Court File and Parties
COURT FILE NO.: CV-19-00613397-0000
DATE: 20210719
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: KAREN IRWIN
AND:
PROTIVITI, A DIVISION OF ROBERT HALF CANADA INC. and ROBERT HALF INTERNATIONAL INC.
BEFORE: Justice A. Ramsay
COUNSEL: Christopher Foulon and Daniel Hunter, for the Plaintiff
James Heeney, for the Defendants
HEARD: April 21, 2021
ENDORSEMENT
The defendants move under rule 21.01 of the Rules of Civil Procedure to stay this action or, alternatively, stay the action only as against the Defendants, Robert Half International Inc. (“RHI”) and Robert Half Canada Inc. (“RHI Canada”), on the basis that the subject matter of the action is governed by an arbitration provision of an Employment Agreement with the plaintiff which mandates binding arbitration.
The plaintiff, Karen Irwin, was employed with the defendant PROTIVITI, a Division of Robert Half Canada Inc. (“RHI”), as a Managing Director in the Company’s Risk and Compliance group from February 6, 2014 to April 2, 2017. PROTIVITI, Robert Half Canada Inc. is a wholly owned subsidiary of Robert Half International Inc.
The plaintiff submits that she was constructively dismissed as a result of what she argues were changes to the fundamental terms and conditions of her employment. The plaintiff had executed an employment agreement with PROTIVITI on December 8, 2013, (the “Employment Agreement”). There is no dispute that the plaintiff negotiated some of the terms of the Employment Agreement and had the benefit of counsel at various stages of the negotiation.
The Employment Agreement contains an arbitration clause which provides, inter alia, that “Any dispute or claim arising out of or relating to Employee's employment,
termination of employment or any provision of this Agreement, whether based on contract or tort or otherwise shall be submitted to arbitration pursuant to applicable provincial law having jurisdiction over the dispute or claim. The parties agree that neither punitive damages nor legal fees may be awarded in an arbitration proceeding required by this Agreement…. (emphasis added).
The plaintiff commenced this action against the defendants on January 28, 2019, seeking damages for constructive dismissal, damages for mental distress, punitive, aggravative damages and exemplary damages. In her affidavit filed in support of the motion, the plaintiff deposes that her compensation was reduced and there was a change in her position, duties and responsibilities. Her health deteriorated. She attributed the decline in her health to her workplace. She suffered from severe depression, anxiety, insomnia, and daily fatigue, and painful physical symptoms, and feared attending the workplace. She contemplated bringing an application before the Ontario Human Rights Tribunal for discrimination, bullying, harassment and a toxic work environment. She was placed on a medical leave of absence on April 7, 2017.
The defendants submit that the dispute falls within the scope of the arbitration provision and ask that this court to stay the action under section 7(1) of the Arbitrations Act, 1991 (“the Arbitration Act”).
The defendants rely on subrule 21.01 of the Rule of Civil Procedure, RRO 1990, Reg 194. Subrule 21.01(3) provides that a defendant may move to have an action stayed or dismissed on the ground that the court has no jurisdiction over the subject matter of the action. The general prohibition against adducing evidence contained in rule 21.01(2) on a rule 21.01(1) motion does not apply to motions under subrule 21.01(3), and extensive materials was filed by both sides including affidavits, transcripts of examinations for discovery and answers to undertakings; in fact, evidence which went beyond providing a proper factual matrix for the motion and encroached upon the determination of the validity and enforceability of the arbitration clause.
The plaintiff submits that the arbitration clause is invalid and void ab initio as it attempts to contract out of the minimum employment standards legislation contrary to the Employment Standards Act, 2000, R.S.O. 2000, c. 41 (“the ESA”), and the guaranteed protections under the Ontario Human Rights Code, R.S.O 1990 c. H. 19 (“the Code”) and is unconscionable.
The defendants also rely on subsection 7(1) of the Arbitration Act, which provides that where a party to an arbitration agreement initiates a proceeding which must be submitted to arbitration under the agreement, the court shall, stay the proceeding, except in limited circumstances, which include i) the party being under a legal incapacity when the agreement was entered into, ii) the agreement is invalid, iii) the dispute is not capable of being arbitrated under Ontario law, iv) the party delayed in bringing the motion, v) the matter is a proper one for default or summary judgment.
The plaintiff does not dispute that there is an arbitration clause. She does not dispute that she negotiated certain terms of the Employment Agreement, and at times, with the assistance of counsel. She submits, however, that the arbitration clause was not brought to her attention and disputes the validity of the clause. She submits that it is illegal, void and unenforceable as it conflicts with the minimum standards mandated by provincial employment standards legislation and human rights legislation. She also argues that the clause is unconscionable.
Pursuant to clause 2 of section 7(1) of the Arbitration Act, an arbitration agreement that is invalid is an exception to the mandatory requirement to stay the proceedings. However, the statute and the jurisprudence establish that the determination of the validity of the arbitration clause is within the jurisdiction of the arbitral tribunal.
Section 17 (1) of the Arbitration Act provides that: “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.”
The jurisprudence as well establishes that where there is a jurisdictional challenge, the issue must first to be resolved by the arbitrator: See: Haas v. Gunasekaram, 2016 ONCA 744 at para. 14 [Haas]; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [Dell Computer Corp.], and Ciano Trading & Services C.T. & S.R.L. v. Skylink Aviation Inc., 2015 ONCA 89, at para. 7.
As Lauwers J.A. stated in Haas: “The law favours giving effect to arbitration agreements”, and, the Supreme Court of Canada has clearly stated in Dell Computer Corp. that “arbitrators should be allowed to exercise their power to rule first on their own jurisdiction” (at para. 70). And, as articulated by the Ontario Court of Appeal by Lauwers J.A., who stated emphatically at paragraph 12 of Haas:
“… the statutory language in s.7 of the current Arbitration Act is directory, not equivocal. It strongly favours giving effect to an arbitration agreement. This policy direction is reinforced by s. 17 of the Arbitration Act:
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.”
Given the plaintiff’s challenge to the validity of the arbitration clause, the directive of the Arbitration Act, and the body of appellate case law which has addressed this issue, in my view, a stay should be granted pending a determination by an arbitral tribunal of the validity of the arbitration clause.
Pursuant to section 106 of the Courts of Justice Act, R.S.O. 1990 c. C.43, the court may stay any proceeding on such terms as are considered just. In the circumstances, the action against the defendants is stayed and the matter referred to arbitration to determine the jurisdictional challenge.
If the parties cannot agree on costs, the moving party may deliver costs submissions within twenty days of the date of this decision limited to three pages, excluding the Costs Outline, and the responding party may deliver costs submissions fifteen days thereafter.
A. Ramsay J.
Date: July 19, 2021