Court File and Parties

COURT FILE NO.: CV-19-139420-00

DATE: 20200625

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: King Valley Estates Inc., Applicant/Respondent

AND:

Trevor Wong and Stacy Sniderman, Respondents/Moving Parties

BEFORE: The Honourable Justice J. Dawe

COUNSEL: J. Lo Faso, for the Applicant/Respondent

S.A. Rosen, for the Respondents/Moving Parties

HEARD: In Writing

ENDORSEMENT

[1] On September 4, 2019 I released my Ruling[^1] holding that the dispute between the Applicant King Valley Estates Inc. ("King Valley") and the Respondents Wong and Sniderman ("Wong and Sniderman") arising out of a failed new home purchase should be referred to arbitration pursuant to the arbitration clause of the "Tarion Addendum". Applying the "competence-competence principle", I held that the disagreement between the parties over whether this arbitration clause applied to their dispute "should initially be left to the arbitrator".[^2]

[2] I indicated that if the parties could not agree on an arbitrator I would remain seized for the purpose of appointing one under s. 10(1) of the Arbitration Act.

[3] Almost ten months later, the parties have been unable to agree on an arbitrator. Counsel for Wong and Sniderman accordingly move to have me appoint an arbitrator and/or give directions with respect to an appointment.

[4] Because the shutdown of the courts during the COVID-19 public health crisis, this motion was brought in writing pursuant to the May 19, 2020 "Protocol for Civil Matters in the Superior Court of Justice, Central East Region" and Rule 37.12.1 of the Rules of Civil Procedure. King Valley's current counsel was properly served with the motion materials by email[^3] on June 10, 2020, but has not filed any response as required by Rule 37.12.1(5).

[5] Following my September 4, 2019 Ruling counsel for Wong and Sniderman tried repeatedly to have an arbitrator appointed by mutual agreement between the parties. However, their efforts have been hampered by King Valley discharging the law firm who had represented it on the motion before me and retaining new counsel, and then discharging these lawyers and retaining its current counsel.

[6] In October 2019, counsel for Wong and Sniderman sent King Valley's counsel a list of four candidates who might act as arbitrator. King Valley then retained new counsel – Maurice Neirinck and Associates – who proposed a fifth candidate, Joel Richler.

[7] In early December 2019 counsel for both parties met with Mr. Richler, who confirmed that he was willing and able to act and provided the parties with draft Terms of Appointment. However, the efforts to have Mr. Richler appointed by mutual agreement foundered when King Valley discharged Mr. Neirinck and his firm in February 2020 and retained its current counsel, Mr. Lo Faso.

[8] In the course of correspondence between counsel in April and May 2020, Mr. Lo Faso proposed that Larry Banack be appointed as arbitrator instead of Mr. Richler. Mr. Banack was one of the four candidates whom Wong and Sniderman had initially proposed in October 2019.

[9] On May 6, 2020 counsel for Wong and Sniderman advised Mr. Lo Faso by email that although Mr. Banack "is, without doubt, certainly as qualified and able and arbitrator as Mr. Richler is", he had concerns both about the cost of retaining Mr. Banack and about his availability to act, particularly during the COVID-19 crisis. He advised further that Wong and Sniderman would nevertheless consent to the appointment of Mr. Banack if King Valley agreed to pay his fees and other expenses, as provided in the arbitration clause of the Tarion Addendum,[^4] and requested that Mr. Lo Faso provide his response that same day. Mr. Lo Faso did not reply to this email, and as noted above he has also not responded to Wong and Sniderman's motion to have an arbitrator appointed.

[10] Wong and Sniderman seek an order appointing Mr. Richler as arbitrator. King Valley, which has not taken any position on this motion, has never at any point raised any substantive objection to Mr. Richler acting as arbitrator. Indeed, it was King Valley's previous counsel who first put his name forward. Its current counsel apparently prefers Mr. Banack, but has not explained why.

[11] Likewise, Wong and Sniderman have no concerns about Mr. Banack's qualifications or competence. Indeed, he was one of the four candidates they initially proposed. Their current preference for Mr. Richler over Mr. Banack is based primarily on cost: Mr. Richler has agreed to charge the parties a lower hourly rate than what Mr. Banack has proposed, and has also agreed to cap his fees for the entire arbitration, including the anticipated preliminary motion by King Valley challenging his jurisdiction.

[12] Mr. Banack and Mr. Richler are both eminently qualified to arbitrate this dispute, neither appear to be under any disqualifying conflict, and each appears to be acceptable to both parties, inasmuch as it was Wong and Sniderman who initially proposed Mr. Banack and King Valley who initially proposed Mr. Richler. Unlike the situation in Kanda Franchising Inc. and Kanda Franchising Leaseholds Inc. v. 1795517 Ontario Inc., 2017 ONSC 7064 at para. 30, the difference in their fees is in my view "sufficiently significant to influence the choice of arbitrator." Mr. Richler has not only agreed to charge a lower hourly fee, but his further agreement to cap the total cost of the arbitration will provide a measure of cost certainty to both parties.

[13] King Valley's failure to make any response to Wong and Sniderman's motion to have Mr. Richler appointed is also in my view a significant factor. If King Valley has some cogent reason to prefer that Mr. Banack arbitrate this dispute, it ought to have presented its reason for my consideration.

[14] A third significant factor is timing. When I rendered my September 4, 2019 Ruling I expected the parties to be able to agree on a mutually acceptable arbitrator within a matter of weeks. Wong and Sniderman have indeed acted diligently to try to move the arbitration process along, and in my view they should not have to wait any longer. They evidently believe that fastest way forward at this point would be for me to appoint Mr. Richler. In the absence of any countervailing reason to make a different order I am inclined to give effect to their wishes.

[15] My sole reservation about appointing Mr. Richler is that the evidence in the record before me regarding his willingness to accept the appointment is somewhat stale. His willingness to accept the appointment in December 2019 does not guarantee that he is still prepared to do so now, some six months later and in the middle of a global pandemic.

[16] With this caveat, I am prepared to exercise my power under s. 10 of the Arbitration Act to appoint Mr. Richler as arbitrator, conditional on his willingness to accept the appointment and on his ability to conduct the hearing on a timetable that is acceptable to Wong and Sniderman. If Mr. Richler declines the appointment, or if Wong and Sniderman are not satisfied with the schedule Mr. Richler proposes, I will remain seized of this matter and will entertain submissions about alternative courses of action that might be pursued.

[17] Wong and Sniderman seek their costs on a substantial indemnity basis, but have not provided either a Bill of Costs or detailed costs submissions. I do not think it would be fair to decide the question of costs without putting King Valley on notice as to exactly how much Wong and Sniderman are seeking and giving King Valley an opportunity to respond.

[18] Accordingly, if the parties are unable to agree on costs, I would invite Wong and Sniderman to provide me with costs submissions of no more than two pages in length, along with their Bill of Costs, within two weeks of the release of this endorsement. This material may be served electronically and filed by way of email to my judicial assistant. King Valley will then have one week to serve and file its response electronically, after which Wong and Sniderman will have a further week to serve and file electronically brief reply submissions of no more than one page in length.

The Honourable Justice Dawe

Date: June 25, 2020

[^1]: 2019 ONSC 4809. [^2]: Dell Computer Corp. v. Union des consommateurs, [2007] 2 SCR 801, 2007 SCC 34 at para. 11. See also Haas v. Gunasekaram, 2016 ONCA 744. [^3]: Under the "Consolidated Notice to the Profession, Litigants, Accused Persons, Public and the Media" issued by the Court on May 13, 2019, during the COVID-19 court shutdown service of documents that under the Rules can be served by email on consent or with a court order may be served by email without consent or a court order. [^4]: As discussed in my September 4, 2019 Ruling, King Valley takes the position that the Tarion Addendum arbitration clause does not apply to its dispute with Wong and Sniderman. I held that the question of whether or not the arbitration clause applies should be determined at first instance by an arbitrator.