Court File and Parties
COURT FILE NO.: CV-18-605952 DATE: 2019-03-22 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: TORONTO STANDARD CONDOMINIUM CORPORATION No. 1628, Applicant AND: TORONTO STANDARD CONDOMINIUM CORPORATION No. 1636, SOHO GRAND CONDOMINIUMS INC. and SOINCO LIMITED, Respondents
BEFORE: Sossin J.
COUNSEL: Carol A. Dirk and Rachel Fielding, Counsel for the Applicant Allan Sternberg and Emily Hives, Counsel for the Respondents
HEARD: March 7, 2019
REASONS FOR JUDGMENT
OVERVIEW
[1] The applicant, Toronto Standard Condominium Corporation No. 1628 (“TSCC 1628”), brought an application on September 27, 2018, seeking various remedies under the Condominium Act, 1998, S.O. 1998, c. 19, (the “Condominium Act”) against the respondents, Toronto Standard Condominium Corporation No. 1636 (“TSCC 1636”), Soho Grand Condominiums Inc. (“Soho”) and its affiliated company Soinco Limited (“Soinco”).
[2] Soho is the original declarant for the two condominium projects located on Wellington St. West in Toronto involved in this dispute.
[3] The dispute at the heart of this application relates to amounts owing under the cost-sharing agreement entered into by TSCC No. 1628 and Soho (the “Reciprocal Agreement”). Among other things, the Reciprocal Agreement sets out the apportioning of costs for common facilities, including the garbage room, the change room, and the CACF room (the “Common Facilities”) in the condominium.
[4] Soinco is an Ontario corporation that owns the common facilities and rooms in the condominium buildings.
[5] On December 29, 2017, TSCC 1628 was sent a demand note by counsel for TSCC 1636 requiring that it pay its arrears in the amount of $412,903.20 to Soinco.
[6] In a letter dated January 30, 2018, TSCC 1628 advised TSCC 1636 that was under no legal obligation to pay the shared expenses for the Common Facilities in the amount specified. TSCC 1628 set out a number of grounds for this position, including,
a. that there is no legal obligation to pay common expenses of a third party;
b. that TSCC 1628 and TSCC 1636 have no legal agreement with Soinco relating to the Common Facilities;
c. that the claim by TSCC 1636 and Soinco for arrears cover periods beyond the expiry of the limitation period;
d. that reimbursement of common expenses was not properly disclosed to TSCC 1628 in the disclosure statement; and
e. that the common expense allocation is “entirely disproportionate and unconscionable.”
[7] TSCC 1636 responded that, “if this matter cannot be resolved amicably, it will proceed to arbitration.”
[8] TSCC 1628 replied to counsel for TSCC 1636 that, “Since your client appears to be commencing arbitration … we would point out that s.132 of the Condominium Act, 1998 actually requires mediation as a first step in this situation.”
[9] On July 10, 2018, the parties attempted mediation under s.132(1) of the Condominium Act without success.
[10] On August 8, 2018, TSCC 1636 advised TSCC 1628 that it wished to move the dispute to arbitration under s.132(1) of the Condominium Act and proposed two potential arbitrators.
[11] On September 26, 2018, TSCC 1628 indicated its intention not to proceed to arbitration and instead to bring an application for this court to resolve the dispute.
[12] On September 28, 2018, TSCC 1628 filed and served its Notice of Application under s. 135 of the Condominium Act and r. 14.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules of Civil Procedure”).
[13] The respondents bring this motion in order to stay the application in favour of arbitration. The respondents rely on both the arbitration clause in the Reciprocal Agreement, and s. 132(1) of the Condominium Act, which mandates that a dispute under an agreement by two corporations be submitted initially to mediation, and if no settlement is reached at mediation, proceed to arbitration under the Arbitration Act, 1991, S.O. 1991, c. 17, (the “Arbitration Act”).
[14] TSCC 1628 opposes this motion on two main grounds. First, its application before this court involves parties who were not signatories to the Reciprocal Agreement; as a result, the issues outlined in its application are not subject to the arbitration clause in that agreement. Second, TSCC 1628 seeks remedies that may not be available through arbitration: these include remedies for oppression under s.135 of the Condominium Act, providing material information that was false, deceptive or misleading under s.133 of the Condominium Act, and other related remedies.
[15] For the reasons set out below, this motion by TSCC 1636 to stay TSCC 1628’s application is denied.
Applicable Legislation
[16] The Rules of Civil Procedure provide as follows:
1.04 (1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
To Defendant
21.01(3) A defendant may move before a judge to have an action stayed or dismissed on the ground that,
Jurisdiction
(a) the court has no jurisdiction over the subject matter of the action; …
[17] The Courts of Justice Act R.S.O. 1990, c. C.43 provides:
Stay of proceedings
106 A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.
Multiplicity of proceedings
138 As far as possible, multiplicity of legal proceedings shall be avoided.
[18] The relevant sections of the Condominium Act provide:
Mediation and arbitration
132 (1) Every agreement mentioned in subsection (2) shall be deemed to contain a provision to submit a disagreement between the parties with respect to the agreement to,
(a) mediation by a person selected by the parties unless the parties have previously submitted the disagreement to mediation; and
(b) unless a mediator has obtained a settlement between the parties with respect to the disagreement, arbitration under the Arbitration Act, 1991,
(i) 60 days after the parties submit the disagreement to mediation, if the parties have not selected a mediator under clause (a), or
(ii) 30 days after the mediator selected under clause (a) delivers a notice stating that the mediation has failed.
Application
(2) Subsection (1) applies to the following agreements:
An agreement between a declarant and a corporation.
An agreement between two or more corporations.
An agreement described in clause 98 (1) (b) between a corporation and an owner.
An agreement that the corporation has entered into with a condominium management provider or a condominium manager and under which the corporation receives condominium management services.
False, misleading statements
133 (1) A declarant shall not, in a statement or information that the declarant is required to provide under this Act,
(a) make a material statement or provide material information that is false, deceptive or misleading; or
(b) omit a material statement or material information that the declarant is required to provide.
Right to damages
(2) A corporation or an owner may make an application to the Superior Court of Justice to recover damages from a declarant for any loss sustained as a result of relying on a statement or on information that the declarant is required to provide under this Act if the statement or information,
(a) contains a material statement or material information that is false, deceptive or misleading; or
(b) does not contain a material statement or material information that the declarant is required to provide.
Oppression remedy
135 (1) An owner, a corporation, a declarant or a mortgagee of a unit may make an application to the Superior Court of Justice for an order under this section.
Grounds for order
(2) On an application, if the court determines that the conduct of an owner, a corporation, a declarant or a mortgagee of a unit is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant, it may make an order to rectify the matter.
Contents of order
(3) On an application, the judge may make any order the judge deems proper including,
(a) an order prohibiting the conduct referred to in the application; and
(b) an order requiring the payment of compensation.
[19] The applicable sections of the Arbitration Act provide:
Court intervention limited
6 No court shall intervene in matters governed by this Act, except for the following purposes, in accordance with this Act:
To assist the conducting of arbitrations.
To ensure that arbitrations are conducted in accordance with arbitration agreements.
To prevent unequal or unfair treatment of parties to arbitration agreements.
To enforce awards.
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.
Exceptions
(2) However, the court may refuse to stay the proceeding in any of the following cases:
A party entered into the arbitration agreement while under a legal incapacity.
The arbitration agreement is invalid.
The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law.
The motion was brought with undue delay.
The matter is a proper one for default or summary judgment.
Arbitration may continue
(3) An arbitration of the dispute may be commenced and continued while the motion is before the court.
Effect of refusal to stay
(4) If the court refuses to stay the proceeding,
(a) no arbitration of the dispute shall be commenced; and
(b) an arbitration that has been commenced shall not be continued, and anything done in connection with the arbitration before the court made its decision is without effect.
Agreement covering part of dispute
(5) The court may stay the proceeding with respect to the matters dealt with in the arbitration agreement and allow it to continue with respect to other matters if it finds that,
(a) the agreement deals with only some of the matters in respect of which the proceeding was commenced; and
(b) it is reasonable to separate the matters dealt with in the agreement from the other matters.
No appeal
(6) There is no appeal from the court’s decision.
Rulings and objections re jurisdiction
Arbitral tribunal may rule on own jurisdiction
17 (1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement.
ANALYSIS
[20] This motion raises a single issue of whether the application by TSCC 1628 should be stayed in favour of arbitration.
The Reciprocal Agreement
[21] On October 6, 2004, TSCC 1628 and Soho, the original declarant, entered into the Reciprocal Agreement. TSCC 1628 alleges that Soho controlled TSCC 1628’s board at the time, and that the Reciprocal Agreement was not negotiated but rather imposed on TSCC 1628. The imposition of the Reciprocal Agreement by Soho on TSCC 1628 forms the basis of TSCC 1628’s claim of oppression under s.135 of the Condominium Act.
[22] TSCC 1636 subsequently assumed all covenants and obligations of Soho under the Reciprocal Agreement.
[23] The Reciprocal Agreement is the source of the allocation of costs of operating and maintaining the Common Facilities. Under that agreement, TSCC 1628 is obliged to pay 69 per cent of the cost while TSCC 1636 pays 31 per cent of the cost.
[24] Additionally, the Reciprocal Agreement provides that TSCC 1628 and TSCC 1636 both use and enjoy access to the Common Facilities. Soinco owns and provides access to the Common Facilities, while TSCC 1636 is responsible for managing, operating and controlling the Common Facilities. The responsibility of TSCC 1636 includes enforcing any default by TSCC 1628 in its payment obligations in relation to the Common Facilities.
[25] TSCC 1628 paid its proportionate share of the costs relating to the Common Facilities under the Reciprocal Agreement for the fiscal years 2005-2008 and 2015-2018.
[26] TSCC 1636 asserts that TSCC 1628 remains in default of paying its share of the costs for the years, 2009-2014. As of October 31, 2018, this amount totalled $362,290.88, inclusive of HST and interest.
[27] The Reciprocal Agreement contains the following arbitration clause:
6.1 The validity, construction and performance of this Agreement shall be governed by the laws of the Province of Ontario and any dispute that may arise under this Agreement shall be determined by arbitration by a single arbitrator to be agreed upon by the parties within thirty (30) days of written notification by any of the parties of a request for arbitration. If the parties are unable to agree upon the arbitrator, same shall be appointed upon application to a single judge of the Ontario Superior Court of Justice in accordance with and pursuant to the Arbitration Act, 1991 (Ontario), as amended. The arbitrator’s decision shall be final and binding upon the parties and shall not be subject to appeal.
[28] Section 132 of the Condominium Act mandates that disputes between two corporations with respect to any aspect of the Reciprocal Agreement proceed first to mediation, and if unsuccessful, then to arbitration under the Arbitration Act.
[29] TSCC 1628 and TSCC 1636 engaged in mediation pursuant to s.132 of the Condominium Act in July of 2018. TSCC 1636 alleges this was and remains the appropriate path to resolve this dispute over payments under the Reciprocal Agreement.
Additional Parties
[30] TSCC 1628 asserts that the Reciprocal Agreement involves itself and TSCC 1636 (which, as indicated above, assumed all the covenants and obligations of Soho, who originally entered into the Reciprocal Agreement with TSCC 1628), and that it has no contractual agreements of any kind with Soinco. For this reason, TSCC 1628 takes the position that it cannot be responsible for the arrears now claimed by Soinco.
[31] TSCC 1628 further asserts that Soho as the declarant had never disclosed to TSCC 1628 any requirement to pay common expenses on the Soinco units, or make payments of any kind to Soinco.
[32] TSCC 1628 also argues that the involvement of Soinco and Soho in aspects of this dispute make it inappropriate for arbitration under the arbitration clause of the Reciprocal Agreement, which can only bind its parties, TSCC 1628 and TSCC 1636.
[33] By contrast, TSCC 1636 submits that itself, Soho and Soinco are closely related parties. In its factum, TSCC 1636 argues that (at para. 41), “…all the relief claimed against the other parties [Soho] and [Soinco] is available through TSCC No. 1636. TSCC No. 1636 assumed all the covenants and obligations of [Soho] under the Reciprocal Agreement, and is also the entity responsible for managing, operating and controlling the Rooms pursuant to the Reciprocal Agreement, and would therefore be responsible for all relief awarded under the Reciprocal Agreement.”
[34] While the closely connected nature of the three respondents likely does not present a bar to arbitration for disputes under the Reciprocal Agreement, it would be open to an arbitrator to conclude that some or all remedies against Soinco and Soho lie beyond the scope of the Reciprocal Agreement between TSCC 1628 and TSCC 1636. In that event, TSCC 1628 may be compelled to bifurcate proceedings and pursue both arbitration pursuant to the Reciprocal Agreement as well as a separate proceeding before this court against Soho and Soinco.
[35] The uncertainty created by the presence of additional parties in arbitration is heightened in this case, given that TSCC 1628 seeks remedies against TSCC 1636, Soho and Soinco which may go beyond the scope of the Reciprocal Agreement.
Remedies
[36] The Notice of Application is brought under the “Oppression Remedy” set out in s. 135 of the Condominium Act. For ease of reference, s.135 of the Condominium Act provides:
Oppression Remedy
135 (1) An owner, a corporation, a declarant or a mortgagee of a unit may make an application to the Superior Court of Justice for an order under this section.
Grounds for order
(2) On an application, if the court determines that the conduct of an owner, a corporation, a declarant or a mortgagee of a unit is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant, it may make an order to rectify the matter.
Contents of order
(3) On an application, the judge may make any order the judge deems proper including,
(a) an order prohibiting the conduct referred to in the application; and
(b) an order requiring the payment of compensation.
[37] In its Notice of Application, TSCC 1628 seeks, inter alia,
a. a Declaration that Soinco, as the owner of the units in question, is solely responsible to pay the common expenses of the units to TSCC 1636;
b. an Order requiring the respondents to reimburse TSCC 1628 any monies paid in the past towards the common expenses of the units;
c. an Order prohibiting the conduct of the respondents in purporting to charge TSCC for common expenses relating to Soinco’s units;
d. an Order directing an accounting by TSCC 1636 and/or Soho of all amounts charged to TSCC 1628 under the Reciprocal Agreement within the last five years, and to the extent that TSCC 1628 has overpaid in any year, an award of the amount overpaid, plus interest;
e. an Order that the conduct of the respondents is oppressive, unfairly prejudicial or unfairly disregards the interests of TSCC 1628 under s. 135 of the Condominium Act;
f. an Order for the payment of compensation by one or more of the respondents under s. 135 of the Condominium Act;
g. a Declaration that Soho made material statements or provided material information which was false, deceptive or misleading within the meaning of s. 133 of the Condominium Act; and
h. damages for the losses sustained by TSCC 1628 as a result of the failure of Soho to property disclose the liability of TSCC 1628 for Common Facilities.
[38] TSCC 1628 alleges that certain remedies sought are not arbitrable under the arbitration clause in the Reciprocal Agreement and s. 132 of the Condominium Act.
[39] Specifically, TSCC 1628 alleges that the payment arrangements relied upon by TSCC 1636 and Soinco are oppressive and contrary to s. 135 of the Condominium Act.
[40] Further, as set out in s. 135(1), applications under this provision can only be brought before this Court.
[41] TSCC 1628 also seeks remedies under s. 133 of the Condominium Act based on false, deceptive or misleading information or statements.
[42] As set out in s. 133(2), applications under this section of the Condominium Act similarly can only be brought before this Court.
[43] TSCC 1636 emphasizes that it is the amounts claimed pursuant to the Reciprocal Agreement that ultimately are at issue in this dispute – both the arrears it claims, and reimbursement for previous amounts paid which TSCC 1628 seeks – and this is precisely what the parties agreed through the arbitration clause of the Reciprocal Agreement would be resolved through arbitration.
[44] Further, TSCC 1636 relies on the conduct of TSCC 1628 itself, which agreed to mediation as a first step in the procedural pathway set out in s. 132 of the Condominium Act. The mediation was unsuccessful. TSCC 1636 asserts that only after the steps both parties took to follow the pathway set out under s. 132 of the Act, did TSCC 1628 shift its concerns to other remedies.
[45] TSCC 1636 also highlights that the Notice of Application begins with the Declaration sought relating to amounts claimed under the Reciprocal Agreement, and frames the Order that the respondents breached the oppression remedy provision under s. 135 of the Condominium Act as “in the alternative.”
[46] TSCC 1628 does not deny that part of its dispute relates to amounts claimed under the Reciprocal Agreement, but characterizes this aspect as only a part of its broader application.
[47] The point of departure for TSCC 1628’s application is that the Reciprocal Agreement was not negotiated on an equal footing. Rather, Soho is alleged by TSCC 1628 to have controlled its Board of Directors at the time the Reciprocal Agreement was signed. TSCC 1628 alleges that the imposition of the Reciprocal Agreement by Soho on TSCC 1628 was oppressive.
The Essence of the Application
[48] In determining whether to grant a stay, the question is whether it is at least arguable that the dispute is arbitrable: MTCC No. 965 v. MTCC No. 1031 and No. 1056, 2014 ONSC 5362 (“MTCC No. 965”), at para. 14. In turn, to answer this question, I first need to determine the core or essence of the dispute. Some courts have referred to this exercise as determining the “pith and substance” of the dispute though this is simply another way of stating the importance of determining whether the dispute arises under the agreement which contains the arbitration clause (see Haas v. Gunasekaram, 2016 ONCA 744, at para 21).
[49] If this dispute arises under the Reciprocal Agreement, then the arbitration clause in the agreement, together with the operation of s. 132 of the Condominium Act, and s. 7 of the Arbitration Act, mandate that this application be stayed and the dispute be resolved by way of arbitration.
[50] In Grey Standard Condominium Corporation No. 50 v. Grey Standard Condominium Corporation No. 46, 2013 ONSC 122 (“Grey”), Justice DiTomaso faced a similar situation, involving a shared facilities agreement and a dispute between two condominium corporations as to the cost of air-conditioning. A Superior Court action had been launched by one party, who alleged unjust enrichment by the other party and sought equitable remedies. DiTomaso J. found that a dispute about how shared utility costs should be paid was squarely addressed within the terms of the shared facilities agreement, and that this dispute should be resolved by arbitration, as set out in the arbitration clause within the agreement, along with s. 132 of the Condominium Act.
[51] MTCC No. 965 also dealt with an analogous situation and is relied upon by TSCC 1636. In that case, Mew J. considered a dispute involving alleged failures on the part of the defendant to comply with the provisions of a shared facilities agreement. The plaintiff also alleged that the conduct of the defendant was or threatened to be oppressive. Mew J. cautioned against allowing the mere invocation of an oppression remedy under s. 135 to avoid the consequence of an arbitration clause in an agreement and the provisions of s. 132 of the Condominium Act in relation to such agreements. Mew J. observed (at para. 18),
The practical effect of the position taken by the plaintiff would be that even where parties have, as in the present case, expressly turned their minds to the issue of dispute resolution and decided to arbitrate their disputes, all a party would need to do to avoid its agreement to arbitrate is to categorise all or part of its dispute as oppression.
[52] While these cases provide important guidance, the judgments granting stays to allow for arbitration under s. 132 of the Condominium Act such as Grey and MTCC No. 965 generally have in common a dispute about compliance with an underlying agreement between the parties. TSCC 1636 similarly characterizes the essence of this case as whether TSCC 1628 has complied with the Reciprocal Agreement.
[53] TSCC 1628, however, has not launched this application in order to compel TSCC 1636 to comply with its interpretation of the Reciprocal Agreement. Rather, TSCC 1628 seeks to attack the legal effect of the terms of the Reciprocal Agreement altogether. As TSCC 1628 states succinctly in its factum (at para. 44), “This Application is not a dispute about the Agreement.”
[54] TSCC 1628 alleges that the imposition of the Reciprocal Agreement by Soho, which at the time controlled TSCC 1628’s Board of Directors, was oppressive. That oppressive conduct resulted in a Reciprocal Agreement which imposed disproportionate costs to be borne by TSCC 1628 for Common Facilities to the benefit of TSCC 1636. TSCC 1628 similarly alleges that false, deceptive or misleading material information was provided by Soho at the time the parties entered into the Reciprocal Agreement. In essence, TSCC 1628 alleges that the Reciprocal Agreement was not an agreement at all, but rather a scheme to have one condominium corporation subsidize another.
[55] I find this dispute bears resemblance to the dispute in Deluce Holdings Inc. v. Air Canada (1998), 12 O.R. (3d) 131 (Ont S.C.J. [Commercial List]), where Blair J. (as he then was) found (at para. 70),
The real subject matter of the dispute, in such circumstances, is not a matter which the parties have agreed to submit to arbitration, but rather one which strikes at the very underpinning of the contractual mechanism itself. It therefore lies beyond the scope of s. 7 of the Arbitration Act, 1991 ...
[56] Some aspects of this dispute no doubt could be addressed through arbitration as arising under the terms of the Reciprocal Agreement, and presumably were explored at the unsuccessful mediation in July of 2018.
[57] While the amount of claimed arrears that TSCC 1628 seeks to resist flows from the Reciprocal Agreement, I find the essence of this claim to be about Soho’s allegedly oppressive conduct. More specifically, the pith and substance of this dispute relates to allegations that Soho imposed a disproportionate burden on TSCC 1628 through the Reciprocal Agreement, as well as the consequences that flowed from this allegedly oppressive conduct.
The Legislative Context
[58] Having concluded that the essence of the dispute relates to Soho’s allegedly oppressive conduct, I must now consider whether the applicable legislation directs such a dispute to be resolved through arbitration or through the application which TSCC 1628 has brought to this court.
[59] Sections 132 and 135 of the Condominium Act must be read against this factual backdrop.
[60] Essentially, s. 132 mandates a procedure for dispute resolution by arbitration where a dispute arises under certain agreements, including ones such as the Reciprocal Agreement in the case at bar.
[61] Section 135 provides for a different procedure before this court where a party alleges oppressive conduct.
[62] TSCC 1636 argues that under s. 132, an arbitrator has jurisdiction to consider allegations of oppression within the context of the Reciprocal Agreement. As a result, TSCC 1636 submits that 1628 would not be prejudiced if this application is stayed in favour of an arbitration.
[63] For purposes of this motion, it is not necessary to address fully whether a dispute under an agreement covered by s. 132 of the Condominium Act also may include claims of oppression. Whatever the scope of an arbitrator to address allegations of oppression, s. 132 clearly was not intended to govern disputes whose core or essence is oppression. Otherwise, s. 135 would have been drafted to permit claims in oppression to be brought before this court or an arbitrator.
[64] Perrell J. considered a similar distinction in Ryan v. York Condominium Corporation No. 340, 2016 ONSC 2470, where he held as follows (at para. 6):
For completeness, I now add that an applicant for an oppression remedy under the Condominium Act, 1998 need not first resort to mediation and arbitration before applying to the Superior Court for an oppression remedy: McKinstry v. York Condominium Corporation No. 472 (2003), 68 O.R. (3d) 557 (Ont. S.C.J.) at paras. 35-46.
[65] TSCC 1636 also relies on the provisions of the Arbitration Act, which are incorporated by reference into the arbitration clause of the Reciprocal Agreement.
[66] Section 7(1) of the Arbitration Act, requires a court to stay a proceeding where it is subject to an arbitration agreement. The Ontario Court of Appeal on several occasions has reaffirmed that such provisions should be read generously in order to favour arbitration over litigation (see, for e.g., Novatrax International Inc. v. Hägele Landtechnik GmbH, 2016 ONCA 771, 132 O.R. (3d) 481). As Lauwers J.A. stated in Haas v. Gunasekaram, 2016 ONCA 744 (at para.10),
The law favours giving effect to arbitration agreements. This is evident in both legislation and in jurisprudence. Section 7 of the Arbitration Act contains mandatory language, stating “the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding” (emphasis added).
[67] The exceptions to the application of s. 7(1) of the Arbitration Act, set out in s. 7(2), do not apply in this case.
[68] Further, the competence-competence principle, as incorporated in s. 17(1) of the Arbitration Act, mandates that unless it is clear that a dispute between the parties falls outside the terms of the arbitration agreement, questions relating to the jurisdiction of the arbitrator should be decided by the arbitral tribunal, as opposed to the court (see for e.g. Ciano Trading & Services C.T. & S.R.L. v. Skylink Aviation Inc., 2015 ONCA 89, at para. 7).
[69] The applicable legislation thus appears to mandate that some aspects of the application under s. 135 of the Condominium Act should come before this court, while some aspects of the dispute should proceed to arbitration as set out in the arbitration clause in the Reciprocal Agreement, s. 132 of the Condominium Act and ss. 7 and 17(1) of the Arbitration Act.
[70] In its factum, TSCC 1628 concedes that certain of its claims are arbitrable, including (at para. 89):
a. The interpretation of the Reciprocal Agreement as to whether “common expenses” of the Soinco Units are properly a Common Facilities cost; and
b. The applicable limitation period for the claims by TSCC 1636 against TSCC 1628.
[71] TSCC 1628 also summarizes what it asserts are the non-arbitrable claims in its application, including:
a. The Declaration that Soinco is solely responsible for paying the common expenses to TSCC 1636;
b. The Order requiring Soinco to reimburse TSCC 1628 for common expenses paid by TSCC 1628 for the Soinco Units to date;
c. The Order amending/correcting the percentage contribution applicable to the Soinco Unites in Schedule “D” of the Declaration of TSCC 1636;
d. The Declaration that Soinco, Soho, and/or TSCC 1636 is oppressive to TSCC 1628 under s.135 of the Condominium Act; and
e. The Declaration that Soho made material statements or provided material information that is false, deceptive or misleading under s. 133 of the Condominium Act.
[72] In Griffin v. Dell Canada Inc., 2010 ONCA 29 (“Griffin”), leave to appeal to SCC refused, [2010] S.C.C.A. No. 75, Sharpe J.A., writing for the court, affirmed that s. 7(5) of the Arbitration Act confers discretion to grant a partial stay where an action involves some claims that are subject to arbitration and some claims that are not, and where those claims are severable.
[73] Sharpe J.A. concluded that the claims in Griffin could not reasonably be bifurcated. He held (at paras. 46-47),
In my view, it would not be reasonable to separate the consumer from the non-consumer claims. We should, therefore, refuse a partial stay and allow all the claims to proceed under the umbrella of the class proceeding.
Granting a stay of the non-consumer claims would lead to inefficiency, a potential multiplicity of proceedings, and added cost and delay. This would be contrary to the Courts of Justice Act, s. 138, which provides that “(a)s far as possible, a multiplicity of legal proceedings shall be avoided”, and contrary to the jurisprudence on the reasonableness of partial stays under s. 7(5) of the Arbitration Act.
[74] The option of bifurcating a dispute into its arbitrable and non-arbitrable parts was also discouraged by the Ontario Court of Appeal in Nipissing Condominium Corporation No. 4 v. Simard, 2009 ONCA 743 (“NCC No. 4”). In NCC No. 4, the Court of Appeal again relied on s. 138 of the Courts of Justice Act as well as Rule 1.04 of the Rules of Civil Procedure, to support its conclusion that bifurcation was not appropriate. The court held (at para. 11),
The arbitration provisions do not apply to all of the matters raised in the application. All of the matters can, however, be addressed by way of an application. The motion judge had to decide whether it was appropriate to proceed in one or two different forums. His decision to avoid “sectioning off” the two main aspects of the claim and to proceed in one forum was within his discretion. We see no reason to interfere.
[75] I believe a similar resolution is appropriate in this case. While an arbitration could deal with some aspects of this dispute, and while other aspects remain contingent on how narrow or broad an arbitrator sees the jurisdiction of the arbitration clause in the Reciprocal Agreement and s. 132 of the Condominium Act, it is apparent that what I have concluded are the core or essential aspects of this application would need to proceed to this court to be resolved, as they arise under s. 135 of the Condominium Act.
[76] Consequently, in light of s. 138 of the Courts of Justice Act and r. 1.04 of the Rules of Civil Procedure, to promote an efficient and complete adjudication of the allegations that TSCC 1628 has raised against TSCC 1636, Soho and Soinco, this entire matter should proceed in the form of the application before this court.
[77] For these reasons, the motion for a stay of this application is denied.
COSTS
[78] TSCC 1628 is entitled to its costs of this motion. If the parties are unable to agree on the costs of this motion, I may be contacted in order to set a timetable for the delivery of cost submissions.
Sossin J. Released: March 22, 2019
