DIVISIONAL COURT FILE NO.: DV-821-09
DATE: 20091224
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT - ENDORSEMENT
Paul Kane, S.C.J.
B E T W E E N:
805882 ONTARIO INC.
Matthew C. Madott, for the Plaintiff (Respondent)
Plaintiff (Respondent)
- and -
CRAIG MOFFAT
William A. Burton, for the Defendant (Appellant)
Defendant (Appellant)
HEARD: December 4, 2009
[1] The plaintiff as landlord and the defendant as tenant are parties to a written 21 year lease of 2 cottages and a main lodge. The lease provides for possession during the term of the lease by the tenant. The lease requires the tenant to pay rent consisting of:
(a) Base rent of $2.00/year; and,
(b) Additional rent. Additional rent consists of operating costs and is payable in advance twice yearly based on the landlord’s estimate of the same. The landlord is to provide the tenant annually with a statement of the actual operating cost incurred and the tenant’s allocated share thereof. Any resulting adjustments resulting from actual versus estimated operating costs, are payable within 30 days.
[2] The lease;
(a) Contains no arbitration provision regarding disputes between the landlord and tenant;
(b) Does not refer to a written shareholder agreement between the parties nor the shares owned by the tenant in the landlord corporation;
(c) Does not incorporate by reference, any term of the shareholder agreement and in particular, the arbitration clause in the shareholder agreement.
[3] The landlord in 2008 commenced a R. 76 Simplified Procedure Action against this tenant. In that action, the landlord seeks judgment in the amount of some $22K for unpaid operating costs dating back to 2005 under the lease. In response, the tenant brought a motion under S. 7 of the Arbitration Act, 1991, S.O. 1991, c.17, to stay the action because of an arbitration clause in the shareholder agreement. The landlord and tenant are among the parties to the shareholder agreement.
[4] The arbitration clause in the shareholder’s agreement states:
ARBITRATIONS
I3. The parties agree to arbitrate any and all claims, controversies or disputes arising out of or relating to this agreement. All such claims, controversies or disputes shall be submitted to a sole arbitrator, and failing agreement by the parties, then the arbitrator shall be nominated by the president of the Arbitrators’ Institute of Canada. (emphasis added)
[5] Rivard J. dismissed the tenant’s motion for a stay of the action. He held that:
(a) The shareholder agreement contemplates that the company may lease its cottages to shareholders of the company and non-shareholders.
(b) The above arbitration clause in the shareholder agreement specifically states that disputes arising out of or relating to this agreement are to be dealt with by arbitration.
(c) The parties to the lease agreement chose not to include a term referring disputes to arbitration. This exclusion from the lease is consistent with the provision contemplated in the shareholder agreement, that cottages may be rented to non-shareholders.
[6] The tenant in this action for recovery of rent seeks leave to enlarge the time to seek leave to appeal, and leave to appeal the decision of Rivard J. to Divisional Court. The tenant originally concluded that this decision of Rivard J. is a final decision not requiring leave. After perfecting his appeal, which was scheduled to be heard in October 2009, the tenant concluded that this is an interlocutory decision requiring leave and an extension of time to present that request.
EXTENSION TO TIME TO SEEK LEAVE TO APPEAL
[7] I grant such extension of time under R. 62.02(2) pursuant to Munyal v. Dhillon [2004] OJ. No. 3906 para 16 and 17, Elguindy v. Prince J1999] O.J. No. 1986 (Sup Ct.), and, by analogy, Frey v. McDonald, [1989] O.J. No. 236 (C.A.), because:
(a) The landlord does not argue prejudice, such extension is granted.
(b) The Notice of Appeal was served well within the 30 days period where leave is not required.
(c) Interlocutory versus final orders have been problematic for lawyers for many years.
(d) Because of the above points, it would be unjust to deprive the tenant of the extension of time to seek leave.
SHOULD LEAVE TO APPEAL BE GRANTED
[8] The parties agree that the test as to this issue is contained in R. 62.02(4)(a) and (b) which state:
Leave to appeal shall not be granted unless,
(a) There is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or
(b) There appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such Importance that, in his or her opinion, leave to appeal should be granted.
CONFLICTING DECISIONS AND DESIREABILITY
[9] The tenant presented no conflicting case law pursuant to R. 62.02(4)(a) to the decision of Rivard J. This is not surprising as the decision sought to be appealed interprets the lease between these parties and the scope of the S. 13 arbitration clause of a shareholder agreement. No case apparently was found with identical wording to S.13 in this shareholder agreement and whether it applies to disputes under another agreement.
[10] The tenant rather argues that Rivard J. adopted a narrow interpretation of S. 13 of the shareholder agree when the case law indicates that a broad interpretation should be applied in interpreting arbitration clauses. The cases presented on this principle involve one agreement containing an arbitration clause. See AMEC E & C Services Ltd. v. Nova Chemicafs (Canada) Ltd. [2003] O.J. No. 2663, Joseph Popack. United Burlinaton Retail Portfolio Inc. v. Lipszyc and Lipszyc, 07-CV-339295-0000, Legacy Leather International Inc. v. Ward 2006 63694 (ON SC), 2006] O.J. No. 3014 and Donaldson International Livestock Ltd. v. Znamensky Selekcionno-Gibridny Center LLC and Nikolay Demin, 2008 ONCA 872.
[11] The above cases involving one agreement, contain broadly worded arbitration clauses and consider claims in a civil action which are “so intertwined with the contract so as to justify that they be heard together in the same forum” as stated by Labrosse J.A. in Crown Resources Corporation S.A. et al v. National Iranian Oil Co. (2006), 2006 28334 (ON CA), 273 D.L.R. (4th) 65, leave to appeal to S.C.C. denied [2006] S.C.C.A. No. 412.
[12] The fact is that Rivard J. made no finding whether this arbitration clause should be broadly or narrowly interpreted. His decision and stated rational does not contradict the above decisions relied on by the tenant. The most this tenant can argue on these cases is that Rivard J. was incorrect in not broadly interpreting clause 13. That argument however does not determine the scope created by the wording and to what clause 13 includes. That is the subject of R. 61.02(4)(b).
CORRECTNESS OF DECISION AND WHETHER MATTER OF PUBLIC IMPORTANCE
[13] The parties agree that the test under R. 62.02(4)(b) is conjunctive. Both elements must be established by the party seeking a stay. See: Brownhall v. Canada (Minister of National Defence) 2006 7505 (ON SC), [2006] O.J. No. 672 PARA 29.
[14] On the first part of this test, the question is whether the tenant has shown good reason to doubt the correctness of the order in question. I do not believe he has.
[15] A review of this lease upon which this claim is founded, does not rely upon, arise out of nor is it intertwined with the tenant’s ownership of shares or the shareholders agreement. The obligation to pay rent and the enforcement of that obligation arises solely under the lease. That obligation and default issue is not intertwined with the rights or obligations of a shareholder at law or pursuant to the terms of this shareholder agreement. The recovery of rent not paid under the lease is not a companion issue to a dispute between the parties under the shareholder agreement which must proceed to arbitration under S. 13, as in Donaldson International Livestock Ltd. v. Znamensky Selekcionno-Gibridny Center LLC and Nikolay Demin, supra. The enforcement of rent owing is the sole issue in this action and is not, within the wording of S. 13, a dispute arising out of or relating to the shareholder agreement.
[16] In coming to the above conclusion, I rely upon the wording of S. 7(1) and S. 7(5) as the authority and requiring this court to determine whether the subject matter of the action is a matter to be submitted to arbitration as stated in these sections.
[17] I finally note that this stay could be justified pursuant to S. 7(2)(5) of the Arbitrations Act. This section permits a stay if the claim could be the subject of summary judgment. The lease states that the tenant must pay such additional rent without deduction, abatement or set-off whatsoever. Although this jurisdiction is not referred to by Rivard J., it results in further reason to doubt the conclusion reached by the motion judge.
[18] For the above reasons, I find that the decision of Rivard J. is not open to serious debate. The tenant therefore has failed to meet the first element of the test in R. 62.02(4)(b) which is fatal to his request for leave.
[19] Although unnecessary given the above conclusion, I also find that the issue as to non- payment of rent does not extend beyond the personal interests of the parties. Unlike the cases relied upon by the tenant, this is not a matter of public concern, of statutory interpretation or would result in a more than one proceeding if not stayed.
[20] Leave to appeal this decision of Rivard J. to Divisional Court is therefore denied. The parties may submit a draft bill of costs and brief written submissions by January 15, 2009.
Paul Kane, S.C.J.
Released: December 24, 2009
DIVISIONAL COURT FILE NO.: DV-821-09
DATE: 20091224
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Paul Kane, S.C.J.
B E T W E E N:
805882 ONTARIO INC
Plaintiff (Respondent)
- and –
CRAIG MOFFAT
Defendant (Appellant)
ENDORSEMENT
Released: December 24, 2009