Ontario – Award enforcement application met with merits arguments in leave to appeal/set aside cross-application #539

In Fogler, Rubinoff LLP v Houle, 2021 ONSC 5626, Justice Vermette heard two applications following an arbitration concerning the assessment of two accounts rendered by applicant, Fogler, Rubinoff LLP, to its clients, respondents Conrad and Sheila Houle. The arbitrator issued an award requiring the respondents to pay. After they did not do so, Foglers brought an enforcement application pursuant to s. 50 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17. Upon such application, the court “shall” grant judgment so long as the requirements of s. 50(3) are not met – the appeal/set aside deadline has not yet elapsed, there is a pending appeal/set aside application, or the award has been set aside or the arbitration is the subject of an award of a declaration of invalidity. In other words, the merits of the award are not relevant. The respondents did not initially appeal the award, but then brought a cross-application – challenging both jurisdiction and the merits – seeking to set aside the award pursuant to s. 46(1)3 of the Arbitration Act or, in the alternative, leave to appeal the award under s. 45(1). Justice Vermette found that the set aside application was really a request to review the substance of the award on the basis that the arbitrator’s decision was unreasonable or incorrect. She also dismissed the motion for leave to appeal on the ground that it did not raise a question of law. Whether the facts met the required legal test was a matter of mixed fact and law. Therefore, given the dismissal of the respondent’s cross-application, she granted the Foglers enforcement application.

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Ontario – Stay motion denied: case was a proper one for summary judgment, but summary judgment not sought – #538

In Jencel 407 Yonge Street Inc. v. Bright Immigration Inc., 2021 ONSC 6030, Justice Akbarali dismissed the Defendant’s motion to stay the action in favour of arbitration. The Plaintiff argued that the stay motion should be dismissed because the action was a proper one for summary judgment, relying upon s. 7(2)5 of the Arbitration Act, 1991, S.O. 1991, c. 17. Justice Akbarali agreed. The key facts were uncontested and the Defendant’s position in the action, which consisted mostly of “bald assertions and unarticulated legal and factual arguments”, did not give rise to any genuine issue requiring a trial. However, the Plaintiff did not move for summary judgment.

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Ontario – Participating party in arbitration not granted leave to intervene in appeal/set aside application – #537

In Baffinland Iron Mines v Tower-EBC, 2021 ONSC 5639, the parties were engaged in a dispute about a project to build a railway to transport ore in Nunavut.  They entered into two contracts which contained an arbitration clause. After delays in the project, one party terminated the contracts; the other claimed breach of contract and commenced an arbitration for its own losses and the losses of its sub-contractor, which participated in the hearing and had counsel present. However, that participation expressly did not constitute an agreement that the sub-contractor was a party to the arbitration.  The tribunal issued a Final Partial Award finding that the contract had been wrongfully terminated, however, the tribunal was split on whether the innocent party was also entitled to recover the damages of the sub-contractor.  The innocent party brought an application to set aside the award pursuant to s. 46 of the Arbitration Act, 1991, S.O. 1991, c. 17, and for leave to appeal the award under s. 45(1) of the Act. The sub-contractor sought leave to intervene in the application on the ground that it had an interest in the subject matter of the proceeding and would be adversely affected by the judgment. Justice Pattillo dismissed the motion, in part, because “courts are reluctant to permit third parties to intervene in purely private and commercial litigation” and that this is “more so where private arbitration is involved.”

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Saskatchewan – Arbitrator’s jurisdiction when one party alleged to have repudiated arbitration agreement – #536

In Saskatchewan v Capitol Steel Corporation, 2021 SKQB 224, Saskatchewan alleged that Capitol Steel Corporation (“CSC”) had repudiated the arbitration agreement in written submissions made just before the arbitration hearing. Saskatchewan’s position was that these submissions denied one of the recitals in the parties’ arbitration agreement that showed agreement on a matter which CSC then put in issue in the arbitration. Saskatchewan challenged the arbitrator’s jurisdiction as a result of CSC’s alleged repudiation of the arbitration agreement. The arbitrator dismissed the application and Saskatchewan then applied to the Court “to decide the matter” under s. 18(9) of The Arbitration Act, 1992, SS 1992, c A-24.1, which states that, “[i]f the arbitral tribunal rules on an objection as a preliminary question, a party may, within 30 days after receiving notice of the ruling, make an application to the court to decide the matter.” Justice Clackson found that the standard of review of an arbitrator’s preliminary decision on jurisdiction, where one party alleged the other repudiated the arbitration agreement, was correctness. He held that the arbitrator was correct in finding there was no repudiation because there was no anticipatory breach. The alleged breach did not deprive Saskatchewan of any of the rights that it had under the arbitration agreement.

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Manitoba – Broad arbitration clause in one agreement required stay of action based on related employment contract – #535

Relying on the growing body of arbitration-friendly jurisprudence from the Supreme Court of Canada and provincial appellate courts, the Manitoba Queens Bench in Wardrop v. Ericsson Canada Inc., 2021 MBQB 183 re-affirmed the importance of the court’s adherence to the stay provisions in s. 7 of The Arbitration Act, C.C.S.M. c. A120 (the “Act”).  Justice Rempel held that an action for wrongful dismissal must be stayed. The key issue concerned the plaintiff employee’s entitlement in the severance period to bonuses made available pursuant to an agreement which contained a broad clause in favour of arbitration. That agreement was separate from the written employment agreement which the plaintiff employee alleged was breached and which did not contain an arbitration clause.  However, the damages sought by the plaintiff related to the bonuses. Justice Rempel granted the defendant employer’s motion for a stay in light of the broad arbitration clause in one of the agreements. Further, in finding that there was no basis to refuse the stay under s. 7(2) of the Act, Justice Rempel narrowly interpreted the provision permitting a refusal of the stay where the matter was a proper one for summary judgment.  The plaintiff employee did not satisfy the court that this exception, or any of the other bases for refusing a stay, was applicable.

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B.C. – Stay motion: pleadings sufficient for “arguable case” that arbitration clause applies, despite contrary evidence – #534

In Beck v Vanbex Group Inc., 2021 BCSC 1619,  Justice Fleming granted a partial stay of a proposed class action under s. 7 of the Arbitration Act, S.B.C. 2020, c. 2.  The issue before her was whether the Defendants had any evidentiary burden to meet to establish an “arguable case” that they were both proper parties to the arbitration agreement, thereby warranting a stay. The Plaintiffs argued that although one of the Defendants was not a signatory to the business agreement upon which they were suing and which contained the arbitration clause, both corporate Defendants were essentially alter egos of one another and both were liable to them.  However, they argued that the Defendants’ stay application must be dismissed in the face of the Defendants’ evidence that the two corporate Defendants were entirely separate and one of them was not a proper party to the arbitration agreement. The Defendants agreed that, in the arbitration or at trial, their position would be that one of the Defendants was not a party to the arbitration agreement; however, they were entitled to a stay because: (1) if the Plaintiffs were correct, the action should be stayed; and (2) if the Plaintiffs were not correct, the Plaintiffs had no claim against the non-party Defendant anyway and the action would be dismissed. Justice Fleming agreed that the issues pleaded by the Plaintiffs demonstrated that it was arguable that both corporate Defendants were proper parties, notwithstanding the evidence adduced by the Defendants to the contrary.

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