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.
Continue reading “B.C. – Stay motion: pleadings sufficient for “arguable case” that arbitration clause applies, despite contrary evidence – #534”B.C. – Leave to appeal on question of law; arbitrator’s error must be “material to result” and appeal must have “arguable merit” – #533
In Escape 101 Ventures Inc. v March of Dimes Canada, 2021 BCCA 313 Justice DeWitt-Van Oosten granted, in part, the Plaintiff’s application for leave to appeal the arbitrator’s award dismissing the Plaintiff’s claims brought pursuant to an asset purchase agreement. The Plaintiff argued that the arbitrator committed errors of law in interpreting the terms of the agreement. Justice DeWitt-Van Oosten found that the arbitrator had misapprehended the evidence, which underlay his conclusions and “laid the foundation for an extricable error of law”. Further, even where an applicant demonstrates that there is an extricable question of law, a court should consider the reasons of the arbitrator as a whole in assessing that error and deny leave unless satisfied that the error was material to the result and the appeal has arguable merit. Justice DeWitt-Van Oosten was satisfied that both these criteria were met. Further, the amount of money at issue met the requirement for leave to appeal in s. 59(4) of the B.C. Arbitration Act, S.B.C. 2020, c. 2, that, “the importance of the result of the arbitration to the parties justifies the intervention of the court”.
Continue reading “B.C. – Leave to appeal on question of law; arbitrator’s error must be “material to result” and appeal must have “arguable merit” – #533”Ontario – Courts decide consent to arbitration de novo, without deference to arbitral tribunal – #532
In Hornepayne First Nation v. Ontario First Nations (2008) Limited Partnership, 2021 ONSC 5534, Justice Fitzpatrick held that a court hearing an application to “decide the matter” of arbitral jurisdiction must decide the question de novo. This was an application to the court under section 17(8) of the Ontario Arbitration Act, 1991. That section provides that, if an arbitral tribunal finds as a preliminary question that is has jurisdiction, any party may apply to the court to “decide the matter”. Justice Fitzpatrick followed the Divisional Court’s decision in Russian Federation v. Luxtona, 2021 ONSC 4605, which interpreted a similar provision in Article 16(3) of the Model Law. He held that the court’s role on such an application is to decide de novo whether the arbitral tribunal had jurisdiction.
Continue reading “Ontario – Courts decide consent to arbitration de novo, without deference to arbitral tribunal – #532”Québec – Arbitration clause cannot be avoided by bringing a class action – #531
In Centre de santé dentaire Gendron Delisle inc. c. La Personnelle, Assurances générales inc., 2021 QCCS 3463, Justice Davis reaffirmed that a valid arbitration clause will be enforced and cannot be avoided by the Plaintiff bringing a class action. In this matter, the Plaintiff sought authorization to bring a class action against various insurance companies under various insurance policies and to be appointed as representative Plaintiff on behalf of dental clinics which claimed business interruption losses caused by the COVID-19 pandemic. Justice Davis dismissed the request for authorization on the basis that it did not meet the requirements of Article 575(2) of the Code of Civil Procedure. However, he said that had he granted authorization, those insured dental clinics covered by an insurance contract containing a valid arbitration clause would have been excluded from the group covered by the class action and referred to arbitration.
Continue reading “Québec – Arbitration clause cannot be avoided by bringing a class action – #531”B.C. – Leave to appeal denied where alleged legal errors did not reflect arbitrator’s reasoning – #530
In Ecoasis Resort and Golf LLP v Bear Mountain Resort & Spa Ltd., 2021 BCCA 285, the Applicants (Bear Mountain and related companies) argued on leave to appeal that the arbitrator committed four extricable errors of law relating to whether it was an implied term of a lease that the lessees would have access to limited common property. The Arbitration Act, S.B.C. 2020, c. 2, like the previous Act, allows appeals on questions of law alone provided they satisfy certain other conditions. Two of the alleged extricable legal errors concerned whether the arbitrator implied a term based on a wrong principle; the third concerned whether the arbitrator, in interpreting the lease, allowed the factual matrix to overwhelm the words of the contract; the fourth concerned whether the arbitrator misapplied the law of the duty of good faith by implying a term into the agreement. On examination, Justice Bennett concluded that none of the alleged errors reflected the arbitrator’s reasoning and, further, “all of the so-called legal issues raised by the applicant, fall into the category of mixed fact and law. I do not see any extricable question of law arising from the reasons of the arbitrator” (para. 49). Leave to appeal was denied.
Continue reading “B.C. – Leave to appeal denied where alleged legal errors did not reflect arbitrator’s reasoning – #530”B.C. – Statutory arbitrator’s award set aside on basis that it was “arbitrary and irrational” – #529
In Shahcheraghi v Divangahi, 2021 BCSC 1576, Justice Horsman set aside the award of an arbitrator of the Residential Tenancy Branch (“RTB”) and remitted the matter back to the RTB for a new hearing, either by the same arbitrator or someone else assigned by the RTB. She found that the arbitrator’s reasons were inadequate for the parties to understand the rationale for the decision:
“[53]… I wish to be clear that my concern with the Arbitrator’s decision is the reasoning process, which in my view is insufficient to serve the basic function of reasons in allowing the parties to understand why the decision was reached…The point is that [certain] issues are unexplored in the Arbitrator’s decision. It is not the role of the reviewing court to re-write the Arbitrator’s reasons so as to arrive at a new rationale that might support the outcome.”
Continue reading “B.C. – Statutory arbitrator’s award set aside on basis that it was “arbitrary and irrational” – #529”Ontario – Partial stay; oppression claim arbitration to precede related family law action – #528
In Pezo v Pezo, 2021 ONSC 5406, the applicant Elma Pezo brought two claims: a family law claim against her spouse Kabir Pezo; and an oppression remedy claim against Kabir and his friend Hadis Kozo regarding a business they had all operated together. Kazo sought a stay of all claims against him on the basis that the parties had entered into a Shareholders’ Agreement with respect to the business that contained a mandatory arbitration clause. However, Elma argued that it was invalid because the two claims intersected and had to be heard together, but the arbitration clause did not meet the requirements for a family law arbitration set out in Ontario Regulation 134/07 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17. Justice Kraft disagreed. She found that the arbitration clause covered only the oppression remedy claims and that she had the discretion to grant a partial stay under s. 7(5) of the Arbitration Act because its two pre-conditions had been met: (a) the agreement dealt with only some of the matters in respect of which the proceeding was commenced; (b) it was reasonable to separate the matters dealt with in the agreement from other matters. She stayed the family law claims an ordered an arbitration with respect to the oppression claims to proceed before the action so that the findings of the arbitrator on issues that could affect the family law claim would be before the court.
Continue reading “Ontario – Partial stay; oppression claim arbitration to precede related family law action – #528”Ontario – “Cumulative series of events” complaint does not extend deadline for raising arbitrator bias – #527
In Spivak v. Hirsch, 2021 ONSC 5464, Justice Jarvis heard a motion to remove an arbitrator pursuant to sections 13 and 15(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 on the basis that the arbitrator demonstrated a reasonable apprehension of bias, actual bias and had not treated the applicant fairly and equally. The applicant raised concerns which she said, cumulatively, constituted bias. Essentially, the applicant argued bias on the basis of awards issued against her and that she was not being afforded the same litigation latitude as the respondent. The court dismissed the application. A reasonable person, when considering the applicant’s concerns in the context of the entirety of the arbitration proceedings, would not think this amounted to bias. In any event, the applicant was out of time. Section 13 of the Arbitration Act makes it mandatory that a person who wishes to challenge an arbitrator must do so within 15 days of becoming aware of the grounds for challenge. There is no discretion to extend the time to take into account earlier incidents of alleged bias.
Continue reading “Ontario – “Cumulative series of events” complaint does not extend deadline for raising arbitrator bias – #527”Québec – confidentiality order denied in court proceedings; parties reminded of confidential arbitration as an alternative – #526
In Douville v St-Germain, 2021 QCCS 3374, Justice Daniel Urbas denied a Defendant’s application for a confidentiality order in a defamation action, but reminded the parties that they could submit their dispute to arbitration, which would afford them the protection sought. Justice Urbas found that the applicant failed to establish a serious risk to an important public interest, but that a further application could be made in due time to seek the protection of specific exhibits or information.
Continue reading “Québec – confidentiality order denied in court proceedings; parties reminded of confidential arbitration as an alternative – #526”B.C. – Whole award to be considered when examining for patent unreasonableness – #525
In Potherat v, Slobodian, 2021 BCSC 1536, Justice Crabtree of the British Columbia Supreme Court found that the decision of an arbitrator of the B.C. Residential Tenancy Branch was neither patently unreasonable nor wrong when read as a whole. In determining whether a decision is patently unreasonable, the court is required to examine both the reasons and the outcome. Justice Crabtree quoted extensively from the arbitrator’s reasons; while sentences or paragraphs are sometimes quoted by courts when reviewing arbitral awards, it is rare that large portions of the arbitrator’s reasons are quoted. Justice Crabtree followed Sherstobitoff v. British Columbia (Workers’ Compensation Appeal Tribunal), 2019 BCSC 1659, which held that that reasons “are to be read as an organic whole, not parsed or dissected in search of error”. Justice Crabtree found that the petitioner’s submissions were a parsing of the decision.
Continue reading “B.C. – Whole award to be considered when examining for patent unreasonableness – #525”