In 1100 Walkers Line Inc. v Elliott Sports Medicine Clinic Inc., 2021 ONSC 5067, Justice E.M. Morgan considered a commercial lease containing a renewal provision, which stated that if the parties could not agree on the applicable market rent to be paid during the renewal term, that issue “shall be determined by arbitration”. When the Tenant terminated the lease, but did not give the required 6 months’ written notice and thereafter vacated the premises, the Landlord sued, asserting that the automatic renewal provision was triggered and rent during the renewal term was owing. The Tenant claimed that the renewal provision was ambiguous and unenforceable, in part, because the applicable market rent during the renewal term had never been agreed upon by the parties, nor determined by arbitration since neither party had commenced an arbitration. Justice Morgan found that the renewal provision was unambiguous and enforceable and that the mandatory arbitration clause did not require the Landlord to initiate an arbitration in which the Tenant would obviously not participate. Further, because only the Landlord adduced any evidence of the applicable market rent, the arbitrator would have fixed the rent at that rate. Therefore, Justice Morgan granted judgment in favour of the Landlord.
Continue reading “Ontario – Party can sue and not required to arbitrate where opposing party obviously will not participate – #514”Ontario – Court application under Model Law Art. 16(3) to “decide the matter” of the tribunal’s jurisdiction is a hearing de novo and not a “review” of the tribunal’s decision – #513
In Russian Federation v. Luxtona Limited, 2021 ONSC 4604, the Divisional Court heard an appeal by Russia of an interlocutory decision of Justice Penny of the Ontario Superior Court of Justice, Russia Federation v. Luxtona Limited, 2019 ONSC 7558. Justice Penny had declined to allow Russia to adduce fresh evidence on an application brought under Model Law Art. 16(3) to set aside an interim arbitral award finding that Russia had consented to arbitrate Luxtona’s claims and that the tribunal therefore had jurisdiction. The proposed fresh evidence related to the jurisdictional issue and had not been before the tribunal. The appeal turned on whether the application before Justice Penny was a “review” of the tribunal award on jurisdiction or a hearing de novo. The Divisional Court, in a decision written by Justice D.L. Corbett, held that Russia was entitled to adduce fresh evidence as of right because the application was a hearing de novo. The court relied upon two key decisions raised by the parties. Mexico v Cargill, 2011 ONCA 622 held that a set aside application brought in the Superior Court of Justice under Art. 34 of the Model Law is a “review” and not a hearing de novo, but in that case there was no challenge to the tribunal’s jurisdiction to hear and decide the dispute. Therefore, the Divisional Court was not bound by it. The English Supreme Court decision of Dallah v Pakistan, [2011] AC 763, held that the court’s role where one party took the position that it had not consented to the arbitration was “to reassess the issue [of jurisdiction] itself” and not to “review” the tribunal’s decision. The Divisional Court found that this approach is supported by the language in the Model Law and the weight of international authority and Art. 2A of the Model Law, which promotes the uniformity of the application of the Model Law internationally.
Continue reading “Ontario – Court application under Model Law Art. 16(3) to “decide the matter” of the tribunal’s jurisdiction is a hearing de novo and not a “review” of the tribunal’s decision – #513”B.C. – party not abandoning position made in written argument, despite counsel’s failure to object to arbitrator’s contrary understanding – #512
In Eisler v. Connor Clark & Lunn Financial Group Ltd., 2021 BCSC 1280, Justice N. Smith granted, in part, the petitioners’ application for leave to appeal an arbitral award arising out of a dispute with their former employer, CCL. During their employment, the petitioners were paid income from certain funds owned by CCL that had investments in a variety of companies. After the petitioners’ employment was terminated, CCL re-organized the funds and acquired new investments in the fund. It stopped paying income from the fund to the petitioners, as a result of which they commenced an arbitration. The arbitrator found for CCL and the petitioners sought leave to appeal the award. One of the issues before Justice Smith was whether the duty of good faith first recognized in Bhasin v. Hrynew, 2014 SCC 71 was before the arbitrator. The argument that CCL had breached the contractual duty of good faith, through an improper use of its discretion to re-organize the fund and terminate the petitioners’ income entitlement, was contained in the petitioners’ written argument. But when the arbitrator asserted during the arbitration that it was his understanding that the petitioners were not advancing this position, petitioners’ counsel failed to correct him. Nonetheless, Justice Smith found that the issue was properly before the arbitrator.
Continue reading “B.C. – party not abandoning position made in written argument, despite counsel’s failure to object to arbitrator’s contrary understanding – #512”Québec – No bias where arbitrator rejected most objections by a party, had little interest in some evidence, questioned witnesses, and showed irritation at party – #511
In Consortium MR Canada ltée v Morissette, 2021 QCCS 2847, Justice Philippe Bélanger heard an appeal of an arbitral award pursuant to which MR was required to carry out remedial work on buildings built by it, as general contractor, which had longstanding water problems and to pay extra-judicial fees because of its abusive behaviour in failing to remedy the problems. MR appealed the award on a number of grounds, including that that the “attitude and remarks” made by the arbitrator during the hearing were a breach of his duty of impartiality. It filed affidavits from witnesses and MR representatives, who said that the arbitrator “seemed disinterested” and “seemed to favour the [building owners]”. Justice Bélanger found that while the arbitrator clearly demonstrated irritation with respect to MR’s delays in completing its remedial work, a reasonable person would not think that this rose to the level of bias.
Continue reading “Québec – No bias where arbitrator rejected most objections by a party, had little interest in some evidence, questioned witnesses, and showed irritation at party – #511”Ontario –Arbitrator has jurisdiction to appoint inspector under the Ontario Business Corporations Act if terms of parties’ arbitration agreement allows, but court assistance needed if third parties affected – #510
In Randhawa v. Randhawa, 2021 ONSC 3643, Justice Koehnen considered whether the arbitrator appointed by the parties had jurisdiction when he issued an award appointing an inspector to conduct an investigation. The applicant (Paul) and the respondent (Rana) were brothers, who were involved in a dispute about the separation of their interests in various businesses which they once ran together. Paul commenced an oppression remedy application in March 2018, which was resolved by Minutes of Settlement dated October 1, 2018. The Minutes of Settlement called for the dissolution or sale of the businesses and provided that any disputes arising from the implementation of the Minutes of Settlement were to be resolved by way of arbitration. Disputes arose and the arbitrator issued an award under the Ontario Business Corporations Act , R.S.O. 1990, c. B. 16, appointing an inspector to conduct an investigation. During the arbitration, Paul brought a court application for the appointment of a receiver over a portion of the brothers’ businesses. Although Rana agreed to the receiver’s appointment, he contested the receiver’s right to conduct an investigation that involved third parties. He also contested the arbitrator’s jurisdiction when he awarded the appointment of an investigator under the OBCA at all and because the investigation included the affairs of a third party. Justice Koehnen granted Paul’s application. He found that there was no previous case and nothing in the parties’ arbitration clause that prohibited an arbitrator from awarding a statutory remedy, including the appointment of an inspector. The arbitrator acknowledged that his jurisdiction was limited to the parties to the arbitration agreement and that any investigation of a third party would require the assistance of the court, which Justice Koehnen ordered. In addition, the parties had agreed to the appointment of a receiver and there was ample evidence of the need to investigate the affairs of the third party as they affected the issues in the dispute between the brothers.
Continue reading “Ontario –Arbitrator has jurisdiction to appoint inspector under the Ontario Business Corporations Act if terms of parties’ arbitration agreement allows, but court assistance needed if third parties affected – #510”B.C. – Challenge of arbitrator’s interpretation of restrictive covenant in shareholders agreement, relying upon employment contract analysis, not appealable “extricable error of law” – #509
In AES Engineering Ltd. v. Khan, 2021 BCSC 1384, Justice Lamb found that the arbitrator’s determination that a restrictive covenant in a shareholders agreement was unenforceable for ambiguity did not raise an extricable error of law that would provide grounds for an appeal of the final award. The applicant argued that the arbitrator had committed errors of “legal methodology” in interpreting the restrictive covenant, including by applying the principles from the “lens” of an employment contract case. Justice Lamb ruled: “There is nothing to suggest that the arbitrator’s interpretation of the contract in this case is a question of law as opposed to the usual question of mixed law and fact. It is clear from the Award that the arbitrator’s finding of ambiguity turned on the specific wording of the restrictive covenant. There was no evidence before me to suggest that this form of restrictive covenant is a standard form clause such that there might be precedential value to the proper interpretation of the clause which might turn this issue into a question of law that would be appealable under s. 31(1) [of the former B.C. Arbitration Act. R.S.B.C 1996, c. 55]. Further, there is no indication on the face of the Award that the arbitrator considered an incorrect principle in finding the clause was ambiguous: he considered the “ordinary grammatical meaning of the words” and found the clause to be ambiguous. In short, the interpretation of the restrictive covenant in this case is a question of mixed law and fact.”
Continue reading “B.C. – Challenge of arbitrator’s interpretation of restrictive covenant in shareholders agreement, relying upon employment contract analysis, not appealable “extricable error of law” – #509”B.C. – no breach of natural justice where arbitrator invites submissions on new issue but declines to incorporate them in award – #508
In Hotel Georgia Development Ltd. v The Owners, Strata Plan EPS849, 2021 BCSC 1236, Madam Justice Heather MacNaughton held that the arbitrator committed no breach of natural justice by inviting submissions on a new issue which he introduced but then declined to rely on out of fairness to Respondent. “Where an arbitrator considers an approach to an issue that has not been raised by either party, natural justice requires the arbitrator to give the parties an opportunity to comment on the approach. The fact that a party does not make sufficient use, if any, of the opportunity given by the arbitrator is not a breach of natural justice and, accordingly, not a basis for setting aside an arbitral award”. MacNaughton J. observed that the arbitrator had signalled a gap in Claimant’s evidence and sought submissions on his ability to make a quantum meruit award. Despite having invited submissions and effectively granted Claimant an opportunity to compensate for its evidentiary gap, the arbitrator elected not to reproduce the responding submissions in the award. “It would be clearly unfair and prejudicial to the Respondent to have a new legal basis for recovery of common law damages at this stage and I exercise my discretion against pursuing that analysis”.
Continue reading “B.C. – no breach of natural justice where arbitrator invites submissions on new issue but declines to incorporate them in award – #508”Québec – request for conciliation under statutory dispute resolution process qualifies as demand for arbitration – #507
In Therrien Couture Joli-Coeur v. Chouinard, 2021 QCCQ 4944, Mr. Justice Enrico Forlini dismissed Client’s challenges against homologation of an award which issued in favour of the Law Firm, determining that Client’s request for conciliation had initiated arbitration of Law Firm’s accounts. Though Client and Law Firm had no written agreement to arbitrate, the dispute resolution process set out in the Regulation respecting the conciliation and arbitration procedure for the accounts of advocates, CQLR c B-1, r 17 qualified as a consensual process and Client’s conciliation request effectively initiated the arbitration. In regard to the alleged breach of natural justice by Law Firm’s delivery of documents the day of the hearing, Forlini J. held that Client could not object to a procedure which had been determined by the Council well in advance of the hearing and in regard to which Client did not object or request an adjournment of the hearing.
Continue reading “Québec – request for conciliation under statutory dispute resolution process qualifies as demand for arbitration – #507”B.C. – court issues sealing orders to avoid “defeating parties’ reasonable expectations of privacy in an ongoing arbitration” – #506
In Stewart v. Stewart, 2021 BCSC 1212, Mr. Chief Justice Christopher E. Hinkson issued sealing orders to protect materials filed (i) in a pending arbitration agreed to as part of the settlement of earlier court litigation and (ii) in court when the parties returned to court post-settlement to dispute compliance with the initial settlement. Applying the two (2) part test developed for publication bans in Dagenais v. Canadian Broadcasting Corp., 1994 CanLII 39 (SCC) and applied to confidentiality orders in Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, Hinkson C.J. determined that “disclosure of this information would be likely to undermine the public policy in this jurisdiction of encouraging arbitrations by defeating the parties’ reasonable expectations of privacy in an on-going arbitration”. Hinkson C.J. limited his orders to specific documents and affidavit passages filed either in the ongoing arbitration or in court and referenced the confidentiality provisions in BCICAC’s (now VanIAC) former Revised Domestic Commercial Arbitration Rules of Procedure which applied to the arbitration.
Continue reading “B.C. – court issues sealing orders to avoid “defeating parties’ reasonable expectations of privacy in an ongoing arbitration” – #506”Alberta – dispute requiring expert evidence and expeditious resolution prompts court to propose arbitration – #505
In Canadian Consulting Engineers Inc v. Brazeau (County), 2021 ABQB 464, Master W. Scott Schlosser declined to proceed by way of summary judgment because “this dispute is not now capable of being resolved in a fair and just way on the existing record” and required the assistance of expert opinion witnesses. Master Schlosser observed that plaintiff made “no pretense of applying for a summary determination in the course of an ordinary lawsuit” and that its “strategy appears to have been to prepare this case for Summary Judgment directly”. Having observed plaintiff’s “very ambitious path taken” and desire to “seek expeditious resolution” and having qualified the dispute as unsuitable for summary judgment due to the expert evidence required, Master Schlosser did prompt the parties to engage in the arbitration still available in their contract and, when doing so, to retain “an expert arbitrator”.
Continue reading “Alberta – dispute requiring expert evidence and expeditious resolution prompts court to propose arbitration – #505”