In Wang v. Mattamy Corporation, 2020 ONSC 7012, Mr. Justice Michael A. Penny dismissed Plaintiffs’ application to extend the delay in which to appeal a Master’s decision staying their action in favour of arbitration. As part of his decision making, he had to determine the merits of their proposed appeal. Based on section 7(6) of Ontario’s Arbitration Act, 1991, SO 1991, c 17 which prohibits appeals of decisions under section 7, he held that the Master’s decision “falls squarely” within section 7 and “it is not appropriate for the court to engage in an analysis of the Master’s decision because any review of it is precluded” by section 7(6).
Plaintiffs sought to appeal the decision of the Master in Wang v. Mattamy Corporation, 2019 ONSC 6675 which stayed their action in favour of arbitration. See the earlier Arbitration Matters note “Consumer contract arbitration clauses resist unconscionability/undue influence challenges” regarding the Master’s decision under consideration in Wang v. Mattamy Corporation, 2019 ONSC 6675 as well as a related decision of another Master in Evans v. Mattamy Homes Limited, 2019 ONSC 3883. Each Master dismissed Plaintiffs’ attempts to resist application of an arbitration agreement based on arguments that the agreements were invalid due to unconscionability and undue influence. Both Masters concluded that Plaintiffs had failed to demonstrate any of the elements required to invalidate the agreements. Any alleged pressure was market driven, due more to Plaintiffs vying to purchase a property from a finite number being sold by Defendant and subject to ongoing sales efforts to other prospective purchasers.
Plaintiffs sought an extension of time to file their appeal to the Divisional Court and, if granted, a further extension of the time to perfect their appeal.
Penny J. set out the dispute between the parties and the procedural history leading up to the Master’s decision, summarizing the latter at paras 9-13, and identified the main issues: whether the appeal has merit; and whether Plaintiffs have explained and justified their delay in filing their appeal.
Regarding the merits, Penny J. identified section 7(6) which provides that there is no appeal from the court’s decision under section 7 of the Arbitration Act, 1991, SO 1991, c 17 which reads as follows:
“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.
(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.
(3) An arbitration of the dispute may be commenced and continued while the motion is before the court.
(4) If the court refuses to stay the proceeding,
(a) no arbitration of the dispute shall be commenced; and
(b) an arbitration that has been commenced shall not be continued, and anything done in connection with the arbitration before the court made its decision is without effect.
(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.
(6) There is no appeal from the court’s decision”.
Penny J.’s brief reasoning made short work of the first issue.
“ If it is determined that the arbitration provision applies to the issue that is raised in the proceeding, and thus s. 7 of the Arbitration Act is invoked, then s. 7(6) precludes any appeal from the decision rendered respecting the motion to stay: Eggiman v. Martin, 2019 ONCA 974 at para. 8. Thus, when a decision “falls squarely” within s. 7, it renders the decision “unappealable”: Radewych v. Brookfield Homes (Ontario) Ltd., 2007 ONCA 721 at para. 4”.
Penny J. also spoke to the Master’s jurisdiction to grant or refuse a stay.
“ Although it was not raised at the time before Master Muir, the plaintiffs now claim that Master Muir did not have jurisdiction to grant the stay. I do not agree. A Master has all the jurisdiction of a judge except in the seven expressed instances listed under rule 37.02(2). If masters are to be precluded from hearing motions, there must be an express exclusion in the rule or other provision that gives rise to the motion. There is no express exclusion in rule 37.02(2) or in the Arbitration Act. Master Muir had jurisdiction to make the order that he did. The principles of consistency and coherence support this conclusion. The “court”, under the Rules of Civil Procedure, includes a master”.
Penny J. held the Master’s decision “falls squarely” within section 7 and “it is not appropriate for the court to engage in an analysis of the Master’s decision because any review of it is precluded by s. 7(6)”, referring to Eggiman v. Martin para. 10.
urbitral notes – First, for the Arbitration Matters note on Eggiman v. Martin, 2019 ONCA 974,, see ““very clear” that Court of Appeal lacks jurisdiction to hear appeal of order granting/refusing stay”. In that case, Ontario’s Court of Appeal dismissed an attempt to appeal a motion judge’s decision refusing to stay an action under section 7(1) of Ontario’s Arbitration Act, 1991, SO 1991, c 17. The Court held that section 7(6) was “very clear” that there was no appeal from an order under section 7(1), whether that order grants or refuses the stay, if the arbitration agreement applies to the issue raised in the proceeding. The Court paused to mention that it was not to be seen as agreeing with the analysis engaged in by the motions judge. For the earlier Arbitration Matters note on the decision in first instance, Eggiman v. Martin, 2019 ONSC 1388, see “arbitrator appointment procedure in franchise agreement risks “absurd and likely unfair result””.
Second, for a more in-depth look at how and whether section 7(6) applies to limit appeals, see the equally recent Court of Appeal decision in Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2020 ONCA 612 and the related Arbitration Matters note “Appeal court reaffirms jurisdiction for appeal of stay decision where decision holds arbitration agreement does not apply“.
In Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, Ontario’s Court of Appeal delivered a masterclass in judicial reasoning/drafting. It set out the role of judicial interpretation of statutes, observed how a wrong interpretation is never right, set out its approach to overruling its own precedents, acknowledged new guidance given in TELUS Communications Inc. v. Wellman, 2019 SCC 19 (CanLII),  2 SCR 144 on section 7(5) of Arbitration Act, 1991, SO 1991, c 17 but distinguished its impact from the Court of Appeal’s well-accepted reasoning in Huras v. Primerica Financial Services Ltd., 2000 CanLII 16892 (ON CA) on section 7(6)’s application. Reasserting its interpretation on section 7(6), the Court held that it did have jurisdiction to hear an appeal of a motion judge’s decision purporting to exercise discretion under section 7(5) to deny a stay. On the merits of the appeal, the Court then applied the Supreme Court’s interpretation which overturned the Court of Appeal’s interpretation on section 7(5).
Third, for guidance on the limits to section 7(6)’s application, see Paulpillai Estate v. Yusuf, 2020 ONCA 655 and the Arbitration Mattes note “No appeal lies from an order refusing a stay whether order was made or not”. In that case, Ontario’s Court of Appeal held that it lacked jurisdiction to hear an appeal of a motion judge’s order regarding a stay in favour of arbitration. No formal motion had been made to refer the dispute to arbitration, the motion judge’s dispositive order was silent on the issue of arbitration and any comments on waiver of arbitration were merely obiter. Even assuming that an order might have been made, the Court held it lacked jurisdiction because section 7(6) of the Arbitration Act, 1991, SO 1991, c 17 stipulated no appeal lay from a decision under section 7.