DATE: 20050920

DOCKET: C43098

COURT OF APPEAL FOR ONTARIO

RE:

ANNE BRENNAN, VALERIE HUGHES, KIM BOURADA DUNN, NADIR NAZARIADLI, NASREEN NAZARIADLI, MARGARET DEVLIN AND BRENDAN DEVLIN (Applicants/Respondents) –and- NATALIE DOLE (Respondent/Appellant)

BEFORE:

CRONK, LANG and JURIANSZ JJ.A.

COUNSEL:

Christopher Rootham

for the appellant

Richard P. Bowles

for the respondents

HEARD:

September 8, 2005

On appeal from the order of C. Hackland J. of the Superior Court of Justice dated January 19, 2005.

E N D O R S E M E N T

[1] This is an appeal from an order of Hackland J. of the Superior Court of Justice appointing an arbitrator and delineating the terms of arbitration to resolve a dispute between neighbours about the costs of snow removal.

[2] The motion to appoint the arbitrator was brought on the basis of a Joint Use Agreement (the Agreement) that provided both for sharing the costs of snow removal from a common right of way and for resolution of disputes under the Agreement by arbitration. The appeal raises the issue of whether the arbitration clause is enforceable by the respondents against the appellant.

[3] The Agreement was executed in 1987 by the developer of the five-unit townhouse development and registered on title against the properties; it was not executed or otherwise assumed by any of the parties to this litigation. The appellant is a successor in title to one of the five townhouses referenced in the Agreement.

[4] The respondents, the owners of the other four townhouses, moved to resolve their snow removal dispute with the appellant through arbitration. On the motion to appoint an arbitrator, the appellant argued that the arbitration clause is unenforceable against her because it is a positive covenant that does not bind her, as a successor in title who did not specifically assume the obligations of the covenant, and because it does not run with the land. The motion judge determined that the arbitration clause was neither a positive nor a negative covenant, but merely an “administrative” one incidental to the negative covenants in the Agreement.

[5] For the reasons that follow, we disagree. In our view, the arbitration clause is a non-binding positive covenant. We reach this conclusion for the following reasons.

[6] First, the arbitration clause is not merely incidental to other covenants in the Agreement. It is a separate covenant that takes away the appellant’s right to civil litigation and imposes a positive obligation on her to proceed to arbitration. Such arbitration clauses have been specifically considered and held to be positive covenants: 4348037 Manitoba Ltd. v. 2804809 Manitoba Ltd., 2003 MBQB 123, [2003] M.J. No. 210 (Q.B.); 2004 MBCA 87, [2004] M.J. No. 207 (C.A.) This court has held that positive covenants do not run with the land and are therefore not binding on subsequent owners: Amberwood Investments Ltd. v. Durham Condominium Corp. 123, (2002), 58 O.R. (3d) 481 (C.A.).

[7] Second, although the respondents argue that the arbitrator should be left to decide the question of jurisdiction, the law is clear that an arbitrator does not have exclusive jurisdiction to do so. In the circumstances of this case, the courts are the most convenient and expeditious forum to decide this issue. See Unifund Assurance Co. Insurance Corp. of British Columbia, 2003 SCC 40, [2003] 2 S.C.R. 63 at para. 45.

[8] Third, the arbitration clause is not statutorily excepted from the general rule that positive covenants do not run with the land. Although Amberwood (para. 51) recognized that statutes could except certain positive covenants from the general rule and specifically referenced the Planning Act, R.S.O. 1990, c. P.13 as such a statute, the Agreement in this case does not fit within such an exception.

[9] The Agreement was registered to comply with a Site Plan Agreement between the developer and the municipality. Compliance with the Site Plan Agreement was necessary for the developer to obtain permission to build the townhouses. In the Site Plan Agreement, the developer agreed with the municipality to provide for the right of way in the development and its maintenance.

[10] The Planning Act, in particular ss. 41(10) and 41(7)(c) thereof, provides for exceptions to the general rule that positive covenants do not run with the land. However, these sections limit the statutory exceptions to those covenants enforced at the instance of a municipality. They do not contemplate enforcement by others, even those intended to benefit from the type of agreements provided for under those sections. Moreover, there is no suggestion here that the municipality delegated its enforcement authority to the respondents.

[11] Fourth, this arbitration clause does not qualify as an exception as a conditional grant. Amberwood (para. 86) recognizes such an exception where a right is granted subject to the acceptance of an obligation. The Site Plan Agreement, however, did not require that the proposed maintenance agreement include an arbitration provision. Accordingly, the arbitration clause cannot be said to have been a condition of the grant; nor does it serve to limit the scope of the grant itself.

[12] For the reasons given, the appeal is allowed and the order below is set aside. Costs are awarded to the successful appellant fixed at $6,567.20, inclusive of disbursements and GST.