In Valiquette v. PL Nouvelle France Inc., 2021 QCCS 1096, Madam Justice Florence Lucas followed the lead recently set out in Groupe Dimension Multi Vétérinaire Inc. v. Vaillancourt, 2020 QCCS 1134 which dismissed attempts to limit an arbitral tribunal’s jurisdiction by way of presumption that statutory recourses were excluded unless expressly included. Lucas J. held that an arbitrator’s jurisdiction extends to all disputes relating directly or indirectly to the contract in which the agreement to arbitrate is contained, unless from its wording or the context a real intention by the parties to limit its scope. Lucas J. held that nothing in the agreement to arbitrate – which defined ‘Dispute’ in ‘excessively broad terms’ – or in the context of the matter permitted inferring the parties’ intention to limit the scope of their agreement to arbitrate or to exclude the oppression remedy from an arbitrator. Relying on the record before her, Lucas J. also definitively determined the issue of jurisdiction and referred the parties to arbitration.
As employees of Groupe Laitier Chalifoux Inc. (“Laitier Chalifioux”), MV and ND benefited from an employment share issue plan (“Contract”) which permitted them to acquire shares in PL Nouvelle France Inc. (“PL Nouvelle France”). Due to (i) a resignation by MV and (ii) the dismissal of ND due to a restructuring, a dispute arose between Laitier Chalifoux and MV/ND regarding the MV/ND’s acquisition of shares prior to the cessation of employment and the parties’ respective rights and obligations involving buy back of those shares upon cessation of employment.
Unsatisfied by the exchanges with Laitier Chalifoux, MV/ND as minority shareholders (“Minority Shareholders”) instituted litigation in Superior Court against Laitier Chalifoux and A.L.P. Canada Inc. (“A.L.P. Canada”) as majority shareholders (“Majority Shareholders”) in PL Nouvelle France invoking oppression and remedies under section 450 of Québec’s Business Corporations Act, CQLR c S-31.1 (“BCA”).
“Section 450 An applicant may obtain an order from the court to rectify a situation if the court is satisfied that
(1) any act or omission of the corporation or any of its affiliates effects or threatens to effect a result,
(2) the business or affairs of the corporation or any of its affiliates have been, are or are threatened to be conducted in a manner, or
(3) the powers the board of directors of the corporation or any of its affiliates have been, are or are threatened to be exercised in a manner
that is or could be oppressive or unfairly prejudicial to any security holder, director or officer of the corporation”.
The Contract at section 17 contained a stepped dispute resolution clause, providing for mediation and arbitration. In the first step, involving mediation, the Contract defined ‘Dispute’ as all litigation, dispute, disagreement, controversy or claim [informal] ‘flowing from this Contract or in regard to this Contract, Plan or Undertaking, including any question concerning its existence, negotiation, interpretation, application, performance, validity, breach, resiliation, resolution or the relationship between the Parties which results from same or relate directly or indirectly’.
That Contract carried that definition of ‘Dispute’ forward into the step for arbitration.
In response to the Minority Shareholders’ court litigation, the Majority Shareholders applied to have the court refer the parties to arbitration.
Lucas J. examined the allegations in the court pleadings. She determined that the court litigation as framed by the Minority Shareholders qualified as disputing the interpretation, application and breach of the Contract as well as its performance and the relationship between the parties which resulted from it.
Lucas J. noted the Majority Shareholders’ reliance on Acier Leroux Inc. v. Tremblay, 2004 CanLII 28564 (QC CA) and Camirand v. Rossi, 2003 CanLII 10224 (QC CA) as authority for acknowledging an arbitrator’s jurisdiction to exercise the powers stated in sections 450 and following of the BCA in cases in which the agreement to arbitrate grants the arbitrator such jurisdiction expressly or implicitly. They argued that the Contract in question qualified as granting jurisdiction to the arbitrator.
The Minority Shareholders disagreed. Relying on Ferreira v. Tavares, 2015 QCCA 844, they argued that the clause fell short of specifying the parties’ intention to renounce their right to seek those remedies before the courts. Lucas J. observed that the Minority Shareholders appeared to conclude from the case law that such renunciation applied only if and when expressly made.
Lucas J. referred to the exact debate made before the Superior Court’s Mr. Justice Frédéric Bachand, as he then was, in Groupe Dimension Multi Vétérinaire Inc. v. Vaillancourt, 2020 QCCS 1134. For the earlier Arbitration Matters note regarding Bachand J.’s reasons, see “Québec – default is all disputes subject to broadly-worded arbitration agreement unless expressly excluded – #309”.
Highlighting paras 29-32 of Bachand J.’s reasons, Lucas J. noted that the default approach is to consider that the arbitrator’s jurisdiction extends to all disputes relating directly or indirectly to the contract in which the agreement to arbitrate is contained, unless from its wording or the context a real intention by the parties to limit its scope.
Lucas J. held that the agreement to arbitrate in the Contract was drafted in a broad manner by which the parties agreed that every ‘Dispute’, defined in [informal translation] ‘excessively broad terms’ would be resolved by an arbitrator. Lucas J. added that nothing in the agreement to arbitrate or in the context of the matter permitted her to infer that the parties had an intention to limit its scope or to exclude the oppression remedy and related powers from an arbitrator.
Lucas J. continued by distinguishing the agreement to arbitrate from those considered in Acier Leroux Inc. v. Tremblay and Ferreira v. Tavares. In the latter cases, the Court of Appeal determined that the parties had intended to restrict the arbitrator’s jurisdiction unlike the case before her.
Based on the above, Lucas J. closed her reasoning by deciding that the arbitrator had jurisdiction. Rather than refer the parties to the arbitrator for a decision on jurisdiction, Lucas J. determined the question in advance.
[informal translation] ‘On the whole, a summary examination of the proceedings and exhibits permits the Court to decide the question of jurisdiction, a mixed fact and law nature, and to conclude that the arbitration clause in the Contract is sufficiently broad to cover the litigation instituted by the minority shareholders in the present instance’.
urbitral notes – First, in Groupe Dimension Multi Vétérinaire Inc. v. Vaillancourt, 2020 QCCS 1134, Mr. Justice Frédéric Bachand, as he then was, dismissed attempts to limit an arbitral tribunal’s jurisdiction by way of presumption that statutory recourses were excluded unless expressly included. He held that the reverse approach was supported by a liberal interpretation which must be given to such agreements to arbitrate and legislative policy favouring development of consensual arbitration. Bachand J. concluded that an arbitral tribunal’s jurisdiction extends to all disputes relating directly or indirectly to the contract in which the agreement to arbitrate is inserted unless the terms of that agreement or relevant contextual elements indicate a real intention of the parties to limit its scope. See “Québec – default is all disputes subject to broadly-worded arbitration agreement unless expressly excluded – #309”.
Second, for other related notes involving oppression remedies and arbitration, see the earlier Arbitration Matters notes:
(i) “Ontario – oppression remedy grants party control of dispute resolution covered by funding agreement – #336” regarding 1515474 Ontario Inc. v. Soocellus Ontario Inc., 2020 ONSC 270. Ontario’s Divisional Court upheld an order granting a shareholder control of the conduct of ongoing dispute resolution. Post-sale of G’s shares in F Co., G retained non-voting shares in F Co. with a right to receive net proceeds in F Co.’s litigation so long as G provided litigation funding and met other financial terms. F Co.’s eventual decisions to reduce activity in the litigation, to seek an end to it and to mediate so as to “accept the best reasonable offer we are able to negotiate” combined to qualify as oppression justifying the grant of litigation control. The order sought to rectify for breach of G’s reasonable expectations created by the sale of G’s shares in a company engaged in litigation but, unlike other oppression remedies, limited the grant of control to the conduct of litigation and not overall operations of F Co.
(ii) “Ontario – majority shareholder referring contract interpretation to arbitration is not oppressive conduct – #275” regarding Richcraft Homes Ltd. v. Urbandale Corporation et al., 2020 ONSC 411. Mr. Justice Robert J. Smith dismissed a minority shareholder’s action which alleged oppression based on a majority shareholder requesting a legal opinion favourable to its interests and then submitting the interpretation to arbitration. Smith J. held that any party to a commercial agreement, including a majority shareholder, is entitled to seek a legal opinion concerning interpretation its rights under a contract and, instead of acting illicitly on any interpretation, refer interpretation of the contract to arbitration.
(iii) “B.C. – T’s responses to F’s mediation efforts justify delayed oppression remedy petition, qualify as component of oppressive conduct – #418” regarding Gierc Jr. v. Wescon Cedar Products Ltd., 2021 BCSC 23. Madam Justice Catherine Murray determined that Petitioner’s “reasonable efforts to mediate and settle the matter” served two (2) purposes: to rebut Respondents’ allegations of Petitioner’s undue delay to apply for oppression remedy under the Business Corporations Act, SBC 2002, c 57 and to qualify Respondents’ own conduct as oppressive.