Condominium Plan No., 2013 ABQB 270

Court of Queen ’ s Bench of Alberta Citation: Condominium Plan No. 0715560 v Le Beau Developments Inc., 2013 ABQB 270 Date: 20130506 Docket: 0901 17461 Registry: Calgary Between: The Owners: Condominium Plan No. 0715560 Plaintiffs - and - Le Beau Developments Inc., Kopperud Architecture Inc., National Home Warranty Programs Ltd., Wiebe Forest Engineering Ltd., A.A.L. Plastering & Sons Inc., ABC Corp, XYZ Corp., Alltech Elevator Services Ltd. and ABMS Ltd. Defendants _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice R. J.

Hall _______________________________________________________ [ 1 ] The Applicants Le Beau Development Inc. and National Home Warranty Programs Ltd. have appealed the decision of Master Hanebury issued January 30, 2012.

[ 2 ] The Applicant Le Beau sets out the background as follows: This action relates to alleged deficiencies in the construction of a condominium complex located at 328 - 21 Avenue SW, in Calgary, Alberta (“Project”). The Plaintiff is a condominium corporation pursuant to the Condominium Property Act representing the owners of the units in the Project. The Applicant Le Beau Developments Inc. (“Le Beau”) was the developer of the Project. On June 29, 2010, the Plaintiff submitted a request for arbitration pursuant to the arbitration clause in the National Home Warranty Limited Construction Warranty Certificate.

The Arbitration relates to a dispute over alleged deficiencies to the Project. Contemporaneously with the Arbitration, the Plaintiff also filed a Statement of Claim in this action claiming damages for deficiencies in the Project. The claims being advanced in this action relate to the same deficiencies that are the subject of the Arbitration. Le Beau and the National Home Warranty Program (“Program”) each brought an application pursuant to

Section 7 of the Arbitration Act , for an Order staying the Action due to the ongoing Arbitration of the same issues raised in the Action. The two applications were successful; however, the Learned Master hanebury (“Learned Master”) directed that the stay was only temporary and that following the conclusion of the Arbitration, if the parties could not agree what issues remained extant in the Action, they could re-apply to the Court for a determination.

Despite their success, both Le Beau and the Program have appealed the decision of the Learned Master on the basis that the relief that she granted was not appropriate relief as contemplated by the Arbitration Act . The Master ’s Decision [ 3 ] Master Hanebury reviewed the facts and arguments of the parties, then reviewed the provisions of

Section 7 of the Arbitration Act in detail, focussing particularly on Section 7(1), (2), and (5). In her analysis she determined that, for the Court to be able to exercise its discretion to permit both the arbitration and the proceeding to continue, two tests must be met. The agreement must deal with only some of the matters in dispute in respect of which the proceeding was commenced and it must be reasonable to separate the matters in dispute dealt with in the agreement from matters in litigation.

At page 8 of her decision under the heading “Conclusion” she stated: To determine if my discretion should be exercised, I turn back to the three fundamental principles described earlier. Holding parties to their bargain, avoiding a multiplicity of actions and the effective and efficient use of the parties and the Courts’ resources. . . . permitting the two processes to proceed together should be an exception. The trigger for proceeding with the action in this case appears to have been the unfavourable preliminary decision by the Arbitrator which limits the defects that can be claimed in the Arbitration.

The parties advise that they expect to proceed to arbitration this spring. Some arbitration proceedings have already been held, including the provision of some viva voce evidence. Two preliminary decisions have been issued by the Arbitrator. The parties are well down the path of arbitration and little would be gained by lifting the statutory and informal self-imposed stay and permitting the action to proceed at this time. Furthermore, the Court should pause before allowing forum shopping when a party commits to arbitration and then, unhappy with the result, seeks to proceed in another forum.

While a multiplicity of actions is to be avoided, in this case the final decision in the arbitration will deal with the request of remediation of some of the alleged defects and deficiencies. The remaining matters will be better defined and one of the first questions to be addressed will be whether those defects that could not be arbitrated due to the missed limitation can still be included in the action or if the arbitration ends the matter. The processes will be consecutive and not concurrent.

[ 4 ] Further in her reasons, Master Hanebury states: The action raises a number of problematic issues which will require consideration such as the nature of the warranty and the

interpretation of its terms; whether any claim that was not considered in the arbitration due to the missed limitation can then support a cause of action; whether any claim in tort can be made against Le Beau in light of the terms of the warranty; whether the only claim in tort can be for dangerous defect and, if so, if any of the unremediated defects come within that definition. A number of these issues can well benefit from the conclusion of the arbitration.

For these reasons, I have come to the conclusion that my discretion under subsection 7(5) should not be exercised, but rather subsection 7(1) should govern and the action should be stayed pending the completion of the arbitration. [ 5 ] When questioned at the end of delivering her decision, Master Hanebury clarified that the action was stayed until the end of the arbitration. Position of the Applicant [ 6 ] The Applicants state that Master Hanebury got it right, in refusing to exercise her discretion granted to her under section 7(5) of the Arbitration Act .

However, they maintain that she is in error in granting the stay only to the end of the arbitration. They maintain that the stay of the action should be permanent. In other words, the ability of the Plaintiff in this action to proceed at all, at least against the two Applicants, should be permanently stayed. [ 7 ] A “stay” stops the proceeding. It does not dismiss the proceeding. Supervision and jurisdiction over the action remains with the Court while the action is stayed. [ 8 ] A major purpose of a stay being granted under the Arbitration Act is to avoid multiplicity of proceedings.

That is to say, the Defendants should not have to fight the same claim on two fronts at the same time. Since the parties have agreed to arbitration, they should be held to their bargain and the arbitration should proceed, with the action stayed. [ 9 ] However, once the arbitration is concluded, the action is not thereby concluded. [ 10 ] Had Master Hanebury granted a stay without more, the stay would have been for an indeterminate period, and would last at least to the time that the arbitration was concluded, in order that the intention of the Arbitration Act would be met.

However, following upon the conclusion of the arbitration, even with an indeterminate stay, either party could return to the Court for disposition or management of the action, as the case may be. [ 11 ] In other words, Master Hanebury has met the requirements of Section 7(1) of the Arbitration Act , by ordering a stay of the proceedings. [ 12 ] Master Hanebury was further authorized to place an end date on the stay as being the end of the arbitration. [ 13 ] Once the arbitration has been concluded, the parties will know what matters have been decided by the Arbitrator and what matters, if any, have not.

The Applicants/Defendants may then be in a position to seek

summary dismissal of the action, on the basis that all matters and issues involving them have been concluded by the decision of the Arbitrator. [ 14 ] Alternatively, the Court may be called upon to make decisions as to what matters have been decided by arbitration, and what matters, if any, remain alive in the action.

[ 15 ] I therefore conclude that the Master’s decision was correct in law. Accordingly, the appeals are dismissed. The Respondent/Plaintiff shall have one set of costs in relation to this appeal to be borne equally by the Applicants. If the parties cannot agree on the applicable Column for costs, they may make written representations to me. Heard on the 17th day of April, 2013. Dated at the City of Calgary, Alberta this 6th day of May, 2013. R. J. Hall J.C.Q.B.A. Appearances: G. Brent Cooper for the Plaintiffs Michael D. Aasen for the Defendant Le Beau Developments Ltd. Brian Wallace and Diane Talarico for the Defendant National Home Warranty Programs Ltd.