Court File and Parties

Court File No.: CV 16-17610-00 Date: 2016 05 27 Superior Court of Justice – Ontario

Re: Carl Gorman, Applicant And: Wade Kosowan, 8108706 Canada Ltd., 7880413 Canada Inc., 929045 Canada Ltd., 9123555 Canada Inc., 1646850 Ontario Inc. and 1551164 Ontario Inc., Respondents

Before: Trimble, J.

Counsel: D. Palmer, for the Applicant D. Bains and E. Moghadamian for the Respondents

Heard: May 25, 2016

Endorsement

[1] On May 25, the parties argued the Respondent’s Motion to Stay Mr. Gorman’s Application.

[2] After I retired and began a review of the material filed and arguments made orally, three issues arose that require further submissions, including case law:

a) Presence of Non Parties to the USA:

[3] The Unanimous Shareholder Agreement of 8 April, 2012 names as parties to the Agreement Messrs. Gorman and Kosowan, 8108706 Canada Ltd., and 7880413 Canada Inc. The Application names as respondents the four parties to the USA, and four additional parties: 9290415 Canada Ltd., 9123555 Canada Inc., 1646850 Ontario Inc. and 1551164 Ontario Inc.

[4] The argument before me proceeded on the question of whether the subject matter of the Application fell within the arbitration clause of the USA. Neither lawyer addressed the question of whether the presence in the Application of four strangers to the Agreement affected the issue of whether the Application can or should be stayed.

[5] Does the fact that the Application lists as respondents four numbered companies that are not parties to the USA affect the analysis with respect to the Motion to Stay? If so, how?

b) Waiver:

[6] There is no dispute that Mr. Kosowan acted unilaterally by excluding Mr. Gorman from the Corporation. The dispute concerns, in part, his justification for so acting. Mr. Kosowan did not pursue the dispute resolution clause in the USA, clause 3.12. In response to my question about what steps he had taken since the outset of the issues with Mr. Gorman to invoke the dispute resolution provision in the USA, Mr. Bain indicated that given the short time since the Application was brought, the Motion to Stay was Mr. Kosowan’s first invocation of the dispute resolution provision in the USA.

[7] The Court of Appeal, in Woodcock, at paragraphs 31 and 32 appears to say that breach of an arbitration clause in an agreement is a matter for the arbitrator to decide.

[8] Mr. Gorman alleges, and Ricchetti, J. found that Mr. Kosowan’s acted without following the dispute resolution provisions of the USA. Is there case law that conflicts with Woodcock and says that a party who breached an agreement by not pursuing the dispute resolution/arbitration clause cannot rely on any other portion of the agreement?

[9] In this case, it might be argued that Mr. Gorman, too, acted without following the dispute resolution provisions of the USA. Apart from the question posed in the paragraph immediately above, is Mr. Kosowan’s act a waiver of the dispute resolution provision? Is Mr. Gorman’s Application in the Superior Court an acceptance of that waiver or has he waived his right to the arbitration provision?

c) Does the Claim for Oppression Relief under either the Canada Business Corporations Act and the Ontario Business Corporations Act affect the claim for a Stay, and if so, how?

[10] Mr. Gorman relies on 829194 Ontario Inc. v. Garibotti for the proposition that a claim for oppression relief under s. 248 of the Ontario Business Corporations Act is not an arbitral issue because it does not arise out of the agreement (although the acts giving rise to the claim might), but goes to the conduct of the affairs of the Corporation. Therefore, he argues, all issues are appropriately brought in an Application in order to prevent multiplicity of proceedings.

[11] The Arbitration Act, 1991, s. 17(1), however, gives the right to the arbitrator to determine his/her own jurisdiction. In light of this, is the appropriate disposition that the application be stayed until the arbitrator rules on his/her jurisdiction?

[12] Counsel should contact my judicial assistant to arrange a suitable date for counsel to make further submissions responding to these questions.

Trimble J. Date: May 27, 2016