COURT FILE NO.: CV-20-00640608-0000 DATE: 2023-07-31 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SPASIW et al, plaintiffs AND: QUALITY GREEN INC. et al, defendants

BEFORE: Associate Justice R. Frank

COUNSEL: R. Rothstein for the defendants, Quintet Ventures Inc., Andrew Robinson, Adrian Robinson, 1160094 B.C. Ltd. and 1161845 B.C. Ltd. (moving parties) A. Spasiw, self-represented plaintiff and on behalf of the plaintiff Astute Ventures Ltd. (responding parties) [1] No one else appearing

HEARD: April 3, 2023

Reasons for Decision

[1] This is a motion by the defendants Quintet Ventures Inc. (“Quintet”), Andrew Robinson, Adrian Robinson, 1160094 B.C Ltd. and 1161845 B.C. Ltd. (collectively, the “Quintet Defendants”) to stay this action in favor of arbitration.

[2] For the reasons that follow, the motion is granted and the action is stayed.

I. Background

(i) Parties and relevant agreements

[3] On August 10, 2018, the plaintiffs, Andrew Spasiw and Astute Ventures Ltd. entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with the Quintet Defendants and others pursuant to which the plaintiffs acquired shares in Quintet. On the same day, the plaintiffs entered into a Shareholders Agreement with the Quintet Defendants and others (the “Shareholders Agreement”, and together with the Share Purchase Agreement, the “Agreements”).

[4] As detailed below, the Share Purchase Agreement and the Shareholders Agreement each contain an arbitration clause (the “Arbitration Clauses”). The Arbitration Clauses in both agreements provide that any dispute concerning their construction, meaning, effect or implementation (including any allegations or disputes regarding alleged breaches) must be submitted to binding arbitration. They also provide that a party seeking injunctive relief, specific performance or any other equitable remedy shall be entitled to seek such remedy in a court of competent jurisdiction.

(ii) Dispute and court proceedings

[5] Starting shortly after the Agreements were entered into, the plaintiffs began to raise certain complaints about the defendants’ performance of their obligations under the Agreements.

[6] On October 30, 2019, Mr. Spasiw filed an application with the court seeking relief under the Canada Business Corporations Act, R.S.C., 1985, c. C-44 (the “2019 Application”), alleging breaches of the Shareholders Agreement and seeking, among other relief, a declaration that the Quintet Defendants had breached the Shareholders Agreement.

[7] On May 6, 2020, the plaintiffs commenced this action by statement of claim seeking the following relief:

a. a declaration that the plaintiffs are entitled to rescind the Share Purchase Agreement;

b. a declaration that the defendants owed and breached their legal duties and/or obligations to the plaintiffs, as more particularly set out below in respect of each defendant, for fraudulent misrepresentation, negligent misrepresentation, conversion and breach of contract;

c. general damages in the amount of $7,000,000 for fraudulent misrepresentation, negligent misrepresentations, conversion and breach of contract;

d. punitive and or exemplary damages against the defendants in the amount of $250,000;

e. a declaration and order pursuant to section 248 of Ontario’s Business Corporations Act, R.S.O. 1990, c. B.16 that the defendants have acted oppressively and unfairly disregarded the plaintiffs’ interests;

f. a declaration that the Share Purchase Agreement between the plaintiffs and Quintet is of no force and effect as the plaintiffs were induced to enter into the Share Purchase Agreement based on misrepresentations and oppressive conduct;

g. an order requiring the defendant 2556410 Ontario Ltd. to distribute profits to the plaintiffs as class B shareholders in the company;

h. an order requiring the Quintet Defendants to provide a full and complete accounting of all activities, and to comply with all of their obligations to the plaintiffs;

i. an order requiring the defendants Quality Green Inc., Quintet and 2556410 Ontario Ltd. to prepare and deliver for inspection, including without limitation, any and all accounts, audited or unaudited financial statements, banking records, sales receipts, and other such financial and administrative documents;

j. an order for restitution and disgorgement of any and all amounts by which the defendants and any entities controlled by them, that have been unjustly enriched as a result of their breaches of their obligations and duties to the plaintiffs due to their oppressive, dishonest, and improper conduct;

k. an order for the immediate payment to the plaintiffs the sum of $6,750,027.95, or the aggregated purchase price for the Quintet shares purchased by the plaintiffs on August 10, 2018;

l. an interim order preventing the defendants from transferring, conveying, charging, or otherwise dissipating assets, other than in the ordinary course of business, until further order of the court;

m. an order pursuant to section 248 of the OBCA for a current and historical valuation of Quintet, Quality Green Inc. and 2556410 Ontario Ltd. and their immediate sale and the distribution of the net sale proceeds to its shareholders, including the plaintiffs;

n. damages for loss of opportunity; and

o. Special and aggravated damages.

[8] The plaintiffs were represented by counsel when the statement of claim was issued. Between May 2020 and November 2020, the Quintet Defendants asked for and obtained an indulgence from the plaintiffs’ counsel before filing a statement of defence in order to investigate the claims. During this period, the parties also engaged in settlement discussions, and the 2019 Application was abandoned by notice of abandonment dated October 29, 2020.

[9] On November 9, 2020, the Quintet Defendants served their statement of defence that includes a pleading that “the Court is not the proper venue to determine this dispute” in view of the Arbitration Clauses.

[10] In December 2020, Mr. Spasiw emailed the defendants, making inquiries about arbitration and a choice of arbitrator.

[11] On January 7, 2021, Mr. Spasiw emailed the Quintet Defendants’ counsel attaching a notice of intention to act in person. Mr. Spasiw indicated that he would be representing himself in the case and asked that the parties “come to an agreement on an arbitrator”.

[12] In January 2021, the plaintiffs released the defendants Janson Le, Robert Dziedzic, and 2556410 Ontario Ltd. from the action.

[13] In the following months, the parties exchanged correspondence about potential arbitrators and terms for arbitrating their dispute, and they engaged in further settlement discussions but were unable to resolve the claims or agree on a process for adjudicating them.

[14] By April 2021, the plaintiffs expressed dissatisfaction with the fact that arbitration had not been commenced and advised that they would be seeking a “trial date” for the action. The parties’ disagreements over the process for adjudicating the plaintiffs’ claims continued through to the fall of 2021. The plaintiffs took the position that the action should continue. The Quintet Defendants took the position that the action should be stayed and that the claims must be determined through arbitration.

[15] In October 2021, the Quintet Defendants’ counsel advised that those defendants intended to bring a motion to stay the action in favour of arbitration. Mr. Spasiw advised that the plaintiffs wished to amend the statement of claim. On April 1, 2022, Mr. Spasiw served the Quintet Defendants’ counsel with a draft amended statement of claim. On May 10, 2022, counsel for the Quintet Defendants advised Mr. Spasiw that the Quintet Defendants did not consent to proposed amendments and still intended to bring a motion to stay the action.

[16] In June 2022, the parties agreed to attend at Civil Practice Court, and an attendance was booked for July 12, 2022. At the July 12 attendance, Mr. Spasiw requested case management of the action. The Quintet Defendants position was that the court should first hear the plaintiffs’ motion to amend their statement of claim, after which the state of the pleadings would be sufficiently clear for the Quintet Defendants to proceed with their motion to stay the action in favour of arbitration. Myers J. ordered that the stay motion and the plaintiffs’ motion for case management were “to await the outcome of the motion to amend”.

[17] On July 14, 2022, Mr. Spasiw informed the Quintet Defendants’ counsel that he was no longer seeking leave to amend his statement of claim. The Quintet Defendants took steps to schedule a stay motion, but the parties had further procedural disagreements. When the Quintet Defendants refused to provide their “contingent consent to case management” in the event the action was not stayed in favour of arbitration, Mr. Spasiw filed a request for case management. Following written submissions, Myers J. released an endorsement dated September 7, 2022 noting that if the action is stayed motion in favour of arbitration, case management will be unnecessary. Myers J. also noted that it was time for the defendants to bring their stay motion or get on with documentary and oral discovery, and that the stay motion needed to be brought forthwith.

[18] The Quintet Defendants served their motion materials for this stay motion on October 7, 2023. The motion was originally returnable on January 6, 2023 and scheduled to be heard in person. However, the motion was confirmed late and did not proceed. It was then rescheduled to be heard virtually on January 26, 2023, but it was adjourned to April 3, 2023 so that, at Mr. Spasiw’s request, it could proceed in person.

II. Legal Framework

[19] The issue to be determined on this motion is whether the plaintiffs’ action should be stayed, in whole or in part, in favor of arbitration.

[20] The relevant provisions of the Arbitration Act, 1991 are as follows:

Stay

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.

Exceptions

(2) However, the court may refuse to stay the proceeding in any of the following cases:

1. A party entered into the arbitration agreement while under a legal incapacity.

2. The arbitration agreement is invalid.

3. The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law.

4. The motion was brought with undue delay.

5. The matter is a proper one for default or summary judgment.

[21] Section 7(5) of the Arbitration Act, 1991 provides another exception to the general rule in s. 7(1). That section provides as follows:

Agreement covering part of dispute

(5) The court may stay the proceeding with respect to the matters dealt with in the arbitration agreement and allow it to continue with respect to other matters if it finds that,

(a) the agreement deals with only some of the matters in respect of which the proceeding was commenced; and

(b) it is reasonable to separate the matters dealt with in the agreement from the other matters.

[22] The Court of Appeal has explained the approach to enforcement of arbitration agreements as follows:

[10] The law favours giving effect to arbitration agreements. This is evident in both legislation and in jurisprudence. Section 7 of the Arbitration Act, 1991 contains mandatory language, stating “the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding” [2].

[23] The Court of Appeal has also outlined the following analytical framework for determining whether to order a stay under s. 7 of the Arbitration Act, 1991:

(1) Is there an arbitration agreement?

(2) What is the subject matter of the dispute?

(3) What is the scope of the arbitration agreement?

(4) Does the dispute arguably fall within the scope of the arbitration agreement?

(5) Are there grounds on which the court should refuse to stay the action? [3]

III. Analysis

(a) Is there an arbitration agreement?

[24] The Arbitration Clauses are arbitration agreements embedded into each of the Agreements. All of the parties to this action are parties to one or both of the Agreements, except Quality Green Inc., which does not oppose this motion.

(b) What is the subject matter of the dispute?

[25] In determining the subject matter of a dispute, the court will determine the “pith and substance” of the subject matter of the dispute. [4] This requires the court to construe the applicable arbitration agreement and the nature of the plaintiffs’ allegations in order to frame the analysis. [5]

[26] The Quintet Defendants submit that the pith and substance of the plaintiffs’ claims directly relate to the meaning, effect and implementation of the Agreements, and to the alleged breaches the Agreements. The claims and allegations include the following:

a. the plaintiffs received no value under the Share Purchase Agreement;

b. the plaintiffs entered into the Share Purchase Agreement on the basis of alleged representations by the Quintet Defendants about Quintet’s financial strength and experience in the cannabis industry, and the Share Purchase Agreement contains express and/or implied terms with respect to the representations;

c. the Quintet Defendants are obligated to redeem the plaintiffs’ shares in Quintet at a fixed price;

d. the Quintet Defendants unfairly disregarded the plaintiffs’ interests” as Quintet shareholders;

e. the Quintet Defendants breached ss. 3.1(e) and 5.1 of the Shareholders Agreement;

f. the Quintet Defendants failed to provide full and accurate disclosure regarding Quintet’s financial capacity; and

g. the Quintet Defendants failed to manage Quintet in accordance with their reasonable expectations about the manner in which its business and affairs would be managed.

[27] The plaintiffs argue that the pith and substance of the claim revolves around their allegations of fraudulent misrepresentation and their oppression claims. They assert that, based on their Charter rights, they cannot be denied their right to have these allegations dealt with by the court rather than through arbitration.

[28] Having considered the allegations in the statement of claim, I do not accept the plaintiffs’ submission that the pith and substance of their claims is fraud and oppression. It is apparent from the pleadings and the nature of the claims that the plaintiffs will be relying on the contractual documents to establish their claims for fraudulent misrepresentation and oppression. Therefore, the claims with respect to misrepresentation largely relate to the alleged failures of the defendants to perform their obligations under the Agreements. [6] This is also the case for the alleged oppression. The claims for disgorgement, unjust enrichment and rescission also relate to or are closely connected with the Agreements. In the result, I find that the plaintiffs’ claims are in pith and substance contractual.

(c) What is the scope of the arbitration agreement?

[29] Section 7.14.1 of the Share Purchase Agreement provides, in part:

7.14.1 Arbitration. Any dispute, difference or question arising between the Parties concerning the construction, meaning, effect or implementation of this Agreement (including any allegations or disputes regarding alleged breaches) shall be submitted to binding arbitration in accordance with the provisions of this Section 7.14. Notwithstanding the foregoing: (i) a claim for indemnification pursuant to a third party claim may be pursued in conjunction with the action or proceeding relating to the third party claim and not by arbitration as contemplated in this Section; and (ii) a Party seeking injunctive relief, specific performance or any other equitable remedy shall be entitled to seek such remedy in a court of competent jurisdiction.

[30] Section 7.7 of the Shareholders Agreement provides, in part:

(a) Arbitration. Any dispute, difference or question arising between the Parties concerning the construction, meaning, effect or implementation of this Agreement (including any allegations or disputes regarding alleged breaches) shall be submitted to binding arbitration in accordance with the provisions of this Section 7.7. Notwithstanding the foregoing a Party seeking injunctive relief, specific performance or any other equitable remedy shall be entitled to seek such remedy in a court of competent jurisdiction.

[31] Certain aspects of the Arbitration Clauses are mandatory requirements to arbitrate, i.e. “shall be submitted to binding arbitration”. Other aspects of the Arbitration Clauses appear to be more permissive than mandatory, i.e. “shall be entitled to seek such remedy in a court of competent jurisdiction”, which may be interpreted as “entitled but not required to seek such remedy in a court of competent jurisdiction”. Thus, although the parties are entitled (but not required) to seek certain types of remedies in a court of competent jurisdiction, this language does not appear to limit the jurisdiction of an arbitrator to deal with such remedies, and the mandatory language of the Arbitration Clauses is broad in scope. [7]

(d) Does the dispute arguably fall within the scope of the arbitration agreement?

[32] The plaintiffs argue that the subject-matter of the dispute is outside the scope of the arbitration agreement. Specifically, they assert that their claims of misrepresentation and for oppression, and the equitable remedies they seek, fall outside the scope of the Arbitration Clauses. I do not agree.

[33] First, the Court of Appeal has made it clear that tort claims do not automatically fall outside of the scope of an arbitration agreement and nullify its applicability. [8] Here, I find that the claims of oppression and misrepresentation are “mingled with the claims of breach of contract” [9] and that the bulk of the claims fall within the Arbitration Clauses as they are “clearly referable” to the Agreements. [10] As the Court of Appeal cautioned in Haas:

[35] Further, I would be reluctant to agree that the presence of tort claims nullifies an arbitration agreement. Justice Laskin cautioned the court to be wary of cases in which a party to an arbitration agreement seeks to avoid it by pleading a common law tort: Piko v. Hudson’s Bay Company (1998), 41 O.R. (3d) 729 (C.A.), at para. 9. Although that case involved possible arbitration under a collective agreement, in my view the principle holds more broadly. [11]

[34] Further, the allegations of fraudulent misrepresentation do not necessarily vitiate the agreement to arbitrate. The following analysis of the Court of Appeal in Haas is applicable:

[36] In Ash v. Corp. of Lloyd’s (1992), 9 O.R. (3d) 755 (C.A.), at para. 9, Carthy J.A. observed that “an allegation that a contract is void ab initio does not make it so until a final judgment of the court”. The court upheld the motion judge’s stay of an action against Lloyds alleging Lloyds’ fraud. Justice Carthy agreed that the strategy of alleging fraud, while depriving the defendant of the contracted choice in respect of arbitration, would impair such arbitration clauses, which he considered to be “too important in international commerce to permit that anomalous result to flow” (at para. 9). The court should lean against a result that undermines arbitration agreements.

[39] Put simply, in cases involving arbitration agreements, fraud does not necessarily vitiate everything. It is a matter of interpretation. The arbitration agreement in this case contains broad language, referring to “any dispute, difference or question…or any failure to agree…respecting this Agreement or anything herein contained then every such dispute, difference or question or failure to agree shall be referred to a single arbitrator” (emphasis added). There is no exclusion for tort claims, misrepresentation or fraud. [12]

[35] Similarly, in this action, the Arbitration Clauses reference “Any dispute, difference or question… concerning the construction, meaning, effect or implementation of this Agreement…”, which is broad language that does not exclude claims for fraudulent misrepresentation or oppression. In addition, the Court of Appeal has recognized that “[s]ubsection 17(2) [of the Arbitration Act, 1991] codifies the common law, and establishes that an arbitration agreement can survive even where the contract in which it is found is determined to be invalid.” [13]

[36] As already noted, the claims for disgorgement, unjust enrichment and rescission relate to or are closely connected with the Agreements and the alleged breaches of those agreements. The plaintiffs’ claims for rescission and disgorgement are based on the same factual matrix as the contractual claims and are pleaded as “in addition and/or in the alternative” to the other claims. Further, although the statement of claim includes a claim for an interim order to prevent the defendants from dissipating assets, the action was commenced in May 2020 and, to date, no steps have been taken to obtain any interim or injunctive relief. In these circumstances, the mere pleading for interim relief is an insufficient basis to find that the dispute does not arguably fall within the scope of the arbitration agreement, and this mitigates against staying the action. [14] In addition, an arbitrator has the power to grant injunctive relief pursuant to s. 8(1) of the Arbitration Act, 1991 such that no party would be left without the ability to seek injunctive relief if the action is stayed.

[37] The Court of Appeal has also explained that, as a general rule, “where it is unclear if the arbitrator has jurisdiction, it is preferable to leave the issue to the arbitrator pursuant to the competence-competence principle”. [15] In Haas, the Court of Appeal applied the competence‑competence principle and rejected an argument by one of the parties that the court should construe the arbitration agreement narrowly and find that the claims in issue fell outside of its scope. The Court of Appeal explained this principle as follows:

I reject the motion judge’s finding that the scope of the arbitration agreement is limited to contractual issues. To the contrary, the scope is broad and, in the normal course, s. 17 of the Arbitration Act, 1991 and the jurisprudence plainly expect that the determination of jurisdiction will be made by the arbitrator, not the court. The motion judge erred in failing to take the relevant principles into account.

[38] In summary on this aspect of the analysis, I find that the claims arguably fall under the Arbitration Clauses. To the extent that there is a challenge to the arbitrator’s jurisdiction, as a general rule, that challenge must be resolved first by the arbitrator. [16]

(e) Are there grounds on which the court should refuse to stay the action?

[39] The plaintiffs assert that the court should refuse to stay the action on basis of the exceptions under s. 7(2) of the Arbitration Act, 1991, as well as an assertion that a stay should be denied because it would violate the plaintiffs’ rights under the Canadian Charter of Rights and Freedoms. [17] I will deal with each of the plaintiffs’ arguments in turn.

1. Did a party enter into the arbitration agreement while under a legal incapacity?

[40] The plaintiffs submit that they entered into the arbitration agreement without legal capacity. The plaintiffs’ evidence on this point is that when Mr. Spasiw executed the Agreements, he “was inexperienced in business transactions, and did not have the benefit of competent legal advise (sic). [He] entered into the agreements without understanding the meaning or significance of arbitration.”

[41] The Quintet Defendants’ evidence is that the plaintiffs were represented by independent counsel during the negotiation and up until the execution of the Agreements, and that the parties and their counsel exchanged multiple drafts of both agreements.

[42] Although the plaintiffs oppose the stay on the basis of legal incapacity, no such allegation is made in the statement of claim. In any event, while it appears that the plaintiffs may be inexperienced in business transactions and dissatisfied with the legal advice they received while negotiating the Agreements, there is no evidence that they lacked legal capacity when they entered into the Arbitration Clauses. There is no basis to refuse a stay on the ground of legal incapacity.

2. Is the arbitration agreement invalid?

[43] The plaintiffs also submit that the arbitration agreement is invalid because the claims fall outside of the Arbitration Clauses. For the reasons outlined above, I find that the claims are within the scope of the arbitration agreement, i.e. the Arbitration Clauses. In any event, the plaintiffs’ submission goes to the scope of the arbitration clause as opposed to its validity. In that regard, I note that Section 7.7 of the Shareholders Agreement includes the following provisions:

(b) Location of Arbitration. Unless the applicable Parties agree otherwise, the venue for arbitration hereunder shall be the City of Toronto, in the Province of Ontario.

(c) Arbitrator. The arbitration shall be heard by a single arbitrator, who is qualified and has the expertise necessary to hear the matter, as mutually agreed to by the applicable Parties. If the applicable Parties are unable to agree upon a single arbitrator, either applicable Party may apply to a court of competent jurisdiction for the appointment of a single arbitrator.

(d) Arbitration Act. The arbitration will be governed by the Arbitration Act, 1991 (Ontario), as amended from time to time.

(e) Binding. The arbitration shall be final and binding on the applicable Parties and no appeals shall lie therefrom.

(f) Costs. The applicable Parties’ costs relating to the arbitration shall be determined by the arbitrator.

(g) Privacy. All meetings and hearings will be held in private, unless the applicable Parties agree otherwise.

(h) Enforcement. Judgment on the award or decision rendered by the arbitrator may be entered in a court of competent jurisdiction.

[44] The Arbitration Clause in Section 7.14.1 of the Share Purchase Agreement contains equivalent provisions. There is nothing invalid or inoperable about the arbitration agreements under the Arbitration Clauses.

3. Is the subject-matter of the dispute not capable of being the subject of arbitration under Ontario law?

[45] In their response to this motion, the plaintiffs’ assert that the subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law because it includes claims of fraud and oppression. The plaintiffs cite no authority for this proposition and there is no basis to find that the subject‑matter of the dispute is not capable of being the subject of arbitration under Ontario law.

4. Was the motion brought with undue delay?

[46] The plaintiffs assert that the stay motion was brought with undue delay. They complain about: (i) the delays by the Quintet Defendants in defending the action; (ii) the delays by the Quintet Defendants in responding to the plaintiffs’ initial proposal to proceed with arbitration (which the plaintiffs subsequently withdrew); (iii) the slow pace taken by the Quintet Defendants to bring this motion; and (iv) the refusal of the Quintet Defendants to consent to case management of the action.

[47] The Quintet Defendants’ position is that they have acted reasonably at all times and that there has been no undue delay. They submit that from the time they delivered their statement of defence in November 2020, they have consistently taken the position that the claims must be arbitrated. They also submit that they informed the plaintiffs at a very early stage of their intention to bring this motion. The Quintet Defendants argue that the delay is the result of the following: (i) attempts by the parties to reach a negotiated settlement; (ii) an initial understanding that the plaintiffs were in agreement that the dispute should be arbitrated; (iii) Mr. Spasiw’s advice that the plaintiffs would be seeking leave to amend the statement of claim (which they ultimately did not do); (iv) ordinary scheduling delays; and (v) various procedural disagreements between the parties that led to the two case conferences before Myers J. referred to above.

[48] In my view, the Quintet Defendants have provided a reasonable explanation with respect to the timing of the motion. The motion was not brought with undue delay.

5. Is the matter a proper one for default or summary judgment?

[49] The plaintiffs made no written submissions on this issue. Although they asserted during oral argument that the matter is a proper one for summary judgment, they did not provide any reasons to support this position other than that are issues of credibility that will require cross‑examination of witnesses. They were unable to explain why an arbitrator would not be able to deal with issues of credibility, or why this makes the action a proper one for summary judgment. The issue of summary judgment does not appear to have been raised at either of the Civil Practice Court attendances in this matter before Myers J., and the plaintiffs have not filed any materials on this motion to support their contention that the matter is a proper one for summary judgment.

[50] In the result, I find that the plaintiffs have not demonstrated that the matter is a proper one for summary judgment.

6. Charter rights asserted by the plaintiffs as a ground for refusing the stay

[51] The plaintiffs oppose this stay motion based on certain Charter claims Mr. Spasiw makes in a separate proceeding he commenced as an application under Court File No. CV-22-00692073-0000 (the “2022 Application”). The respondents to the 2022 Application are The Law Society of Ontario, McMillan Binch LLP (counsel for the Quintet Defendants in this action), David Milosevic (former counsel to the plaintiffs in this action) and Benjamin Bathgate (a lawyer at McMillan Binch LLP, counsel for the Quintet Defendants in this action).

[52] In the 2022 Application, Mr. Spasiw is seeking a declaration that the respondents have offended the principles of fundamental justice and violated Mr. Spasiw’s fundamental freedoms and rights as prescribed in sections 2(b), 7 and 15(1) of the Charter. The grounds listed in Mr. Spasiw’s application include that the proceedings with respect to the action and the steps taken to stay the action in favour of arbitration are Charter violations because they have: (1) restricted Mr. Spasiw’s expression, including his right to be heard by an impartial decision-maker; (2) deprived Mr. Spasiw of his liberty and security interests; and (3) failed to treat Mr. Spasiw with fundamental equality before the law.

[53] In essence, the plaintiffs’ position is that an order requiring the action to proceed to arbitration would be inconsistent with the plaintiffs’ Charter rights because it would preclude their right to freedom of expression, including with respect to the equitable remedies they are seeking, and because no one should be denied their right to have their claim determined by the court.

[54] I do not accept the plaintiffs’ submission that the alleged violation of their Charter rights (which they are pursuing in a separate application) is a basis to decline the requested stay. The plaintiffs’ asserted Charter rights are not a bar to the requested stay, which is expressly permitted under the Arbitration Act, 1991. As noted, the Court of Appeal has recognized the mandatory wording in s. 7 of the Arbitration Act, 1991 and that the law favours giving effect to arbitration agreements, which is evident in both legislation and in jurisprudence. [18]

7. Should the action only be stayed in part?

[55] The Quintet Defendants submit that although the court has discretion under s. 7(5) of the Arbitration Act, 1991 to stay the proceeding with respect to the matters dealt with in an arbitration agreement and allow it to continue with respect to other matters, separating the plaintiffs’ action into two proceedings, one before an arbitrator and the other before a judge, might create inconsistent results. Therefore, they submit, the entire matter must be arbitrated.

[56] In my view, it is not necessary for me to make any determination on this issue as it would be premature to do so before the arbitrator decides on any jurisdictional challenges. [19]

Disposition and Costs

[57] For the reasons outlined above, the Quintet Defendants’ motion is granted and the action is stayed.

[58] In terms of costs, the Quintet Defendants seek partial indemnity costs in the amount of $37,000 (after removing the costs associated with certain steps that had been listed in their cost outline but in respect of which they are no longer seeking costs). They submit that the plaintiffs’ conduct, including by raising constitutional issues that are irrelevant to this motion, unnecessarily lengthened the duration of the motion and caused the Quintet Defendants to incur increased costs.

[59] Although self-represented, the plaintiffs’ costs outline seeks costs in the amount of $200,000. They submit that the motion evolved into issues that include questions about the rule of law, procedural fairness, Charter violations and the right to be heard and judged by an impartial decision‑maker. They submit that the Quintet Defendants lengthened unnecessarily the duration of the proceeding, and that many of the steps they took were improper, vexatious and negligent.

[60] Given that the Quintet Defendants were successful on this motion, I find that they are entitled to their costs on a partial indemnity basis. In determining the quantum of costs, the overriding principles are fairness and reasonableness. [20] I have reviewed the parties’ costs outlines and considered their costs submissions. In addition, I am guided by the factors set out in Rule 57.01(1) when awarding costs. I have also noted the stated purposive approach to cost, namely that costs rules are designed: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements. [21]

[61] Having heard the parties’ costs submissions and reviewed their respective costs outlines, and considering all the relevant factors set out in Rule 57.01(1), I find that it is fair and reasonable in the circumstances, and within the reasonable expectation of an unsuccessful party, for the plaintiffs to pay the Quintet Defendants costs fixed in the amount of $20,000, inclusive of disbursements and taxes, within 60 days.

[62] I order as follows:

1. The action is stayed in favour of the arbitration agreements set out in the Arbitration Clauses in the Shareholders Agreement and Share Purchase Agreement; and

2. The plaintiffs shall pay the Quintet Defendants costs of this motion fixed in the amount of $20,000, inclusive of disbursements and taxes, within 60 days of this order.

R. Frank Associate J. Date: July 31, 2023

[1] By order of Associate Justice Abrams made on January 17, 2023, Mr. Spasiw was granted leave to represent the corporate plaintiff, Astute Ventures Ltd. [2] Haas v. Gunasekaram, 2016 ONCA 744 (“Haas”) at para 10 (emphasis added) [3] Haas v. Gunasekaram, 2016 ONCA 744 (“Haas”) at para 17 [4] Haas at para 21 and ff [5] Haas at paras 22-23 [6] Haas at paras 26-27 [7] Haas at para 29 [8] Haas at para 32 [9] Haas at para 32 citing Matrix Integrated Solutions Ltd. v. Naccarato, 2009 ONCA 593, 97 O.R. (3d) 693 at paras 16-17, which was distinguished on its facts, which in turn cited Dalimpex Ltd. v. Janicki (2003), 64 O.R. (3d) 737 (C.A.) [10] Haas at para 34 [11] Haas at para 35 [12] Haas at para 36 and 39 [13] Haas at para 13 [14] MBN Environmental Engineering Inc. v. Anderson, 2015 ONSC 6333 at para 90 [15] Ciano Trading & Services C.T. & S.R.L. v. Skylink Aviation Inc., 2015 ONCA 89 at para 7; see also Haas at paras 14-15 [16] Union des consommateurs c. Dell Computer Corp., 2007 SCC 34 at para 84 [17] Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11 (the “Charter”) [18] Haas at para 10 [19] Haas at para 44 [20] Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.) [21] 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238 at para 10