Court File and Parties

COURT FILE NO.: CV-23-00695689-0000 DATE: 20230419 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: LINK 427 GENERAL PARTNERSHIP, Applicant AND: HIS MAJESTY THE KING IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF TRANSPORTATION AS REPRESENTED BY ONTARIO INFRASTRUCTURE AND LANDS CORPORATION, FAY MARZUQ and MELISSA RAFFOUL, Defendants

BEFORE: Justice A.P. Ramsay

COUNSEL: Scott McGrath, for the Applicant Devon Johnson, for His Majesty the King of Ontario Represented by the Minister of Transportation as Represented by Ontario Infrastructure and Lands Corporation Tanya A. Pagliaroli, for the Respondents, Fay Marzuq and Melissa Raffoul

HEARD: Oral Reasons given on April 19, 2023

Endorsement

[1] The applicant, Link 427 General Partnership (“the applicant”), commenced this application pursuant to s. 29(4) of the Arbitration Act, 1991, S.O. 1991, c. 17, on March 3, 2023. The applicant seeks an order to enforce an interim order of Arbitrator Douglas Cunningham, K.C., requiring two former employees, and non-parties to the arbitration, Fay Marzuq and Melissa Raffoul (“the respondents”), to attend to be examined for discovery. The applicant requires two or six hours to examine the respondents. The Arbitrator granted the motion and ordered the respondents to attend examinations for discovery for up to six hours each.

[2] The respondents oppose the application. The Minister of Transportation took no position.

[3] For the reasons below, I would dismiss the application.

[4] The parties to the arbitration are described in paragraph one of the applicant’s factums. Those parties are proceeding to arbitration under the Arbitration Act, 1991. Those parties are signatory to an arbitration agreement. The agreement includes a provision that the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, applies.

[5] The applicant relies on the Alberta Court of Appeal decision of Jardine Lloyd Thompson Canada Inc. v. SJO Catlin, 2006 ABCA 18, 264 D.L.R. (4th) 358, leave to appeal refused, [2006] S.C.C.A. No. 87. In Jardine, the Alberta Court of Appeal was asked to consider the scope of examination for discovery in international commercial arbitrations and, on cross-appeal, the decision of a tribunal which ordered production of a confidential standstill agreement. The court held that an arbitration tribunal could not compel a non-party to submit to examinations for discovery under the International Commercial Arbitration Act (“ICAA”) but could seek the assistance from the court in obtaining discovery evidence from third parties. That power is derived from s. 27 of the ICAA, which provides:

The arbitral tribunal, or a party with the approval of the arbitral tribunal, may request from the Supreme Court assistance in taking evidence, and the court may execute the request within its competence and according to its rules on taking evidence.

[6] The present case involves a domestic arbitrator. Unlike a Superior Court Judge, the Arbitrator has no inherent jurisdiction. Jurisdiction is conferred on the Arbitrator by virtue of the Arbitration Act, 1991, and the arbitration agreement between the parties. Section 29 of the Arbitration Act, 1991, governs the taking of evidence and notices to witnesses. Pursuant to s. 29(4), a party or the tribunal may seek a court order or directions with respect to the taking of evidence at the arbitration. The relevant text of the section reads:

On the application of a party or of the arbitral tribunal, the court may make orders and give directions with respect to the taking of evidence for an arbitration as if it were a court proceeding.

[7] In fact, there is no application before me to “make orders” or “give directions”, but rather an application to enforce an interim procedural arbitral decision. The decision relates to non-parties.

[8] The jurisprudence establishes that non-parties are not bound by the terms of an arbitration agreement between the parties, absent an agreement by the non-party. That is to say, an arbitration agreement between the parties to arbitrate does not give an Arbitrator jurisdiction over a non-party: Seidel v. Telus Communications Inc., 2011 SCC 15, [2011] 1 S.C.R. 53, at para 39; Dian Musical Reproduction Rights Agency Limited v. Canadian Recording Industry Association (2005), 68 C.P.R. (4th) 241 (Ont. S.C.), at para. 11. As Echlin J. stated at para. 9 and 11:

BMG was not a party to the arbitration. The arbitrator had no inherent jurisdiction, unlike a Superior Court judge. The jurisdiction did not arise from the arbitration agreement nor from the Arbitration Act, 1991, S.O. 1991 c.C.17.

While the arbitration agreement purports to give the arbitrator the jurisdiction, an arbitration agreement cannot give an arbitrator jurisdiction over a non-party.

[9] The case of Dian involved compelling a non-party to answer written interrogatories. Justice Echlin held that an arbitrator has no right to order a non-party to answer interrogatories outside of a hearing. In Pirner v. Pirner (1997), 34 O.R. (3d) 386 (Gen. Div.), the third-party applicants sought a declaration under s. 48(1) of the Arbitration Act, 1991, that the arbitral award was not binding against them and was invalid insofar as it affects their rights. Justice Jarvis quashed the arbitral award and in doing so, held that strangers to the arbitration agreement will not be bound by the award, in the absence of some agreement to the contrary.

[10] The principle that arbitrators have no jurisdiction over non-parties is aptly summed up by Binnie J. in Seidel where he stated, at para. 39:

Yet it can hardly be denied that arbitrators, who derive their jurisdiction by virtue of the parties’ contract, cannot order relief that would bind third parties, or that only superior courts have the authority to grant declarations and injunctions enforceable against the whole world.

[11] Counsel for the applicant was not aware if the respondents were represented by counsel when the order was made. The court may refuse to compel discovery of a non-party where no notice is given or the non-party is not invited to respond prior to the order being made: See Dian, at para. 18; Pirner, at pp. 390 & 391.

[12] I adopt the words of Perell J. in Farah v. Sauvageau Holdings Inc., 2011 ONSC 1819, 11 C.P.C. (7th) 363, wherein he stated, at para. 66:

Necessity is not the mother of jurisdiction, and moreover, the Legislature recognizes in sections 6, 8 (1), and 18(2) that the courts are available to fill any “gaping holes” in the efficacy of arbitration proceedings. The approach of the Legislature is to limit the court’s ability to stay arbitration proceedings and to direct courts to assist the arbitration process by making available the Superior Court’s jurisdiction in aid of the arbitrator’s jurisdiction, which is enhanced over the parties to the agreement to arbitrate but not over strangers to that agreement.

[13] The respondents, being strangers to the arbitration agreement, are not bound by the terms of the agreement in the absence of their agreement. A well-established body of cases, including the Supreme Court of Canada case of Seidel, establish that the Arbitrator did not have the jurisdiction to make the order sought. As the Arbitrator had no jurisdiction to make the order, the court is not inclined to enforce the procedural order against the non-party respondents, and strangers to the arbitration agreement. I would dismiss the application on that basis alone.

[14] Alternatively, the parties agree that the evidence that the non-parties possess is relevant. However, I am satisfied on the materials before me that the undertakings and questions taken under advisements have been answered. I am further satisfied that the information sought to be elicited from the non-parties, as set out in the respondents’ Compendium, has not only been answered by the non-parties, but as well, was put to multiple individuals, and the applicant obtained answers. I would decline to assess whether the Arbitrator applied the wrong test in arriving at his decision, but, on the evidence before, despite Mr. McGrath’s excellent argument, after the initial refusal, the respondents answered the question, and there does not appear to be any actual, or constructive refusal by the respondents to provide the information.

[15] The parties have agreed to costs.

A.P. Ramsay J. Date: April 19, 2023