B.C. – court acknowledges but declines to follow reasoning in Heller v. Uber Technologies Inc. – #271

In A-Teck Appraisals Ltd. v. Constandinou, 2020 BCSC 135, Madam Justice Mary A. Humphries expressly noted but declined to follow the reasoning in Heller v. Uber Technologies Inc., 2019 ONCA 1 (leave to appeal granted Uber Technologies Inc., et al. v. David Heller, 2019 CanLII 45261 (SCC), under advisement following the November 6, 2019 hearing).  Recognizing the Ontario Court of Appeal as a persuasive authority whose judgments merit respect, Humphries J. held it was “not obvious” that its reasoning applied to B.C. legislation and the unfairness informing that result did not arise on the facts before her.  She refused to void an arbitration agreement in an employment contract and, in doing so, granted a stay.

By 2016 contract of employment, Defendant provided real estate appraisal services to Plaintiff (“Employment Contract”). Defendant resigned his employment effective August 15, 2019.  The Employment Contract contained an agreement to arbitrate which Humphries J. introduced as “not a model of clear English”:

50.  All matters in difference between the parties in relation to this agreement, excepting matters related to Confidential information, Non-Competition, Non-Solicitation, and Injunctive Relief, shall be resolved as follows:

(a) [mediation provision]

(b) If the parties cannot resolve their differences by way of mediation within a reasonable time, they shall refer the dispute to the arbitration of a single arbitrator. If the parties agree upon one, otherwise, to three arbitrators, one to be appointed by each party and third to be chosen by the first two named before they enter upon the business of arbitration. The award and determination of the arbitrator or arbitrators or any two of the three arbitrators shall be binding upon the parties and their respective heirs, legal representatives, successors, and assigns. The arbitration shall be conducted pursuant to the provisions of the Arbitration Act (British Columbia).

Disputes arose in October 2019 as to whether Defendant provided appraisals in breach of the Employment Contract’s non-solicit and non-compete provisions prompting Plaintiff to file an action in B.C. Supreme Court.  Plaintiff subsequently filed a November 12, 2019 application to enjoin certain activity by Defendant which Plaintiff considered breaches of the Employment Contract. Defendant counterclaimed for wrongful dismissal.

Plaintiff promptly applied December 23, 2019 for an order under section 15 of B.C.’s Arbitration Act, RSBC 1996, c 55 to stay Defendant’s counterclaim, asserting that the counterclaim fell within the terms of the arbitration clause in the Employment Contract.  In reply, Defendant applied for summary judgment.  

Humphries J. heard argument on the stay application and reserved judgment.  The parties later agreed that the balance of the applications could be adjourned.  Plaintiff expressly did not plead against the application for summary judgment “because to do so would negate their argument that the arbitration clause must prevail”.  For his part, Defendant undertook to take no steps in default, pending Humphries J.’s decision.

Defendant argued that the arbitration clause was void and unenforceable because it attempts to contract out of certain key requirements contained in B.C.’s Employment Standards Act, RSBC 1996, c 113 (“ESA”).  Relying on Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 SCR 986, Defendant argued that the Employment Contract’s conflict of those sections of the ESA renders the entire Employment Contract void ab initio. Defendant relied on the provisions of section 4 of the ESA which set the ESA provisions as minimum requirements in regard to which any waiver has no effect.

Defendant further relied on the Ontario Court of Appeal decision in Heller v. Uber Technologies Inc and added that there was a potential for conflicting findings in parallel proceedings as to whether Defendant resigned or Plaintiff terminated the employment.

Plaintiff argued that Prince George (City of) v. A.L. Sims & Sons Ltd., 1995 CanLII 2487 (BC CA) (i) identified the pre-requisites to section 15(1) of the Arbitration Act, (ii) held that an arbitration clause is not inoperable merely because other disputed issues are inter-related with those to be resolved by arbitration and (iii) determined that the court has no residual discretion if the requirements of section 15(1) have been met.  As more recent applications of the wrongful dismissal issues being sent to arbitration, Plaintiff also relied on Pietrasz v. Eminata Group, 2014 BCSC 479 and Rashid v. Wipro Limited, 2015 BCSC 2199.

Plaintiff further argued that Defendant’s rights under the ESA are “retrospective” as Defendant is no longer an employee of Plaintiff.  Regarding Defendant’s concern for conflicted findings, Plaintiff disputed the likelihood of such a scenario.  The non-solicit and non-compete provisions expired August 2020 and, with the court’s anticipated schedule, the possibility of a hearing on the merits before then was unlikely.

[31] In response to the latter point, the plaintiff says the lawsuit will not make it to trial because the non-competition/solicitation provision only applies for a year and is up in August of 2020. That period will have expired before a court can deal with a trial and thus there will be no findings from a court to influence the arbitrator. The court would not be required, on an application for an injunction, to make findings that would impinge on the arbitration process, but in any event, the parties can agree not advise to the arbitrator of that application.

Humphries J. compared the wording of Ontario’s Employment Standards Act, 2000, SO 2000, c 41 which she found to be similar to but sufficiently different from B.C.’s equivalent Employment Standards Act. 

She did not find herself persuaded by Heller v. Uber Technologies Inc. which had examined the Ontario Employment Standards Act.

[39] While, for this court, the Ontario Court of Appeal is persuasive authority and its judgments should be viewed with respect, it is not obvious that a statutory complaint/investigative mechanism becomes an employment standard itself rather than a procedure for enforcing employment standards. More importantly, the reasoning in that case was informed by the unfairness of requiring the parties in Canada to resolve disputes in the Netherlands.

In contrast to the Ontario Court of Appeal’s reasons when considering the Ontario Employment Standards Act, Humphries J. held that B.C.’s ESA “cannot easily be read to include a complaint/investigative procedure used to enforce those minimum requirements as itself a “minimum requirement””.

[41] If such a reading were to be imported into the British Columbia context based on Heller, thus rendering most arbitration clauses nullities, it will have to await the interpretation of the issues by the Supreme Court of Canada. The statutory provisions in Ontario and British Columbia are different; the important and, in my view, overriding concern of the Ontario court as to the “inoperative” aspect of the clause requiring resolution of disputes in the Netherlands is not applicable to the case before me; and the logic of the reasoning in Heller on the issue of the dispute mechanism as an employment standard is not of such persuasive effect that it should prevail in the context of the British Columbia legislation.

Examining Defendant’s pleadings, Humphries J. determined that Defendant’s cause of action existed at common law and did not invoke the ESA.

Thus he is not relying upon a solely statutory cause of action. Wrongful dismissal exists as a common law cause of action and the defendant has filed a counterclaim for that cause of action; this is a dispute that falls within the arbitration clause on its face; the plaintiff company has taken no steps in that action.

Applying the criteria developed in B.C. and in light of the specific wording in B.C.’s own ESA, Humphries J. concluded that the requirements of the Arbitration Act had been met, the arbitration clause was not void, inoperable or incapable of being performed and Prince George (City) v. McElhanney Engineering Services Ltd. precluded her from exercising any residual discretion to refuse a stay. 

urbitral note – First, Humphries J.’s reasons disclose the B.C. courts’ ability and willingness to apply technology to enable earlier and less costly adjudication of applications.  Humphries J. notes that the application was filed on December 23, 2019, just before the holiday break and came before her on January 16, 2020.  The reasons note that the place of hearing and the place of judgment were Prince George, B.C. 

That said, it is worth noting that the reasons also disclose that, despite the fact that she is assigned to Vancouver and the application was presentable in Prince George, the court was still able to conduct the hearing without counsel, parties and the court being obliged to incur time and expense to travel to a single location.  As Humphries J.’s notes, “the matter came on before me in Vancouver by video from Prince George”.

While the courts’ use of videoconferencing to conduct interim hearings is neither new nor unusual (and actually appears as an authorized, official option in some courts’ rules of practice), the ease with which the court engaged in the process supports that courts’ increased flexibility in conducting dispute resolution.

In using its resources, the court accelerated determination of the motion to stay and, as a consequence, accelerated the parties’ ability to undertake arbitration.  By using their own resources to provide prompt and efficient resolution of disputes, the courts further enhance the assistance they provide to arbitration as an alternative dispute resolution. The efforts made by the courts are gains enjoyed by arbitration.   

Second, for an earlier Arbitration Matters note on the Ontario Court of Appeal decision in Heller v. Uber Technologies Inc. see “Determination of exceptions to mandatory stay are for court to make and not arbitrator”.

Third for recent considerations of Heller v. Uber Technologies Inc., see “Consumer contract arbitration clauses resist unconscionability/undue influence challenges”.