In Miracle v. Maracle, 2019 ONCA 238, the Ontario Court of Appeal upheld the unreported September 10, 2018 decision by Mr. Justice Patrick Hurley denying an unpaid expert and unpaid arbitrator leave to be added as parties to post-arbitration litigation. In doing so, Hurley J. left open the possibility that the result could have been different had an earlier court order, recognizing and enforcing the arbitration award, mentioned personally the expert and arbitrator as beneficiaries of the orders for payment of arbitration costs incurred by the prevailing arbitral party. Hurley J.’s comments also serve to guide arbitration counsel in drafting dispositive sections for recognition and enforcement applications.
Hurley J.’s decision is not posted online but additional facts setting out the underlying commercial dispute between a father and son appear in Maracle III v. Miracle, 2017 ONCA 950, paras 6-10. That Court of Appeal decision involved a successful application to extend the time in which a party could apply for leave to appeal an October 10, 2017 Superior Court decision dismissing an application to set aside an arbitral award.
The appellant in Miracle v. Maracle, 2019 ONCA 238 had served as an expert witness to Mr. Andrew Miracle (“Mr. Miracle”) in an arbitration conducted in October/November 2016 and involving a commercial dispute between Mr. Miracle and his son, Mr. Andrew Maracle III (“Mr. Maracle III”). Note: the first vowel in the father’s surname “Miracle” is an “i” and the first vowel for the son’s surname “Maracle” is an “a”.
As of September 2018, neither the expert nor the arbitrator had been paid for their services and neither had commenced litigation for recovery of the unpaid amounts.
The expert and the arbitrator both applied to the Superior Court in Court file no. 13-0284-00:
(i) to be added to the court litigation between Mr. Miracle and Mr. Maracle III;
(ii) the appointment of a receiver for the corporation regarding which the arbitration had been conducted until their accounts were paid along with a payment to be made to a former spouse of Mr. Miracle; and,
(iii) an order that Mr. Miracle pay an unidentified amount to his lawyer in trust for Mr. Miracle.
In addition to the above, the expert sought a separate hearing for “the interpretation of his contract of that amount owed” by Mr. Miracle in addition to the amount owed by Mr. Miracle III.
The Motion was adjourned to September 10, 2018 and, prior to that date, the expert and the arbitrator delivered an amended Notice of Motion seeking additional relief:
(iv) an order appointing an investigative receiver and a collection receiver for the Corporation;
(v) the costs of the receiver by paid by Mr. Maracle III and the Corporation; and,
(vi) an injunction preventing Mr. Maracle III from filing bankruptcy prior to the receiver’s investigation report.
In their motion, the expert and the arbitrator applied to be added as parties based on Rule 60.06(1) of Ontario’s Rules of Procedure.
“Rule 60.06(1) An order that is made for the benefit of a person who is not a party may be enforced by that person in the same manner as if the person were a party.”
In Superior Court, Hurley J. disagreed, stating that the
addition of parties to a lawsuit is governed by Rule 5.
“Rule 5.03(1) Every person whose presence is necessary to enable the court to adjudicate effectively and completely on the issues in a proceeding shall be joined as a party to the proceeding.”
Rule 5.03(4) acknowledges the court’s own authority to add necessary parties.
“Rule 5.03(4) The court may order that any person who ought to have been joined as a party or whose presence as a party is necessary to enable the court to adjudicate effectively and completely on the issues in the proceeding shall be added as a party.”
In his reasons, Hurley J. wrote that, following the arbitration between Mr. Miracle and Mr. Maracle III:
(i) Mr. Miracle III applied to the Superior Court to set aside the award under section 46 of Ontario’s Arbitration Act, 1991, SO 1991, c 17; and,
(ii) Mr. Miracle applied to have the Superior Court recognize and enforce the award under section 50.
In his October 10, 2017 decision, also unreported, Mr. Justice Stanley Kershman dismissed the application to set aside the award and granted the application to enforce it. In doing so, Kershman J. made a series of orders which Hurley J. reproduced in part in his own September 10, 2018 decision including:
(i) an order that the costs of the arbitrator for the arbitration in the amount of $43,050.66 be shared equally between (a) Mr. Miracle for ½ and (b) Mr. Maracle III and another for the other ½; and,
(ii) an order that Mr. Maracle III pay Mr. Miracle $151,455.00 plus post-judgment interest at 2% per year commencing November 24, 2016, for costs and disbursements incurred by Mr. Miracle “at the arbitration”.
Hurley J. noted that on March 23, 2018 Mr. Maracle III appealed Kershman J.’s decision and the Ontario Court of Appeal denied leave to do so. As a result, Hurley J. concluded that, with the exception of enforcement proceedings, the lawsuit as against Mr. Maracle III was over, though it remained outstanding against the other two (2) defendants, an individual and a bank.
“In these circumstances, neither [the expert] nor [the arbitrator] are necessary parties and I decline to add them as parties to the lawsuit. They are creditors who can, if they wish, commence a lawsuit to collect their unpaid accounts. They would be well advised to do so immediately given the passage of time since they rendered the services to Mr. Miracle and [Mr.] Maracle III.”
Hurley J. offered further insights regarding why he denied the expert and the arbitrator status as parties. He did so by pointing to the actual wording of the order which issued in Kershman J.’s October 10, 2017 decision recognizing and enforcing the award.
“I find that [the expert and the arbitrator] cannot rely on 60.06 to enforce the order of Kershman J. on their personal behalf because on its face, it was not made for the benefit of anyone other than Mr. Miracle. It identified sums of money in relation to Mr. Curtis’ fees and also the disbursements incurred by Mr. Miracle in the arbitration, but did not direct, as it could have, that the monies be paid to [the expert] or [the arbitrator].“
In denying leave to be added as parties, Hurley J. therefore did not state that experts and arbitrators do not, as a general rule, have no standing to apply for status as a party. Instead, he implied that the result could have been different had Kershman J.’s order been framed as one for the benefit of the expert and/or the arbitrator. Observing that the order “did not direct, as it could have” a payment to either the expert or the arbitrator, Hurley J. applied the actual wording of the court decision when issuing his own order.
In addition to his reasons which addressed the order sought regarding payment, Hurley J. also dismissed the request for an order appointing a receiver on the basis of three (3) separate grounds. First, the litigation had been completed and he had no jurisdiction to appoint a receiver, referring to section 101 of Ontario’s Courts of Justice Act, RSO 1990, c C.43. Second, absent litigation filed personally by the expert and/or the arbitrator, Hurley J. had no jurisdiction to appoint a receiver under Rule 60.02(1)(b). Third, even if he had opportunity and jurisdiction to do so, the materials provided to him did not support the appointment.
Hurley J. also commented that a hearing in respect of the expert’s contract “could only be done if he commenced a proceeding”. Hurley J. dismissed the application but without costs, commenting that the expert and the arbitrator “understandably wish to be paid for their services, but I can only grant relief to which they are legally entitled, not what I may think is fair or just in the circumstances.”
The expert appealed. In brief reasons, the Court of Appeal upheld Hurley J.’s decision. In doing so, the Court provided reasons which might suggest a broader rule limiting the expert’s or arbitrator’s involvement as a creditor.
Despite Hurley J.’s openness to grant part of the application had Kershman J.’s October 10, 2017 decision mentioned either the expert or the arbitrator personally, the Court stated that the expert’s rights as a creditor do not make him a necessary party. The brief manner in which the Court of Appeal upheld the decision risks leaving the impression that the ‘rule’ is broader than the underlying reasoning offered by Hurley J.
“ The appellant moved before the motion judge for an order to be added as a party to the action. We agree with the motion judge that there is no basis to add the appellant as a necessary party to the action under r. 5 of the Rules of Civil Procedure.
 The appellant was an expert witness on behalf of the plaintiff at the arbitration. His rights as a creditor of the plaintiff, who was successful in the action under which the arbitration was conducted, do not make him a necessary party to the action for the purpose of enforcing the plaintiff’s judgment.”
The Court dismissed the appeal, with costs fixed at $4,000.00.