Ontario – Multiplicity of proceedings not a basis to refuse a stay of action in favour of arbitration.
CASE #003E
Star Woodworking Ltd. v. Improve Inc.
2021 ONSC 4940 (CanLII)
F.L. Myers J., July 13, 2021
This case considered whether the Court should stay four actions under s. 7(1) of the Arbitration Act, 1991 (“Arbitration Act”) pending the disposition of a condominium dispute arbitration. Justice Myers noted that the condominium corporation was a necessary party but really “a bit player”.
The case involved a fraudulent misrepresentation claim against the owner of the corporate defendant and others arising from the purchase of a condominium. The vendor represented the condominium was 90% sold but the sales may have been fictitious. The essence of the plaintiffs’ claims dealt with issues that pre-date the condominium corporation assuming control of the project.
The condominium corporation is a party because the validity of its declaration and bylaws are in issue and it is alleged to have acted oppressively in enforcing those provisions against the plaintiffs. Relief sought invalidating the undisclosed condominium declaration and bylaw terms flows from pre-turnover conduct of the developer. Relief sought against the condominium corporation all turned on whether there was wrongdoing committed by the developer. Findings against the developer are a condition precedent to the relief claimed against the condominium corporation.
- 132(4) of the Condominium Act, 1998 (“Condominium Act”) makes mediation and arbitration of the claims against condominium corporation mandatory. However, if the arbitration proceeded, evidence about the claims which are not arbitrable would be unavoidable.
- 7(1) of the Arbitration Act requires the Court to stay the action in favour of arbitration unless the exceptions in s.7(2) apply. The exceptions did not apply.
The purpose of the mandatory mediation and arbitration provisions in s. 132 of the Condominium Act is to encourage expeditious, simple and inexpensive resolution of disagreements between a condominium corporation and its unit owners with respect to the corporation’s declaration.
In this case, Justice Myers noted that the provision was being used as a form of bifurcation and partial resolution that increases risks of multiplicity of proceedings. Instead of being simple and inexpensive, the condominium corporation seeks to create a second front for the full case to be heard but with no authority given to the arbitrator to resolve all the issues.
However, despite the statutory desirability to avoid multiplicity of proceedings set out in s. 138 of the Courts of Justice Act, RSO 1990, c C.43, issues of multiplicity (and the questions of efficiency, affordability, and proportionality that underpin the goal of limiting multiple proceedings) give way to the express provisions of s. 7(1) of the Arbitration Act. The Court referred to the ONCA decision in Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2021 ONCA 360 (CanLII) at para. 20, which held that there is no discretion to refuse the stay. See also, TELUS Communications Inc. v. Wellman, 2019 SCC 19 (CanLII), [2019] 2 SCR 144, at para 76.
As a result, the Court stayed only the claims pleaded against the condominium corporation and allowed the other claims to proceed to trial.