Shared Facilities Dispute Requires Med/Arb Despite Oppression Claim

The Court recently had to determine whether a dispute with respect to a shared facilities agreement must proceed to mediation and arbitration or whether it could be heard in court (see Metropolitan Toronto Condominium Corporation No. 965 v. Metropolitan Toronto Condominium Corporation Nos. 1031 and 1056 (2014) SCJ).

The plaintiff, a condominium, brought an application against two other condominiums claiming they had breached the shared facilities agreement (SFA) they were all parties to. The plaintiff condominium also alleged that the other two condominiums were acting oppressively. The defendants brought a motion asking the court to stay (put a stop to) the action and order arbitration. The defendant condominiums argued that the shared facilities agreement required arbitration of disputes. They also argued that section 132 of the Condominium Act, 1998 required mediation and arbitration of disputes with respect to shared facilities disputes. The plaintiff condominium argued that mediation and arbitration was not required because it was seeking relief under section 135 of the Condominium Act, 1998 (oppression).  

The Court stayed the action as it “is at least arguable that the dispute between the parties is arbitrable” (the test according to the Arbitration Act, 1991).  The judge said:

The practical effect of the position taken by the plaintiff would be that even where parties have, as in the present case, expressly turned their minds to the issue of dispute resolution and decided to arbitrate their disputes, all a party would need to do to avoid its agreement to arbitrate is to categorise all or part of its dispute as oppression.

This case serves as another warning to lawyers and condominiums – don’t try to avoid the mandatory mediation/arbitration requirements in the Act by categorizing everything as oppression. Oppression should be reserved for those rare cases where the conduct is extreme. There is no need to manufacture a tornado to blow out a match.