Québec – broad and liberal interpretation of arbitration agreement limited by agreement’s narrow scope of dispute – #104

A tenant and condo unit landlord successfully resisted their condo association’s motion to refer them to arbitration on the grounds that the arbitration agreement did not apply to the dispute before the court and that the agreement did not bind the tenant. In Lahaye-Abenhaïm v. Association des copropriétaires du Lowney 1, 2018 QCCS 3215, Madam Justice Johanne Brodeur held that even a broad and liberal interpretation of arbitration clauses still has to meet the parties’ intention to submit to arbitration as stated in their agreement.

In October 2017, the Association des copropriétaires du Lowney 1 (the ”Association” ) passed a by-law which addressed smoking in the condo development (the “Smoking By-law”), taking effect November 1, 2017. Towards the end of November 2017, the tenant was diagnosed with stage 4 cancer and received a prescription for medical-use marijuana. The tenant and condo owner filed a February 21, 2018 court application for judicial review to annul the Smoking By-Law. Pending the litigation, the condo owner received two (2) fines, April 14, 2018 and May 8, 2018, from the Association respectively for $7,500.00 and $6,000.00 for breach of the Smoking By-law. The tenant amended his claim to add a claim for moral and punitive damages for the Association’s intrusive behaviour.

The Association applied to have the dispute referred to arbitration. Referring to Dell Computer Corp. v. Union des consommateurs, [2007] 2 SCR 801, 2007 SCC 34 and Société du port ferroviaire de Baie-Comeau—Hauterive v. Jean Fournier Inc., 2010 QCCA 2161, Brodeur J. noted that a court had no discretion in referring parties to arbitration provided all three (3) conditions were met:

1. the parties must have entered into an arbitration agreement for the question in dispute;
2. the litigation must not have been inscribed (scheduled) for trial; and,
3. the court must not have ruled that the arbitration agreement is null.

In Acier Leroux Inc. v. Tremblay, 2004 CanLII 28564, referring to Desputeaux v. Éditions Chouette (1987) Inc., [2003] 1 SCR 178, 2003 SCC 17, Québec’s Court of Appeal emphasised the consensual nature of arbitration and the need to identify and respect the scope of disputes which the parties agreed to submit to arbitration.

[40] Although Acier Leroux is right to note the important distinctions between the arbitration clause that was examined in Camirand [v. Rossi, 2003 CanLII 10224 (2003 CanLII 10224 (QC CA), [2003] R.J.Q. 1081 (C.A.), leave to appeal to the Supreme Court of Canada refused on October 9, 2003, case number 29810] and the one in issue here, it is nevertheless constant that the content of an agreement to arbitrate is, to use the words of LeBel, J., the “primary source” of an arbitrator’s jurisdiction. An arbitration award that steps outside its terms of reference may not be homologated, or it may be annulled. Similarly, before a decision is made to invoke an arbitration clause, the jurisdiction to do so must be found within the terms of the clause itself.

The arbitration agreement in issue appeared as Article 96 of the Association’s constituting document for the condo unit owners (the “Declaration”). Article 96 provided that any dispute regarding the Declaration or flowing from its interpretation or its application must be sent to arbitration and that the resulting award would be final and without appeal. Article 96 also contained further details regarding the arbitral process, including the nomination of the arbitrator.

The Association’s motion seized the court of the applicability of Article 96 and no other details. The parties had agreed on an arbitrator and other formalities but disagreed as to whether the tenant’s and condo unit owner’s dispute fell within the terms of Article 96. Brodeur J. noted that the parties did not dispute the nature of the agreement to arbitrate – was it a perfect agreement or not – but only its scope.

The Declaration was well-drafted and used a variety of well-defined terms in a coherent, consistent manner. The Declaration distinguished between two (2) types of documents: the condominium building’s by-law (the “Building By-law”) and the all other by-laws. With references to the actual text of the Declaration, Brodeur J. identified a sampling of the such distinctions and concluded that only the Building By-law formed part of the Declaration. All other by-laws, including the Smoking By-law, were passed in compliance with the Declaration but not as part of it. As a result, the fulsome wording of Article 96 served only to narrow its scope rather than broaden it. Article 96 applied to the Declaration as well as the Building By-law but not the Smoking By-law in issue.

Following the guidance of the Supreme Court in Desputeaux v. Éditions Chouette (1987) Inc., Brodeur J. was unable to find jurisdiction for the arbitrator in the terms of Article 96 for the dispute identified in the tenant’s and condo owner’s litigation and dismissed the Association’s motion.