Ontario – court passes on stay because hockey contract’s arbitration agreement not in play

Presented with disputes stemming from the same, key fact, Mr. Justice James A. Ramsay in Niagara Ice Dogs Hockey Club Inc. v. Ontario Major Junior Hockey League, 2019 ONSC 1713 refused to enjoin a hockey league from holding a disciplinary hearing for a hockey club in favour of that same club’s arbitration with one of its players.  In doing so, Ramsay J. demonstrated that the same fact can trigger separate sets of rights and obligations between the club, the player and the league as well lead to different dispute resolution processes.

Niagara Ice Dogs Hockey Club Inc. (“Club”) applied ex parte for an injunction requiring the Ontario Major Junior Hockey League (“League”) and its commissioner (“Commissioner”) to adjourn a March 18, 2019 internal League appeal hearing of the Commissioner’s February 15, 2019 decision to sanction the Club based on the League’s finding that the Club had breached League rules.

The Club was bound by two (2) separate sets of rights and obligations: those applicable to its membership in the League and those set out in an agreement with one of its players (“Player”).  In May 2018, the Player had complained to the Commissioner that the Club had breached an agreement to pay him $10,000.00 per year for the four (4) years during which he had played for the Club.  The agreement was set out in a side letter between the Club and the Player but had not until then been disclosed to the League.

In response to the Player’s complaint, the League mandated a law firm to investigate.  After having conducted the investigation, including interviewing two (2) of the Club’s representatives, the investigator concluded that the Club had made the alleged deal.  The Commissioner accepted that conclusion and issued a March 1, 2019 decision in which the League:

(i) fined the Club $250,000.00; and,

(ii) deprived the Club of two (2) future draft picks.

The Club filed an appeal with the League on March 1, 2019 and sought the earliest date for an appeal hearing.  The League responded on March 11, 2019 and scheduled a March 18, 2019 hearing.   

On March 14, 2019, the Club wrote the Commissioner requesting him: (i) to arbitrate the dispute between the Club and the Player; and, (ii) to adjourn the appeal hearing in light of the pending request for arbitration.  The League responded on March 14, 2019 refusing to adjourn the appeal.   The next day, on March 15, 2019, the Club applied to the Superior Court for:

(i) an interim injunction requiring the League to adjourn the appeal; and,

(ii) an order staying further disciplinary proceedings by the League against the Club until the dispute between the Club and its Player was arbitrated.

The Club relied on the arbitration agreement contained in the contract between it and the Player and invoked the first three (3) provisions of section 6 of Ontario’s Arbitration Act, 1991, SO 1991, c 17 as the basis for the Court’s jurisdiction:

6 No court shall intervene in matters governed by this Act, except for the following purposes, in accordance with this Act:

1. To assist the conducting of arbitrations.

2. To ensure that arbitrations are conducted in accordance with arbitration agreements.

3. To prevent unequal or unfair treatment of parties to arbitration agreements.

4. To enforce awards.

Ramsay J. dismissed the Club’s application.  He determined that the Commissioner’s decision did not involve the contract between the Club and the Player.

[11] I do not accept the Applicant’s argument because the decision in question did not concern the player’s contract. The commissioner’s decision did not purport to decide the issue between the player and the team. It did not award the player any compensation. The commissioner was not asked to arbitrate the dispute between the league and the player until after he had issued the decision in question. The commissioner imposed a penalty on the Ice Dogs for breach of the league’s rules, by which the Ice Dogs have agreed to abide. I have not been given any evidence of an arbitration clause in the league’s constitution, rules or by-laws.

Having dismissed the application for an injunction, Ramsay J. observed that the Club should “first exhaust the remedies available to them by virtue of their membership in the league.”

The same, key fact drew the attention of the Club, the Player and the League: whether the Club and the Player had entered into an agreement for the annual payment.  That key fact triggered different sets of rights/obligations and different dispute resolution processes:

(i) under the contract between the Club and the Player, the fact involved alleged breach of contract and the Club’s obligation to pay the Player the annual remuneration.  The fact would be determined by arbitration; and,

(ii) under the rules applicable to the Club’s membership in the League, the fact involved alleged breach of the League’s membership rules prohibiting payment of the annual remuneration.  The fact would be determined by another type of dispute resolution as there was no evidence before Ramsay J. of any undertaking to arbitrate involving the League and the Club.

Implicit in the Club’s application is the potential that different dispute resolutions could lead to different determinations of the same fact. Equally implicit in Ramsay J.’s reasons is that the potential for conflicting determinations was not argued, not relevant, not persuasive or not decisive.