Court of Appeal for Ontario

Date: 2019-12-13

Docket: M50718 (C67233)

Panel: Pepall, Tulloch and Benotto JJ.A.

Between

Leeds Standard Condominium Corporation No. 41 Plaintiff (Appellant/Responding Party)

and

Simon Fuller, Tall Ships Landing Developments Inc. and the Corporation of the City of Brockville Defendants (Respondents/Moving Parties)

Counsel

Nadia J. Authier, for the moving parties

Antoni Casalinuovo, for the responding party

Heard

November 12, 2019

On Appeal

On appeal from the order of Justice Sandra Nishikawa, of the Superior Court of Justice, dated June 24, 2019, with reasons reported at 2019 ONSC 3900.

Reasons for Decision

[1] Motion to Quash

[1] This is a motion to quash an appeal. The appeal arises from a decision of the motion judge, staying the appellant's action in favor of arbitration. We allowed the motion to quash with reasons to follow. These are those reasons.

[2] The Underlying Dispute

[2] The underlying dispute is an action by the appellant, Leeds Standard Condominium Corporation No. 41 ("Leeds"), claiming oppression and breach of contract against the respondents, Tall Ships Landing Developments Inc. ("Tall Ships") and Simon Fuller. The parties entered into two agreements relating to a condominium development in Brockville: a Shared Amenities Agreement ("SAA") and a Shared Facilities Agreement ("SFA"). Both agreements relate to the joint use and sharing of costs of certain facilities, improvements and amenities around the development, and contained identical arbitration clauses.

[3] In June 2018, Leeds brought an action against Tall Ships and Simon Fuller, seeking a declaration that the defendants were or threatened to be oppressive, unfairly prejudicial and/or unfairly disregarded the interests of Leeds in carrying out the SAA and SFA. It sought damages for breach of contract and duty of care, disclosure of documents, and renegotiation of the SFA and SAA. The respondents brought a motion to stay the action in favour of arbitration under the arbitration clauses in both agreements.

[3] Motion Judge's Decision

[4] Nishikawa J., the motion judge, allowed the respondents' motion and stayed the action in favour of arbitration, under s. 7(1) of the Arbitration Act, 1991, S.O. 1991, c. 17. She found that the dispute arguably fell within the scope of the arbitration clauses in the SFA and SAA, and therefore should be sent to arbitration. The arbitrator should determine its own jurisdiction, according to the "competence-competence" principle.

[4] The Appeal and Motion to Quash

[5] The appellant, Leeds, seeks to appeal this decision at this court, and the respondents, Tall Ships and Simon Fuller, move to quash the appeal on the basis that it is barred by s. 7(6) of the Arbitration Act.

[5] Statutory Bar to Appeal

[6] We agree that the appeal is barred by s. 7(6) of the Arbitration Act. That section provides that there is no appeal from a decision under s. 7(1) of the Arbitration Act to stay a proceeding in favour of arbitration. The motion judge's decision was made under s. 7(1) to stay the proceeding below in favour of arbitration, and there is no appeal from it.

[6] Appellant's Arguments

[7] The appellant makes several arguments why s. 7(6) of the Arbitration Act should not bar the appeal in this case. First, it submits that it was denied natural justice in the proceedings below because it was not given proper notice that the respondents would move to stay under the Arbitration Act. Because of this, the motion judge erred in relying on the Arbitration Act in her decision to stay. Second, it submits that the pith and substance of its claim is oppression under the Condominium Act, 1998, S.O. 1998, c. 19, and that the arbitration clauses cannot preclude its access to this statutory remedy.

No Denial of Natural Justice

[8] We do not agree that the appellant was denied natural justice at the proceeding below. Leeds relies on the fact that the respondents, in their notice of motion below, referred to r. 21.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, but not to the Arbitration Act as grounds for the motion to stay. Leeds argues that because the notice of motion did not mention the Arbitration Act, it did not have sufficient notice of this argument and was unable to properly respond to it.

[9] There was no denial of natural justice in this case. In their notice of motion, the respondents relied on Rule 21.01(3)(a). That Rule provides that an action may be stayed for lack of jurisdiction. Moreover, the notice of motion recited the arbitration provisions in the SFA and the SAA. It was also clear in the respondents' factum that they were relying on the Arbitration Act, and Leeds was served with this factum 13 clear days before the motion below. Leeds had the chance to respond to this argument both in its own factum and in oral submissions on the motion below. Furthermore, at no point during the proceedings below did Leeds argue that it had been taken by surprise by this argument or seek an adjournment of the motion. Its surprise seems to have emerged retrospectively in response to this motion to quash.

Motion Judge Correctly Applied the Test to Determine Whether the Disagreement Fell Within the Scope of the Arbitration Clauses

[10] We also do not agree that the motion judge erred in ordering a stay under s. 7(1) of the Arbitration Act. Leeds argues that the pith and substance of its claim is oppression under s. 135 of the Condominium Act, and this is a statutory remedy that cannot be precluded by the arbitration clauses in the SFA and SAA. However, the motion judge considered this argument and determined that Leeds' claims were arguably within the scope of the arbitration clauses.

[11] The motion judge correctly applied the test from Haas v. Gunasekaram, 2016 ONCA 744, 62 B.L.R. (5th) 1 in deciding whether to stay the proceeding in favour of arbitration. She considered Leeds' argument that its claims were, in pith and substance, oppression, and notwithstanding, determined that the claim arguably fell within the scope of the arbitration clause. To the extent that the arbitrator's jurisdiction was still arguable, it was up to the arbitrator to determine the scope of its own jurisdiction.

[12] The motion judge cited the comments of Mew J., who decided a related proceeding between the same parties, that "courts should guard against allowing the mere invocation of an oppression remedy under s. 135 to avoid the consequence of an arbitration clause." She also noted that, in a different proceeding covering similar issues between the same parties, Leeds itself had taken the position that similar issues were not oppression and were properly submitted to arbitration.

[13] We see no reason to depart from the determination of the motion judge on how to characterize the appellant's claims. Leeds has not established that the pith and substance of its claim is oppression and falls outside the scope of the arbitration clauses. As counsel for the respondents observed, Leeds still has the opportunity to raise the proper characterization of its claims in front of the arbitrator, and the arbitrator shall then determine its own jurisdiction.

[14] In conclusion, the motion to quash is granted. There is no appeal from the motion judge's decision to stay the proceeding below under s. 7(1) of the Arbitration Act, because it is barred by s. 7(6) of the Act. There was no denial of natural justice, and no error in the motion judge's decision to stay the proceeding in favour of arbitration, that would render s. 7(6) inapplicable.

Costs

[15] We allow the motion to quash and award costs to the moving parties fixed in the amount of $15,000, inclusive of disbursements and applicable taxes.

"S.E. Pepall J.A."

"M. Tulloch J.A."

"M.L. Benotto J.A."