In City of Toronto v. Resource Productivity & Recovery Authority, 2020 ONSC 599, Madam Justice Katherine E. Swinton dismissed an attempt by non-parties to enjoin a private arbitration from proceeding. Though one of the arbitral parties exercised duties under Ontario legislation, the dispute stemmed from a bilateral agreement and involved no exercise of statutory power of decision subject to judicial review. Swinton J. observed that the non-parties argued the arbitrator lacked authority but neither of the arbitral parties challenged the arbitrator’s jurisdiction.
The City of Toronto (“City”) and the Association of Municipalities of Ontario (“AMO”) sought an interim injunction to enjoin an arbitration between Resource Productivity & Recovery Authority (“RPRA”) and Stewardship Ontario (“SO”). Swinton J. dismissed their application.
RPRA, an administrative body, performs regulatory, compliance and enforcement duties under Ontario’s Waste Diversion Transition Act, 2016, SO 2016, c 12, Sch 2 (“WDTA”). RPRA is the successor to Waste Diversion Ontario (“WDO”) established under the Waste Diversion Act, 2002, SO 2002, c 6 (“WDA”).
RPRA is the “authority” designated in the WDTA and in the Resource Recovery and Circular Economy Act, 2016, SO 2016, c 12, Sch 1. The latter defines a “circular economy” as one in which participants strive (a) to minimize the use of raw materials, (b) to maximize the useful life of materials and other resources through resource recovery, and (c) to minimize waste generated at the end of life of products and packaging. RPRA develops waste diversion programs in cooperation with industry funding organizations. It determines the amount of money required by industry funding organizations to carry out their responsibilities under the WDTA. In doing so, RPRA solicits input from municipalities and other stakeholders.
SO is a not-for-profit, special purpose corporation designated under the WDTA as an industry funding organization for “printed paper” and “packaging”. Subject to RPRA’s oversight, SO operates a “Blue Box Program”, which is not the same as the residential curbside pickup and processing of recyclables. SO’s Blue Box Program is a funding programme designed to draw funding from businesses which supply “printed paper” and “packaging” to residential consumers. Those business are called “stewards” and their funds offset some of the costs municipalities incur with curbside recycling services. Over 1,400 stewards are registered and pay fees to fund the annual “Steward Obligation” created under the WDTA and to fund SO.
The applicable legislation requires that a funding organization, such as SO, have an agreement with RPRA to govern the funding organization’s role in implementing and operating a waste diversion program. In 2003, SO entered into such an agreement with WDO (“Program Agreement”). In 2016, when RPRA replaced WDO, the Program Agreement continued. Changes to the Program Agreement can only be made with ministerial approval. The Program Agreement includes a detailed code for dispute settlement including binding arbitration.
Each year, RPRA determines the annual funding obligation of the stewards to be transferred to municipalities. RPRA has the obligation to determine that amount in a fair manner consistent with its legislated mandate and the provincial interest. Prior to issuing its determination, RPRA collects various inputs, including those from municipalities.
In 2019, the RPRA set the funding amount at $126.4 million and, in doing so, disclosed the inputs it had received (“2019 Steward Obligation decision”). SO objected to the legality of including three (3) inputs contributed by the municipalities. When RPRA decided to include these inputs anyway, SO served an October 15, 2018 notice to invoke the dispute resolution process. The reasons at paras 13-23 set out the procedural steps which followed, including:
– December 20, 2018 – RPRA advised the City and AMO about SO’s dispute and proposed a process which would involve the municipalities as well as SO. SO refused, arguing that its dispute was bilateral with RPRA;
– February 20, 2019 – SO commenced an application in Ontario Superior Court for a determination as to the legality of the proposed dispute resolution process. SO subsequently agreed with RPRA to convert that application to a preliminary arbitration to determine the correct scope of the dispute resolution process including whether RPRA had authority to include the City and AMO (“Process Arbitration”);
– March 22, 2019 – The City and AMO advised that they were unwilling to participate in the procedure proposed;
– June 7, 2019 – The arbitrator issued a decision in the Process Arbitration determining, among other things, that the City and AMO were not proper parties. The arbitrator reasoned that (i) the Program Agreement was a bilateral agreement between RPRA and SO; (ii) the Program Agreement conferred no authority to include non-parties; (iii) no dispute existed with the municipalities;
– July 2019 – RPRA and SO appoint an arbitrator for the merits of their dispute, agree on a timetable for exchange of pleadings and expert reports;
– February 18, 2020 – ten (10) day hearing on the merits scheduled; and,
– October 9, 2019 – The City and AMO file application for judicial review to quash the RPRA’s 2019 Steward Obligation decision, arguing that it provides municipalities with funding less than the amounts set by legislation. The City and AMO also seek (i) a declaration that the 2019 Steward Obligation may only be challenged by way of judicial review and (ii) an injunction preventing RPRA and SO from engaging in arbitration to alter the 2019 Steward Obligation decision.
The only relief submitted to Swinton J. involved the City’s and AMO’s application for interim injunction. That application sought to enjoin RPRA and SO from proceeding on February 18, 2020 in their bilateral arbitration until the City’s and AMO’s own court application for judicial review had been determined.
Sitting in Divisional Court, Swinton J. noted her jurisdiction to issue interim orders under section 4 of Ontario’s Judicial Review Procedure Act, RSO 1990, c J.1. As her opening observation, Swinton J. characterized the City’s and AMO’s relief as “unusual”.
“[The City and AMO] are not seeking to prevent a decision maker from continuing a hearing while the decision of the decision maker is under judicial review. Nor are they seeking to stay a decision that has been made and is under review. Here, the applicants seek to stop a private arbitration proceeding that was commenced pursuant to an agreement between RPRA and SO, which is proceeding under the Arbitration Act, 1991, S.O. 1991, c. 17.”
Despite other arguments made by SO, including lack of jurisdiction, Swinton J. considered the application strictly from whether the City and AMO met the three (3) part test for an interim injunction set out in RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC),  1 SCR 311: (i) serious issue to be tried – paras 29-38; (ii) irreparable harm – paras 39-42; and, (iii) balance of convenience – paras 43-52.
(i) serious issue to be tried – Swinton J. noted that the City and AMO in their judicial review application sought to attack the statistical model used by RPRA, an issue not raised in the arbitration. Rather, the arbitration disputed RPRA’s use of the three (3) inputs challenged by SO.
Swinton J. observed that the City and AMO challenged the arbitrator’s authority to determine the validity of RPRA’s exercise of its statutory power of decision when determining the 2019 Steward Obligation decision. “[The City and AMO] submit that the arbitrator has no authority to determine the validity of that decision. In other words, they are challenging the jurisdiction of the arbitrator in the arbitration proceedings, although RPRA, a party to that arbitration, does not take the position that the arbitrator lacks jurisdiction.”
Swinton J. also dismissed the City’s and AMO’s argument that the arbitration improperly purports to determine the rights of the municipalities without their involvement and that a declaration ought to issue to prevent the arbitrator from improperly exercising a statutory power of decision. She was at a loss to identify which statutory power of decision risked being exercised by the arbitrator.
“ It is not clear to me what statutory power of decision underlies the declaratory relief sought. The arbitrator is not exercising a statutory power of decision. He obtains his authority from the agreement between RPRA and SO, and the arbitration process is governed by the provisions of the Arbitration Act. (Universal Settlements International Inc. v. Duscio, 2011 ONSC 41 (Div. Ct.) at paras. 3-5).”
She further disagreed with the City’s and AMO’s argument that, by arbitrating its dispute with SO, RPRA was, without authority, delegating to the arbitrator RPRA’s power to determine the 2019 Steward Obligation. “In my view, participation in the arbitration is not an exercise of a statutory power of decision by RPRA, but rather compliance with RPRA’s obligations in the Program Agreement with SO – an agreement that has been approved by the Minister, and that cannot be changed in a material way without ministerial approval.”
The City and AMO also argued that determination of the Steward Obligation cannot be characterized as a “dispute” between RPRA and SO. Swinton J. again disagreed, identifying the argument as a jurisdictional challenge which neither of the parties to the arbitration had raised. “That is a question of arbitrability. The arbitrator’s jurisdiction to deal with the dispute raised by SO has not been challenged in the arbitration. Implicitly, the parties to the arbitration accept he has jurisdiction. Thus, the applicants are improperly seeking to collaterally attack the ruling of the arbitrator in the Process Decision in the guise of this motion for an interim injunction.”
(ii) irreparable harm – Swinton J. found no evidence of an irreparable harm. In addition to different issues being raised in the arbitration and the judicial review application, Swinton J. also noted that RPRA was merely performing its duties under legislation and its rights and obligations under its private agreements. “Nor do I find the argument about RPRA’s role a basis to find irreparable harm to the applicants. RPRA is an administrative and regulatory body that developed the Blue Box Program Plan in conjunction with SO and entered into the Program Agreement with it. Most importantly, it agreed to arbitrate disputes about the Blue Box Program Plan with SO.”
(iii) balance of convenience – Swinton J. determined that SO would suffer the most if an injunction issued. In addition to specific financial consequences, SO had only arbitration as a means to resolve its dispute with RPRA and had the right and obligation to proceed by arbitration. “While the applicants may be restricted to judicial review as a way to challenge the Steward Obligation decision, the Program Agreement requires SO to resort to a non-judicial forum to resolve its dispute about the inputs permitted under the Blue Box Program Plan.”
Swinton J. closed with comments on delay and on whether arbitration was preferable to court litigation.
Regarding delay, the application for an injunction had been filed in December 2019 despite the arbitration having been scheduled since July 2019 to start in February 2020.
RPRA submitted that “the best outcome would be the determination of the challenges of both SO and the applicants in a single forum with both SO and the municipalities as parties”. Swinton J. declined to involve herself in determining which process was better, noting that it was not her choice and that the choice, given earlier to the City and to AMO, had been refused.
“ It may be that a single forum is preferable, but it is not the task of this Court to design a dispute resolution procedure for the parties. The City and AMO were offered an opportunity to participate in a single, arbitral forum in early 2019, and in their letter in March 2019, they refused that offer.”
urbitral note – First, Swinton J. was alert to the situation in which SO found itself. It had only the arbitration process to pursue and enjoining it from pursuing that process would create prejudice to SO.
Second, Swinton J. expressly refrained from identifying or discussing which procedural option was better, limiting herself to remarking that the City and AMO had refused the opportunity to involve themselves in the process they now sought to enjoin.
Third, the Divisional Court in Universal Settlements International Inc. v. Duscio, 2011 ONSC 41 at paras 3-5, referred to by Swinton J. at para. 33 of her reasons, identifies the Divisional Court’s restrained role in arbitral matters set out in the Arbitration Act.
“ First, the Divisional Court has no jurisdiction to grant relief under the Arbitration Act. The Act clearly states that applications to challenge an arbitration award under that Act must be brought before the Superior Court of Justice or the Family Court in the case of family arbitrations (see ss. 45 and 46, as well as the definition of “court” in s.1). The Divisional Court has appellate jurisdiction pursuant to s.19 of the Courts of Justice Act, R.S.O. 1990, c.C.43, as well as the authority to grant judicial review pursuant to s.6(1) of the [Judicial Review Procedure Act, RSO 1990, c J.1]. In addition, a number of other statutes confer appellate jurisdiction on this Court. However, it has no authority to grant the type of relief sought under the Arbitration Act, as it does not fall within the definition of “court” for purposes of ss. 45 and 46 of the Arbitration Act.
 Section 6 of the Act does not confer power on the Divisional Court to review or set aside an arbitration award. As the Court of Appeal stated in Inforica Inc. v. CGI Information Systems and Management Consultants Inc.,  ONCA 642 at para. 14
It is clear from the structure and purpose of the Act in general, and from the wording of s. 6 in particular, that judicial intervention in the arbitral process is to be strictly limited to those situations contemplated by the Act.
The authority to review an award is not found in s. 6 but is found elsewhere in the Act.
 Second, the Divisional Court has no jurisdiction to award the relief sought under the JRPA against a private consensual arbitrator. Subsection 2(1) provides that the Court, on judicial review, may grant relief that the applicant would be entitled to in proceedings by way of an application for an order of mandamus, prohibition or certiorari or proceedings in an action for a declaration or injunction in relation to the exercise, refusal to exercise or proposed or purported exercise of a statutory power of decision. An application for judicial review is thus a public law remedy, and it is not available to challenge the award of a private consensual arbitrator (see Sharecare Homes Inc. v. Cormier,  N.S.J. No. 367 [2010 NSSC 252] at para. 51; Alaimo v. Di Maio,  O.J. No. 3570 (S.C.J.) [2008 CanLII 46326 (ON SC)] at paras. 53 and 58; Blustein v. Blustein, 2010 ONSC 6897 (Div. Ct.)) [2011 ONSC 1888].”
Fourth, the cases cited in the preceding passages offer further insights into how and why arbitrators and non-statutory tribunals, absent express legislative grants, lack authority to issue prerogative writs (mandamus, prohibition and certiorari) of public law reserved to courts with inherent jurisdiction.
Fifth, for a sample precedent of an award involving the City, AMO and the SO, including the text of the dispute resolution process attached as Appendix A, see the November 25, 2014 arbitral award regarding the 2014 Steward Obligation.