CWL Commercial (Edm) Inc . Applicant - v. -, 2013 ABQB 545

Court of Queen ’ s Bench of Alberta Citation: CWL Commercial (Edm) Inc. v. Dynafour Real Estate, A Partnership, 2013 ABQB 545 Date: 20130918 Docket: 1203 17838 Registry: Edmonton Between: CWL Commercial (Edm) Inc . Applicant - and - Dynafour Real Estate, A Partnership Respondent _ ________________________________________ ______________ Reasons for Judgment of W. S. Schlosser, Master in Chambers _________________________________________ ______________ [ 1 ] This is a dispute about whether a matter should be submitted to arbitration. [ 2 ] The Applicant is a partner in Dynafour Real Estate.

In April 2012, the parties agreed to submit two disputes involving commission entitlement to arbitration. These matters have been referred to an arbitrator and the process is underway. [ 3 ] There is an earlier Dynafour Real Estate Partnership Agreement with what appears to be an effective date of December 19, 2007; although the agreement was apparently not executed until September 2008. The Applicant seeks to have a third, earlier, dispute (the ‘Greyhound dispute’) referred to arbitration pursuant to the Partnership Agreement.

The dispute predated the signing of the Partnership Agreement but is within its effective period.

[ 4 ] The Partnership Agreement provides: 13. ARBITRATION IN THE EVENT OF A DISPUTE: 13.1 Any matter of dispute among the parties to this Agreement or a matter of

interpretation with respect to this Agreement shall be referred to arbitration in accordance with the provisions hereof. 13.2 The party initiating the arbitration may institute the proceedings by delivering to the other Partners/Managing Partner/Associate Partners and the Partnership a notice (herein referred to as the "Arbitration Notice") containing the name of three (3) persons proposed as arbitrator, together with their respective addresses and callings and a copy of their respective consents to accept the appointment, from which the other Partners/Managing Partner/Associate Partners may choose one (1) to serve as arbitrator.

If the Partners/Managing Partner/Associate Partners receiving the Arbitration Notice do not agree with any of the arbitrators proposed and fail to propose to the party initiating the arbitration an acceptable alternate within thirty (30) days thereafter, the party initiating the arbitration shall apply to the court of competent jurisdiction, on notice to the other Partners/Managing Partner/Associate Partners and the Partnership, for appointment by the court of a single arbitrator. 13.3 The arbitrator shall determine the issues of fact falling for determination by the arbitration proceedings, including any necessary

interpretation of provisions of this Agreement, within a period of sixty (60) days after confirmation of his appointment as arbitrator.

The arbitrator shall be the master of his own procedure and the decision of the arbitrator with regard to any matter properly before him shall be final and binding upon the parties hereto whether they have entered into the arbitration or not. 13.4 Any costs arising out of arbitration proceedings hereunder shall be borne by those parties in the amounts determined by the arbitrator. 13.5 The parties hereto covenant that they will not apply nor will they have any right to apply by any means to any court to challenge any decision of the arbitrator on a matter properly before the arbitrator. [ 5 ] The Respondent argues that the Greyhound dispute is not caught by the agreement to submit the later two matters to arbitration pursuant to the April 2012 agreement and it cannot ride this dispute in on their coat-tails.

The Respondent further argues that since the deal the Applicant now wants to submit to arbitration predated the signing of the Partnership Agreement, the matter should not go to arbitration unless the Respondent expressly agrees. And it does not agree. [ 6 ] The Respondent further argues that the time for the earlier claim expired under the Limitations Act in 2010 or, at the very latest, sometime in August 2012. In other words, the two matters presently before the arbitrator and the one sought to be added are like apples and oranges.

The two oranges agreed to be dealt with by arbitration are quite unlike the apple the Applicant now seeks to add to the bowl. [ 7 ] I agree with the Respondent that the voluntary agreement cannot be construed to include the earlier matter as this is plainly not what the parties had in mind.

The main question is whether the earlier matter is caught by the Partnership Agreement at all and, even if it is, whether it should go to arbitration in the face of what the Respondent says are compelling limitation arguments. [ 8 ] This application is somewhat unusual in that it is like asking for specific performance of a term of the Partnership Agreement. It is not like the usual situation in which a party to an arbitration agreement has commenced an action and the other side is asking for a stay pursuant to

section 7 of the Arbitration Act, RSA 2000, c. A-43. Neither side has specifically raised any jurisdictional issues so I am presuming that the determination of this question is proceeding by agreement or that it is the type of issue intended to be covered by

section 6(

a) or (

b) of the Act. [ 9 ]

Section 17 of the Act provides: 17(1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement.

(2) The arbitral tribunal may determine any question of law that arises during the arbitration. [ 10 ] Section 17(3) provides for an appeal of preliminary rulings (for which the standard review is correctness: Urban E Homes Ltd. v. Condominium Corp. No. 0313563 , 2013 ABQB 109 , per Jerke, J.). [ 11 ] This, presumably, includes limitations issues and the scope of the Partnership Agreement. The Arbitration Act incorporates the Limitations Act in section 51(1). which provides: 51(1) The law with respect to limitation period applies to an arbitration as if the arbitration were an action and a matter in dispute in the arbitration were a cause of action. [ 12 ]

Section 6 of the Arbitration Act provides: 6 No court may intervene in matters governed by this Act, except for the following purposes as provided by this Act: (

a) to assist the arbitration process (

b) to ensure that an arbitration is carried on in accordance with the arbitration agreement. (

c) to prevent manifestly unfair or unequal treatment of a party to an arbitration agreement; (

d) to enforce awards.

[13] The Act and the decided cases suggest that the starting point is non-intervention. In Epcor Power L.P. v. Petrobank Engery& Resources Ltd., 2010 ABCA 378, our Court of Appeal held: 16. As a matter of law and policy, the role of the courts in relation to arbitration has been one of non-intervention. The objective orarbitration legislation and the jurisprudence interpreting it is to promote adherence to agreements, efficiency and fairness and to lendcredibility to an important dispute resolution process. Courts are instructed to be mindful of this overarching purpose in any exercise ofdiscretion. The discretion seems to be framed in the negative, as one “not to refer”, a distinction.

Section 6 of the Arbitration Act, RSA, 2000, c. A.43 sets out when a court may intervene in matters governed by the Act. Thestarting point is non-intervention, subject to a stated list of fairly narrow and discrete exemptions to be interpreted in accordance with theexpressed legislative purpose. 19. In Dell, the Supreme Court of Canada considered this interplay and set out general principles governing it:

(1) As a general rule inany case involving an arbitration clause, a challenge to the arbitrator’s jurisdiction must be resolved first by the arbitrator.

(2) A courtshould depart from the rule of systematic referral to arbitration only if the challenge to the arbitrator’s jurisdiction is based solely on aquestion of law.

(3) If the challenge requires the production and review of factual evidence, the court should normally refer the case toarbitration as arbitrators have for this purpose the same resources and expertise as courts.

(4) Where questions of mixed law and fact areconcerned, the court hearing the referral application must refer the case to arbitration unless the questions of fact require only superficialconsideration of the documentary evidence in the record.

(5) Even when considering one of the exceptions, the court might decide that toallow the arbitrator to rule first on his or her competence would be best for the arbitration process (emphasis added) 20. It is apparent from the language employed by the Supreme Court of Canada that the discretion available to not refer a matter toarbitration is circumscribed, and applies to narrow circumstances: only on a pure question of law alone that can be readily resolved onsuperficial material and will expeditiously dispose of the entire dispute between the parties.

Even if the court can resolve an issue itself, itmay still choose not to do so and instead refer the matter to arbitration. [14] The applicability of the arbitration provision in the Partnership Agreement to the earlier matter and the limitation issues,including whether a limitation period may have been suspended by agreement are all mixed questions of fact and law. (Epcor (above) atparas. 24 and 25.) [15] It is doubtful that the Court has the power to ‘stay an arbitration’ except in accordance with

section 6(c)of the Act or byoperation of section 7(4), which prohibits an arbitration from being commenced or continued if the Court refuses to stay an action. What is the threshold for this Application? [16] This point does not seem to be directly addressed by any of the decided cases. Given that the backdrop is non-intervention bythe Court and that the Arbitrator has the ability to determine jurisdictional issues and deal with the preliminary objections (subject toappeal), the Applicant need only show that there is an arguable case that may be covered by an arbitration agreement.

In Buffalo PointDevelopment Corp. v. Edward Alexander et al, 2012 MNQB 341, para. 24, 25, 26. Martin J. said: [24] Now, for the substance of this matter. I start by acknowledging that counsel advised that there are no precedents specificallydealing with s. 47 of the Act, its scope or

interpretation. What is the determination I must make? [25] In determining whether the intended arbitration is invalid because the arbitration clause does not apply to the matter in dispute, itfollows from Dell that I need not engage in a detailed analysis of all of the evidence that may be available. Rather, as a thresholddetermination of the applicability of an arbitration agreement, I need only be satisfied on the record before me that there is an arguablecase that may be covered by the arbitration agreement.

To require more would be to, in essence, have the court determine the merit ofthe complaint that the arbitrator should decide. As noted at paragraph 165 of Dell, the court ought to send the matter to arbitration"unless it is obvious that the dispute is not within the arbitrator's jurisdiction." [26] Further, as to the threshold determination, an analogous situation is judicial consideration of a stay of court proceedings pursuantto provisions such as s. 7 of the Act.

In those situations, the jurisprudence is clear that the reviewing court must consider, among othermatters, whether the dispute is one which falls within the terms of the arbitration clause (Heyman v. Darwins Ltd.,[1942] 1 All E.R. 337(H.L.); Hopkins v. Ventura Custom Homes Ltd, 2011 MBQB 271 , 2011MBQB 271, 272 Man.R. (2d) 122). Courts havedescribed the test of whether a dispute falls within the terms of an arbitration clause, as whether the dispute is "arguable" (see 678400Ontario Inc. v. Roehampton Apartments Ltd (2006), R.P.R. (4th) 152 (Ont.

S.C.J.)) or ‘prima facie' (see Hopkins) within the scope ofthe arbitration agreement. (emphasis added) [17] The remarks in that case are persuasive. The Applicant has demonstrated that it is at least arguable that the earlier matter bereferred to an Arbitrator. [18] A Respondent opposing arbitration should be required to show that it is ‘beyond doubt’ that the matter is one that the Act orAgreement do not apply to, or that the matter is one of pure law, in order to supplant the jurisdiction of the arbitrator and force theApplicant to have the matter determined by the court.

Disposition [19] The subject of this Application should be put to an Arbitrator for consideration. It need not necessarily be done in conjunctionwith the other two matters already underway. The Arbitrator should deal with the scope of the Partnership Agreement and the limitationissues identified by the Respondent as preliminary issues.

[ 20 ] Costs follow the event. Heard on the 23 rd day of July, 2013. Dated at the City of Edmonton, Alberta this 18 th day of September, 2013 W. S. Schlosser M.C.C.Q.B.A. Appearances: Randolph Langley Henning Byrne LLP for the Applicant Theodore D. Bosse, Q.C. Ogilvie LLP for the Respondent