NOTEWORTHY CASES

Supreme Court of Canada Rules on Arbitration Clauses in Web-based Contracts
Dell Computer Corp. v. Union des Consommateurs
2007 SCC 34 – July 13, 2007

Web-based contract – Arbitration clause – Dell’s website had an error in pricing on it for 2 types of handheld computers – When Dell became aware of the errors, it blocked access to the order pages through it’s main website and posted a correction notice – However, a consumer (O. Dumoulin) was able to get into the page through a different route and ordered a handheld at the lower price – When Dell refused to honour Dumoulin’s order at the lower price, the Consumer Union and Dumoulin filed a motion to bring a class action against Dell – Dell applied for referral of Dumoulin’s claim to arbitration pursuant to an arbitration clause in the terms and conditions of sale – The Superior Court and the Court of Appeal both held that the arbitration clause could not be set up against Dumoulin and authorized the class action against Dell – The case was appealed to the Supreme Court of Canada – The SCC found that the traditional test that is used to determine whether clauses in paper contracts are “external” within the meaning of Civil Code of Quebec (art. 1435) cannot be transposed without qualification to web-based contracts -The SCC held that a clause that requires operations of such complexity that its text is not reasonably accessible cannot be regarded as an integral part of the contract – In the case at bar, the arbitration clause could be accessed through a hyperlink and was therefore not “external” – The SCC allowed the appeal and held that Oliver’s claim should be referred to arbitration – The motion to bring a class action was dismissed

http://www.canlii.org/en/ca/scc/doc/2007/2007scc34/2007scc34.html

Execution of Med/Arb Agreement was Found to be a “Performance Obligation”
Kay v. Korakianitis
2007 CanLII 29278 (ON SC) – July 24, 2007

Family law – The applicant (wife) brought a motion for an order confirming M.K. as the parties’ arbitrator – The parties’ interim separation agreement stated that they would sign a mediation/arbitration agreement that would provide them with the right to proceed with non-binding mediation with P.E. and that if the matter were to proceed to arbitration, M.K. or another jointly agreed upon person would act as arbitrator – The parties did not end up signing a mediation/arbitration agreement and the husband claimed that accordingly there was no agreement to submit the dispute over corollary issues to arbitration – The Court rejected this argument and found that such an agreement did exist based on the clause in the interim separation agreement – The Court held that the execution of a mediation/arbitration agreement was simply a “performance obligation” – The husband’s lawyer also claimed that the arbitrator was tainted for several reasons, including the fact that the wife’s lawyer had unilateral conversations with the him and sought relief from the him before the mediation was completed – The Court held that it would be have better if the mediation had been completed before the wife’s lawyer communicated with the arbitrator – Notwithstanding the Court’s view of what a better procedure would have been, it found that there was no reasonable apprehension of bias on the part of the arbitrator – The motion was granted

http://www.canlii.org/en/on/onsc/doc/2007/2007canlii29278/2007canlii29278.html

Trial Ordered Despite Arbitration Clause
125516 Canada Limited, 655053 Ontario Limited, 844211 Ontario Limited and Maurice Savard v. William Day Construction Limited
2007 CanLII 33113 (ON S.C.) – August 15, 2007

Arbitration – The defendant (“Day”) sought an adjournment of the trial in this matter, which was scheduled to commence in September 2007 following the order of Gauthier J. – The action stemmed from an agreement dated April 30, 2002 whereby the parties had discussed a share purchase arrangement which Day did not complete – As a result, the plaintiff (“Savard”) alleged that he suffered damages – Day submitted that since the parties had agreed in writing to submit all disputes to arbitration pursuant to the Arbitration Act, Gauthier J. erred in failing to stay the action – Savard objected to an adjournment on the grounds that Day waited too long before seeking arbitration and postponing the trial would cause irreversible prejudice that could not be compensated with costs – The Court held that the adjournment ought not to be granted – The negotiations and proceedings had been going on for over 5 years – Day ought to have known of the right to proceed to arbitration and yet he chose to exercise that option at the last moment – In arriving at her decision, Gauthier J. considered the time factors and concluded that the motion for a stay of proceedings was brought with “undue delay” – An adjournment of the trial would cause undue prejudice to Savard that could not be compensated by costs, in particular with respect to his ability to compete for other contracts and in terms of his health – Any further delay in having this matter heard would severely affect the orderly and effective process of the administration of justice – Arrangements had been made to summon a bilingual jury panel and a bilingual judge had been selected – These arrangements that had been made by the court would result in a waste of judicial time and resources if the adjournment were granted – The motion for adjournment was dismissed

http://www.canlii.org/en/on/onsc/doc/2007/2007canlii33113/2007canlii33113.html

Court Refused to Consider Memorandum Prepared During Mediation
Albertson v. Albertson
CanLII 38555 (ON S.C.) – September 12, 2007

Divorce – Costs – The husband brought a motion for joint custody of the 3 children of the marriage – The parties had served offers to settle before the motion was heard – Neither of the offers were accepted by the other party – In their submissions on costs, the husband argued that success on the motion was divided, whereas the wife argued that she was successful on the motion – In support of her submission, the wife filed an unsigned draft of a “Memorandum of Understanding With Respect to Parenting Arrangements” that was prepared by the Children’s Centre Thunder Bay during a mediation between the parties – The Court refused to consider this document, as it was prepared as part of mediated settlement discussions – The Court noted that mediation in family law matters would be discouraged if evidence was permitted in subsequent litigation as to what the parties said in the mediation or as to the details of draft settlement documents that were prepared – The Court found that the access time proposed by the wife in her offer to settle was accepted by the Court – Accordingly, the wife was successful on the motion and therefore entitled to costs to the date that her offer was served and full recovery costs from that date

http://www.canlii.org/en/on/onsc/doc/2007/2007canlii38555/2007canlii38555.html

Mediator Subjected to House-Arrest for Contempt of Court
Law Society of Upper Canada v. Boldt, 2007
CanLII 41426 (ON S.C.) – October 1, 2007

Contempt of court – Unauthorized practice of law – M. Boldt carried on business as a paralegal and mediator – In 1998, she was convicted on one count of the unauthorized practice of law – She undertook to the Court and the Law Society not to commit any further breaches of the Law Society Act and was fined $100 – In 2000, Boldt was found to be acting in violation of her undertaking and an injunction was granted against her, restraining her from practicing law and in particular from drafting separation agreements – In 2006, Boldt was found in contempt of court for breaching the court order issued in 2000 – The Ontario Court of Appeal dismissed her appeal of the finding of contempt – The matter was remitted to the Ontario Superior Court of Justice for penalty submissions – The Law Society of Upper Canada sought incarceration of Boldt for 4 months – Counsel for Boldt submitted that a fine of $5,000 would be appropriate – The Court found that Boldt had repeatedly and knowingly violated court orders and that this was particularly serious for someone who works within the framework of the administration of justice – Boldt suggested that the long-term costs of the proceedings had bankrupted her once and contributed to her poor health – She urged that the Court not impose a penalty that would pose a large financial burden on her – The Court considered the fact that Boldt had profited from her flagrant breaches of the initial undertaking and injunction – The Court concluded that the penalty in this case had to be more persuasive than the past court orders and a fine had been, as the financial cost of proceedings had not been a deterrent to Boldt – The Court found that a community-based period of incarceration could serve as a specific deterrent for Boldt and as a general deterrent for the public – The Court ordered that Boldt be subject to a 3-part penalty: (1) house arrest for a period of 4 months; (2) prohibition from carrying on her para-legal business for 4 months; and (3) publication of the terms of the Order in a local newspaper in her community – Boldt was also ordered to pay costs of the proceedings on a substantial indemnity basis given the deliberate and wilful nature of her continuing contempt
http://www.canlii.org/en/on/onsc/doc/2007/2007canlii41426/2007canlii41426.html

Teachers Entitled to Full Lunch-Break Pursuant to Collective Agreement
Conseil scolaire de district catholique Franco-Nord v. Association des enseignantes et des enseignants franco-ontariens
2007 CanLII 40547 (ON S.C.D.C.) – October 1, 2007

Arbitration – Collective agreement – The Conseil scolaire de district catholique Franco-Nord (the “Board”) applied for judicial review of an arbitration decision in which the arbitrator upheld the grievances of the union (the “AEFO”) – At the beginning of the 2005-2006 school year, the teachers who worked at the École élémentaire de la Résurrection at Sturgeon Falls were directed to receive students in their classrooms 5 minutes before the start of classes in the afternoon – The issue before the Court was whether in light of the Education Act and its Regulations, the arbitrator erred in deciding that Article 10.3.1 of the collective agreement freed the teachers of all assigned tasks during their lunch break – Article 10.3.1 of the collective agreement read as follows: “at the middle of the school day, a teacher is free of all assignments during the period allocated for the teacher’s meal as follows: […] at the elementary school level, during the period of time between the end of classes in the morning and the start of classes in the afternoon – The AEFO argued that requiring the teachers to take charge of the students 5 minutes before the start of classes in the afternoon constituted a breach of the collective agreement – The Board argued that they did not instigate this requirement, but required the teachers to conform with paragraph 20(d) of O.Reg 298, which according to the Board, required teachers receive students in their classrooms 5 minutes before the start of classes in the afternoon – The arbitrator agreed with the AEFO and held that teachers were free of all assigned tasks during the lunch break as contemplated by the collective agreement – Following the Ontario Court of Appeal’s decision in Toronto Catholic District School Board v. Ontario English Catholic Teachers Assn. (Toronto Elementary Unit) 2001 CanLII 8597 (ON C.A.), the Court held that the standard of review in this case was that of patent unreasonableness and that the arbitrator’s decision was not patently unreasonable on any of the grounds advanced by the Board – The collective agreement was not incompatible with the Act and any apparent conflict was resolved by the arbitrator in the least intrusive manner – Section 20(d) of O.Reg 298 merely required the teachers to be present and that the classroom be ready to receive the students 5 minutes before the beginning of the classes in the afternoon – It does require them to either receive the students or be responsible for their conduct during this time – The application for judicial review was dismissed

http://www.canlii.org/en/on/onscdc/doc/2007/2007canlii40547/2007canlii40547.html