Recent Cases in ADR
Condominium Corporation Failed to Follow Mandatory Mediation and Arbitration Provisions
Metropolitan Condominium Corporation No. 1143 v. Peng
2008 CanLII 1951 (ON S.C.) – January 25, 2008
Condominium Act (the “Act”) – Mandatory mediation and arbitration provisions – MTCC 1143 (the “Corporation”) alleged that Li Peng (a unit owner) conducted himself in a loud and disturbing manner, contrary to the Corporation’s Rules – Li submitted that he did not behave in an inappropriate manner that would have disturbed his neighbours – From May 2005 to January 2007, the Corporation sent Li eight letters complaining about his conduct, without response from Li – In February 2007, the Corporation wrote to Li, advising him that it would be initiating mediation proceedings under the Act – In the absence of a response, the Corporation sent Li a letter stating that it had no choice but to institute arbitration proceedings, which would take place whether or not he attended – The Corporation then sent another letter to Li stating that if he did not agree to mediate or arbitrate the dispute, it would commence a court application – The Corporation proceeded with its court application for a compliance order pursuant to the Act, requiring Li to comply with the Corporation’s Declaration and Rules – Li submitted that the Corporation was prohibited by ss. 134(2) of the Act from obtaining an order for compliance, having failed to proceed with mediation and arbitration in accordance with s. 132 of the Act – The Corporation submitted that it was not required to proceed with mediation or arbitration because the issues involved in the application did not constitute a “disagreement” within the meaning of ss. 132(4) of the Act, rather it was seeking to enforce its Declaration and Rules – In the alternative, the Corporation submitted that mediation and arbitration were not “available” to it as a result of Li’s failure to respond to its requests for such proceedings – The Court held that the issue between the Corporation and Li did constitute a “disagreement” within the meaning of ss. 132(4) of the Act – Citing Juriansz J., the Court concluded that the term “disagreement” should be given a generous interpretation and that s. 132 applies to disagreements about the validity, interpretation, application, or non-application of the Corporation’s Declaration, By-laws and Rules – The fact that s. 132 applied to the dispute was further confirmed by the actions of the Corporation, which instead of initially commencing an application, instituted mediation and arbitration proceedings – The Court also held that although the mediation process was not available to the Corporation, the arbitration process was – The arbitration proceedings could have taken place in the absence of Li – The Corporation was accordingly not entitled to apply for a compliance order under the Act – The application was dismissed.
http://www.canlii.org/en/on/onsc/doc/2008/2008canlii1951/2008canlii1951.html
Court of Appeal Refuses to Narrow Interpretation of Arbitration Clause
Greenfield Ethanol Inc. v. Suncor Energy Products Inc.
2007 ONCA 823 (CanLII) – November 30, 2007
Arbitration clause – The issue in this appeal was the interpretation of an arbitration clause contained in an agreement for the long-term supply of fuel grade ethanol between Commercial Alcohols Inc. (now Greenfield Ethanol Inc.) and Sunoco Inc. (now Suncor Energy Products Inc.) – The agreement provided that if a dispute as to the interpretation of the agreement or with respect to the performance of a party to the agreement arose, the parties would attempt to resolve the dispute through discussions between designated officers, failing which the dispute would proceed to arbitration – Commercial Alcohols commenced an arbitration proceeding with several claims – Sunoco argued that the claim for damages for breach of fiduciary duty was not covered by the arbitration clause and refused to proceed with arbitration – The application judge found that Commercial Alcohols’ claim referred specifically to a number of provisions in the agreement that were alleged to have given rise to fiduciary obligations and concluded that the claims were arbitrable – On appeal, Sonoco argued that the application judge erred in that there was no specific clause in the agreement that expressly established a fiduciary duty – The Court of Appeal disagreed and found that the broadly worded arbitration clause ought not be interpreted that narrowly – Given Commercial Alcohols’ reliance on the agreement as giving rise to a fiduciary duty, the application judge did not err in finding that the claim for breach of fiduciary duty is not clearly outside of the scope of the arbitration clause – The appeal was dismissed.
http://www.canlii.org/en/on/onca/doc/2007/2007onca823/2007onca823.html
Court Grants Stay of Proceedings Against Third Party
Delamarter v. Desjardins Security Life Assurance Company (Desjardins-Laurentian Life Assurance Company Inc.)
2007 CanLII 49485 (ON S.C.) – November 15, 2007
Arbitration Act (the “Act”) – Stay of proceedings – This case involved a motion brought by a third party, INTESA BANK CANADA (IBC), to stay third party proceedings commenced against them by the defendant, Desjardins Security Life Assurance Company (Desjardins) – IBC and Desjardins entered into an agreement whereby Desjardins would insure loans granted by IBC to its clients, subject to the clients satisfying Desjardins’ insurability requirements – The Agreement contained an arbitration clause, which stated: “The parties express their formal intention to resolve any disagreement resulting from the interpretation or execution of this Agreement, excluding the provisions stated in the contract, according to fairness and custom rather than the strict rules of law. Any disagreement which cannot be resolved by the parties shall be submitted to arbitration […]” – In November 2003, Mrs. Delamarter completed an application for life insurance with respect to a mortgage – Her application was refused by Desjardins and she died of cancer shortly thereafter – Her husband found out about the refusal after her death and commenced an action against Desjardins – The issue before the Court was whether Desjardins was entitled to involve IBC as a third party in those proceedings or whether it was bound to arbitrate pursuant to the agreement entered into by Desjardins and IBC – Desjardins argued that ss. 7(2) of the Act vested the Court with the authority to refuse a stay of proceedings and was applicable in this case because (1) the agreement to arbitrate was invalid in that it was vague due to the phrase, “excluding the provisions stated in the contract”; (2) the subject-matter in dispute was not capable of being arbitrated as the issue of negligence raised went beyond the four corners of the agreement; and (3) there had been undue delay in invoking the agreement – With respect to the first argument, the Court held that it was open to treat the phrase: “excluding the provisions stated in the contract” in the arbitration clause as “surplusage” and excise it from the provision, as it was common ground that there were no such exclusions – Read without the offending phrase, the parties’ intention to submit any disputes to arbitration was clear and unambiguous – With respect to the second argument, the Court held that ss. 17(1) of the Act granted arbitral tribunals the authority to rule on objections with respect to the exercise or validity of an agreement to arbitrate – With respect to the third argument, the Court found that there had not been undue delay – The motion for a stay of proceedings was granted.
http://www.canlii.org/en/on/onsc/doc/2007/2007canlii49485/2007canlii49485.html
Arbitrator’s Ruling Went Beyond the Scope of the Arbitration Agreement
Smyth v. Medical Advisory Committee of the Perth
2007 CanLII 46718 (ON S.C.) – November 2, 2007
Arbitration ruling (the “Ruling) – The parties agreed to have the issues pertaining to the Medical Advisory Committee’s denial of Dr. Smyth’s request for hospital privileges dealt with by way of binding and confidential arbitration – The Arbitrator’s Ruling supported the denial of his reappointment to the medical staff at Falls District Hospital – Dr. Smyth applied to have the Ruling set aside, arguing that the Arbitrator dealt with issues that went beyond the scope of the Arbitration Agreement – He submitted that the issues to be dealt with at the Arbitration were intended to be two narrow issues that were specifically reiterated in the Arbitration Agreement – The Respondents argued that the what was put before the arbitrator was the appropriateness of the Medical Advisory Committee’s recommendation and the broader issue of the disposition of Dr. Smyth’s application for reappointment – The Court disagreed with the Respondent’s position and found that the only two issues that were to be dealt with at the arbitration hearing were the two issues specifically reiterated in the Arbitration Agreement – Had the parties intended the scope of the Arbitration Agreement to include additional matters, specific wording, such as a basket clause, would have been included in it – The Ruling made by the Arbitrator clearly dealt with matters beyond the scope of the two specific issues set out in the Arbitration Agreement – The Ruling was set aside and a new Arbitration hearing on the two specific issues was ordered – Dr. Smyth was granted full hospital privileges pending the completion of the new arbitration hearing.
http://www.canlii.org/en/on/onsc/doc/2007/2007canlii46718/2007canlii46718.html
Nayla Mitha :: About Author :: Email
Leave a Reply