SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-12-462174
DATE: 20130417

RE: ONTARIO MEDICAL ASSOCIATION, Plaintiff

AND:

WILLIS CANADA INC. and AVIVA CANADA INC., Defendants

BEFORE: Newbould J.

COUNSEL:
Peter H. Griffin and Brendan F. Morrison, for the plaintiff

Melissa Hogg, for Aviva Canada Inc.

Lauren Butti, for Willis Canada Inc.

HEARD: April 15, 2013

ENDORSEMENT

[1] The defendant Aviva Canada Inc. (“Aviva”) moves for an order staying this action on the grounds that the subject matter of the claim against Aviva is subject to an arbitration agreement. The plaintiff Ontario Medical Association (“OMA”) opposes the motion as it says it is not a party to the agreement to arbitrate.

[2] The OMA represents the political, clinical and economic interests of Ontario’s medical profession. Willis Canada Inc. (Willis”) carries on business as an insurance brokerage. Aviva carries on business as a provider of personal and commercial insurance.

Relevant contractual provisions

[3] In June 2004, Willis “For the Ontario Medical Association Portfolio” and Aviva entered into a “Broker/Agent Agreement” (the “June 2004 agreement”) by which Willis would broker Aviva insurance coverage to members of the OMA for 5 years commencing July 1, 2004. What Ontario Medical Association Portfolio constitutes is not defined in the agreement. The June 2004 agreement provided that Willis would collect the premiums and remit them to Aviva net of commissions to be paid to the OMA as set out in a commission schedule to the agreement. The OMA did not execute the June 2004 agreement.

[4] The schedule of commissions provided for an “Over-Ride (Sponsor Fee)” of 2% on the gross premiums, with a minimum payment of $500,000 annually to made by Aviva to the OMA. It provided that within ninety days “the parties (inclusive of the Ontario Medical Association)” would meet to commence negotiations to augment the current Over-Ride (Sponsor Fee) based on actuarially calculated profits/loss ratios.

[5] The June 2004 agreement contained an arbitration provision as follows:

3. Arbitration Where the parties disagree, any dispute between them arising out of this Agreement, but not specifically dealt with under the terms of this Agreement, shall be submitted to arbitration pursuant to the provisions of any applicable arbitration law, and the expense of such arbitration shall be borne equally by the broker/agent [Willis] and the Company [Aviva].

[6] An addendum to the June 2004 agreement was made on December 16, 2005 (the “2005 addendum”). It provided for a Variable Sponsor Fee which was to vary based on loss ratios. OMA, as well as Willis and Aviva, signed the addendum. The 2005 addendum stated in its preamble:

This Addendum is executed pursuant to and is attached to and forms part of the Broker/Agent Agreement for The Ontario Medical Association portfolio dated June, 2004 (the “Broker/Agent Agreement”). The Ontario Medical Association (“OMA”) joins this Addendum for purposes of Clause 3 below exclusively.

[7] Clause 3 provided:

3. Variable Sponsor Fee: OMA joins the Addendum as the beneficiary of the Company’s obligations contained in Clause Two of the Schedule of Commissions as amended hereby. Pursuant to instructions provided by the Broker/Agent, effective January 1st 2005 and continuing through the term of the Broker/Agent Agreement, and in direct reference to the aforesaid Clause Two, the Company agrees to pay to OMA a Variable Sponsor Fee in addition to the Over-Ride Sponsor Fee contained in said Clause Two. The Variable Sponsor Fee is based on the following criteria and is determined by the Variable Sponsor Fee percentage by the Gross Written Premium:

Loss Ration

Variable Sponsor Fee

Greater than 62.5%

0.0%

55% to 62.5%

0.5%

47% to 55%

0.75%

Less than 47%

1.0%

[8] The addendum also contained a clause as follows:

4. No other Amendments to the Broker/Agent Agreement: Except as provided in this Addendum, the Broker/Agent Agreement remains in full force an (sic) in effect in accordance with its original tenor.

Analysis

[9] Pursuant to section 7(1) of the Arbitration Act, 1991, a court must stay an action that has been commenced where the parties are subject to an arbitration agreement.

[10] Under the law of Ontario, it is not for the court on an application for a stay of proceedings to reach any final determination as to the scope of the arbitration agreement or whether a particular party to the legal proceedings is a party to the arbitration agreement. Those are matters within the jurisdiction of the arbitral tribunal. Only where it is clear that the dispute is outside the terms of the arbitration agreement, or that a party is not a party to the arbitration agreement, should the court reach any final determination in respect of such matters on an application for a stay of proceedings. Where it is arguable that the dispute falls within the terms of the arbitration agreement or that a party to the legal proceedings is a party to the arbitration agreement, the stay should be granted and those matters left to be determined by the arbitral tribunal. See Dalimpex Ltd. v. Janicki (2003), 2003 34234 (ON CA), 64 O.R. 3d 737, para. 21(C.A.) and Dancap Productions Inc. v. Key Brand Entertainment Inc. (2009), 2009 ONCA 135, 55 B.L.R. (4th) 1 (Ont.C.A.) at paras. 32-33.

[11] OMA says that it is clear that it is not a party to the arbitration agreement contained in the June 2004 agreement and that, as set out in the preamble to the 2005 addendum, it joined the 2005 addendum for purposes of clause 3 exclusively.

[12] In my view it is arguable that OMA is a party to the arbitration agreement contained in the June 2004 agreement. There are a number of reasons for this, although I point out that I make no determiniation as to whether any of the reasons would suffice to make the OMA a party to the arbitration agreement. That will be a matter for the arbitrator.

[13] The June 2004 agreement is stated at the outset to be an agreement between Aviva and Willis “For the Ontario Medical Association Portfolio”. The commission schedule to the June 2004 agreement provides that “the parties (inclusive of the Ontario Medical Association)” will negotiate to augment the current Over-Ride (Sponsor Fee). That does not say that the parties “as well as” the OMA will negotiate, and one reading of it arguably is that the OMA was a party as a result of Willis making the agreement “for the Ontario Medical Association Portfolio”.

[14] The 2005 addendum by its terms became part of the June 2004 agreement. Clause 3 of the 2005 addendum by its terms amends the commission schedule in the June 2004 agreement. It provides that Aviva “agrees to pay to OMA a Variable Sponsor Fee in addition to the Over-Ride Sponsor Fee contained in” the commission schedule to the June 2004 agreement. That is, by the 2005 addendum, the OMA became a party to a direct covenant from Aviva to pay to OMA both the new Variable Sponsor Fee and the old Over-Ride (Sponsor Fee). It thus became a party to the commission schedule in the June 2004 agreement which is a part of the June 2004 agreement. Arguably, the OMA thus became a party to the June 2004 agreement and the arbitration clause contained in it.

[15] In this action the OMA claims breach of contract against Aviva, and has pleaded that the contract is the 2005 addendum which formed part of the June 2004 agreement. It claims that Aviva has breached its contract to make payments covered by the June 2004 agreement. That is, it claims that it is a party to the June 2004 agreement. Arguably that is inconsistent with its position that it is not a party to the arbitration provision contained in the June 2004 agreement.

[16] The arbitration provision in the June 2004 agreement begins with the words “Where the parties disagree”. It is a question of interpretation whether the word “parties” can be interpreted to include the OMA. In my view it is arguable and should be determined by an arbitrator appointed under the June 2004 agreement.

Conclusion

[17] The motion by Aviva to stay the action against it is granted. Aviva is entitled to its costs. If these cannot be agreed, brief written submissions along with a cost outline may be made by Aviva within 10 days and the OMA shall have 10 further days to make brief written reply submissions.

Newbould J.

Date: April 17, 2013