Banni v. Johnson, 2020 BCPC 264

Citation: Banni v. Johnson 2020 BCPC 264 Date: 20201216 File No: 2067726 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (Small Claims) BETWEEN: RALPH BANNI CLAIMANT AND: CHRISTOPHER JOHNSON, REAL ESTATE ERRORS AND OMISSION INSURANCE CORPORATION, SCOTT TWINING LAW CORPORATION, TWINING, SHORT & HAAKONSON, AND SCOTT TWINING DEFENDANTS ORAL REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE J. O'C. WINGHAM Appearing on his own behalf: R. Banni Counsel for Christopher Johnson and Real Estate Errors and Omission Insurance Corporation: S.

Cordell Counsel for Scott Twining Law Corporation, Twining, Short & Haakonson, and Scott Twining: S. Braun Place of Hearing: Vancouver , B.C. Date of Hearing: December 15, 2020 Date of Judgment: December 16, 2020 A Corrigendum was released by the Court on February 8, 2021.

The corrections have been made to the text and the Corrigendum is appended to this document. [ 1 ] THE COURT : The defendants, the Real Estate Errors and Omissions Insurance Corporation and Christopher Johnson, apply for an order under s. 11 of the Arbitration Act staying these proceedings against them. [ 2 ] On August 22, 2014, a Small Claims action was commenced in the Port Coquitlam Registry of this court by Ben Wilson [phonetic] and Tina Wilson [phonetic]. In that action, the Wilsons sued the claimant in these proceedings, Ralph Banni, and Sandie Banni and 612287 B.C.

Ltd. as well as Royal LePage Coronation Realty. In that case, the Wilsons sought damages for alleged

negligence, breach of fiduciary duty, fraud, and breach of contract. [3] The defendant in this case, Real Estate Errors and Omissions Insurance Corporation, responded to the claims on behalf of Mr.Banni pursuant to an indemnity plan, which permitted it to defend such claims and to appoint and instruct counsel. At first, the RealEstate Errors and Omissions Insurance Corporation used the defendant, Christopher Johnson, one of its staff lawyers and employees, butsubsequently it retained outside counsel, Scott Twining, to defend the Wilsons' action and used its staff lawyer, Mr. Johnson, to instructMr.

Twining. [4] In November 2014, the Wilsons amended their claim to include a claim for punitive damages. At the time, the Real Estate Errorsand Omissions Insurance Corporation reserved its right to deny coverage to Mr. Banni for punitive damages. [5] After a 10-day trial and receiving written submissions, His Honour Judge Jamieson delivered lengthy written reasons in which hedismissed the Wilsons' claims except for the claim for punitive damages against Mr. Banni. At paragraph 172 of that decision, JudgeJamieson found that Mr.

Banni had acted at times in a high-handed and reprehensible manner and he awarded the Wilsons $12,500 inpunitive damages. The defendant, the Real Estate Errors and Omissions Insurance Corporation, declined coverage to Mr. Banni for thepunitive damages awarded against him. Mr.

Banni did not dispute that denial of coverage at that time. [6] The indemnity plan included an arbitration clause which reads as follows [as read in]: All disputes arising out of or in connection with this indemnity plan or in respect of any defined legal relationship associated with it orderived from it shall be referred to and finally resolved by arbitration before a single arbitrator under the Domestic Arbitration Rules ofthe British Columbia International Commercial Arbitration Centre. The time limit to deliver an arbitration notice pursuant to those rulesshall be two years after the right to do so arose.

Unless we agree otherwise, the arbitration shall be held in Vancouver. You agree to keepall communications, meetings, evidence, materials, and hearings relating to the arbitration, any reasons or award arising from thearbitration strictly confidential unless we agree otherwise or disclosure is required by law. [7] In this action, Mr. Banni claims reimbursement for the punitive damages he was ordered to pay to the Wilsons in the PortCoquitlam action and he claims punitive damages against all the defendants for a breach of the indemnity plan, breach of trust, breach offiduciary duty, and negligence.

He submitted that this case relates to the conduct and handling of the Wilson case by the defendants. [8]

Section 7 of the Arbitration Act provides: 7(1) If a party commences legal proceedings in a court in respect of a matter agreed to be submitted to arbitration, a party to the legalproceedings may, before submitting the party's first response on the substance of the dispute, apply to that court to stay the legalproceedings.

(2) In an application under subsection (1), the court must make an order staying the legal proceedings unless it determines that thearbitration agreement is void, inoperative or incapable of being performed.

(3) An arbitration may be commenced or continued and an arbitral award made even if an application has been brought undersubsection (1) and the issue is pending before the court. [9]

Section 7 of the Arbitration Act, R.S.B.C. 2020, replaced s. 15 of the previous Act. Its wording, although not identical, is similar.Section 15 of the previous Act was considered in Williams v. Amazon.com, Inc., 2020 BCSC 300. At paragraph 25 of that decision,Madam Justice Horsman referred to Prince George v. McElhanney Engineering Services Ltd. (1995), (BC CA), 9B.C.L.R. (3d) 368 (C.A.), paragraph 25: In Prince George (City) v. McElhanney Engineering Services Ltd. … our Court of Appeal held that s. 15 establishes three prerequisites toa stay of proceedings in favour of arbitration: (

a) the applicant must show that a party to an arbitration agreement has commenced legal proceedings against another party to theagreement; (

b) the legal proceedings must be in respect of a matter agreed to be submitted to arbitration; and (

c) the application must be brought in a timely manner; that is, before the applicant takes a step in the proceeding. [10] The approach to whether these prerequisites are met is set out at paragraph 26: In determining whether these prerequisites are met, the role of the court is only to assess whether the applicant has established anarguable case.

The court does not resolve legitimate disputes between the parties regarding the scope of the arbitration agreement or theidentification of the parties to the agreement as these are matters for the arbitral tribunal to determine: Gulf Canada Resources Ltd. … [11] If the applicant establishes an arguable case and the prerequisites are met, the court must grant a stay unless the court determinesthat the agreement is void, inoperative, or incapable of being performed (paragraph 28 of the Williams v. Amazon.com, Inc. decision).Justice Pearlman in Pixhug Media Inc. v.

Steeves, 2017 BCSC 2171, explained at paragraph 46 that: The low threshold of an arguable case reflects the strong public policy in giving effect to arbitration agreements … [12] Mr. Banni submits that he was never given a copy of the indemnity agreement and that having to go to arbitration would create ahardship on him. He relies on the recent decision of the Supreme Court of Canada in Uber Technologies v.

Heller, 2020 SCC 16, in hissubmission that I should find the arbitration clause in the indemnity agreement invalid. [13] The claimant's claims in this proceeding, clearly and by his own admission, relate to the conduct and the handling of the Wilsonlitigation which was undertaken by the applicants in this proceeding pursuant to the indemnity agreement. The indemnity agreement

contains Condition 8, which I have referred to. That clause provides that any arbitration will take place in Vancouver unless otherwise agreed. Mr. Banni's claims that he was not a party to the arbitration agreement and that he was never given a copy of it is, at the very least, suspect. He was a realtor from 1981 to 2016. The indemnity agreement has been in existence along with the defendant, Real Estate Errors and Omissions Insurance Corporation, since 1988. The affidavit evidence indicates that a copy of the agreement was sent every year to each licensee when they received notice to renew their licence.

This would have included Mr. Banni. There is, at the very least, an arguable case that Mr. Banni was familiar with the agreement and its contents and that he was a party to it and accepted its terms. The first prerequisite set out in the McElhanney case, in my view, has been met. [ 14 ] The second prerequisite has also been met. These proceedings relate to the defence of the Wilson case undertaken by the defendant applicants under the indemnity agreement. As I have stated, this was acknowledged by Mr.

Banni in his submissions. [ 15 ] With respect to the third prerequisite, this application was brought in a timely fashion. The notice of claim in this case was filed October 14, 2020, and it meets the requirement of s. 7(1) of the Arbitration Act . The applicant defendants have not responded to the substance of the claim. Their reply simply challenges the jurisdiction of this court to hear the claim. [ 16 ] Mr. Banni submits, as well, that the indemnity agreement should not apply as the defendants acted outside the agreement as they had a policy that they would never settle a claim.

If that is the case, it seems to me that Mr. Banni's complaint, again, in that respect, also relates to the conduct of the defence of the Wilson claim under the indemnity agreement and it would be covered by the arbitration clause. [ 17 ] Mr. Banni submits that there was an inequality of bargaining power between him and the defendant, Real Estate Errors and Omissions Insurance Corporation, and that the requirements and cost of arbitration would result in the issues never being resolved. As I have indicated, he relies on the recent Supreme Court of Canada case in Uber Technologies v. Heller , 2020 SCC 16 .

In that case, the Supreme Court of Canada considered a case where the arbitration clause had been found to be unconscionable and was therefore not valid. [ 18 ] In that case, the arbitration clause provided that the arbitration would take place in the Netherlands. It required a $14,000 U.S. upfront payment of an administration fee and that amount equalled the annual salary of the claimant in that case. The court also found that there was a significant gulf in sophistication between the parties.

Due to those factors, the court found the arbitration clause to be unconscionable and therefore invalid. [ 19 ] This case is distinguishable in a number of ways from the Uber case. Mr. Banni was a realtor for over three decades. His business included drafting, reviewing, and negotiating contracts. He cannot be described as being unsophisticated. The arbitration clause provides that the arbitration will be in Vancouver or elsewhere if the parties agree. There is no provision in the clause for upfront fees which would make it unlikely the dispute would be able to be resolved.

There is nothing in the evidence which would lead to the conclusion that the clause is unconscionable and therefore invalid. [ 20 ] I am of the view that there should be a stay of proceedings of the claim against the applicant defendants. [ 21 ] The remaining issue is whether the stay of proceedings should be against all of the defendants. Ms. Braun, counsel for the remaining defendants, takes no position. In other words, she neither opposes the stay of proceedings not supports it. [ 22 ] In Ts’kw’aylaxw First Nation v.

Graymont Western Canada Inc. , 2018 BCSC 2101 , Justice Weatherill discussed the rationale for a stay of proceedings against all parties where only some are parties to an arbitration agreement.

At paragraphs 31 to 33, he stated in part: [31] In circumstances where the plaintiff advances claims against multiple parties, some of whom are not parties to the arbitration agreement, a stay of the proceedings as a whole is the appropriate remedy if the claims against the various parties are sufficiently intertwined, and if such a stay would be consistent with the principle of judicial economy … [32] A stay of proceedings as a whole allows the claim to proceed to arbitration in a manner consistent with the parties’ wishes, allows the arbitrator to make all necessary findings of fact and, should there be any issues extant at the conclusion of the arbitration, still preserves the court’s jurisdiction to consider those issues if necessary … [33] It is clear that the claim by the plaintiffs against the Province is inextricably related to the claim against Graymont.

Indeed, counsel for the plaintiffs conceded that to be the case. To permit the action against the Province to proceed in the circumstances would be to endorse multiple proceedings and create the risk of inconsistent decisions, which ought to be avoided … [ 23 ] In this case, the claims against the various defendants are clearly intertwined. They all relate to the claimant's defence in the Wilson case.

As a result, I order that this action be stayed in its entirety pending the outcome of the arbitration. (REASONS CONCLUDED) CORRIGENDUM - Released February 8, 2021 In the Reasons for Judgment dated December 16, 2020, the following changes have been made: [1] On the cover page, claimant information and counsel for the defendants should read: Appearing on his own behalf: R. Banni Counsel for Christopher Johnson and Real Estate Errors and Omission Insurance Corporation: S. Cordell Counsel for Scott Twining Law Corporation, Twining, Short & Haakonson, and Scott Twining: S. Braun

_____________________________ The Honourable Judge J. O’C. Wingham Provincial Court of British Columbia