r v. Ontario Hydro, 2019 NLCA 14

Richard Dewey, William Perry, Charlotte Jacobs and WilliamTurner (appellants) v. Corner Brook Pulp and Paper Limited(first respondent) and Kruger Inc. (second respondent) andDeer Lake Power Company Limited (third respondent) and TheTown of Deer Lake (fourth Respondent) and Her Majesty theQueen in Right of Newfoundland and Labrador (fifthrespondent) (17/105) Indexed As: Dewey v. Corner Brook Pulp and Paper Limited 2019 NLCA 14 4 C.A.N.L.R. 219 Court of Appeal of Newfoundland and Labrador Welsh, O’Brien and Goodridge JJ.A. March 19, 2019

Summary: The Appellants, filed a statement of claim and applied for certification under the Class Actions Act, SNL 2001, c. C-18.1, claiming thatCorner Brook Pulp and Paper Limited is liable for damage to their properties. The Company applied for a stay of proceedings arguingthat legislation under which it was incorporated, first passed in 1915, required the dispute to be determined through arbitration. Since 1915 the Company has operated under agreements with the Province which were incorporated into legislation. The originalagreement was incorporated by a

Schedule to the 1915 Act which contained a provision providing for arbitration to resolve disputes. TheSchedule to the 1915 Act also contained a clause that provided for the option of pursuing an action in court instead of arbitration. Thatclause was later removed by a 1927 amendment to the Act, which also inserted a clause providing for arbitration, but with a right toappeal the arbitral award to the Supreme Court. The applications judge found the 1927 amendment eliminated the option to bring a courtaction by necessary implication. The applications judge granted the stay. The appellants appealed.

Held: Appeal allowed. Welsh J.A. (O’Brien and Goodridge JJ.A. concurring): The provision in the 1915 legislation providing for the option to bring a courtaction has not been expressly repealed. A mandatory arbitration clause will generally confer exclusive jurisdiction on thetribunal. However, that general principle does not apply where the legislation specifically provides for the option to proceed by way ofcourt action. Nothing in the amendments to the 1915 Act repeals the option to bring a court action by necessary implication.

From the beginning, the legislation provided for the choice of arbitration or a court proceeding. Nothing in the subsequent amendmentschanged that. Indeed, circumstances may arise where the more effective option is the courts. For example, in this case, there are severalparties with an interest. The four Appellants have separate disputes with the Company. They have chosen to apply for certification toproceed by way of a class action which would address all the issues in the same forum at the same time.

The applications judge erred inordering a stay of proceedings of the Appellants’ action in court on the basis that the dispute could be determined only by means ofarbitration. The legislation provides for the option of arbitration or court proceedings. Cases cited: Weber v. Ontario Hydro, (SCC), [1995] 2 S.C.R. 929

Bisaillon v. Concordia University , 2006 SCC 19 , [2006] 1 S.C.R. 666 Seidel v. Telus Communications Inc. , 2011 SCC 15 , [2011] 1 S.C.R. 531 Counsel: Raymond Wagner Q.C., Bob Buckingham and Madeleine Carter, for the appellants; Thomas O’Reilly Q.C. and Richard Gosse, for the first respondent; No appearance by the second respondent; No appearance by the third respondent; Steve Penney, for the fourth respondent; and Philip Osborne and Jessica Pynn, for the fifth respondent. This appeal was heard on November 21, 2018 before Welsh, O’Brien and Goodridge JJ.A.

The following judgment was filed on March 19, 2019 by Welsh J.A. for the Court. ______________________________________________________________ Welsh J.A.: [ 1 ] The Appellants, Richard Dewey, William Perry, Charlotte Jacobs and William Turner, filed a statement of claim and applied for certification under the Class Actions Act , SNL 2001, c. C-18.1 , claiming that Corner Brook Pulp and Paper Limited (the “Company”) is liable for damage to their properties.

The Company applied for, and was granted, a stay of the court proceedings on the basis that the legislation requires the claims to be adjudicated by arbitration. In appealing that decision, the Appellants rely on the

interpretation of legislation first enacted in 1915. [ 2 ] In the Court appealed from, the Company’s application to stay the proceedings was opposed by the Town of Deer Lake (the “Town”) and Her Majesty the Queen in Right of Newfoundland and Labrador (the “Province”). Kruger Inc. and Deer Lake Power Company Limited, named as respondents in the action, did not participate in the application or in this appeal.

BACKGROUND [ 3 ] The Appellants claim that their properties were damaged by the operation of the Company’s water control and hydroelectric power generating system, which provides power to the Company’s paper mill at Corner Brook. The facts are succinctly stated by the applications judge (2017 NLTD(G) 203): [ 4 ] Since 1915 the Company has operated under agreements with the Province which were incorporated into legislation.

The Company maintains that the legislation provides that disputes arising from such operations, including any alleged injurious impact upon private rights, including the cause of action alleged by the Plaintiffs in these proceedings be resolved by arbitration. Therefore, the company argues that these proceedings must be stayed. [4] There is no dispute that the legislation applies to the Company. Under the applications judge’s

interpretation of the statutes and agreements, the Appellants’ disputes with the Company must be determined by arbitration. ISSUES [ 5 ] At issue is whether the applications judge erred in interpreting the legislation with the result that the Appellants’ claim against the Company in court could not proceed. ANALYSIS The Legislation [ 6 ] The Newfoundland Products Corporation Act , 1915 (6 Geo. 5), c. 4, passed on June 5, 1915, confirmed an agreement, dated April 16, 1915, which was entered into between the Province and Newfoundland Products Corporation, Limited, “subject to the conditions and exceptions” contained in the Act . The Agreement is incorporated by a

Schedule to the Act . Under clause 1 of the Schedule, the Province demised certain water and power rights to the Company: … and for the purpose of its works and operations the Company shall have the right to divert, stop or dam up any stream, lake or water

course within the drainage area of the Humber River, and to make, construct or maintain any dam, water course, culverts, drains and reservoirs in said area for any of its said works and operations, … [ 7 ] Clause 15 of the

Schedule provides for the payment of compensation, for any damage caused by the works, to be settled by arbitration: If the Company, in or by reason of the exercise of any of the rights hereby granted, submerge, destroy, damage or injuriously affect any private rights, interests, lands or property, and shall be unable to agree with the owner thereof as to compensation to be paid therefor, the Company, with the consent of the Governor in Council, may proceed with the exercise of the said rights, …and the compensation to be paid by the Company to the owner , for or in respect to such rights, interests, lands or property, shall be settled by arbitration in the manner hereinbefore provided. (Emphasis added.) [ 8 ]

Section 13 of the Act addresses the procedure to be applied when arbitration is engaged: Where in the Agreement provision is made for the holding of arbitrations under

section 55 of the Crown Lands’ Act, the following procedure is substituted in lieu thereof: (

a) There shall be three arbitrators, one appointed by each of the contestant parties, the third by the Supreme Court, consisting of not less than two Judges. … [ 9 ]

Section 14 of the 1915 Act , which is pivotal in this appeal, provides for the option of pursuing an action in court: Nothing herein or in the

Schedule hereto in relation to the settlement of claims by arbitration shall be held or construed to prejudice or exclude the right of any claimant to institute an action in a Court of competent jurisdiction in respect to any such claim. [ 10 ] The 1915 statute was amended in 1923 by the Newfoundland Power and Paper Co., Ltd. Act , 1923 (14 Geo. 5), c. 1. Clause 8 of the

Schedule provided for a new arbitration procedure.

Unlike the 1915 legislation, arbitration under the amendment was not limited to questions of compensation and an application by a party to the dispute was required: Any questions, disputes or differences arising out of, under or in connection with this Agreement or the execution thereof shall, on the application of either party, be referred to the award and final determination of two disinterested persons, one to be appointed by each of the parties in difference, and if the arbitrators fail to agree, then to the award, umpirage and final determination of an umpire to be appointed by the arbitrators … (Emphasis added.) [ 11 ] The statute was again amended in 1927 by the International Paper Co., Ltd.

Act , 1927 (18 Geo. 5), c. 4, which reiterated in clause 2 of the Schedule: The Company shall be entitled to all the rights, powers, privileges, franchises and exemptions vested in, or owned or enjoyed by the Old Company under the Act and Agreement of 1915 and the Subsequent Acts and Agreements, and shall be bound by all the obligations imposed upon the Old Company under said Acts and Agreements, except in so far as such rights, powers, privileges, franchises and exemptions and such obligations are extended, modified or otherwise affected by the following provisions: … [ 12 ] Clause 2(

n) of the

Schedule set out a change in the arbitration procedure while retaining the requirement for an application by a party to settle a question, dispute or difference: Clause 8 of the Agreement of 1923 shall not apply to the Company; but the following provision shall apply to the Company: Any questions, disputes or differences between the parties hereto, or between the Company and third parties where provision for arbitration is made herein, or in the Act or Agreement of 1915 or any of the Subsequent Acts and Agreements, arising out of, under or in connection with this Agreement or the Agreement of 1915 or any of the Subsequent Acts and Agreements, or the execution thereof, shall on the application of either party be submitted to the arbitration of three arbitrators and the provisions of

Part VI of the Judicature Act,

Chapter 83 of the Consolidated Statutes (Third Series), except

Section 212 and except as modified in this Clause, shall apply to any such submission. One arbitrator shall be appointed by each of the parties and the third by the two so appointed. … The award of the arbitrators or any two of them shall be final and binding upon the parties thereto, unless appeal therefrom shall be made to the Supreme Court … . That clause also includes a method for appointing an arbitrator if a party fails to make an appointment or if the two cannot agree on a third. (Part VI of the Judicature Act , referenced in clause 2(n), addresses arbitrations generally and is not relevant for purposes of this appeal.) [ 13 ] Clause 5 of the

Schedule to the 1927 Act provided further: … the Company shall acquire, regulate the amount of water flowing in the streams, lakes and watercourses referred to in said Clause 1 or in said other grants or demises in such manner as it may require for its operations; provided that the Company shall pay for such damage as it may cause thereby in accordance with the provisions in that respect of the Act and Agreement of 1915 as affected by the Subsequent Acts and Agreements. [ 14 ] The arbitration provision was again amended in 1938 by the Bowater’s Newfoundland Act , 1938 (2 Geo. 6), c. 53, clause 36 of the Schedule:

Every arbitration provided for in this Agreement shall be conducted in the manner provided for arbitration in Clause 2 of the Agreementof 1927. In estimating the amount of compensation to be awarded by arbitrators, no increase in the value of the property by reason of theprojected operations of the Company shall be taken into consideration.

Interpretation and Application of the Legislation The Applications Judge’s Conclusion [15] The applications judge concluded: [26] Therefore, I find that under the 1915 legislation, a claimant had the right to pursue a claim in Court and was not restricted toarbitration by virtue of

Section 14 of the 1915 Act. … [37] Accordingly, Clause 8 of

Part II of the

Schedule to the 1923 Act does not amend or vary the rights of a claimant to initiate andpursue a claim in Court as was provided in the 1915 legislation. The

interpretation of this Clause is not relevant after the passage of the1927 Act with the annexed agreement. … [42] In my opinion, the 1927 legislation removed the rights of the claimants such as the Plaintiffs to pursue their claim in Court asoriginally provided in

Section 14 of the 1915 Act. The opening wording of Clause 2 of the 1927 Agreement confirms the rights andobligations of the Company except as affected by the various provisions of that Clause. While Clause 2(

n) does not explicitly refer toSection 14 of the 1915 Act, the matters set out in that clause effectively take away the right to litigate a claim in Court in favor ofmandatory arbitration. [43] First of all, Clause 2(

n) of the 1927 agreement applies to “any questions, disputes or differences” both between the Governmentand the Company and between the Company and third parties where there is a provision for arbitration. Contrary to the positionadvanced by the Town, it would be unreasonable to exclude claims between the Company and third parties from the scope of this clausein view of the language of the provision. There was no convincing argument why these parties and their disputes should be treateddifferently. … [46] As well, the Plaintiffs maintain that

Section 14 of the 1915 Act has not been replaced or repealed by Clause 2(n), and that theclause relates to procedure only. I do not accept this position as

Section 14 and Clause 2(

n) cannot continue together.

Section 14 gavethe option of arbitration or Court to a claimant, while Clause 2(

n) mandated that both parties had to resort to arbitration. (Emphasis added.)

Interpretation of the Legislation [16]

Section 14 of the 1915 Act has not been expressly repealed. Further, for the following reasons, I am satisfied that the applicationsjudge erred when he concluded that

section 14 had been rendered inoperative by clause 2(

n) of the

Schedule to the 1927 Act because thetwo provisions could not operate together. [17] The 1915 legislation specifies in clause 15 of the

Schedule that, where the parties are unable to agree on compensation to be paidby the Company to the property owner, compensation “shall be settled by arbitration” as set out in

section 13 of the Act. The effect ofthis language would be to impose mandatory arbitration. However, that result is overridden by the clear language in

section 14 of the Actwhich provides that nothing in the

Schedule in respect of settlement by arbitration “shall be held or construed to prejudice or exclude theright” of the property owner to commence an action in court. Nowhere in subsequent legislation is the option to proceed in courtremoved. [18] Rather, the amendments, which consistently refer back to the 1915 legislation, make three changes. First, each amendmentmakes a change to the manner in which arbitrators are to be appointed. Second, the reference to “compensation to be paid” in the 1915legislation is expanded to include any questions, disputes or differences.

Third, arbitration is engaged “on the application of eitherparty”. None of these changes operates to exclude by implication the application of

section 14 of the 1915 Act. [19] From the beginning, the legislation provided for the choice of arbitration or a court proceeding. Nothing in the subsequentamendments changed that. Indeed, circumstances may arise where the more effective option is the courts. For example, in this case,there are several parties with an interest. The four Appellants have separate disputes with the Company. They have chosen to apply forcertification to proceed by way of a class action which would address all the issues in the same forum at the same time. [20] The applications judge referred to the decisions in Weber v.

Ontario Hydro, (SCC), [1995] 2 S.C.R. 929, atparagraph 67, and Bisaillon v. Concordia University, 2006 SCC 19, [2006] 1 S.C.R. 666, at paragraph 47, for the proposition that amandatory arbitration clause will generally confer exclusive jurisdiction on the tribunal. However, that general principle does not applywhere the legislation specifically provides for the option to proceed by way of court action. That distinction is referenced in Seidel v.Telus Communications Inc., 2011 SCC 15, [2011] 1 S.C.R. 531.

Binnie J., for the majority, explained: [42] For present purposes, the relevant teaching of Dell and Rogers Wireless is simply that whether and to what extent the parties’freedom to arbitrate is limited or curtailed by legislation will depend on a close examination of the law of the forum where the irateconsumers have commenced their court case. Dell and Rogers Wireless stand, as did Desputeaux, for the enforcement of arbitrationclauses absent legislative language to the contrary. [Italics in the original.]

[ 21 ]

Section 14 of the 1915 Act is, in fact, legislative language to the contrary which operates to give the parties to a dispute the option of court proceedings or arbitration. The applications judge’s error in concluding that

section 14 had been rendered inoperative resulted in further error by leading him to determine that the exception arising from express legislative language was not engaged. [ 22 ] In

summary,

section 14 of the 1915 Act has not been repealed either expressly or by implication. Accordingly, in resolving a dispute, a party may proceed by way of arbitration or an action in court.

SUMMARY AND DISPOSITION [ 23 ] The applications judge erred in ordering a stay of proceedings of the Appellants’ action in court on the basis that the dispute could be determined only by means of arbitration. The legislation provides for the option of arbitration or court proceedings. [ 24 ] Accordingly, I would allow the appeal. I would make no order as to costs ( Class Actions Act , s. 37 ). Appeal allowed.