



COURT OF APPEAL FOR ONTARIO

CITATION:
Kolios v. Vranich, 2012
    ONCA 269

DATE: 20120426

DOCKET: C54718

Blair, Lang and Hoy JJ.A.

BETWEEN

Dimitrios Kolios, Tracey-Lee Kolios
    and The Dimitrios
    Kolios Family Trust

Applicants (Respondents)

and

Darko Vranich and Darko
    Vranich Holdings Inc.
, Champlain Development Corporation 2184206 Ontario
    Limited, 2155328 Ontario Limited, 2023725 Ontario Limited, 2181738 Ontario
    Limited and 2185026 Ontario Limited

Respondents (
Appellants
)

Thomas M. Slahta, for the appellants

Rahul Shastri and David Winer, for the respondents

Heard and released orally: April 23, 2012

On appeal from the order of Justice Robert P. Boissonneault
    of the Superior Court of Justice, dated September 27, 2011.

ENDORSEMENT

[1]

The appeal challenges the decision of the motion judge dismissing the
    appellants motion to stay the respondents litigation on the basis that
    certain shareholder agreements contained a clause providing for arbitration of
    all disputes.  In our view, the appeal must be allowed and the respondents
    litigation stayed pursuant to s. 7(1) of the
Arbitration Act
, S.O.
    1991, c. 17, which provides:

If a party to an arbitration agreement commences a proceeding
    in respect of a matter to be submitted to arbitration under the agreement, the
    court in which the proceeding is commenced shall, on a motion of another party
    to the arbitration agreement, stay the proceeding.

[2]

The respondents resist arbitration arguing that the parties never
    reached an agreement concerning the contents of Schedule G (Shareholder Loans)
    to the shareholder agreements.  In their view, the parties never reached an agreement,
    including any arbitration agreement.

[3]

This argument fails for three reasons.

[4]

First, the respondents have not sought any relief such as a declaration
    that the shareholder agreements were invalid or void
ab

initio
.

[5]

Second, the shareholder agreements contain severability clauses the
    effect of which is that the arbitration clauses are separate contracts.  In
    addition, s. 17(2) of the
Arbitration Act
provides that [i]f the
    arbitration agreement forms part of another agreement, it shall, for the
    purposes of a ruling on jurisdiction, be treated as an independent agreement
    that may survive even if the main agreement is found to be invalid.

[6]

Third, s. 17(1) of the
Arbitration Act
provides that [a]n
    arbitral tribunal may rule on its own jurisdiction to conduct the arbitration
    and may in that connection rule on objections with respect to the existence or
    validity of the arbitration agreement.

[7]

Accordingly, it is for the arbitrator to deal with any attack the
    respondents may choose to make on the existence or validity of the agreements.

[8]

We observe that, in our view and contrary to the submissions of the respondents,
    the motion judge made no factual finding regarding the completeness or
    otherwise of the shareholder agreements.

[9]

Finally, the appellants do not pursue a stay of litigation concerning
    the following companies: 2023725 Ontario Limited, 2181738 Ontario Limited and
    2185026 Ontario Limited, none of which were parties to any shareholder
    agreement.

[10]

Accordingly,
    the appeal is allowed, the order below is set aside and an order will go
    staying the respondents application, except with respect to 2023725 Ontario
    Limited, 2181738 Ontario Limited and 2185026 Ontario Limited.

[11]

The
    costs order of the motion judge is set aside.  In view of the mixed result,
    there will be no order for costs of the motion.  Costs of the appeal are
    awarded to the appellants fixed in the amount of $7,500, inclusive of
    disbursements and applicable taxes.

R.A. Blair J.A.

S.E. Lang J.A.

Alexandra Hoy
    J.A.


