Hopkins v. Ventura Date:, 2013 MBCA 67

Citation: Hopkins v. Ventura Date: 20130705 Custom Homes Ltd., 2013 MBCA 67 Docket: AI 12-30-07742 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Barbara M. Hamilton Mr. Justice Richard J. Chartier Madam Justice Holly C. Beard BETWEEN : ) A. E. Verhaeghe WILLIAM ERIC HOPKINS and ) for the Appellant CHRISTA LEIGH HOPKINS ) ) G. G. Zazelenchuk (Plaintiffs) Respondents ) for the Respondents ) - and - ) ) Appeal heard: VENTURA CUSTOM HOMES LTD. ) June 13, 2012 ) (Defendant) Appellant ) Judgment delivered: ) July 5, 2013 BEARD J.A. I. THE ISSUE [ 1 ] This appeal involves the

interpretation and application of The Arbitration Act , C.C.S.M., c. A120 (the Act ), to a dispute arising out of an agreement between the parties for the construction of a new home (the Agreement). The respondents, William Eric Hopkins and Christa Leigh Hopkins (the Hopkins), filed a statement of claim against the appellant, Ventura Custom Homes Ltd. (Ventura), after discovering water leakage into the home and the presence of mould.

Ventura responded with a motion under s. 7 of the Act to stay the statement of claim on the basis that, by the terms of the Agreement (the arbitration clauses), the parties had agreed to resolve any disputes arising out of, or in connection with, that Agreement by arbitration under the Act . [ 2 ] The motion judge dismissed the motion for a stay, and Ventura is appealing that decision. In the decision, the motion judge found that the arbitration clauses in the Agreement had no valid application to the matter in dispute between them, thus disentitling Ventura to a stay of proceedings under s. 7(1) of the Act .

In the alternative, he invoked ss. 6 (

c) and 7(2) (

b) of the Act to refuse the stay. [ 3 ] While Ventura has set out several grounds of appeal, they can be condensed into the following two grounds: (

i) Did the motion judge err in his

interpretation of the Agreement? (ii) Did the motion judge err in exercising his discretion pursuant to ss. 6 (

c) and 7(2) (

b) of the Act ? II. THE FACTS [ 4 ] The facts in this matter are not in dispute. On October 27, 2005, the parties entered into the Agreement whereby Ventura agreed to construct, and the Hopkins agreed to purchase, a custom-built home on land to be acquired by Ventura. The home was built, and the Hopkins took possession in May 2006. [ 5 ] In approximately October 2010, over four years after taking possession, the Hopkins contacted Ventura to advise that they had discovered serious water leakage into their home.

They alleged that the leakage had caused mould to grow, making the home unsafe to live in. [ 6 ] Ventura advised the Hopkins that, pursuant to the Agreement, it was only liable for defective materials and workmanship for the first year following possession and that any problems that arose after that were to be referred to the National Home Warranty Program (the Program). [ 7 ] Following that advice, the Hopkins made a complaint regarding their water damage to the Program.

The Program responded that the warranty provided by the Program only covered structural defects and, because the problem they were raising was not a structural defect, it did not fall within the terms of the warranty. As a result, the Program denied liability under its warranty.

[ 8 ] The Hopkins then filed a statement of claim in which they allege, among other things, that the materials used by, and the workmanship of, Ventura were not such that the finished product (the house) was fit for the intended purpose, being its use as a family home.

They have not filed any request to initiate an arbitration proceeding regarding their claim. [ 9 ] Ventura filed a statement of defence denying the allegations and taking the position that any disputes between the parties rising out of, or in connection with, the Agreement should, by the terms of the Agreement, be referred to arbitration instead of being dealt with in the courts. It then filed its motion under s. 7 of the Act for a stay of proceedings. The motion was dismissed, permitting the court proceeding to continue. That decision led to this appeal. [ 10 ]

Section 10 of the Agreement, which includes the arbitration clauses, states: DISPUTES: 10.1 If, in the opinion of the Purchaser, the work being done or materials supplied by the Builder are not in accordance with the Specifications, the Purchaser shall immediately notify the Builder in writing and if any dispute or difference arises between the Builder and the Purchaser in that respect, the same shall be referred to arbitration as hereinafter provided. 10.2 If any dispute arises between the Purchaser and the Builder concerning any matter arising out of or in connection with this Agreement, and such dispute cannot be resolved between the Parties, then and in that event the Parties shall refer the matter to arbitration.

The arbitrator who shall be the sole Arbitrator and Judge in the matters under dispute shall be the then area representative of the National Home Warranty Program. In the event the aforementioned Arbitrator is unable to complete their duties in the Arbitration for whatever reason, then he shall appoint another Arbitrator who shall act in his stead. The Arbitration Act of Manitoba shall govern the arbitration procedure and the decision of the Arbitrator shall be final and binding upon the Parties. The costs for the arbitration procedure shall be shared by the Parties on an equal basis.

In the event the dispute arises out of the payment of monies, the Purchaser shall be obligated to pay all installments under the Agreement Price as they become due. 10.3 The Purchaser agrees to refrain from creating unfavourable publicity about the Builder through any media including the placing of any signs on the Land and dwelling house regarding the Builder.

The Purchaser agrees that damages are an inadequate remedy for any breach of the provisions of this paragraph and that in addition to any damages which the Builder may claim, it shall be entitled to injunctive relief as of right and also to its reasonable legal costs and expenses on a solicitor and client basis incurred in enforcing the provisions of this paragraph. III. THE ACT [ 11 ] The Act , in what is substantially its current form, came into effect on June 28, 1997.

Prior to its enactment, the question of modernizing the province’s arbitration legislation was the subject of a report of the Manitoba Law Reform Commission, being Report #85, Arbitration (November 1994), online: http://www.manitobalawreform.ca/pubs/pdf/archives/85-full_report.pdf (the Report), in which the commissioners reported on the value of arbitration, the problems with the law as it then was, arbitration reform in Canada, new policy directions in the uniform model legislation and recommended reform for Manitoba. [ 12 ] The commissioners recommended that Manitoba replace the arbitration legislation then in effect with a new statute based on a model that had been developed for international arbitrations and adopted in several provinces, including Ontario, Alberta, Saskatchewan and New Brunswick.

British Columbia and Qu ébec had also passed legislation to the same effect . The Minister of Justice and Attorney General, in comments that closely follow statements in the Report, confirmed, at second reading, that this was the model being proposed for Manitoba. He also stated that one of the underlying intentions of the model legislation was to harmonize arbitration law across Canada. (See Manitoba, Legislative Assembly, Debates and Proceedings (Hansard) , 36th Leg., 3rd Sess., vol. XLVII No. 29 (18 April 1997) at 1,647 (Hon.

Vic Toews). [ 13 ] The Report identifies the value of arbitration as including: lower cost to the parties, due mostly to costly pre-trial procedures associated with litigation; earlier resolution of the dispute, being months for arbitration as compared to years for litigation; an informal and flexible process; privacy and confidentiality; and the ability to select a decision-maker with knowledge of the area (at pp. 1- 2). [ 14 ] Some of the findings in the Report and in the Minister’s remarks are important to assist in understanding the intent behind the legislation: - The Report identifies one of the two main difficulties with the former legislation as “due to legislators’ historical distrust of private tribunals, the courts were given too broad a scope for discretionary intervention.

The easy access to the courts defeats the purpose of arbitration” (at p. 2.). The Minister stated that “[w]ith the changes that will be brought by this act, it is expected that arbitration will become a more attractive option for dispute resolution in Manitoba” ( Hansard at p. 1,648). - The new policy directions in the uniform model legislation are identified to include restricted access to the courts.

The Report explains (at p. 4): One way that this model restricts access to the courts is by removing the court’s former discretion to stay arbitrations, which it often used to override contractual agreements to arbitrate. Parties who had unwisely agreed to arbitration or for whom litigation would be better tactically thus had a fairly easy “escape hatch” from their contract. The new model statute represents a distinct change in policy and ends the court’s discretion. Now a court must stay litigation unless the case can be brought within narrow exceptions where the court still enjoys discretion.

- The Minister’s remarks are similar, in that, in referring to the changes in the new legislation, he stated (Hansard at p. 1,647): The first change is that the new act places greater recognition on the will of the parties. …. The act also strengthens arbitrationagreements by requiring courts to hold parties who enter into valid arbitration agreements to those agreements. [15] Many courts at all levels have accepted the primacy of arbitration agreements and the need to respect the arbitrationprocess that has been chosen by the parties. In Burlington Northern Railroad Co. v.

Canadian National Railway Co. (1995), (BC CA), 59 B.C.A.C. 97, Cumming J.A., in dissent, adopted by the S.C.C., (SCC), [1997] 1 S.C.R. 5,upheld the motion judge’s order staying the action. In doing so, he stated (at paras. 57-58): I find support for [staying the court] action in the words of Campbell, J., in Boart Sweden AB v. NYA Stromnes AB (1988), 41B.L.R. 295 (Ont.

H.C.) at pp. 302-303: “Public policy carries me to the consideration which I conclude is paramount having regard to the facts of this case, and that is the verystrong public policy of this jurisdiction that where parties have agreed by contract that they will have the arbitrators decide their claims,instead of resorting to the courts, the parties should be held to their contract.” That passage has been cited with approval: see Automatic Systems Inc. v. Bracknell Corp. et al. (1994), (ON CA), 74 O.A.C. 111; 18 O.R. (3d) 257 (C.A.), BWV Investments Ltd. v.

Saskferco Products Inc. et al. (1994), (SK CA), 125 Sask.R. 286; 81 W.A.C. 286; 119 D.L.R. (4th) 577 (C.A.). It is equally applicable here. [16] A similar statement was made by Juriansz J.A., for the court, in Ontario v. Ontario First Nations Limited Partnership(2004), (ON CA), 73 O.R. (3d) 439 (C.A.), regarding s. 6 of the Ontario arbitration legislation (which is the same ass. 6 of the Act) (at para. 26):

Section 6, while allowing more scope for judicial intervention than does the Model Law, directs the court not to intervene exceptfor the specified purposes. The purposes listed should be construed narrowly in accordance with the objective of the

section to restrainjudicial intervention. Under the rubric of assisting the conduct of the arbitration, ensuring the arbitration is conducted in accordancewith the agreement, or preventing unequal or unfair treatment, the court should not decide a question in the first instance simply becauseit expects that, if the question is left to the arbitrator, the unsuccessful party will appeal.

This is not only because the court should giveeffect to the parties’ prior agreement to settle their disputes through arbitration, but also because on an appeal, the arbitrator’s decision inthe first instance may be of assistance to the court, and as well arbitration may provide a cheaper and more flexible process for makingany findings of fact that might be necessary to decide the question. Rather, in exercising its discretion under s. 6, the court should take apragmatic approach and intervene only when there are undoubted practical reasons for doing so. …. (See also Bloomer Hotel Corp. et al. v.

Boehm Hotel Corp. et al., 2009 MBCA 68 at para. 19, 240 Man.R. (2d) 69; and Ontario v.Imperial Tobacco Canada Ltd. et al., 2011 ONCA 525 at paras. 33-35, 281 O.A.C. 329.) [17] The relevant sections of the Act are: Court intervention limited 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 unfair or unequal treatment of a party to an arbitration agreement; (

d) to enforce awards. Stay 7(1) Subject to subsection (2), if a party to an arbitration agreement commences a proceeding in a court in respect of a matter in disputeto be submitted to arbitration under the agreement, the court shall, on the motion of another party to the arbitration agreement, stay theproceeding.

Refusal to stay 7(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 Manitoba law; (

d) the motion was brought with undue delay; (

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

summary judgment. . . . . . No appeal 7(6) There is no appeal from the court’s decision under this section. . . . . . Independence and impartiality of arbitrator 11(1) An arbitrator shall be independent of the parties and shall act impartially. Disclosure before appointment 11(2) Before accepting an appointment as arbitrator, a person shall disclose to all parties to the arbitration any circumstances of which that person is aware that may give rise to a reasonable apprehension of bias.

Disclosure during proceedings 11(3) An arbitrator who, during an arbitration, becomes aware of circumstances that may give rise to a reasonable apprehension of bias shall promptly disclose the circumstances to all parties. No revocation 12 A party may not revoke the appointment of an arbitrator. Challenge 13(1) A party may challenge an arbitrator only on one of the following grounds: (

a) circumstances exist that may give rise to a reasonable apprehension of bias; ….

Challenge by appointing party 13(2) A party who appointed an arbitrator or participated in the arbitrator’s appointment may challenge the arbitrator only on grounds of which the party was unaware at the time of the appointment. . . . . . Removal by agreement or resignation 13(4) The other parties may agree to remove the arbitrator who is being challenged, or the arbitrator may resign.

Decision on challenge 13(5) If the arbitrator is not removed by the parties and does not resign, the arbitral tribunal, including the arbitrator who is being challenged, shall decide the issue and shall notify the parties of its decision. Appeal from decision 13(6) Within 10 days of being notified of the arbitral tribunal’s decision, a party may make an application to the court to decide the issue and, in the case of the challenging party, to remove the arbitrator. . . . . . Removal of arbitrator by court 15(1) The court may remove an arbitrator on a party’s application under subsection 13(6) …. . . . . .

No other appeal 15(6) Except as provided in subsection (5) [which does not apply to this case], there is no appeal from the court’s decision or from its directions under this section. IV. THE MOTION JUDGE’S DECISION [ 18 ] The motion judge summarized his decision as follows (at para. 17): … I have determined that the relevant considerations flowing from the governing jurisprudence do not permit me to conclude that the arbitration clause has application in the particular circumstances of this case.

I have also determined that in the present case, pursuant to s. 6(c), court intervention is justified so as to “prevent unfair or unequal treatment of a party to an arbitration agreement”. In addition, given what will be explained is my determination that the dispute in question falls outside the scope of time contemplated by the Agreement’s arbitration provision, the Agreement provision has no valid application and the court can, accordingly, refuse to grant a stay pursuant to s. 7(2) (

b) of the Act . [ 19 ] From this, it can be seen that the motion judge determined that the motion should be dismissed for three reasons. First, he found that the arbitration clause did not have application in this case. Second, he applied s. 6 (

c) of the Act to find that court intervention was necessary to prevent unfair and unequal treatment of one party to the agreement. Third, he found that, because the Agreement had no application, the court could refuse the stay pursuant to s. 7(2) (

b) of the Act . [ 20 ] The motion judge stated that the determination of whether an arbitration clause has application and is valid and binding is guided by the principles in Heyman v. Darwins Ltd. , [1942] A.C. 356 (H.L. (E.)), as applied by this court in Injector Wrap Corp. v.

Agrico Canada Ltd. (1990), (MB CA), 67 Man.R. (2d) 158; Bloomer Hotel; and Hnatiuk et al. v. Court et al., 2010MBCA 20 at para. 20, 251 Man.R. (2d) 178. He then considered the following four factors from Heyman: 1. Has the precise nature of the dispute been ascertained? 2. Is the dispute one which falls within the terms of the arbitration clause? 3. Is the arbitration clause still effective? 4.

Is there any sufficient reason why the matter in dispute should not be referred to arbitration? [21] He concluded that the first two factors did not give rise to concerns about the prima facie application of theAgreement’s arbitration clause.

He appears to have come to the conclusion, based on the third and fourth factors, that the arbitrationclause did not apply in the circumstances of this case. [22] The motion judge stated that the Agreement was to be interpreted according to the “well established principle in theinterpretation of contracts and agreements that courts are to give effect to the intention of the parties” (at para. 28). He also found that“[t]he intention of the parties should be largely discernible from the words they have used in the written document setting out theapparent agreement” (at para. 28).

He referred to Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., (SCC), [1980] 1 S.C.R. 888, and Moore (Geoffrey L.) Realty Inc. v. Manitoba Motor League, 2003 MBCA 71 at paras.11-12, 173 Man.R. (2d) 300, as authority for those principles.

In interpreting the meaning of the Agreement, he stated that he wasexamining the nature and purpose of the Agreement. [23] The motion judge found that the arbitration clause did not have application in this case by interpreting cls. 10.1 and 10.2to apply only to disputes that arose during the course of construction, but not to disputes arising thereafter. He came to this conclusionfor three reasons: - First, he found that the wording of cl. 10.1 uses “present tense language which addresses ‘work being done or materials supplied bythe builder’ during the course of construction” (at para. 35).

From this, he stated that the “[u]se of the present tense is consistent with aninterpretation of s. 10 that would suggest that the availability of arbitration is meant for those disputes arising during the course ofconstruction” (at para. 35). - Second, he found that the appointment of the area representative of the Program as the arbitrator would make sense during theconstruction period, when Ventura was liable for any defects, but would be unfair and absurd thereafter, because the arbitrator wouldwork for the Program and also be arbitrating complaints that the Program would be liable to remedy, if the complaints were successful.

He also noted that the Program had already denied coverage to the Hopkins, so it would, again, not make sense to have its representativearbitrating that same dispute.

He rejected Ventura’s argument that the agreement provided for a replacement arbitrator, his reason being that “[t]he necessaryinvolvement of the area representative in that reassignment leaves too much room for the perception that … [the Program] remainsunduly involved in the designation of a new supposedly independent third party adjudicator” (at para. 37). - Third, he found that the parties “might logically intend” (at para. 38) a more restrictive

interpretation of s. 10 in that parties mightintend to have mandatory arbitration during the construction period to minimize costs and delays during the construction process, whendelays would be expensive (at para. 38). He found that, after possession, the same benefits and/or fairness were “not obvious” (at para.39), such that he found that it was “not obvious” that both parties would intend to bind themselves to arbitration for any and all disputes“forever and a day” (at para. 39). [24] The motion judge found that, if he was incorrect regarding his

interpretation of s. 10 of the Agreement, then thatprovision was at least ambiguous. He found that the Agreement was a standard form agreement that was imposed by Ventura on theHopkins without negotiation. He then applied the principle of contra proferentem, being that an ambiguous provision will be construedagainst the party that imposed it. [25] The motion judge stated that not only would the

interpretation that s. 10 applies after the construction period result inan absurdity, but it would also result in a violation of a basic precept of natural justice and an obvious unfairness. On that basis, he foundthat he could intervene pursuant to s. 6(

c) of the Act to prevent unfair or unequal treatment of a party. [26] Finally, he stated that, in concluding that the arbitration clause had no valid application to the case, he was invoking s.7(2)(

b) to refuse Ventura’s application to stay the court proceedings commenced by the Hopkins. V. THE POSITIONS OF THE PARTIES The Appellant’s Position Section 7(2)(

b) of the Act [27] Ventura argues that the courts have long recognized that, where parties have contractually agreed to an alternativemeans of dispute resolution, such as arbitration, courts will enforce those agreements. [28] Ventura states that, in this case, the motion judge found that the arbitration clause was valid, but that it only applied todisputes that arose during the construction process, and not after. Its position is that “validity” and “application” are not synonymous, sothat the motion judge’s finding that the Agreement had no “valid application to the present case” (at para. 44) was not a finding that the

Agreement was not valid. As a result, it argues that the motion judge erred in determining that s. 7(2)(

b) applied such that he couldrefuse the stay on the basis that the “arbitration agreement” was invalid. [29] It has further argued that, having found the Agreement valid, if a determination needs to be made regarding theapplication of the arbitration clause to a specific situation, that should be resolved as a preliminary issue at the arbitration, as the partieshad originally intended.

Purpose and Effect of Arbitration Clause in the Construction Industry [30] Ventura argues that the motion judge erred by failing to take judicial notice of, and give due consideration to, thepurpose and effect of arbitration clauses in the construction industry, in general. It points to s. 8 of the Agreement, being the warranty byVentura and that by the Program. It argues that it would be absurd to permit the Hopkins to rely on the provisions of the Agreement tosupport their claim, yet not be bound by the arbitration provisions to resolve those claims.

Section 10 of the Agreement [31] Ventura states that the “cardinal principle of contract

interpretation,” and the court’s main objective, is to determine andgive effect to the parties’ true intention, determined objectively, based on a reasonable person’s expectation and understanding, asexpressed in the agreement as a whole at the time that the contract was made. For this, it relies on Moore Realty, and Manulife Bank ofCanada v. Conlin, (SCC), [1996] 3 S.C.R. 415. [32] Ventura argues that the motion judge erred in limiting the application of s. 10 of the Agreement to the constructionphase. It argues that the motion judge’s

interpretation is contrary to the stated intention in cl. 10.3 of the Agreement, being to eliminateor refrain from creating unfavourable publicity for the builder, which would not occur if disputes could be commenced in the courts. [33] It also argues that, if the parties had intended to limit the arbitration provision to the construction process, they couldeasily have done so by putting words to that effect in the Agreement.

It argues that the absence of such a limitation suggests that that wasnot the intended effect of the Agreement. [34] Ventura takes the position that the Agreement states that the arbitration process is to be governed by the Act and thatthe Act provides for the means to ensure that all arbitration proceedings are fair and equitable.

Those means include challenging theappointment of the arbitrator, if any party forms the opinion that there is a reasonable apprehension of bias, or requesting to have thearbitrator removed. [35] Ventura disagrees with the motion judge’s finding that the appointment of the Program’s area representative as thearbitrator is absurd, that it creates a potential for unfairness and that it is a violation of the basic precepts of natural justice.

It argues thatthe Program serves as an insurance provider in the construction industry, and it is designed to resolve disputes quickly, efficiently and ina cost-effective manner. It argues that its role is akin to that of any other insurer, all of whom handle claims internally when determiningwhether or not to compensate an insured. As a result, the arbitration clauses in the Agreement are not illogical and do not offend theprinciples of natural justice. [36] Ventura also disagrees with the motion judge’s finding that the arbitration provision of the Agreement is ambiguous.

Itargues that the provision is only capable of one meaning, being that all disputes must be resolved through arbitration, and that nothingelse would make sense. [37] It argues that, if this court finds that there is an ambiguity, one must not jump to the contra proferentem rule, but, rather,consider the evidence to determine the parties’ true intention. In this regard, it argues that subjective intention is irrelevant, but thatevidence of past conduct is admissible.

Its position is that the fact that the Hopkins made a claim to the Program before commencingcourt proceedings leads to an inference that they were aware that disputes should be resolved by arbitration. [38] In

summary, Ventura argues that the arbitration clause is clear, unambiguous and reflects the true intention of theparties to have all disputes settled by arbitration, instead of traditional litigation. The Respondents’ Position [39] The Hopkins argue that the motion judge did not err in his decision. They take the position that he correctly set out thefactors from Heyman as being the applicable factors to consider. They state that he applied the correct provisions of the Act and that itwas appropriate for him to exercise his discretion pursuant to s. 6(

c) and 7(2)(b). [40] In interpreting s. 10 of the Agreement, they argue that he applied the correct criteria, considered the whole contract anddirected his mind to the factors in Moore Realty.

They state that he considered the following facts: that the contract was a standard formcontract, that there was an ambiguity and that, if s. 10 was meant to be effective after the Program came into effect, that would lead to anabsurdity and a denial of natural justice. [41] The Hopkins agree with the motion judge’s finding that it was logical for the area representative to be the arbitratorduring the construction process, but illogical and unfair for that to occur after the Program came into effect.

They argue that theunfairness was compounded, in this case, by the fact that the Program had already prejudged the dispute between the parties. [42] The Hopkins accept that there is a role for arbitration and for the Act, but they argue that the court continues to have animportant role in that, under the Act, it has the discretion to interfere, including under ss. 6 and 7. They argue that, in this case, themotion judge exercised his discretion appropriately, and there is nothing in his reasons that exhibits either a misdirection or an injusticesuch that the decision should be reversed. VI.

JURISDICTION TO APPEAL FROM THE COURT’S DECISION

[43] Ventura has appealed a decision of a judge made under s. 7 of the Act. Pursuant to s. 7(6), there is no appeal from thecourt’s decision under s. 7, which raises the question of whether this court has the jurisdiction to entertain this appeal. [44] This issue has been considered by the Ontario Court of Appeal on several occasions, based on the same provision as s. 7of the Act. In Mantini v.

Smith Lyons LLP (2003), (ON CA), 64 O.R. (3d) 505, Feldman J.A., speaking for the court,stated as follows (at paras. 15-16): The scope and effect of s. 7(6) of the Act have been considered by this court in two recent decisions, Huras v. PrimericaFinancial Services Ltd. (2000), (ON CA), 137 O.A.C. 79, [2000] O.J. No. 3772 (QL) (C.A.), and Brown v. Murphy(2002), (ON CA), 59 O.R. (3d) 404, 212 D.L.R. (4th) 35 (C.A.).

Those cases explain that where a motion judgedecides that a matter is not subject to arbitration, that is a decision that falls outside the scope of s. 7, and an appeal from that decision isnot barred by s. 7(6). Therefore, because the motion judge determined that all of the respondents’ claims fall outside the arbitration agreement, s. 7(6)does not bar the appellant’s appeal. …. (See also SNC-SNAM, G.P. v. Opron Maritimes Construction Ltd. et al., 2011 NBCA 60 at paras. 31-40, 386 N.B.R. (2d) 1, and Griffinv.

Dell Canada Inc., 2010 ONCA 29 at para. 25, 98 O.R. (3d) 481.) [45] In Opron Maritimes, Richard J.A., for the court, further explained the jurisdiction to entertain an appeal (at para. 40): The Ontario cases persuade me to conclude, as stated above, that if a motion judge stays a proceeding on the grounds theconditions in s. 7(1) are met, there can be no appeal from that decision. Similarly, if a motion judge concludes that at least one of thecriteria listed in s. 7(2) is met, and, as a result, refuses to stay the proceeding, there can be no appeal from that decision. ….

On theother hand, if the motion judge holds there is no applicable arbitration agreement upon which the proceedings could be stayed, or, inother words, if the judge does not make any of the determinations he or she might be called upon to make under s. 7 of the ArbitrationAct, then s. 7(6) cannot be successfully invoked to bar an appeal. See also Clark (A.G.) Holdings Ltd. et al. v. HOOPP Realty Inc., 2013 ABCA 101 at paras. 6-13, 544 A.R. 114. [46] This court considered the

interpretation of s. 7(6) of the Act in Hnatiuk at paras. 26-35, albeit in a different factualcontext. In that case, the motion judge found that the dispute came within the arbitration clause of the agreement and granted a stay ofthe court proceedings under s. 7 of the Act.

This court found that one issue on appeal was whether the motion judge had misdirectedhimself as to the nature of the dispute, with the result that an arbitration on the issue, as defined, would result in an ineffective arbitrationprocess (at para. 35). [47] In interpreting s. 7(6), this court accepted the decisions in Brown and Mantini, but found as follows (at para. 35): …. Failure to intervene, by construing s. 7(6) too literally, would result in an ineffective arbitration process.

The arbitratorwould have to focus on a subsidiary question only, while the fundamental dispute remained outside his or her purview. That cannot bewhat was intended by the legislature in enacting s. 7(6). A discretionary order which stays a court proceeding and refers a dispute toarbitration cannot be immune from appellate review if failure to review would send a wrongly described dispute to arbitration, with thelikely result that the process would be futile. [48] In

summary, it is clear that some decisions made under s. 7 are subject to appeal, and it is important to determine theexact nature of both the question under appeal and the underlying dispute in order to determine the applicability of s. 7(6) and whetherthere is jurisdiction to entertain an appeal. [49] In this case, the motion judge concluded that the arbitration clauses were valid, but that their application was limited todisputes arising during the construction period and did not extend to disputes arising after that time.

Regarding the Hopkins’ complaint,he found that the dispute arose after the construction was complete and the Hopkins had taken possession; therefore, it was not subject tothe arbitration clause. Having found that the dispute was not subject to arbitration, the result is that his decision falls outside the scope ofs. 7 and I would find that an appeal from that decision is not barred by s. 7(6). VII. ANALYSIS

Section 7 of the Act [50] Ventura applied for a stay of the action under s. 7 of the Act. As explained in paras. 11-16 herein, the Act was enactedin its current form in 1997. This new legislation included a significant change in the wording of s. 7, which calls for caution whenapplying decisions based on the former legislation, such as Heyman and Injector Wrap. Although Heyman is a British case, it is basedon British legislation that had identical wording to that in s. 7 of the pre-1997 legislation in Manitoba (R.S.M. 1987, c. A120 (the formerAct)), which was the legislation that was under consideration by this court in Injector Wrap. [51]

Section 7 of the former Act stated: Staying proceedings in action commenced by a party as reference

7 Where a party to a submission … commences any legal proceedings in any court against any other party to the submission … inrespect of any matter agreed to be referred, any party to the legal proceedings may … apply to that court to stay proceedings; and thatcourt, if satisfied that there is no sufficient reason why the matters should not be referred in accordance with the submission, and that theapplicant was, at the time the proceedings were commenced, and still remains, ready and willing to do all things necessary to the properconduct of the arbitration, may make an order staying the proceedings. [emphasis added] [52] In Heyman, Lord Macmillan held that an application for a stay under s. 7 of the former Act must be determined byasking the four questions set out in para. 20 herein (at p. 370). [53]

Section 7 of the Act, as it now appears, requires a two-step analysis: - the court must first determine whether the court proceeding is “in respect of a matter in dispute to be submitted to arbitration underthe agreement” (s. 7(1) of the Act); - if the answer is no, then the court will not grant a stay; - if the answer is yes, then the court must proceed to consider s. 7(2) of the Act and whether any of the five cases in (

a) to (

e) thereinapplies to permit the court to refuse to stay the court proceedings. (See Huras v. Primerica Financial Services Ltd. (2000), (ON CA), 137 O.A.C. 79 at paras. 9-10; Brown at para. 5;Mantini at para. 17; Nazarinia Holdings Inc. v. 2049080 Ontario Inc. ((c.o.b.) J.W. Car Care), 2010 ONSC 1766 at paras. 19-21 (QL),aff’d 2010 ONCA 739 (QL); Opron Maritimes at para. 32; MDG Kingston Inc. v. MDG Computers Canada Inc., 2008 ONCA 656 atparas. 14-16, 92 O.R. (3d) 4, leave to appeal to S.C.C. refused, [2010] S.C.C.A.

No. 94 (QL).) [54] The first three questions from Heyman clearly relate to the issue raised in s. 7(1), being whether the court proceeding isin respect of a matter in dispute to be submitted to arbitration under the agreement. As such, they remain relevant to the

interpretationand application of s. 7(1) of the Act. [55] The fourth question in Heyman uses the very wide wording found in s. 7 of the former Act, but that wording no longerappears anywhere in the current s. 7 of the Act. However, the issue contained therein and that is found in the fourth question in Heyman,being reasons not to refer a matter to arbitration, was enacted as s. 7(2) of the Act, albeit with very different, and much more limited,wording. This is in keeping with the legislature’s purpose and intention in amending the legislation, as explained at paras. 11-16, herein.

Thus, I would find that the fourth, wider question from Heyman is no longer relevant to the analysis under the current s. 7. [56] This court referred to the four Heyman questions in both Bloomer Hotel and Hnatiuk, decisions that followed theenactment of the Act. While both decisions cited the current s. 7, neither makes reference to the change in the legislation after thedecisions in Heyman and Injector Wrap or considered or commented on the continued applicability of those decisions under the newlegislation. A reading of the reasons in Bloomer Hotel and Injector Wrap shows that the

interpretation of the legislation and theapplicability of Heyman and Injector Wrap were not at issue and were not considered. In Bloomer Hotel, this court referred to s. 7(2) assetting out the grounds for refusing a stay under s. 7(1). In Hnatiuk, the issues were the

interpretation of s. 7(6) and the determination ofthe precise nature of the dispute, not the

interpretation of either ss. 7(1) or 7(2). For these reasons, these decisions are not a precedent forthe analysis of the

interpretation and application of ss. 7(1) and (2) of the Act and the continued applicability of the decisions in Heymanand Injector Wrap. [57] In determining whether the court proceeding is “in respect of a matter in dispute to be submitted to arbitration under theagreement” within s. 7(1), the court must interpret the arbitration provisions of the agreement, which requires a consideration of theprinciples of contractual

interpretation as they apply to an arbitration clause. Principles of the

Interpretation of an Arbitration Clause [58] The court’s role in the

interpretation of private arbitration clauses (or any contract, for that matter) is to give effect tothe intentions of the parties as reflected in the words they have used. The principles to be applied in so doing were summarized byHamilton J.A. in Bell Mobility Inc. v. MTS Allstream Inc., 2009 MBCA 28, 236 Man.R. (2d) 167, wherein she stated (at para. 42): …. [The guiding principles of contractual

interpretation] are that the contract should be construed as a whole, all the words in thecontract are to be given meaning, if possible, and the absence of words may be considered. The goal is to determine the objective intentof the parties at the time of execution. See Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., (SCC), [1980] 1 S.C.R. 888; 32 N.R. 488, and Moore Realty. (See also, for example, Huras v.

Primerica Financial Services Ltd. (2001), (ON CA), 55 O.R. (3d) 449 at paras. 10-12 (C.A.).) [59] While the foundational principles are clear, in recent years, courts of all levels have recognized the many benefits ofconsensual contractual arbitration and have adopted a broadminded attitude to the applicability and

interpretation of such clauses. This isconsistent with, and in keeping with, the amendments to arbitration legislation across Canada and internationally. Geoff R. Hall, in histext, Canadian Contractual

Interpretation Law, 2d ed. (Markham: LexisNexis Canada Inc., 2012), states (at pp. 227-28):

The courts have repeatedly held that arbitration clauses are to be given a large and liberal

interpretation. The position in Québecis the same as in common law Canada. This approach has an unabashed policy goal: it furthers the modern trend of comity beingextended by the judiciary to private dispute resolution procedures which have been adopted by the parties. It also reflects the policyembodied in modern Arbitration Acts that directs the courts not to interfere in arbitrations. Such an approach is different from that whichprevailed in an earlier era, in which the courts jealously guarded their jurisdiction and tended to interpret arbitration provisionsnarrowly.

Cases from that era are not now followed. [60] This court has recently adopted, in principle, a liberal approach to interpreting arbitration clauses in Bloomer Hotel (atpara. 19): When the parties entered into their agreements, they purposefully included the arbitration clause. Courts should be reluctant tointerfere with the clear intention of the parties, which was certainly in part to protect the privacy of their business affairs. In as much aspossible, courts should give effect to the fact that the parties chose their forum to settle disputes. [61] The effect of this change in approach to the

interpretation of arbitration agreements and arbitration clauses withinagreements was explained by Hall (at p. 228): As a result of this interpretative approach and its underlying policy concern of encouraging private systems of dispute resolution,where the language of an arbitration clause is capable of bearing more than one meaning but one that fairly provides for arbitration, thecourts should favour the

interpretation which would result in arbitration. From the perspective of contractual

interpretation generally, the presumption that arbitration provisions are to be interpretedbroadly with ambiguities resolved in favour of arbitration clearly reflects policy objectives outside of the usual policy goals ofcontractual

interpretation. Indeed, arbitration clauses may be interpreted not so as to enforce the parties’ intentions, but rather to imposeupon private actors obligations which the state otherwise considers desirable. Even if the parties’ intentions or the factual matrix mightsupport a narrow construction, the courts will almost always presume a broad one. This is one of a limited number of areas in the law ofcontract

interpretation in Canada in which enforcing the parties’ intentions is not the paramount principle followed by the courts. However, since the presumption is very clear in the case law, in most cases it truly is fair to presume that parties enter into arbitrationagreements knowing how the courts will approach them. There may only be limited circumstances in which the parties’ intentions trulyare overruled by the judicial presumption in favour of a broad scope for arbitration provisions. [62] Thus, adopting a broad and liberal approach to the

interpretation of arbitration agreements has resulted in the principlethat, if an arbitration clause is capable of two meanings, one of which provides for arbitration of the disagreement, the court willgenerally adopt that

interpretation. (See, for example, Canadian National Railway Co. et al. v. Lovat Tunnel Equipment Inc. (1999), (ON CA), 122 O.A.C. 171 at paras. 20-22; Bolands Ltd. et al. v. Smith (Ivan) Holdings Ltd., 2002 NSCA 146 at para.47, 210 N.S.R. (2d) 215; Wright v. Nova Scotia Public Service Long Term Disability Plan Trust Fund, 2006 NSCA 101 at para. 77, 246N.S.R. (2d) 308; and Imperial Tobacco at para. 60.) [63] The breadth of the court’s

interpretation in favour of arbitration, where it is provided in a contract, was illustrated inSeidel v. TELUS Communications Inc., 2011 SCC 15, [2011] 1 S.C.R. 531. Binnie J., for the majority, stated (at para. 2): The choice to restrict or not to restrict arbitration clauses in consumer contracts is a matter for the legislature. Absent legislativeintervention, the courts will generally give effect to the terms of a commercial contract freely entered into, even a contract of adhesion,including an arbitration clause. …. [64] In

summary, while the court’s role in the

interpretation of private arbitration clauses is to give effect to the intentions ofthe parties as reflected in their words, policy considerations in encouraging arbitration, and a generally broad and liberal attitude by thecourts in favour of arbitration, where that option has been chosen, will impact the

interpretation in any given case. Grounds of Appeal (

i) Did the motion judge err in his construction of the Agreement? Standard of Review [65] The traditional standard of review for a question of contractual

interpretation was one of correctness. This court hasanalysed this question on several occasions in the last few years, as have courts of appeal in most other provinces, and most have nowadopted a new approach based on the decision of Iacobucci and Major JJ., for the majority, in Housen v. Nikolaisen, 2002 SCC 33,[2002] 2 S.C.R. 235. (See Prairie Petroleum Products Ltd. v. Husky Oil Ltd. et al., 2008 MBCA 87 at para. 36, 231 Man.R. (2d) 1; BellMobility Inc. at paras. 28-41; King v.

Operating Engineers Training Institute of Manitoba Inc., 2011 MBCA 80 at paras. 19-29, 270Man.R. (2d) 63; Telecommunication Employees Association of Manitoba Inc. et al. v. Manitoba Telecom Services Inc. et al., 2012MBCA 13 at paras. 99-103, 275 Man.R. (2d) 185. See Hall at pp. 125-33.) [66] In

summary, the following is the current standard to be applied:

- the standard of review is dependent on the nature of the question; - questions that raise errors of law are reviewable on a standard of correctness, and will include the application of an incorrect principle, the failure to consider a required element of a legal test or the failure to consider a relevant factor (see King at para. 21); - a trial judge’s determination of the factual matrix or surrounding circumstances, drawing factual inferences from the facts, findings as to credibility or good faith, consideration of extrinsic evidence and consideration of the evidence as a whole are questions of fact and reviewable on a standard of palpable and overriding error, or its functional equivalents of “clearly wrong,” “unreasonable” or “not reasonably supported by the evidence” (see King at para. 22); - a question of mixed fact and law, such as when a trial judge applies the legal principles to the language of the specific contract in the context of the relevant facts and inferences, is, generally, reviewable on the standard of palpable and overriding error (see King at para. 23); - what appears to be a question of mixed fact and law must be carefully analysed to determine whether the facts and law are truly inextricably intertwined (so as to engage the standard of palpable and overriding error) or whether there is a question of law that can be separated or extricated from the facts; if there is an extricable question of law, the standard to be applied to it is that of correctness (see King at paras. 23-28); and - questions of mixed fact and law, where the factual determinations and the law are inextricably intertwined, will often include questions for which the court has to make factual findings in order to determine the essential terms of the contract (see King at para. 27). [ 67 ] This new approach to the standard of review for contractual

interpretation will require a careful analysis of each issue under appeal to determine its exact nature, as this will dictate the standard of review to be applied. Clearly, there may be, and often will be, more than one standard of review arising in a single appeal, depending on the number and nature of the grounds of appeal. Analysis [ 68 ] The motion judge relied on the decisions in Consolidated Bathurst , Pense v. Northern Life Assurance Co. (1907), 15 O.L.R. 131 at 137 (C.A.) and Moore Realty to conclude that the applicable principles of contractual

interpretation are as summarized in para. 57 herein. He made no reference to the principles related specifically to the

interpretation of arbitration clauses or the cases related thereto (see, for example, paras. 58-63 herein). Furthermore, there was no indication in his reasons that he applied a broad and liberal approach to the

interpretation of the arbitration clauses. There was also no indication that he determined whether the arbitration clauses were capable of a meaning that provided for arbitration of the dispute, or considered whether that meaning should be adopted over one that did not provide for arbitration. In fact, he adopted what he earlier described as “that more restricted

interpretation” (at para. 38). [ 69 ] The motion judge based his

interpretation of s. 10 of the Agreement on three factors.

The first related to the wording of the arbitration clauses, the second related to the provision in the Agreement nominating the area representative of the Program as the arbitrator and the concern that there would be the perception of bias in relation to that nomination, and the third related to his finding that it was not obvious that the parties intended to bind themselves to arbitration for any and all disputes. [ 70 ] Regarding the wording of the arbitration clause, the motion judge stated (at para. 35): Given the specificity of much of what is set out in the Agreement, there are innumerable matters of dispute which could arise as between the builder and the purchaser during the course of construction.

Indeed, s. 10.1 uses present tense language which addresses “work being done or materials supplied by the builder” during the course of construction. Use of the present tense is consistent with an

interpretation of s. 10 that would suggest that the availability of arbitration is meant for those disputes arising during the course of construction. [ 71 ] The motion judge moved from considering the language used in cl. 10.1 to a general comment about s. 10, without considering that cls. 10.1 and 10.2 may be separate provisions that were intended to apply to different situations. Further thereto: - While the wording of cl. 10.1 appears to deal with disputes arising during the construction process, cl. 10.2 is not similarly worded.

The wording of cl. 10.2 is very broad and general, speaking of “any dispute [that] arises between the Purchaser and the Builder concerning any matter arising out of or in connection with this Agreement.” There is no reason, from the wording of cl. 10.2, to limit its application to disputes arising during the construction process. - The drafters could have used words to link the two clauses or to limit the effect of cl. 10.2, such as having cl. 10.2 read “[i]f any dispute arises between the Purchaser and Builder under cl. 10.1,” but no such limiting words are included. - Clause 10.3, which is part of s. 10, could only apply after the Hopkins had taken possession of the property, because the Agreement provides that Ventura will acquire the property.

As the owner, Ventura would control the placement of any signs on the property prior to possession. For cl. 10.3 to have any meaning, it would have to apply after the Hopkins took possession of the property. This would suggest that the three clauses in s. 10 are not to be read together and that they do not all apply only prior to possession date. [ 72 ] The broader, more liberal,

interpretation, and that which is equally, if not more, in keeping with the wording of cls. 10.1 and 10.2, would be to read the two clauses as separate provisions, rather than using the wording of cl. 10.1 to limit the

interpretation of cl. 10.2. [ 73 ] The second factor relates to the appointment of the area representative of the Program as the sole arbitrator of all disputes and the potential for bias. In this regard, the motion judge stated (at para. 35):

…. Use of the present tense is consistent with an

interpretation of s. 10 that would suggest that the availability of arbitration is meant for those disputes arising during the course of construction. Such an

interpretation would also seem both logical and congruous with the contemplated role of the area representative from the [Program]. In that regard, I agree with the Hopkins who submit that while it makes sense during construction for a representative of the [Program] to be an arbitrator of complaints as between the builder and purchaser, it does not make sense for that same person to be an arbitrator of disputes when a successful complaint may impose liability on the [Program], or where, as here, someone from that program has already denied coverage to a purchaser. Any

interpretation of s. 10 that would require a dispute such as the present to be determined by an arbitrator who is a representative of the [Program], leads to not only an absurdity, but a potential unfairness and obvious violation of a basic precept of natural justice. [ 74 ] The motion judge rejected Ventura’s argument that, if the Hopkins were of the view that the area representative would have been biased, cl. 10.2 of the Agreement permitted the appointment of another person where the arbitrator was “unable to complete their duties in the Arbitration for whatever reason.” In his view, this provision may not be applicable to a complaint of bias and, in any event, the agreement required that the area representative appoint the replacement, who would be equally tainted. [ 75 ] Notwithstanding that cl. 10.2 states, in part: “The Arbitration Act of Manitoba shall govern the arbitration procedure,” it does not appear that the motion judge considered the availability of recourse to the Act to resolve the question of the appointment of a suitable arbitrator.

Section 13(1) (

a) of the Act entitles any party to challenge an arbitrator on the ground that circumstances exist that may give rise to a reasonable apprehension of bias. This challenge is made to the arbitrator or arbitral tribunal (s. 13(5)) with an appeal to the court (s. 13(6)), whose decision is final, except in very limited circumstances (ss. 15(5) and (6)). [ 76 ] As well, an application to appoint a new arbitrator may have been available under s. 6, which permits a court to intervene to assist the arbitration process (s. 6(a)) and to prevent unfair or unequal treatment of a party (s. 6(c)).

Without deciding the issue, it would seem that both of these provisions may have been available to challenge the perceived bias of the arbitrator and to ensure a fair process. Further, a more restrained solution, such as replacing the arbitrator, rather than removing the entire matter from arbitration to the courts, would have been more in keeping with the purpose of the Act and the intentions of the parties. [ 77 ] Further on this factor, the motion judge stated that the Program had already denied coverage to the Hopkins (at para. 35 of his reasons, set out at para. 73 herein).

The Program provides coverage only for “structural defects,” while, in the statement of claim, the Hopkins have not claimed any structural damage; what they have claimed is that “a substantial amount of water had been penetrating a main floor exterior wall. …. As a result … a considerable amount of mould has accumulated in the … house which mould had severely affected the air quality in the … house.” [ 78 ] That said, the expert report submitted by the Hopkins suggests that there is structural damage to the house.

The determination of the nature of the claim, that is whether it is related to a structural defect, is a factual issue that would be within the expertise of an arbitrator to resolve. [ 79 ] If there is a problem with the appointment of the area representative of the Program due to a perceived bias, the broader and more liberal

interpretation of the arbitration clause would be to give effect to the parties’ intention to have their procedural disputes settled under the Act , as has been specifically provided in the Agreement, and to raise the question of bias with the arbitrator, as contemplated by the Act . This broader

interpretation would permit the parties to resolve any concerns about the suitability of the arbitrator within their chosen dispute resolution mechanism, rather than completely removing their choice of a resolution forum for all purposes following their taking possession of the property. [ 80 ] The third factor given by the motion judge for adopting a narrow

interpretation of the arbitration clause was that (at paras. 38-39): …. … [A]n adjudication by way of arbitration during the course of construction, provides for a flexible, supple and usually efficient forum by which the builder and purchaser can minimize costly and interminable delays during a process (construction) which can little afford the more cumbersome and unpredictable realities of litigation.

Although always to some extent true, the axiom “time is money” has a particular significance during that period where the purchaser is paying for and the builder is providing the construction of a home agreed upon. It is not obvious that arbitration for disputes arising after possession, provides the same benefits and/or fairness that accrue to the parties who are otherwise obliged to use such a forum during the course of construction. It is, by extension, not obvious that it would be the intention of both parties to knowingly bind themselves to an arbitration forum for any and all disputes, forever and a day.

Given that fact …. [ 81 ] Saying that “it is, by extension, not obvious that it would be the intention of both parties to knowingly bind themselves to an arbitration forum” does not constitute a positive finding or inference of fact that it was not their intention to bind themselves to arbitration following construction. If the motion judge intended this as a common sense inference, then it ignores the current reality that many complex commercial agreements provide for private arbitration to resolve a wide variety of disputes, completely displacing traditional litigation.

It also runs contrary to the government’s purpose in enacting the Act and the jurisprudence in favour of upholding an arbitration agreement. [ 82 ] In my view, this reasoning was speculative and cannot support the conclusion reached by the motion judge. Conclusion [ 83 ] In conclusion, while the motion judge applied the general principles of contractual

interpretation, he did not consider or apply any of the principles related specifically to the

interpretation of contractual arbitration clauses when he interpreted the arbitration

clauses in the Agreement. As a result, he did not apply the correct legal principles. The failure to apply the correct legal principles is a question of law and is reviewable on a standard of correctness. Thus, I would find that the motion judge erred in law in his

interpretation of the arbitration clauses of the Agreement by failing to consider the correct principles of contractual

interpretation as they relate to the

interpretation of the arbitration provisions of the Agreement. [ 84 ] In the result, his conclusion that s. 7(1) did not apply to the dispute and that Ventura was not entitled to a stay of the court proceedings pursuant thereto cannot be sustained. (ii) Did the motion judge err in exercising his discretion pursuant to ss. 6 (

c) and 7(2) (

b) of the Act ? Standard of Review [ 85 ] The application of ss. 6(

c) and 7(2) are discretionary decisions. The standard of review for such decisions was recently set out by this court in Bloomer Hotel (at para. 14): The order made by the motions judge is a discretionary one. Accordingly, in order for this court to interfere with that order, we must be satisfied that the judge has misdirected him or herself or his or her decision is so clearly wrong as to amount to an injustice. …. Application of

Section 6(

c) of the Act [ 86 ]

Section 6 can only be invoked after a finding that the Act applies to the dispute. It was invoked by the motion judge to refuse the stay of proceedings as an alternative to his finding that the stay should be refused on the basis that the arbitration clause did not apply to the dispute. Regarding the application of s. 6 (

c) of the Act , the motion judge stated (at para. 43): In pointing to the potential participation of a representative of the [Program] in circumstances like the present case, I earlier characterized the connected

interpretation of s. 10 as leading to an absurdity. Not only would such an

interpretation result in an absurdity, it would also result in a violation of a basic precept of natural justice and then an obvious unfairness. On that basis, I justify this court’s intervention in the present dispute by invoking s. 6 (

c) of the Act – “to prevent unfair or unequal treatment of a party to an arbitration agreement”. [ 87 ] The motion judge’s invocation of s. 6, and his decision to refuse the stay of proceedings pursuant thereto, is premised on his finding that it would be unfair and absurd to have the area representative of the Program appointed as the arbitrator of disputes arising after the Hopkins took possession of the house due to the potential for bias on the part of the area representative. [ 88 ] In coming to this decision, the motion judge did not take into account the correct principles of contractual

interpretation, the purpose of the Act , or the intention of the legislature in enacting the legislation. Thus, he failed to consider and apply the correct legal principles regarding the

interpretation and application of the Act . As a result of this misdirection, no deference is owed to his decision to invoke s. 6 (

c) or to the decision that he made pursuant thereto. [ 89 ] The Act has provisions governing the appointment of arbitrators and challenges thereto, as set out earlier in this decision. In this case, the dispute between the parties does not lead to the conclusion that proceeding with the arbitration would be fruitless or necessarily lead to an ineffective arbitration process.

As suggested by Juriansz J.A. in Ontario First Nations , the parties should have taken advantage of those provisions to take their dispute to the arbitrator, to see if the matter could be resolved at that level, before resorting to the courts. For these reasons, I would find that the motion judge erred in invoking s. 6 to refuse to grant a stay of the court proceedings. Application of Section 7(2)(b) [ 90 ] The motion judge found (at para. 44): In concluding as I have that the arbitration clause has no valid application to the present case, I am also invoking s. 7(2)(

b) to refuse Ventura’s application to stay proceedings commenced by the Hopkins’ statement of claim. [ 91 ] Section 7(2)(

b) gives a court the discretion to refuse a stay of proceedings where the arbitration agreement is invalid. [ 92 ] I will first address the question of whether this court has jurisdiction to consider this issue, given s. 7(6) of the Act .

As set out in para. 45 herein, Richard J.A., in Opron Maritimes , stated that “if a motion judge concludes that at least one of the criteria listed in s. 7(2) is met, and, as a result, refuses to stay the proceeding, there can be no appeal from that decision” (at para. 40). [ 93 ] While the motion judge did state that he was refusing the stay pursuant to s. 7(2) of the Act , that does not end the appeal in this case.

A review of the motion judge’s decision shows that, despite his ruling, he did not find “that at least one of the criteria listed in s. 7(2) is met” – that is, he did not find that “the arbitration agreement [or clauses, in this case] is invalid,” as is required by s. 7(2)(b). In fact, he found that the Agreement, including the arbitration clauses, was valid . He then proceeded to interpret the arbitration clauses in a particular manner, but that did not include a finding that either the Agreement, or the arbitration clauses in that Agreement, was invalid.

While he stated that “the arbitration clause has no valid application to the present case” (at para. 44), this is not a finding that the arbitration clauses were invalid; it is, rather, an

interpretation of a valid arbitration clause. [ 94 ] Regarding “invalidity” in s. 7(2) of the Act , in MDG Kingston , Feldman J.A. indicated that invalidity within s. 7(2) (

b) would include fraud or circumstances rendering the agreement void ab initio (see para. 25). There is no suggestion of any such

circumstances in this case. [ 95 ] Thus, it is clear that, while the motion judge said that he was invoking s. 7(2) (b), he did not find that the criterion in s. 7(2) (

b) was met. That being the case, s. 7(6) is not engaged to prevent this court from considering this aspect of his decision on appeal. [ 96 ] Given that the motion judge did not find that either the Agreement, or the arbitration clauses, was invalid, he clearly misdirected himself as to the

interpretation of s. 7(2)(

b) of the Act and, thereby, committed an error of law. As a result, no deference is owed to his decision. [ 97 ] I would find that, on the facts as found by the motion judge, there is no basis under s. 7(2) of the Act to refuse the stay of the court proceedings under s. 7(1). VIII. DETERMINING JURISDICTION [ 98 ] The law regarding the relationship between the courts and administrative tribunals is evolving, with both the legislatures and the courts showing an increasing degree of deference to administrative tribunals, including arbitral tribunals.

This evolution includes the determination of whether an arbitrator or a court should rule first on questions of the jurisdiction to hear the matter, as well as the

interpretation of the tribunal’s home statute. [ 99 ] The intention of the legislature can be seen in ss. 17(1) and (2) of the Act . Under the former subsection, an arbitral tribunal has the jurisdiction to rule on its own jurisdiction, including the existence and validity of the arbitration agreement. Under the latter subsection, an arbitral tribunal may determine any question of law that arises during an arbitration. The evolution of the jurisprudence is evident in decisions like Dell Computer Corp. v.

Union des consommateurs , 2007 SCC 34 at paras. 68-89 , especially paras. 84-85, [2007] 2 S.C.R. 801 ; Imperial Tobacco at paras. 33-42; St. Pierre v. Chriscan Enterprises Ltd. et al. , 2011 BCCA 97 at para. 24 , 302 B.C.A.C. 62 ; and Manitoba v. Russell Inns Ltd. et al. , 2013 MBCA 46 . [ 100 ] The parties did not define the issues in this case as raising questions of jurisdiction, so the matter was not argued on that basis in either court.

The fact that this issue was not raised with counsel during the appeal hearing should not be taken as an endorsement by this court of counsel’s failure to address the question of jurisdiction. I raise this issue to put litigants on notice that, in future proceedings, the question of who, as between an arbitrator and a court, has the jurisdiction to hear the issue in the first instance should be addressed, taking into account recent developments in this area of the law. IX.

DISPOSITION OF THE APPEAL [ 101 ] For the above-noted reasons, I would find that the motion judge erred in refusing to grant Ventura’s motion for a stay of proceedings. In the result, I would grant the appeal and stay the court proceedings pursuant to s. 7(1) of the Act on the basis that, by the terms of the Agreement, the parties had agreed to resolve any dispute by way of arbitration under the Act . [ 102 ] I would order that costs of this appeal and in the court below are payable to Ventura. __________________________ J.A. I agree: __________________________ J.A. I agree: __________________________ J.A.