COURT OF APPEAL FOR ONTARIO

CITATION: Kolios v. Vranich, 2012 ONCA 269

DATE: 20120426

DOCKET: C54718

Blair, Lang and Hoy JJ.A.

BETWEEN

Dimitrios Kolios, Tracey-Lee Kolios and The Dimitrios Kolios Family Trust

Applicants (Respondents)

and

Darko Vranich and Darko Vranich Holdings Inc., Champlain Development Corporation 2184206 Ontario Limited, 2155328 Ontario Limited, 2023725 Ontario Limited, 2181738 Ontario Limited and 2185026 Ontario Limited

Respondents (Appellants)

Thomas M. Slahta, for the appellants

Rahul Shastri and David Winer, for the respondents

Heard and released orally: April 23, 2012

On appeal from the order of Justice Robert P. Boissonneault of the Superior Court of Justice, dated September 27, 2011.

ENDORSEMENT

[1] The appeal challenges the decision of the motion judge dismissing the appellants’ motion to stay the respondents’ litigation on the basis that certain shareholder agreements contained a clause providing for arbitration of all disputes. In our view, the appeal must be allowed and the respondents’ litigation stayed pursuant to s. 7(1) of the Arbitration Act, S.O. 1991, c. 17, which provides:

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 a motion of another party to the arbitration agreement, stay the proceeding.

[2] The respondents resist arbitration arguing that the parties never reached an agreement concerning the contents of Schedule G (Shareholder Loans) to the shareholder agreements. In their view, the parties never reached an agreement, including any arbitration agreement.

[3] This argument fails for three reasons.

[4] First, the respondents have not sought any relief such as a declaration that the shareholder agreements were invalid or void ab initio.

[5] Second, the shareholder agreements contain severability clauses the effect of which is that the arbitration clauses are separate contracts. In addition, s. 17(2) of the Arbitration Act provides that “[i]f the arbitration agreement forms part of another agreement, it shall, for the purposes of a ruling on jurisdiction, be treated as an independent agreement that may survive even if the main agreement is found to be invalid.”

[6] Third, s. 17(1) of the Arbitration Act provides that “[a]n 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.”

[7] Accordingly, it is for the arbitrator to deal with any attack the respondents may choose to make on the existence or validity of the agreements.

[8] We observe that, in our view and contrary to the submissions of the respondents, the motion judge made no factual finding regarding the completeness or otherwise of the shareholder agreements.

[9] Finally, the appellants do not pursue a stay of litigation concerning the following companies: 2023725 Ontario Limited, 2181738 Ontario Limited and 2185026 Ontario Limited, none of which were parties to any shareholder agreement.

[10] Accordingly, the appeal is allowed, the order below is set aside and an order will go staying the respondents’ application, except with respect to 2023725 Ontario Limited, 2181738 Ontario Limited and 2185026 Ontario Limited.

[11] The costs order of the motion judge is set aside. In view of the mixed result, there will be no order for costs of the motion. Costs of the appeal are awarded to the appellants fixed in the amount of $7,500, inclusive of disbursements and applicable taxes.

“R.A. Blair J.A.”

“S.E. Lang J.A.”

“Alexandra Hoy J.A.”