Court File and Parties
2020 ONSC 5016
COURT FILE NO.: CV-19-623043
DATE: 2020/08/20
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Toronto Standard Condominium Corporation No. 2082
Applicant
– and –
Hotel 550 Wellington GP Ltd. and Mohari Canada Inc.
Respondents
Megan Mackey, for the Applicant
Daniel Murdoch, for the Respondents
HEARD: July 31, 2020
REASONS FOR DECISION
The Motion
[1] This is the Respondents motion to stay the within Application on the basis that the matter lies within the jurisdiction of a mediator and/or arbitrator as required by s. 132(1) and s. 132(2) of the Condominium Act, 1998, S.O. 1998 c 19. (the “Act”) and s. 5.1 of the Reciprocal Agreement (the “RA”).
[2] Section 132(1) of the Act mandates mediation and/or arbitration as the initial avenue of dispute resolution:
Every agreement mentioned in subsection (2) shall be deemed to contain a provision to submit a disagreement between the parties with respect to the agreement to,
(a) mediation by a person selected by the parties unless the parties have previously submitted the disagreement to mediation; and
(b) unless a mediator has obtained a settlement between the parties with respect to the disagreement, arbitration under the Arbitration Act, 1991,
(i) 60 days after the parties submit the disagreement to mediation, if the parties have not selected a mediator under clause (a), or
(ii) (ii) 30 days after the mediator selected under clause (a) delivers a notice stating that the mediation has failed.
[3] Section 132(2) of the Act states:
Subsection (1) applies to the following agreements:
(i) an agreement between a declarant and a corporation;
(ii) an agreement between two or more corporations…
[4] Section 5.1 of the RA includes an arbitration clause:
Subject to Section 132 of the Act, the validity, construction and performance of this Agreement shall be governed by the laws of the Province of Ontario and any dispute that may arise under this Agreement shall be determined by arbitration by a single arbitrator to be agreed upon by the parties within thirty (30) days of written notification by any of the parties of a request for arbitration. If the parties are unable to agree upon the arbitrator, same shall be appointed upon application to a single judge of the Ontario Superior Court of Justice in accordance with and pursuant to the [Arbitration Act]. The arbitrator’s decision shall be final and binding upon the parties and shall not be subject to appeal.
[5] The Applicant resists the motion on the basis that if the parties are allowed to mediate and/or arbitrate the issue of their failure to comply with a settlement, this will result in an endless stream of mediation and/or arbitration, and a situation where no settlement would ever be binding.
Factual Background
[6] The Applicant The Toronto Standard Condominium Corporation No. 2082 (“TSCC No. 2082”) is a residential condominium located at 550 Wellington Street West in Toronto, Ontario. TSCC No. 2082 shares a building and amenities with the 1 Hotel Toronto (the “Hotel”), previously the Thompson Hotel. The Hotel was previously owned by Hotel 550 Wellington GP Ltd. (“Hotel 550”) and was sold to Mohari Canada Inc. (“Mohari”) in 2017.
[7] The parties are governed by the RA, which was signed by Hotel 550 and TSC No. 2082 on March 1, 2010. Under the RA, the Hotel controls the shared areas (the “Common Facilities”) but the parties share the costs of those Common Facilities.
[8] In 2016, a dispute arose between TSCC No. 2082 and the Hotel in respect of the gym facilities (the “Amenity Area”). In essence, the Hotel made renovations which eliminated approximately 50% of the Amenity Area that had been reserved for use by condominium residents by turning that space into more hotel rooms and a meeting room. TSCC No. 2082 alleged that these renovations violated the RA by (i) making unauthorized alterations to the Amenity Area; (ii) denying TSCC No. 2082 access to a second gym space, and; (iii) improperly charging TSCC No. 2082 for repair and maintenance of the gym.
[9] In accordance with s. 5.1 of the RA, TSCC No. 2082 and The Hotel entered into mediation and signed Minutes of Settlement (“MOS”) dated May 19, 2017. In the MOS, the Hotel agreed to renovate and return a portion of the renovated space to the Amenity Area by December 1, 2017. It is not disputed that these renovations were not made by that time. Some extensions were negotiated.
[10] In December of 2019, TSCC No. 2082 served a Notice of Application alleging that The Hotel and Mohari had breached the RA and the MOS. The Hotel and Mohari responded that the dispute was subject to mediation and arbitration, pursuant to s. 132 of the Act. TSCC No. 2082 declined to proceed to mediation.
[11] The Hotel and Mohari now bring this motion seeking an Order dismissing or permanently staying the within application on the grounds that it is statutorily subject to mediation and/or arbitration.
[12] TSCC No. 2082 asks this Court to dismiss the motion such that the within Application – which asks this Court to enforce the MOS– may be adjudicated. TSCC No. 2082 submits that because enforcement is all it seeks, it should not be required to go to mediation and/or arbitration.
[13] Both parties seek costs.
Legal Framework, Issues, and Analysis
[14] The legal issues in question are as follows:
(a) What is the test for a stay pursuant to s. 7(1) of the Arbitration Act, 1991, S.O. 1991, c.17 (the “Arbitration Act”)?;
(b) Does s. 132 of the Arbitration Act require that this dispute be resolved by mediation and arbitration?;
(c) Does s. 5.1 of the RA require that this dispute be resolved by arbitration?; and
(d) Has Mohari met the test for a stay pursuant to s. 7(1) of the Arbitration Act?
The Dispute Should be Resolved by Mediation and Arbitration
[15] For the reasons below, I conclude that the dispute should be resolved by mediation and/or arbitration, and that Mohari and The Hotel are entitled to a stay of proceedings.
[16] TSCC No. 2082 has commenced this application under s. 132(1) of the Act in respect of the parties’ obligations under the RA and the MOS. The mandatory nature of s. 132(1) of the Act requires that this application be stayed in favour of mediation and arbitration.
[17] As well, s. 5.1 of the RA requires that this dispute be arbitrated. Not only does the RA contain an agreement to resolve all disputes by mediation/arbitration in accordance with s. 132 of the Act, but the parties also specifically included an arbitration clause in s. 5.1 of the RA.
[18] Section 132(2) provides that dispute resolution pursuant to s. 132(1) applies to, among other things, agreements between two or more corporations, and agreements described in s. 98(1), which are agreements between a corporation and an owner governing cost allocation and respective responsibilities of parties relating to the modification of common elements.
[19] In Channa v. Carleton Condominium Corp. No. 429, 2011 ONSC 7260, the Court clarifies at para. 43 that s. 132(1) of the Act requires that disputes arising from “an existing agreement governing a modification to the common elements must form the subject of mediation and arbitration.”
[20] The RA and the MOS, together which form the complete agreement between the parties in respect to this dispute, by definition, fall within the scope of s.132 of the Act.
[21] As a result, this Application must be stayed in favour of mediation and/or arbitration.
[22] Since this dispute relates to the rights and obligations of the parties under the RA, s. 5.1 requires that this dispute be determined by an arbitrator. (Apparently the law as to whether this can go straight to arbitration is unclear. Hopefully the parties can agree on “where” it goes from here.)
Test for a Stay in Met by Mohari and Hotel 550
[23] Pursuant to s. 7(1) of the Act, this Court must stay a proceeding commenced where the parties are subject to an arbitration agreement:
If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding.
[24] The mandatory nature of s. 7(1) and s. 7(2) of the Act is supported by the principle and policy behind the legislation that where parties have already agreed to settle their disputes by arbitration, courts should not be jumping in to interfere.
[25] The analytical framework applicable to stay a motion is laid out by the Ontario Court of Appeal in Haas v. Gunasekaram, 2016 ONCA 744, at para. 17:
Is there an arbitration agreement?
What is the subject matter of the dispute?
What is the scope of the arbitration agreement?
Does the dispute arguably fall within the scope of the arbitration agreement?
Are there grounds on which the court should refuse to stay the action?
[26] This Court only has specific and narrow discretion under s. 7(2) of the Act to refuse a stay of proceedings. In MDG Kingston Inc. v. MDG Computers Canada Inc., 2008 ONCA 656, at paras. 19-22, the Ontario Court of Appeal describes the limited scope of s. 7(2) as providing “limited exceptions to the mandatory requirement that courts enforce arbitration clauses” where it would be “either unfair or impractical to refer the matter to arbitration.”
[27] Given that there is an arbitration agreement between the parties, since (i) both the RA and MOS fall within the scope of s. 132 of the Act and are accordingly each statutorily deemed to contain a provision to submit disputes to mediation and arbitration, (ii) the subject matter of the dispute is an alleged breach of contractual obligations set out in the RA and MOS, and (iii) that the scope of the mediation and arbitration provisions is broad to include any “disagreement between the parties with respect to the agreement,” I find that the dispute falls within the scope of jurisdiction of a mediator/arbitrator and that on these facts, Mohari and The Hotel meet the requirements for a stay of proceedings. It is neither unfair or impractical to refer the matter to mediation and/or arbitration.
[28] The Respondents have indicated to the Court that they would consent to the matter going straight to arbitration if the Applicant so chooses.
[29] If the parties cannot agree on costs, they can send their submissions to my assistant, Lorie Waltenbury, at lorie.waltenbury@ontario.ca, the moving party within 14 days and the responding party within 7 days thereafter.
Ferguson J.
Date: August 20, 2020
2020 ONSC 5016
COURT FILE NO.: CV-19-623043
DATE: 2020/08/20
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Toronto Standard Condominium Corporation N. 2082
Applicant
– and –
Hotel 550 Wellington GP Ltd. and Mohari Canada Inc.
Respondents
REASONS FOR DECISION
J. E. Ferguson J.
Released: August 20, 2020