Domestic Archives - Page 13 of 26

December 20, 2022December 15, 2022

Ontario – BIA trustee cannot delegate claims determination to arbitrator – #695

In Re YG Limited Partnership, 2022 ONSC 6138, Justice Kimmel held that the Trustee appointed under the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (the “BIA“) could not delegate to an arbitrator its authority, pursuant to section 135 of the BIA, to determine and value claims against the debtor. That put the Trustee in the position of an adversary, rather than a decision maker. As such, she found that a continuation of an arbitration to determine damages was not a valid exercise of the Trustee’s authority. She refused to order the Sponsor, who had agreed to indemnify the Trustee for all administrative fees and expenses incurred in relation to the resolution of unresolved claims against the debtor, to fund the administrative fees and expenses connected with Phase 2 of the arbitration (damages) following Phase 1 (liability). The issue of the Phase 1 administrative fees was not before her.

December 16, 2022December 15, 2022

Ontario – Participation in litigation beyond pleadings waives arbitration agreement – #693

In Azam v Multani Custom Homes Ltd., 2022 ONSC 6536, Justice Chang denied the defendant’s application to stay litigation under section 7 of the Arbitration Act, 1991, SO 1991, c 17 (“Arbitration Act”) upon finding the defendant unduly delayed bringing the application for a stay, after having actively participated in many steps to advance the litigation over a 16-month period, with the effect that the defendant had abandoned its rights to rely upon the arbitration clause and it was therefore invalid.

December 15, 2022December 15, 2022

Ontario – Leave to appeal award application and appeal dismissed together – #692

In The Tire Pit Inc. v Augend 6285 Yonge Village Properties Ltd., 2022 ONSC 6763, Justice Vermette dismissed an application for leave to appeal an award and the appeal itself. The grounds of appeal did not raise questions of law which were subject to appeal pursuant to subsection 45(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 (“Act”) and had no importance beyond the parties. In any event, if she was wrong, she found that they lacked merit.

December 5, 2022August 8, 2023

Alberta – Court of Appeal to clarify its jurisdiction in arbitration matters – #689

In Schafer v Schafer, 2022 ABCA 358, Justice Pentelchuk ordered further briefing on the court’s jurisdiction to hear an appeal from an order of the Alberta Court of King’s Bench refusing permission to appeal under section 44(2) of the Arbitration Act, RSA 2000, c A-43 (the “Arbitration Act”). Although the amounts in dispute were relatively small, the case engaged several foundational questions. The first involved the overlapping, and sometimes dissonant, statutory jurisdiction of the Court of Appeal in matters ancillary to arbitration. Second, Justice Pentelchuk saw merit in providing interpretive guidance to parties and counsel on the appeal rights which flow from the arbitration agreement signed by the parties, which was said to be “standard” in family law arbitration in Alberta. She accordingly granted permission to brief the issue of jurisdiction to a panel of the Court of Appeal, in order to provide clarity in situations where the Judicature Act, Rules of Court, and Arbitration Act intersect. Justice Pentelchuk also asked the parties to address whether the arbitration agreement was a standard form agreement (which could make its interpretation an issue of law rather than mixed law and fact), and apply to adduce fresh evidence on that question, if necessary.

December 2, 2022December 1, 2022

Ontario – Narrow basis for excess jurisdiction set aside challenges reaffirmed – #688

In Mensula Bancorp Inc. v. Halton Condominium Corporation No. 137, 2022 ONCA 769, the Ontario Court of Appeal overturned a Superior Court set aside decision and restored an arbitral award. The Court reiterated and underscored directives from Alectra Utilities Corporation v. Solar Power Network Inc., 19 ONCA 254: There is a narrow basis for set aside challenges to arbitral awards on the ground of alleged excess of jurisdiction. Review of the substance of the arbitral award is not authorized. The correctness or reasonableness of the arbitrator’s decision is irrelevant. Set aside is not an appeal.

December 1, 2022December 1, 2022

Supreme Court – Peace River v Petrowest Part 2: no conflict between arbitration, bankruptcy law – #687

In Peace River Hydro Partners v Petrowest, 2022 SCC 41, the central issue was whether a receiver/trustee in bankruptcy may disclaim the arbitration clause in a contract and sue in the courts when it seeks to enforce the debtor’s contractual rights against third parties. The case concerned the tension between the court’s supervisory power over all proceedings brought by a receiver/trustee under the Bankruptcy and Insolvency Act (BIA) RSC 1985, c. B-3, and party autonomy to contract out of the courts. Section 15 of the British Columbia (former) Arbitration Act, RSBC 1996 c. 55 required a stay of proceedings where a party to an arbitration agreement has commenced a court proceeding in respect of a matter to be submitted to arbitration, unless the arbitration agreement is “void, inoperative, or incapable of being performed”. The Supreme Court of Canada dismissed the stay application of the defendant sued by the receiver/trustee, but split 5-4 on the reasons. The majority found that the arbitration clauses at issue were “inoperative” because enforcing them would compromise the orderly and efficient resolution of the receivership. This authority arises from the statutory jurisdiction conferred on provincial superior courts under ss. 243(1) and 183(1) of the BIA. It found that this interpretation of the stay provision ensures that provincial arbitration legislation and federal bankruptcy legislation are not in conflict. The minority found that the specific language of the “template” Receivership Order authorized the Receiver/Trustee to disclaim the arbitration agreements, rendering them inoperative.

November 21, 2022November 22, 2022

Ontario – Defendant to stayed action may commence arbitration – #684

In Star Woodworking Ltd. v. Improve Inc., 2022 ONSC 5827, the defendant condominium corporation sought an order that the Court appoint an arbitrator to hear and resolve the plaintiffs’ claims against it. The plaintiffs had originally commenced actions in the Ontario Superior Court of Justice, and a number of claims were stayed as they were required to be brought in arbitration pursuant to the Condominium Act, 1998, SO 1998, c 19, and the Arbitration Act, 1991, SO 1991, c 17. Justice Myers rejected the plaintiffs’ argument that they could not be forced to be claimants in an arbitration if they did not wish to do so. Justice Myers held that the arbitration was properly commenced pursuant to section 23 of the Arbitration Act, 1991.

November 17, 2022November 17, 2022

Supreme Court – Peace River v Petrowest Part 1: Separability Clarified? – #682

Most of the commentary about the Supreme Court of Canada’s decision of Peace River Hydro Partners v Petrowest, 2022 SCC 41, is about the interplay between arbitration law and bankruptcy/insolvency law – and my next Case Note will address that issue. However, perhaps a more important issue for arbitration law was the Court’s consideration of the doctrine of separability (although it was not relevant to the outcome). The scope of its application in Canada was uncertain following the 2020 decisions of the British Columbia Court of Appeal under appeal, Petrowest Corporation v Peace River Hydro Partners, 2020 BCCA 339, and the Supreme Court of Canada in Uber Technologies Inc. v Heller, 2020 SCC 16 (“Uber”).

November 7, 2022March 8, 2023

Québec – Fragmentation of shareholders dispute stayed pending appeal on jurisdiction – #678

In Istanboulian v Kalajian, 2022 QCCA 1259, Justice Cournoyer granted leave to appeal from a judgment of the Québec Superior Court, which had referred part of a claim to arbitration. He found that the judgment under appeal caused irremediable injury to the Applicants by possibly preventing them from being heard in the appropriate forum and that it was in the interest of justice to immediately get to the bottom of the jurisdictional issue.

October 26, 2022October 26, 2022

Alberta – Action brought to require payment ordered in award – #676

In Tomalik v Enthink Inc., 2022 ABCA 302, the Court dismissed an appeal of the decision of Justice Gill of the Alberta Court of King’s Bench, who ordered the Appellant companies to buy out the Respondents’ shares in the companies pursuant to a Unanimous Shareholders Agreement (“USA”) and a valuation done by the second of two valuators. The Respondents argued that the first valuation was too low and pursued arbitration, as result of which the arbitrator found the first valuation deficient and ordered a second valuation, which was even lower. The arbitrator ordered the Appellants to purchase the shares at the second valuation amount. When they refused to pay, the Respondents sued the Appellants for breach of contract and, in a separate action, the second valuator in negligence for failing to arrive at a fair valuation. The two actions were permitted to proceed; by accepting the valuation as binding upon them in the first action and challenging it in the second, the Respondents were not seeking “inconsistent and mutually exclusive rights”.