Court of Appeal for Ontario

Date: 2017-12-05 Docket: M48520

Pardu J.A. (In Chambers)

Between

Andrew Maracle III and Jasmin Johnson Moving Parties (Proposed Appellants)

and

Sir Andrew Clifford Miracle Responding Party (Respondent)

Counsel

Sean Dewart, for the moving parties

Richard Watson, for the respondent

Heard

December 4, 2017

Motion

On a motion to extend the time to seek leave to appeal from the judgment of Justice Stanley J. Kershman of the Superior Court of Justice dated October 10, 2017, with reasons for judgment reported at 2017 ONSC 5876, dismissing an application to set aside an arbitral award.

Endorsement

Background

[1] The moving parties, Andrew Maracle III and Jasmin Johnson, seek leave to extend the time to move for leave to appeal a decision of the Superior Court of Justice, confirming an arbitral award in favour of the responding party, Sir Andrew Clifford Miracle. That decision was dated October 10, 2017.

[2] The moving parties' former counsel (not counsel on the appeal) mistakenly thought he had 30 days following October 10, 2017 to serve a notice of motion seeking leave to appeal, rather than 15 days as prescribed by r. 61.03.1(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In this case, the former counsel attempted service of a notice of appeal in which he sought an extension of time to seek leave to appeal on November 2, 2017.

Applicable Legal Principles

[3] The parties agree on the applicable principles governing this motion as described at paras. 14 and 15 of Reid v. College of Chiropractors, 2016 ONCA 779:

The test on a motion to extend time is well-settled. The governing principle is whether the "justice of the case" requires that an extension be given: Rizzi v. Mavros, 2007 ONCA 350, 85 O.R. (3d) 401, at para. 17; Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, 114 O.R. (3d) 636, at para. 15. Each case depends on its own circumstances. The relevant considerations include:

a) whether the moving party formed a bona fide intention to seek leave to appeal within the relevant time period;

b) the length of, and explanation for, the delay in filing;

c) any prejudice to the responding party, caused, perpetuated or exacerbated by the delay; and

d) the merits of the proposed appeal.

See Rizzi, at para. 16; Froese, at para. 15.

This court has held that lack of merit alone can be a sufficient basis on which to deny an extension of time, particularly in cases such as this where the moving party seeks an extension of time to file a notice of leave to appeal, rather than an extension of time to file a notice of appeal: Miller Manufacturing and Development Co. v. Alden, [1979] O.J. No. 3109 (C.A.), at para. 6; Froese, at para. 16.

Positions of the Parties

[4] The responding party concedes that the failure to meet the deadline occurred as a result of the moving parties' lawyer's error and that there is no prejudice flowing from that short delay.

[5] The responding party's position is that the moving parties are unlikely to get leave to appeal. On that ground, it submits leave to extend the time to file a notice of motion for leave to appeal should be refused.

Factual Background

[6] The moving party, Andrew Clifford Maracle III, and the respondent are son and father. These parties signed a partnership agreement to run a business selling cigarettes and gasoline. That agreement contained a mandatory arbitration clause. The father sued the son, alleging that the son had misappropriated the profits from the partnership. The father also sued Jasmin Johnson, the son's wife, alleging that she signed cheques on the partnership's account without having signing authority. Ms. Johnson was not party to the partnership agreement.

[7] The father made wide ranging claims against Ms. Johnson in his statement of claim relating to the partnership, including allegations that both moving parties "breached their fiduciary duty to the Plaintiff by taking the Plaintiff's share of the partnership's assets and profits and by furthering their own interests over those of the Plaintiff. These Defendants also conspired to defraud and committed conversion by taking the Plaintiff's partnership assets and profits." He sought a tracing order, an accounting of profits, and claimed a constructive trust over the moving parties' assets.

[8] On May 9, 2016, Scott J. of the Superior Court of Justice made a consent order that "the plaintiff and the defendants, Maracle and Johnson, will attend binding arbitration in Kingston, ON."

[9] The moving parties and the responding party signed an arbitration agreement dated October 7, 2016, acknowledging that the "Plaintiff and the Defendants have agreed to proceed to an arbitration of their dispute".

The Arbitration and Procedural Fairness Issue

[10] The arbitrator made a substantial award in favour of the father against the son. He refused to make any findings in relation to the dispute between the father and his daughter-in-law because she was not a party to the partnership agreement, despite the agreement of all parties that they would submit their disputes to binding arbitration. The arbitrator did not invite submissions from the parties on his final decision to decline to exercise jurisdiction over the disputes involving Ms. Johnson. The moving parties submit that this was procedurally unfair.

[11] As the above review of the pleadings illustrate, the allegations against Ms. Johnson were inextricably intertwined with the disputes related to the partnership and the accounting of profits. On its face, the dispute between Ms. Johnson and the father fell within the terms of the arbitration agreement that both parties signed. It is arguable that the arbitrator did not act with procedural fairness when he declined to arbitrate the disputes between the father and Ms. Johnson in the absence of submissions from the parties. There is no indication that any of the parties raised this issue of excluding Ms. Johnson from the issues to be dealt with by the arbitrator.

[12] Section 46(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 provides that a court may set aside an arbitral award if a party was not treated fairly, or if the arbitration procedures did not comply with the Act.

[13] The application judge indicated that he did not "see what benefit would be gained by an arbitration between Clifford and Jasmin", and concluded that going to trial in relation to the dispute between Jasmin and the father would not result in "duplication, inconsistent findings or multiple proceedings." This conclusion may be doubtful, given the pleadings that connect the partnership issues with the other claims against Ms. Johnson.

[14] The responding party argues that his son cannot possibly be affected by the arbitrator's refusal to deal with the claims against his Ms. Johnson. Given the extent to which the claims against each moving party are intertwined, I disagree with this submission.

Analysis and Decision

[15] I recognize that the moving parties may face a more rigorous test for leave, given that this motion for leave to appeal asks for a second review of an arbitral decision. However, I am persuaded that given the brevity of the delay, and the absence of prejudice, the interests of justice in this case requires the moving parties be given an opportunity to persuade this court that leave should be granted.

[16] Given the state of the record, I am not prepared to attach any conditions to the extension of time. Moreover, given my analysis above, I do not need to rule on the admissibility of certain emails containing references to settlement discussions in the record since they were not considered in making this decision.

Order

[17] The motion is allowed and the moving parties are given 10 days from the date of release of this decision to file a motion for leave to appeal from the decision of Kershman J. dated October 10, 2017.

[18] Costs should follow the result. Costs are fixed in the moving parties' favour at $3,568.53, payable within 30 days.