Court of Appeal Considers Law Applicable to Bifurcation of Disputes between Court and Arbitration

Andrew Ottaway, B.A. (Hons.), LL.B.Arbitration, Civil Litigation, Commercial, Commercial and Contract Litigation, Commercial Arbitration, Commercial Litigation, Contract Disputes0 Comments

In Wellman v. TELUS Communications Company, 2017 ONCA 433, the Ontario Court of Appeal recently considered the law applicable to determining whether to bifurcate a dispute between court proceedings and arbitration.  

In Wellman v. TELUS, the plaintiffs consisted of consumers and businesses.  The plaintiffs commenced a class action against the defendant, Telus, regarding alleged overbilling.  The Telus contact contained an arbitration clause.  Telus acknowledged that the arbitration clause was not binding on the consumer plaintiffs (due to the Consumer Protection Act, 2002).  But Telus’s position was the the business plaintiffs were bound by the arbitration clause.

Telus brought a motion to stay the business plaintiffs’ class action in favour of arbitration.  Telus relied upon, among other things, section 7(5) of the Ontario Arbitration Act, which provides for a partial stay of court proceedings to be granted where an arbitration agreement deals with only some of the matters in respect of which the proceeding was commenced and it is reasonable to separate the matters dealt with in the agreement from the other matters.  The motion judge refused the grant a partial stay under Section 7(5) and dismissed the motion.

The defendant appealed, arguing that the motion judge had applied the wrong law.  Specifically, the defendant argued that the decision of the Supreme Court of Canada in Seidel v. TELUS Communications Inc., 2011 SCC 15 (decided under British Columbia legislation) overtook the Ontario Court of Appeal’s decision in Griffin v. Dell Canada Inc., 2010 ONCA 29 (decided under Ontario legislation).  The defendant stated that Seidel required the court to give effect to the arbitration clause even if that led to a bifurcation of proceedings.

The Court of Appeal rejected the defendant’s argument, finding that the differences between the legislation of Ontario and British Columbia explained the different approaches in Griffin and Seidel to the bifurcation of proceedings where some claims are subject to an arbitration agreement and some are not. The Court found that, in Ontario, the legislature chose to provide the court with the discretion to separate disputes subject to an arbitration clause from other matters in the litigation under section 7(5).  The Court, therefore, had the discretion to refuse to enforce the arbitration clause.  The Court of Appeal dismissed the defendant’s appeal.

The lawyers at Gilbertson Davis LLP have experience with commencing and challenging arbitration proceedings.  Please contact us for an initial consultation.

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About the Author
Andrew Ottaway, B.A. (Hons.), LL.B.

Andrew Ottaway, B.A. (Hons.), LL.B.

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