10060 Jasper Avenue Building Limited v. WR Equities Inc, 2023 ABKB 23

Court of King’s Bench of Alberta Citation: 10060 Jasper Avenue Building Limited v Scotia Place Tower III Inc, 2023 ABKB 23 Date: 20230112 Docket: 1903 13304, 2203 16783 Registry: Edmonton Between: 10060 Jasper Avenue Building Limited and WR Equities Inc Plaintiffs - and - Scotia Place Tower III Inc Defendant Corrected judgment: A corrigendum was issued on April 20, 2023; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of Applications Judge Brian W.

Summers _______________________________________________________ Introduction [ 1 ] This application came before me in morning chambers. After hearing oral argument, I asked for written briefs. They have been provided and I have reviewed them. As I reviewed the briefs, I came to realize that there was evidence being relied upon, which had not been provided to me. I requested that evidence and have now reviewed it. [ 2 ] The issue on this application is whether this action should be stayed in favour of arbitration.

What is unique with respect to this application is that it is the Plaintiffs that are seeking to stay the action commenced by them.

Facts [ 3 ] This action concerns a retail and office complex in Edmonton, previously called Scotia Place, but now called Rice Howard Place (“Complex”). The Complex is made up of two parcels of land owned by the Plaintiffs (“Plaintiffs’ Lands”) and one parcel of land owned by the Defendant (“Defendant’s Lands”). [ 4 ] The operation and management of the Complex are governed by an Owners Agreement and a Management Agreement (collectively “the Agreements”), both dated October 31, 1988.

Under the Management Agreement the Plaintiffs manage the Complex, but they have retained Morguard Investments Limited as Property Advisor. [ 5 ] There is a dispute resolution process in the Agreements. However, it is not mandatory, but permissive. [ 6 ] The Plaintiffs wanted to proceed with replacement of all windows in the Complex. The Defendant did not agree.

The Plaintiff proceeded to replace windows on the Plaintiffs’ Lands and Morguard sent an invoice to the Defendant for its share of the costs (“2017 Invoice”). [ 7 ] On September 18, 2017 the Plaintiffs served a Notice of Default upon the Defendant with respect to the Defendant’s failure to pay the 2017 Invoice. [ 8 ] On October 17, 2017 the Defendant sent a Notice of Objection to the Plaintiffs stating, among other things that the Defendant: (

a) Disputes that (the Defendant) has failed to make any payment...; (

b) Confirms that there is a bona fide dispute as to whether there has been a failure or default under the Agreement with respect to the alleged non-payment of the invoice... (“Disputed Matter”) (

c) Hereby refers the Disputed Matter to an expert in accordance of

Article 9.01(

a) and

Article 10 of the Agreement; (

d) Hereby refers the Disputed Matter to an expert in accordance with

Article 4.07and

Article 10 of the Agreement to the extent (the Plaintiffs) have treated the Disputed Matter as Operating Costs; and (

e) Nominates Robert H. Teskey QC to serve as an expert.

The Notice of Objection also stated: Notwithstanding the above notice to (the Plaintiffs), (the Defendant) maintains that the Notice of Default served... is a nullity as neither of (the Plaintiffs) has authority, power or authority to demand payment from (the Defendant).... (The Defendant) specifically reserves all rights available to it at law including but not limited to its right to seek declaratory and injunctive relief from the Alberta courts against (the Plaintiffs) as it relates to their attempt to foist a portion of the 2016 Enhancement Costs on (the Defendant).

Specifically, this notice is provided out of an abundance of caution in that an Alberta court refuses to take jurisdiction over this matter or declines to declare the Notice of Default a nullity. (The process referred to in this Notice of Objection will be referred to as the “Expert Decision Making Process”) [ 9 ] Counsel for the Plaintiffs sent a “with prejudice” reply, dated October 27, 2017, which stated, among other things: Additionally, Morguard’s nomination of the Honorable Jean Côté to serve as the expert shall not in any way be constructed as an acquiescence or attornment to the expert decision-making process as set out in the Owners’ Agreement.

Morguard expressly preserves and maintains its right to claim ... that: (i) (the Defendant) does not have the right to refer the disputed matter to the expert under the Owners’ Agreement; (ii) Morguard’s participation in the expert decision-making process is not mandatory; and (iii) the decision of the expert is not binding, in whole or in part, on the parties to the Owners’ Agreement. [ 10 ] A second invoice (“2018 Invoice”) was sent to the Defendant with respect to further costs.

The parties exchanged the same correspondence with respect to the 2018 Invoice that they exchanged with respect to the 2017 Invoice. [ 11 ] On June 26, 2019 the Plaintiffs commenced this action by Statement of Claim but did not serve it as their intent was to just preserve the limitation period. [ 12 ] On January 14, 2020 the Plaintiffs filed an Originating Application (action number 2003 00975) seeking an order that Jean Côté be appointed as the expert (“Expert Appointment Proceeding”). [ 13 ] On January 27, 2020 the Defendant filed a Statement of Defense and Counterclaim in this action but counsel for the Plaintiffs refused to accept service as the Statement of Claim had never been served. [ 14 ] On February 6, 2020 Chief Justice Moreau granted an order in the Expert Appointment Proceeding appointing Mr.

Teskey QC as the expert for the Expert Decision Making Process. [ 15 ] On January 24, 2022 the Plaintiffs served their Affidavits of Records in this action but on a without prejudice basis to their position that the matter should proceed by the Expert Decision Making Process. [ 16 ] In March of 2022 counsel for the Plaintiffs contacted Mr. Teskey in order to explore the possibility of a non-binding mediation.

[ 17 ] In or about September of 2022 the Defendant retained Matthew Turzansky of Field LLP as its counsel. This conflicted Mr. Teskey QC (also of Field LLP) from conducting a mediation or arbitration. [ 18 ] On October 7, 2022 the Plaintiffs commenced a third action (by Originating Notice) seeking an order that the Defendant submit to the Expert Decision Making Process. [ 19 ] On October 14, 2022 the Defendant filed an application in this action seeking

summary dismissal of the action. [ 20 ] On November 14, 2022 the Plaintiffs filed an application in this action seeking that it be stayed. [ 21 ] An Affidavit of Records of the Defendant was sworn on December 9, 2022. Issue [ 22 ] Fundamentally, there is only one issue: Should this action be stayed in favour of the Expert Decision Making Process? Discussion [ 23 ] The Plaintiffs rely upon

section 7 of the Arbitration Act, which states: Stay 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.

(3) An arbitration of the matter in dispute may be commenced or continued while the application is before the court.

(4) If the court refuses to stay the proceeding, (

a) no arbitration of the matter in dispute shall be commenced, and (

b) an arbitration that has been commenced shall not be continued, and anything done in connection with the arbitration before the court’s refusal is without effect.

(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.

(6) There is no appeal from the court’s decision under this section. [ 24 ] The Defendant does not contest that the Expert Decision Making Process is an arbitration, but notes that subsection 7(1) of the Arbitration Act provides that the stay may be granted “on the application of another party to the arbitration agreement” ie a party other than the party that commenced the legal proceeding.

Since the Plaintiffs commenced this action, they do not have the status to apply for an order to stay it. [ 25 ] The Defendant also argues that there has been undue delay in the Plaintiffs bringing the application for the stay and that is a proper ground to refuse to grant the stay. [ 26 ] The Plaintiffs make the following five points: (

a) The policy underlying the Arbitration Act is to respect the autonomy of the parties and hold them to their agreement to arbitrate; (

b) The onus of proof is on the party opposing the stay; (

c) The Plaintiffs only commenced this action to preserve the limitation period in case the Expert Decision Making Process did

not proceed; (

d) The courts have recognized that the Arbitration Act is not a model of clarity; and (

e) Section 8 of the Judicature Act gives the court the discretion to grant the order applied for by the Plaintiffs.

It states: 8 The Court in the exercise of its jurisdiction in every proceeding pending before it has power to grant and shall grant, either absolutely or on any reasonable terms and conditions that seem just to the Court, all remedies whatsoever to which any of the parties to the proceeding may appear to be entitled in respect of any and every legal or equitable claim properly brought forward by them in the proceeding, so that as far as possible all matters in controversy between the parties can be completely determined and all multiplicity of legal proceedings concerning those matters avoided. [ 27 ] I refuse the Plaintiffs’ application to stay this action for the following reasons: (

a) The Plaintiffs do not have status to make the application for the stay of the action they commenced. The provincial legislature did not provide authority for a plaintiff to apply for an order staying the action that the plaintiff commenced; (

b) Although this action was commenced as a place holder and the Statement of Claim was not formally served, the Plaintiffs should not be able to rely upon this fact since the action was commenced over one year ago and was not served. The consequence of the Plaintiffs’ argument on this point would be that this action is a nullity for not being served within one year. The Plaintiffs have not asked that this action be declared a nullity; (

c) The Expert Decision Making Process is not mandatory under the Agreements, but is permissive; (

d) Neither the Plaintiffs nor the Defendant unequivocally committed to the Expert Decision Making Process.Both the Plaintiffs and the Defendant preserved rights outside of the Expert Decision Making Process and in fact denied that the Expert Decision Making process was binding; (

e) The Plaintiffs did delay in bringing this application, although I also note that the Defendant was also responsible for substantial delay in this matter; and (

f) To the extent that I can tell from the evidence presented, this appears to be a case where

summary adjudication may be appropriate. [ 28 ] If costs cannot be agreed upon, an application may be made before me in morning chambers. Heard on the 18 th day of November, 2022. Dated at the City of Edmonton, Alberta this 12 th day of January, 2023. Brian W. Summers A.J.C.K.B.A. Appearances: Alexandra C. Bochinski DLA Piper (Canada) LLP for the Plaintiffs Matthew Turzansky and Angela Beierbach Field LLP for the Defendant

_______________________________________________________ Corrigendum of the Memorandum of Decision of The Brian W. Summers _______________________________________________________ Docket number 2203 16783 was added.