CITATION: Basandhi v. Patel, 2016 ONSC 7556
COURT FILE NO. 210/16 (Peterborough)
DATE: 20161202
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Minakshi Basandhi
Applicant
– and –
Kalpesh Babubhai Patel, and 2484276 Ontario Inc. operating as “Kitchen Kings”
Respondents
Rakesh Basandhi for the applicant
No one appearing for the respondents
Heard: November 10, 2016
Bale J.:
Introduction
[1] Minakshi Basandhi and Kalpesh Babubhai Patel are parties to a unanimous shareholder agreement in relation to 2484276 Ontario Inc. which operated a restaurant in Peterborough with the name “Kitchen Kings”.
[2] A dispute arose between the parties as a result of Patel’s failure to keep proper books and records, and the dispute was submitted to arbitration by Basandhi, pursuant to Article 14 of the agreement. In the meantime, the restaurant had closed, and Basandhi took the position that Patel was responsible for the closure.
[3] The issues submitted to arbitration were whether Patel had breached certain provisions of the shareholder agreement, and if so, what remedies Basandhi was entitled to.
[4] The remedy claimed by Basandhi was an award of damages, in the following amounts:
• $60,000 for loss of income resulting from the closure of the restaurant;
• $50,000 for damages to her reputation, and that of her husband;
• $15,000 for stress suffered by her, her husband, and her two sons, as a result of Patel’s conduct; and
• $10,000 for income lost by her, and her husband, as a result of having to be away from their law practice in India, in order to conduct this litigation in Ontario.
[5] The arbitration hearing was held on September 6, 2016, and the arbitrator rendered a decision on September 8, 2016. In his decision, the arbitrator held that the unanimous shareholder agreement was invalid, that Patel was the sole owner of the shares of the corporation, and that Basandhi was entitled to damages in the amount of $10,000, on a quantum meruit basis.
[6] Basandhi now applies to this court under section 46 of the Arbitration Act, 1991, for an order setting aside the arbitration award. In particular, Basandhi relies upon the grounds for setting aside an arbitral award contained in paragraphs 3 and 6 of subsection 46(1) of the Act, which are as follows:
The award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement.
The applicant was not treated equally and fairly, was not given an opportunity to present a case or to respond to another party’s case, or was not given proper notice of the arbitration or the appointment of an arbitrator.
Analysis
Whether the award contains a decision on a matter that is beyond the scope of the agreement
[7] Basandhi’s argument under paragraph 3 of subsection 46(1) of the Act is that the in holding the shareholder agreement to be invalid, the arbitrator decided a matter that was beyond the scope of the arbitration clause in the agreement. As a result, it is argued, the arbitrator failed to consider an appropriate award of damages for breach of the agreement.
[8] I agree with Basandhi’s argument on this point. The issue of the validity of the shareholder agreement was not submitted to arbitration, and neither party argued that the agreement was invalid.
Whether Basandhi was given an opportunity to respond to Patel’s case
[9] Basandhi’s argument under paragraph 6 of subsection 46(1) of the Act is that as a result of the arbitrator allowing Patel to file, on the day of the hearing, an arbitration brief consisting of a large and unsorted pile of business records, she was denied a fair opportunity to respond to his case.
[10] On this issue, Rakesh Basandhi, arguing the application upon behalf of his wife, conceded that it was unlikely that Patel’s late filing of the business records resulted in any prejudice to her case. It is therefore not necessary for me to consider this issue.
Relief requested
[11] In addition to an order setting aside the arbitral award, Basandhi asks that this court reverse the decision of the arbitrator, and award the damages for breach of the shareholder agreement that she claimed in the arbitration. However, on an application under s. 46 of the Arbitration Act, 1991, I do not have jurisdiction to do so. The court’s jurisdiction under section 46 is restricted to setting aside the award, or remitting the award to the arbitrator, with directions about the conduct of the arbitration. If the court sets aside the award, it may also remove the arbitrator and give directions about the conduct of the arbitration.
[12] In support of his request that I reverse the decision of the arbitrator and award damages, Basandhi points to the jurisdiction given to the court on an appeal under section 45 of the Act which provides, in subsection 45(5), that the court may confirm, vary or set aside the award. However, a variation of the award is not available under section 46, and Basandhi has no right of appeal – Article 14.3 of the arbitration agreement provides that there be no appeal from any decision of the arbitrator.
Disposition
[13] An order setting aside the arbitral award may or may not be in the applicant’s best interests. She will therefore have 90 days from the date of these reasons to elect whether to enforce the award, or to have it set aside. In the event that no election is made within that time, an order will issue that it be set aside.
[14] The applicant will have her costs of this application, payable by the respondent Patel, and fixed in the sum of $2,500.
“Bale J.”
Released: December 2, 2016
CITATION: Basandhi v. Patel, 2016 ONSC 7556
COURT FILE NO. 210/16 (Peterborough)
DATE: 20161202
ONTARIO
SUPERIOR COURT OF JUSTICE
Between:
Minakshi Basandhi
Applicant
– and –
Kalpesh Babubhai Patel, and 2484276 Ontario Inc.
Respondents
REASONS FOR JUDGMENT
Bale J.
Released: December 2, 2016