In Shoppers Drug Mart Inc. v. Retirement Home Specialists Inc., 2019 NLSC 44, Mr. Justice Robert P. Stack upheld an ex parte Newfoundland and Labrador court decision registering as its own judgment an earlier Ontario court decision enforcing awards. In dismissing defendants’ contestation as a collateral attack on the awards, Stack J. listed alternative procedural steps which might have provided plausible opportunity to challenge the awards. Stack J. underlined the limited role of the Ontario court enforcing an arbitration award under its Arbitration Act, 1991, SO 1991, c 17, and the Newfoundland and Labrador court providing reciprocal enforcement of another province’s court judgments under the Reciprocal Enforcement of Judgments Act, RSNL 1990, c R-4.
Retirement Home Specialists Inc. signed a Pharmacy Provider Agreement with Shoppers Drug Mart Inc. (“Shoppers”) effective January 19, 2011. On the same day, Bay Roberts Retirement Centre Limited, Retirement Home Investments Inc., Meadow Creek Retirement Centre Inc., and Presidential Estates Inc. signed a second, separate Pharmacy Provider Agreement with Shoppers on substantially the same terms. The two Pharmacy Provider Agreements (the “Agreements”) each contained:
– a governing law clause providing that the Agreements “shall be made and construed in accordance with the laws of the province where the Facilities are located [Newfoundland and Labrador]”;
– an attornment to the jurisdiction of the Ontario Superior Court; and,
– a dispute resolution clause stipulating that disputes would be determined by arbitration in accordance with the provisions of Ontario’s Arbitration Act and from which “there shall be no appeal”.
Shoppers terminated the Agreements effective October 18, 2015. Retirement Home Specialists Inc., Bay Roberts Retirement Centre Limited, Retirement Home Investments Inc., Meadow Creek Retirement Centre Inc., and Presidential Estates Inc. (“Retirement Homes”) disputed the enforceability of the Agreements and Shoppers commenced arbitration seeking repayment of $840,000.00 from Retirement Homes.
At the arbitration hearing, Retirement Homes did not challenge the arbitrator’s jurisdiction or termination of the Agreements. Rather, they argued that the Agreements were not enforceable because they violated the Pharmaceutical Services Act, SNL 2006, c P-12.01.
“ Following a hearing at which the Retirement Homes participated, the arbitrator made three awards. In the first award, he found that Retirement Home Specialists Inc. was required to pay to Shoppers $352,597 and that Bay Roberts Retirement Centre Limited, Retirement Home Investments Inc., Meadow Creek Retirement Centre Inc., and Presidential Estates Inc. were jointly and severally liable to pay Shoppers $488,433 (the “Award”). In the second award, the arbitrator found the Retirement Homes jointly and severally liable to Shoppers for costs in the amount of $94,861.47 (the “Costs Award”). Finally, the arbitrator made a joint and several supplemental costs award in favour of Shoppers against the Retirement Homes of $19,780.63 (the “Supplemental Costs Award”).”
With notice to Retirement Homes, Shoppers applied to the Ontario Superior Court under section 50(3) of Ontario’s Arbitration Act to have the three (3) awards entered as judgments of that court. The application was granted May 1, 2018 along with a subsequent costs order on June 4, 2018. (The orders are not reported).
Shoppers then applied ex parte to the Newfoundland and Labrador Supreme Court to register the Ontario judgments against Retirement Homes. Retirement Homes applied to set aside the ex parte orders. In doing so, they shifted the burden to Shoppers to demonstrate that the ex parte order should be maintained.
Retirement Homes raised two (2) broad grounds.
First, reciprocal enforcement should be refused under section 3(6)(b) of the Reciprocal Enforcement of Judgments Act, because Retirement Homes neither carried on business in Ontario nor appeared or submitted to the jurisdiction of the Ontario courts.
Stack J. dismissed this ground. He determined that Retirement Homes had “contractually, and therefore voluntarily, submitted to the laws of the Province of Ontario for the purpose of the arbitration and attorned to the jurisdiction of the Ontario Superior Court”.
“ Notwithstanding that the Agreements permitted the parties to seek recourse to the Ontario Superior Court of Justice or to “the courts of competent jurisdiction in the province where the Facilities are located” for interim relief, there was no suggestion that the terms of the Ontario Act did not apply to the arbitration. Once the arbitration was held under the laws of the Province of Ontario, the jurisdiction of the Ontario Superior Court was confirmed in the Remedies provisions contained in the Ontario Act.”
Second, reciprocal enforcement should be refused under section 3(6)(f) and (g) of the Reciprocal Enforcement of Judgments Act because the Ontario judgments were in respect of a cause of action that for reasons of public policy would not have been entertained by the Newfoundland and Labrador Supreme Court.
Stack J. noted that these arguments had been raised in the arbitration. The arbitrator had concluded that no breach of the Pharmaceutical Association Act had occurred and that Shoppers’ conduct was not contrary to public policy.
“I agree with Shoppers that the Agreements empowered the arbitrator to interpret the Agreements and the 2006 Act. That is precisely what he did in the Awards.”
Stack J. then offered what could have been an advisable, alternative approach to raising this argument earlier rather than later.
“ If the Retirement Homes were genuinely of the view that the terms of the Agreements were contrary to the public policy of this Province, then they could have submitted that question to this Court before they participated in the arbitration process. Or, they could have challenged the jurisdiction of the arbitrator before him or in the Ontario Superior Court. Had the arbitrator ruled against them on that issue, they could then have sought judicial review in Ontario. Or, perhaps, they could have applied to the Ontario Superior Court, at or before the time Shoppers sought to enter the Awards as judgments, for a declaration that the arbitrator was without jurisdiction to make the Awards (see the reference to section 46 of the Ontario Act below). Ultimately, of course, they could have appealed an unfavourable decision of the Ontario Superior Court to the Ontario Court of Appeal. The Retirement Homes did none of these things.”
At paras 35-37, Stack J. reiterated the limit scope of his involvement and that of the Ontario courts. The substance of the awards was not in issue before him and he was not tasked with conducting judicial review of the awards.
“The simple matter before me is whether Shoppers has valid judgments of the Ontario Superior Court that are appropriate for registration in this Province. The issue before the Ontario Superior Court was whether, in the absence of the Retirement Homes appearing, it was in order to register the Awards as judgments.”
He noted that the Ontario Superior Court’s role was “limited to determining whether the application before it has been properly served upon the adverse parties and whether the award has been subject to appeal or to an application to set it aside or have it declared invalid.”
Stack J. held that Retirement Homes did not apply under section 46 of Ontario’s Arbitration Act to set aside the awards, had been served with the Ontario recognition and enforcement proceedings and had no evidence that the awards had been appealed, set aside or declared invalid in Ontario or in Newfoundland and Labrador. Stack J. listed the missed opportunities:
“ The Retirement Homes’ arguments under sections 3(6)(f) and (g) of the Act are also without merit. In summary, at no time did the Retirement Homes:
(a) refuse to take part in the arbitration as constituted pursuant to the Agreements;
(b) make any challenge to the appointment of the arbitrator or the application of the Ontario Act, either before the Ontario court or this Court;
(c) appeal or seek judicial review of the Awards, either before the Ontario Superior Court or this Court;
(d) oppose Shopper’s applications before the Ontario Superior Court, despite having been given notice;
(e) make an application to the Ontario Superior Court pursuant to section 46 of the Ontario Act;
(f) appeal the judgments of the Ontario Superior Court; or
(g) bring any proceeding of any kind for “interim relief … or other equitable relief” in response to any of the foregoing, either before the Ontario Superior Court or this Court.”
He characterized Retirement Homes’ contestation under the Reciprocal Enforcement of Judgments Act as a “collateral attack” on the awards. To reduce the dispute before him to its essence, Stack J. tracked the wording of sections 3(6)(f) and (g) of the Reciprocal Enforcement of Judgments Act to the facts of the application before him:
“ The “judgments” of the Ontario Court that were the subject of the order by Butler, J. were in respect of applications by Shoppers pursuant to section 50(1) of the Ontario Act. The “causes of action” in that court were the applications to register the Awards pursuant to the Ontario Act. I was not made aware of any defence that the Retirement Homes may have had to those applications. Nor is the registration of an arbitration award as a judgment in the Ontario Superior Court pursuant to the Ontario Act contrary to the public policy of the Province of Newfoundland and Labrador.
 The Awards themselves were not before the Ontario Superior Court just as they are not before me. The Retirement Homes cannot use the Act to make a collateral attack on the Awards.”
Stack J. held that Shoppers had met its burden and demonstrated that the ex parte order from Newfoundland and Labrador’s Supreme Court should be maintained.
The reasons demonstrate a brisk application of Canadian legislation designed to assist arbitral parties in the enforcement of their awards. Stack J.’s reasons also list the alternative steps available to those arbitral parties unsuccessful in the arbitral process and wary of the intra-provincial assistance awaiting enforcement of the awards. The reasons demonstrate that those alternative steps can be taken provided that are supported by the facts and are taken in a timely manner.
Note: see Ontario’s Arbitration Act, section 50(4) for provisions on enforcing in Ontario an award made elsewhere in Canada.