SINGER ENTERPRISES INC. Plaintiff - v. -, 2022 SKKB 268

KING’S BENCH FOR SASKATCHEWAN Citation: 2022 SKKB 268 Date: 2022 12 12 Docket: QBG-SA-00275-2022 Judicial Centre: Saskatoon ___________________________________________________________________________ BETWEEN: SINGER ENTERPRISES INC. Plaintiff - and - PARRISH & HEIMBECKER, LIMITED Defendant Counsel: Robert G. Kennedy, K.C., and Ellen K. Fitzgerald for the plaintiff Collin K. Hirschfeld, K.C. for the defendant ___________________________________________________________________________ FIAT CURRIE J.

December 12, 2022 ___________________________________________________________________________ Introduction [ 1 ] Since 2015 Singer Enterprises Inc. (“Singer”) and Parrish & Heimbecker, Limited (“P&H”) have entered into a series of contracts under which Singer sold grain to P&H. The proceedings here relate to three such contracts that were entered into in January and February 2021.

The contracts provided for Singer to deliver grain to P&H in the last quarter of 2021. [ 2 ] In July 2021 Singer realized that, due to poor growing conditions, it would have difficulty in meeting its contractual obligations to provide grain to P&H that year. Pursuant to the contracts Singer so notified P&H, explaining that the reason for the difficulty was drought and severe weather.

Indeed, later that year Singer delivered some of the grain but it did not deliver all of the grain that it was to deliver to P&H. [ 3 ] In response to the shortfall in grain delivery, pursuant to the contracts P&H cancelled Singer’s obligation to deliver the shortfall amounts, and P&H triggered Singer’s obligation to pay to P&H a total of $765,037.59 in lieu of delivering the shortfall amounts of grain. [ 4 ] Singer has refused to pay P&H, taking the position that those “buyout” provisions of the contracts are unconscionable and improvident, and therefore are unenforceable. [ 5 ] In this circumstance, P&H has initiated arbitration proceedings.

Arbitration is contemplated in each of the contracts, in an identical clause. In short, that arbitration clause provides that “Any claim relating to this Contract” will be settled by arbitration. [ 6 ] Singer did not respond to P&H’s initiation of arbitration proceedings. Instead, Singer commenced this action. In its statement of claim Singer alleges the unconscionability and improvidence of the contracts.

Singer claims a declaration that the contracts are unenforceable, claiming specifically a declaration that the arbitration clause does not empower an arbitral tribunal to determine whether the contracts are unconscionable. Singer further claims an interlocutory injunction restraining P&H from pursuing the arbitration. [ 7 ] Now each party brings an application before me. P&H applies for a stay of this action on the basis that the parties have agreed to arbitration.

Singer applies for a declaration that the arbitration clause does not apply to the question of whether the contracts are unconscionable, and on that basis Singer applies for an injunction restraining P&H from perfecting or prosecuting the arbitration. [ 8 ] In its notice of application Singer asserted that the arbitration clause does not apply to the question of unconscionability because that question is outside the scope of “Any claim relating to this Contract”. At the hearing of these applications, though, Singer refined its position.

Singer now asserts that the arbitration clause itself is unconscionable and that it is for that reason that the arbitration should not proceed.

[ 9 ] P&H says that, since the parties agreed in the contracts to have all issues determined by an arbitral tribunal, it should be the arbitral tribunal who determines whether the arbitration clause is unconscionable (along with all other issues).

Singer says that the question of the unconscionability of the arbitration clause must be determined by the court, not by the arbitral tribunal. [ 10 ] Singer further submits that, if this court determines that the arbitration clause is not unconscionable, the court should rule that it will be this court – not the arbitral tribunal – who addresses all of the other issues identified in this action. [ 11 ] With this background, potentially there are several issues to be decided on these applications.

The first of these is whether it be the arbitral tribunal or the court who rules on whether the arbitration clause is unconscionable. A. Will it be the arbitral tribunal or the court who rules on whether the arbitration clause is unconscionable? 1. The contracts [ 12 ] Each of the three contracts is a two-page document (although I infer that each original contract is on a single sheet of paper, with printing on both sides). The first page is entitled “Purchase Confirmation”.

It identifies, in readily-readable print, details of the parties, the grain that is to be delivered, when delivery is to take place, and the price to be paid. Under the large heading “Special Instructions and Conditions”, in a small but readable font, a paragraph includes this statement: … By signing this Contract, the parties understand and agree to the terms and conditions on both the front and reverse side of this Contract. … [ 13 ] The second page (the “reverse side”) almost entirely is filled with terms in a small but readable font.

These terms include provisions such as those relating to transfer of good title, merchantable quality, rejection of grain, and many others. Among those terms is the arbitration clause, clause 12: 12) This Contract shall be governed by the laws of the Province in which it was written and the laws of Canada as may be applicable therein except where an issue may be decided under the National Grain and Feed Association Grain Trade Rules. Any claim relating to this Contract shall be settled by arbitration under the National Grain and Feed Association Arbitration Rules as are in effect at the date of this agreement.

The parties agree to submit to arbitration. Judgment upon any arbitration award may be entered in any court or tribunal of competent jurisdiction. Copies of the National Grain and Feed Association Trade Rules and National Grain and Feed Association Arbitration Rules are available upon request and also on the National Grain and Feed Association’s website at http://www.ngfa.org. [ 14 ] The parties’ execution of the contracts is not disputed. 2. The National Grain and Feed Association Rules [ 15 ] P&H has filed in evidence a copy of the National Grain and Feed Association Rules.

On the face of those Rules, however, they are not the Rules that were in effect at the date of the contracts. The contracts all had been entered into by February 2021, but the Rules that have been provided by P&H were amended March 31, 2021. Singer also has filed in evidence a copy of the Rules, but those Rules were amended March 15, 2022, so they also are not the Rules that were in effect at the date of the contracts. [ 16 ] The “Rules as are in effect at the date of this agreement”, then, are not in evidence. Fortunately, reference to those Rules is not necessary for a determination of these applications. 3.

An arbitral tribunal’s power to rule on its jurisdiction [ 17 ] In Saskatchewan there are two principal statutes dealing with arbitration. If an arbitration is international, The International Commercial Arbitration Act , SS 1988-89, c I-10.2 (“the ICAA ”), applies. If an arbitration is domestic, The Arbitration Act, 1992 , SS 1992, c A-24.1 (“the domestic Act ”), applies. [ 18 ] Here the parties do not agree as to whether the arbitration that is the subject of these proceedings is an international arbitration or a domestic arbitration. Which Act applies does not matter, though.

This is so because the key provision of each Act effectively is the same in both Acts . That provision empowers an arbitral tribunal to rule on its own jurisdiction, including the existence or validity of the arbitration agreement: (

a) The ICAA declares that the UNCITRAL Model Law on International Commercial Litigation (“the International Law ”) applies in Saskatchewan. The International Law appears as the

Schedule to the ICAA . Article 16(1) of the International Law provides: The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (

b) The domestic Act provides in s. 18: 18

(1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement.

(2) The arbitral tribunal may determine any question of law that arises during the arbitration.

(3) If the arbitration agreement forms part of another agreement, it shall, for the purposes of a ruling on jurisdiction, be treated as an independent agreement that may survive even if the main agreement is found to be invalid. …

[ 19 ] As Chief Justice Richards has observed in Greer v Babey , 2016 SKCA 45 at paras 26-28 , such provisions firmly incorporate the well-established “competence-competence” principle: [26] … [The ICAA ] strongly promotes the systemic referral of disputes to arbitration. … [27] Article 16(1) [of the ICAA ] is also critical in this context because it authorizes arbitrators to rule on challenges to their jurisdiction… [28]

Article 16 embodies the “competence-competence” principle -- the idea that an arbitration tribunal should decide questions concerning its own jurisdiction. [ 20 ] Before I delve more deeply into the application of the “competence-competence” principle to this matter, I must address three additional grounds that have been advanced by Singer as reasons for concluding that the arbitral tribunal does not have the power to rule on its jurisdiction. Those grounds relate to ambiguity, contra proferentum and equity. 4. Ambiguity in the arbitration clause [ 21 ] Singer says that the arbitration clause is ambiguous.

The ambiguity, says Singer, arises from the clause providing that the contracts are governed by Saskatchewan and Canadian law “except where an issue may be decided under the National Grain and Feed Association Trade Rules”. I do not find an ambiguity in that provision. 5. Contra proferentum [ 22 ] Singer asserts that the arbitration clause does not give to the arbitral tribunal any jurisdiction to determine whether the contracts are unconscionable.

Invoking the principle of contra proferentum (by which an ambiguity is interpreted against the party who prepared the contract), Singer points out that the arbitration clause does not expressly say that the unconscionability of the contracts may be decided by arbitration. Therefore, Singer argues, the operation of contra proferentum leads to the conclusion that the unconscionability of the contracts may not be decided by arbitration. [ 23 ] I do not find that the absence of an express reference to unconscionability leaves an ambiguity.

There is no ambiguity in “Any claim relating to this Contract shall be settled by arbitration ….” Furthermore, the power to rule on jurisdiction that is given to an arbitral tribunal under both the ICAA and the domestic Act is so broadly and forcefully stated in those Acts , as noted by Chief Justice Richards, that one may conclude only that each Act states expressly that an arbitral tribunal has the jurisdiction to rule on the existence and validity of contracts, full stop. 6.

The arbitral tribunal’s power to apply equity [ 24 ] Singer says that declaring a contract unconscionable would be a matter of applying equity, because doing so involves the equitable remedy of contract rescission. The domestic Act , in s. 32, empowers an arbitral tribunal to apply equity but, says Singer, the ICAA does not. Thus Singer asserts that if this dispute is subject to the ICAA , the arbitral tribunal has no jurisdiction to rule on an issue involving unconscionability. [ 25 ] The International Law specifically addresses the application of equity in Article 28(3):

(3) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so. [ 26 ] Ex aequo et bono and amiable compositeur both are references to equity. [ 27 ] It is significant that

Article 28 appears in

Chapter VI of the International Law . That

chapter is entitled “Making of Award and Termination of Proceedings”. The significance is apparent when one refers also to

Article 16 of the International Law , which states that an arbitral tribunal “may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement” (emphasis added).

Article 16, which includes this broad and forceful statement of the arbitral tribunal’s power to rule on jurisdiction, appears in

Chapter IV, which is entitled “Jurisdiction of Arbitral Tribunal”. [ 28 ] Those

chapter headings are not part of any specific

article of the International Law , of course. This raises a question of

interpretation – specifically, whether it is appropriate to consider those

chapter headings in interpreting the International Law . In that regard I have reference to s. 2-19 of The Legislation Act , SS 2019, c L-10.2 : 2-19

(1) In this section, “section heading” means a heading that appears in an enactment immediately above or beside a

section or a provision of a section.

(2) The following are part of an enactment: (

a) a

preamble; (

b) headings other than

section headings.

(3) The following are not part of an enactment and are to be considered to have been included editorially and for convenience of reference only: (

a) section headings; (

b) tables of contents; (

c) information notes providing legislative history;

(

d) information notes providing text as an alternative for non-text content. [ 29 ] The International Law is part of the ICAA by way of being the

schedule to the ICAA . That being the case, applying s. 2-19(1) I may consider the

chapter headings, which amount to “headings”, but I may not consider the

article headings, which amount to “section headings”. [ 30 ] On this topic of statutory

interpretation I note s. 11 of the ICAA : 11

(1) This Act shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the Act in their context and in the light of its objects and purposes.

(2) In applying subsection (1) to the International Law, recourse may be had to: (

a) the Report of the United Nations Commission on International Trade Law on the work of its 18th session (June 3 – 21, 1985); (

b) the International Commercial Arbitration Commentary on Draft Text of a Model Law on International Commercial Arbitration; as published in

Part I of The Canada Gazette on October 4, 1986. [ 31 ] Section 11(1) confirms the appropriateness of applying s. 2-19 of The Legislation Act to the

interpretation of the International Law . Doing so is the normal approach to determining the ordinary meaning of the terms of Saskatchewan legislation, and s. 11(2) specifically contemplates that s. 11(1) will be applied to the International Law .

It further permits but does not require recourse to the additional references listed there. [ 32 ] Thus I may consider the circumstance that, in the ICAA , the sole restriction on the use of equity appears under the heading “Making of Award and Termination of Proceedings”, while the broad power to rule on jurisdiction appears under the heading “Jurisdiction of Arbitral Tribunal”.

A ruling on jurisdiction is one thing, and making an award and bringing that process to an end is another. [ 33 ] The International Law , then, prohibits (without agreement) the application of equity in making the award on the merits of the matter, and it bestows upon the arbitral tribunal the broad power to rule on any jurisdictional issue, including the existence or validity of the arbitration agreement. [ 34 ] In this circumstance, given the breadth and force with which the power to rule on jurisdiction is stated in the legislation, I conclude that an arbitral tribunal is empowered to rule on its own jurisdiction even when that issue touches on a matter of equity. 7.

When the “competence-competence” principle is applied [ 35 ] I return now to the application of the “competence-competence” principle to this matter. As I have noted, both the ICAA and the domestic Act incorporate the principle. The principle was discussed by Justice Deschamps in Dell Computer Corp. v Union des consommateurs , 2007 SCC 34 , [2007] 2 SCR 801 , at paras 84-85 : [84] First of all, I would lay down a general rule that in any case involving an arbitration clause, a challenge to the arbitrator’s jurisdiction must be resolved first by the arbitrator.

A court should depart from the rule of systemic referral to arbitration only if the challenge to the arbitrator’s jurisdiction is based solely on a question of law. This exception is justified by the courts’ expertise in resolving such questions, by the fact that the court is the forum to which the parties apply first when requesting referral and by the rule that an arbitrator’s decision regarding his or her jurisdiction can be reviewed by a court.

It allows a legal argument relating to the arbitrator’s jurisdiction to be resolved once and for all, and also allows the parties to avoid duplication of a strictly legal debate… [85] … Where questions of mixed law and fact are concerned, the court hearing the referral application must refer the case to arbitration unless the questions of fact require only superficial consideration of the documentary evidence in the record. [ 36 ] Not long ago, contract

interpretation was considered to be exclusively a question of pure law. In Sattva Capital Corp. v Creston Moly Corp. , 2014 SCC 53 , [2014] 2 SCR 633 , the Supreme Court modified that approach, with Justice Rothstein explaining that the

interpretation of commercial arbitration contracts generally is a question of mixed fact and law, not a question of law alone. [ 37 ] The Supreme Court returned to the topic in Ledcor Construction Ltd. v Northbridge Indemnity Insurance Co. , 2016 SCC 37 , [2016] 2 SCR 23 , specifically addressing standard form contracts (also known as contracts of adhesion). Justice Wagner (as he then was) addressed the nature of a standard form contract at paragraph 25: [25] ... Professor John D.

McCamus has described standard form contracts as follows: ... the document put forward will typically constitute a standard printed form that the party proffering the document invariably uses when entering transactions of this kind. The form will often be offered on a "take it or leave it" basis. In the typical case, the other party, then, will have no choice but either to agree to the terms of the standard form or to decline to enter the transaction altogether. Standard form agreements are a pervasive and indispensable feature of modern commercial life.

It is simply not feasible to negotiate, in any meaningful sense, the terms of many of the transactions entered into in the course of daily life. ( The Law of Contracts (2nd ed. 2012), at p. 185) … [ 38 ] At paragraphs 46 and 48, Justice Wagner explained the proper approach to interpreting what appears to be a

standard form contract: [46] Sattva should not be read as holding that contractual

interpretation is always a question of mixed fact and law, and always oweddeference on appeal. I would recognize an exception to Sattva’s holding on the standard of review of contractual

interpretation. Where,like here, the appeal involves the

interpretation of a standard form contract, the

interpretation at issue is of precedential value, and thereis no meaningful factual matrix specific to the particular parties to assist the

interpretation process, this

interpretation is bettercharacterized as a question of law subject to correctness review. … [48] Depending on the circumstances, however, the

interpretation of a standard form contract may be a question of mixed fact andlaw, subject to deferential review on appeal. For instance, deference will be warranted if the factual matrix of a standard form contractthat is specific to the particular parties assists in the

interpretation. Deference will also be warranted if the parties negotiated andmodified what was initially a standard form contract, because the

interpretation will likely be of little or no precedential value. Theremay be other cases where deferential review remains appropriate. As Iacobucci J. recognized in Southam [ (SCC),[1997] 1 SCR 748], the line between questions of law and those of mixed fact and law is not always easily drawn.

Appellate courtsshould consider whether “the dispute is over a general proposition” or “a very particular set of circumstances that is not apt to be of muchinterest to judges and lawyers in the future” (para. 37). [39] The Saskatchewan Court of Appeal elaborated on this discussion in Mosten Investments LP v TheManufacturers Life Insurance Company (Manulife Financial), 2021 SKCA 36, [2019] 9 WWR 1, at paras 52-3 and 55: [52] … A contract (or issue) is a standard form contract (or an issue of standard form contract

interpretation) for the purposes ofappellate review only if three conditions are met. … [53] Second, there must be no factual matrix that is specific to the parties to the contract and that is probative of the issue of contractinterpretation. … … [55] … The

interpretation of a standard form contract or of a standard form clause is always a question of law because the answer hasprecedential value. That is so because the law and the facts are the same each time the standard form contract language is interpreted. …[Emphasis added] [40] While both the Court of Appeal in Mosten and the Supreme Court in Ledcor were addressing this topic in thecontext of appellate review, the principle applies directly to the

interpretation of a contract. Where the factual circumstances of a contractwill affect the

interpretation of what otherwise is a standard form contract, the

interpretation is not a question of pure law and theinterpretation lacks precedential value. The

interpretation lacks precedential value because it depends on the facts of the case (“ameaningful factual matrix specific to the particular parties” per Justice Wagner in Ledcor) and not exclusively on the wording of thecontract. 8. The nature of an unconscionable contract [41] The contract

interpretation question here is whether the arbitration clause is unconscionable.

Justices Abella andRowe discussed the nature of an unconscionable contract in Uber Technologies Inc. v Heller, 2020 SCC 16 at paras 62-65: [62] Most scholars appear to agree that the Canadian doctrine of unconscionability has two elements: “an inequality of bargainingpower, stemming from some weakness or vulnerability affecting the claimant and ... an improvident transaction” (McInnes [MitchellMcInnes, The Canadian law of Unjust Enrichment and Restitution (Markham, Ont: LexisNexis, 2014)], at p. 524 (emphasis deleted); seealso Swan, Adamski and Na [Angela Swan, Jakub Adamski & Annie Y.

Na, Canadian Contract Law, 4th ed (Toronto: LexisNexis,2018)], at p. 986; McCamus [John McCamus, The Law of Contracts, 2d ed (Toronto: Irwin Law, 2012)], at pp. 424 and 426-27; Benson[Peter Benson, Justice in Transactions: A Theory of Contract Law, (Cambridge, Mass.: Harvard University Press, 2019)], at p. 167;Waddams (2017) [S.M. Waddams, The Law of Contracts, 7th ed (Toronto: Thomson Reuters, 2017)], at p. 379; Stephanie Ben-Ishai andDavid R. Percy, eds., Contracts: Cases and Commentaries (10th ed. 2018), at p. 719). [63] This Court has long endorsed this duality.

In Hunter [ (SCC), [1989] 1 SCR 426], Wilson J. observed that [t]he availability of a plea of unconscionability in circumstances where the contractual term is per se unreasonable and theunreasonableness stems from inequality of bargaining power was confirmed in Canada over a century ago .... [Emphasis in original;p. 512; see also p. 462, per Dickson C.J.] [64] In Norberg [ (SCC), [1992] 2 SCR 226], La Forest J. described proving the elements of unconscionability as “atwo-step process”, involving “(1) proof of inequality in the positions of the parties, and (2) proof of an improvident bargain” (p. 256).The concurring judgment in Douez v.

Facebook Inc., [2017 SCC 33,] 2017 SCC 33 , [2017] 1 S.C.R. 751, followed a similarapproach in a case involving a standard form consumer contract: Two elements are required for the doctrine of unconscionability to apply: inequality of bargaining powers and unfairness. Prof.McCamus describes them as follows: ... one must establish both inequality of bargaining power in the sense that one party is incapable of adequately protecting his or herinterests and undue advantage or benefit secured as a result of that inequality by the stronger party. [Emphasis deleted; para. 115.] (See also Loychuk v.

Cougar Mountain Adventures Ltd., 2012 BCCA 122, 347 D.L.R. (4th) 591, at paras. 29-31; Roy v. 1216393 OntarioInc., 2011 BCCA 500, 345 D.L.R. (4th) 323, at para. 29; McNeill v. Vandenberg, 2010 BCCA 583, at para. 15 ; Kreutziger

[(1978), (BC CA), 9 BCLR 166], at p. 173; Morrison [(1965) (BC CA), 55 DLR (2d 710], at p. 713) [65] We see no reason to depart from the approach to unconscionability endorsed in Hunter, Norberg and in Douez. That approachrequires both an inequality of bargaining power and a resulting improvident bargain. [42] A standard form contract tends to be viewed as arising from an inequality of bargaining power, but it is notnecessarily so.

Justices Abella and Rowe said in Uber at paras 88-89: [88] We do not mean to suggest that a standard form contract, by itself, establishes an inequality of bargaining power (Waddams(2017), at p. 240). Standard form contracts are in many instances both necessary and useful. Sophisticated commercial parties, forexample, may be familiar with contracts of adhesion commonly used within an industry. Sufficient explanations or advice may offsetuncertainty about the terms of a standard form agreement.

Some standard form contracts may clearly and effectively communicate themeaning of clauses with unusual or onerous effects (Benson, at p. 234). [89] Our point is simply that unconscionability has a meaningful role to play in examining the conditions behind consent to contractsof adhesion, as it does with any contract. The many ways in which standard form contracts can impair a party's ability to protect theirinterests in the contracting process and make them more vulnerable, are well-documented.

For example, they are drafted by one partywithout input from the other and they may contain provisions that are difficult to read or understand (see Margaret Jane Radin, “Accessto Justice and Abuses of Contract” (2016), 33 Windsor Y.B. Access Just. 177, at p. 179; Stephen Waddams, “Review Essay: TheProblem of Standard Form Contracts: A Retreat to Formalism” (2013), 53 Can. Bus. L.J. 475, at pp. 475-476; Thal, at pp. 27-28;William J. Woodward, Jr., “Finding the Contract in Contracts for Law, Forum and Arbitration” (2006), 2 Hastings Bus.

L.J. 1, at p. 46).The potential for such contracts to create an inequality of bargaining power is clear. So too is their potential to enhance the advantage ofthe stronger party at the expense of the more vulnerable one, particularly through choice of law, forum selection, and arbitration clausesthat violate the adhering party's reasonable expectations by depriving them of remedies.

This is precisely the kind of situation in whichthe unconscionability doctrine is meant to apply. [43] The question of unconscionability here, then, involves a consideration of whether the arbitration clause arose inthe context of inequality of bargaining power, and whether the arbitration clause amounts to an improvident bargain for Singer. [44] This takes me to the question (flowing from my discussion of when the “competence-competence” principle isapplied) of whether those two elements can be determined purely through examining the contract provisions, with no more than acursory reference to facts, or whether a determination of those two elements requires consideration of a meaningful factual matrix. 9.

Meaningful factual matrix: inequality of bargaining power [45] Singer alleges that the arbitration clause is unconscionable not just on its face but in the circumstances.

Singerinvites an examination of the facts of this dispute in the course of examining whether there was an inequality of bargaining powerbetween the parties when they entered into the contracts. [46] In its statement of claim, Singer invites the court to consider: - the comparative levels of sophistication between Singer and P&H, including the size and extent of each’s business operation; - Singer’s lack of opportunity to negotiate the standard terms; and - the circumstance that Singer needed to contract with someone in selling its grain, and: o only a few such companies operate in Saskatchewan; and o all of those companies have non-negotiable standard form contracts. [47] Consideration of these factors requires evidence to be adduced and the finding of the relevant facts. [48] Similarly, in his second affidavit on these applications OJ Singer, the representative of Singer, identifies thestages of the negotiation of the contracts, specifically referring to emails between Singer and P&H.

This likewise is evidence that needsto be evaluated for a determination of fact. [49] In that affidavit Mr. Singer also provides some detail of his own sophistication, factors that Singer hopes will betaken into account in a consideration of the allegation of inequality of bargaining power. Again, this is evidence that needs to beevaluated for a determination of fact. [50] P&H counters Singer’s assertion as to inequality of bargaining power with its own evidence as to how thecontracts were negotiated and as to the parties’ sophistication, and P&H has filed documentation in that regard.

That documentationincludes evidence of the history between the two parties, including reference to their cumulative contracts totalling a value of over$20 million. This, too, is evidence that needs to be evaluated for a determination of fact. [51] The issue of whether the arbitration clause is unconscionable will be determined in part by a determination ofwhether there was an inequality of bargaining power between the parties in entering into the contracts.

The question of inequality ofbargaining power is not one that will be determined with reference to the clause and the contracts without reference to any facts thatwould be specific to this case. Rather, the question will be determined with reference to – and, if Singer succeeds in its position, inreliance on – facts that are specific to this case. [52] Determination of whether there was an inequality of bargaining power requires consideration of a meaningfulfactual matrix.

10. Meaningful factual matrix: improvident bargain [53] An example of an improvident bargain was provided by Justices Abella and Rowe in Uber at paras 94-95: [94] The improvidence of the arbitration clause is also clear. The mediation and arbitration processes required US$14,500 in up-front administrative fees. This amount is close to Mr. Heller’s annual income and does not include the potential costs of travel, accommodation, legal representation or lost wages. The costs are disproportionate to the size of an arbitration award that could reasonably have been foreseen when the contract was entered into.

The arbitration award also designates the law of the Netherlands as the governing law and Amsterdam as the “place” of the arbitration. This gives Mr. Heller and other Uber drivers in Ontario the clear impression that they have little choice but to travel at their own expense to the Netherlands to individually pursue claims against Uber through mandatory mediation and arbitration in Uber’s home jurisdiction.

Any representations to the arbitrator, including about the location of the hearing, can only be made after the fees have been paid. [95] The arbitration clause, in effect, modifies every other substantive right in the contract such that all rights that Mr. Heller enjoys are subject to the apparent precondition that he travel to Amsterdam, initiate an arbitration by paying the required fees and receive an arbitral award that establishes a violation of this right. It is only once these preconditions are met that Mr. Heller can get a court order to enforce his substantive rights under the contract.

Effectively, the arbitration clause makes the substantive rights given by the contract unenforceable by a driver against Uber. No reasonable person who had understood and appreciated the implications of the arbitration clause would have agreed to it. [54] As with its assertion of inequality of bargaining power, Singer advances a factual element in the determination of whether the arbitration clause constitutes an improvident bargain for Singer. [55] For example, in his first affidavit Mr.

Singer observes that the arbitration process dictated by the arbitration clause requires Singer to pay an initial arbitration fee of US $8,958.97. He adds that the arbitration process will cause Singer to incur further expenses, including expenses relating to Mr. Singer attending in Virginia. Singer’s point is that these expenses demonstrate an improvident bargain, presumably drawing an analogy to the expenses that were reviewed in Uber . [56] Whether such expenses lead to a finding of an improvident bargain can be determined only in the context of knowing Singer’s financial resources.

A consideration of Singer’s suggestion that such expenses are relevant to the question requires knowing how such expenses would affect Singer – a consideration of facts. [57] More broadly, Singer asserts that the arbitration clause gives P&H an undue advantage or benefit over Singer. Singer says so in the context of anticipating that the arbitration would be conducted in the U.S. state of Virginia.

A consideration of that assertion requires considering how an arbitration in Virginia would affect both P&H and Singer. [58] The issue of whether the arbitration clause is unconscionable will be determined in part by a determination of whether, arising from an inequality of bargaining power, the arbitration clause constitutes an improvident bargain for Singer. As with the previous question, the question of improvident bargain is not one that will be determined with reference to the clause and the contracts without reference to any facts that would be specific to this case.

Rather, the question will be determined with reference to – and, if Singer succeeds in its position, in reliance on – facts that are specific to this case. [59] Determination of whether the arbitration clause constitutes an improvident bargain for Singer requires consideration of a meaningful factual matrix. 11. The arbitral tribunal will rule on whether the arbitration clause is unconscionable [60] Determining the unconscionability issue is not just a matter of interpreting a standard form provision. Rather, that issue must be determined with reference to the circumstances that are peculiar to this case.

There is a meaningful factual matrix that must be considered. [61] The question of the unconscionability of the arbitration clause, then, is one of mixed fact and law. It must be ruled on, in the first instance, not by the court but by the arbitral tribunal. B. Disposition of the applications [62] The arbitral tribunal will rule on the issue of the unconscionability of the arbitration clause. That being the case, as contemplated in such circumstances in both the ICAA ( s. 9 ) and the domestic Act (s. 8), this action is stayed pending: (

a) the arbitral tribunal’s ruling on Singer’s allegation that the arbitration clause is unconscionable; or (

b) if Singer does not participate in the arbitration process, the arbitral tribunal’s determination of the arbitration process. [63] The other issues raised on these applications cannot be addressed until the arbitral tribunal has made that ruling. In this sense, then, the other issues have been raised prematurely. Accordingly: (

a) the balance of P&H’s application is dismissed, without prejudice to P&H’s right to renew it following the above ruling or determination by the arbitral tribunal; and (

b) Singer’s application is dismissed, without prejudice to Singer’s right to renew the application (except for that part seeking to prevent the arbitral tribunal from determining the validity of the arbitration clause) following the above ruling or determination by the arbitral tribunal. C. Costs

[64] P&H has been successful in obtaining an initial stay and in opposing an injunction, and both applications were argued fully. Accordingly, P&H will have the costs of each application under column 2. D. Conclusion [65] I order that: (

a) P&H’s application is granted to the extent that this action is stayed pending: (

i) the arbitral tribunal’s ruling on Singer’s allegation that the arbitration clause is unconscionable; or (ii) if Singer does not participate in the arbitration process, the arbitral tribunal’s determination of the arbitration process; (

b) the balance of P&H’s application is dismissed, without prejudice to P&H’s right to renew it following the above ruling or determination by the arbitral tribunal; (

c) Singer’s application is dismissed, without prejudice to Singer’s right to renew the application (except for that part seeking to prevent the arbitral tribunal from determining the validity of the arbitration clause) following the above ruling or determination by the arbitral tribunal; and (

d) P&H will have the costs of each application under column 2. “G.M. Currie” J. G.M. CURRIE