Peters v. D’Antonio, 2016 ONSC 7141
CITATION: Peters v. D’Antonio, 2016 ONSC 7141
COURT FILE NO.: CV-15-22960
DATE: 20161118
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Robert Peters
Applicant
– and –
Marco D’Antonio and Mike Valente
Respondents
James H. Cooke, for the Applicant
Jessica A. Koper, for the Respondents
HEARD: November 14, 2016
Thomas J.:
The Application
[1] This is an application pursuant to sections 45 and 46(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 (the “Arbitration Act”) to appeal or set aside an arbitration award dated October 15, 2015, made pursuant to the Agents Policy and Procedure Manual of Valente Real Estate (the “Manual”).
[2] At the hearing of the application, the applicant abandoned his request for leave pursuant to s. 45 and so these reasons deal only with the merits of the s. 46 relief claimed.
Background
[3] The applicant, Robert Peters (“Peters”), and the respondents, Marco D’Antonio (“D’Antonio”) and Michael Valente (“Valente”), all work in the real estate business in Windsor and the surrounding area.
[4] In or around January 2013, the parties entered into a verbal agreement to work together to sell commercial and multi-family properties in the Windsor-Essex area with Tony Miranda as the buyers’ real estate agent, and to split the commission equally between the three of them.
[5] Based on the agreement, the parties worked on several deals involving the sale or potential sale of various commercial properties and multi-family properties in the Windsor area.
[6] The sale of the commercial property located at 156 Chatham Street, Windsor, with Tony Miranda as the listing real estate agent, resulted in a dispute with respect to the appropriate split of the commission and whether their agreement applied to that transaction. It was the applicant’s position that the commission should be 100 per cent attributed to him, while the respondents believed that the commission should be split equally between the three agents.
[7] As a result, the parties consented to participate in an arbitration offered by Remo Valente Real Estate.
[8] The Manual indicates that if any dispute with respect to commission should arise, such dispute will be referred to an arbitration committee for a final and binding decision.
[9] The parties signed an arbitration agreement dated October 15, 2016, and an arbitration, pursuant to the Manual, was held on the same day, before a panel of three arbitrators. The arbitrators were all real estate agents of Remo Valente Real Estate. The arbitration agreement signed by the parties also indicates that the arbitration shall be final and binding on the parties and that the parties “agree to be bound by the outcome.”
[10] The three parties to the arbitration made submissions and questioned each other all as part of the arbitration process.
[11] The arbitration committee released a decision on the same day, October 15, 2015 (the “Award”).
[12] Their decision in its entirety is set out below:
RESULTS OF THE ARBITRATION HEARING HELD THURSDAY, OCTOBER 15TH, 2015
BETWEEN:
Robert Peters
Marco D’Antonio
Mike Valente (Manor Realty)
in regards to the Commissions received related to the sale of 156 Chatham St. West, Windsor, Ontario
It is the unanimous decision of the Arbitration Committee as follows:
As to commissions related to above-mentioned transaction, all commissions received shall be split equally (1/3 each) between Bob Peters, Marco D’Antonio and Mike Valente.
Signed by the Arbitration Committee this 15th day of October, 2015
Issue
[13] The issue is quite simply, what is the effect, if any, of a total absence of reasons for this arbitration award?
Position of the Parties
[14] Counsel for the applicant argues that reasons for the arbitration finding are essential to the process. Reasons are required by s. 38 of the Arbitration Act and they are an important part of procedural fairness, especially to his client who was the losing party. In addition, he says they are essential in considering whether to apply for leave to appeal pursuant to s. 45(1).
[15] He maintains that this is not a case where I can imply reasons for the decision since I have no record to consider. In addition, it is not a case that I can send back to the arbitration committee since that decision is now over a year old and I have no information about the continued availability of the members of the panel and no idea if there is any record to which they could refer, to prompt their memories of how they came to their conclusion.
[16] As such, counsel for the applicant says, I must set aside the award.
[17] Counsel for the respondents argues that there must be a stated reason for needing the reasons for the arbitration award. She suggests that the rules of the arbitration made clear that the ruling would be final and binding. As a result, there can be no appeal and, therefore, no need to contemplate grounds for an appeal.
[18] While acknowledging the importance of reasons for any decision, counsel maintains they must be viewed in context. It is argued this was a very simple single issue. Counsel suggests the reasons can be implied from the positions taken by each of the parties on this simple issue.
[19] If I am inclined to find that the reasons are necessary, counsel for the respondents suggest I make use of s. 46(8) of the Arbitration Act and send the matter back to the committee and direct them to provide reasons for their award.
Analysis
[20] The relevant portions of the Arbitration Act are set out below. The limitation on court intervention is captured by s. 6:
Court Intervention limited
No court shall intervene in matters governed by this Act, except for the following purposes, in accordance with this Act:
To assist the conducting of arbitration.
To ensure that arbitrations are conducted in accordance with arbitration agreements.
To prevent unequal or unfair treatment of parties to arbitration agreements.
To enforce awards.
[21] The requirement of reasons is found in s. 38(1):
Form of award
- (1) An award shall be made in writing and, except in the case of an award made on consent, shall state the reasons on which it is based.
[22] The potential for leave to appeal on a question of law is set out in s. 45(1):
Appeal on question of law
- (1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave …
[23] Finally, s. 46 deals with setting aside an award or sending it back for specified reasons.
Setting aside award
(1) On a party’s application, the court may set aside an award on any of the following grounds:
The procedures followed in the arbitration did not comply with this Act.
Court may return award to arbitral tribunal
(8) Instead of setting aside an award, the court may remit it to the arbitral tribunal and give directions about the conduct of the arbitration.
[24] For very good reasons, it is not appropriate for courts to intervene in a completed arbitration process. That direction was discussed at para. 58 of Orgaworld v. The Corp. City of Ottawa, 2015 ONSC 318 (Orgaworld), drawing on a quote from Sharpe J.A. in Inforica Inc. v. C.G.I. Information Systems and Management Consultants Inc., 2009 ONCA 642, 97 O.R. (3d) 161 (C.A.):
It is clear from the structure and purpose of the Act in general, and from the wording of s. 6 in particular, that judicial intervention in the arbitral process is to be strictly limited to those situations contemplated by the Act. This is in keeping with the modern approach that sees arbitration as an autonomous, self-contained, self-sufficient process pursuant to which the parties agree to have their disputes resolved by an arbitrator, not by the courts. As Inforica states in its factum, "arbitral proceedings are presumptively immune from judicial review and oversight". The Act encourages parties to resort to arbitration, "require[s] them to hold to that course once they have agreed to do so" and "entrenches the primacy of arbitration over judicial proceedings ... by directing the court, generally, not to intervene": Ontario Hydro v. Denison Mines Ltd., [1992] O.J. No. 2948 (Gen. Div.), Blair J.
[25] The modern approach to the delivery of reasons can be traced to the decision of Binnie J. in R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869 (Sheppard). Dealing with a mere five lines of reasons for conviction in a criminal case from Newfoundland, Binnie J. said the following at para. 24:
[T]he requirement of reasons is tied to their purpose and the purpose varies with the context. At the trial level, the reasons justify and explain this result. The losing party knows why he or she has lost. Informed consideration can be given to grounds for appeal. Interested members of the public can satisfy themselves that justice has been done, or not, as the case may be.
[26] The view of the Supreme Court of Canada on the topic of reasons was modified by the Chief Justice in the Court’s 2008 decision in R. v. R.E.M., 2008 SCC 51, [2008] 3 S.C.R. 3. There, she adopted the functional approach to the adequacy of reasons. While agreeing with the three purposes set out in Sheppard above, the Chief Justice at para. 16 directed that the reasons must be considered in context with the evidence, the issues and arguments at trial.
[27] There is no doubt based on the progeny of Sheppard and R.E.M., that the duty to deliver reasons applies not just to criminal cases, but to family and civil trials and motions as well as rulings of boards and tribunals. In addition, it is statutorily mandated here.
[28] In addressing whether the considerations for leave to appeal pursuant to s. 45 really has any application in the context of this argument about an absence of reasons, let me consider briefly the argument that no appeal is possible.
[29] The respondents argue that both the arbitration agreement signed by the applicant and respondents and the terms of the Valente Real Estate Manual dictate that the decision of the committee was final and binding. The respondents rely on Highbury Estates v. Bre-Ex Limited, 2015 ONSC 4966 (Highbury Estates), and Orgaworld, as support for the proposition that an agreement that there shall be no appeal from a final and binding decision of an arbitrator includes an agreement that there will be no application for leave to appeal.
[30] I do not see the law on this point as being that clear. Prior to the coming into force of the Arbitration Act, there was no statutory right of appeal from an arbitration award. The cases that dealt with the simple phrase “final and binding” in the arbitration contract must be viewed in that light.
[31] In Highbury Estates and Orgaworld, the agreement stated that the award would be “final and binding and there shall be no appeal.” The phrase “and there shall be no appeal” is missing in the agreement I am considering.
[32] In Denison Mines Ltd. v. Ontario Hydro (2002), 2002 CanLII 20161 (ON CA), 58 O.R. (3d) 26 (C.A.), the Court considered an agreement that stated “all disputes arising in connection with this agreement shall be finally settled under the provisions of the Arbitrations Act….”
[33] Sharpe J.A. considered the significance of the 1991 legislative change and concluded the following at para. 16:
In my view, this case is distinguishable from Labourers' International Union of North America, Local 183 v. Carpenters and Allied Workers, Local 27(1997), 1997 CanLII 1429 (ON CA), 34 O.R. (3d) 472, 97 C.L.L.C. 220-057 (C.A.). In that case, the parties had entered into an arbitration agreement before the date the Act came into force, but the arbitration itself took place after the operative date of the Act. The arbitration agreement provided that the arbitration would be "final and binding" and was otherwise silent as to appeals. The applicant argued that since the arbitration agreement was silent on the question of an appeal, it could have recourse to the new s. 45(1) and apply for leave to appeal. This court rejected that submission, finding that the arbitration agreement had to be interpreted in light of legal regime
prevailing at the date it was written. When the parties entered the agreement, it was not necessary to exclude a right of appeal expressly. The words "final and binding" indicated an intention to exclude any right of appeal, and the parties could not be expected to have expressly contracted out of a legislative scheme that did not exist when they wrote the agreement. In the case at bar, the situation is different. The parties did turn their minds to the terms of the arbitration after the new Act came into effect. They entered a complete and comprehensive agreement that made no reference to the Sale Agreement or to rights of appeal. In these circumstances, the 1992 Act and the right to seek leave to appeal under s. 45(1) apply.
[34] As a result, it may be that the phrase “final and binding” may be insufficient to exclude a right of appeal (Commercial Arbitration in Canada: A Guide to Domestic and International Arbitrations, J. Kenneth McEwan and Ludmila B. Herbst, Canada Law Book, page 10-131).
[35] I cannot accept the respondents’ argument that this arbitration was so simple and so informal that I am able to imply reasoning for the award. It is without dispute that oral and written submissions were made and delivered and that the parties were examined before the committee. I have no record of that evidence or argument. It seems essential that the committee must have determined the respondents’ evidence on the terms of the agreement to split commissions was more credible than the applicant’s but I have no idea why.
[36] The respondents offer Highbury Estates and Palmieri v. Alaimo, 2015 ONSC 4336, as examples of arbitrations where the court could remedy deficient reasons by filling in the blanks from the record or sending it back to the arbitrator for a brief clarification. In Highbury Estates, there were some reasons although deficient. In Palmieri, Vallee J. found at para. 80 that “[t]here is also no doubt that the reasons for the finding of $656,000 in the Award are set out in writing in the Reproduction Estimate.” In that case, the Reproduction Estimate was a document before the court which arrived at the same conclusion as the arbitrator. Justice Vallee sent the award back to allow the arbitrator to tell the parties that that was, in fact, the case.
[37] I have no record to work with here and no document to seize as determinative of the issue.
[38] It also seems to be a dangerous practice to suggest that I can imply reasons where none exist simply because there is, in the view of one of the parties, a single simple issue to be decided.
[39] With regard to the stated issue in this application, I have found that the absence of reasons here is significant. It offends s. 38 of the Arbitration Act and that deficiency is captured by s. 6(1) and s. 46(1)(7) of that Act. It further offends the relevant common law requirements. The applicant here is entitled to know why his position on the arbitration did not prevail and to assess his options, if any. If an appeal results, the court requires reasons to review and other members of the public, perhaps those working in real estate, would benefit from the explanation of how the dispute was resolved.
[40] I have concluded that there is no escaping the necessity of reasons in this arbitration.
[41] Counsel for the respondents urged that if I were to reach that conclusion, I should not set aside the award but send it back to the committee members and direct them to provide reasons. Section 46(8) provides for that possibility. That was the result in Palmieri.
[42] I recognize that this committee was comprised of three Valente agents selected in accordance with the terms of the Manual. I have no other information about them. I do not know if they are still available. I do not know if they made notes and, if so, if they kept them. I have no evidence that any written record was prepared about what took place at the arbitration. I have no idea if they are in a position to recall how and why they reached the conclusion they did. Sending this matter back for reasons is not a viable option.
Conclusion
[43] For the reasons set out above, pursuant to s. 46 of the Arbitration Act, I am setting aside this award. If the parties cannot resolve costs, I will receive written submissions within 30 days of the release of these reasons limited to five (5) typed pages. If I do not receive submissions, there will be no costs order.
Original signed by Justice Bruce Thomas
Bruce Thomas
Justice
Released: November 18, 2016
CITATION: Peters v. D’Antonio, 2016 ONSC 7141
COURT FILE NO.: CV-15-22960
DATE: 20161118
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Robert Peters
Applicant
– and –
Marco D’Antonio and Mike Valente
Respondents
REASONS on application
Thomas J.
Released: November 18, 2016