BC – Franchisor addresses Uber arbitration agreement flaws to obtain stay of proceedings – #560

In Kang v Advanced Fresh Concepts Franchise Corp., 2021 BCPC 262, Small Claims Court Judge S. Archer granted a motion to stay an action in favour of arbitration under either section 8 of the International Commercial Arbitration Act, R.S.B.C. 1996 c.233 or, in the alternative, section 7 of the B.C. Arbitration Act, S.B.C. 2020, c.2. Judge Archer concluded that the international Act applied because the parties, at the time of their agreement, had their places of business in different countries, but that it didn’t matter because the test for a stay was essentially the same. Moreover, she distinguished the facts from those in Uber Technologies Inc. v Heller, 2020 SCC 16; the arbitration agreement was not unconscionable because the income earned by the claimant franchisee was “significant” as compared with the cost to commence an arbitration under the ICDR Rules.

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Ontario – Appeal of award dismissed after party refused to participate – #557

In Vanhof & Blokker Ltd. v Vanhoff & Blokker Acquisition Corp., 2021 ONSC 7211, the Respondents/Appellants on Appeal (“the Sellers”) sold the assets of their horticultural and garden supply business to the Applicants/Respondents on Appeal (“the Purchasers”) pursuant to an Asset Purchase Agreement dated December 29, 2014. The Sellers alleged that the Purchasers breached the terms of the Asset Purchase Agreement and they therefore refused to make payments under the Agreement, claiming that they were induced to enter into the Agreement by fraudulent and negligent misrepresentations made by the Purchasers. The Sellers refused to participate in an arbitration of the dispute and then appealed the final award. Justice Pollack dismissed the appeal, relying upon s. 27(3) of the Arbitration Act, 1991, S.O. 1991, c. 17, on the basis that the Sellers had been advised of the date for the arbitration and had filed material, but had failed to participate. They were obliged to raise their objections about the arbitrator’s jurisdiction before the arbitrator at the hearing, rather than by letter.

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BC – correctness standard of review applies on set aside applications on jurisdiction grounds – #555

In lululemon athletica canada inc. v Industrial Color Productions Inc., 2021 BCCA 428, Justice Marchand, for the British Columbia Court of Appeal, dismissed lululemon’s appeal of the chambers judge’s dismissal of its application to set aside the arbitrator’s award made in favour of Industrial Color Productions (“ICP”). The issue was whether the arbitrator had acted outside his jurisdiction in awarding ICP damages that lululemon argued were never claimed in the pleading. Justice Marchand found that the chambers judge had applied the wrong standard of review – the standard of review is correctness and United Mexican States v Cargill, 2011 ONCA 622 remains the leading case on the standard of review for set aside applications on matters of jurisdiction. Canada (Minister of Citizenship and Immigration) v. Vavilov2019 SCC 65 and Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 were not helpful in this context. However, Justice Marchand found that the chambers judge’s decision to dismiss the set aside application was correct; the arbitrator did not stray outside the scope of the submission to arbitration when the impugned pleading was read generously.

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B.C. – Award challenged for legal error, denial of natural justice after baseball arbitration – #552

In 1150 Alberni Limited Partnership v Northwest Community Enterprises Ltd., 2021 BCSC 2053, Justice Groves heard a petition to set aside an arbitral award or, in the alternative, for leave to appeal the award, as well as a cross-petition to enforce the award. The award arose out of a final offer selection arbitration, which required the arbitrator to accept one party’s submission in its entirety and provide reasons. Justice Groves dismissed the set aside and leave to appeal petitions. The arbitrator had not erred in law or in denying the petitioner natural justice; the losing party was simply re-arguing its case. Justice Groves granted an order enforcing the award.

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B.C. – Parties’ “expeditious” settlement process led to 2 arbitrations and multiple court proceedings over 7 years – #549

In Grewal v Mann, 2021 BCSC 1995, Justice MacNaughton denied the defendants’ motion to stay the plaintiff’s appeal of an arbitral award to the B.C Supreme Court, pending determination of their appeal of that Court’s leave decision to the Court of Appeal. She found that there was no prejudice to the defendants and that the lengthy history of the parties’ dispute and their acrimony made it likely that the decision on the appeal of the award (which was to be heard by the B. C. Supreme Court under s. 31 of the former B.C. Arbitration Act, RSBC 1996, c. 55) would be appealed to the Court of Appeal and that both appeals could be heard together.  She found that, “it would be more efficient to allow matters to proceed to conclusion in the BC Supreme Court and then, for the parties to decide what appeals they wish to take to the Court of Appeal”.  By this point, the parties were seven years away from their 2014 agreement to sever their business relationship “expeditiously”. They agreed to a three-stage mediation and arbitration process that led to a mediated settlement agreement (the terms of which were not memorialized and became contentious), two arbitrations (one which required no written reasons and one which resulted in one page of reasons), one stay of proceedings, and two appeals (so far).

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NL – Pre-judgment attachment order granted re possible damages payable from arbitration -#548

In Sandford v Astaldi, 2021 NLSC 130, the plaintiffs sought a pre-judgment attachment order pursuant to s. 27 of the Newfoundland and Labrador Judgment Enforcement Act on the exigible property of defendant Astaldi Canada Inc. They also asked that defendants Muskrat Falls Corporation (“MFC”) and Nalcor Energy be prohibited from dealing with Astaldi property they hold in a manner that would be likely to hinder the plaintiffs in the enforcement of any judgment they may obtain against Astaldi in their litigation. The exigible property at issue was: (a) monetary damages which Astaldi hoped to receive as a result of a private commercial arbitration against MFC and Nalcor; and (b) proceeds held by MFC and Nalcor from the sale of equipment owned by Astaldi. The issue on the application was whether there were reasonable grounds to believe that Astaldi “is dealing” or “is likely to deal” with its exigible property otherwise than for the purpose of meeting its reasonable and ordinary business expenses; and, if so, whether the manner of it so dealing would likely seriously hinder the plaintiffs in enforcement of a judgment. Justice Thompson granted the pre-judgment attachment order on the ground that Astaldi was no longer conducting business at all in the province, which meant that it was not dealing with its exigible property at all, nor meeting its expenses.

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Alberta – Award was “abbreviated” to save time and costs – #544

In Alvarez v Alvarez, 2021 ABQB 717, Justice Malik denied leave to appeal an arbitrator’s award on a question of law pursuant to section 44(2) of the Arbitration Act, RSA 2000, c. A-43. He found that no question of law was raised. However, the case raises issues  concerning s. 44(1) of the Act, which allows a party to ask the tribunal to “correct typographical errors, errors of calculation and similar errors in the award”  and s. 40, which permits a party to ask the tribunal to “explain any matter” in the award. The arbitrator issued an Award, and later at the request of the applicant, a Corrected Award, which included a “nominal correction”. It also addressed the applicant’s requests for correction, but made no changes to the Award. Before Justice Malik, the applicant argued (unsuccessfully) that the Award and Corrected Award contained errors of law. Justice Malik noted that the, “[a]rbitrator acknowledged that the Award was abbreviated to save time and costs, that just because he had not set out every fact or argument did not mean he had not considered them, and that a party could request additional reasons should they wish to pay the additional cost.”  The applicant argued on the application for leave to appeal that the arbitrator had not explained his Award sufficiently. The decision does not indicate whether the parties requested an abbreviated award to save time and costs. The Award was issued 8 months after the close of hearings.

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Ontario – Challenge to arbitrator’s integrity to be determined using bias test – #543

In Farmer v Farmer, 2021 ONSC 5913, the appellant wife appealed three arbitral awards arising out of a five-day family arbitration pursuant to s. 45(6)(a) of the Ontario Arbitration Act, 1991, SO 1991, c. 17. The wife’s grounds for appeal included that the arbitrator’s reasons were deficient and that the arbitrator’s “Clarification/Explanation Award” rendered after the parties complained that he had omitted certain issues in his first award, was an “after-the-fact” justification for the first award. The arbitrator admitted that he had had difficulty with his dictaphone when he had drafted the first award so that certain portions of it were inadvertently omitted, but said in the “Clarification/Explanation Award” that all issues had been considered. Justice Finlayson found that the “presumption of integrity” which applies to judges also applies to arbitrators and that the wife had to meet a test “similar to” the “reasonable apprehension of bias test” to rebut that presumption. She did not do so and this ground of appeal was dismissed. Justice Finlayson also concluded that the arbitrator’s reasons were insufficient, and substituted his own decision on one issue.

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Ontario – Award enforcement application met with merits arguments in leave to appeal/set aside cross-application #539

In Fogler, Rubinoff LLP v Houle, 2021 ONSC 5626, Justice Vermette heard two applications following an arbitration concerning the assessment of two accounts rendered by applicant, Fogler, Rubinoff LLP, to its clients, respondents Conrad and Sheila Houle. The arbitrator issued an award requiring the respondents to pay. After they did not do so, Foglers brought an enforcement application pursuant to s. 50 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17. Upon such application, the court “shall” grant judgment so long as the requirements of s. 50(3) are not met – the appeal/set aside deadline has not yet elapsed, there is a pending appeal/set aside application, or the award has been set aside or the arbitration is the subject of an award of a declaration of invalidity. In other words, the merits of the award are not relevant. The respondents did not initially appeal the award, but then brought a cross-application – challenging both jurisdiction and the merits – seeking to set aside the award pursuant to s. 46(1)3 of the Arbitration Act or, in the alternative, leave to appeal the award under s. 45(1). Justice Vermette found that the set aside application was really a request to review the substance of the award on the basis that the arbitrator’s decision was unreasonable or incorrect. She also dismissed the motion for leave to appeal on the ground that it did not raise a question of law. Whether the facts met the required legal test was a matter of mixed fact and law. Therefore, given the dismissal of the respondent’s cross-application, she granted the Foglers enforcement application.

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Ontario – Stay motion denied: case was a proper one for summary judgment, but summary judgment not sought – #538

In Jencel 407 Yonge Street Inc. v. Bright Immigration Inc., 2021 ONSC 6030, Justice Akbarali dismissed the Defendant’s motion to stay the action in favour of arbitration. The Plaintiff argued that the stay motion should be dismissed because the action was a proper one for summary judgment, relying upon s. 7(2)5 of the Arbitration Act, 1991, S.O. 1991, c. 17. Justice Akbarali agreed. The key facts were uncontested and the Defendant’s position in the action, which consisted mostly of “bald assertions and unarticulated legal and factual arguments”, did not give rise to any genuine issue requiring a trial. However, the Plaintiff did not move for summary judgment.

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