Ontario – ‘Parochial’ perspective on expert determination rejected – #708

In KMH Cardiology Centres Incorporated v Lambardar Inc., 2022 ONSC 7139, Justice Myers referred a dispute for expert determination pursuant to the parties’ agreement. He concluded that the parties intended the dispute to be determined by an expert, and not arbitration, even though it required the expert to engage in the exercise of contractual interpretation and not simply a mathematical calculation.

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John’s 2022 Hot Topic: Summary judgment in arbitration – #699

My “hot topic” for 2022 is the Court of Appeal for Ontario’s confirmation that an arbitration can be determined by summary judgment. In Optiva Inc. v. Tbaytel, 2022 ONCA 646, the Court approved proceeding by summary judgment motion where such a motion is consistent with the parties’ arbitration agreement. While the case addressed four grounds of appeal, including whether the arbitrator’s ruling to proceed by summary judgment was a procedural order or a jurisdictional award, the central issue, and my “hot topic,” is whether the arbitrator’s partial award, which decided a summary judgment motion should be set aside. For a summary of the decision, see Case Note – No oral hearing required even if one party requests it #667.

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Ontario – Arbitrator resignation did not terminate arbitration – #652

In Kubecka v Novakovic, 2022 ONSC 4503, Justice Pinto determined that, on the wording of the parties’ arbitration agreement, the parties had agreed that the arbitration was not terminated and their dispute returned to the jurisdiction of the courts – even when the arbitrator resigned. He appointed a replacement arbitrator on the application of one of the parties.

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Québec – Parallel proceedings insufficient to justify disregard of arbitration agreement – #651

In Travelers Insurance Company of Canada v Greyhound Canada Transportation, 2022 QCCQ 4746, Justice Davignon declined jurisdiction over part of a dispute – the Plaintiffs sued the Defendants for recovery of damages as a result of an explosion on their property; in a separate action, one Defendant sued the other to recover any damages it might be required to pay to the Plaintiffs, relying upon a warranty provision in the Defendants’ agreement (to which the Plaintiffs were not parties). That agreement contained both a forum selection and arbitration clause. Justice Davignon declined jurisdiction over the warranty claim. He was unmoved by the fact that this would result in the dispute being debated in two different forums – the court, in respect of the principal action, and arbitration, as to the warranty claim – and gave full effect to the arbitration clause in the agreement between the Defendants.

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Alberta – SCC Wastech decision applies to exercise of arbitrator’s discretion to resign – #647

In SZ v JZ, 2022 ABQB 493 Justice Marion agreed to hear an application for urgent relief, despite the Respondent’s position that he had no jurisdiction. The Respondent argued that the parties were engaged in arbitration until the Arbitrator resigned unilaterally; however, the parties’ arbitration agreement continued to be enforceable. Justice Marion disagreed. He found that the Alberta Arbitration Act, RSA 2000, c A-43 (Arbitration Act) and the arbitration agreement (to which the Arbitrator was a party) allowed the Arbitrator to resign and that because the parties agreed to arbitration only before the specific Arbitrator appointed, upon his resignation, the arbitration terminated. However, the Arbitrator was required to exercise his discretion to resign reasonably and in good faith, including in a manner that was consistent with the purposes for which the discretion was provided in the contract,  in accordance with the Supreme Court of Canada decision in Wastech Services Ltd v Greater Vancouver Sewage and Drainage District, 2021 SCC 7. There was no suggestion that he had not done so.

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Ontario – Arbitrator’s notes not a substitute for transcript – #627

In Aquanta Group Inc. v Lightbox Enterprises Ltd, 2022 ONSC 3036, Justice Morgan was asked to appoint an arbitrator when the parties could not agree. The Respondents opposed all arbitrator candidates on the Applicants’ list and requested the appointment of an arbitrator who was previously appointed by the parties in an earlier arbitration involving the same parties and the same agreements. The Respondents argued that this would facilitate costs and time savings by allowing the arbitrator to use his notes from the earlier arbitration because there was no transcript of that arbitration. The Applicants had challenged the award arising from the earlier arbitration and opposed the appointment of the same arbitrator on the basis of reasonable apprehension of bias. Justice Morgan rejected the Respondents’ request to appoint the same arbitrator and found that their proposal, among other things, violated the principle of deliberative secrecy. In the alternative, the Respondents agreed to the appointment of certain candidates on the Applicants’ list. Justice Morgan chose one of those, “resort[ing] to the entirely arbitrary approach of going in alphabetical order”.

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Ontario: Award set aside for “trickery and injustice” – #624

In Campbell v. Toronto Standard Condominium Corp. No. 2600, 2022 ONSC 2805, Justice Perell of the Ontario Super Court of Justice set aside an arbitral award for “constructive fraud” pursuant to s. 46(1), para. 9 of the Ontario Arbitration Act, 1991. The arbitral award ordered the Campbells, who were condominium owners (the “Owners”), to pay $30,641.72 to the Toronto Standard Condominium Corporation No. 2600 (the “Condo Corp.”), which represented the costs of their arbitration. The matter began as a dispute regarding the Owners’ alleged non-compliance with the rules of the Condo Corp, including noise complaints and short-term rentals. However, the Owners were led to believe that the arbitration would be limited to the reasonableness of Condo Corp.’s legal costs in enforcing compliance up to and including the arbitration. Justice Perell held that the Owners were “tricked” intothe arbitration because it was actually an arbitration on the non-compliance issues.While Justice Perell found that the Condo Corp. was not deceitful, he found that “[2] it misled, outmanoeuvred, and outsmarted the [Owners]” such that “[t]he court should not countenance the trickery and the injustice.” As a result, the arbitral award was set aside.

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Ontario – Arbitration or expert determination?  Stay granted, referral to “Independent Accountant” – #620

In 2832402 Ontario Inc. v 2853462 Ontario Inc., QBD Modular Systems Inc., and QBD Cooling Systems Inc., 2022 ONSC 2694, Justice Conway was asked to decide whether the parties had agreed to arbitration or expert determination. The parties had entered into a Share Purchase Agreement (“SPA”), which contained a dispute resolution clause to deal with disagreements as to post-closing purchase price adjustments, which disputes were to be determined by an “Independent Accountant”. A dispute arose and the Vendor brought a court application against the Purchaser for production of documents to allow it to calculate the post-closing adjustments. The Vendor argued that even if the parties had agreed to arbitration, the document production issue was outside the jurisdiction of the Independent Accountant. Justice Conway considered the various indicia of arbitration and concluded that the clause in the SPA was an arbitration clause. Therefore, she stayed the application and referred the production issue to the Independent Accountant. That issue was relevant to the Independent Accountant’s ability to decide the parties’ dispute as to the amount of the post-closing purchase price adjustment.

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Ontario – Appeal permitted on issue not first submitted to arbitrator for correction – #617

In Farmer v Farmer, 2022 ONSC 2410, Justice Alex Finlayson found that he had discretion to consider an issue on appeal that had not been raised before the arbitrator as an error to be corrected or amended pursuant to s. 44(1) of the Ontario Arbitration Act, 1991, SO 1991, c. 17. Justice Finlayson found that there was a “dearth” of authority on this issue and set out principles to be considered when deciding whether a court should exercise its discretion. Here, the issue raised was one that was intertwined with an issue that was properly before the court on the appeal, there was no prejudice to the parties, and the error was discovered by the court after the expiry of the 30-day period under s. 44(1) for seeking correction or amendment of the award from the arbitrator.

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Nova Scotia – Self-inflicted compliance issues no basis to object to arbitration – #604

In Install-A-Floor Limited v. The Roy Building Limited, 2022 NSSC 67, the applicant, Floors Plus, sought an order appointing an arbitrator pursuant to the dispute resolution provision of its contract with the respondent, the Roy. The respondent opposed the application on two grounds: (1) the applicant lost its right to pursue arbitration as the limitation period had expired; and (2) the applicant did not adhere to certain contractual requirements and as such was disentitled to apply for the appointment of an arbitrator. Justice Norton granted the relief sought and ordered the arbitrator be appointed pursuant to the parties’ contract. On the evidence before him, Justice Norton found that the arbitration was commenced in compliance with the applicable limitation period. He also found that there was nothing in the parties’ contract to indicate that the respondent was relieved of its contractual obligations to participate in the dispute resolution process, and further, that the respondent could not rely on compliance issues created by its own conduct to object to arbitration. 

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