COURT OF APPEAL FOR ONTARIO

CITATION: Toronto Standard Condominium Corporation No. 2130 v. York Bremner Developments Limited, 2014 ONCA 809

DATE: 20141117

DOCKET: M44092 (C58349)

Hoy A.C.J.O., Epstein and Hourigan JJ.A.

BETWEEN

Toronto Standard Condominium Corporation No. 2130

Applicant (Respondent)

Moving Party

and

York Bremner Developments Limited, The Cadillac Fairview Corporation Limited and York Bremner Hotel Leaseholds Limited

Respondents (Appellants)

Responding Parties

APPLICATION UNDER sections 10 and 23 of the Arbitration Act, 1991, section 132 of the Condominium Act, 1998, section 17 of the Ontario New Home Warranties Plan Act, Rule 14.05(3)(d) and (h) of the Rules of Civil Procedure, and the inherent jurisdiction of this court.

Richard Macklin and Neil G. Wilson, for the moving party

Catherine Francis, for the responding parties

Heard: November 5, 2014

On appeal from the judgment of Justice Wendy M. Matheson of the Superior Court of Justice, dated January 8, 2014.

ENDORSEMENT

[1] Toronto Standard Condominium Corporation No. 2130 (the “Condominium Corporation”) moves to quash the appeal by York Bremner Developments Limited (the “Declarant”), The Cadillac Fairview Corporation Limited and York Bremner Hotel Leaseholds Limited (the “Appellants”) of the January 8, 2014 judgment of the application judge appointing an arbitrator in connection with the arbitration commenced by the Condominium Corporation.

[2] The Condominium Corporation argues that there are two bases for doing so. First, s. 10(2) of the Arbitration Act, 1991, S.O. 1991, c. 17 precludes any appeal of the application judge’s decision. Second, the Appellants have attorned to the jurisdiction of the arbitrator.

[3] We agree that s. 10(2) of the Arbitration Act, 1991 precludes an appeal of the application judge’s judgment. The appeal is accordingly quashed. Given our conclusion regarding the effect of s. 10(2), it is unnecessary to address the parties’ arguments on the issue of whether the Appellants have attorned to the jurisdiction of the arbitrator.

The Background

[4] It is helpful to briefly set out the background in this matter.

[5] The Condominium Corporation is the condominium corporation for a residential condominium in a complex called Maple Leaf Square. The Declarant owns the commercial and retail lands at Maple Leaf Square. York Bremner Hotel Leaseholds Limited (“Leasing”) holds a leasehold interest in a hotel in Maple Leaf Square. The Cadillac Fairview Corporation Limited is described as the Declarant’s agent, appointed to be the common facilities manager of Maple Leaf Square.

[6] The Declarant, Leasing and the Condominium Corporation entered into an agreement called the Complex Reciprocal Agreement (the “CRA”). The CRA relates to the management of the common facilities, areas and services of the condominium development. The CRA contains a broad arbitration clause. It provides that “[S]hould any dispute, difference or question arise between or among the Parties arising out of, or in connection with, [the CRA]…” then such dispute, difference or question is to be submitted to and resolved by arbitration.

[7] A number of disputes arose between or among the parties and the Condominium Corporation sought to initiate arbitration proceedings under the CRA. It also commenced overlapping proceedings in court.

[8] In accordance with the CRA, the Condominium Corporation issued a notice of arbitration on May 17, 2013, seeking arbitration pursuant to, amongst other things, the CRA and the Arbitration Act, 1991. Clause 22.02 of the CRA required the Declarant and Leasing – the “Responding Party” in the language of clause 22.02 – to give notice to the Condominium Corporation within 10 days advising whether or not they accepted the proposed arbitrator. Clause 22.02 also provides as follows:

Within 10 days after receipt of such notice, the Responding Party shall give notice to the Initiating Party advising whether the Responding Party accepts or does not accept the arbitrator proposed by the Initiating Party. If such notice is not given within such 10 day period, the Responding Party shall be deemed to have accepted the arbitrator proposed by the Initiating Party. If the Responding Party does not accept the arbitrator proposed by the Initiating Party and the Parties cannot agree upon a single arbitrator within such 10 day period, either the Initiating Party or the Responding Party may apply to a judge of Superior Court of Ontario for the appointment of a single arbitrator.

[9] The Appellants did not respond to the Condominium Corporation’s notice within 10 days but refused to move forward with the arbitration.

[10] The Condominium Corporation brought an application seeking the appointment of an arbitrator. The grounds for its application included s. 10 of the Arbitration Act, 1991. The Condominium Corporation argued that one of two persons should be appointed as arbitrator pursuant to the CRA and should rule on his own jurisdiction.

[11] At para. 7 of her reasons, the application judge noted that the Appellants took no issue with the process of proposing an arbitrator. She also noted that at the outset of the hearing the Appellants indicated for the first time that they were not objecting to the individuals proposed by the Condominium Corporation to act as arbitrator. Rather, the Appellants argued that none of the issues in the Condominium Corporation’s notice of arbitration fell within the ambit of the arbitration agreement in the CRA and were accordingly outside the jurisdiction of the arbitrator. Therefore, there was no point in appointing an arbitrator.

[12] The application judge disagreed. At para. 20 of her reasons, she cited Dancap Productions Inc. v. Key Brand Entertainment, 2009 ONCA 135, 55 B.L.R. (4th) 1, for the principle that “[a] court will decline to have the arbitrator determine his or her jurisdiction only when it is clear or obvious that there is no jurisdiction.” She concluded that, since at least one issue arguably fell within the jurisdiction of the arbitrator, the arbitrator should be appointed and determine his jurisdiction.

[13] The application judge also accepted that the Condominium Corporation had commenced the overlapping court proceedings to protect against limitation period problems and because the relief that it seeks under s. 113 of the Condominium Act, 1998, S.O. 1998, c. 19 must be pursued in court.

[14] The judgment of the application judge describes the Condominium Corporation’s application as for “an Order appointing either Gary Caplan or Larry Banack as arbitrator for an arbitration to be conducted pursuant to sections 10 and 23 of the Arbitration Act, 1991, section 132 of the Condominium Act, 1998, section 17 of the Ontario New Home Warranties Plan Act and [the CRA]…” Pursuant to the judgment, the court ordered that “Larry Banack is appointed as arbitrator in connection with the arbitration commenced by a Notice of Arbitration issued on May 17, 2013, as amended on December 17, 2013.”

[15] After the arbitrator was appointed, the Condominium Corporation put the Appellants on notice that it would argue that the Appellants had attorned to the jurisdiction of the arbitrator if they did not move to stay the arbitration proceedings. The Appellants responded that they would not be able to establish that they would suffer irreparable harm if the stay were not granted, could therefore not succeed in obtaining a stay, and would accordingly not move for a stay.

[16] Before the arbitrator considered the question of his jurisdiction, the Condominium Corporation withdrew 13 of the issues in its notice of arbitration. The arbitrator determined that he had the jurisdiction to determine the remaining six issues. In his award on the issue of jurisdiction, the arbitrator noted that the Appellants explicitly stated that they did not seek a stay of the arbitration proceedings, including the jurisdiction motion.

[17] The arbitrator has since determined two of the six issues over which he asserts jurisdiction. The Condominium Corporation has withdrawn one of the six issues, and a further issue regarding HST has been adjourned, to permit the Condominium Corporation to pursue relief through the Canada Revenue Agency. A hearing in respect of the final two issues is scheduled for January of 2015.

[18] The Appellants have participated actively in the proceedings before the arbitrator. Facta have been filed, submissions made and witnesses cross-examined. The Appellants have also paid costs awarded by the arbitrator. By August 5, 2014, the parties had spent more than $100,000 on the arbitrator’s fees. The Condominium Corporation (and presumably the Appellants) have incurred additional costs for counsel, experts and disbursements.

[19] The Appellants have launched an appeal of the arbitrator’s ruling on his jurisdiction to the Superior Court of Justice.

[20] On their appeal to this court, the Appellants propose to argue that the application judge erred in law in referring all the issues in the notice of arbitration to the arbitrator. They would argue that she was required to assess each of the issues raised in the notice of arbitration and to refer only those that she determined were arbitrable or at least potentially arbitrable under the arbitration agreement.

Analysis

[21] As we indicated above, the Condominium Corporation’s grounds for the appointment of the arbitrator included s. 10 of the Arbitration Act, 1991. Section 10(1) provides that:

Appointment of Arbitral Tribunal

10. (1) The court may appoint the arbitral tribunal, on a party’s application, if,

(a) the arbitration agreement provides no procedure for appointing the arbitral tribunal; or

(b) a person with power to appoint the arbitral tribunal has not done so after a party has given the person seven days’ notice to do so.

[22] The Appellants accepted that s. 10(1) entitled the application judge to appoint an arbitrator. They did not take issue with the Condominium Corporation’s reliance on s. 10(1) in putting the matter before the application judge. They only took issue with the scope of the matters to be referred to the arbitrator. In our view, it is not open to the Appellants to argue at this stage that the arbitrator was not appointed under s. 10(1) of the Arbitration Act, 1991.

[23] Accepting, as we do, that the arbitrator was appointed by the application judge under s. 10(1) of the Arbitration Act, 1991, s. 10(2) bars the Appellants’ attempt to appeal the application judge’s judgment. That section provides as follows:

No appeal

(2) There is no appeal from the court’s appointment of the arbitral tribunal.

[24] This case is very different from Brennan v. Dole (2005), 2005 CanLII 33122 (ON CA), 11 B.L.R. (4th) 169 (Ont. C.A.), where an appeal from a court order appointing an arbitrator was allowed because this court held that the purported arbitration agreement was not enforceable by the respondents against the appellants.

[25] The Appellants are not without a remedy. They have – as they were entitled to – appealed the arbitrator’s ruling on the issue of jurisdiction to the Superior Court of Justice pursuant to s. 17(8) of the Arbitration Act, 1991.

Disposition

[26] The appeal is accordingly quashed.

[27] The Condominium Corporation shall be entitled to costs of the appeal and the motion to quash, fixed in the amount of $20,000, including disbursements and HST.

“Alexandra Hoy A.C.J.O.”

“G.J. Epstein J.A.”

“C. W. Hourigan J.A.”