Stay/Declinatory Exception Archives - Page 5 of 13

November 22, 2023November 22, 2023

Québec – Arbitrator has jurisdiction to determine lien entitlement; only court has jurisdiction to enforce – #794

Santé Montréal Collectif CJV c. Veolia Health Services Montreal 2023 QCCS 3817 concerned a dispute relating to the construction of a hospital complex. The Respondent, Veolia Health Services Montreal sec (“Veolia”), alleged it was due money for repair work as part of its contractual obligation to perform maintenance after construction of the hospital complex was complete. It filed a notice of arbitration and at the same time a hypothec, or lien, against the subject property (the “Mortgage Notice”) with the court. The Applicant, Sante Montreal CJV Collective sec (“CJV”) built the hospital complex. It, had separate obligations to ensure the property was clear of encumbrances and applied to strike the Mortgage Notice (the “Request to Strike”). Even though only the Court had authority to discharge the Mortgage Notice, it nonetheless suspended CJV’s application, pending the determination of the arbitration, and ruled that the Veolia’s entitlement to relief pursuant to the Mortgage Notice was an issue for an arbitrator to decide.

October 26, 2023October 20, 2023

Québec –Waiver of arbitration after court proceedings, despite letter proposing arbitration– #786

The Superior Court of Québec in 13647846 Canada inc. c. Phase III Wellington Griffintown inc., 2023 QCCS 3589 dismissed an application for a stay of proceedings in favor of arbitration on the grounds that: (i) it was made too late without justification, and (ii) the plaintiffs had waived their recourse to arbitration by submitting their dispute to the Superior Court first. Here, the plaintiffs brought legal proceedings with respect to a matter that was subject to an arbitration agreement. They then proposed arbitration by letter, which the defendants rejected. When the plaintiffs sought a stay of part of their own proceedings in favour of arbitration pursuant to Article 622 of the Québec Code of Civil Procedure (“CCP”), the Court found that they were out of time. The 45-day time period for the stay motion started when the court proceedings were commenced, and the stay application was not made within this period. It was irrelevant that their letter was sent within the 45-day period. The Court also found that plaintiffs had waived their right to arbitrate.

October 25, 2023October 20, 2023

Alberta –Stay of Arbitration Granted Where Potential For “Forensic Prejudice” – #785

In Dow Chemical Canada ULC v Nova Chemicals Corporation, 2023 ABCA 217, the Appellant Dow Chemical Canada ULC (“Dow”) obtained leave to appeal a decision of a lower court, which declined to make a declaration of invalidity of the arbitration or grant an injunction prohibiting the continuation of the arbitration pursuant to section Section 47 of the Arbitration Act, RSA 2000, c A-43. In Dow Chemical Canada ULC v Nova Chemicals Corporation, 2023 ABCA 262, a single judge of the Alberta Court of Appeal ordered a limited stay of the ongoing arbitration until a panel of the Court could decide the appeal. In that context, the judge found that “forensic prejudice” was sufficient to obtain the limited stay of arbitration. This referred not to prejudice to the applicant, but to the possibility that if Dow were correct that the arbitration were invalid, it might “embarrass the justice system” to allow the arbitration to proceed when it should not have.

October 1, 2023October 1, 2023

B.C. – Court articulates principles on fixing conditions in leave applications – #778

In Kingsgate Property Ltd. v The Board of Education of School District No. 39, 2023 BCSC 1266, the Court considered the text, context and purpose of s. 31(3) of the (former) Arbitration Act R.S.B.C. 1996 c. 55 (the “Arbitration Act”). (Comparable language appears in s. 59(5) of the current B.C. domestic Act.) That section allowed a court to attach such conditions to an order granting leave to appeal an arbitration award as it considers just. The Court determined that s. 31(3) empowered the Court to impose conditions on granting leave to appeal that will prevent miscarriages of justice. Here, the Court made two such orders sought by the petitioner Kingsgate Property Ltd. (the “Tenant”). Firstly, the Court settled the terms of security with respect to the Tenant’s appeal of an award made in a rent review arbitration (the “Award”). Secondly, the Court ordered a stay of the Award and a default notice the Board of Education of School District No. 39 School Board (the “Landlord ”) had issued for arrears of rent (the “Default Notice”).

September 12, 2023October 23, 2023

B.C. – Arbitration clause in contract of adhesion not unconscionable/against public policy – #772

In Williams v. Amazon.com Inc., 2023 BCCA 314 the Court upheld a partial stay of a proposed class action in favour of arbitration. It found that the Chambers Judge did not err when she concluded that an arbitration clause that formed part of a contract of adhesion was not unconscionable or against public policy. In doing so, the Court distinguished the case from the Supreme Court of Canada decision in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37 (“Ledcor”) on the issue of the applicable standard of review. In Ledcor, the Supreme Court determined that correctness standard applies when reviewing the interpretation of standard form contracts. Here, the British Columbia Court of Appeal found that a deferential standard was applicable because of the highly contextual and fact specific analysis required for determining unconscionability/public policy issues. The fact that a contract of adhesion was involved did not change that conclusion. The Court also distinguished this case from the Supreme Court of Canada decision in Uber Technologies Inc. v. Heller, 2020 SCC 16 (“Uber”), where the Supreme Court found an arbitration clause in a contract of adhesion invalid on the basis of unconscionability and, in concurring reasons, as against public policy. The Court distinguished Uber because of, among other things, the “profound” differences that it noted in the two cases between the arbitration clauses at issue and the vulnerability of the plaintiffs.

August 29, 2023August 28, 2023

Ontario – Stay granted: tort claims were in “pith and substance” contractual – #768

In Spasiw et al v. Quality Green Inc. et al, 2023 ONSC 4422, the Court granted the defendants’ motion to stay the action in favour of arbitration in the context of a shareholders dispute. The plaintiffs’ claims of fraudulent misrepresentation and oppression were “closely connected with and related to” the parties’ share purchase agreement and shareholders agreement and in “pith and substance” contractual.. Accordingly, the claims fell within the broad scope of the arbitration clauses contained in the parties’ two agreements.

August 14, 2023August 18, 2023

Alberta – Misapplication of separability principle in contract dispute – #762

Gutama Estate v Vital Property Services Inc., 2023 ABKB 436, is NOT an arbitration case and the contract at issue contained no arbitration clause. But bear with me! The case involved the alleged repudiation/termination of a shareholders agreement and the consequences to the rights and obligations of the parties as a result. The question: if the contract was repudiated/terminated, were all the parties’ rights unwound? The Court quoted from Heyman v. Darwins Ltd. (uniset.ca), the leading U.K. decision that established the common law principle of separability of the arbitration clause. The Court described Heyman v Darwins as a case that addresses the operation of an arbitration clause where the contract has come to an end: in circumstances in which the contract-terminating event did not go to the very existence of the contract, “it did not matter how the contract came to be terminated: the contract (including its arbitration clause) had existed, and the arbitration clause continued to operate….” The Court then extrapolated that concept and applied it more broadly: “[i]n other words, pre-existing and engaged contractual rights continued to operate despite the later termination (by whatever means) of the contract”. Applying that reasoning to this case where the shareholders agreement was alleged to have been repudiated or terminated by its own terms, the Court said that any such termination did not, “eclipse the agreement completely ie render it meaningless for all purposes and at all times… [i]nstead, crystalized rights and obligations would continue.” In other words, “the parties would be discharged from future obligations, but remain bound by rights and obligations that have accrued through partial performance”. Thus the Court imported part of a uniquely arbitration law principle with a specific public policy purpose, separability, into general contract law.

August 4, 2023August 1, 2023

British Columbia – Google wins stay of conspiracy claims; plaintiff refuses to arbitrate – #761

In Spark Event Rentals Ltd. v. Google LLC, 2023 BCSC 1115, the BC Supreme Court granted the Google Defendants a stay in favour of arbitration. The Court rejected Spark’s assertion that the applicable arbitration agreement prohibited it from commencing arbitration, and that the entire dispute with Google could not be resolved in arbitration. Spark had also sued affiliates of Apple in the action. Apple applied, unsuccessfully, to stay the action on the basis that it was so intertwined with the claims against Google that it would amount to an abuse of process for the BC litigation to proceed in parallel with an arbitration against Google on the same claims. However, Spark represented to the Court that if its claims against Google were stayed, it would not proceed with an arbitration; accordingly, the Court found that Apple’s stay application was moot. While the Court left the door open to Spark to arbitrate with Google, in effect the arbitration agreement appears to have provided a tactical shield for Google – for now. This may be a case to watch, as Canadian courts have not yet definitively ruled on the availability of joint and several damages from co-conspirators in private litigation under the Competition Act, RSC 1985, c C-3 4. Another unsettled question that may arise in due course is whether, in these circumstances, a party has a right of contribution and indemnity from a co-conspirator if it is ordered to pay more than its proportional share of damages.

August 1, 2023August 1, 2023

Ontario – Courts will also enforce agreements in favour of court proceedings – #758

In Eurofins Experchem Laboratories, Inc. v BevCanna Operating Corp., 2023 ONSC 4015, the Court dismissed an application by Defendant BevCanna Operating Corp (“BevCanna”) for a permanent stay of the action or alternatively, a permanent stay of any claims caught by the arbitration clause in the agreement between BevCanna and the Plaintiff, Eurofins Experchem Laboratories, Inc. (“Eurofins”). The Court found that Eurofins’s claim sought recovery of unpaid fees under the parties’ contract, even though it also included claims for breach of fiduciary duty and unjust enrichment. Claims for unpaid fees fell within an exception to the mandatory arbitration clause. It permitted (but did not require) claims for unpaid fees to be brought in the courts. In reaching this conclusion, the Court considered whether the essential character, or pith and substance of the dispute, was covered by the arbitration clause. This focus ensures that parties are held to their agreement and avoids attempts by clever counsel to plead their way around an arbitration clause.

July 18, 2023July 17, 2023

Federal – Stay test may vary – no Canadian standard arbitration stay provision – #755

In General Entertainment and Music Inc. v Gold Line Telemanagement Inc., 2023 FCA 148, a unanimous Federal Court of Appeal (Webb, Rennie, and Locke, JJA) upheld a stay of court proceedings in a copyright and trademark infringement action. As a result, complicated disputes about party identity will be resolved in the international arbitration, not by the court which heard the motion to stay. The decision underscores a key stay of proceedings principle: complex questions of fact or mixed fact and law relating to arbitral jurisdiction should first be referred to the arbitrator. This is so even in the absence of a standard statutory stay of proceedings provision, as occurred in this case. Stay considerations differ by jurisdiction and context, domestic or international, and it is not an invariable technical prerequisite that a party must apply for the stay before taking any step in the court proceedings.