In 10060 Jasper Avenue Building Limited v Scotia Place Tower III Inc, 2023 ABKB 23, Justice Summers refused an application to stay a proceeding brought by the party who commenced it. He found that the applicant party did not have status to make the application under the relevant arbitration legislation.
Background -The dispute concerned a retail and office complex in Edmonton, built on two parcels of land owned by 10060 Jasper Avenue Building Limited and WR Equities Inc (the “Plaintiffs”) and another parcel owned by Scotia Place Tower III Inc. (the “Defendant”). The Parties were bound by an Owners Agreement and a Management Agreement (collectively, the “Agreements”), both dated October 31, 1988, pursuant to which the Plaintiffs operated and managed the complex. The relevant portions of the Agreements are neither described nor reproduced, but it appears that: (i) they included a dispute resolution process; (ii) which was not mandatory, but permissive; and (iii) which provided that certain types of disputes may be referred to an “expert” (paras. 5 and 8). The Parties and Justice Summer referred to the relevant provision as the “expert decision-making process”.
The dispute – Over the Defendant’s objection, the Plaintiffs replaced all windows in the complex in 2016. In 2017, the Plaintiffs arranged for its property manager, Morguard Investments Limited, to provide Defendant with an invoice for its share of the costs. On September 18, 2017, the Plaintiffs served a notice of default upon the Defendant for failure to pay that invoice. On October 17, 2017, the Defendant responded by disputing that it was in default under the Agreements, referring the dispute to the expert decision-making process and nominating a lawyer to serve as the expert, while reserving its right to seek redress from the Alberta courts. On October 27, 2017, the Plaintiffs replied by nominating a former judge as the expert, while reserving their right to avoid the expert decision-making process. The Defendant was provided with an invoice from Plaintiffs in 2018 regarding further costs pertaining to the complex, and the Parties exchanged correspondence analogous to what they exchanged regarding the 2017 invoice.
The court proceedings – The Parties then took the following steps in the Alberta courts:
- On June 26, 2019, the Plaintiffs commenced an action by statement of claim (the “First Action”), but did not serve it as their intent was to just preserve the limitation period;
- On January 14, 2020, the Plaintiffs filed a separate originating application (the “Second Action”), seeking an order that its nominee be appointed as the expert;
- On January 27, 2020, the Defendant filed a statement of defence and counterclaim in the First Action, but the Plaintiffs refused to accept service as the statement of claim had never been served;
- On February 6, 2020, the court decided the Second Action, presumably opposed by the Defendant, and appointed the latter’s nominee as the expert for the expert decision-making process;
- On January 24, 2022, the Plaintiffs served their affidavits of documents in the First Action but without prejudice to their position that the matter should proceed by way of the expert decision-making process;
- In or about September of 2022, the Defendant retained the law firm of its court-appointed nominee, who was consequently conflicted from conducting the expert decision-making process;
- On October 7, 2022, the Plaintiffs commenced a “Third Action” seeking an order requiring that the Defendant submit to the expert decision-making process;
- On October 14, 2022, the Defendant filed an application in the First Action seeking a summary dismissal; and
- On November 14, 2022, the Plaintiffs filed an application in the First Action seeking that it be stayed.
On the stay application, the Plaintiffs took the position that the expert decision-making process should be qualified as arbitration, and relied on subsection 7(1) of the Alberta Arbitration Act, which provides that “[i]f 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 proceeding.” The Defendant agreed that the expert decision-making process qualified as arbitration, but opposed the Plaintiffs’ application on two bases: (i) that only a party that is not the one which commenced the proceeding may seek a stay pursuant to subsection 7(1) of the Alberta Arbitration Act: and (ii) the Plaintiffs brought the application with undue delay, which is a ground to refuse a stay under paragraph (d) of subsection 7(2) of the Alberta Arbitration Act.
Justice Summers set out four main reasons to refuse the Plaintiffs’ application to stay the First Action (para. 27):
- The Alberta legislature “did not provide authority for a plaintiff to apply for an order staying the action that the plaintiff commenced”;
- Both Parties agreed that the expert decision-making process was not mandatory under the Agreements but was permissive. In fact, neither the Plaintiffs nor the Defendant unequivocally committed to the expert decision-making process, and both the Plaintiffs and the Defendant reserved their rights outside of that process;
- The Plaintiffs did delay in bringing the stay application, although the Defendant was also responsible for substantial delay in this matter; and
- The matter appeared to be a case where summary judgement may be appropriate (which is a ground to stay the proceeding under paragraph (e) of subsection 7(2) of the Alberta Arbitration Act).
Contributor’s Notes:
First, on its face, the only principle for which this case may stand is the unavailability of the remedy under subsection 7(1) of the Alberta Arbitration Act to the party which commenced the action in respect of which a stay is sought. The decision does not address whether the expert decision-making process agreed upon by the parties qualified as arbitration (as opposed to expert determination, for instance), and whether the subject matter of the disputes fell within its scope.
Second, it is disappointing that the decision did not address the Plaintiffs’ argument, based on section 8 of the Alberta Judicature Act (para. 26e), which grants the court general jurisdiction to grant any remedy that seems just to the court, including to avoid multiplicity of proceedings. This approach appears to be in line with, for instance, the Nova Scotia’s Court of Appeal decision in Clyde Bergemann Canada Ltd. v. Lorneville Mechanical Contractors Ltd., 2018 NSCA 14. In that case, the Nova Scotia Court of Appeal also confirmed that the party who commenced an action could not seek its stay under subsection 9(1) of the Nova Scotia Commercial Arbitration Act, which is similarly worded to subsection 7(1) of the Alberta Arbitration Act. The Court of Appeal upheld the first instance judge’s decision to stay the proceeding, relying on subsection 41(e) of the Nova Scotia Judicature Act. See Arbitration Case Note –Nova Scotia – Court of Appeal sceptical that litigants suffer irreparable harm if obliged to litigate instead of arbitrate – #089. See also Arbitration Case Note – Ontario – Arbitration or expert determination? Stay granted, referral to “Independent Accountant” – #620, pertaining to the decision of the Ontario Superior Court of Justice in 2832402 Ontario Inc. v 2853462 Ontario Inc., QBD Modular Systems Inc., and QBD Cooling Systems Inc., 2022 ONSC 2694.
The failure to address this argument is even more dissatisfying considering the facts of the case, which may result in a multiplicity of proceedings and the risk of inconsistent results. Indeed, on the one hand, the court may be understood to have enforced the arbitration agreement between the parties by appointing an expert as a result of the Second Action, though the specific reasons for doing so are not set out in Justice Summers’ reasons. On the other hand, Justice Summers allowed legal proceedings that could have been declared null (para. 27b), the First Action, to continue in parallel with the arbitration, by refusing Plaintiffs’ application to stay. It is surprising that Justice Summers did not decide all at once the Plaintiffs’ application to stay and their Third Action, seeking to compel Defendant to submit to arbitration, out of a concern for consistency and to avoid unnecessary expenditures of resources by the Parties and the court.