COURT FILE NO.: CV-20-448-00
DATE: 2021-08-13
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Hornepayne First Nation
Applicant
- and -
Ontario First Nations (2008) Limited Partnership
Respondent
COUNSEL: R. Bodner, for the Applicant D. Outerbridge and R. Saab for the Respondent
HEARD: August 5, 2021, at Thunder Bay, Ontario via Video Conference
BEFORE: Mr. Justice F. Bruce Fitzpatrick
Judgment on Application
[1] This Application arises from an award of Clifford Lax (the “Arbitrator”) dated August 20, 2020 (the “Award”). The Arbitrator determined he had jurisdiction to adjudicate a dispute between the Applicant, Hornepayne First Nation (“HFN”) and the Respondent Ontario First Nations (2008) Limited Partnership (“OFNLP”). The dispute arose from a limited partnership agreement (the “Agreement”) where both entities are alleged to be parties. HFN challenged the jurisdiction of the Arbitrator to have heard the dispute. HFN argued it was not a signatory to the Agreement and therefore not bound by the arbitration provisions of the Agreement. For reasons that follow, I find that HFN was a signatory to the Agreement and the Arbitrator had jurisdiction to proceed to adjudicate the dispute pursuant to the arbitration provisions of the Agreement.
Application of the Arbitration Act to this Application
[2] HFN brings this application pursuant to the provisions of section 17(8) of the Arbitrations Act 1991 S.O. 1991 c. 17. That section provides:
Review by court
(8) If the arbitral tribunal rules on an objection as a preliminary question, a party may, within thirty days after receiving notice of the ruling, make an application to the court to decide the matter.
[3] Despite the title of the subsection ‘review by court’, the parties proceeded on this application as if the matter was to be heard as a hearing de novo as opposed to a “review” which would be in the nature of an appeal. This approach arises from the recent decision of Corbett J. sitting in the Divisional Court in the matter Russian Federation v. Luxtona, 2021 ONSC 4605. That case involved an arbitrator determining if they had jurisdiction to hear a matter. In that decision, the Divisional Court considered statutory language of the Ontario International Commercial Arbitration Act 2017 SO 2017, which by Schedules 2 and 5 to that Act adopted for Ontario the provisions of the UNCITRAL Model Law on International Arbitration (the “Model Law”). At paragraph 20 and 21 of Russian Federation Corbett J. set out the relevant sections of the Model Law and the Ontario ICAA as follows:
[20] Article 16 of the Model Law provides:
Competence of arbitral tribunal to rule on its jurisdiction
(1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement ....
(3) .... If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award. (emphasis added)
[21] Subsection 11(1) of the International Commercial Arbitration Act, 2017, provides: If, pursuant to article 16(2) of the Model Law, an arbitral tribunal rules on a plea that it does not have jurisdiction, any party may apply to the Superior Court of Justice to decide the matter. (emphasis added)
[4] It is noted that the language of Article 16(3) of the Model Law is the same as the provisions of section 17(8) of the Arbitration Act.
[5] At paragraph 22 of Russian Federation Corbett J. continued:
[22] The court is “to decide the matter”. It is not "to review the tribunal's decision". "The matter", referenced in both art. 16(1) of the Model Law and s.11(1) of the Act is the issue of the tribunal's jurisdiction. This is clear language conferring original jurisdiction on the court to adjudicate the question of the tribunal's jurisdiction. This language is not qualified by a privative clause or terms of reference for the application. The court's task is entirely described by the phrase “decide the matter”.
[6] I agree with Corbett J.’s analysis. I find that the language used by the Legislature in paragraph 17(8) of the Arbitration Act directs that an application concerning a preliminary question of an arbitrator’s jurisdiction is to be treated as a hearing de novo on application to the Superior Court.
Background Facts
[7] HFN is a so-called “Near Band”, being a First Nation band that does not yet have Federal government recognition under the Indian Act RSC 1985 c 1-5.
[8] The Agreement is a mechanism through which the Government of Ontario equitably distributes gaming revenue to Ontario First Nations and Near Bands. OFNLP is the general partner of the Agreement. One hundred thirty-one Ontario First Nations and Near Bands, save and except the Chippewas of Rama First Nation participate as limited partners in the Agreement. OFNLP was established in 2008 by the Ontario Chiefs in Assembly to receive gaming revenues from Ontario Lottery and Gaming Corporation (“OLG”). The Agreement provides that each limited partner must complete an audit which accounts for the funds it had received in the previous year. The funds must have been spent on “approved purposes”, being (i) community development, (ii) health, (iii) education, (iv) economic development, or (v) cultural development.
[9] The First Nations of Ontario have had a contractual entitlement to receive a portion of OLG gaming and ancillary non-gaming revenues in the province since 1996. The entitlement has arisen from two distinct contractual arrangements. In February 2008, OFNLP was established to continue with the contractual arrangement first struck in 1996. At that time, First Nations Chiefs in Ontario arranged to meet in Thunder Bay on February 6 and 7. It was a very important meeting for all concerned. The Ontario Minister of Aboriginal Affairs was in attendance to present a new arrangement to the Chiefs which was the result of years of negotiations between First Nations and the Province. Ninety-nine point one percent of the Chiefs in attendance voted in favour of the new arrangement.
[10] As a result of the acceptance of the new arrangement, in 2008 OFNLP received and distributed a lump sum to the limited partners, including HFN, and has, since April 2011 received and distributed monthly payments from gross revenues from gaming and ancillary non-gaming operations of OLG in Ontario. In 2014, as the result of a dispute concerning reporting, OFNLP ceased payments to HFN. Ultimately this dispute lead OFNLP to seek to engage the mandatory arbitration provisions of the Agreement.
Position of the Parties
[11] At the commencement of the arbitration hearing in August 2020, HFN made a preliminary objection to the Arbitrator as to jurisdiction. There was no issue before the Arbitrator, or before the Court, that a person purporting to bind HFN attended the Thunder Bay February 6 and 7, 2008 meeting. There is no dispute this person signed the Agreement on behalf of HFN. Before the Arbitrator and on this application, HFN argued that the person who signed the Agreement on behalf of HFN in February 2008 had no authority to do so. Consequently, the Agreement does not bind HFN. OFLNLP argues to the contrary.
The Issue
[12] In my view, the only issue to be determined on this application concerning jurisdiction of the Arbitrator is whether or not HFN is bound to the Agreement by the signature of Noah Mederios, the person who attended the February 2008 meeting in Thunder Bay and signed the Agreement on behalf of HFN.
The Evidence and Findings of Fact
[13] The parties filed a variety of affidavits on this application. There were submissions by both sides that certain affidavits should be struck in their entirety. In my view, these arguments were not sufficiently persuasive to take such a drastic step with regard to any of the materials filed in this matter. However, that is not to say that I am prepared to accept everything said in the affidavits as true or probative on the issue concerning jurisdiction. In fact, in my view, much of what was put before the court, particularly by the applicant, was irrelevant to the issue on this application.
[14] The evidence filed by the applicant provided significant detail of an internal HFN political battle between Chief Laura Medeiros and persons subsequently elected Chief of HFN including the deponent Chief Kocis who was elected Chief in 2014. Chief Medeiros was elected Chief in 2001. I accept the evidence put forward by HFN that she was not reelected in either 2004 or 2007 as elections were not held in those years. An election was held in 2008. In my view, the timing of the election is critical to the issue before the Court.
[15] Based on the evidence presented, I find that an election for the position of Chief of HFN occurred on February 12, 2008. The result of the election was disputed. The response of Chief Medeiros to the result of the election, which saw the defeat of her son Noah Medeiros for the position of Chief was to “void” that election and to continue to hold herself out as Chief of HFN. Nevertheless, she was Chief on February 7, 2008. There was no evidence placed before the Court that any other person held themselves out or was entitled to act as Chief of HFN on that date, and on the next 4 days before the February 12, 2008 election. There was no evidence placed before the Court that OFNLP had any knowledge or awareness of the leadership dispute that was going on inside HFN up to an including February 12, 2008.
[16] The evidence before me was that a person, Noah Medeiros, bearing credentials in the form of a proxy, given by Laura Mederios, (the only person who at the time was holding themselves out as Chief of HFN) attended the Thunder Bay February meeting. The capacity of Mr. Medeiros to represent HFN at that meeting was accepted by the representatives of OFNLP conducting the meeting. I find no evidence was placed before me that would call in to question the legitimacy or propriety of that decision by OFNLP or the Chiefs of Ontario to recognize Mr. Medeiros as having authority to bind HFN. In cross examination, the representative of OFNLP likened the decision to accept Mr. Mederios as being a form of respect and courtesy extended by all Chiefs of Ontario to each other on important occasions such as the Thunder Bay meeting. This approach made eminent sense. What does not make a great deal of sense to me, were the arguments of HFN that somehow OFNLP should have refused to allow Mr. Mederios’ participation at that meeting.
[17] I found Ms. Commandant gave her evidence on this application in a forthright, direct and credible manner when she was cross examined. For the purposes of this hearing, the only evidence that required any scrutiny with regard to credibility revolved around the events of the February 2008 Thunder Bay meeting. The only direct evidence I have about that meeting came from Ms. Commandant. The Agreement was clearly signed by Noah Mederios. The sign in sheet for the meeting was signed by Noah Mederios. No evidence was placed before me that he was not there. HFN argues he should not have been there. I was not persuaded by that argument.
[18] I agree with the argument of OFNLP that the documents tendered by both parties relating to the February 2008 Thunder Bay meeting are business records admissible pursuant to section 35(2) of the Ontario Evidence Act R.S.O. 1990 c E 23. In my view, there was no need for a formal notice to be provided of these particular records as they appeared in the material of both parties.
[19] I do not agree with HFN’s argument that Ms. Commandant’s affidavit should be struck out.
[20] HFN argues OFNLP knew of the disputed status of Linda Mederios prior to February 2008. HFN also points to correspondence dated June 7, 2004 to a solicitor who at the time was retained independently by both HFN and the predecessor for OFNLP. I note the letter was marked “without prejudice” which was odd as it was from a member of HFN ostensibly seeking legal advice from HFN’s counsel. I did not find the submission of HFN that knowledge of a solicitor received in confidence from one client, Client 1 about internal political problems of Client 1 could be found to inform and bind another independent client of that same solicitor, Client 2. In my view, this kind of assertion flies in the face of the primary professional obligation of client confidentiality of solicitors as well as the practical concern of how it is that solicitors are expected to be so omniscient as to connect dots four years after the fact. HFN argues that in 2008, a solicitor retained in 2004 for both HFN and the predecessor for OFNLP should have brought forward the independent knowledge of HFN’s internal woes, to inform OFNLP to stop Noah Mederios from signing the agreement. This was not a persuasive argument.
[21] I do not accept the HFN argument that OFNLP had knowledge that Ms. Mederios’ status as Chief was disputed as of February 7, 2008. I do not accept that on the evidence provided on this matter, it would be reasonable to conclude that OFNLP could have acted in any other way than it did during the Thunder Bay meeting of February 2008.
[22] In the circumstances of this case, the timing of the February 12, 2008 election and the absolute lack of evidence that any other person was holding themselves out as Chief of HFN as of February 7 or 8, 2008 is fatal to the position taken by HFN as to the status of HFN as a signatory and therefore party to the Agreement at any time material to the issue of the Arbitrator’s jurisdiction to hear the matter.
[23] HFN also argued that the HFN Band Council holding office in February 2008 did not issue a Band Council Resolution (BCR) for any action taken in respect of either the Agreement or Mr. Medeiros’ participation in the Thunder Bay meeting. I accept no BCR was prepared in respect of the events of February 2008. However, I am not persuaded that circumstance is dispositive of anything in this matter. First, I accept the arguments of OFNLP that HFN was not at the time covered by the provisions of section 2(3) of the Indian Act RSC 1985 c 1-5. That section provides as follows:
Exercise of powers conferred on band or council
(3) Unless the context otherwise requires or this Act otherwise provides,
(a) a power conferred on a band shall be deemed not to be exercised unless it is exercised pursuant to the consent of a majority of the electors of the band; and
(b) a power conferred on the council of a band shall be deemed not to be exercised unless it is exercised pursuant to the consent of a majority of the councillors of the band present at a meeting of the council duly convened.
[24] HFN was and is a Near Band. By definition, Near Bands are not covered by the provisions of the Indian Act. Second, the Chiefs of Ontario and the OFNLP in charge of the ratification process did not require representatives to present such BCR evidence as a condition precedent to voting on the Agreement. Again, this position makes eminent sense given the context of mutual respect among the leadership of the various Ontario First Nations coming together to vote on an issue of great importance to all the people of Ontario.
[25] I am persuaded by the argument of OFNLP that no other person was holding themselves out as Chief on the date the agreement was signed. Counsel for HFN fairly conceded there was no evidence before the Court that in February 2008 any member of HFN was opposed to the signing of the Agreement. There was also no evidence before the court that, before 2020, any member or person holding an elected position with HFN took the position now taken on this hearing regarding HFN not being a party to the Agreement.
[26] I accept and find on this hearing there is evidence of part performance on the part of HFN respecting the Agreement. This evidence is the fact that HFN did receive proceeds under the Agreement for the period 2008 to 2014. In my view, this is the main benefit to HFN of the Agreement. OFNLP continues to hold funds otherwise payable to HFN under the Agreement pending the outcome of this hearing and another appeal of the main award of the Arbitrator.
[27] Whatever the status of Laura Mederios after February 7, 2008, I find that no person in authority representing HFN sought to have the Near Band resile from the terms of the Agreement until OFNLP sought to bring the matter before the Arbitrator. Despite subsequent court rulings about Ms. Mederios’ status after February 12, 2008, those rulings do not disturb the legal impact of a representative of HFN duly signing the Agreement on February 7, 2008 and then HFN taking the benefits of said Agreement for a period of some six years, 2008 to 2014.
[28] On a de novo basis, relying on the evidence filed by the parties, I find that HFN was a party to the Agreement at all material times necessary for the Arbitrator to determine he had jurisdiction to arbitrate the dispute placed before him by OFNLP.
[29] If the parties and I were wrong to proceed on this application as a hearing de novo, I have considered the decision of the Arbitrator independently. I find he was correct in finding he had jurisdiction to proceed. I find he was correct to find that HFN had duly signed the Agreement. I find he was correct to find that there was evidence of Noah Mederios’ proper attendance at the Thunder Bay meeting. I find he was correct to find that no BCR was required to authorize Noah Mederios to attend. I find he was correct to conclude that the Agreement did not impose any additional liability or contractual responsibility on HFN beyond that to which they had been subject as the result of the contract to which they were a party that had commenced in 1996.
[30] I note the Arbitrator had the opportunity to question Chief Kocis directly. He had the benefit of an answer by Chief Kocis to the effect he too would have signed the Agreement had he been in attendance at the February 2008 meeting.
[31] I found the Arbitrator’s reasons to be cogent, well written, thorough and legally correct. His findings are consistent with ones I have found on this hearing. They are consistent that the Arbitrator had jurisdiction to proceed.
[32] I acknowledge HFN has asserted that the Arbitrator failed to act in a procedurally fair manner and exhibited a reasonable apprehension of bias. In my view, he did not act in procedurally unfair manner. The procedure on the Arbitration was determined by the terms of the Agreement and in consultation with the parties in a pre-hearing process. Further, any specific failure to allow cross examination of the parties has been cured by the cross examination permitted on this hearing.
[33] I do not accept the argument that the conduct of the Arbitrator on the jurisdiction hearing of August 6, 2020 displayed a reasonable apprehension of bias. I could find nothing in the record filed that would assist HFN in that assertion. Such arguments are very serious and require detailed particulars of the conduct of an adjudicator. Such particulars were lacking on this hearing. While a 140 page transcript of the three hour proceeding appeared in the record, I was not directed in any affidavit material or in the facta of the parties to any specific comments or actions of the Arbitrator from which I could determine that the Arbitrator had acted in a manner leading a reasonable person to assess that he was biased.
[34] I find there is no basis to find the Arbitrator acted in a biased manner. I find the Arbitrator was correct in his decision that he had jurisdiction over the matter.
[35] For all of the reasons above, the application is dismissed with costs payable by HFN to OFNLP on a partial indemnity basis.
[36] The parties should be familiar with my view on costs as the result of my decision on costs in Hornepayne First Nation v. Ontario First Nations (2008) Ltd., 2021 ONSC 4575 released in late June of this year and involving the same counsel as here. The efforts expended on this motion were similar to the previous matter in my view. I hope this will inform counsel’s discussions on costs and perhaps lead them to an agreement without the necessity of further submissions.
[37] If no agreement is reached, the parties will make written submissions regarding costs. Submissions will be limited to two pages plus a bill of costs. OFLNP shall provide its submission on or before August 27, 2021. HFN shall provide its submission on or before September 3, 2021.
“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick
Released: August 13, 2021
COURT FILE NO.: CV-20-448-00
DATE: 2021-08-13
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Hornepayne First Nation
Applicant
- and -
Ontario First Nations (2008) Limited Partnership
Respondent
JUDGMENT ON APPLICATION
Fitzpatrick J.
Released: August 13, 2021
/lvp