



COURT OF APPEAL FOR ONTARIO

CITATION: Toronto Standard Condominium
    Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2021
    ONCA 360

DATE: 20210528

DOCKET: C66825

Huscroft, Nordheimer and Harvison
    Young JJ.A.

BETWEEN

Toronto
    Standard Condominium Corporation No. 1628

Applicant/Responding Party

(Respondent)

and

Toronto
    Standard Condominium Corporation No. 1636, Soho Grand Condominiums Inc. and Soinco
    Limited

Respondents/Moving Parties

(Appellants)

Allan Sternberg and Emily Hives, for
    the appellants

Carol A. Dirks, Rachel Fielding
    and Ronald Davis for the respondent

Heard: April 29, 2021 (by
    video conference)

On appeal from the order of Justice Lorne
    Sossin of the Superior Court of Justice, dated March 22, 2019, with reasons
    reported at 2019 ONSC 1827.

REASONS FOR DECISION


[1]

The appellants appeal from the order of the motion
    judge dismissing the appellants motion to stay this application in favour of
    arbitration.

BACKGROUND

[2]

The respondent in appeal is a 136-unit
    residential condominium located at 350 Wellington St. West. The appellant, Soho
    Grand Condominiums Inc. (Soho), registered the condominium on October 1,
    2004. Soon thereafter, on November 12, 2004, Soho registered the appellant,
    Toronto Standard Condominium Corporation No. 1636 (TSCC 1636). TSCC 1636 has
    55 residential units and is located at 348 Wellington St. West. TSCC 1636s
    units were never sold to outside purchasers. All of the units have always been
    owned by either Soho or by the appellant, Soinco Limited (Soinco).

[3]

The respondent in appeal and TSCC 1636 are
    physically integrated. They share some facilities not only with each other, but
    also with another Soho condominium.

[4]

The respondent in appeal and Soho entered into a
    cost-sharing agreement dated October 6, 2004 (the Reciprocal Agreement),
    wherein they agreed to contribute to the costs of the operation and maintenance
    of defined Common Facilities on a 69 per cent (the respondent in appeals share)
    and 31 per cent (Sohos share) basis. The Common Facilities include visitor
    parking units, bicycle spaces, and service areas for either or both of the
    corporations, such as the lobby, elevators, stairwells, mechanical rooms,
    garbage rooms, loading areas, electrical rooms, telephone rooms and a
    transformer vault.

[5]

TSCC 1636, upon its creation on November 12,
    2004, assumed all of Sohos rights and obligations under the Reciprocal
    Agreement. Recital (h) to the Reciprocal Agreement provided for this step. It
    reads:

[I]t is acknowledged that [Soho] is entering
    into this Agreement on behalf of [TSCC 1636] with respect to its respective
    lands and portions of the Building on the express understanding that as soon as
    its condominium corporation is registered as a separate condominium corporation,
    [TSCC 1636] shall thereupon automatically assume all covenants and obligations
    of [Soho] contained herein with respect to such lands contained within such
    condominium corporation, as if it were an original party hereto, and
    concomitantly, [Soho] shall thereupon be automatically forever released and
    relieved from any further obligations and/or liabilities arising under this
    Agreement and/or any successor agreement hereto with respect to same.

[6]

TSCC 1636 manages and operates the Common
    Facilities under the Reciprocal Agreement. Soinco owns the three units in TSCC
    1636 (the Rooms) which are at the heart of the dispute between the parties. The
    Rooms consist of a CACF Room
[1]
,
    a service/garbage room, and a change room. The common expenses for the Rooms
    form part of the Common Facilities Costs in the Reciprocal Agreement.

[7]

The dispute between TSCC 1636 and the respondent
    in appeal relates to the amounts due under the Reciprocal Agreement for the use
    of the Rooms. TSCC 1636 alleges that, as of October 31, 2018, the respondent in
    appeal owes $362,290.88, inclusive of HST and interest, for its proportionate
    share of the costs relating to the use of the Rooms. The respondent in appeal
    denies that it is responsible for this amount.

[8]

The Reciprocal Agreement contains an arbitration
    clause which reads, in part:

The validity, construction and performance of
    this Agreement shall be governed by the laws of the Province of Ontario and any
    dispute that may arise under this Agreement shall be determined by arbitration
    by a single arbitrator to be agreed upon by the parties within thirty (30) days
    of written notification by any of the parties of a request for arbitration.

[9]

The respondent in appeal paid its proportionate
    share of the costs relating to the Common Facilities under the Reciprocal
    Agreement for the fiscal years 2005-2008 and 2015-2018. TSCC 1636 asserts that the
    respondent in appeal remains in default of paying its share of the costs for
    the years, 2009-2014.

[10]

The respondent in appeal disputes that it owes
    any monies under the Reciprocal Agreement. Indeed, the respondent in appeal submits
    that it is entitled to be repaid monies it has paid to TSCC 1636 towards common
    expenses for the Rooms under the Reciprocal Agreement. The respondent in appeal
    says that, in 2004, Soho controlled both the respondent in appeal and TSCC
    1636. The respondent in appeal alleges that Soho engineered the Reciprocal Agreement
    with TSCC 1636 and orchestrated having the respondent in appeal sign it. It
    also alleges that Soho hid the fact of the origin of the Reciprocal Agreement
    from the respondent in appeal when the condominium building was turned over to
    the owners of the units.

[11]

Given the dispute over the monies owing, TSCC 1636
    advised the respondent in appeal that it would be proceeding to have the matter
    arbitrated. That process began with the dispute proceeding to mediation. There
    is disagreement as to whether the mediation was undertaken in compliance with
    s. 132(1) of the
Condominium Act
, 1998
, S.O. 1998, c. 19.
    In any event, the mediation was not successful.

[12]

After the unsuccessful mediation, TSCC 1636
    indicated that it would proceed to arbitration over the dispute. The respondent
    in appeal disagreed and, on September 27, 2018, it commenced this application.
    In its Notice of Application, the respondent in appeal sought various forms of relief
    including a declaration that any common expenses attributable to the Rooms do not
    form part of the Common Facilities Cost within the meaning of the Reciprocal Agreement;
    a declaration that Soinco, as the owner of the Rooms, is solely responsible to
    pay the common expenses of the Rooms to TSCC 1636; and an order requiring the appellants
    to reimburse the respondent in appeal for any monies paid towards the common
    expenses of the Rooms.

[13]

The respondent in appeal also sought various
    alternative forms of relief, including an Order that the conduct of the
    [appellants] is oppressive, unfairly prejudicial or unfairly disregards the
    interests of the [respondent in appeal] pursuant to Section 135 of the
Condominium
    Act, 1998
.

[14]

In response to the Notice of Application, the
    appellants brought a motion to stay the application in favour of arbitration. The
    respondent in appeal resisted that motion on two principal grounds. First, the
    respondent in appeal asserts that its application involves parties who were not
    signatories to the Reciprocal Agreement and, as a result, the issues outlined
    in its application are not subject to the arbitration clause in the Reciprocal
    Agreement. Second, the respondent in appeal says that it is seeking remedies
    that may not be available through arbitration, including remedies for
    oppression under s. 135 of the
Condominium Act, 1998
; for providing
    material information that was false, deceptive, or misleading, under s. 133
    of the
Condominium Act, 1998
; and other related remedies.

THE DECISION BELOW

[15]

The motion judge dismissed the appellants
    motion for a stay. In doing so, the motion judge acknowledged that there were
    elements of the dispute that could be addressed through arbitration as arising
    under the terms of the Reciprocal Agreement. However, the motion judge found
    that the essence of the claim was Soho's allegedly oppressive conduct. He said,
    at para. 57 of his reasons:

More specifically, the pith and substance of
    this dispute relates to allegations that Soho imposed a disproportionate burden
    on TSCC 1628 through the Reciprocal Agreement, as well as the consequences that
    flowed from this allegedly oppressive conduct.

[16]

The motion judge noted that the respondent in
    appeal had conceded that certain of its claims are arbitrable, including the
    interpretation of the Reciprocal Agreement as to whether "common
    expenses" of the Rooms are properly a Common Facilities Cost, and the
    applicable limitation period for the claims by TSCC 1636 against the respondent
    in appeal.

[17]

At the same time, the motion judge noted that
    the respondent in appeal said that other issues were not arbitrable, namely, whether
    Soinco is solely responsible for paying the common expenses to TSCC 1636;
    whether Soinco should reimburse the respondent in appeal for common expenses
    paid by it for the Rooms to date; whether the percentage contribution
    applicable to the Rooms should be altered; whether the conduct of the
    appellants was oppressive; and whether Soho had made material statements or
    provided material information that was false, deceptive, or misleading, under
    s. 133 of the
Condominium Act, 1998
.

[18]

In the end, the motion judge concluded, at para.
    75:

While an arbitration could deal with some
    aspects of this dispute, and while other aspects remain contingent on how
    narrow or broad an arbitrator sees the jurisdiction of the arbitration clause
    in the Reciprocal Agreement and s. 132 of the [
Condominium Act,

1998
],
    it is apparent that what I have concluded are the core or essential aspects of
    this application would need to proceed to this court to be resolved, as they
    arise under s. 135 of the [
Condominium Act, 1998
]
.

[19]

The motion judge found that the entire matter should
    proceed in the form of the application before the court and dismissed the
    motion for a stay.

ANALYSIS

(1)

The arbitration clause

[20]

In our view, the motion judge erred in the
    conclusions that he reached. In fairness to the motion judge, part of the error
    arose from the fact that the motion judge did not have the benefit of the
    decision in
TELUS Communications Inc. v. Wellman
, 2019 SCC 19, [2019]
    2 S.C.R. 144, when he reached his decision. In
TELUS
, the Supreme Court
    of Canada made it clear that a court did not have discretion to refuse to stay
    claims that were dealt with in an arbitration agreement. In language that has
    particular application to the case here, Moldaver J. said, at para. 76:

More fundamentally, Mr. Wellman's
    interpretation sits at odds with the policy underlying the
Arbitration Act
that parties to a valid arbitration agreement should abide by their agreement.
    If accepted, Mr. Wellman's interpretation would reduce the degree of certainty
    and predictability associated with arbitration agreements and permit persons
    who are party to an arbitration agreement to "piggyback" onto the
    claims of others.

[21]

The dispute as it exists between the respondent
    in appeal and TSCC 1636 is clearly covered by the very broad language of the
    arbitration clause, that is, any dispute that may arise under this Agreement.
    The motion judge, therefore, should have stayed that portion  of the application
    instituted by the respondent in appeal.

[22]

On this point, the respondent in appeal makes a
    late effort to rely on s. 7(2) of the
Arbitration Act, 1991
, S.O.
    1991, c. 17, which permits a court to refuse to stay a proceeding on certain
    bases, including that the arbitration agreement is invalid based on unconscionability:
Uber Technologies Inc. v. Heller
, 2020 SCC 16, 447 D.L.R. (4th) 179,
    at paras. 3-4, 52-53 and 98.

[23]

We would not give effect to this submission. For
    one, the point was not raised and argued before the motion judge. For another,
    we do not see any basis upon which it could be said that the arbitration clause
    in this case is unconscionable.

(2)

The oppression claim

[24]

We also do not agree with the motion judge that
    the pith and substance of the dispute is the asserted oppression claim. Rather,
    the core dispute is with respect to the interpretation and application of the
    Reciprocal Agreement. Indeed, it would appear that, if the issues relating to
    the Reciprocal Agreement are ultimately determined in favour of TSCC 1636, there
    would be little left to the claims being advanced by the respondent in appeal.

[25]

In our view, courts should generally be cautious
    in their approach to oppression claims of the type asserted here. In
    particular, courts should be wary of allowing such claims to overtake, and
    potentially distort, the dispute resolution process that lies at the heart of
    the
Condominium Act, 1998
, a central aspect of which is a preference
    for arbitration over court proceedings. In other words, courts should be alert
    to the possibility that persons, who are party to an arbitration agreement, are
    attempting to avoid that process by "piggybacking" onto claims made
    against others:

see e.g.
MTCC No. 965 v. MTCC No. 1031 and No. 1056
,
    2014 ONSC 5362, at para. 18; see also
TELUS
, at paras. 76, 98.

[26]

In considering this issue, the motion judge erred
    in his interpretation of the oppression section of the
Condominium Act,
    1998
. Assuming that any aspect of the dispute between the parties falls
    within the scope of s. 135 of the
Condominium Act, 1998
, a question
    that we do not determine here, we do not agree with the motion judge that such
    a claim can only be determined by a court.
[2]
In his reasons, the motion judge said, at para. 40: Further, as set out in s.
    135(1), applications under this provision can only be brought before this
    Court.

[27]

Section 135(1) reads:

An owner, a corporation, a declarant
    or a mortgagee of a unit may make an application to the Superior Court of
    Justice for an order under this section.

[28]

The language of s. 135(1) is permissive, not
    mandatory. It contemplates that, in certain circumstances, it may be necessary
    to have resort to the Superior Court of Justice to obtain relief. However, s.
    135(1) does not oust the jurisdiction of an arbitrator to consider the same
    relief, if that relief is part of the dispute in question that properly falls
    within the terms of the arbitration provision or within the terms of s. 132. In
    this case, we have already noted the broad language of the arbitration clause.
    There is nothing, in our view, that would preclude an arbitrator, acting under
    the authority of that arbitration clause, from considering the alleged
    oppressive conduct advanced by the respondent in appeal, at least as it relates
    to the actions of TSCC 1636.

[29]

In saying that, we are aware that the dispute,
    at least insofar as the oppression claim is made, includes parties that may not
    technically be parties to the arbitration process. We say technically because
    it is not entirely clear, from the relationship between the parties and their
    status, whether they might fall within the ambit of the arbitration clause, or
    otherwise be subject to arbitration under s. 132 of the
Condominium Act,
    1998
. We repeat that the emphasis in the
Condominium Act, 1998
,
    through s. 132, is on the resolution of various different forms of disputes by
    way of arbitration. On that point, we note that both Soho and Soinco appear to
    be owners and thus may be subject to the arbitration process mandated by s. 132.

[30]

In any event, we have already said that the core
    issue involves the dispute between TSCC 1636 and the respondent in appeal
    regarding the proper application and interpretation of the Reciprocal Agreement.
    Subject to our observations as to the possible application of the arbitration
    process to Soho and Soinco, there is nothing that prevents the issues, as between
    those two parties and the respondent in appeal, from proceeding in the Superior
    Court of Justice while the arbitration is ongoing, subject to any motion that
    might be brought for a stay of that proceeding on other grounds. We would also
    note the possibility that, rather than have parallel proceedings going on, Soho
    and Soinco might voluntarily agree to be part of the arbitration proceeding.
    None of these different considerations detract from the central point that the
    dispute between TSCC 1636 and the respondent in appeal must proceed to
    arbitration.

[31]

On this point, we do not agree with the motion
    judge that this case bears resemblance to the dispute in
Deluce Holdings
    Inc. v. Air Canada
(1992), 98 D.L.R. (4th) 509 (Gen. Div.). In that case,
    the arbitration clause was a very narrow one, relating solely to the value of
    the shares. As Blair J. noted, at p. 527, [t]here is no general resort to
    arbitration clause in the event of any dispute arising in connection with the
    Agreement. It was that fact that clearly led Blair J. to refuse to stay the
    proceeding. In this case, as we have already noted, there is a very broad
    arbitration clause.

(3)

The fresh evidence

[32]

Finally, we must address the motion brought by
    the respondent in appeal to file fresh evidence. The respondent in appeal
    sought to adduce evidence of conduct by the appellants that it asserts demonstrates
    their continued dominance over the respondent in appeal.

[33]

The fresh evidence consists of an affidavit from
    a member of the Board of Directors of the respondent in appeal. The affidavit alleges
    that its property manager has improperly transferred certain monies from the
    accounts of the respondent in appeal to TSCC 1636 at the direction of an
    officer of Soho. The affidavit also alleges that the legal fees being incurred
    by the appellants are being improperly charged to the facilities budget for the
    buildings. Further, there are allegations regarding improper restrictions on
    the use of the service elevator and of improper renovations to the loading
    dock.

[34]

We would not admit the fresh evidence. It does
    not meet the test for the admission of fresh evidence set out in
Palmer v.
    The Queen
, [1980] 1 S.C.R. 759, at p. 775. Specifically, none of this
    evidence is relevant to the issue as to the applicability of the arbitration clause
    nor could it be expected to have affected the result on that issue. This
    evidence may be relevant to the dispute between the parties, but it is not relevant
    to the proper process for resolving that dispute.

CONCLUSION

[35]

The appeal is allowed and the order below is set
    aside. In its place, an order is granted staying the application as it relates
    to the issues between TSCC 1636 and the respondent in appeal.

[36]

The appellants are entitled to their costs of
    the appeal in the agreed amount of $20,000, inclusive of disbursements and HST.
    As also agreed, the costs award below of $15,000 is reversed to be in favour of
    the appellants.

Grant Huscroft J.A.

I.V.B. Nordheimer J.A.

A. Harvison Young J.A.





[1]
Central Alarm and Control Facilities



[2]

The issue as to the scope and application of s. 135 of the
Condominium
    Act, 1998
was not argued before us.


