Cliff’s Notes – Choose Your ADR Process Wisely

The case of Lobranova v. Grynyshyn 2019 ONSC 3064 may well be authority for the principle that you cannot have your cake and eat it at the same time. This recent decision by Justice F. Myers prevents a party from abandoning arbitration for a court process after arbitration has been the process chosen by the parties.

This is not a family law case, but family law lawyers, mediators and arbitrators will be all too familiar with its factual scenario. One side sues the other over the proceeds of the sale of a property of about 2.4 million dollars. During the court process the property is sold and, on consent, the proceeds are paid into court. Both parties then decide to submit the case to arbitration with respect to all issues including the matter of ownership (both legal and equitable) an accounting for construction expenses, and the question of HST and HST filings.

The case is somewhat procedurally complex.  Issues include a change of lawyer, disparaging comments made by the new lawyer to the arbitrator, difficulty scheduling and jurisdictional issues. Most importantly for our purposes, the aggrieved parties apply to the Court for an injunction or stay to prevent the arbitrator from continuing to hear the case even though there was still an outstanding issue to complete.

In dismissing the application Justice Myers said the following:

[50] It is often useful and important to take a step back to consider the issues in a proceeding on a holistic basis to ensure that one does not lose the justice of the forest in the details of the trees.

[51] In this dispute, the parties agreed to have their court proceedings resolved by arbitration. That was their right. They were heard by the arbitrator very quickly as they wished. One corollary of the parties’ decision to proceed by alternative dispute resolution is that the parties have very limited access to the courts when things do not go as they hope. In my view, a court is not justified in intervening where a new counsel for a party prefers an alternate theory of the case over one that was advanced by the party at the arbitration hearing. A party does not raise an error of law on appeal where it seeks to reverse its position and ignore the evidence it presented at the arbitration. An arbitration is not a test run in which evidence and positions can be tried on for size and then discarded in subsequent court proceedings. The parties opted-out of their court proceedings. Resort to the court after an arbitration is not a do-over. The arbitration is the main event. The court can intervene only on the prescribed grounds set out in The Arbitration Act, 1991 none of which is raised on the arguments made on this motion.

[52] [Counsel’s] complaint that the arbitrator is punishing him is also untenable. He is not arguing that the arbitrator should be removed for bias. The argument just hovers in the air. Moreover, in making this argument, he is acting as counsel and witness at the same time. His submissions were laced with his personal unsworn evidence.

This case demonstrates that it is important for parties to understand that, once the arbitration process is chosen, a court will only rarely intervene prior to completion of the arbitration.