DATE: 20060614

DOCKET: C44737

COURT OF APPEAL FOR ONTARIO

RE:

MARSHALL JOHNSTON (Plaintiff/Respondent) – and – ROY MLAKAR and MARK GOUDIE (Defendants/Appellant) – and – ROGER BOURBONNAIS (Third Party)

BEFORE:

GILLESE, ARMSTRONG and LANG JJ.A.

COUNSEL:

Lorne S. Silver

for the appellant

Walter T. Langley

for the respondent, Marshall Johnston

Christopher Riggas, Q.C. and J. P. Alexandrowicz

for the intervenor

HEARD:

June 2, 2006

On appeal from the order of Justice David L. McWilliam of the Superior Court of Justice dated December 2, 2005.

E N D O R S E M E N T

OVERVIEW

[1] Marshall Johnston was the General Manager of the Ottawa Senators Hockey Club from June 1999 to June 2002. During that period, Ray Mlakar was the President and CEO of the Senators and Mark Goudie was a Vice President.

[2] After his employment ended, Mr. Johnston started a civil action for misrepresentation. He alleged that during the negotiation of his employment agreement, Mssrs. Mlakar and Goudie represented to him and his lawyer, Mr. Bourbonnais, that the compensation he would receive as General Manager would be the same as that which had been paid to his predecessor. In response to the claim, Mr. Goudie commenced a third party claim against Mr. Bourbonnais and issued a counterclaim against Mr. Johnston.

[3] Mr. Mlakar brought a motion in which he sought, pursuant to s. 7(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 (the “Act”), to have Mr. Johnston’s action stayed and the matter referred to arbitration by the Commissioner for the NHL. He relied on s. 10 of the employment contract and the terms of the NHL Constitution which give the Commissioner exclusive jurisdiction to arbitrate employment-related disputes between member clubs, players and League employees and to resolve matters that may be detrimental to the best interests of the League or professional hockey.

[4] By order dated December 2, 2005, McWilliam J. dismissed the motion. One of the bases on which he refused to stay the action was that there was a reasonable apprehension of bias in relation to the Commissioner.

[5] Mr. Mlakar appeals. The NHL was granted standing to intervene. It supports the appellant’s request to have the motion judge’s order set aside.

[6] For the reasons that follow, we would dismiss the appeal.

ANALYSIS

[7] The motion below appears to have proceeded on the assumption that Mr. Johnston was a party to an arbitration agreement and, therefore, that s. 7(1) of the Act applies. In our view, however, Mr. Johnston is not a “party to an arbitration agreement” and s. 7(1) is inapplicable.

[8] Section 7(1) reads as follows:

7.(1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding.

[9] To begin with the obvious, there is no arbitration agreement per se in this matter.

[10] We do not accept that the Constitution, standing alone, brings the matter within the purview of s. 7(1) as Mr. Johnston is not a party to the Constitution.

[11] Assuming that the employment agreement is an “arbitration agreement” for the purposes of s. 7(1), it must be determined whether the employment agreement contains a provision requiring Mr. Johnston to submit disputes of this sort to arbitration. There is no such express provision to that effect. The appellant and intervenor argue that s. 10 of the employment agreement has that effect, however.

[12] The relevant part of paragraph 10 of the employment agreement reads as follows:

10. Constitution and Bylaws

The Manager acknowledges that the Club is bound by the Constitution and Bylaws of the National Hockey League and … agrees to diligently pursue all actions reasonably required by the General Manager to assure the Club’s adherence to and compliance with such Constitution and Bylaws.

[13] To again state the obvious: s. 10 does not state that disputes between the contracting parties are to be resolved by arbitration or according to the terms of the Constitution. Nor does s. 10 provide that Mr. Johnston agrees to submit any disputes he might have to arbitration or to resolve such disputes in accordance with the terms of the Constitution. Section 10 does, however, expressly provide that the Club is bound by the Constitution.

[14] The appellant and intervenor argue that s. 10 should be interpreted to mean that Mr. Johnston agreed that he would be bound by the Constitution, including its arbitration provisions. They say that would have been the reasonable expectation of the parties to the employment agreement as Mr. Johnston knew that the Club was bound by the Constitution and that his role as General Manager was to ensure that the Club would comply with the Constitution.

[15] We do not accept this argument. Had the parties intended that Mr. Johnston be bound by the Constitution or that he be required to submit disputes to arbitration, it would have been a simple matter to have inserted terms to that effect into the agreement. In our view, clear language is necessary in order to take away the right of a person to have recourse to the courts.

[16] We conclude, therefore, that as Mr. Johnston is not a party to an arbitration agreement, s. 7(1) of the Act does not apply and cannot provide a basis on which to stay his action.

[17] One further matter warrants comment. Through a letter from counsel to the NHL sent prior to commencing civil proceedings, Mr. Johnston made inquiries about proceeding by arbitration to resolve his compensation dispute. In part, the letter sought to clarify the question of what entity would be responsible for payment of any arbitration award in light of the fact that the Senators’ NHL franchise had been sold pursuant to proceedings under the Companies’ Creditors Arrangement Act. In our view, this letter does not operate to bar Mr. Johnston from bringing a civil proceeding.

[18] As we have found s. 7(1) of the Act to be inapplicable, there is no need to go further and consider s. 7(5). That said, we agree with the motion judge that the more just course is for the court to assume jurisdiction over the entire dispute, including the claims and counterclaims involving Mr. Goudie and the third-party claim against Mr. Bourbonnais. Mr. Goudie is no longer employed by the NHL; the events underpinning his counterclaim occurred when neither he nor Mr. Johnston were employed by the NHL; and, Mr. Bourbonnais has never been affiliated with the NHL. Thus, on any view of the proceedings, the Commissioner does not have jurisdiction over at least some of the parties and claims. Given the interrelatedness of the various claims, having some of the claims decided by arbitration while having the other related claims proceed in the courts would lead to an unnecessary multiplicity of proceedings. Such a result runs contrary to s. 138 of the Courts of Justice Act, which provides that “As far as possible, multiplicity of legal proceedings shall be avoided”.

[19] In light of our conclusion in respect to s. 7(1) of the Act, it is unnecessary to decide whether the motion judge was entitled to consider allegations of bias on the motion to stay and, if so, whether he applied the correct test.

DISPOSITION

[20] Accordingly, the appeal is dismissed with costs to the respondent fixed at $5,000, all inclusive, such costs to be borne equally by the appellant and the intervenor.

“E. E. Gillese J.A.”

“Robert P. Armstrong J.A.”

“S. E. Lang J.A.”