In Joseph Lebovic Charitable Foundation, et al v. Jewish Foundation of Greater Toronto, et al, 2024 ONCA 933,(“Lebovic“) the Court confirmed its prior ruling in Iris Technologies Inc. v. Rogers Communications Canada Inc., 2022 ONCA 634 (“Iris”). In both cases the arbitrator ruled, as a preliminary question, they had jurisdiction to decide the matter before them. In both cases one of the parties unsuccessfully sought a review of that ruling pursuant to s. 17(8) of the Ontario Arbitration Act, 1991. In both cases that party attempted to appeal to the Court of Appeal. And in both cases the motion to appeal was quashed with the Court of Appeal holding that s. 17(9) clearly prohibits any appeal from such a review.
Background facts – Lebovic deals with a motion to quash a motion for leave to appeal based on lack of jurisdiction. The case arose in the context of a long-standing dispute relating to a 2005 donor agreement. The agreement contained an arbitration clause.
Under the donor agreement the responding parties (Lebovic, et al) agreed to make a donation to the moving parties (JFGT et al) in exchange for naming a campus in Vaughan after individual members of the Lebovic family.
In May 2015, JFGT commenced an arbitration to resolve a dispute concerning the proposed sale of a portion of the campus lands named after the Lebovics. Lebovic, et al objected. Later the parties agreed to a consent order. In April 2021, JFGT initiated an arbitration raising various issues relating to the donor agreement and the consent order. Lebovic, et al brought a counterclaim in the arbitration.
Jurisdiction objection in arbitration – After the initiation of the April 2021 arbitration, including service of the counterclaim, Lebovic, et al retained new counsel and raised for the first time concerns over the arbitrator’s jurisdiction. Before the hearing of the arbitration on the merits started, the arbitrator heard arguments on whether they had jurisdiction over the issues raised in the arbitration. The arbitrator reserved their decision on jurisdiction. After the parties presented their evidence on the arbitration but before they made closing submissions, the arbitrator released a decision dated March 15, 2023, in which they concluded they had jurisdiction over the issues raised in the arbitration. The arbitrator then decided the merits of the arbitration in a separate award dated July 27, 2023.
Court review – Lebovic, et al initiated two separate proceedings in the Superior Court. The first was an application to review the arbitrator’s jurisdiction decision, and the second was an appeal from the July 27, 2023, arbitration award.
In an August 8, 2024, decision (reported at 2024 ONSC 4400) the Superior Court dismissed the application to review the arbitrator’s ruling, finding Lebovic, et al had waived their right to object to the arbitrator’s jurisdiction. (See Arbitration Matters blog Ontario – Arbitrator jurisdiction – dispute arose from Consent Order after earlier arbitration #863)
Lebovic, et al sought leave to appeal that order to the Court of Appeal. JFGT moved to quash the motion for leave on the basis the court did not have jurisdiction to hear an appeal from the application judge’s order.
In quashing the appeal of the award, the Court held:
“[8] We agree with the moving parties. It is plain from s. 17(9) of the Arbitration Act 1991, S.O. 1991, c. 17, that there is no appeal from the application judge’s decision. Section 17(8) provides that: “If the arbitral tribunal rules on an objection as a preliminary question, a party may, within thirty days after receiving notice of the ruling, make an application to the court to decide the matter.” Section 17(9) states: “There is no appeal from the court’s decision.” (Emphasis added.)
[9] We do not accept the responding parties’ argument that the arbitrator’s jurisdiction decision was not a ruling “on an objection as a preliminary question” and therefore that it was not made under s. 17 (8)of the Arbitration Act, 1991. It is evident that the issue of jurisdiction was argued as a preliminary question before the arbitrator; he did not wait to deal with this issue in the award, but instead issued a separate, preliminary ruling: see s. 17(7) of the Arbitration Act, 1991. While he may have delivered his ruling after the parties had already commenced the hearing of the arbitration on the merits, this does not alter the fact that the issue was raised and decided as a preliminary question: Iris Technologies Inc. v. Rogers Communications Canada Inc., 2022 ONCA 634, at paras. 7-8.
[10] Moreover, the responding parties treated the jurisdiction decision as a ruling on a preliminary question by bringing a stand-alone application to review the arbitrator’s jurisdiction decision, and a separate application in respect of the arbitrator’s July 27, 2023 award. In the circumstances, we have no doubt that the application to review the arbitrator’s jurisdiction decision was brought under s. 17 (8) of the Arbitration Act 1991, and that any appeal from the application judge’s order is precluded by s. 17(9).
[11] Accordingly, we find that this court does not have jurisdiction over the appeal. The motion for leave to appeal is quashed.”
Contributor’s Notes:
My Arbitration Matters colleagues have previously commented on the lower court’s ruling in Lebovic, noted above [#863], and the Court of Appeal’s ruling in Iris, (Ontario – No appeal lies from preliminary jurisdictional decision [#666]).
So, what’s to be made of this ruling by the Court of Appeal in Lebovic? On its face, nothing.
The legislation is clear. If a tribunal rules on its own jurisdiction “as a preliminary question”, a party has 30 days to challenge that ruling in court. But there is no appeal from the court’s decision. Period. Full stop.
There’s nothing surprising in that. It’s consistent with the Ontario Court of Appeal’s previous rulings on s. 17(9) (including Iris) and with comparable language in Toronto Standard Condominium Corporation No. 2299 v. Distillery SE Development Corp., 2024 ONCA 712 regarding s. 10(2) of the Act relating to the appointment of an arbitrator. It simply accepts the plain reading of the legislation.
For those wondering what other appellate courts might have said, it appears Ontario is alone in ruling on this section of the Act.
In their Arbitration Acts Alberta, Saskatchewan, Manitoba, and New Brunswick each have virtually identical provisions to Ontario’s (Saskatchewan’s is found in s. 18 while the others, like Ontario, are all in s. 17) and BC has essentially the same provision in its Act (s. 23(7) & (8)). The only appellate commentary I found in any of those provinces was a very brief decision from the Saskatchewan Court of Appeal (Saskatchewan v Capitol Steel Corporation 2018 SKCA 3 (CanLII)) but it didn’t analyze the merits of the issue.
So, why are we talking about such a straightforward decision?
Just looking at the Court of Appeal’s decision it’s easy to overlook the unusual procedural history of the case.
The lower Court’s decision was given by way of Endorsement. In that Court Lebovic, et al had argued the combined effect of s. 4(1) [Reasonable time for waiver of right to object] and s. 17(3) [Time for objections to jurisdiction no later than first statement to tribunal] of the Act meant they had until the commencement of the arbitration to object to the arbitrator’s jurisdiction. The Endorsement doesn’t set out Lebovic, et al’s argument in detail. However, at para. 26 to 29, the Endorsement suggests it rested on two premises. First, in using the phrase “within the time limit provided”, s. 4(1) means where the Act sets a time limit for the completion of a step in an arbitration, that time limit becomes the last day for taking that step. Second, s. 17(3) sets the time limit for making an objection to jurisdiction at, “no later than the beginning of the hearing”. Therefore, say Lebovic, et al the combined effect of s. 4(1) and s. 17(3) means they had until the “beginning of the hearing” to object to the arbitrator’s jurisdiction.
The Court rejected that argument. First, the Court held s. 4(1) addresses the deemed waiver of the right to object. It sets a deadline for when waiver will be deemed, not whether a party has in fact waived their right to object at some earlier time. Further, s. 4(1) doesn’t restrict the possibility a party “agreed to remit certain issues to the arbitrator which would necessitate waiving any jurisdictional challenge.” Second, Lebovic, et al’s position is inconsistent with the underlying premise of arbitration as it would add needless cost, complexity, and wasted resources. Finally – and to my mind this is the most significant reason for dismissing the application – the Court concluded the objection to jurisdiction was not genuine. Some 18 months had passed during which time Lebovic, et al had taken several significant steps to move the arbitration forward without raising a jurisdictional issue and only raised it at the 11th hour when new counsel came on the scene. The Court saw the challenge as a ploy.
Although not entirely clear from the lower Court’s Endorsement, it appears Lebovic, et al brought their application under s. 17(8)of the Act. In describing the relevant legal principles the Court says, at para. 17, “[a]n arbitral tribunal may rule on its own jurisdiction to conduct the arbitration: s. 17(1) of the Arbitration Act. A party may apply under s. 17(8) of the Arbitration Act for review by the court to decide the matter.” [Emphasis added]
And yet, from the Court of Appeal’s decision it appears Lebovic, et al argued the arbitrator’s ruling on jurisdiction was not “an objection on a preliminary question”, which is the basis for a s. 17(8) application.
Confused? So am I.
It’s not clear from either of the decisions whether Lebovic, el al brought the lower Court application solely under s.17(8) or whether they also relied on another basis. If Lebovic, et al relied only on s. 17(8), the Court of Appeal’s rejection of a subsequent appeal makes perfect sense. But for them to argue the arbitrator’s ruling on jurisdiction was not “an objection on a preliminary question” suggests the original application was brought on some other basis.
Without having the briefs to review I am speculating but, Lebovic, el al may have relied on the fact the arbitration had already commenced on the merits when the arbitrator issued his jurisdictional ruling. While interesting to consider whether that fact alone might mean a ruling on jurisdiction was not “on a preliminary question”, the facts in this case don’t support the argument. Here, Lebovic, et al (through new counsel) raised the jurisdictional issue less than a week before the hearing was to begin. The issue was argued before the hearing on the merits began. And, perhaps most importantly, Lebovic, et al brought a stand-alone application to review the arbitrator’s jurisdiction decision and a separate application in respect of the award on the merits.
Of course, another possibility – not foreign to courts and litigators – is Lebovic, et al felt they had nothing to lose so, might as well throw the ball deep and see what happens.
Whatever the thinking may have been, we can safely make the trite but worthwhile observations that:
- Arbitration is supposed to be a more efficient process than traditional litigation so introducing steps that add complexity, delay, and cost should be avoided and the Courts should look askance at any attempt to do so.
- Jurisdiction is a fundamental issue. Complaints or concerns about it should be raised as early as possible because it may not be possible to do so later.
- Hail Mary passes are only entertaining if they’re caught.