

Section 8 of the Judicature Act . Lastly, it also seeks an Order consolidating all outstanding matters as between the parties in the within action and it further sought advice and directions for the expedient prosecution of any outstanding issues. [ 11 ] LC takes the position that the action described in the Statement of Claim relates to students taking the LC diploma program at CIABT and is based on a Contract made in Alberta.

It also takes the position that the action relates to claims or potential claims, in tort, of students taking the LC diploma program at CIABT, as against CIABT and LC, and that the tort was committed in Alberta. [ 12 ] The various applications were before the Court on September 4, 2012. At that time Justice E.A.

Hughes directed that all issues contained in the Applications of LC filed on August 27 and August 31, 2012, and CIBAT’s Application filed on August 31, 2012, were to be set down for a Special Chambers Application on November 6, 2012. [ 13 ] In addition, the Chambers Justice granted the following Orders: An interim injunction, which is without prejudice to the parties’ ability to argue the interim prohibitive injunctive relief sought in the Plaintiff’s Application on the merits at the special chambers application, is granted from the date of this Order until the date of the special chambers application that prohibits CIABT from using the Lethbridge College (“LC”) logo (the “LC Logo”) on any correspondence or documents, including documents for immigration purposes, without the express written authorisation of LC.

CIABT may continue to use the LC Logo on its website, and CIABT may reference the words of the contract regarding the joint undertaking between Lethbridge College and CIABT to deliver the 2 year diploma program in business administration for recruiting purposes on any correspondence or documents, but cannot use the LC logo.

CIABT has not attorned to the jurisdiction of the Alberta Court by appearing and making submissions on September 4, 2012, or by virtue of the Court granting of this Order. [ 14 ] On September 19, 2012, LC made application for an Order: 1. Determining the legal

interpretation of

Article 2.5 of the contract between Lethbridge College and CIABT (the “CIABT Contract”) which states: CIABT will be provided the opportunity to extend this contract if mutually agreeable, for a further 5 years. This option will be available until June 30, 2012. 2. Adjourning the application originally set for the Special Chambers application set for November 6, 2012 until the legal

interpretation of

Article 2.5 of the CIABT Contract has been decided; 3. A declaration that the appearance by CIABT or argument by CIABT on the application or the

interpretation of

Article 2.5 of the CIABT contract shall not be an attornment to the jurisdiction of the Courts of the Province of Alberta for purposes of the within Action # 1206 00575; [ 15 ] LC advanced the argument that the

interpretation of this provision in the Contract would dispose of a material part of the claim and would thereby shorten the Trial and save expenses. [ 16 ] It is clear from the nature of the Applications made and their timing that each side is seeking to gain a strategic advantage in terms of where the dispute should be heard. This is clearly illustrated by LC’s response to CIABT’s Application to have the matter resolved by way of arbitration. LC sued a large number of students.

It says it has no intention of pursuing a remedy against these individuals, but rather is seeking to protect their (the students) collective interests. LC has brought an Application inviting the Court to adjudicate on the extension clause arguing that this will expedite resolution of the dispute. In argument counsel for LC even suggested that CIABT was not a party to the contract because its proper identity had not been established. These positions appear to be aimed at having an Alberta Court bite on at least one of these arguments so as to give LC “home field advantage” in this litigation process.

Despite LC’s able arguments I think it is fair to conclude that neither party is at a disadvantage, legally, regardless of which forum is chosen to adjudicate these various disputes. This conclusion then leads to a discussion of the nature of the relationship between the parties, as articulated in the Contract, and as disclosed by their dealings with one another. [ 17 ] Although the Contract is silent about the location of signing, and the Affidavit material is unhelpful, I accept submissions made on behalf of CIABT that the document was signed in Toronto, Ontario.

The Affidavit materials establish that LC has been in existence for many years while CIABT’s history is relatively short. I am left to conclude that the contract in question was drafted by LC. This conclusion is supported by the fact that the contract contemplated the delivery of LC course content and the fact that LC is a large established public college with a high degree of sophistication.

It is apparent from the materials that, at the time of signing the Contract, neither party sought to clearly identify each other’s legal status or name. [ 18 ] By the terms of the Contract LC was to deliver the materials necessary for instruction of the program to CIABT, and CIABT was to deliver the content of the program, in Toronto, to students using its own facilities, hardware and teachers. CIABT was to arrange for all licencing, permits, applications and approvals as contemplated in the Contract.

LC was to send its own staff to evaluate the program, and LC was solely responsible for determining the success of students, as well as admission criteria. When a student was accepted for admission LC provided an identification card to that student verifying the student’s registration in the program. The successful student would be awarded a diploma by LC. [ 19 ] The arrangement between the parties resulted in thousands of dollars of fees being transferred from CIABT to LC. However, LC claims that it did not receive all monies it was owed.

Compounding the complexity of this litigation is the spectre of students caught

in the middle. It appears that the students targeted for this course were foreigners whose status in Canada depended, in whole or in part, on their enrollment in an accredited academic institution. Allegations are made by CIABT that through LC’s misconduct, in relation to registration, students were deported or denied entry into Canada. [ 20 ] Whatever may have been the parties’ respective degree of sophistication they were able to agree on a Dispute Resolution process as provided by

Article 10 of the Contract:

Article 10 - Dispute Resolution 10.1 If a dispute under this Contract arises the parties agree to provide, without prejudice, frank, candid and timely disclosure of all relevant facts, information and documents to facilitate the negotiations to come to a mutual Contract and settlement of the dispute. 10.2 If a settlement of any dispute cannot be reached through initial negotiations of the parties then the following procedures will apply: (

a) Either LC or CIABT can give a notice to the other that the provisions of this paragraph are to be implemented; (

b) Within 14 days after any such notice the Vice-President of LC and the President of the CIABT shall each appoint a representative for the purpose of negotiating a settlement to the dispute. (

c) The representatives so appointed shall work in good faith with a view to reaching a negotiated settlement to any dispute within 30 days of their appointment and shall provide a joint report to the Presidents of both LC and CIABT at the end of that 30 day period. 10.3 If a settlement cannot be reached through the good faith negotiations of the parties, the dispute shall be referred to the arbitration of a single arbitrator, if the parties agree to one, otherwise to three arbitrators, one to be appointed by each party and a third to be chosen by the first two named before they enter into the business of arbitration.

The award and determination of the arbitrator or two of the three arbitrators shall be binding upon the parties. [ 21 ] It is reasonable to conclude that the parties agreed to this provision in contemplation of the potential for disputes and the need to resolve such conflict in an efficient and businesslike manner. Having concluded that LC took the lead in drafting the Contract, I must assume that LC was clearly mindful of the Dispute Resolution clauses.

While this Contract is for the delivery of education material, it is nonetheless a commercial contract wherein services are received and money is paid for those services. Business people are astute enough to recognize the potential for problems to arise and the need to minimize the costs of resolution. The parties prudentially anticipated the utility of

Article 10. [ 22 ] LC pleads, in its Statement of Claim, that CIABT made fraudulent, negligent or innocent misrepresentations. LC then argues that a potential remedy for such conduct is recision, resulting in the Contract being rendered void of ab initio. To bolster this position LC points to the facts that the Contract was signed on August 9, 2009, however, the entity CIABT was not incorporated until October 28, 2011. Flowing from this set of facts LC says it is impossible for the subsequently incorporated CIABT to be a party to the Contract since it did not exist at the time the Contract was entered.

It then follows that there is no arbitration clause to be considered since it is impossible to hold that LC agreed to arbitration with a non-existent entity. [ 23 ] Despite the simplistic charm of this argument it overlooks the all too obvious fact that these two entities contracted to supply and pay for services. Nowhere does the Contract represent that CIABT was incorporated at the time of execution. The evidence before me establishes that each performed their respective obligations for a significant period of time.

Whatever may have been CIABT’s motivation for incorporating or if that intention predated the signing of the Contract, there is no credibility to LC’s argument that there was never a Contract. I therefore reject this aspect of LC’s submissions. [ 24 ] In arguing the applicability of the arbitration provisions of the Contract, CIABT relies on the Alberta Arbitration Act . In doing so, it is clear that the Alberta Act and the Ontario Arbitration Act, 1991, SO 1991, c 17, have similar provisions. CIABT argues, concurrently, that the proper forum for hearing these matters is Ontario.

Accordingly, the issues before me are: 1. Is the arbitration clause in the Contract enforceable?

2. If so, what is the proper forum in which to deal with this dispute? [ 25 ] The 1991 amendments to the Alberta Arbitration Act restrict the otherwise broad discretion Courts previously exercised in relation to stay applications. In International Resource Management (Canada) Ltd v Kappa Energy (Yemen) Inc, 2001 ABCA 146 , Justice Côté said at paragraph 3: 3. The Act removes the court ’ s former flexible power to decide whether to stay a suit and compel arbitration, or to let the suit proceed instead.

The new legislation is intended to hold parties to their bargains, and to create some certainty and speed. [ 26 ] The Alberta Arbitration Act provides as follows: 6 No court may intervene in matters governed by this Act, except for the following purposes as provided by this Act: (

a) to assist the arbitration process; (

b) to ensure that an arbitration is carried on in accordance with the arbitration agreement; (

c) to prevent manifestly unfair or unequal treatment of a party to an arbitration agreement; (

d) to enforce awards. 7(1) If a party to an arbitration agreement commences a proceeding in a court in respect of a matter in dispute to be submitted to arbitration under the agreement, the court shall, on the application of another party to the arbitration agreement, stay the proceedings.

(2) The court may refuse to stay the proceeding in only the following cases: (

a) a party entered into the arbitration agreement while under a legal incapacity; (

b) the arbitration agreement is invalid; (

c) the subject-matter of the dispute is not capable of being the subject of arbitration under Alberta law; (

d) the application to stay the proceeding was brought with undue delay; (

e) the matter in dispute is a proper one for default or

summary judgment.

(3) An arbitration of the matter in dispute may be commenced or continued while the application is before the court.

(4) If the court refuses to stay the proceeding, (

a) no arbitration of the matter in dispute shall be commenced, and (

b) an arbitration that has been commenced shall not be continued, and anything done in connection with the arbitration before the court’s refusal is without effect.

(5) The court may stay the proceeding with respect to the matters in dispute dealt with in the arbitration agreement and allow the proceeding to continue with respect to other matters if it finds that:

(

a) the agreement deals with only some of the matters in dispute in respect of which the proceeding was commenced, and (

b) it is reasonable to separate the matters in dispute dealt with in the agreement from the other matters.

(6) There is no appeal from the court’s decision under this section. [ 27 ] The Ontario Arbitration Act mirrors these sections of the Alberta Act. [ 28 ] The onus of demonstrating that the case is not appropriate for arbitration lies with the party opposing the arbitration. [ 29 ] Having regard to the materials filed I am satisfied that LC has not met the onus of demonstrating that any of the exceptions set forth in section 7(2) of the Act apply. It is clear that each of the parties had legal capacity to enter the Contract. There is no basis to suggest the Arbitration Agreement is invalid.

The subject matter of this dispute is capable of arbitration. The application to stay was brought in a timely manner. The matter in dispute is not a proper one for default or

summary judgment due to the number and complexity of the issues raised. [ 30 ] Both the Ontario and Alberta Acts allow the courts a limited power of intervention in the arbitration process.

Section 6 of the Alberta Act contemplates the potential for a degree of judicial guidance of the process. [ 31 ] Using this as a platform, CIABT argues that this Court, now having found in favour of a stay of LC’s Statement of Claim, should declare that Ontario is the proper forum in which to proceed with the arbitration. [ 32 ] I am satisfied that based on the materials before me Ontario is the proper forum. I base this opinion on the following facts. The Contract was signed in Ontario.

While the course content was created in Alberta, its delivery was to be in the Province of Ontario, using facilities and personnel in Ontario. The student body receiving this education, although technically LC students, attended class in Ontario, paid their money in Ontario and relied on the Ontario campus as their vehicle for status in Canada. The students affected by this dispute either are or were residents in Ontario. It is probable that their evidence will be used in resolving this dispute.

Their convenience is best served by dealing with the matter in Ontario. [ 33 ] For the reasons outlined herein I direct a stay of the Alberta Action and direct that the dispute be dealt with in Ontario pursuant to the provisions set forth in the Contract. [ 34 ] Having made this determination I need not deal with the other outstanding issues raised in LC’s applications, particularly the interrelation of

Article 2.5 of the Contract relating to the extension of this agreement. Those are matters best dealt with by the dispute resolution process outlined in the Contract.

[ 35 ] It is clear that up to the time of the hearing of these applications CIABT had not attorned to the jurisdiction of this Court. By my ruling CIABT has not attorned to this jurisdiction. They have not been required to address the other issues raised by LC, specifically the injunctive relief sought. Heard on the 09 th day of November, 2012. Dated at Lethbridge, Alberta this 4 th day of February, 2013. J.H. Langston J.C.Q.B.A. Appearances: Peterson & Purvis LLP K. Greg Senda for the Plaintiff Burnet, Duckworth & Palmer LLP James D. Murphy for the Defendants