Condo Arbitration, Condo Litigation, Condo Oppression Claims, and Piggybacking

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and MediatorArbitration, Arbitrators, Commercial, Condo Arbitrator, Condo Litigation, Moving Litigation to Arbitration, Oppression Remedies, Real Estate Arbitrator0 Comments

As a Condo Dispute Arbitrator, I am very interested when the Court of Appeal for Ontario addresses an appeal concerning an arbitration clause in a condominium document and a motion to stay Superior Court proceedings in favour of arbitration.

The Case

In the very recent decision Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2021 ONCA 360, the Court of Appeal for Ontario, allowed an appeal from the order of the motion judge dismissing the appellants’ motion to stay an application in favour of arbitration.

The dispute concerned a cost-sharing agreement (“Reciprocal Agreement”), wherein the parties agreed to contribute to the costs of the operation and maintenance of defined Common Facilities.  A dispute arose as to the amounts due under the Reciprocal Agreement, which contained this arbitration clause: “The validity, construction and performance of this Agreement shall be governed by the laws of the Province of Ontario and any dispute that may arise under this Agreement shall be determined by arbitration by a single arbitrator to be agreed upon by the parties within thirty (30) days of written notification by any of the parties of a request for arbitration.”

The Issues

The case report describes that after an unsuccessful mediation, TSCC 1636 indicated that it would proceed to  arbitration over the dispute,  The respondent in appeal disagreed and commenced the application for substantive relief in the Ontario Superior Court of Justice, including for “an Order that the conduct of the [appellants] is oppressive, unfairly prejudicial or unfairly disregards the interests of the [respondent in appeal] pursuant to Section 135 of the Condominium Act, 1998”.  In response the appellants brought a motion to stay the application in favour of arbitration.

The respondent in the appeal resisted the motion on the grounds that the application: (1) involves parties who were not signatories to to the Reciprocal Agreement, and (2) seeks remedies that may not be available through arbitration, including remedies for oppression under s. 135 of the Condominium Act, 1998.

Decision Below

The motion judge dismissed the motion to stay the proceedings in favour of arbitration. While admitting that there were elements of the dispute that could be addressed though arbitration, the motion judge found that the essence of the claim was alleged oppressive conduct. The motion judge concluded “While an arbitration could deal with some aspects of this dispute, and while other aspects remain contingent on how narrow or broad an arbitrator sees the jurisdiction of the arbitration clause in the Reciprocal Agreement and s. 132 of the [Condominium Act, 1998], it is apparent that what I have concluded are the core or essential aspects of this application would need to proceed to this court to be resolved, as they arise under s. 135 of the [Condominium Act, 1998].” and found that the entire matter should proceed in the form of the application before the court and dismissed the motion top stay.

Analysis of the Court of Appeal 

The Court of Appeal stated that the motion judge did not have the benefit of TELUS Communications Inc. v. Wellman, 2019 SCC 19, [2019] 2 S.C.R. 144, when he reached his decision. In TELUS, the Supreme Court of Canada made it clear that a court did not have discretion to refuse to stay claims that were dealt with in an arbitration agreement. In language that has particular application to the case here, Moldaver J. said, at para. 76: “More fundamentally, Mr. Wellman’s interpretation sits at odds with the policy underlying the Arbitration Act that parties to a valid arbitration agreement should abide by their agreement. If accepted, Mr. Wellman’s interpretation would reduce the degree of certainty and predictability associated with arbitration agreements and permit persons who are party to an arbitration agreement to “piggyback” onto the claims of others.”

The Court of Appeal found that:

  1. The dispute as it exists between the respondent in appeal and TSCC 1636 is clearly covered by the very broad language of the arbitration clause, that is, “any dispute that may arise under this Agreement”;
  2. Uber Technologies Inc. v Heller, 2020 SCC 16, 447 (4th) does not apply, since the Court of Appeal did not see any basis upon which it could be said that the arbitration clause in this case is unconscionable;
  3.  It disagreed with the motion judge that the “pith and substance” of the dispute is the asserted oppression claim, and that the core disputes is with respect to the interpretation and application of the Reciprocal Agreement;
  4.  It did not agree with the motion judge that such a claim can only be determined by the court;
  5.  The language of s. 135(1) of the Condominium Act, 1998 is permissive and not  mandatory (“may make an application”);
  6.  Section 135(1) does not oust the jurisdiction of an arbitrator to consider the same relief, if that relief is a part of the dispute in question that properly falls within the terms of the arbitration provision or within the terms of s. 132

Court of Appeal Cautions the Courts

The Court of Appeal cautioned the lower courts to be wary of attempts to avoid arbitration by “piggybacking” claims, stating:

[25] In our view, courts should generally be cautious in their approach to oppression claims of the type asserted here. In particular, courts should be wary of allowing such claims to overtake, and potentially distort, the dispute resolution process that lies at the heart of the Condominium Act, 1998, a central aspect of which is a preference for arbitration over court proceedings. In other words, courts should be alert to the possibility that persons, who are party to an arbitration agreement, are attempting to avoid that process by “piggybacking” onto claims made against others: see e.g. MTCC No. 965 v. MTCC No. 1031 and No. 1056, 2014 ONSC 5362,  at para. 18; see also TELUS, at paras. 76, 98.

May 31, 2021 

David Alderson, Condo Arbitrator 

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About the Author

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and Mediator

David Alderson, LL.B, LL.M (Commercial and Corporate), Lawyer, Qualified Arbitrator and Mediator, has practiced over 38 years as a commercial and business litigator in diverse matters in the courts and in domestic and international arbitration proceedings in Ontario, England & Wales, Bermuda and Dubai. David is also admitted in New York. He is a qualified, experienced and independent arbitrator. The ADR Institute of Canada has accredited David as a Qualified Arbitrator. He accepts appointment as a sole arbitrator and as a panel member in a panel arbitration concerning business, commercial, commercial leasing, commercial rent renewal disputes, condo, contract, construction, distribution, employment, events cancellation, franchise, joint venture, marine, oppression remedy, partnership, procurement, real estate, reinsurance, sale of good, sale of business, technology and transportation disputes. David also offers practice management arbitration of procedural disputes in the courts. He is an experienced commercial mediator. Bio | Lawyer | Arbitrator | Mediator | Contact

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