Ontario Archives - Page 11 of 32 - Arbitration Matters

June 30, 2022July 13, 2022

Ontario – “Vigorous” intervention and “difficult”, “incisive” questions by arbitrator not bias – #632

In Dufferin v Morrison Hershfield, 2022 ONSC 3485, Justice Woodley dismissed an application made pursuant to sections 13(6) and 15(1) of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17, for an order removing an arbitrator on the basis that, “circumstances exist which give rise to justifiable doubts about the Arbitrator’s independence and impartiality, which are alleged to give rise to a reasonable apprehension of bias”. Essentially, the allegations were that the arbitrator had “entered the fray” because of the many questions he asked the witnesses, pre-judged the issues, and become an advocate for the Respondent. Justice Woodley found that the arbitrator was interventionist, but that she could find no bias or a reasonable apprehension of bias; “instead, [she] found a deeply invested, engaged Arbitrator that worked tirelessly for the parties in furtherance of his mandate, which was to determine the truth of the issues before him”. The Applicants were not out of time to bring their application because the alleged conduct complained of was “cumulative”. In any event, it would be “nonsensical” to allow a partial arbitrator to continue, even if the Respondent had not objected in time.

June 21, 2022June 17, 2022

Ontario – No stay despite broad arbitration clause – #629

In FNF Enterprises Inc. v. Wag and Train Inc., 2022 ONSC 2813,Justice Ramsay dismissed the Defendant’s motion for a stay of proceedings under section 7 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17. The Defendant sought a stay of proceedings based on an arbitration clause included in a lease agreement. Justice Ramsay concluded that, standing alone, the arbitration clause suggested that issues arising out of the lease agreement shall be determined by way of arbitration, but he decided that, interpreting the lease agreement as a whole, the arbitration clause did not extend to an issue concerning collection of unpaid rent, which could be sought by action. Therefore, Justice Ramsay declined to stay the proceedings.

June 17, 2022June 27, 2022

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”.

June 9, 2022June 7, 2022

Ontario – Receiver not bound by international arbitration clause with foreign seat – #626

In Royal Bank of Canada v. Mundo Media Ltd., 2022 ONSC 2147, Justice Penny found that a court-appointed receiver was not required to arbitrate claims under New York law-governed contracts that provided for JAMS arbitration seated in New York. He found that the B.C. Court of Appeal’s analysis in Petrowest Corporation v. Peace River Hydro Partners, 2020 BCCA 339, which focused on the separability of the arbitration clause, was not binding on him, and declined to follow it. Rather, Justice Penny focused on the insolvency law “single proceeding” doctrine. He found that the appointment of the receiver rendered the arbitration clause “inoperative”.

June 7, 2022May 27, 2022

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.

June 2, 2022June 14, 2022

Ontario – Powers of Independent Accountant “acting as expert and not as arbitrator” – #622

In Elad Canada Operations Inc. v Rester Ontario Investments Inc., 2022 ONSC 2327, Justice Penny considered the role of an Independent Accountant retained by parties to a Share Purchase Agreement (“SPA”) to determine disputes relating to the calculation of post-closing purchase price adjustments. The Independent Accountant was to make a final determination, “acting as an expert and not an arbitrator”. In addition, the parties disputed the process for determination of the dispute after they had followed the information exchange protocol provided for in the SPA. The Vendor’s dispute notice disagreed with the Purchaser’s calculation of the adjustment and provided a narrative explanation. It argued that the Independent Accountant’s jurisdiction to make a final determination “based solely on the written submissions of the parties” referred to the information exchanged pursuant to the protocol and did not allow the Purchaser to provide “narrative” submissions in response to the Vendor’s dispute notice. Justice Penny disagreed and found that this was the first opportunity the Purchaser had to respond to the issues in dispute and that it was, “inconceivable that both the parties and the independent accountant would not reasonably expect that written submissions to the independent accountant would: a) identify the points in dispute; and b) set out each side’s position on those points” (para. 35). Once Justice Penny had interpreted the SPA, the issue of the correct calculation of the post-closing adjustment was to be decided by the Independent Accountant.

May 25, 2022May 26, 2022

Ontario – Dismissal of appeal of order enforcing award as abuse of process – #621

In Ledsham v. Air Canada Pilots Association, 2022 ONSC 1877, a self-represented litigant found himself in the wrong place at the wrong time to appeal an order enforcing an arbitral award. Justice D.L. Corbett of the Ontario Divisional Court summarily dismissed the appeal under rule 2.1.01 of the Ontario Rules of Civil Procedure. That Rule provides that the court may, on its own initiative, stay or dismiss a proceeding if it appears on its face to be frivolous, vexatious or an abuse of the process. Despite observing several badges of vexatiousness, Justice Corbett declined to declare the appellant a vexatious litigant. He nevertheless found the appeal before him was frivolous, vexatious and an abuse of process.

May 24, 2022May 26, 2022

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.

May 22, 2022May 26, 2022

Ontario – Trial required to determine compliance with arbitration preconditions – #618

In H. R. Doornekamp Construction Ltd. v. Canada (Attorney General) (Department of Public Works and Government Services), 2022 ONSC 2247, the Divisional Court (Justices Stewart, Lederer and Tzimas) dismissed the Defendant’s motion for summary judgment and decided that a trial was required to determine whether a party had properly complied with a condition precedent to an arbitration clause. The issue was whether the Plaintiff’s rights under the dispute resolution clause were extinguished or whether the Defendant’s conduct was such that the Plaintiff’s rights were not yet engaged.

May 19, 2022May 19, 2022

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.