COURT FILE NO.: CV-18-611547
DATE: 20201019
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Margaret Boryczka Gupta, Shashikant Gupta, Michael Anthony Kettles, and Michele Anne Kettles
Plaintiffs/Responding Parties
– and –
Lindal Cedar Homes Ltd., and Axmith & Company Limited also known as Axmith & Company Ltd. formerly known as Bestwood Homes Limited
Defendants/Moving Parties
G. Brown, for the Plaintiffs/Responding Parties
H. Jones and K. Phung, for the Defendant/Moving Party, Lindal
No one for the Defendant, Axmith & Company Limited also known as Axmith & Company Ltd. formerly known as Bestwood Homes Limited
HEARD: September 1, 2020
O’BRIEN, J.
REASONS FOR DECISION
Overview
[1] In July 1994, Charles Kettles ordered materials and a design to build his cottage in Bruce Mines, Ontario. Twenty years later, he transferred title in the cottage to his children, the Plaintiffs, Margaret Gupta and Michael Kettles and to their spouses, the other Plaintiffs. In 2018, according to the Plaintiffs, they discovered significant wood rot throughout the cottage, including in the structural beams. The Plaintiffs commenced this action against Lindal Cedar Homes Ltd. (“Lindal”), the supplier of the materials and design for the cottage. They also attempted to sue the local dealer of Lindal products; however, the correct identity of the local dealer is in dispute. Lindal now brings this motion to stay the action on the basis of an arbitration clause which it submits requires the dispute to be brought before an arbitrator.
[2] There are a number of factual disputes in this case regarding the initial purchase of the Lindal materials and design. Lindal’s evidence is that each customer must sign a Purchase and Sale Agreement before their home package is shipped. The Purchase and Sale Agreement is the agreement that includes the arbitration clause. None of the parties in this case have been able to locate a copy of a Purchase and Sale Agreement signed by Charles Kettles 26 years ago, although Lindal submits he must have signed one.
[3] Lindal does not sell homes to end purchasers directly. Instead, it distributes the materials and design for standard designed houses to local dealers, who deal directly with the purchaser. There is a dispute in this case about the identity of the local dealer at the time Charles Kettles purchased his design and materials. The Plaintiffs have named Axmith & Company Limited (“Axmith”), formerly known as Bestwood Homes Limited (“Bestwood”) and submit that Charles Kettles purchased the Lindal products from Axmith. However, Lindal submits that Axmith only became a dealer in 1998. Axmith has defended this claim on the basis that Charles Kettles purchased his home from Bestwood, not Axmith and that Axmith is incorrectly named in the claim.
[4] In their Statement of Claim, the Plaintiffs allege that Lindal and Axmith provided Charles Kettles with a “lifetime structural warranty” for the cottage and that this warranty was transferred from Charles Kettles to the Plaintiffs. They allege that Lindal and Axmith owed a duty of care to immediate and subsequent purchasers of the cottage, including the Plaintiffs, that they were negligent, and that they failed in a duty to warn Charles Kettles or any subsequent purchasers that the design, products, and materials they provided were defective.
[5] The only issue to determine on this motion is whether the action should be stayed on the basis of the arbitration clause in Lindal’s Purchase and Sale Agreement. For the reasons that follow, I conclude that the action should be stayed and referred to an arbitrator pursuant to the arbitration clause.
Arbitration Clause
[6] Lindal was transitioning between two versions of the Purchase and Sale Agreement (“PSA”) around the time Charles Kettles purchased the Lindal material in July 1994. As none of the parties have located a copy of any Purchase and Sale Agreement signed in this case, Lindal has provided the standard form for both agreements.
[7] The arbitration clauses in both agreements are identical other than the reference to the “Canadian Arbitration Association” in one as opposed to “the applicable Provincial Arbitration Act” in the other. The arbitration clause in the agreement that was in use until about June 1994 (which Lindal has referred to as the “pre-1994 PSA”) reads as follows:
- B. Arbitration – Any controversy between the purchaser and seller and/or Lindal arising out of or related to this Purchase & Sale Agreement, warranty or the performance or breach thereof, shall be settled by arbitration governed by the rules of the American Arbitration Association (or by the Canadian Arbitration Association, if the home is sold or built in Canada) upon application by any party…
[8] The arbitration clause in the agreement that was first circulated in June 1994 and continued to be used until approximately 1996 (the “1994 PSA”) reads as follows:
- B. Arbitration – Any controversy between the purchaser and seller and/or Lindal arising out of or related to this Purchase & Sale Agreement, warranty or the performance or breach thereof, shall be settled by arbitration governed by the rules of the American Arbitration Association or the applicable Provincial Arbitration Act in Canada upon application by any party…
[9] The arbitration clause in both agreements is found under the provision addressing Resolution of Disputes. The Resolution of Disputes clause includes clause (A) addressing mediation, clause (B) addressing arbitration (reproduced above) and clause (C) addressing procedure. The procedure clause in both versions of the Purchase and Sale Agreement provides:
C. Procedure - …If the mediation or arbitration involves Lindal’s warranty or other Lindal matters, is against Lindal or originated by Lindal, the arbitration or mediation shall be held in Seattle, Washington or Vancouver, BC and the respective laws of Washington or British Columbia including statute of limitations shall apply.
[10] Both PSAs also included a choice of law clause at s. 19. It provides that “[w]ith respect to the rights and duties of Lindal,” the laws of the State of Washington would control for residents of the United States and the laws of British Columbia would control with respect to sales to residents of Canada.
Principles regarding jurisdiction of arbitrators
[11] In this motion, Lindal relies on s. 106 of the Courts of Justice Act, R.S.O. 1990 c. C.43, which permits a court to stay any proceeding on such terms as are considered just. It also relies on subsection 7(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 (the “Act”), which contains mandatory language requiring the court to stay a proceeding which is required to be submitted to arbitration under an arbitration agreement. It reads:
7(1) 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. (emphasis added)
[12] Courts are generally to take a “hands off” approach to matters governed by the Act: Telus Communications Inc. v. Wellman, 2019 SCC 19, at para. 56. In Haas v. Gunasekaram, 2016 ONCA 744 (“Haas”), the Ontario Court of Appeal emphasized the mandatory language found in s. 7(1), stating at paras. 10-12 that the language in the provision is not equivocal and that “[t]he law favours giving effect to arbitration agreements.” Further, the court set out the “competence-competence principle,” which requires that in any case involving an arbitration clause, a challenge to the arbitrator’s jurisdiction must be resolved first by the arbitrator: Haas, at para. 14; See also: Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, at para. 84; Ciano Trading & Services C.T. & S.R.L. v. Skylink Aviation Inc., 2015 ONCA 89, at para. 7.
[13] The Court of Appeal in Haas specifically underscored the importance of allowing the arbitrator to determine the scope of arbitral jurisdiction. A court should grant a stay so long as it is “arguable” that the dispute falls within the arbitration agreement. A court has the discretion to determine a challenge to an arbitrator’s jurisdiction on a pure question of law or on a question of mixed fact and law that requires only superficial consideration of the documentary evidence. Where it is unclear if the arbitrator has jurisdiction, it is preferable to leave the issue to the arbitrator. At para. 15, the Court of Appeal adopted the following passage from Sharpe J.A. in Dancap Productions Inc. v. Key Brand Entertainment, Inc., 2009 ONCA 135:
It is now well-established in Ontario that the court should grant a stay under art. 8(1) of the Model Law where it is “arguable” that the dispute falls within the terms of an arbitration agreement. In Dalimpex Ltd. v. Janicki (2003), Charron J.A. adopted the following passage by Hinkson J.A. in Gulf Canada Resources Ltd. v. Arochem International Ltd. as “the proper approach” to art. 8(1):
It is not for the court on an application for a stay of proceedings to reach any final determination as to the scope of the arbitration agreement or whether a particular party to the legal proceedings is a party to the arbitration agreement because those are matters within the jurisdiction of the arbitral tribunal. Only where it is clear that the dispute is outside the terms of the arbitration agreement or that a party is not a party to the arbitration agreement or that the application is out of time should the court reach any final determination in respect of such matters on an application for a stay of proceedings.
Where it is arguable that the dispute falls within the terms of the arbitration agreement or where it is arguable that a party to the legal proceedings is a party to the arbitration agreement then, in my view, the stay should be granted and those matters left to be determined by the arbitral tribunal.
As Charron J.A. explained in Dalimpex, “a deferential approach” allowing the arbitrator to decide whether the dispute is arbitrable, absent a clear case to the contrary, “is consistent both with the wording of the legislation and the intention of the parties to review their disputes to arbitration.” (citations omitted)
[14] Section 17 of the Act in Ontario also specifically authorizes an arbitral tribunal to rule on its own jurisdiction, including with respect to the existence or validity of the arbitration agreement. It provides:
17(1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement.
Analytical framework
[15] The Court of Appeal in Haas at para. 17 set out the following analytical framework for an analysis under s. 7 of the Act. The questions to be answered are as follows:
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?
[16] I apply that framework below. By way of overview, there are numerous issues in dispute with respect to the arbitration agreement in this case. They include the existence of the arbitration agreement, the parties to the agreement, and the scope of the arbitral clause. I conclude that there is an arguable case on all of these issues. There is an arguable case that the PSA was signed, that Lindal and the Plaintiffs are bound by it, and that the dispute in this action falls within the arbitral clause. The answers to these questions are not evident on the face of the record and require more detailed factual findings better left for the arbitrator.
[17] I also conclude below that there are no grounds on which the court should refuse to stay the action. I am not persuaded that the stay should be refused on the basis that Axmith filed a Statement of Defence in this court, as submitted by the Plaintiffs. Equally, I am not persuaded that the stay should be refused on the basis of the Plaintiffs’ argument that the arbitration agreement is unconscionable.
Is there an arbitration agreement?
Arguable case that the agreement existed
[18] Although neither party has located a PSA in this case, it is arguable that Charles Kettles entered into such an agreement.
[19] First, it is not entirely surprising that neither party has located a copy of an agreement, given that it would have been entered into some 26 years ago. However, Lindal has provided evidence of its standard practice dating back to that time, which requires purchasers of its products to enter into its standard form agreement. Specifically, the evidence of Robert Lindal, the President and CEO of Lindal, is that all orders of Lindal products required and continue to require, without exception, that the customer sign a PSA in the form required by Lindal. Lindal’s practice and protocol is that it then assigns a number to each order. No number is assigned unless or until Lindal receives an executed PSA. An assigned number must be issued before plans are printed and materials are shipped and before any type of warranty is issued.
[20] In this case, there is evidence to support Mr. Kettles having signed a PSA. Lindal’s computer system shows that he was assigned a warranty number. In addition, the same warranty number appears on the design plans for his home. Further, Mr. Lindal’s evidence is that the company’s practice and protocol is that home packages are not shipped absent a signed PSA in their records. In this case, the package was shipped.
[21] The Plaintiffs’ only basis to contradict Mr. Lindal is the evidence of Michael Kettles. Charles Kettles has passed away. His son Michael states that his father did not recall entering into a written agreement. Further, while his father was a meticulous record-keeper, his family has been unable to locate a copy of a written agreement with Lindal or Axmith. However, Michael Kettles also states that his father did recall that Lindal provided him with a “form of warranty.” Charles Kettles was unable to find a copy of the warranty prior to his passing. Lindal’s PSA included a limited warranty of materials. It also indicated that it would provide the purchaser with a structural warranty in some circumstances (which Lindal submits do not appear to apply here). In any event, the fact that Charles Kettles believed he had a warranty form but could not find it raises questions about whether he had a warranty in a PSA and whether his record-keeping was complete.
[22] Both the pre-1994 PSA and 1994 PSA included an arbitration clause. Overall, there is sufficient evidence that Charles Kettles entered into a PSA that I consider the existence of an arbitration agreement to be an arguable question for an arbitrator to determine.
Arguable case that Lindal and Plaintiffs are parties to the arbitration agreement
[23] The Plaintiffs submit that neither Lindal nor they themselves are parties to the PSA. However, I conclude that there is an arguable case that both Lindal and the Plaintiffs are parties to the arbitration agreement.
[24] First, there is an arguable case that Lindal was a party to the PSAs it prepared. Although both the pre-1994 PSA and 1994 PSA initially list at the top of the form that the purchaser and seller are the parties to the agreement, a clause immediately underneath states that Lindal is a party, at least with respect to the warranties it makes:
Seller is an independent contractor expressly authorized to sell products manufactured by Lindal Cedar Homes, Inc. and Lindal Cedar Homes Ltd. (“Lindal”). The materials contracted for by the Purchaser are being sold to the Purchaser by the Seller and not by Lindal. Lindal is a party to this agreement only with respect to the warranties it makes in paragraphs 3 and 4 as set forth herein. (emphasis added)
[25] Further, the arbitration provisions expressly apply to “[a]ny controversy between the purchaser and seller and/or Lindal…” (emphasis added). Similarly, the arbitration procedure references claims involving Lindal, specifically stating that if mediation or arbitration “involve Lindal’s warranty or other Lindal matters, is against Lindal or originated by Lindal,” then it would be held in Seattle or Vancouver. I also note that Lindal prepared the PSAs and required its distributors to use them. It insisted on receiving a signed PSA prior to shipping its products to a customer. Given all these factors, there is an arguable case that Lindal was a party to the arbitration agreement.
[26] However, the Plaintiffs submit that they themselves were not parties to any arbitration agreement. Their position is that if any PSA was entered into, it was entered into by Charles Kettles and not by them. They further submit that the provision in the PSAs addressing successors and assigns does not apply to them, as any agreement that was entered into was not assigned to them.
[27] The inurement provision in both the pre-1994 and 1994 PSAs provides that “[t]his agreement shall inure to and be binding upon the parties hereto, their heirs, administrators, successors and assigns.” There is an arguable case that the Plaintiffs constitute “assigns” of the PSA. Specifically, the Plaintiffs allege in the Statement of Claim that Lindal provided Charles Kettles with a “lifetime structural warranty” for the cottage and that this warranty was transferred to them. A warranty could only be provided by Lindal to Charles Kettles by an agreement. In other words, the Plaintiffs are claiming to have been assigned and are claiming the benefit of an agreement entered into between Charles Kettles and Lindal. In these circumstances, there is an arguable case that they are bound by the arbitration clause in the PSA.
What is the subject matter of the dispute?
[28] Although the Plaintiffs characterize their claim in part in negligence and as a failure of the duty to warn, their claim against Lindal overall arises from the existence of a contract. The Plaintiffs allege that there were defects in the design of the cottage, that there were structural defects, and that there were defects in the materials provided to Charles Kettles. However, the design and materials that Lindal provided to Charles Kettles could only have been provided pursuant to an agreement. The Plaintiffs also allege that Lindal breached a structural warranty provided to Charles Kettles and that the warranty was transferred from Charles Kettles to the Plaintiffs.
[29] In Haas, although the plaintiff had framed his claim as relating to misrepresentations, breach of fiduciary duty, and oppressive behaviour, the Court of Appeal noted at para. 26 that the allegations largely related to obligations under a shareholders’ agreement, or, in any event, depended on the existence of the shareholders’ agreement. The Court noted that the plaintiff would be relying on contractual documents.
[30] Similarly, here, obligations Lindal had with respect to the design and materials it provided arose at first instance from a contractual relationship. In addition, the alleged warranty could only arise from an agreement. If the PSA is found to have been entered into, it will be central to Lindal’s defence to the action. This is not to say that the Plaintiffs cannot also make a claim for a duty of care in tort. However, the contract is a key component of this dispute. It will play a central role in the background to all allegations, in the warranty claim and in the defence of the action.
What is the scope of the arbitration agreement?
[31] The scope of the arbitration clause in both the pre-1994 and 1994 PSA is broad. It states that “[a]ny controversy between the purchaser and seller and/or Lindal arising out of or related to this Purchase and Sale Agreement, warranty or the performance or breach thereof, shall be settled by arbitration” (emphasis added).
[32] The Court of Appeal has emphasized that where an arbitration clause addresses both disputes “arising out of” as well as disputes “related to” an agreement, they should be generously interpreted to enjoy a “wide compass”: Dancap Productions Inc., at para. 38; see also Haas, at para. 29.
Does the dispute arguably fall within the scope of the arbitration agreement?
[33] I conclude that the dispute arguably falls within the scope of the arbitration clauses in both the pre-1994 PSA and 1994 PSA, which have identical wording as to their scope. First, the claim against Lindal arises out of and is related to the PSA in that Lindal could not owe any legal obligation to the Plaintiffs without the prior existence of an agreement between Lindal and Charles Kettles to provide the materials and design for the cottage. In addition, the arbitration clauses specifically identify the scope of the clause as covering a warranty claim. The Plaintiffs have directly pleaded breach of warranty.
[34] The Plaintiffs point out that Lindal has denied it provided a lifetime warranty to Charles Kettles, as it did not provide such warranties in 1994. Lindal also has denied that it provided a 10-year warranty, which was available to some customers at the time, but for which it states Mr. Kettles did not appear to meet the preconditions. The details of the warranty do not change my conclusion. Both the 1994 and pre-1994 PSAs contain limited warranty clauses. Regardless of the details of any warranty, a dispute about the warranty falls within the scope of the arbitration clause.
[35] On the basis of the broad wording of the arbitration clause, the connection of the allegations to an agreement between Lindal and Charles Kettles, and the specific pleading of the warranty claim, the dispute arguably falls within the scope of the arbitration agreement.
Are there grounds on which the court should refuse to stay the action?
[36] The Plaintiffs make two primary arguments against the granting of a stay in the circumstances of this action. They submit that the action should not be stayed given that Axmith already has attorned to the jurisdiction of this court by filing a Statement of Defence. Second, they submit that the arbitration clause in the PSA should fail under s. 7(2) of the Act on the basis of unconscionability.
Claim against Axmith
[37] I am not prepared to deny the stay on the basis that Axmith filed a Statement of Defence. The Plaintiffs submit that Axmith has attorned to the jurisdiction of the court by filing a Statement of Defence and cannot be compelled to participate in an arbitration. However, the case relied on for this proposition is distinguishable. In Penn-Co Construction Canada (2003) Ltd. v. Constance First Nation, 2007 CarswellOnt 6556 (S.C.J.) (“Penn-Co”), the plaintiff sought an order requiring the defendant to proceed with arbitration pursuant to the terms of the parties’ contract. The Court refused to order arbitration, based in part on the wording of s. 7 of the Act. The Court concluded that the motion seeking a stay could not be brought by the party who commenced the court proceeding. In those circumstances, the other party could not be compelled to participate in an arbitration.
[38] However, the Court acknowledged at para. 25, that a motion for a stay could be brought by an opposing party, as occurred in this case. Here, Lindal was not the party who commenced the proceeding. Further, in its Notice of Motion, Lindal sought a stay of the action in its entirety, not just the action as against it. Axmith had notice of the motion but chose not to participate.
[39] In addition, unlike in Penn-Co, where the plaintiff had sued several parties whose claims were not arbitrable, if Axmith was the local dealer who sold the Lindal products to Charles Kettles, it is a party to the arbitration agreement. As set out above, the “seller” is a party to the PSA. The arbitration clause applies to “[a]ny controversy between the purchaser and seller and/or Lindal arising out of or related to this Purchase & Sale Agreement…” (emphasis added). The allegations in the Statement of Claim are made jointly against Lindal and Axmith, without distinguishing between them. The Plaintiffs allege that both Lindal and Axmith owed them a duty of care, that they both breached the standard of care for the same reasons, that they both had a duty to warn, and that they both provided and breached a lifetime structural warranty. Therefore, the issues to be addressed by the arbitrator are the same for both parties.
[40] Finally, I note that the only basis on which Axmith defended the action in court was that it was not a proper party. It has pled that the Statement of Claim incorrectly calls it a predecessor to Bestwood, when instead Bestwood and Axmith were separate corporations carrying on separate business dealings. It denies having sold Lindal products to Charles Kettles and states that it only began to sell Lindal products in 1998. The arbitrator has jurisdiction to determine the parties to the arbitration agreement. If the arbitrator determines that Axmith was not a party to the agreement, in that it did not sell the products to Charles Kettles and was not the successor to Bestwood, then it is not a party to this dispute at all. It is not necessary for this issue to be separately determined in court.
Subsection 7(2) of the Act
[41] The Plaintiffs also submit that the court should not stay the action because the arbitration clause is unconscionable.
[42] Subsection 7(2) of the Act permits the court to refuse to stay a proceeding on the basis that the arbitration agreement is invalid. It provides: “However, the court may refuse to stay the proceeding in any of the following cases: “… 2. The arbitration agreement is invalid….” The Plaintiffs submit that the arbitration clause in this case should be considered invalid on the basis of unconscionability, following the decision of the Supreme Court of Canada in Uber Technologies Inc. v. Heller, 2020 SCC 16 (“Uber”). There, the Supreme Court found the clause requiring an Ontario Uber driver to resolve any dispute with Uber through arbitration in the Netherlands was unconscionable and thereby invalid.
[43] This case is a far cry from Uber. Mr. Heller was an individual food delivery person in Toronto, earning between $400 and $600 a week, up against a multinational corporation. The arbitration clause was found in a 14-page standard form services agreement, on which he was required to click “I agree” when he first logged on to the app. The mediation and arbitration processes under the agreement required a payment of $US 14,500 in up-front administrative fees. The Court found that these costs were disproportionate to the size of an arbitration award that could reasonably have been foreseen when the contract was entered into.
[44] As set out in Uber at paras 65 and 79, unconscionability requires inequality of bargaining power and an improvident bargain. However, “[f]reedom of contract remains the general rule.” Further, “[i]t is precisely because the law’s ordinary assumptions about the bargaining process do not apply that relief against an improvident bargain is justified”: Uber, at para. 86. I am not persuaded that in this case, the ordinary assumptions of the bargaining process do not apply.
[45] The Plaintiffs in this case seek damages of $600,000. They have not provided any evidence as to their employment, finances or sources of income. Although they have stated that having to re-start the litigation as an arbitration might make it unaffordable for them as individuals, there are no particulars to support this assertion. To date, the only step in this action apart from this motion has been the drafting of the Statement of Claim. Meanwhile, although the procedure clause in the PSA states that the arbitration would take place in Vancouver, the procedure would be within the control of the arbitrator. As Lindal submitted, given the current prevalence of video conference hearings, it is quite possible that parties and witnesses from Ontario or elsewhere could participate remotely.
[46] The evidence otherwise does not support an inequality of bargaining power. Although the contract used by Lindal was a standard form, Uber specifically states at para. 88 that standard form contracts do not by themselves establish an inequality of bargaining power. Here, the PSA was only two pages. Further, Michael Kettles’ evidence does not provide any details about the relationship between the parties that would establish an inequality of bargaining power. To the contrary, the evidence suggests that Charles Kettles had a comfortable, personal relationship with representatives of Lindal. Michael Kettles states as follows in his affidavit:
Because of his interest in the Cottage’s design, my father also spoke directly with Lindal representatives. One of my father’s contacts at Lindal was a Lindal vice-president (the “VP”) who lived in the St. Clair Shores area of Michigan. My father could not recall the VP’s name when telling me about him, but recalled that he would occasionally meet with the VP and ask him questions about the design and construction of the Cottage. My father also spoke often of his personal relationship with Sir Walter Lindal, who originally founded Lindal.
[47] In the Statement of Claim, the Plaintiffs have pleaded that Charles Lindal purchased the Lindal product from Axmith “[a]fter several information meetings with Axmith representatives.” Although Lindal was a corporation and Charles Kettles an individual, the Plaintiffs have not pleaded an inequality of bargaining power. Both the evidence and the pleading suggest that Mr. Kettles developed a direct relationship with Lindal and had the opportunity to raise any concerns prior to entering into an agreement.
[48] The Plaintiffs also are concerned about the forum selection clause in the arbitration agreement, which would require that the arbitration take place in Vancouver. For overlapping reasons, the Plaintiffs submit both that the bargain was improvident and that they have met the “strong cause” test to avoid the application of the forum selection clause. As set out in Douez v. Facebook, 2017 SCC 33, at paras. 28-29, a party seeking to avoid the application of a forum selection clause must show strong reasons why the court should not enforce it. The Plaintiffs submit that the bargain was improvident and it has met the “strong cause” test for reasons including that the action relates to a cottage in Ontario, the Plaintiffs have no connection to British Columbia, and none of the witnesses, to the Plaintiffs’ knowledge, are resident in British Columbia.
[49] I do not agree that the bargain was improvident. The location of the arbitration obviously favours Lindal. Lindal is based in the United States. With distribution across Canada, it is not surprising that it would seek to establish a fixed location for arbitrations. However, the cost of an arbitration is not obviously higher than the cost of a trial in Ontario, apart from costs of travel and accommodation. Further, while many of the proposed witnesses live in Ontario, they do not live in Toronto. Moreover, the Plaintiffs, Michael and Michele Kettles live in Texas.
[50] Most importantly, I consider the arbitrator to have control over the location and procedure of the arbitration. The forum selection clause in the PSA is found within the Dispute Resolution provision. The arbitrator controls the procedure of the arbitration and, specifically, concerns about the location and procedure of the arbitration may be raised before the arbitrator. As Lindal has suggested, the arbitrator may consider conducting a video-conference hearing in whole or in part to address the Plaintiffs’ concerns. Given the arbitrator’s control over the procedure of the arbitration, it will be for the arbitrator to determine any issues regarding the venue for the arbitration. In all of the circumstances, I do not consider the bargain to have been improvident.
Conclusion
[51] In sum, I consider there to be an arguable case that the dispute falls within the scope of an arbitration agreement. The fact that Axmith filed a Statement of Defence does not persuade me that a stay should be refused. I also am not satisfied that a stay should be refused on the basis of unconscionability. Therefore, I conclude that the matter should be stayed in favour of arbitration.
Disposition
[52] The motion is allowed and the action is stayed. I encourage the parties to reach agreement on costs. If they are unable to do so, Lindal may provide me with its submissions on costs of no more than four pages, not including attachments, within 14 days of the date of this decision. The Plaintiffs then will have a further 7 days to provide responding submissions with the same limitation on length. The submissions may be sent by e-mail to my judicial assistant, Anna Maria Tiberio.
O’Brien, J.
Released: October 19, 2020
COURT FILE NO.: CV-18-611547
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Margaret Boryczka Gupta, Shashikant Gupta, Michael Anthony Kettles, and Michele Anne Kettles
Plaintiffs/Responding Parties
– and –
Lindal Cedar Homes Ltd., and Axmith & Company Limited also known as Axmith & Company Ltd. formerly known as Bestwood Homes Limited
Defendants/Moving Parties
REASONS FOR DECISION
O’Brien, J.
Released: October 19, 2020