In Toronto Standard Condominium Corporation No. 2299 v Distillery SE Development Corp., 2024 ONCA 712, the Court held that there could be no appeal from an order appointing an arbitrator, even though the order did not explicitly indicate that it was made pursuant to s. 10 of the Arbitration Act, 1991, SO 1991, c 17. Section 10(1) provides that the court may appoint an arbitrator on a party’s application if, for example, the arbitration agreement provides no appointment procedure. Pursuant to s. 10(2), there is no appeal from the court’s appointment. Here, the application for an order appointing an arbitrator did not refer to s. 10 of the Arbitration Act but did refer to Rule 14.05 of Ontario’s Rules of Civil Procedure, RRO 1990, Reg 194 (the general rule pertaining to applications and what types of relief may be sought by application, including a determination of rights under a contract). This reference to Rule 14.05 did not engage s. 6 of the Ontario Courts of Justice Act, RSO 1990, c C.43, which sets out the matters over which the Court of Appeal has jurisdiction and provides for an appeal as of right in respect of most final orders of Superior Court judges. The appeal of the appointment order was quashed based on the appeal prohibition in s. 10(2) of the Arbitration Act.
Background – The parties to the dispute were Toronto Standard Condominium Corporation No. 2299 (“TSCC 2299”), which controlled a condominium property in Toronto, Ontario, and Distillery SE Development Corp. (“Distillery”), a development company that owned portions of the condominium’s underground parking garage and commercial/retail areas.
TSCC 2299, Distillery, and another condominium entered into a Shared Facilities Agreement (the “SFA”) in 2012 that governed the mutual use, maintenance, cost sharing, and other matters relating to the service of units, systems, and facilities. The SFA contained an alternative dispute resolution process providing that disputes were to be resolved by binding arbitration, where the parties “may agree on a single arbitrator or may each appoint an arbitrator who would agree to appoint a single arbitrator.”
In 2018, several disputes arose. TSCC 2299 delivered a notice of arbitration in April 2018. Distillery delivered a notice of arbitration in May 2018. The parties agreed on an arbitrator in July 2018. Neither party took further steps in the arbitration at that time.
In June 2022, having retained new counsel, TSCC 2299 delivered a Fresh as Amended Notice of Arbitration (the “2022 Notice”) and proposed a different arbitrator. Distillery reminded it of the previous agreement to an arbitrator. TSCC 2299 asserted it would be willing to proceed with that arbitrator if the arbitration included the matters in the 2022 Notice. Distillery objected to the scope of disputes in the 2022 Notice.
TSCC 2299 ultimately confirmed its agreement to move ahead with the arbitrator agreed in 2018. Distillery took the position that TSCC 2299 had repudiated the parties’ agreement on an arbitrator, which in any event did not extend to the expanded issues in the 2022 Notice.
The Application to Appoint an Arbitrator – TSCC 2299 brought a court application seeking an order appointing the arbitrator who had been agreed in 2018 and confirming that all issues raised in the 2022 Notice were within his jurisdiction. Distillery requested that the 2022 Notice be quashed as raising claims prematurely.
The application judge confirmed the appointment of the arbitrator that the parties had agreed to in 2018. She found that the parties had reached a binding agreement as to his appointment. That agreement had not been repudiated. The application judge made no explicit reference to any statutory provision grounding the order appointing an arbitrator.
The application judge did not determine whether the issues in the 2022 Notice properly were before the arbitrator. These matters were left to the arbitrator to determine.
The Appeal – Distillery appealed the application judge’s decision. TSCC 2299 moved to quash the appeal on the basis that there was no right to appeal an order appointing an arbitrator.
Distillery asserted that the appointment order was not made under s. 10(1) of the Arbitration Act because the provision was not specified either by TSCC 2299 as a basis for the application or by the application judge as a basis for her authority to make the order. Instead, Distillery asserted, the order was made under Rule 14.05(3)(d) of the Ontario Rules of Civil Procedure, which permits a court to determine rights under a contract on application. On that basis, the order would be appealable as of right under s. 6(1)(b) of the Ontario Courts of Justice Act.
Distillery also argued that the facts of the case did not fit within the requirements of s. 10(1), so the appointment order must have been made pursuant to the Superior Court’s general jurisdiction to enforce an agreement under Rule 14.
Finally, Distillery argued that the portion of the application judge’s order providing that the arbitrator would determine issues about jurisdiction, mandate, and additional parties was not part of the appointment order.
The Court of Appeal entirely rejected Distillery’s positions.
The application was not expressly premised on s. 10(1) of the Arbitration Act, but it did state that it was made under that statute and it referred to s. 6 of the Arbitration Act, which permits court intervention only for certain purposes (including to assist the conducting of arbitrations and to ensure that arbitrations are conducted in accordance with arbitration agreements) and “in accordance with this Act”. The only provision of the Arbitration Act applicable to court appointment of an arbitrator was s. 10(1). This was considered sufficient to engage the provision’s application.
The application’s reference to Rule 14.05 of the Ontario Rules of Civil Procedure was held not to invoke a separate source of jurisdiction. Rather, it prescribed a permissible procedure for the determination of the type of matter advanced.
Further, an unrepudiated agreement to appoint an arbitrator that a party refuses to follow through on was held to qualify as a situation where “a person with power to appoint the arbitral tribunal has not done so”, thereby meeting the requirements of s. 10(1)(b) of the Arbitration Act. In the court’s view, accepting Distillery’s argument on this point would have been contrary to the statutory restriction on court intervention except in specified circumstances and permitted an end run around the “carefully crafted” appeal rights in the statute.
Lastly, the court held that the portion of the underlying order providing that certain issues were to be determined by the arbitrator could not be construed as severable from the appointment and subject to its own appeal regime.
Therefore, s. 10(1) of the Arbitration Actwas the source of the application judge’s authority to make the order under appeal. The prohibition on appeals in s. 10(2) applied to the order in its entirety, and the appeal was quashed.
Contributor’s Notes:
The court’s treatment of s. 6 of the Arbitration Act in this case creates an interesting juxtaposition with the approach taken by the Alberta Court of Appeal to the comparable s. 6 of the Arbitration Act, RSA 2000, c A-43 in Sivitilli v PesoRama Inc, 2024 ABCA 249.
In TSCC 2299, the court considered the impact of an application being brought under s. 6 of the Ontario Arbitration Act. Section 6 of that statute reads:
“6 No court shall intervene in matters governed by this Act, except for the following purposes, in accordance with this Act:
- To assist the conducting of arbitrations.
- To ensure that arbitrations are conducted in accordance with arbitration agreements.
- To prevent unequal or unfair treatment of parties to arbitration agreements.
- To enforce awards.”
It seems the court viewed this provision’s reference to court intervention for purposes “in accordance with this Act” as effectively incorporating any other provision of the Ontario Arbitration Act that would be applicable to the matter. In the context of the application to appoint an arbitrator, the only applicable provision was s. 10. The court then applied s. 10, including its limited appeal rights, to the order as a whole.
In Sivitilli v PesoRama Inc, the Alberta Court of Appeal considered whether leave was required to appeal decisions under s. 6 of the Alberta Arbitration Act, which is almost identical to s. 6 of the Ontario Arbitration Act.
The court in Sivitilli acknowledged that the Alberta statute does not address the appeal route for challenges to arbitrations pursuant to s. 6 – in contrast to challenges pursuant to s. 47 (e.g. on the basis that the arbitration agreement is invalid), which expressly require leave to appeal under s. 48. Because appeals of s. 6 challenges were not addressed in the statute, the Alberta court held that the general appeal regime in Alberta’s rules of court, which did not require leave, applied. For further discussion of Sivitilli v PesoRama Inc, see the following previous blog post: Alberta – Statutory Framework of Arbitral Appeals Clarified – Leave or No Leave? – #862 – Arbitration Matters.
TSCC 2299 and Sivitilli represent different approaches to questions of court jurisdiction in arbitration matters:
- The analysis in TSCC 2299 gave primacy to the arbitration statute, with rules of civil procedure relegated to a secondary consideration rather than the fundamental source of jurisdiction. The Ontario court considered whether a provision in the arbitration statute applied to the matter, and then whether a procedural rule supplemented or changed the outcome. This is a very arbitration-friendly approach, as further demonstrated by the court’s expansive interpretation of s. 10 as encompassing even orders ancillary to the core appointment order.
- The analysis in Sivitilli gave primacy to the court rules that create its jurisdiction, with the applicable arbitration statute considered only to the extent that it specifically dealt with a matter in the proceeding and provided a basis to deviate from the court rules. Appeal rights in respect of Arbitration Act s. 6 challenges were not addressed in the statute. Therefore, the general appeal regime applied, which in Sivitilli provided for an appeal as of right.
While I generally celebrate arbitration-friendly outcomes, the Ontario court’s analysis here raises some red flags and may represent undue deference to domestic arbitration legislation. The Ontario Court of Appeal derives its jurisdiction from s. 6 of the Courts of Justice Act, and that must be the starting point of its jurisdiction analysis. That jurisdiction is subject only to applicable statutory limitations. While those statutory limitations must be given meaning, they should not be interpreted in an unduly expansive manner or extended to matters to which they do not specifically apply.
The application underlying TSCC 2299 was pursuant to s. 6 of the Ontario Arbitration Act, not s. 10. The statute does not address appeals of orders made pursuant to s. 6. This arguably should have resulted in the matter defaulting to the court’s core appellate jurisdiction, which would have permitted an appeal as of right. Instead, the Court of Appeal interpreted s. 6 of the Arbitration Act to bring in the application of s. 10, and limited appeal rights even in respect of the order leaving the arbitrator to determine certain issues and not specifically appointing an arbitrator.
The Ontario court’s approach suggests that even matters not explicitly addressed in the applicable arbitration statute may be impacted by restricted appeal rights, despite that the rules of court otherwise might have permitted an appeal. Such deviations from the court’s core jurisdiction pursuant to the Courts of Justice Act may put the courts’ supervisory role over arbitrations at risk.
It will be interesting to see if this outcome opens the door to expansive interpretations of limited appeal rights in respect of other arbitration-related orders.