CITATION: Apollo Building Group et al. v. Rabkin et al., 2015 ONSC 1329
COURT FILE NO.: CV-15-00519381-0000
DATE: 20150327
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
APOLLO BUILDING GROUP and PAUL JAFER POUR
Applicant
– and –
ERIC RABKIN and PENNY AHLSTROM
Respondent
Joseph Markin, for the Applicants
Michael Novak, for the Respondent
HEARD: February 26, 2015
Dow, j
reasons FOR JUDGMENT
[1] The applicants, Apollo Building Group Ltd. (“Apollo”) and its operator, Paul Jafer Pour (“Pour”), seek to set aside the arbitration award of Mr. W.A. Derry Millar dated November 21, 2014, thereby permitting their action commenced by statement of claim issued January 7, 2014, (Exhibit F to the affidavit of Pour sworn January 16, 2015) to proceed to trial. The applicants submit that the ADR Chambers Expedited Arbitration Rules, which governed this dispute, failed to provide them with an equal and fair opportunity to present their case and respond to the other parties’ cases, contrary to s. 19 of the Arbitrations Act, S.O. 1991, c 17. The respondents, Eric Rabkin (“Mr. Rabkin”) and his spouse, Penny Ahlstrom (“Ms. Ahlstrom”), resist the application on two grounds: (1) that the form of arbitration was agreed to in the Residential General Contractor Contract (“the contract”) executed by the parties September 17, 2012, (Exhibit A of Pour’s affidavit); and (2) that this application, issued January 9, 2015, was issued after the expiry of the 30 day limit, specified in s. 47(1) of the Arbitrations Act, for an appeal or application to set aside the arbitration award.
Background - Facts
[2] The key facts can be summarized as follows:
a) the contract provided for about $300,000 of renovation to the respondents’ home in King City, for which Apollo was to be paid a $50,000 fee;
b) the contract was proposed by Pour but amended at the suggestion of Mr. Rabkin, a lawyer, to include clause 13: “Dispute Resolution – Arbitration Agreement” in which “the parties agree that the ADR Chambers Expedited Arbitration Rules give the parties a fair opportunity to present their case and respond to the case of the other side”;
c) the Expedited Arbitration Rules (Exhibit B to Pour’s affidavit) place restrictions on the length of the hearing, the number of witnesses, the duration of examination and cross examination, and the materials which can be submitted;
d) the work was not performed in a satisfactory or timely way by Mr. Pour and Apollo and their services were terminated by Mr. Rabkin;
e) Apollo commenced an action on January 7, 2014.
f) Mr. Rabkin took the position that any disputes had to be resolved by way of arbitration, given clause 13 of the contract, and issued an initial Notice to Arbitrate dated January 9, 2014, (Exhibit H of Mr. Pour’s affidavit). This arbitration did not proceed because Apollo/Mr. Pour refused to pay its 50 percent share of the requisite $15,000 fee (see letter dated February 28, 2014, from ADR Chambers to the parties – Exhibit C of Mr. Rabkin’s affidavit sworn February 18, 2015);
g) Apollo/Mr. Pour objected to the limitations imposed by the Expedited Arbitration Rules and sought to expand the hearing (as permitted by ADR at their sole discretion; see s. 27 of the Expedited Rules and set out in ADR’s letter February 14, 2014, Exhibit I to Mr. Pour’s affidavit) to which Mr. Rabkin would not agree;
h) a second Notice to Arbitrate was issued August 25, 2014, for which Mr. Rabkin paid the entire $15,000 fee. In that notice, Mr. Rabkin claimed damages in the amount of $749,100, element of which was about $180,000 in expenses incurred over the agreed upon budget;
i) the arbitration proceeded October 30, 2014, during which Apollo/Mr. Pour raised the issue of the restrictions described above. The submission was considered and rejected by the arbitrator (paragraphs 17-26 of the arbitration – Exhibit N to Pour’s affidavit);
j) in the second arbitration Mr. Rabkin sought and itemized over $200,000 of damages (paragraphs 219-233 of the arbitration decision) and Apollo/Mr. Pour sought payment of its $50,000 contractor’s fee (paragraphs 203-205 of the decision);
k) in a 56-page decision dated November 21, 2014, the arbitrator found the claims of Mr. Rabkin failed and these were dismissed. The claims of Apollo/Mr. Pour also failed and were dismissed. Costs were reserved;
l) following receipt of submissions from both parties the claimant, Mr. Rabkin was held responsible for the cost of the arbitration, being the $15,000 deposited to ADR, by a written decision dated December 1, 2014 (Exhibit O to Pour’s Affidavit);
m) Mr. Rabkin then brings a motion under s. 7 of the Arbitrations Act to stay the court action commenced by Apollo/Mr. Pour in January 2014 and scheduled for a five-day trial commencing January 12, 2015;
n) the motion by Mr. Rabkin was heard on December 30, 2014, by Justice Stinson, who accepted that the arbitration award rendered the issues in the action res judicata. In paragraph 17 of his decision, he also indicated he considered the argument by Apollo/Mr. Pour “that the arbitration clause is invalid” and rejected same (Exhibit B to Mr. Rabkin’s affidavit). Justice Stinson stated (at paragraph 22) that Apollo/Mr. Pour were bound by its outcome until Apollo/Mr. Pour were successful in setting it aside. Accordingly, they now seek to do so.
Issue 1: Quality and Fairness
[3] Apollo argues that the Expedited Arbitration Rules’ restrictions on the number and type of witnesses, duration of testimony, and availability of experts violate s. 3 of the Arbitration Act, which does not permit the parties to contract out of the s. 19 requirement that “Each party shall be given an opportunity to present a case and to respond to the other parties’ cases as part of equal and fair treatment.” However, clause 13 of the Residential General Contractor contract, inserted at Mr. Rabkin’s request to what would otherwise be described as Apollo’s document, expressly states the parties agree to the fact that the Expedited Arbitration Rules give “the parties a fair opportunity to present their case and respond to the case of the other side.” In these circumstances, I am not prepared to set aside that agreement. Apollo, as the contractor, would generally be thought to have the upper hand in negotiating the terms of the contact. The fact that the homeowner is a lawyer does not change that dynamic. It was certainly open to Mr. Pour to consider the source of the proposed clause and to reflect on its repercussions, if not to seek his own legal advice before agreeing to it.
[4] As a result, the court concludes this application fails on the issue of fairness. It is noted that this analysis, the principles considered, and the conclusion reached accord with those of both the arbitrator and Justice Stinson.
Issue 2: Time Limit
[5] Section 47 of the Arbitration Act provides that the parties have 30 days after they “receive the award” to appeal the award or make an application to set aside the award. Apollo had the award on or shortly after November 21 and the cost decision on or shortly after December 1, 2014. There was no suggestion by Apollo that it did not receive the award in a timely way or less than 30 days before it issued this application January 9, 2015.
[6] Apollo argues that the effect of s. 7 is to provide additional time, that is, it was not until Mr. Rabkin’s motion to stay Apollo’s action was heard and decided by Justice Stinson on December 30 that time began to run. I disagree.
[7] In reviewing the reasons of Justice Stinson, I note that he alerted Apollo to the 30-day limit (in paragraph 17 of his reasons). Specifically, he referred to s. 47 and the 30-day time limit and expressly did “not pre-judge the prospect of a potential motion by Apollo to somehow extend the time within which to appeal or to commence an application to set aside the award.”
[8] This application record does not contain in the relief sought any request to extend the time for appeal or to set aside the arbitration award. Had such a request been made, as counsel for Mr. Rabkin submitted, I would have to then consider whether the law permits same.
[9] Counsel for Mr. Rabkin directed the Court to Wong v. Wires Jolley LLP, 2010 ONSC 4835 where Justice A. D. Grace concludes there was no authority under the Arbitrations Act to extend the time limit noting the power to do so should be expressly given (as exists under s. 39 of the Arbitration Act with respect to the time within which an arbitral tribunal is required to make an award). I agree. As a result, this application also fails on this ground.
Costs
[10] Mr. Rabkin is entitled to costs and submitted a claim totaling $6,454.96. Counsel for the applicant did not have available a cost outline, as required, and reviewed the bill provided by counsel for Mr. Rabkin. Counsel for Apollo did not make strenuous objections to the quantum claimed. The amount seeks costs on a full indemnity scale. I would modestly reduce the amount being claimed and fix costs at $5,000, inclusive of fees, disbursements, and HST.
Mr. Justice G. Dow
Released: March 27, 2015
CITATION: Apollo Building Group et al. v. Rabkin et al., 2015 ONSC 1329
COURT FILE NO.: CV-15-00519381-0000
DATE: 20150327
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
APOLLO BUILDING GROUP and PAUL JAFER POUR
Applicant
– and –
ERIC RABKIN and PENNY AHLSTROM
Respondent
REASONS FOR JUDGMENT
Mr. Justice G. Dow
Released: March 27, 2015