SHOPPERS DRUG MART INC. Applicant And: RETIREMENT HOME SPECIALISTS INC., BAY ROBERTS RETIREMENT CENTRE LIMITED, RETIREMENT HOME INVESTMENTS INC., MEADOW CREEK RETIREMENT CENTRE INC., v. PRESIDENTIAL ESTATES INC., 2019 NLSC 44

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Shoppers Drug Mart Inc. v. Retirement Home Specialists Inc. , 2019 NLSC 44 Date : February 20, 2019 Docket : 201801G6956 Between: SHOPPERS DRUG MART INC. Applicant And: RETIREMENT HOME SPECIALISTS INC., BAY ROBERTS RETIREMENT CENTRE LIMITED, RETIREMENT HOME INVESTMENTS INC., MEADOW CREEK RETIREMENT CENTRE INC., and PRESIDENTIAL ESTATES INC. Respondents Before: Justice Robert P. Stack Place of Hearing: St. John’s, Newfoundland and Labrador Date(

s) of Hearing: February 6, 2019

Summary: Retirement Home Specialists Inc., Bay Roberts Retirement Centre Limited, Retirement Home Investments Inc., Meadow Creek Retirement Centre Inc., and Presidential Estates Inc. have sought to set aside an ex parte order of the Court made pursuant to the Reciprocal Enforcement of Judgments Act , that registered as judgments against them orders obtained by Shoppers Drug Mart Inc. in the Ontario Superior Court of Justice arising out of an arbitration conducted in that province. The application was dismissed with costs.

Retirement Home Specialists Inc., Bay Roberts Retirement Centre Limited, Retirement Home Investments Inc., Meadow Creek Retirement Centre Inc., and Presidential Estates Inc. voluntarily attorned to the jurisdiction of the Ontario court by the terms of their agreements with Shoppers Drug Mart Inc. Furthermore, the judgments obtained in Ontario related only to the registration of the arbitration awards and did not involve a review of the awards themselves. Consequently, the application to this Court challenging the results of the arbitration amounted to an impermissible collateral attack on the arbitration awards.

Appearances: Joseph J. Thorne Appearing on behalf of the Applicant Daniel W. Bennett Appearing on behalf of the Respondents Authorities Cited: CASES CONSIDERED: Midnight Marine Ltd. v. Lloyd’s Underwriters , 2010 NLCA 64 . STATUTES CONSIDERED: Reciprocal Enforcement of Judgments Act , RSNL 1990, c. R-4 ; Arbitration Act, 1991 , S.O. 1991, c. 17 ; Pharmaceutical Association Act , SNL 2006, c. P-12.01 .

REASONS FOR JUDGMENT Stack, J. : INTRODUCTION [ 1 ] Shoppers Drug Mart Inc. (“Shoppers”) commenced an Originating Application ( ex parte ) by which it obtained an order of Butler, J. of this Court pursuant to the Reciprocal Enforcement of Judgments Act , RSNL 1990, c.

R-4 (the “ Act ” ), that registered as judgments against Retirement Home Specialists Inc., Bay Roberts Retirement Centre Limited, Retirement Home Investments Inc., Meadow Creek Retirement Centre Inc., and Presidential Estates Inc. (collectively, “the Retirement Homes”), orders obtained by Shoppers against them in the Ontario Superior Court of Justice. [ 2 ] The Retirement Homes filed an application with this Court on November 22, 2018 and ask that the Court set aside the ex parte Order: (

a) under section 3(6) (

b) of the Act , because they neither carried on business in Ontario nor appeared or submitted to the jurisdiction of the Ontario courts; or (

b) under section 3(6) (

f) and (

g) of the Act : (

i) because the Ontario judgments are in respect of a cause of action that for reasons of public policy or for some similar reason would not have been entertained by this Court; or (ii) because the Retirement Homes would have a good defence if an action were brought on the judgment. [ 3 ] Because Shoppers obtained the Order of Butler, J. on an ex parte application without notice to the Retirement Homes, the onus rests upon Shoppers to demonstrate why the ex parte Order should not be set aside. [ 4 ] The facts, as they relate to the application before me, are not complex.

Retirement Home Specialists Inc. entered into a Pharmacy Provider Agreement with Shoppers effective as of January 19. 2011. Effective the same date, Bay Roberts Retirement Centre Limited, Retirement Home Investments Inc., Meadow Creek Retirement Centre Inc., and Presidential Estates Inc. also entered into a Pharmacy Provider Agreement with Shoppers.

The two agreements were made on substantially the same terms, particularly as to applicable law, dispute resolution and termination, and so will be referred to in this decision collectively as the Agreements. [ 5 ] Shoppers terminated the Agreements effective October 18, 2015.

The Retirement Homes contested the enforceability of the Agreements and so Shoppers commenced an arbitration proceeding in accordance with their terms seeking repayment from the Retirement Homes of a combined amount of approximately $840,000. [ 6 ] Following a hearing at which the Retirement Homes participated, the arbitrator made three awards. In the first award, he found that Retirement Home Specialists Inc. was required to pay to Shoppers $352,597 and that Bay Roberts Retirement Centre Limited,

Retirement Home Investments Inc., Meadow Creek Retirement Centre Inc., and Presidential Estates Inc. were jointly and severally liable to pay Shoppers $488,433 (the “Award”). In the second award, the arbitrator found the Retirement Homes jointly and severally liable to Shoppers for costs in the amount of $94,861.47 (the “Costs Award”).

Finally, the arbitrator made a joint and several supplemental costs award in favour of Shoppers against the Retirement Homes of $19,780.63 (the “Supplemental Costs Award”). [ 7 ] Shoppers, on notice to the Retirement Homes, brought applications before the Ontario Superior Court of Justice to have the three Awards entered as judgments against the Retirement Homes in the Ontario Superior Court.

Judgments were granted in favour of Shoppers in Ontario and, subsequently, by the ex parte Order of Butler, J., those judgments were registered in this jurisdiction in accordance with the Act . procedural history [ 8 ] In order to fully understand the application that I must decide, it is helpful to have a more complete appreciation of the procedural history of the arbitration, the applications to the Ontario Superior Court and the two applications to this Court. [ 9 ] By

Article VIII, Governing Law, the Agreements provide that they “shall be made and construed in accordance with the laws of the province where the Facilities are located [Newfoundland and Labrador] and the federal laws of Canada as applicable.”

Article VIII provides as well that “The parties hereby attorn to the jurisdiction of the Ontario Superior Court of Justice and to the courts of competent jurisdiction in the province where the Facilities are located”. [ 10 ]

Article II-1 of the Agreements provides for the right of termination.

Article II-2 of the Agreements provides that a dispute may be determined by arbitration “from which there shall be no appeal, such arbitration to be held in accordance with the provisions of the Arbitration Act then in force in the Province of Ontario”.

That provision goes on to state, “Nothing in this provision precludes a party from seeking interim relief by way of injunction (mandatory or otherwise) or other equitable relief in the Ontario Superior Court of Justice or in the courts of competent jurisdiction in the province where the Facilities are located”. [ 11 ] When the Retirement Homes disputed the enforceability of the Agreements, Shoppers referred the matter to arbitration in accordance with

Article II-2. The Honourable Stephen T. Goudge was appointed arbitrator. The arbitration was conducted under the terms of the Agreements in accordance with the Arbitration Act, 1991 , S.O. 1991, c. 17 (the “ Ontario Act ” ). [ 12 ] At the arbitration, the Retirement Homes neither challenged the jurisdiction of the arbitrator nor took issue with Shopper’s termination of the Agreements or the amounts to be repaid thereunder.

They did, however, argue before the arbitrator that the Agreements were not enforceable against them because the terms of the Agreements violated the Pharmaceutical Association Act , SNL 2006 c. P-12.01 (the “ 2006 Act ” ). [ 13 ] Following the hearing of evidence and written and oral submissions by the parties, the arbitrator made the three Awards in favour of Shoppers. [ 14 ] As we have seen, the Agreements provided that the Awards were not subject to appeal. I was not advised as to the law relating to any inherent jurisdiction of the Ontario Superior Court for judicial review of the Awards.

In any event, however, the Ontario Superior Court is granted a limited authority to review the Awards pursuant to

section 46 of the Ontario Act , as we shall see below. [ 15 ] In accordance with sections 50(1) to (3) of the Ontario Act , Shoppers applied to enforce the Awards as judgments of the Ontario Superior Court.

Section 50 provides in relevant part as follows: 50(1) Application for enforcement of award A person who is entitled to enforcement of an award made in Ontario or elsewhere in Canada may make an application to the court to that effect. 50(2) Formalities The application shall be made on notice to the person against whom enforcement is sought, in accordance with the rules of court, and shall be supported by the original award or a certified copy. 50(3) Duty of court, award made in Ontario The court shall give a judgment enforcing an award made in Ontario unless, (

a) the thirty-day period for commencing an appeal or an application to set the award aside has not yet elapsed;

(

b) there is a pending appeal, application to set the award aside or application for a declaration of invalidity; (

c) the award has been set aside or the arbitration is the subject of a declaration of invalidity; or (

d) the award is a family arbitration award. … [ 16 ] The record before me shows that the Retirement Homes were served with Shoppers’ applications to enforce the Awards as judgments of the Ontario Superior Court. [ 17 ] By order of Wilton-Siegel, J. of the Ontario Superior Court of Justice, Commercial List, dated May 1, 2018, made pursuant to section 50(3) of the Ontario Act , the Award and the Costs Award were ordered recognized and enforced against the Retirement Homes.

By order of McEwen, J. of the Ontario Superior Court of Justice, Commercial List, dated June 4, 2018, also made pursuant to section 50(3) of the Ontario Act , the Supplemental Costs Award was ordered recognized and enforced against the Retirement Homes. [ 18 ] Until they brought this application, the Retirement Homes did not challenge or otherwise appeal the Awards or the Ontario judgments. issues [ 19 ] The following issues are identified by the Retirement Homes: (

a) Should the Order of Butler, J. be set aside under section 3(6) (

b) of the Act ? (

b) Should the Order of Butler, J. be set aside under section 3(6) (

f) or (

g) of the Act ? (

c) If the answer to issue (

a) or (

b) is yes, then how should this matter be dealt with? analysis Should the Order of Butler, J. be set aside under section 3(6) (

b) of the Act ? [ 20 ] The Retirement Homes submit that because they neither carried on business in Ontario, nor appeared or submitted to the jurisdiction of the Ontario courts, the test under section 3(6) (

b) has been satisfied and the Order of Butler, J. should be set aside. [ 21 ] Section 3(6) (

b) of the Act provides:

(6) An order for registration shall not be made where it is shown by the judgment debtor to the court to which application for registration is made that, … (

b) the judgment debtor, being a person who was neither carrying on business nor ordinarily resident within the state of the original court, did not voluntarily appear or otherwise submit during the proceedings to the jurisdiction of that court. [ 22 ] Shoppers does not dispute that the Retirement Homes did not carry on business in Ontario or appear in the Ontario Superior Court, voluntarily or otherwise; rather, it says, the real issue is whether the Retirement Homes agreed to submit to the jurisdiction of that court. [ 23 ] In support of its position, Shoppers points to the Agreements which, as we have seen, provide in

Article VIII, Governing Law, that they “shall be made and construed in accordance with the laws of the province where the Facilities are located [Newfoundland and Labrador] and the federal laws of Canada as applicable.”

Article VIII provides as well that “The parties hereby attorn to the jurisdiction of the Ontario Superior Court of Justice and to the courts of competent jurisdiction in the province where the Facilities are located”. [ 24 ] We have also seen that

Article II-2 of the Agreements provides for arbitration of disputes “in accordance with the provisions of the Arbitration Act then in force in the Province of Ontario.” Nevertheless, that provision goes on to state, “Nothing in this provision precludes a party from seeking interim relief by way of injunction (mandatory or otherwise) or other equitable relief in the Ontario Superior Court of Justice or in the courts of competent jurisdiction in the province where the Facilities are located.” The Retirement Homes say that they have raised questions regarding the

interpretation of Newfoundland and Labrador legislation and regulations, namely the 2006 Act , and the determination of public policy in this Province and, as such, are entitled to “equitable relief” from this Court.

[ 25 ] Without explaining the equitable nature of the relief sought or how it relates to the interim relief provisions of the Agreements, the Retirement Homes submit that to the extent the determination of public policy in this Province is within the inherent jurisdiction of this Court, the parties cannot contract for an arbitrator or the Ontario Superior Court to determine such an issue. To this end, the Retirement Homes point to various provisions in the 2006 Act that they say are violated by the Agreements.

Because the parties agreed to attorn to the jurisdiction of the Newfoundland and Labrador Supreme Court, they say, the arbitrator had no jurisdiction to decide those issues, being as they are within the inherent jurisdiction of this Court. [ 26 ] The Retirement Homes have provided no statutory or case law authority for their arguments. I am satisfied that they are without merit on the facts of this case. Let us see why. [ 27 ] The Retirement Homes do not deny that they executed the Agreements.

In any event, it is clear that they viewed the Agreements as binding upon them, at least as to their dispute resolution provisions. The Retirement Homes participated in the arbitration before Mr. Goudge where they raised no jurisdictional issues. [ 28 ] I am satisfied that the arbitration was conducted pursuant to

Article II-2 of the Agreements in Toronto, Ontario under the Ontario Act . I conclude that the Retirement Homes submitted to the jurisdiction of the Ontario Superior Court as provided for in the Ontario Act by their execution of the Agreements and their participation in the arbitration. [ 29 ] Notwithstanding that the Agreements permitted the parties to seek recourse to the Ontario Superior Court of Justice or to “the courts of competent jurisdiction in the province where the Facilities are located” for interim relief, there was no suggestion that the terms of the Ontario Act did not apply to the arbitration.

Once the arbitration was held under the laws of the Province of Ontario, the jurisdiction of the Ontario Superior Court was confirmed in the Remedies provisions contained in the Ontario Act . [ 30 ] The Retirement Homes contractually, and therefore voluntarily, submitted to the laws of the Province of Ontario for the purposes of the arbitration and attorned to the jurisdiction of the Ontario Superior Court as provided in the Agreements and in the Ontario Act . Having done so, this branch of their argument fails.

Whatever other arguments they may have for having the Order of Butler, J. set aside will have to be assessed under the second branch of their position. Should the Order of Butler, J. be set aside under section 3(6) (

f) or (

g) of the Act ? [ 31 ] Sections 3(6) (

f) and (

g) of the Act provide certain other circumstances upon which an order for registration of an extra- provincial judgment shall not be made:

(6) An order for registration shall not be made where it is shown by the judgment debtor to the court to which application for registration is made that, … (

f) the judgment was in respect of a cause of action that for reasons of public policy or for some similar reason would not have been entertained by the registering court; or (

g) the judgment debtor would have a good defence if an action were brought on the judgment. [ 32 ] The Retirement Homes submit that the terms of the Agreements were contrary to the public policy of this Province and, as such, they would have a good defence to the claims made under the Agreements. [ 33 ] These issues were raised at the arbitration. The arbitrator concluded there was no breach of the 2006 Act in force at the time of the Agreements, nor was any conduct of Shoppers contrary to public policy that informed the amended 2006 Act .

I agree with Shoppers that the Agreements empowered the arbitrator to interpret the Agreements and the 2006 Act . That is precisely what he did in the Awards. [ 34 ] If the Retirement Homes were genuinely of the view that the terms of the Agreements were contrary to the public policy of this Province, then they could have submitted that question to this Court before they participated in the arbitration process. Or, they could have challenged the jurisdiction of the arbitrator before him or in the Ontario Superior Court.

Had the arbitrator ruled against them on that issue, they could then have sought judicial review in Ontario. Or, perhaps, they could have applied to the Ontario Superior Court, at or before the time Shoppers sought to enter the Awards as judgments, for a declaration that the arbitrator was without jurisdiction to make the Awards (see the reference to

section 46 of the Ontario Act below). Ultimately, of course, they could have appealed an unfavourable decision of the Ontario Superior Court to the Ontario Court of Appeal. The Retirement Homes did none of these things. [ 35 ] It must be kept in mind that the substance of the Awards is not before me. That is, this is not a judicial review of the Awards. The simple matter before me is whether Shoppers has valid judgments of the Ontario Superior Court that are appropriate for registration in this Province.

The issue before the Ontario Superior Court was whether, in the absence of the Retirement Homes appearing, it was in order to register the Awards as judgments. [ 36 ] Pursuant to sections 50(2) and (3) of the Ontario Act , the jurisdiction of the Ontario Superior Court, when asked to register an arbitration award obtained pursuant to the Ontario Act as a judgement, is limited to determining whether the application before it has been properly served upon the adverse parties and whether the award has been subject to appeal or to an application to set it aside or have it declared invalid.

I was provided with proof of service of the Ontario Superior Court proceedings upon the Retirement Homes. Furthermore, they did not raise any issue regarding the Awards having been appealed, set aside or declared invalid either before the

Ontario Superior Court or this Court. [ 37 ] As is clear from the foregoing, when considering the registration of an arbitration award under section 50(1) of the Ontario Act , the Ontario Superior Court is not to conduct a judicial review of the award. Nevertheless, a person against whom an arbitration award has been made under the Ontario Act is not without recourse to the court. Under

section 46 the Ontario Act , they may apply to the Ontario Superior Court to have the award set aside.

Section 46 provides: Setting aside award 46

(1) On a party’s application, the court may set aside an award on any of the following grounds: 1. A party entered into the arbitration agreement while under a legal incapacity. 2. The arbitration agreement is invalid or has ceased to exist. 3. The award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement. 4. The composition of the arbitral tribunal was not in accordance with the arbitration agreement or, if the agreement did not deal with that matter, was not in accordance with this Act . 5.

The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law. 6. The applicant was not treated equally and fairly, was not given an opportunity to present a case or to respond to another party’s case, or was not given proper notice of the arbitration or of the appointment of an arbitrator. 7. The procedures followed in the arbitration did not comply with this Act . 8. An arbitrator has committed a corrupt or fraudulent act or there is a reasonable apprehension of bias. 9. The award was obtained by fraud. 10.

The award is a family arbitration award that is not enforceable under the Family Law Act. [ 38 ] There was no suggestion that the Retirement Homes made any

section 46 application to the Ontario Superior Court to have the Awards set aside. [ 39 ] The Retirement Homes’ arguments under sections 3(6) (

f) and (

g) of the Act are also without merit. In

summary, at no time did the Retirement Homes: (

a) refuse to take

part in the arbitration as constituted pursuant to the Agreements; (

b) make any challenge to the appointment of the arbitrator or the application of the Ontario Act , either before the Ontario court or this Court; (

c) appeal or seek judicial review of the Awards, either before the Ontario Superior Court or this Court; (

d) oppose Shopper’s applications before the Ontario Superior Court, despite having been given notice; (

e) make an application to the Ontario Superior Court pursuant to

section 46 of the Ontario Act ; (

f) appeal the judgments of the Ontario Superior Court; or (

g) bring any proceeding of any kind for “interim relief … or other equitable relief” in response to any of the foregoing, either before the Ontario Superior Court or this Court.

[ 40 ] The “judgments” of the Ontario Court that were the subject of the order by Butler, J. were in respect of applications by Shoppers pursuant to section 50(1) of the Ontario Act . The “causes of action” in that court were the applications to register the Awards pursuant to the Ontario Act . [1] I was not made aware of any defence that the Retirement Homes may have had to those applications.

Nor is the registration of an arbitration award as a judgment in the Ontario Superior Court pursuant to the Ontario Act contrary to the public policy of the Province of Newfoundland and Labrador. [ 41 ] The Awards themselves were not before the Ontario Superior Court just as they are not before me. The Retirement Homes cannot use the Act to make a collateral attack on the Awards. [ 42 ] This ground of argument by the Retirement Homes also fails. disposition [ 43 ] The third question, “If the answer to issue (

a) or (

b) is yes, then how should this matter be dealt with?” is rendered moot because the answer to each of those questions is “No”. [ 44 ] Shoppers has established that the ex parte Order of Butler, J. ought to be maintained. Consequently, the application of Retirement Home Specialists Inc., Bay Roberts Retirement Centre Limited, Retirement Home Investments Inc., Meadow Creek Retirement Centre Inc., and Presidential Estates Inc., is dismissed with costs to Shoppers Drug Mart Inc. in accordance with Rule 55, Column 3 of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D . _____________________________ Robert P. Stack Justice