Professional Documents
Culture Documents
F.G. Wynne
A.D. Mitchell
Vancouver, B.C.
January 31, 2014
Vancouver, B.C.
March 21, 2014
Citation:
Page 2
Career College (Burnaby) Inc., for an order for a stay of proceedings pursuant to
[2]
The plaintiff Josef Pietrasz filed a notice of civil claim following his termination
The basis for this application is that the plaintiff, Josef Pietrasz was employed
The defendants say the matter is covered by the Arbitration Clause (the
Clause) and this Court lacks the jurisdiction to hear this claim or should decline to
exercise any jurisdiction it may have.
[5]
performed because the Clause is in conflict with the Choice of Law and Jurisdiction
Clause. In addition, he says the claim for a finding of bad faith and resulting punitive
damages places this claim outside the scope of the Clause.
Factual Overview
[6]
The plaintiff was first employed as Vice President Student Recruitment for
University Canada West and the Vancouver College of Art and Design, a salaried
position pursuant to an employment contract dated November 2009. He was laterally
transferred to a new position as Vice President Strategic Campus Admissions and
signed a new employment contract on or about August 2011. Both contracts contain
the same Arbitration Clause.
[7]
commenced an action against the defendants for that termination which termination
Page 3
14.
On July 30, 2013, the Plaintiff filed a Notice of Civil Claim in the
Supreme Court of British Columbia.
15.
In paragraph 7 of the Notice of Civil Claim the Plaintiff alleges that the
original terms of the Plaintiffs employment with the Defendants were set out
in the 2009 Agreement. In paragraph 8 of the Notice of Civil Claim the
Plaintiff alleges that on or about August 8, 2011 he was laterally transferred
to the Vice President Strategic Campus Admissions position but received no
value from this lateral transfer and no consideration passed between the
Plaintiff and the Defendants. the Plaintiff does not plead or rely on the
2011 Agreement in his Notice of Civil Claim.
16.
In paragraph 9 of the Notice of Civil Claim, the Plaintiff alleges that he
was terminated without cause and without adequate compensation in lieu of
notice.
17.
In paragraphs 10 to 12 of the Notice of Civil Claim the Plaintiff alleges
that the Defendants breached express or, alternatively, implied terms of the
2009 Agreement in respect of the compensation in lieu of notice that was
provided to him following the termination of his employment. In particular, the
Plaintiff cites paragraph 17(f) of the 2009 Agreement:
After the probation period, the Company may terminate your
employment, without just cause, by providing you with one
months notice for each three month period or portion thereof
of employment up to a maximum of one year notice.
18.
This severance provision is significantly more generous than the
severance provision (paragraphs 16(e) and (f)) in the 2011 Agreement)
applicable in circumstances where the Defendants terminated the Plaintiff
without cause.
19.
In paragraph 13 of the Notice of Civil Claim the Plaintiff describes the
remuneration package he alleged he should have received at the time of his
termination, including compensation; incentive compensation; benefits; and
paid annual vacation.
20.
The compensation and incentive compensation that the Plaintiff was
entitled to pursuant to the 2009 Agreement is addressed at paragraph 8 of
the 2009 Agreement; his benefit entitlement is addressed at paragraph 9 of
the 2009 Agreement; and his entitlement to annual vacation is addressed at
paragraph 10 of the 2009 Agreement.
21.
In paragraph 15 of the Notice of Civil Claim the Plaintiff alleges
breaches of provisions of the 2009 Agreement respecting annual raises and
incentive compensation.
accuracy:
Page 4
22.
In paragraphs 16-17 of the Notice of Civil Claim the Plaintiff alleges
that the Defendants conduct in wrongfully dismissing him by breaching the
2009 Agreement and withholding wages earned by the Plaintiff entitles him to
aggravated and punitive damages. Further, the Plaintiff alleges that he has
suffered mental distress as a result of the Defendants breach of the 2009
Agreement and his wrongful dismissal and the manner in which the
Defendants carried out the breach of the 2009 Agreement and the wrongful
dismissal.
[8]
The plaintiff says the 2009 contract governs the parties relationship and not
the August 2011 contract. For the purposes of this application that dispute is of no
relevance. The only issue is whether the Clause is binding in the circumstances.
[9]
The Arbitration Clause and the Choice of Law and Jurisdiction Clause are set
Arbitration
You agree that this Agreement and your employment relationship shall be
interpreted and governed in accordance with the laws of the Province of
British Columbia, and the British Columbia courts shall have exclusive
jurisdiction over any disputes arising from this Agreement.
Legal Analysis
[10]
The core of the analysis in this case revolves around the Commercial
Arbitration Act referenced in the Clause. Section 2(3) of that Act provides:
Application of Act
2
(3)
If an arbitration agreement contains a reference to the
Arbitration Act, R.S.B.C. 1979, c. 18, or the Commercial Arbitration
Act, R.S.B.C. 1996, c. 55, that reference is deemed to be a reference
to this Act.
Page 5
15
(1)
If a party to an arbitration agreement commences legal
proceedings in a court against another party to the agreement in
respect of a matter agreed to be submitted to arbitration, a party to the
legal proceedings may apply, before filing a response to civil claim or
a response to family claim or taking any other step in the proceedings,
to that court to stay the legal proceedings.
(2)
In an application under subsection (1), the court must make an
order staying the legal proceedings unless it determines that the
arbitration agreement is void, inoperative or incapable of being
performed.
[11]
The law in this area is relatively recent and well understood. The parties to his
application do not dispute the law which applies. In particular both counsel cited the
same authorities and the principles which this Court should apply which I set out
here.
[12]
This Court held in Cut & Run Holdings Ltd. v. Booze Bros. Holdings et al.,
2005 BCSC 167 at para.41, While arbitration clauses will generally be liberally and
broadly construed, care must still be taken to ensure that disputes which are outside
the scope of the parties agreement are not made the subject of arbitration.
[13]
have adopted the following approach, articulated by the British Columbia Court of
Appeal in St. Pierre v. Chriscan Enterprises Ltd., 2011 BCCA 97:
[24]
Generally, the courts have taken a deferential approach to a
challenge to an arbitrators jurisdiction, giving precedence to the agreement
between the parties to arbitrate and allowing the arbitrator to determine at
first instance, whether a particular dispute is arbitrabIe.
[14]
In relation to the test applicable to s. 15(1) of the Arbitration Act both parties
Stay of proceedings
[15]
(a)
(b)
(c)
There is no doubt that the dispute as framed in the notice of civil claim
arise[s] out of or in connection with the agreement as provided for in the Clause.
The plaintiff relies on the parties 2009 employment contract. An essential issue
between the parties is whether it is the 2009 or the 2011 contract that governs the
terms of the plaintiffs termination. Further the issue of whether there are damages
as claimed also flows from the employment contract terms, including whether there
was bad faith on the part of the defendant and punitive damages should flow
therefrom. There is no issue that the application was brought in a timely manner.
[16]
elements. It is obvious the parties meet this initial test for a s. 15(1) stay of
proceedings. The real issue here is in relation to s. 15(2). There is an issue related
to prerequisite (b) above which I will deal with later in these reasons when
discussing punitive damages.
[17]
Invoking s. 15(2) the plaintiff raises an issue as to whether the Clause is valid
at all.
[18]
The essential nature of that submission, which was not strongly pressed by
the plaintiff at the hearing, is that the Arbitration Clause and the Choice of Law and
Jurisdiction Clause are in conflict, rendering the Arbitration Clause too vague,
duplicative, in conflict, or to be interpreted against the defendants by the doctrine
contra preferendum. Thus, says the plaintiff one cannot rely on an arbitration clause
as the exclusive means of dispute resolution when the jurisdiction clause provides
that the British Columbia courts have exclusive jurisdiction.
22
Page 6
Page 7
This submission has little merit. The interpretation of the plaintiff of clear
conflict is one possible interpretation of the words but not the most probable or
reasonable. When asking the necessary question of contract interpretation, what
specific, the Arbitration Clause and one general, the Choice of Law and Jurisdiction
Clause are intended to live together. Hoban Construction Ltd. v. Alexander, 2012
BCCA 75, sets out the British Columbia Court of Appeals most recent expositi on on
this subject. Where at para. 47 of that decision the court quotes from Marquest
Industries Ltd.:
[47]
the inquiry is not whether the contracts were competently drafted,
but rather whether they disclose the parties intentions as to the substance of
their agreement. In Marquest Industries Ltd. v. Willows Poultry Farms Ltd.
(1968), 1 D.L.R. (3d) 513 (B.C.C.A.), the majority outlined the role of the court
at 517-18:
In the first place, consideration must be given to the duty of a
Court and the rules it should apply, where a claim is made that
a portion of a commercial agreement between two contracting
parties is void for uncertainty or, to put it another way, is
meaningless. The primary rule of construction has been
expressed by the maxim, ut res magis valeat quam pereat or
as paraphrased in English, a deed shall never be void where
the words may be applied to any extent to make it good. The
maxim has been basic to such authoritative decisions as
Scammell v. Ouston, [1941] 1 All. E.R. 14; Wells v. Blain,
[1927] 1 D.L.R. 687, [1927] 1 W.W.R. 223; Ottawa Electric Co.
v. St. Jacques (1902), 31 S.C.R. 636, as well as many others,
which establish that every effort should be made by a Court to
find a meaning, looking at substance and not mere form, and
that difficulties in interpretation do not make a clause bad as
not being capable of interpretation, so long as a definite
meaning can properly be extracted. In other words, every
clause in a contract must, if possible, be given effect to. Also,
as stated as early as 1868 in Gwyn v. Neath Canal Navigation
Co. (1868), L.R. 3 Ex. 209, that if the real intentions of the
parties can be collected from the language within the four
corners of the instrument, the Court must give effect to such
intentions by supplying anything necessarily to be inferred and
rejecting whatever is repugnant to such real intentions so
ascertained.
[Emphasis added]
was the intention of the parties, it most probably is that those two clauses -- one
Page 8
Choice of Law and Jurisdiction Clause embraces the specific Arbitration Clause.
Further, parts of disputes in relation to the employment contract are specifically
of a dispute such that part of the dispute is arbitrated and part can be determined in
a court (see ABOP LLC v. Qtrade Canada Inc., 2007 BCCA 290). In other words,
there is no necessary conflict between these two clauses.
Punitive Damages
[21]
The main submission of the plaintiff as pressed at the hearing is that the
plaintiffs claims of bad faith and the resulting claim for punitive damages places this
matter outside the jurisdiction of an arbitrator. The plaintiff relies in large part, but not
exclusively, on Joe Martin & Sons Ltd. v. Carrier Lumber Ltd., 2006 BCSC 237.
[22]
Contract and Subcontract Regulation, s. 25 under the Forest Act, R.S.B.C. 1996,
c. 157 -- the court found that under the circumstances of the dispute the jurisdiction
to award punitive damages could not be within the exclusive jurisdiction of the
arbitrator. The 2006 decision quoted from a 2003 decision of this Court between the
same parties and pursuant to the same Regulation that found at para. 68 of that
decision the arbitration tribunals in these two disputes are without jurisdiction to
award punitive damages (Carrier Lumber Ltd. v. Joe Martin & Sons Ltd., 2003
BCSC 1038).
[23]
repeating as a guide to any analysis of a claim that an arbitrator does or does not
have jurisdiction to award punitive damages:
[57]
in Lee v. Gao, the procedure undertaken by the judges on review
was to look at the empowering legislation. Langston, J. had the benefit of the
Supreme Court of Canada decision in Ontario v. 97649 Ontario Inc. decided
years after Mr. Justice Thackray's decision. He went through a meaningful
discussion and analysis of whether or not the powers assumed by the
Provincial Court Judge were necessarily required, utilizing the function and
structure approach recommended by the Supreme Court of Canada decision.
exempted from arbitration and indeed it is open to a court or arbitrator to sever parts
[59]
The respondents in these proceedings, and the arbitrators in the
decisions they made, have relied heavily on the fact that there is no
restriction in the Act, and have relied heavily on the particular wording of s. 5
of the Regulation and what they see to be the incorporation of the
Commercial Arbitration Act into the Regulation.
[60]
In so doing, they embarked, in my respectful opinion, on the wrong
analysis. The analysis ought to have been centered on the express powers
given under the legislation. The arbitrators ought not to have gone further if
the power was not expressly given in the enabling legislation or regulation. I
find the arbitrators confused incidental power necessary for the conduct of
the proceedings with substantive powers. This was the same error that
prompted them to read the inclusion of the provisions of the Commercial
Arbitration Act in s. 6 as being something substantive rather than
procedural. In my view, the application of the Hayes decision and the
decision of Thackray, J. (as he then was) in Lee v. Gao can only lead to one
conclusion and that is that the reference to the Commercial Arbitration Act
is only to incorporate the procedural aspects of that Act into the Regulation.
Rather than set out detailed procedural rules in the Regulation, I find that the
clear intention of the Legislature was to merely incorporate the procedural
rules found in the Commercial Arbitration Act to the Regulation. I find s. 6
of the Regulation to merely address the issue of procedure and therefore is
not substantive in nature as are ss. 5 and 25 of the Regulation. Mr. Justice
Thackray, in his concluding paragraphs in Lee v. Gao (set out in paras. 47
and 48 hereof) commented that if parties to an arbitration wished to have
punishment there was a forum for such a procedure and that forum would
be the Supreme Court of British Columbia, a court of inherent jurisdiction.
This is consistent with the comments of McLachlin, J. (as she then was) in
Weber at para. 57 (set out in full at para. 40 hereof) where she stated:
It might occur that remedy is required which the arbitrator is
not empowered to grant. In such a case, the courts of inherent
jurisdiction in each Province may take jurisdiction.
[24]
I agree with the thoughtful and thorough submissions on this issue by the
[58]
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Page 10
Act in justifying its conclusion that the arbitrator had the power to award
punitive damages.
[25]
In my view, this is a clear case where all of the relief sought by the plaintiff
[28]
powers under the Arbitration Act (previously the Commercial Arbitration Act) have