Manitoba – facts raising claim subject to arbitration, but common to judicial review, disregarded – #366

Despite overlap in facts, Mr. Justice James G. Edmond in Ladco Company Limited v. The City of Winnipeg, 2020 MBQB 101 declined to include an alleged breach of contract issue as an issue ancillary to judicial review applications, observing only that, if valid, that alleged breach should be determined by another procedural mechanism such as arbitration provided in the parties’ agreements.  The facts in the record involved both (i) a 2016 exercise of a city’s statutory powers and the constitutionality of a by-law and resolution and (ii) a breach of contract issue arguably subject to an agreement to arbitrate.  Despite acknowledging that certain facts in the record overlapped with issues properly raised for judicial review, Edmond J. held that he would disregard those facts involving breach of contract and would “leave that issue to another day”.

Edmond J.’s reasons addressed three (3) separate judicial review applications filed by different entities (“Applicants”): (i) Ladco Company Limited (“Ladco”); (ii) Ridgewood West Land Corp. and Sage Creek Development Corporation (“Qualico”); and, (iii) Urban Development institute (Manitoba Division) and Manitoba Home Builders’ Association Inc.

Applicants sought to quash an October 26, 2016 By-Law and a related Resolution issued by the City of Winnipeg’s (“City”).  Applicants argued, among other things, that the City lacked statutory authority or power to enact the By-Law and pass the Resolution.  In particular, Applicants argued, among other grounds, that:

(i) the fee imposed by the City’s By-Law (“Impact Fee”) is a constitutionally invalid indirect tax;

(ii) imposing the Impact Fee discriminates against developers, builders and homeowners within certain developments and is discriminatory, arbitrary and invalid; and,

(iii) Ladco and Qualico argued also that applying the Impact Fee within their developments breached the development approval process and specific development agreements between them and the City.

Edmond J. noted at para. 20 that many of the facts were not disputed and dealt mostly with the history of the development process, governing legislation by-laws and City policies and at para. 21 listed the components of the City’s regulatory scheme.  As well, at para. 103(l), Edmond J. listed the fourteen (14) development agreements referenced or attached as exhibits to Applicants’ affidavits (“Development Agreements”).

Further to his analysis of the evidence and the applicable principles and case law, Edmond J. at para. 231 issued his findings on the City’s authority to enact and impose the Impact Fee and the constitutionality of the Impact Fee but expressly held back from determining Ladco’s and Qualico’s request to decided the alleged breach of contract issue.  He determined that it would be inappropriate and not in accordance with the Court of Queen’s Bench Rules, Man Reg 553/88 (“Rules”) to do so.

Within the factual matrix raised by the dispute, Applicants also raised a breach of contract issue which, in doing so, raised issues relevant to disputes subject to an agreement to arbitrate. 

At paras 104-111, Edmond J. paused to address Applicants’ arguments that their dispute with the City was actually a breach of contract issue.  Applicants argued that the Development Agreements contained an express or, alternatively, implied obligation on the City to pay for offsite or regional infrastructure not otherwise agreed to by Ladco or Qualico in the development approval process and the Development Agreements.  Imposing the Impact Fee constituted a breach of the Development Agreements.

The City denied the alleged breach of contract and further urged that a breach of contract could not be determined as part of the judicial review applications.  Those claims required pleadings, discovery, damage particulars which were all absent from the record before Edmond J.  In addition to those submissions, the City submitted that any breach of contract dispute was subject to a mandatory agreement to arbitrate contained in the applicable Development Agreements. 

Applicants rebutted the City’s arguments, submitting that their relief was declaratory not compensatory and ancillary to the relief sought in the judicial review applications.

Edmond J. did consider the City’s submissions of the disputed material facts and the record constituted, applying the general rule in Garwood v. Garwood Estate, 2007 MBCA 160 paras 52 and 58 and Winnipeg Condominium Corp. 479 v. 520 Portage Avenue Ltd et al, 2020 MBCA 66 para. 43 that disputed material facts could only be determined in “limited circumstances”.  See paras 106-108.

Emond J. agreed that the Rules did permit declaratory relief provided the declaration was ancillary to the other relief properly sought in the application.  On the record before him, Edmond J. determined that the breach of contract issue was “a stand-alone claim” and “not ancillary to the other relief and the other issues addressed in the application”.  As a result, Edmond J. held that “all references to the breach of contract issue in the affidavits must be disregarded” unless relevant to the other issues properly before him.

At para. 110 Emond J. affirmed that the disputed facts regarding the breach of contract issue ought to be decided by either a trial of an issue or by arbitration.  In directing towards those other procedural solutions, Emond J. did not pre-determine whether the breach was covered by the agreement to arbitrate.  He did state that he did not see express language in the Development Agreements which contained the City’s obligations as framed by Applicants.

[111] The City submits that the development agreements contain an arbitration clause which requires the parties to proceed to arbitration to resolve “disputes”.  Since I have determined that the breach of contract issue should not be decided in these applications, it is unnecessary and premature for me to decide whether the arbitration clause applies in this case.  It is unclear whether the present dispute respecting the imposition of the Impact Fee is a “dispute” as defined in the various development agreements.  I leave that issue for another day, to be determined if the applicants wish to proceed with the breach of contract issue as a trial of an issue, commence a separate action or give notice to proceed with an arbitration pursuant to the various development agreements”.

urbitral note – First, the distinctions drawn by Edmond J. remind arbitral parties and practitioners that facts may give rise to overlapping causes of action which cannot be blended into a single procedural mechanism.  The obstacle can be either the nature of the procedural remedy sought in court, the existence of an agreement to arbitrate or both.

Second, reproduced at the foot of his decision as Schedule A, Edmond J. provides a table of his reasons to rulings on admissibility for disputed evidence.  The rulings address a variety of objections and provide arbitration practitioners a current view of an experienced trial judge’s approach to evidence.

Third, Ladco filed its application for judicial review on January 25, 2017 and the other (2) applications were filed at dates not mentioned but, based on the docket numbering, soon after in 2017.  The decision determines that breach of contract ought to be raised in a distinct proceeding.  For limitation periods of general application in Manitoba applicable to either discrete or successive breaches of a contract obligation, see The Limitation of Actions Act, CCSM c L150.