Court of Appeal for Ontario

Citation: Secure Solutions Inc. v. Smiths Detection Toronto Ltd., 2011 ONCA 337

Date: 20110503

Docket: C53347

Before: Goudge, Gillese and Watt JJ.A.

Between:

Secure Solutions Inc.

Plaintiff/Respondent

and

Smiths Detection Toronto Ltd. and Smiths Detection Montreal Inc.

Defendants/Appellants

Counsel:

Gideon Forrest and Zohaib Maladwala, for the appellants

Jonathan C. Lisus and Andrew J. Winton, for the respondent

Heard: April 21, 2011

On appeal from the order of Justice Gray of the Superior Court of Justice, dated February 16, 2011.

ENDORSEMENT

[1] This is an appeal from the order of Gray J. declining to stay the respondent’s action.

[2] The appellants’ primary argument is that there is an agreement between the parties containing an arbitration clause that encompasses the issues raised in the litigation and, as a consequence, the litigation process must defer to arbitration.

[3] The first issue is whether there is arguably an arbitration clause in whatever contract continues to exist between the parties. The motion judge appeared very sceptical that there was any such contract. However, for the purposes of the motion before him, he was prepared to proceed on the assumption that such a contract existed. He did not decide that issue.

[4] In our view, it is not arguable that whatever contract existed between the parties in 2009 and 2010 (when the events that triggered the litigation took place) it included an arbitration clause. Over the 13 years of continuous dealings between the parties there was a written contract in place for only two 12 month periods: – the 2005 contract and the 2007 contract. Only in those two contracts is there reference to arbitration. By its terms, the second of these, the 2007 contract, expired on July 17, 2008. It was not renewed, as the appellants clearly have acknowledged. In 2009, the appellants took the policy decision that their disputes with the respondent would not be arbitrated. While the parties continued to do business after July 2008, the terms of any oral agreement reflecting the issues on which they were ad idem, could only be gleaned from their conduct. There was nothing in writing. In the face of taking the position in 2009 that they did not want their disputes arbitrated but litigated, and having clearly communicated that to the respondent, it is very difficult to see how the appellants could establish a meeting of the minds to the effect that their disputes would be arbitrated. In our view, that position is simply not arguable. If there is no arbitration provision contracted for at the relevant time, that ends the matter.

[5] Based on the assumption of an arbitration provision, the motion judge went on to decide that it was an implied oral one, not one in writing as required by the clear language of s. 5(3) of the International Commercial Arbitration Act and thus the provincial Arbitration Act applied. He found that the claims of breach of trust, breach of fiduciary duty, conspiracy and unjust enrichment did not remotely come within that clause and that it was inappropriate to grant a partial stay of any remaining issues. All the issues should be decided in one proceeding. Finally, he found that, as a matter of fact, there was no forum selection clause in any oral agreement between the parties, and in any event, Ontario is the more convenient forum for the litigation.

[6] The appellants attack each of these findings. Despite Mr. Forrest’s vigorous and thorough advocacy, we do not agree that the motion judge erred in disposing of any of these issues. Indeed, we agree with him. His reasons are persuasive and we would adopt them.

[7] The appeal must be dismissed. Costs to the respondent fixed at $15,000 inclusive of disbursements and applicable taxes.

“S. T. Goudge J.A.”

“E. E. Gillese J.A.”

“David Watt J.A.”