Court File and Parties

COURT FILE NO.: CV-18-00599231 DATE: 2019/01/15 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: FCA Canada Inc., Applicant AND: Christine Lamontagne, Respondent

BEFORE: Justice Spies

COUNSEL: R. Bevan Brooksbank, for the Applicant, FCA Canada Inc. Lauren Ray for the Respondent, Christine Reid-Lamontagne

HEARD: November 19, 2018

Endorsement

Overview

[1] FCA Canada Inc. ("FCA") brings this application to set aside an award of an arbitrator dated May 5, 2018 (the “Final Award”) under an arbitration agreement designed to resolve small disputes between consumers and major automotive vehicle manufacturers. The applicant is the manufacturer of a 2013 Dodge Ram truck (the "Vehicle") that the respondent, Christine Reid-Lamontagne ("Lamontagne"), purchased brand new on August 29, 2013 from an Ontario Chrysler Jeep Dodge (the "Authorized Dealer").

[2] Pursuant to s. 12.1 of the arbitration agreement, the decision of the Arbitrator is final and binding on both parties, subject to the “very limited rights” that Lamontagne and the Manufacturer have to seek an examination of the decision by a court under applicable provincial legislation.

Facts

[3] When Lamontagne purchased her Vehicle, the Authorized Dealer presented her with options for features. Such features included a remote starter (the "Starter"). Lamontagne agreed to purchase the Vehicle on the understanding that it would include the Starter. The Starter was in her Vehicle when she took delivery of it.

[4] Lamontagne has experienced a number of ongoing problems with the Vehicle (the "Symptoms"). As a result, she initiated an arbitration claim (the "Claim") under the Canadian Motor Vehicle Arbitration Plan ("CAMVAP").

[5] CAMVAP is an alternative dispute resolution program whereby disputes between automobile manufacturers and their customers can be resolved through arbitration. It is intended to be an inexpensive, expeditious alternative to the courts that does not require consumers to have legal counsel. The parties consented to this process in an Agreement for Arbitration (the "Arbitration Agreement).

[6] The provisions of the Arbitration Agreement include:

2.1. Arbitration means that You and the Manufacturer both agree to accept the decision of an impartial person (the Arbitrator) who will listen to both sides of the case, weight the evidence, and make a decision that is final and binding on both You and the Manufacturer, subject to Section 12.

2.2. The Arbitrator will decide all questions of fact, law, procedure and evidence that arise in the case.

4.1. To be eligible for the CAMVAP program, Your dispute must fall within a category listed under Section 4.2. In addition, You and Your Vehicle must meet the other eligibility criteria under Section 4.3 and Your dispute must not be excluded under Section 4.4.

4.2. You can arbitrate disputes relating to:

4.2.2. Allegations of a Current Defect in vehicle Assembly or Materials specific to Your Vehicle as delivered by the Manufacturer to an Authorized Dealer. [Emphasis added]

4.4. You cannot arbitrate disputes:

4.4.2. Involving Claims or allegations of a defect in the design of Your Vehicle or the design of any of the Materials in Your Vehicle;

4.4.5. Involving Claims strictly relating to a dispute between You and an Authorized Dealer;

4.4.15. Relating to any Claim or allegation of defect, in respect of parts, components, or accessories which were not authorized by the Manufacturer and were not ordered and installed by the Manufacturer or an Authorized Dealer at the Time that Your Vehicle was sold to the original retail Lamontagne;

4.5. Eligibility Disputes

4.5.1. If preliminary matters are raised with respect to eligibility of Your Vehicle for the Plan, CAMVAP may, at the Provincial Administrator’s discretion, select and appoint an Arbitrator to make a determination about eligibility. The hearing regarding eligibility will be normally held by teleconference.

6.4. The Arbitrator may determine that:

6.4.1. The Manufacturer has no liability with respect to Your Claim; or

6.4.2. In accordance with the terms set out in this Agreement, Your Claim is not eligible for arbitration, and that he or she has no jurisdiction to hear the matter or to make an award with respect to your Claim.

18.2. Authorized Dealer – An automobile dealer who has been appointed by the Manufacturer as a dealer authorized to sell Your Vehicle.

18.7. Current Defect –A defect in your Vehicle that you allege:

(i) is currently causing symptoms in Your Vehicle; and

(ii) has not been repaired properly.

18.15. Materials - The parts and components that were used in the assembly of Your Vehicle by the Manufacturer and the parts and components that were delivered by the Manufacturer to an Authorized Dealer and installed on Your Vehicle by an Authorized Dealer.

[7] The Claim was submitted to arbitration (the "Arbitration") before an arbitrator appointed by CAMVAP (the "Arbitrator"). During the Arbitration, FCA was represented by a manager with decades of experience in CAMVAP arbitrations. Lamontagne was self-represented.

[8] On September 18, 2017, FCA questioned whether the Claim was eligible for Arbitration on the grounds that it had not been given an opportunity to resolve the dispute. The Arbitrator convened a teleconference on eligibility. He then granted a consent award confirming that Lamontagne agreed to make her Vehicle available for inspection by FCA and FCA agreed that the Vehicle was “now eligible for the CAMVAP process” (the "First Consent Award").

[9] FCA inspected the Vehicle. Lamontagne submitted videos evidencing some Symptoms. The Arbitrator then directed, with FCA's consent, that the Claim proceed to a hearing on the merits on December 14, 2017 (the "Second Consent Award").

[10] At the merits hearing, the Arbitrator and the parties inspected the Vehicle. Certain Symptoms were evident. FCA requested another opportunity to inspect the Vehicle. Lamontagne again consented. This agreement was endorsed by the Arbitrator in a consent order dated December 18, 2017 (the "Third Consent Award"). Accordingly Lamontagne provided FCA's representative with the original keys for her Vehicle that she received when she took delivery of it from the Authorized Dealer. FCA admits that once its representative took possession of these keys it came to their attention that there was an aftermarket starter installed on the Vehicle.

[11] In February 2018, FCA advised the Arbitrator of its position that the Starter was an "aftermarket" part and that FCA would not conduct any further inspections of the Vehicle until it was brought to "original equipment specifications". FCA's position was that these specifications required the removal of the Starter at Lamontagne’s cost.

[12] The problem is that pursuant to s. 13.1 of the Arbitration Agreement, Lamontagne was not required to pay for "any of the costs relating to the arbitration of the Claim", as the costs are fully paid by participating Manufacturers including FCA. Lamontagne did not object to the removal of the Starter, but as the Starter came with her Vehicle, her position was that FCA should bear the cost.

[13] The parties agree that the Starter and its installation and their costs were not disclosed on the Purchase Agreement to Lamontagne as they were built into the purchase price of the Vehicle. Accordingly Lamontagne did not know of or approve of the installation of an aftermarket part. In its factum, FCA alleges that Lamontagne agreed that the Starter was an unauthorized aftermarket part and that there is no FCA authorized remote starter available for the Vehicle but that is not correct. This was the position of FCA at the Arbitration. In fact, the Arbitrator concluded that the Starter was authorized by FCA, a conclusion FCA challenges.

[14] Following FCA's refusal to conduct further inspections, the Arbitrator elected to exercise his power under the Arbitration Agreement to order a technical inspection of the Vehicle by an independent technical inspector (the "Inspection Order"). The Inspection Order sought answers to a number of questions; one was identifying what role, if any, the Starter had in the Symptoms.

[15] The technical inspection took place on March 5, 2018. FCA provided the technical inspector with information regarding the installation of the Starter including an email from the Authorized Dealer advising that the Starter was "aftermarket" and that it was installed by a company called Nu-Tek, and a copy of the invoice from Nu-Tek (“Invoice”). This Invoice was made out to the Authorized Dealer, and was rendered months after the installation of the Starter took place. Following the technical inspection, the technical inspector released his report dated March 19, 2018 (the "Report").

[16] The Report acknowledged that the Symptoms were intermittent in nature. It confirmed that the Vehicle's Starter was "supplied and installed on a sublet basis" by the Authorized Dealer, i.e. , the Authorized Dealer's agent installed the Starter. As the Starter was connected to the Vehicle's main electrical system and designed to interact with the Vehicle’s lighting, door-lock and engine operation systems and an activation of an authorization code appeared not to have occurred, the Report concluded that:

[b]ecause these systems are largely connected to the DTC [error] codes...it is in our opinion reasonable to consider that a defect in the installation or operation of the [Starter] may be influencing and or responsible for individual and or all of the remaining symptoms... [Emphasis added]

[17] The Report recommended the removal of the Starter in order to facilitate further testing . It is significant that the Report did not reach any conclusion of the likelihood of the Starter's role in the Symptoms present in the Vehicle other than the fact that it was a possibility. The Report did not state that this was the likely cause of the Symptoms as submitted in the applicant’s factum.

[18] The parties had the opportunity to provide written responses with respect to the Report to the Arbitrator before the Final Award was rendered. FCA’s response was that any cost relating to the removal of the Starter should not be the responsibility of the manufacturer because their evidence “clearly shows that the aftermarket remote starter system was not installed or approved by the manufacturer.”

[19] The Arbitrator had a copy of the Invoice and the Report and asked for a copy of the Purchase Agreement from the parties. After he received this he asked for further clarification about the Starter. In that clarification the parties agreed that since there was no separate pricing for the Starter on the Purchase Agreement that this aftermarket installation was inclusive of the sale price of this Vehicle.

[20] FCA's position before the Arbitrator was that the Vehicle was operating as designed or that alternatively the Symptoms were the result of something other than a "Current Defect" of assembly/materials in the Vehicle and that it did not 'authorize' the installation of the Starter in the Vehicle. FCA argued that it should not have to pay for the removal of the Starter from the Vehicle. I agree with counsel for the respondent that this was a substantive defence on the merits, not a jurisdictional objection.

[21] Lamontagne submitted that the Symptoms are a result of defects of assembly/materials present in the Vehicle and that the Starter should be removed at FCA's cost. She stated that she had not been advised at the time of purchase that the Starter was not an "original equipment manufactured" part or of the circumstances of its installation, and concluded:

"It is [not]... my responsibility for how the dealership conducts business, or any short cuts they make to sell a truck. They are there to represent the manufacturer [FCA] and thus this should be the manufacturer's responsibility."

Final Award

[22] The Arbitrator determined the merits of the Claim in an award dated May 5, 2018 (the "Final Award").

[23] In the Final Award, which is ten pages long, the Arbitrator began by observing that FCA's objections to eligibility were satisfied in the Consent Awards and that there were no further eligibility objections. This is a key finding that I will come back to. Turning to the merits, the Arbitrator framed his inquiry for the dispute as follows: "Is there a current defect of assembly/materials present in this Vehicle and if so, what remedy would be appropriate?"

[24] The Final Award quoted extensively from the Report, including that the Symptoms were intermittent, the inspection revealed active and historical DTC codes in the Vehicle, the Starter was supplied and installed on a sublet basis by the Authorized Dealer, and the opinion in the Report that it was reasonable to consider that a defect in the installation and/or operation of the Starter " may be influencing and/or responsible for individual and/or all the remaining symptoms" in the Claim. [Emphasis added] Again it is important to note that the Arbitrator did not find that the Starter was the “likely cause” of the Symptoms, as submitted in the applicant’s factum.

[25] The Arbitrator noted that he had personally observed some of the Symptoms in the Vehicle when he inspected the Vehicle at the hearing on December 14, 2017. He found that the presence of DTC codes related to some Symptoms corroborated Lamontagne's testimony and video evidence. This evidence was also consistent with his firsthand observations.

[26] The Arbitrator underscored that, in order for Lamontagne to succeed, as set out in s. 4.2.2 of the Arbitration Agreement, she must establish "a current defect in vehicle assembly or materials specific to your vehicle as delivered by the manufacturer to an authorized dealer." As the Arbitration Agreement does not define the term "defect", the Arbitrator referred to its ordinary dictionary meaning, as well as the definition of a "Current Defect" in s. 18.7 of the Arbitration Agreement and he confirmed that s. 18.7 states that a defect in the design of any materials is not a Current Defect.

[27] In his reasons, the Arbitrator noted the case was challenging because of the "difficultly in relating particular symptoms to particular defects". Nevertheless he found, after considering all of the evidence that the “Consumer has established on a balance of probabilities, current defects of assembly/materials in this vehicle.” In reaching this conclusion, the Arbitrator "placed significant weight" on the Report, which he found was consistent with the Lamontagne’s testimony and related evidence she provided and his own post-hearing observation of the Vehicle where some of the Symptoms described by the Consumer were present. He found that:

The fact that symptoms may be intermittent does not mean they do not exist. The totality of this evidence suggests to me that there is a defect ( i.e. a fault or imperfection) present in this vehicle which continues to cause symptoms and which has not yet been properly repaired.

[28] It is significant that the Final Award contains no conclusions about the likelihood of the Starter being a primary cause of the Current Defect.

[29] After finding a Current Defect, the next issue the Arbitrator considered was the appropriate remedy. The Arbitrator relied on the remedy suggested by the Report, namely the removal of the Starter.

[30] The Arbitrator noted in his Reasons that initially FCA appeared to be taking the position that it could not be held responsible for any Symptoms that might have been caused by the Starter “because it was an ‘after-market’ part,” relying on s. 4.4.15 of the Arbitration Agreement. As such as I have already concluded, it is clear that FCA raised this issue as a defence on the merits, not as a preliminary issue of the jurisdiction of the Arbitrator. I do not agree with the applicant that it was the arbitrator who misconstrued this.

[31] The Arbitrator found that s. 4.4.15. did not bar the Claim. He found there was "no evidence of significance" contradicting Lamontagne's testimony that the Starter was in her new Vehicle when she took delivery of it, the cost of the installation of the starter was part of the sale price of the vehicle, the Lamontagne agreed to purchase her new Vehicle at a certain price on the understanding it would include certain options including the Starter, and that:

The dealership/Manufacturer accepted the Consumer’s offer and provided her with the vehicle and options she requested. In my view it would be unreasonable, given the particular facts of this case, to conclude that these options, including the remote starter, were not ‘authorized by the Manufacturer’.

For these reasons, the Arbitrator accepted the recommendation of the Report and ordered that FCA remove and replace the Vehicle's Starter.

Issues

[32] There is no dispute that arbitrators must be afforded significant deference and that judicial intervention in arbitrations must be very narrow. This is not an appeal. Instead, FCA applies to set aside the Final Award under s. 46 of the Arbitration Act, 1991, S.O. 1991, c. 17, s. 4(1) (the “Act”), which provides this Court may set aside the award if it 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 Arbitration Agreement.

[33] The issues raised by this application are as follows:

a) is FCA barred from raising an issue with respect to the jurisdiction of the Arbitrator because it failed to raise a timely objection to the jurisdiction of the Arbitrator to determine the Claim. This is a key preliminary issue raised by the respondent;

b) in the alternative, did the Arbitrator pose the correct question and determine his jurisdiction, or, as framed by the respondent, was the Arbitrator's inquiry of whether there was a Current Defect beyond the scope of the Arbitration Agreement; and

c) in the further alternative, was the Final Award's finding that there was a Current Defect unreasonable and ought it to be set aside?

Analysis

Is FCA barred from raising an issue with respect to the jurisdiction of the Arbitrator because it failed to raise a timely objection to the jurisdiction of the Arbitrator to determine the Claim?

[34] The respondent submits as a preliminary issue that FCA is barred from raising an issue with respect to the jurisdiction of the Arbitrator because it failed to raise a timely objection to the jurisdiction of the Arbitrator to determine the Claim.

[35] The Act provides that a party who participates in an arbitration despite being aware of non-compliance with a provision of the Act, save for exceptions which do not apply in this case, and does not object to the non-compliance within the time limit provided or, if none is provided, within a reasonable time, shall be deemed to have waived the right to object. Section 17 (1) of the Act provides that an arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and s. 17 (3) provides that a party who has an objection to the arbitral tribunal’s jurisdiction to conduct the arbitration shall make the objection no later than the beginning of the hearing or, if there is no hearing, no later than the first occasion on which the party submits a statement to the tribunal. Subsection (5) provides that a party who has an objection that the arbitral tribunal is exceeding its authority shall make the objection as soon as the matter alleged to be beyond the tribunal’s authority is raised during the arbitration.

[36] Accordingly both the Act and the Arbitration Agreement provide that the Arbitrator may rule on his jurisdiction to conduct the Arbitration. FCA was required by the Act to raise any objection it had to the jurisdiction of the Arbitrator to hear the Claim on this Starter issue no later than the beginning of the hearing. Although FCA challenged the eligibility of a brake shift issue, it did not seek an eligibility award to determine the eligibility for the Claim for Arbitration. In fact, as the Arbitrator stated in his Final Award with respect to eligibility, as a result of an eligibility teleconference held on September 29, 2017, “the Manufacturer accepted that the vehicle was eligible for the CAMVAP process”. This agreement was confirmed in the First Consent Award. At the time of the Final Award, there was no dispute between FCA and Lamontagne as to the Vehicle's eligibility for CAMVAP arbitration. The parties thereby gave the Arbitrator the authority to decide their dispute relating to the Claim.

[37] In its factum, FCA complains that the Arbitrator failed to address the jurisdictional basis for rendering his Final Award. However, in my view it is FCA who failed to put their complaint about jurisdiction for the Starter issue before the Arbitrator to ask him to determine their objection as the Act required. The applicant argues that it did not argue s. 4.4.15 as a defence on the merits but I disagree. Given it did not raise this issue as an eligibility issue, in my view FCA did in fact treat the issue as a matter going to the merits of the Claim and that is how the Arbitrator dealt with it. After referring to the First Consent Award, the Arbitrator noted at p. 7 of the Final Award that there is no dispute between Lamontagne and FCA on “the vehicle’s […] eligibility for the CAMVAP process.”

[38] FCA admits that it knew that the Starter was an aftermarket part by December 2017. I agree with the submission of the respondent that FCA was required to raise a jurisdictional objection promptly if it believed that the Arbitrator lacked jurisdiction to determine the Claim, or if FCA believed that determining the Claim would cause the Arbitrator to exceed his authority. FCA did not do so. Instead, it raised this as a defence on the merits and proceeded with the Arbitration. Having lost on the merits, the Applicant cannot now re-cast the issue as one of jurisdiction.

[39] FCA should have raised all jurisdictional issues as a preliminary issue in accordance with s. 4.5.1. of the Arbitration Agreement as was done when the First Consent Award was arrived at.

[40] In Piazza Family Trust v. Veillette, 2011 ONSC 2820 at para. 70, the Divisional Court found that the intention of s. 17(3) of the Act is to prevent parties from participating in arbitration proceedings and withholding a possible objection to the jurisdiction of the arbitrator until they become aware of the result. The Court went on to find that the terms of s. 17(3) should be enforced in these circumstances as otherwise the section would have no meaning. The Act “was intended to prevent parties from seeking the benefit of arbitration and proceeding without objection and then attempting to contest the jurisdiction of the arbitrator once the result is known” at para. 71. I agree with the respondent that this is what FAC is attempting to do in this application

[41] There is no doubt that FCA was aware of the proper procedure and could have raised as an eligibility issue, before the commencement of the hearing, that if only the Starter is what is causing the Symptoms experienced by Lamontagne’s Vehicle, that the Symptoms are caught by the definition of “Materials” set out in s. 18.15. If that were the case I agree with the applicant that the Starter could not be a Current Defect in Materials that can be arbitrated under s. 4.4.2. That however was not done by FCA and was not even argued by FCA before the Arbitrator. FCA complains that the definition of Materials was not addressed in the Final Award but that issue was never raised by FCA before the Arbitrator.

[42] In my view, even if FCA had a valid jurisdictional argument on this basis, it cannot raise it now given that it did not object to the jurisdiction of the Arbitrator on this basis before the commencement of the hearing on the merits and the Arbitrator was never asked to consider his jurisdiction on this basis. The Arbitrator considered the one argument that was raised by FCA: whether the Claim was excluded by virtue of s. 4.4.15., as that was raised by FCA as a defence – a reason for why it should not be responsible for the repair - not as a matter of jurisdiction. By not addressing this section as a question of jurisdiction at the outset, FCA effectively submitted this issue for determination by the Arbitrator on the merits; see Nasjjec Investments Ltd. v. Nuyork Investments Ltd., 2015 ONSC 4978 at para. 152 (SCJ).

[43] For these reasons I conclude that in failing to object when it had the statutory obligation to do so, FCA waived its right to contest the jurisdiction of the Arbitrator to determine the Claim after the fact. FCA cannot now contest the Final Award by citing lack of jurisdiction. The Act prohibits the court from setting aside the Final Award on these grounds in these circumstances.

[44] I could end my reasons here and dismiss the application, but I will go on and deal with this application by considering the alternative arguments raised by the parties on the merits.

In the alternative, did the Arbitrator pose the correct question and determine his jurisdiction, or, as framed by the respondent, was the Arbitrator's inquiry of whether there was a Current Defect beyond the scope of the Arbitration Agreement?

[45] FCA relies on the Ontario Court of Appeal's decision in United Mexican States v. Cargill Inc., 2011 ONCA 622, ( Cargill) , which was an appeal by Mexico from the dismissal of its application to set aside an arbitration award made under Chapter 11 of the North American Free Trade Agreement (“NAFTA”). At para. 42, the court held that the standard of review to apply is correctness, “in the sense that the tribunal had to be correct in its determination that it had the ability to make the decision it made. At para. 44 the court added that it is important to remember the fact that the courts are expected to intervene only “in rare circumstances where there is a true question of jurisdiction " [emphasis added] and at para. 45 that the courts are warned to ensure that they take a narrow view of what constitutes a question of jurisdiction and to “resist broadening the scope of the issue to effectively decide the merits of the case”.

[46] In Cargill at para. 52 the court summarized that the role of the reviewing court is to identify and narrowly define any true question of jurisdiction and ask the following three questions:

a) What was the issue that the tribunal decided?

b) Was that issue within the submission to arbitration?

c) Is there anything in the arbitration agreement, properly interpreted, that precluded the tribunal from making the award?

[47] The court then explained the proper approach for a reviewing court to take at para. 53:

The role of the reviewing court is to identify and narrowly define any true question of jurisdiction. The onus is on the party that challenges the award. Where the court is satisfied that there is an identified true question of jurisdiction, the tribunal had to be correct in its assumption of jurisdiction to decide the particular question it accepted and it is up to the court to determine whether it was. In assessing whether the tribunal exceeded the scope of the terms of jurisdiction, the court is to avoid a review of the merits . [Emphasis added]

[48] In Consolidated Contractors Group S.A.L. (Offshore) v. Ambatovy Minerals S.A., 2017 ONCA 939, (Consolidated Contractors) the Court of Appeal considered the grounds for judicial intervention in international arbitral awards under the United Nations Commission on International Trade Law (UNCITRAL) Model Law and reaffirmed the principals set out in Cargill. The Article of the Model Law in question was worded in manner that is similar to the language of s. 46(1)3 of the Act.

[49] In Canada (Human Rights Commission) v. Canada (Attorney General), 2018 SCC 31 at para. 31, the Supreme Court of Canada held that a "true question of jurisdiction” is confined to instances where the decision maker must determine whether it has the authority to "enter into the inquiry before it" and that in this sense “‘true’ questions of jurisdiction involve a far narrower meaning of ‘jurisdiction’ than the one ordinarily employed. The Supreme Court underscored at para. 41, that as of 2018 "true questions of jurisdiction" have been on “life support" and that the existence of this category has "long been doubted".

[50] The applicant argues that this was a case where there was an appeal not an application to set aside an arbitral award but in my view that does not make a difference on this issue. The court was clearly considering the standard of review framework and the applicable standard of review of a tribunal; in that case the Canadian Human Rights Commission but the definition of a “true question of jurisdiction” was not limited to a particular type of tribunal but rather in what circumstances a review of a tribunal’s decision could be done on the standard of correctness.

[51] The respondent argues that in the case at bar, no "true question" of jurisdiction is engaged and the Final Award should not be reviewed on that issue. It is submitted that here the issue before the Arbitrator was whether there was a "Current Defect" and the Arbitration Agreement expressly authorizes the Arbitrator to hear disputes relating to allegations of a "Current Defect". Furthermore, there is nothing in the Arbitration Agreement to preclude the Arbitrator from making a finding of a "Current Defect." I agree with this position of the respondent. The Arbitrator's interpretation of the Arbitration Agreement or his findings of fact regarding a Current Defect and authorization are not true questions of jurisdiction. The arbitrator's determination of a "dispute" relating to an "alleged" Current Defect was squarely within the parameters of the Arbitration Agreement.

[52] In the alternative, even if the correctness standard is engaged because there is a "true question of jurisdiction," in my view the Arbitrator was correct in his assumption of jurisdiction.

[53] FCA argues that the Arbitrator failed to pose the correct questions to enable him to properly address his jurisdiction but their submission assumes that the Arbitrator found that the Starter was the only cause of the Symptoms that he identified in the Final Award. As I have already stated, that is not what the Arbitrator found. It was only FCA that was making this assertion. Lamontagne simply argued that there were Symptoms causing problems in her Vehicle. 6

[54] To be “correct” in his assumption of jurisdiction, the Arbitrator was only required to be correct in in his assumption of jurisdiction to decide the particular question he accepted; Cargill at para. 53. The Arbitration Agreement states that the Arbitrator can hear disputes relating to allegations of Current Defects. The Arbitrator's inquiry was: "Is there a current defect of assembly/materials present in this vehicle, and if so, what remedy would be appropriate?" In my view he correctly found that had the authority to undertake this inquiry.

[55] In assessing whether the Arbitrator exceeded the scope of the terms of jurisdiction, this Court cannot review the merits of the Arbitrator’s decision that there is a Current Defect. The result of the Arbitrator's inquiry is not reviewable - on the correctness standard or otherwise. That is really what the applicant is asking this Court to do.

[56] FCA relies on a decision of this Court in FCA Canada Inc. v Pajunen, 2017 ONSC 7223 ("Pajunen"). In Pajunen, Cavanaugh J. considered the same Arbitration Agreement and found that in that case the arbitrator's act of assuming jurisdiction to decide the particular question was incorrect. That conclusion however was based on a completely different set of facts and so is not of assistance to the inquiry I must make. The other cases relied upon by FCA are clearly distinguishable as they involve matters that failed either part (b) or part (c) of the Cargill test.

Was the Final Award's finding that there was a Current Defect unreasonable and ought it to be set aside?

[57] In Pajunen Cavanagh J. approved of the conclusion reached by Hainey J. in Ford Motor Co. of Canada v. Lachapele, 2011 ONSC 2217 (Lachapele) at paras. 19-21. Hainey J. relied on a decision of the Court of Appeal in Smyth v. Perth & Smith Falls District Hospital, 2008 ONCA 794, and held that if the arbitrator asked the correct questions a reasonableness standard applies in assessing whether the arbitrator’s award should be set aside. He held that this approach was consistent with the principles set out by the Supreme Court of Canada in Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53; a case dealing with a commercial arbitration award.

[58] In Advanced Explorations Inc. v. Storm Capital Corp., 2014 ONSC 3918, at paras. 36-8, Justice Mew considered Smyth and Lachapele and held that even when the parties have agreed that an arbitration decision will be final and binding and there will be no right of appeal, that Smyth is "at best ambiguous" authority for the proposition that that an arbitrator's award can be reviewed for reasonableness under s. 46(1)3 of the Act, relying on J. Kenneth McEwan and Ludmila B. Herbst, Commercial Arbitration in Canada: A Guide to Domestic and International Arbitrations, loose-leaf, (Toronto: Canada Law Book Inc., 2013), at s. 10:60:30:10.

[59] Even if the Final Award can be reviewed for reasonableness under s. 46(1)3 of the Act, I find that the Final Award was reasonable and ought not to be set aside. A decision is reasonable if the decision falls within a range of possible outcomes which are defensible in respect of the facts and the law; see PQ Licensing S.A. v. LPQ Central Canada Inc., 2018 ONCA 331 at para. 35, referencing Dunsmuir v. New Brunswick, 2008 SCC 9 at para. 47. The question for this Court is not whether it would have reached the same decision as the Arbitrator. The fact that an alternative interpretation may exist does not make the Final Award unreasonable.

[60] The Final Award found that a Current Defect in the Vehicle had been established on the balance of probabilities. FCA argues that the Arbitrator found that the Starter or its installation was the 'Current Defect' and that the Starter likely caused the Symptoms. In fact in his oral submissions Mr. Brooksbank submitted “what else could it be?”

[61] I do not accept that submission as the Final Award does not make either of these findings. Instead, the existence of the Current Defect was established - that was the extent of the Lamontagne's burden under the Arbitration Agreement. The Arbitrator determined there was a Current Defect in the Vehicle as defined in s. 18.7. that (i) is currently causing symptoms; and (ii) has not been repaired properly. The term "defect" is not defined in the Arbitration Agreement - the Arbitrator cited the Oxford Dictionary definition. It was open to the Arbitrator to conclude that the evidence supported this conclusion. This evidence included the findings of the Report and his own personal observations.

[62] FCA's arguments are essentially complaints about arbitral fact-finding, under the guise of engaging the scope of the Arbitration Agreement. I agree with the respondent. FCA cannot re-cast the facts on this application.

[63] FCA also argues that the Starter is not "authorized". This was its argument before the Arbitrator. The Arbitrator rejected this argument. FCA cannot appeal this finding of fact or mixed fact and law.

[64] The Arbitrator found it would be unreasonable to hold, on the facts of this particular case, that the Starter was "not authorized" within the meaning of s.4.4.15, which states that disputes are ineligible where they relate to parts or components not authorized by the Manufacturer. In my view the Arbitrator's interpretation of this section was justifiable. "Authorized" is not a defined term under the Arbitration Agreement. As the Starter and its installation formed part of the purchase price for the new Vehicle and was part of the Vehicle before Lamontagne took delivery of it, the Arbitrator concluded it was authorized by FCA. This was a reasonable conclusion available on the facts, the evidence, the Arbitration Agreement, and the ordinary meaning of the terms therein.

[65] FCA argues that the Final Award fails to recognize the separate legal identities of the Authorized Dealer and the Manufacturer and that this conflation places the Final Award in direct conflict with s. 4.4.5., which carves out as ineligible disputes between the consumer and an authorized dealer. First of all, FCA did not introduce any evidence to support this submission. Furthermore, this submission ignores the unique facts of this case. The definition of an Authorized Dealer is a “dealer who has been appointed by the Manufacturer as a dealer authorized to sell your Vehicle ”. In my view given that broad definition, which does not speak to the issues of separate legal identities, it was not unreasonable for the Arbitrator to conclude that it would be unreasonable to find that the Starter was not “authorized by the Manufacturer” given it was on the Vehicle when Lamontagne purchased it from the dealer and its price and installation were buried in the purchase price. As Hainey J. found in Lachapelle, at para. 22, the Arbitration Agreement should be read in a manner consistent with the expectations of non-lawyer consumers. This reinforces the reasonableness of the Arbitrator’s interpretation of the Arbitration Agreement.

[66] Furthermore I do not accept the applicant’s argument that the Arbitrator’s interpretation would apply to any auto part regardless of its aftermarket non-authorized status. This was an unusual case as the Starter and its installation and their associated costs were not disclosed on the Purchase Agreement to Lamontagne as they were built into the purchase price of the Vehicle. Accordingly Lamontagne did not know of or approve of the installation of an aftermarket part. Contrary to the submission of the applicant, the timing of the installation of the Starter and the other circumstances of how it was sold is important.

[67] In fact, as the respondent submitted, if I were to accept the applicant's submission that when an arbitrator finds a "Current Defect", that finding raises a jurisdictional question, this would lead to every award where such a defect is found being reviewable on a correctness standard.

[68] FCA's argument regarding commercial absurdity ignores the purpose of the CAMVAP process. This is not a dispute between two commercial parties. CAMVAP is a consumer dispute resolution program meant to divert complaints away from the courts to ensure the expeditious and practical resolution of small disputes at a low cost. If FCA's argument is accepted, it would eviscerate the equality of bargaining power and information that CAMVAP is meant to achieve - manufacturers could defeat consumers' requests for repairs to eligible vehicles whenever they took the position that there was no "authorized" part available. As the respondent submitted, the Final Award does not require the Starter to be replaced with an "FCA authorized" Starter.

[69] The Arbitrator accepted the remedy recommended by the Report, namely, the removal of the Starter. FCA insists that there is no "authorized" remote starter available for the model of the Vehicle. The Arbitrator did not make this finding. The Arbitrator is empowered under the Arbitration Agreement to make awards as to repairs. In my view this remedy was reasonable.

[70] It is important to remember that FCA will still be able to seek the remedy of contribution and indemnity from its Authorized Dealer under its dealership agreement if it turns out that the Starter is the only cause of the Symptoms. By contrast, Lamontagne has no contractual relationship with Nu-Tek, the agent of the Authorized Dealer who installed the Starter, and thus has no clear remedy against it. While Lamontagne could sue the Authorized Dealer, this legal action would not be consistent with the purposes of CAMVAP. I also note that if the facts of this case are not as unique as I believe, manufacturers like FCA could make it clear to their authorized dealers that they need to separately list and identify aftermarket parts in their purchase agreements.

[71] In conclusion the Arbitrator explained his reasoning in a manner that is clear and understandable. The Final Award discusses the arguments raised by the parties, the evidence adduced, and the interpretation of the Arbitration Agreement. In my view there is no basis to find that the Final Award fails to meet this threshold.

[72] For these reasons I find that the Final Award is reasonable in that it justifiable, transparent and intelligible; see Dunsmuir at para. 47; Sattva at para. 119.

Disposition

[73] For these reasons I dismiss the applicant's Application to set aside the Final Award of the Arbitrator, with costs. Counsel agreed that costs be assessed in favour of the successful party in the amount of $20,000.00. Accordingly I order that the applicant pay costs in the amount of $20,000.00 to the respondent within 30 days of the release of this Endorsement.

Spies J. Date: January 15, 2019