Ontario – jurisdiction to correct/amend document affecting others reserved to Superior Court by legislation – #493

In Mensula Bancorp Inc. v. Halton Condominium Corporation No. 137, 2021 ONSC 2575, Madam Justice Marie-Andrée Vermette set aside an award in which the arbitrator, unsatisfied with the interpretation given by the “plain language” of a condominium declaration, “purported to deal with and correct what he thought were errors and inconsistencies”.  Doing so “crossed the line between interpretation and correction/amendment” and decided a matter beyond the scope of the agreement to arbitrate, justifying Vermette J.’s intervention under section 46(1)3 of the Arbitration Act, 1991, SO 1991, c 17.  Because a condominium declaration is “the equivalent of the constitution of a condominium corporation” and, registered, impacts current and prospective condominium owners, section 109 of the Condominium Act, 1998, SO 1998, c 19 reserves jurisdiction to the Superior Court to correct alleged errors and inconsistencies. The parties also reiterated that jurisdiction in their agreement to arbitrate which itself appeared in their applicable documents by virtue of that same legislation.

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Ontario – though authorized, plaintiffs fail to justify stay of their own action after taking too many steps – #491

Despite section 7(1) of the Arbitration Act, 1991, SO 1991, c 17 requiring that a stay application be brought by the party which did not commence the court proceeding, Mr. Justice Christopher de Sa in Deluxe Windoors Manufacturing Inc. v. Bruhm, 2021 ONSC 3616, accepted that the parties’ agreement to arbitrate authorized either party to apply for stay.  Ostensibly authorized to apply to stay its own action, Plaintiffs’ own activity in the action nonetheless prompted de Sa J. to follow Lansens v. Onbelay Automotive Coatings Corp., 2006 CanLII 51177 (ON SC) which dismissed a stay application because defendant seeking the stay had taken several steps in the action before applying for a stay. Regarding Plaintiffs’ application for a stay, de Sa J. stated that “I agree with the Defendant that the Plaintiffs have acted no differently than the defendants in Lansens, in fact they did not simply respond, they initiated this claim”.

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Ontario – agreement to arbitrate not unconscionable where governing law preserves executive’s Employment Standards Act rights – #490

In Leon v. Dealnet Capital Corp., 2021 ONSC 3636, Master Barbara McAfee declined to exercise her discretion under section 7(2) of the Arbitration Act, 1991, SO 1991, c 17 to refuse a stay.  She dismissed the senior executive’s reliance on Uber Technologies Inc. v. Heller, 2020 SCC 16 to invalidate the agreement to arbitrate contained in the employment agreement, noting that the governing law preserved the executive’s right to file an Employment Standards Act, 2000 S.O. 2000, c.41 complaint.  Master McAfee also disagreed that (i) the Business Corporations Act, RSO 1990, c B.16 oppression claim, contained in employer’s counterclaim, was not arbitrable or (ii) the employer had attorned by filing a defense and counterclaim or applied for a stay with “undue” delay. Master McAfee confirmed there was no evidence that employer or its current counsel “noticed” the agreement to arbitrate contained in the employment agreement until later in the action.

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Ontario – legislation permitting application to court does not oust arbitrator’s jurisdiction for same remedy – #485

In Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2021 ONCA 360, Ontario’s Court of Appeal held that wording in the Condominium Act, 1998, SO 1998, c 19 which permits an application to the Superior Court for relief regarding oppression set out in that legislation “does not oust the jurisdiction of an arbitrator to consider the same relief, if that relief is part of the dispute in question that properly falls within the terms of the arbitration provision”.  The Court also expressly accepted that a stay order would result in “parallel proceedings” – arbitration between two (2) parties and court litigation with all four (4) over the balance of the dispute – but concluded that parallel proceedings did not “detract from the central point” that two (2) of the parties must arbitrate.  The Court did observe that the other non-parties to the arbitration “might voluntarily agree to be part of the arbitration proceedings”.

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Ontario – offer to settle in advance of stay application must contain real compromise to justify higher costs – #482

In Kore Meals LLC v. Freshii Development LLC, 2021 ONSC 3736, Mr. Justice Edward M. Morgan provided guidance on how to make an offer to settle in advance of an application to stay which would qualify for the increased costs eligible under Rule 49.10(2) of Ontario’s Rules of Civil Procedure, RRO 1990, Reg 194.  Morgan J. observed that advising that “Defendants were right and the Plaintiff was wrong” and that defendants would apply for a stay contains no real compromise.  Defendants’ offer to refrain from defending or seeking a stay of proceedings if plaintiff would walk away from the claim is not an offer which attracts increased costs.   Morgan J. nonetheless granted costs on a partial indemnity scale, qualifying them as reasonable.  He determined that the motion required “considerable legal research”, counsel “did what it to took to win the motion” and he was “not inclined to second guess [FD]’s counsel’s investment of time and effort” regarding an amount of fees which would not surprise “a sophisticated corporate party”.

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Ontario – security for costs order in recognition application appealable “because it speaks to the response of Canadian courts to international comity” – #479

In China Yantai Friction Co. Ltd. v. Novalex Inc., 2021 ONSC 3571, Ontario’s Divisional Court granted leave to appeal (i) a decision dismissing an application to order that the award debtor deposit the award amount pending opposition to recognition of the award and (ii) a decision granting an order for security for costs against the non-resident award creditor seeking recognition.  The award debtor had not applied to set aside or suspend the award in Beijing where the award was made and had not argued any of the grounds listed in article 36(1)(a) of the International Commercial Arbitration Act, 2017, SO 2017, c 2, Sch 5 to resist recognition.  The Divisional Court held there was “reason to doubt the correctness of the decision”.  Though the matter involved recognition of an arbitral award issued outside of Canada rather than a court decision, the Divisional Court considered the appeal “important because it speaks to the response of Canadian courts to international comity and our relationship to the courts of other countries”.

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