Court File and Parties

COURT FILE NO.: 4257/15

DATE: 2019-01-18

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: GLENN SCHNARR & ASSOCIATES INC. AND HERBERT T. ARNOLD, Plaintiffs

AND:

VECTOR (GEORGETOWN) LIMITED, WILLIAM ALFRED JAMES ALLISON, ROBERT THOMAS ALLISON, THE ESTATE OF ISLA RAYMONDE ALLISON, DECEASED, LORMEL DEVELOPMENTS (EIGHTH LINE) LTD., LORMEL DEVELOPMENTS (GEORGETOWN) LTD., AND SHELSON PROPERTIES LIMITED, Defendants

BEFORE: Gibson J.

COUNSEL: Thomas Arnold, Counsel for the Plaintiffs Micheal Simaan, Counsel for the Defendants

HEARD: December 4, 2018

Endorsement

[1] On January 31, 2002, the plaintiffs and the defendants, as original parties or as assignees to a contract, entered into a Cost Sharing Agreement with respect to approximately 1,000 acres of land in the vicinity of Georgetown, Ontario. The agreement included payments to the plaintiffs regarding the further development of lands located on Lots 11-15, Concession 8 (Esq.) Town of Halton Hills, in the Region of Halton.

[2] The motions before the Court concern the plaintiffs’ claims, as consultants, against previous and current landowners for payment under the Cost Sharing Agreement.

[3] By Notice of Motion dated June 11, 2018, the plaintiffs seek a stay so that the parties can proceed to arbitrate the dispute.

[4] By Notice of Motion dated June 8, 2018, the defendant Lormel Developments (Georgetown) Ltd. (“Lormel”) requests pursuant to Rule 21.01(1)(a) of the Rules of Civil Procedure a determination of a question of law, and/or summary judgment, to dismiss the plaintiffs’ action on the basis that the limitation period has expired.

[5] Both motions were heard together on December 8, 2018.

[6] The issues which arise for the court to consider are thus: 1) is the action statute-barred by reasons of the expiry of the limitation period? and 2) if it is not, should this action be stayed in order for the parties to submit this dispute to arbitration?

[7] The plaintiffs dispute that Lormel had an independent right to terminate the Cost Sharing Agreement and dispute that the limitation period for the plaintiffs to bring an action had expired. Their position is that a determination on either the termination or limitation period issue must be made by an arbitrator pursuant to the terms of the Cost Sharing Agreement. They note that the plaintiffs and the other defendants, Vector (Georgetown) Limited and Shelson Properties Limited, have all agreed to use the services of Mr. Stephen Morrison as Arbitrator for this dispute.

[8] The plaintiffs commenced their court action by way of a Statement of Claim issued on November 5, 2015.

[9] Section 7(1) of the Arbitration Act, which contains mandatory language, is not available to the plaintiffs, as they are the party which commenced the court proceeding and are therefore not “another party to the arbitration agreement”.

[10] The plaintiffs contend that s.106 of the Courts of Justice Act is available to any party in the action. This section provides that “a court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.”

[11] The plaintiffs rely upon the case of Bondfield Cosntruction Co. v. London Police Services Board, 2013 ONSC 4719, for the proposition that arbitration clauses are to be given a large, liberal and remedial interpretation to effectuate the dispute resolution goals of the parties. They point to the analytical framework set out by the Court of Appeal in Haas v. Gunasekaram, 2016 ONCA 744, in considering whether to grant a stay. However, I would note that the analysis in Haas was under s.7(1) of the Arbitration Act (which is not available to the plaintiffs here as it is their own proceeding), and not s.106 of the Courts of Justice Act.

[12] The defendants note that this action was brought 11 years after the defendant terminated its involvement in the Cost Sharing Agreement on October 8, 2004. The plaintiffs acknowledged receiving this notice of termination and failed to lodge any objection or take any action in the intervening decade.

[13] The defendants contend that there is no reasonable explanation for this delay. The plaintiffs’ position is that the language of the agreement means that it is incapable of termination by one party. The defendant’s position in this regard is that the plaintiffs are relying upon a commercially unreasonable reading of the termination clause within the Cost Sharing Agreement. They argue that, in any event, even if the plaintiffs’ position is correct that termination was not permitted under the agreement, then the defendant’s termination of the agreement in 2004 necessarily amounted to a breach of that contract which was actionable within two years by the plaintiffs. In failing to take any steps to pursue that alleged breach of contract, the plaintiffs’ claim is statute-barred by reason of the expiry of the relevant two-year limitation period under the Limitations Act.

[14] The defendants further contend that the plaintiffs are estopped from bringing this claim as, during the 11 years since the termination, the parties had no dealings with one another and acted as though the agreement had been terminated, and the defendants fulfilled the duties that otherwise would have been performed by the plaintiffs. Further, the defendants contend that it should be dismissed under the doctrine of laches.

[15] The defendant’s position is that once a party has elected to proceed in court, it is not able to stay its own proceeding in favour of arbitration.

[16] The Limitations Act provides that a proceeding cannot be commenced more than two years after the claim was discovered. This period begins when the party knew or ought to have known that an injury, loss or damage occurred.

[17] I consider that on the facts of this case, the plaintiffs’ claim does not fall under any of the exceptions provided for by the Limitations Act.

[18] The initial termination was provided by the Lormel defendant’s counsel in October of 2004. The plaintiffs acknowledged receiving this termination and did not reject it, bring a claim asserting a breach of contract, or otherwise seek to prevent the Lormel defendant from terminating the agreement.

[19] The CSA allowed that a bonus period potentially extended the contract by four years after termination. The plaintiffs would have been eligible for a bonus where a report was adopted by the Regional Council recommending including the lands in the Georgetown Urban Area in the following four years after termination. No report was adopted.

[20] I find that the plaintiffs failed to bring a claim when they had discovered the alleged damage or breach of contract. Further, no action was commenced within two years of the expiry of the potential bonus period (which would have been four years after the defendants’ notice of termination in 2004).

[21] I agree with the position of the defendants that, even if it was considered that the defendant improperly terminated the contract when it was not permitted to do so, the plaintiffs should have advised of their position then, and commenced proceedings. The plaintiffs took no steps to complain or to prevent the termination of the contract, and allowed the defendant to proceed as if the agreement had been terminated.

[22] Even apart from the expiry of the limitation period which I have found, I would agree with the defendant’s submissions that the plaintiffs would be estopped by conduct, and by laches. Acquiescence can justify the application of the doctrine of laches, even without actual prejudice occurring: per Lederman J. in Zurich Insurance Company v. TD General Insurance Company, 2014 ONSC 3191 at paras. 35 and 37.

[23] I would also agree with the defendant’s submission that the plaintiffs’ motion to stay the proceedings cannot be granted when they brought the action.

[24] In these circumstances, I decline to exercise my discretion under s.106 of the Courts of Justice Act to stay the proceedings.

[25] The plaintiffs’ motion is dismissed. The defendant’s motion for summary judgment is granted.

[26] The parties are encouraged to agree upon appropriate costs. If the Parties are not able to agree on costs, they may make brief written submissions to me (maximum three pages double-spaced, plus a bill of costs). The defendant may have 14 days from the release of this endorsement to provide its submissions, with a copy to the plaintiffs; the plaintiffs a further 14 days to respond; and the defendant a further 7 days for a reply, if any. If no submissions are received within this timeframe, the Parties will be deemed to have settled the issue of costs as between themselves. If I have not received response or reply submissions within the specified timelines after the defendant’s initial submission, I will consider that the parties do not wish to make any further submissions, and will decide on the basis of the material that I have received.

Gibson J.

Date: January 18, 2019