Court Stays Injunction Claim in Favour of Arbitration / Refuses to Consolidate Arbitration Proceedings Without Consent of All Parties

Andrew Ottaway, B.A. (Hons.), LL.B.Arbitration, Civil Litigation, Commercial and Contract Litigation, Commercial Arbitration, Commercial Contracts, Commercial Litigation, Contract Termination, Injunction & Specific Performance, Insurance0 Comments

In Loan Away Inc. v. Western Life Assurance Company, 2018 ONSC 7229, the plaintiff had an agreement with the defendant by which the plaintiff sold the defendant’s insurance policies in return for payments by the defendant.  The defendant ceased making payments and the plaintiff commenced an action against the defendant for an injunction to require the defendant to make the payments to the plaintiff and to prevent the defendant from terminating the insurance policies that the plaintiff had sold on the defendant’s behalf.

The defendant relied upon an arbitration clause in its agreement with the plaintiff to stay the action.  The plaintiff argued, among other things, that the claim should not be stayed because the arbitration clause contained arbitration clause contained an exception for requests for a temporary restraining order or other forms of injunctive relief. The plaintiff argued that its request for a permanent injunction fell under the category of “other forms of injunctive relief”. The Judge cited Dancap Productions Inc. v. Key Brand Entertainment Inc., 2009 ONCA 135 it is “arguable”, in which the Court of Appeal stated that where it is “arguable” that a dispute falls within the terms of an arbitration agreement, the court should grant a stay and refer the issue of jurisdiction to the arbitral tribunal. The Judge found that whether an interim injunction whether a request for a permanent injunction falls within the terms of the arbitration agreement and therefore the matter should be referred to the arbitrator for determination.

The plaintiff also argued that, if the action was stayed, the resulting arbitration between the plaintiff and the defendant should be joined with another arbitration between the defendant and a third party.

The Judge considered section 8(4) of the Arbitration Act, which allows the Court to consolidate two arbitrations.  The Judge noted that the Act requires that an application for consolidation be made by all parties.  As the defendant and the party to the other arbitration objected to consolidation, the Judge determined that he did not have jurisdiction to consolidate the arbitrations.

The lawyers at Gilbertson Davis LLP have experience with insurance disputes, commercial disputes, injunctive relief and arbitration (as both counsel and arbitrators).  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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