Serendipity Ventures Inc v Winters, 2016 ABQB 398

Court of Queen’s Bench of Alberta Citation: Serendipity Ventures Inc v Winters, 2016 ABQB 398 Date: 20160712 Docket: 1501 07447, 1501 15055 Registry: Calgary Between Docket: 1501 07447 Serendipity Ventures Inc. and 1685237 Alberta Ltd. Plaintiffs/ Respondents - and - Bruce Winters, Benicon Alberta Ltd., Okotoks Air Ranch Inc., Bryce Medd, David Gould, and Robert D. McIntyre Defendants/ Applicants

and Between: Docket: 1501 15055 798551 Alberta Ltd., 803560 Alberta Ltd., 811008 Alberta Ltd. and Carefoot Fisher Holdings Corp. Applicants/ Respondents - and - Benicon Land Company Ltd., Benicon Alberta Ltd. and Okotoks Air Ranch Inc. Respondents/ Applicants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J. Strekaf _______________________________________________________ I.

Introduction [ 1 ] The issue on these applications is whether the disputes that have arisen amongst some of the principals involved with the Okotoks Air Ranch Joint Venture (“Joint Venture”) and their respective companies should be resolved by arbitration, litigation or some combination of both. The Applicants on these applications are the Respondents in the 1501-15055 Originating Application (“Originating Application”) and the Defendants in the 1501-07447 Action (“Action”). They are seeking an order staying both proceedings pursuant to

section 7 of the Arbitration Act, RSA 2000, c A-43, on the basis that they were brought by parties who are subject to an arbitration agreement on matters that are covered by the arbitration agreement. [ 2 ] The Originating Application was brought by 798551 Alberta Ltd, 803560 Alberta Ltd, 811008 Alberta Ltd and Carefoot Fisher Holdings Corp (who are four of the five of the remaining Class A Participants/Venturers in the Joint Venture) against Benicon Land Company Ltd (“Benicon Land”, the other remaining Class A Participant in the Joint Venture), Benicon Alberta Ltd (“Benicon Alberta”, a Class C Participant in the Joint Venture), and Okotoks Air Ranch Inc (“OAR”, formerly known as 788420 Alberta Ltd and the agent for the Joint Venture).

They are seeking access to records of the Joint Venture, to replace the Joint Venture accountant and to obtain signing authority on the Joint Venture bank account. [ 3 ] The Plaintiffs in the Action are Serendipity Ventures Inc (“SVI”) and 1685237 Alberta Ltd who are claiming interests either as a Class C Participants or in the profits payable to the Class C Participant. Keith Laws was one of the principals of the law firm Gould Laws Stephan who did the legal work to set up the Joint Venture and is the principal of SVI and of 803560 Alberta Ltd.

The Defendants in the Action are Bruce Winters (the principal of Benicon Land, Benicon Alberta and OAR), OAR, Bryce Medd (Executive Vice President of OAR), David Gould (a director of OAR and one the principals of Gould Laws Stephan), and Robert McIntyre (the accountant who prepared the Joint Venture’s financial statements). The Plaintiffs allege that the Defendants wrongfully established Benicon Alberta as a Class B Participant in breach of the terms of the Joint Venture Agreement, contrary to fiduciary duties owed to the

other Venturers, without authority and as part of an unlawful conspiracy to deprive them of their share of the profits payable to the Class C Participants. II. Background and Relevant Facts [ 4 ] The Joint Venture was created in 1998 to develop and subdivide 240 acres of land in the north east corner of the Town on Okotoks (“Lands”) and to sell the resulting residential building lots to home builders and the public. The Joint Venture is currently in Phase 11 of 15 planned phases, which are expected to be completed in 2020.

The project included the ownership and management of an operating airstrip on the Lands. [ 5 ] The Joint Venture Agreement was comprised of 13 Joint Venture Agreements executed effective August 31, 1998, each by one of the 13 Class A Participants and by Benicon Alberta as the Class C Participant. No Class B Participant was identified in any of the Joint Venture Agreements.

Over the years, the interests of eight of the Class A Participants have been redeemed and currently only five of the original Class A Participants remain, who are all parties to the Originating Application. [ 6 ] The Joint Venture Agreements contemplated that legal title to the lands would be held in trust for the Venturers/Participants by OAR and that OAR would be appointed agent and nominee of the Joint Venture to conduct its business by way of an Agency and Nominee Agreement dated August 31, 1998, which was never prepared.

While OAR is referred to in numerous places and assigned certain responsibilities in the Joint Venture Agreements, it was not identified as a party nor was it a signatory to the Joint Venture Agreements. Benicon Alberta was identified as the Project manager in the Joint Venture Agreements. [ 7 ] The Joint Venture Agreements outline the Participants’ contributions to expenditures and their participation in profits from the Joint Venture.

It contemplates that expenditures would be addressed by the Class A Participants initially, collectively contributing $1.5 million with further sums loaned to the Project at prime plus 5%. Class B Participants would provide a guarantee of capital financing or the provision of a letter of credit from the ATB to finance a portion of the expenditures and Class C Participants would make no contribution to expenditures.

Receipts (defined as proceeds from the sale of lots or other revenues from the Project) would be distributed in the following order: (1) to repay the Class A Participants initial contributions of $1.5 million, (2) to pay the Class A Participants a further $1.5 million (representing a 100% return on their contribution), (3) to pay the Class B Participants one half of the cash received by the Joint Venture supported by their guarantees, and (4) any surplus remaining after the above payments and the repayment of loans to the Class A Participants would be paid to the Class C Participant. [ 8 ]

Section 11.1 of the Joint Venture Agreement (“Arbitration Clause”) states: Provided always and it is hereby agreed and declared that if and whenever any dispute or question shall arise between any one or more of the participants to the Joint Venture or between any of the Class A Participants, Class B Participants and the Class C Participant, their respective heirs, executors, administrators or assigns touching these presents or anything herein contained, or the constructions hereof, or the rights, duties or liabilities in relation to this agreement, the matter in difference shall first be sought to be resolved by the participants, who shall use their best efforts to resolve the matter in difference, resorting in the first instance to mediation; but if the matter in difference cannot be resolved within 30 days of the date that the matter in difference arose, or if a mediation has been set, upon the completion of the mediation, the said matter in difference shall be submitted to and referred to three arbitrators, one to be appointed by each of the disputing parties, and the decision of the arbitrators shall be final and binding upon the parties hereto. [ 9 ]

Section 12 of the Joint Venture Agreement provides restrictions on the transfer of interests in the Joint Venture. It states: 12.1 No Venturer shall sell, transfer or otherwise dispose of his Venture Interest to a third party without giving the other Venturers an opportunity to purchase all of the said Venture Interest proposed for sale or transfer by him at a price and on terms set by the Venturer selling his Venture Interest. Such Venturer shall notify the other Venturers in writing of the price and terms agreeable to him, and the other Venturers shall have THIRTY

(30) DAYS from the date such notice is received to agree to purchase the said Venture Interest at the specified price and on the specified terms.

If no Venturer is willing to purchase such Venture Interest at such price or upon such terms, then the disposing Venturer shall have the right to dispose of his Venture Interest to any other person whatsoever but only at such price and upon such terms as are no less favorable than those offered to the other Venturers. 12.2 Notwithstanding anything contained or implied herein to the contrary, before any Venture Interest is sold or otherwise disposed of to a person who is not a party to this Agreement, the proposed purchaser or transferee shall agree to be bound by the provisions of this Agreement to the same extent as if he had been an original party hereto and shall be so bound on purchase of any such Venture Interest. [ 10 ] The Joint Venture Agreements were drafted by the law firm Gould, Laws and Stephan.

Messrs.

Gould and Laws were both involved in the creation of the Joint Venture, although their precise roles and responsibilities is now a matter of some dispute. [ 11 ] The Plaintiffs take the positon that 34% of some form of Benicon Alberta’s Class C Participant interest has been transferred to SVI (13.75%), 1685237 (5.75%), Gould (8%) and Wealthy Tortoise Financial Group Inc (6.5%) through a series of agreements dated February 11, 2003, June 21, 2005, and September 1, 2015, however, the precise nature of the interests transferred is now a matter of considerable controversy on these applications. [ 12 ] The initial Joint Venture Agreements did not identify a Class B Participant.

The Defendants claim that Mr. Winters executed a personal guarantee in favour of ATB on behalf of Benicon Alberta in late 1998 or early 1999 in connection with the purchase of the Lands and that Benicon Alberta thereby became the Class B Participant, but that Mr. Laws wrongfully failed to record Benicon Alberta’s Class B Participant interest in the Joint Venture records. No affidavit has been provided by Mr. Winters and the evidence to this effect is hearsay from Mr. Medd.

There is no evidence that any reference was made in any Joint Venture documents to there being a Class B Participant prior to the financial statements for the year ending March 31, 2013. [ 13 ] The Plaintiffs allege that in 2013, when it had become apparent that the Joint Venture was going to generate significant

profits, that the Defendants purported to create Benicon Alberta as a Class B Participant, the effect of which would be to allocate profits of the Joint Venture to Benicon Alberta in its capacity as a Class B Participant in priority to the Class C Participants, and thereby deprive the Plaintiffs of their portion of the profits that would have otherwise been available to the Class C Participants. [ 14 ] The Action was commenced on June 29, 2015.

On July 30, 2015, the Defendants served a Notice of Demand for Mediation/Arbitration on the Plaintiffs with respect to the dispute outlined in the Statement of Claim in the Action. [ 15 ] The Originating Application was commenced on December 22, 2015. The Respondents served a Notice of Demand for Mediation/Arbitration on the Applicants with respect to the dispute outlined in the Originating Application on January 6, 2016. [ 16 ] These applications for stays of the Origination Application and the Action were brought on April 7, 2016.

An amended application for a stay of the Action was brought on June 10, 2016 to add as applicants the Defendants Medd, Gould, and McIntyre, who had been added as Defendants in the Action pursuant to the Amended Amended Statement of Claim on October 13, 2015. III. Analysis [ 17 ] The main issue to be determined on these applications is whether the Originating Application and the Action should be stayed, in whole or part, pursuant to

section 7 of the Arbitration Act . This will depend upon whether the parties to the Originating Application and the Action are parties to the Joint Venture Agreement, whether the disputes advanced in the Originating Application and the Action are subject to the Arbitration Clause in

section 11.1 of the Joint Venture Agreement and whether these jurisdictional questions should be determined by this Court or by the arbitrators. [ 18 ] The Arbitration Act contains a strong legislative direction to the Courts that they have a limited role where parties have agreed to resolve their disputes by arbitration.

Section 6 of the Arbitration Act states: 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. [ 19 ] Subsections 7(1) and (2) of the Arbitration Act require the Court to stay disputes subject to an arbitration agreement, except in certain limited circumstances: 7(1) If a party to an arbitration agreement commences a proceeding in a court in respect of a matter in dispute to be submitted to arbitration under the agreement, the court shall, on the application of another party to the arbitration agreement, stay the proceeding.

(2) The court may refuse to stay the proceeding in only the following cases: (

a) a party entered into the arbitration agreement while under a legal incapacity; (

b) the arbitration agreement is invalid; (

c) the subject matter of the dispute is not capable of being the subject of arbitration under Alberta law; (

d) the application to stay the proceeding was brought with undue delay; (

e) the matter in dispute is a proper one for default or

summary judgment. [ 20 ] Section 17(1) provides an arbitral tribunal with the ability to rule on its own jurisdiction.

It states: 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. [ 21 ] The Alberta Court of Appeal provided direction as to how and by whom the determination of whether a dispute falls within the scope of an arbitration clause is to be determined in Epcor Power LP v Petrobank Energy and Resources Ltd , 2010 ABCA 378 (paragraphs 16-20 ): 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 of arbitration legislation and the jurisprudence interpreting it is to promote adherence to agreements, efficiency and fairness and to lend credibility to an important dispute resolution process. Courts are instructed to be mindful of this overarching purpose in any exercise of discretion. The discretion seems to be framed in the negative, as one "not to refer", a distinction intended to emphasize the legislative preference for arbitration. 17 These parties have agreed that disputes arising from the contract may be submitted to arbitration.

Article A11.1 states that any controversy may be submitted, and provides mandatory principles once notice of a controversy has arisen. The chambers judge concluded that the parties had chosen broad language stating that arbitration is available for "any controversy". The controversy here clearly arises under the contract. It is also clear that clause 5.7 dealing with the price mechanism has a mandatory referral to arbitration.

Section 6 of the Arbitration Act , RSA 2000, c A-43 sets out when a court may intervene in matters governed by the Act. The starting point is non-intervention, subject to a stated list of fairly narrow and discrete exemptions to be interpreted in accordance with the expressed 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 in any case involving an arbitration clause, a challenge to the arbitrator's jurisdiction must be resolved first by the arbitrator.

(2) A court should depart from the rule of systematic referral to arbitration only if the challenge to the arbitrator's jurisdiction is based solely on a question of law.

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

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

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

Even if the court can resolve an issue itself, it may still choose not to do so and instead refer the matter to arbitration. [ 22 ] I will deal with each proceeding in turn. A.

Action [ 23 ] The Applicants submit that as the Plaintiffs are claiming to be Class C Participants that they should be treated as parties to the Joint Venture Agreement, that the disputes fall within the scope of the broadly drafted Arbitration Clause and that the Action should be stayed. [ 24 ] The Plaintiffs deny that they are parties to the Joint Venture Agreement or “participants” within the meaning of the Arbitration Clause because they were neither signatories to the Joint Venture Agreement or “assigns” of Benicon Alberta’s Class C Participants’ interest.

To the extent that they claim to have an interest in relation to the Class C Participants’ interest, they now characterize it as a “right to participate in the profits paid to Benicon Alberta’s Class C interest”. They deny that the dispute falls within the scope of the Arbitration Clause and state that five of the six the Defendants (OAR, Medd, Winters, Gould and McIntyre with the exception of Benicon Alberta) are not parties to the Joint Venture Agreement. They submit that the Court may refuse a stay pursuant to section 7(2) (

e) of the Arbitration Act as the matter is a proper one for

summary judgment. [ 25 ] The first matter to be addressed is the suggestion that the Court could refuse to grant a stay because the matter is a proper one for

summary judgment. It is abundantly clear from the affidavit evidence that has been filed that there are highly contested facts that will need to be decided to determine the main issue in the action, that is, whether the Class B Participant shares were properly issued or not. This is not a proper case for

summary judgment and the exception in section 7(2) (

e) is not available. [ 26 ] The other issues raised by the Plaintiffs are all matters that that involve a challenge to the arbitrator’s jurisdiction. As outlined by the Supreme Court of Canada in Dell Computer Corp v Union des consommateurs , 2007 SCC 34 , such matters should be resolved by the arbitrators except where the challenge is based solely on a question of law or on questions of mixed fact and law that require only superficial consideration of the documentary evidence.

In such instances the court might still decide that it would be best for the process to allow the arbitrator to rule on its competence. [ 27 ] The issue of whether the Plaintiffs are assignees and parties to the Joint Venture Agreement is clearly a question of mixed fact and law that will require more than a superficial consideration of the documentary evidence to resolve.

It is also a matter over which the Plaintiffs and the Defendants are each taking internally contradictory positions. [ 28 ] The Plaintiffs allege in the Amended Amended Statement of Claim that a total of 34% of Benicon’s Class C Venturer interest in the Joint Venture was conveyed to the Plaintiffs.

Paragraphs 29 and 30 state that by an “Assignment Agreement effective September 1, 2015, CFH, as assignor, granted, conveyed and assigned its 11.5% Class C Venturer interest to the Plaintiffs” and that by virtue of the Assignment Agreement the Plaintiffs are “entitled to prosecute this Action in respect to such assigned Class C Venturer interest in their own names”. Paragraph 31 states that the ownership of the Class C Venturer interest in the Joint Venture includes MCO (5.75%) and SVI (13.75%).

The remedies sought include orders declaring that the Class C percentage interests in the Joint Venture include MCO (5.75%) and SVI (13.75%) and directing that the books and accounting records of the Joint Venture be amended to show the proper ownership of the Class C Venturer interest holders in the Joint Venture.

However, at the same time, the Plaintiffs take the position that they do not qualify as assignees of the Class C Venturer interest so as to make them bound by the Arbitration Clause. [ 29 ] The Defendants in the Action bring this stay application seeking to refer the disputes in the Action to arbitration on the basis that the Plaintiffs are bound by the Arbitration Clause yet were unwilling in oral submissions to concede that the Plaintiffs qualify as Class C Venturers. In fact, in Mr.

Medd’s affidavit filed in support of the application to refer the matter to arbitration on the basis that the Plaintiffs are bound by the Arbitration Clause, he states that “Benicon remains the sole Class B and Class C Venturer, although Benicon has provided conditional participation in its Class C Venturer interest to, amongst others, the two Plaintiffs”. [ 30 ] I am satisfied that the jurisdictional questions of whether the Plaintiffs are Class C Venturers such that they are bound by the Arbitration Clause are matters that should be referred to the arbitrators for determination.

The question is not straightforward and it will require more than a superficial review of the documentary record to resolve. For example, it will involve the

interpretation of the various agreements which establish the chain of the Plaintiffs’ interest in the Class C Participant interest in the context of their surrounding circumstances. It is preferable for the arbitrators to rule on this issue as the nature of the interest assigned to the Plaintiffs and the rights flowing as a result are closely connected with the substantive issues raised by the Plaintiffs. For example, whether or not the Plaintiffs

are “parties” to the Joint Venture Agreement may significantly impact their ability to advance claims based upon alleged breaches of the Joint Venture Agreement and the nature of any fiduciary duties that may or may not be owed to them. [ 31 ] The Plaintiffs submit OAR is not a party to the Joint Venture Agreement, although it was referred to in the Joint Venture Agreement and that in any event a dispute between a Venturer and OAR is not caught by the language in the Arbitration Clause as it relates to disputes between “participants”. [ 32 ] The Defendants submit that it is implicit that OAR is covered by and subject to the Joint Venture Agreement, including the Arbitration Clause, even though it is not identified as a party and did not execute the Joint Venture Agreement.

In any event, the Defendants advise that OAR (as well as the individual Defendants Medd, Winters, Gould and McIntyre) would agree to participate in and be bound by arbitration. [ 33 ] The Plaintiffs correctly note that they cannot be required to accept the participation in arbitration proceedings of OAR (if it is not a party to the Arbitration Clause) or of the individual Defendants (who are clearly not parties to the Joint Venture Agreement): Kaverit Steel & Crane Ltd v Kone Corp , 1992 ABCA 7 at para 21 , [1992] AJ No 40 at paragraphs 13 and 14. [ 34 ] The question of whether OAR is a party to the Joint Venture Agreement is a question of mixed fact and law that will require more than a superficial consideration of the documentary evidence to determine.

It will likely require evidence regarding the surrounding circumstances that led to the execution of the Joint Venture Agreements and the subsequent conduct of the parties. For example: - It appears that the Agency and Nominee Agreement dated August 31, 1998 between OAR and each Venturer contemplated in

section 8.1 of the Joint Venture Agreement was never prepared. Does this failure, or the surrounding circumstances, suggest that it was/was not anticipated that OAR would be a party to the Joint Venture Agreement itself? - There is conflicting evidence regarding the roles and responsibilities of Mr. Gould and Mr. Laws in relation to the creation of the Joint Venture and the preparation of the initial agreements.

It is unclear if either was responsible for the failure to prepare the Agency and Nominee Agreement and whether or not that may be significant; - To the extent that OAR is assigned specific responsibilities in the Joint Venture Agreements and the parties have proceeded in the absence of the Agency and Nominee Agreements, has there been an implicit or de facto addition of OAR as a party to Joint Venture Agreement through its activities in providing services to the Joint Venture? - As the Joint Venture is not itself a legal entity, there is uncertainty as to which entities were parties to any arrangements involving OAR and what were the terms and conditions and legal significance of those arrangements. [ 35 ] The Defendants also submitted that as SVI is the beneficial owner of a Class A Participant interest through 803560 Alberta Ltd, that its claims in the Action are subject to the Arbitration Clause.

SVI denies that the Arbitration Clause applies as its beneficial interest as a Class A Participant is not at issue in the arbitration.

The Plaintiffs also dispute whether the dispute raised in the Action falls within the scope of the Arbitration Clause which they submit was intended to resolve dispute between participants or classes of them not claims that OAR and the individual defendants wrongfully created Benicon Alberta’s Class B Participant interest. [ 36 ] While these questions may constitute pure questions of law that could be determined by me, it would be preferable to have the arbitrators rule on the issue of which disputes fall within the scope of the Arbitration Clause once they have determined which parties are bound by the Arbitration Clause.

Given the overlapping nature of these jurisdictional issues, it would be best for the arbitration process to have the arbitrators determine all of the jurisdictional issues rather than to have me rule on some aspects of their jurisdiction in a piecemeal fashion at this stage of the proceedings: Dell (paragraph 86). B. Stay of the Action against the Defendants Medd, Winters, Gould and McIntyre [ 37 ] It is not disputed that the individual Defendants Medd, Winters, Gould and McIntyre are not parties to the Arbitration Clause.

The issue then arises whether the Action should be permitted to continue against them at this time pursuant to section 7(5) of the Arbitration Act . [ 38 ] Section 7(5) of the Arbitration Act provides a limited discretion for the Court to allow some aspects of a proceeding that involves matters dealt with in an arbitration agreement to proceed: ( 5) The court may stay the proceeding with respect to the matters in dispute dealt with in the arbitration agreement and allow the proceeding to continue with respect to other matters if it finds that (

a) the agreement deals with only some of the matters in dispute in respect of which the proceeding was commenced, and (

b) it is reasonable to separate the matters in dispute dealt with in the agreement from the other matters. [ 39 ] The Plaintiffs submit that the Action should be permitted to continue as against the individual Defendants while the Defendants submit that the Action should be stayed in its entirety pending conclusion of the arbitration proceedings. [ 40 ] As the Arbitration Clause does not apply to the individual Defendants, the test in section 7(5) (

a) is satisfied as the arbitration agreement does not deal with the matters in dispute as against them. The question then becomes whether the test in section 7(5)(

b) is satisfied, that is, whether it is reasonable to separate the allegations in respect of the individual Defendants from the other allegations. [ 41 ] In UCANU Manufacturing Corp v Calgary (City) , 2015 ABCA 22 , the Alberta Court of Appeal considered an application to stay a portion of an Action pending arbitration and stated at paragraphs 7- 8:

7 The parties agree that the Court of Queen's Bench has the jurisdiction to grant a stay of proceedings in favour of a party to an action pending the outcome of a related arbitration, in that regard see: Western Oil Sands and Yaworksi v Gowling Lafleur Henderson LLP , 2013 ABCA 21 . As was noted by the court in Western Oil Sands , the remedy is discretionary and must be exercised in accordance with established principles. The factors to be considered are (

i) whether the issues in the arbitration are substantially the same as the issues in the action, (ii) the defendant must satisfy the court that the continuance of the action would work an injustice, and (iii) the stay must not cause an injustice to the plaintiff. In that case Wittmann ACJ (as he then was) noted that the court must bear in mind the efficient resolution of disputes and the efficient management of the resources of the court and the parties. In the Yaworski decision, this Court concluded that the combination of

section 7 of the Arbitration Act ,

section 18 of the Judicature Act , RSA 2000, c J-2, and the court's inherent jurisdiction to control its own process to avoid unnecessary and duplicitous proceedings provide a chambers judge with the jurisdiction to stay a third party suit pending a related arbitration: at para 23. 8 It is clear from the reasons for judgment of the chambers judge that he considered all of these factors in exercising his discretion to stay the action against the respondents.

He expressly noted that the burden is on the defendant to establish that the issues in the action and the arbitration are substantially the same, that the continuation of the action would work an injustice on the defendant, and that no injustice would befall the plaintiff. He concluded that the arbitration would "go a long way in resolving the dispute between UCANU and Graham", and would, at least, define many of the issues between those two parties and illuminate the issues vis-à-vis the three respondents.

He considered the need to ensure efficiencies in the system, including avoiding unnecessary work for litigants. He also rejected UCANU's argument that it would be prejudiced by lack of disclosure if the litigation process were not permitted to proceed in conjunction with the arbitration, noting that it was UCANU who had initiated the arbitration process. [ 42 ] The issues in the arbitration in relation to Benicon Alberta and potentially OAR are closely related to the allegations in relation to the individual Defendants.

There was no evidence of any specific prejudice that would be suffered by the Plaintiffs if the Action was stayed pending arbitration or by the individual Defendants if the Action proceeded pending arbitration, beyond delay, and the possibility of different results. In this case, the arbitration may go a long way to resolving some of the issues as against the primary Defendants, or at least defining the nature of the dispute.

As a result, the balance of convenience favours staying the remainder of the Action pending completion of the arbitration, or at least doing so until the arbitrators have determined the scope of their jurisdiction. C. Originating Application [ 43 ] The Applicants submit that all of the parties on the Originating Application are parties to the Joint Venture Agreement, that the disputes contemplated in the Originating Application fall within the scope of the Arbitration Clause and that the entire proceeding should be stayed pursuant to

section 7 of the Arbitration Act . [ 44 ] The applicants on the Originating Application who oppose a stay concede that they are Class A Venturers and are parties to the Joint Venture Agreement. However, they submit that the principal party against whom they seek relief is OAR, who they say is not a party to the Joint Venture Agreement. They deny that the matters raised fall within the scope of Arbitration Clause. [ 45 ] As with the Action, I am of the view that this is not a matter that is suitable for

summary judgment, and that the questions of whether OAR is a party to the Joint Venture Agreement, and, if so, whether the dispute in relation to OAR falls within the scope of the Arbitration Clause, are jurisdictional questions that should be referred to the arbitrators to determine. [ 46 ] However, the question of whether the dispute raised in the Originating Application as it relates to Benicon Land and Benicon Alberta falls within the scope of the Arbitration Clause is a pure question of law that can be determined by me.

I am satisfied that issues relating to the scope of rights each Venturer has as against other Venturers in relation to obtaining records and the conduct of Joint Venture banking and Joint Venture accounting are within the scope of the broadly drafted Arbitration Clause as they relate to construction of, and to the Participants’ rights, duties or liabilities in relation to the Joint Venture Agreement. D.

Was the Originating Application Improperly Commenced [ 47 ] The Applicants also sought to stay or strike the Originating Application on the basis that it was improperly commenced as it should have been commenced by Statement of Claim as it involves substantial factual disputes. It is not necessary for me to address this issue as a result of the determinations that I have already made.

However, I note that while parties are expected to comply with the Rules of Court as to how actions are started, Rule 3.2(6) states: If an action that is started in one form should have been started or should continue in another, the Court may make any procedural order to correct and continue the proceeding and deal with any related matter. IV. Conclusion [ 48 ] In

summary: (

a) The claims advanced in the Action against Benicon Alberta are stayed pending completion of the arbitration of those disputes; (

b) The claims advanced in the Action against Bruce Winters, Bryce Medd, David Gould, Robert McIntyre and OAR are stayed pending a determination by the arbitrators of their jurisdiction to decide the disputes thereunder and thereafter pending the completion of the arbitration of those disputes, unless otherwise ordered by the Court;

(

c) The claims advanced in the Originating Application against OAR are stayed pending a determination by the arbitrators of their jurisdiction to decide the disputes thereunder in relation to OAR and thereafter pending completion of the arbitration of those disputes, unless otherwise ordered by the Court; and (

d) The claims advanced in the Originating Application against Benicon Alberta and Benicon Land are stayed pending completion of the arbitration of those disputes. [ 49 ] If the parties are unable to agree on costs, they are at liberty to make written submissions within 30 days. Heard on the 29 th day of June, 2016. Dated at the City of Calgary, Alberta this 12 th day of July, 2016. J. Strekaf J.C.Q.B.A. Appearances: J. Patrick Peacock, Q.C. and Richard Van Dorp Peacock Linder Halt & Mack LLP for the Plaintiffs (Action 1501 07447) for the Applicants (Action 1501 15055) V. Philippe Lalonde, McLeod Law LLP for the Defendants (Action 1501 07447) for the Respondents (Action 1501 15055)