Ontario court upholds decision allowing arbitration to proceed by summary judgment motion

The Ontario Court of Appeal recently upheld an application judge’s decision allowing an arbitration involved in a contract of breach dispute to proceed by way of a summary judgment motion.

In Optiva Inc. v. Tbaytel, 2022 ONCA 646, the respondent, Tbaytel, is an independent provider of telecommunication services. The respondent agreed to purchase a new software package for $8.5 million from the appellant Optiva Inc. to update its systems. They also agreed that disputes arising from the contract would be resolved by arbitration.

The respondent terminated the contract due to alleged breaches by the appellant. They then entered into an arbitration agreement, naming the arbitrator and describing his powers and duties.

The arbitrator ruled that the respondent could bring a summary judgment motion in the arbitration. Thus, some of the issues raised could be properly resolved through a summary judgment. He ultimately concluded that the appellant had breached the contract. He issued a partial award of $4,390,000 in favour of the respondent.

The appellant sought from the Ontario Superior Court an order setting aside the arbitrator’s award. It also sought leave to appeal on questions of law. However, the application judge refused to set aside the arbitrator’s order and dismissed the appellant’s leave to appeal. The appellant appealed the decision to the Court of Appeal, arguing that the application judge erred in holding that the arbitrator could proceed by summary judgment motion.

The Court of Appeal dismissed the appeal and upheld the application judge’s conclusion that the arbitrator had the authority to proceed with the arbitration by a summary judgment motion.

The appellant argued that the arbitration agreement was silent on the availability of a summary judgment procedure, and in the absence of the consent of both parties, the power to proceed by summary judgment could not be inferred from the silence in the agreement. The court disagreed.

According to the court, while there is no specific reference to a summary judgment procedure in the arbitration agreement, the agreement is “far from silent” on the arbitrator’s authority to decide on the procedures to be followed in the course of the arbitration.

“The opening language of paragraph 8 gave the arbitrator the power to hear all motions during the arbitration,” Justice David Doherty wrote. “Paragraph 8 goes on to provide numerous examples of the kinds of motions the arbitrator can hear, while expressly indicating that the examples provided in paragraph 8 were not intended as an exhaustive list of the arbitrator’s powers in respect of the conduct of the arbitration.”

The court also determined that the parties agreed in paragraph 8.1.13 that the arbitrator had the power to interpret agreements, including the arbitration agreement. They also agreed that the arbitrator would decide what the terms of the arbitration agreement, including the terms in paragraph 8, meant.

Moreover, the court learned that paragraphs 8.1.10 and 8.1.11 allowed the arbitrator to decide on the number of witnesses to be called, the time allocated for their testimony, and the order and way a witness would be examined.

“In summary, Optiva’s interpretation of the arbitration agreement, which would limit the arbitrator’s powers to those specifically granted in the agreement, flies in the face of the language used,” Justice Doherty wrote.

Since the appellant agreed that the arbitrator could determine the procedures governing the arbitration, the court held that the summary judgment procedure followed by the arbitrator did not result in unfairness to the appellant.

“There is no evidence that Optiva was denied the opportunity to present any evidence that it wanted to present before the arbitrator,” Justice Doherty wrote. “There is also no evidence that Optiva did not have a full and fair opportunity to challenge the case put forward by Tbaytel.”