The Increasing Importance Of Arbitration in Condos

In the span of one week in June of 2017, three decisions were released (one by the Supreme Court of Canada and two by the Ontario Superior Court of Justice)[1] which emphasized the considerable level of deference that the Courts will afford Arbitrators in deciding disputes amongst parties. All three cases dealt with an appeal of an Arbitrator’s decision, whereby a party asked the Court to set aside the Arbitrator’s ruling. On all three occasions, the Court declined to grant any of the appeals.

It is well established in the law, that judicial review of an Arbitrator’s decision is rarely granted. Courts have recognized that parties themselves select an Arbitrator based on that Arbitrator’s expertise in the specific area of law which is the subject of the dispute. Arbitrations are intended to be an autonomous, self-contained, and self-sufficient dispute resolution process within which the parties agree to keep their dispute private and outside of the judicial system. Arbitration from a procedural standpoint, gives the parties greater input and control with respect to timing and how the arbitration itself is conducted, versus having a dispute adjudicated by the Court.

Section 132 of the Condominium Act, 1998, S.O, 1998, c. 19 (the “Condominium Act”) provides a basic framework as to when a Condominium Corporation can utilize arbitration versus having a dispute proceed to Court. Ultimately, condominium arbitrations are governed by theArbitration Act, 1991, S.O. 1991, c. 17 (the “Arbitration Act”), which provides clear statutory provisions regarding:

1. the selection of an Arbitrator;
2. how, once the parties have agreed to arbitrate a dispute, they cannot initiate a duplicate proceeding in the Ontario Superior Court of Justice; and
3. the basis for which a party may appeal an Arbitrator’s decision.

Unlike a final decision by a Judge, whereby parties typically have a legal right to an appeal, appeals under an arbitration are permitted only on narrow grounds, namely on questions of law. Where the appeal involves an interpretation of both the facts of the dispute and the applicable law, the Courts will decline to grant permission to appeal.

The only other ground in which a party can attempt to set aside an arbitration award is based on certain grounds set in the Arbitration Act; the most common argument that is advanced, is where a party alleges it was not treated equally or fairly by the Arbitrator or was not given an opportunity to present its case at the arbitration. This will require the Court to analyze the proceedings that ultimately led to the Arbitrator’s decision, to determine whether all parties were given a fair and equal chance to present their case. Given that arbitrations normally proceed based on an agreement or the input of the parties, it is typically difficult to establish that one party was not treated equally and/or fairly. It is common, when there are concerns with respect to the arbitration process, that the parties will seek an interim ruling from the Arbitrator for directions and/or clarification with respect to the arbitration. Even if a party is dissatisfied with an Arbitrator’s interim ruling or believes it is incorrect, the Courts have been clear that only the final order(s) of the Arbitrator can be appealed – not interim ones that deal with procedure.

From a policy perspective, the Courts are also encouraging litigants to use arbitration as a process to resolve their disputes. Courts are giving Arbitrators more and more latitude in deciding disputes privately and deferring to an Arbitrator’s decision about the internal rules of each arbitration.

In light of the fact that, as Condominium Corporations spread across Ontario and become increasingly intricate, and the use of complex shared facility agreements continues to rise, arbitrations in the condominium industry are becoming more and more common.

Coupled with the fact that condominium law is also becoming increasingly complex, there is a benefit to Condominium Corporations in electing to proceed via arbitration, and utilizing an arbitrator who specializes in condominium law. An Arbitrator with condominium law experience understands the nuances of the Condominium Act, as well as the practical realities of day-to-day condominium living; from pet issues to multifaceted shared facility disputes. Arbitrators also have the ability to be more flexible in their approach to addressing the dispute, as opposed to the Courts which are mandated to follow a strict set of rules.

While we do not believe that arbitrations will fully overtake the Courts’ role in interpreting the Condominium Act and resolving disputes involving Condominium Corporations, arbitrations play a complementary role in resolving condominium disputes. Given that the judicial system is becoming more and more backlogged with cases, arbitrations are being encouraged by the Courts and should be embraced as an alternative dispute resolution process.

[1] These 3 cases are: York Condominium Corporation No. 201 v. York Condominium Corporation No. 366, 2017 ONSC 975; Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32; and Louiseize v. Peel Condominium Corporation No. 103, 2017 ONSC 4031.

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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