In Paulpillai Estate v. Yusuf, 2020 ONCA 655, Ontario’s Court of Appeal held that it lacked jurisdiction to hear an appeal of a motion judge’s order regarding a stay in favour of arbitration. No formal motion had been made to refer the dispute to arbitration, the motion judge’s dispositive order was silent on the issue of arbitration and any comments on waiver of arbitration were merely obiter. Even assuming that an order might have been made, the Court held it lacked jurisdiction because section 7(6) of the Arbitration Act, 1991, SO 1991, c 17 stipulated no appeal lay from a decision under section 7. For a more in-depth look at how and whether section 7(6) applies to limit appeals, see the equally recent Court of Appeal decision in Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2020 ONCA 612 and the related Arbitration Matters note “Appeal court reaffirms jurisdiction for appeal of stay decision where decision holds arbitration agreement does not apply“.
After the passing of one of the two founders of medical schools, the parties disputed operation of medical schools pending dissolution of the partnership which operated the schools. In first instance, Appellants and Respondents contested an application for a range of interim relief which lead to a decision in first instance in Paulpillai v. Yusuf, 2020 ONSC 851. For more on the facts and the decision of Madam Justice Judy A. Fowler Byrne (“motion judge”) in first instance, see the earlier Arbitration Matters note “Failing to file application to stay and taking significant steps in litigation justifies refusal of stay”.
Due to the complexity of the facts and issues, the motion judge’s dispositive orders spanned 28 detailed paragraphs grouped at the concluding para. 94 of her decision. Appellants appealed and applied for a stay of the order pending appeal. Respondents applied to quash the appeal on the basis that the motion judge’s order was interlocutory and that any appeal lay with the Divisional Court.
The Court of Appeal held that it lacked jurisdiction over the appeal and quashed the appeal and also dismissed the motion to say the order under appeal. In doing so, the Court dealt with its jurisdiction in two (2) ways. First, it examined the nature of the order to determine whether it was final (and within its jurisdiction) or interlocutory (and within the Divisional Court’s jurisdiction). Second, it looked to the provisions in the Arbitration Act, 1991, SO 1991, c 17 to determine if it could hear the appeal. Doing so required it to examine whether there was actually a formal motion to stay in favour of arbitration and, if so, could the Court hear an appeal on such an order.
This note deals with the issues in the reverse order to that followed in the Court of Appeal reasons.
(A) Jurisdiction over motion to stay order – Appellants held that the order had refused to refer their dispute to arbitration and, in doing so, determined in a final manner the forum for adjudicating the dispute and deprived Appellants of their substantive contractual right to resolve the dispute by arbitration. The Court disagreed.
First, the Court noted that the order was silent on the issue of arbitration and attributed this to the fact that no formal motion had been made to refer their dispute to arbitration. The Court referred to the reasons mentioning the issue of arbitration but also noting the absence of a motion to stay the proceedings under section 7(1) of the Arbitration Act. The latter requires that a motion be filed and, even then, the court has discretion under section 7(1)(4) to refuse a stay if that motion is brought with “undue delay”.
Second, the Court characterized the motion judge’s comments on waiver as obiter.
Third, the Court did address its jurisdiction to hear the appeal, even if the order was silent on the referral to arbitration and assuming the motion judge had in fact relied on waiver to determine the motion. The Court held that it had no jurisdiction due to the provisions of section 7(6) which stated that no appeal lay from the court’s decision under section 7. It referred to TELUS Communications Inc. v. Wellman, 2019 SCC 19 (CanLII),  2 SCR 144 and the recent October 1, 2020 Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2020 ONCA 612. (See the notes below).
The Court of Appeal held that, treating the order to refer the dispute to arbitration as either an interlocutory or a final order, the Court lacked jurisdiction “over this aspect of the order under appeal”.
(B) Jurisdiction for final/interlocutory order – This issue consumed much of the reasons as it was the first and key reason the Court dealt with the substance of the attempt to appeal the order in first instance. The Court’s analysis on this issue covers paras 11-38. The Court’s analysis provides a helpful reference to the key principles which, despite tying them to court rules, still lend themselves to determining similar issues in arbitral practice.
Section 6(1)(b) of the Courts of Justice Act, RSO 1990, c C.43 governs appeals from orders issued by the Superior Court. An appeal lies to the Court of Appeal from a final order while an appeal lies, with leave, the Divisional Court from interlocutory orders. The Court identified the key principles and sources for the principles to assist qualifying an order as either final or interlocutory and grouped them into four (4).
(i) an appeal lies from a court’s order, not from its reasons given for making the order: see Grand River Enterprises v. Burnham (2005), 2005 CanLII 6368 (ON CA) para. 10; Amphenol Canada Corp. v. Sundaram, 2019 ONCA 932 para. 21; and Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2016 ONCA 404 para. 33;
(ii) an interlocutory order does not determine the real matter in dispute, subject matter of the litigation, any substantive right. An order remains interlocutory if the substantive matters remain undecided: Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375 para. 16; Hendrickson v. Kallio, 1932 CanLII 123 (ON CA) p. 678; Ball v. Donais (1993), 1993 CanLII 8613 (ON CA); Amphenol Canada Corp. v. Sundaram, 2019 ONCA 932 para. 18;
(iii) whether an order is final or interlocutory requires one to examine the terms of the order, the judge’s reasons, the nature of the proceedings giving rise to the order and other contextual factors that inform the nature of the order: Prescott & Russell (United Counties) v. David S. Laflamme Construction Inc., 2018 ONCA 495 para. 7; and,
(iv) access to appellate review must be decided on the basis of the legal nature of the order and not case-by-case which depends on the application of the order to the case’s particular facts; characterization of the order depends upon its legal nature, not its practical effect: Laurentian Plaza Corp. v. Martin (1992), 1992 CanLII 7561 (ON CA) p. 116; Amphenol Canada Corp. v. Sundaram, 2019 ONCA 932 para. 19;: see Ontario Medical Assn. v. Miller (1976), 1976 CanLII 679 (ON CA) p. 470; Deltro Group Ltd. v. Potentia Renewables Inc., 2017 ONCA 784 para. 3.
The Court addressed each of the orders in turn and issued a decision on each as to whether it qualified as an interlocutory or final order. The orders involved: appointment of an accounting firm as investigative monitor – paras 18-23; interim release of funds to operate schools – paras 24-29; interim injunction – paras 30-32; conversion of the application to an action – paras 33-34; refusal to seal the court file – paras 37-38. Applying the principles to the orders, the Court held that all components were interlocutory and subject to the Divisional Court’s jurisdiction.
urbitral notes – First, prior to issuing the 28 components of her order, the motion judge prefaced them with the following prompt to reconsider arbitration:
“ This is not simply a dispute regarding the accounting of monies. The employment of many individuals and the education of students lie in the balance. This matter needs to be resolved on a timely basis. While the parties have not opted for arbitration, I urge them to reconsider that avenue so that these issues can be adjudicated in a timelier way, and on terms that will facilitate the multi-jurisdictional nature of this dispute”.
Second, para. 91 of TELUS Communications Inc. v. Wellman, 2019 SCC 19,  2 S.C.R. 144 focuses expressly on the effect of section 7 of the Arbitration Act having no qualifying language to modify the restriction on appellate intervention on orders under section 7.
“ Finally, s. 7(6) provides simply that “[t]here is no appeal from the court’s decision”. Given the absence of any qualifying language, s. 7(6) must be taken as referring to a “decision” made under any subsection contained in s. 7. This would include, for example, a decision to stay the proceeding under s. 7(1), a decision to refuse a stay under s. 7(2), or a decision to order a partial stay under s. 7(5)”.
Third, see paras 45-62 of the October 1, 2020 Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2020 ONCA 612 (“Toronto Standard No. 1628 v. Toronto Standard No. 1636”). Those reasons re-consider and re-endorse the reasoning in Huras v. Primerica Financial Services Ltd., 2000 CanLII 16892 (ON CA) and, by implication, the cases which subsequently applied it. See the earlier Arbitration Matters note “Section 7 provision barring appeals inapplicable if motion judge did not decide under section 7“.
Huras v. Primerica Financial Services Ltd. held that a motion judge’s decision that a matter is not subject to arbitration under an arbitration agreement is a decision outside the scope of section 7, and thus an appeal from that decision is not barred by section 7(6).
In that Toronto Standard No. 1628 v. Toronto Standard No. 1636, the Court of Appeal expressly considered whether TELUS Communications Inc. v. Wellman overwrote Huras v. Primerica Financial Services Ltd. and held that it had not. See paras 6, 49 and 59 in particular and its summary statement at para. 62:
“ This review of the Huras line of cases shows that courts have tackled the question of when s. 7(6) bars an appeal through several related inquiries. Courts have held that s. 7(6) does not bar an appeal when: (i) there is no arbitration agreement or no applicable arbitration agreement; (ii) the dispute lies beyond the scope of s. 7; (iii) the Arbitration Act does not apply; and (iv) the motion judge did not make a decision under s. 7. Each of these inquiries is directed at the same question — the question raised by s. 7(6) — whether the motion judge made a decision under s. 7 of the Arbitration Act. If the answer is “yes”, s. 7(6) bars an appeal. If the answer is “no”, s. 7(6) does not bar an appeal”.
update – See the decision of the Saskatchewan Court of Appeal in Abbey Resources Corp. v. Andjelic Land Inc., 2020 SKCA 125, released after this note was posted, and the related Arbitration Matters note “Appeal court endorses other appeal courts’ approach to hear appeals where arbitration agreement does not apply”. In Abbey Resources Corp. v. Andjelic Land Inc., Saskatchewan’s Court endorsed the reasoning in Ontario Court of Appeal reasoning Huras v. Primerica Financial Services Ltd., 2000 CanLII 16892 (ON CA) to determine that, under section 8(6) of its The Arbitration Act, 1992, SS 1992, c A-24.1, the Court of Appel did have jurisdiction to hear an appeal of a decision in first instance which refused a stay if the decision held that that arbitration agreement did not apply.
Identifying that case as the first in a “very solid line of authority” and a “significant body of case law from other provinces”, the Court held that it did have jurisdiction to hear the appeal. On the merits, the Court held that the trial judge made no error in deciding the issue of the arbitrator’s jurisdiction because the case qualified as an exception to the “methodic referral of matters to arbitration” favoured by competence-competence. “The leases would seem to be standard form contracts, the interpretation of which is of precedential value, and there appears to be no meaningful factual matrix specific to [the parties] that can inform their interpretation”.