Supreme Court

Alternative Dispute Resolution

Relation of arbitration to court proceedings

Stay of court proceedings

Section 7(5) of Arbitration Act, 1991 does not permit court to ignore valid and binding arbitration agreement

Plaintiffs claimed defendant phone companies engaged in undisclosed billing practices of “rounding up” calls to next minute. Defendants' contracts contained mandatory arbitration clause but pursuant to s. 7(2) of Consumer Protection Act, claims in respect of consumer contracts could proceed in court. Motions judge granted plaintiffs' motions to certify actions as class proceedings and dismissed defendants' motion for stay of non-consumer claims pursuant to s. 7(5) of Arbitration Act, 1991. In refusing to grant partial stay, judge followed Ontario Court of Appeal decision in G case, which she concluded had not been overtaken by Supreme Court of Canada decision in S case, and determined it would be unreasonable to separate consumer and non-consumer claims. Defendants’ appeal of denial of partial stay of non-consumer claims was dismissed on basis that it was correct to apply G case to determine whether partial stay of proceedings should be granted under s. 7(5) of Arbitration Act, 1991 in proposed class proceeding involving both consumer and business customer claims. Appeal judge found that while both G case and S case involved arbitration clauses in context of proposed class proceeding, S case was decided under relevant laws of BC, which differed in material ways from those of Ontario. Defendants appealed. Appeal allowed. Business customer claims were stayed. Motions judge and Court of Appeal erred in law by interpreting s. 7(5) of Arbitration Act, 1991 incorrectly and by refusing to order stay that was mandatory under s. 7(1). Section 7(5) of Consumer Protection Act shielded consumers from stay under s. 7(1) of Arbitration Act, 1991, but business consumers did not qualify as “consumers” under Consumer Protection Act and therefore, they could not invoke protections that were available to consumers under Consumer Protection Act. Interpreting s. 7(5) of Consumer Protection Act in way that restricted its application to consumers led to sound result that upheld legislative objectives underlying both statutes. Section 7(5) of Arbitration Act, 1991 did not permit court to ignore valid and binding arbitration agreement.

TELUS Communications Inc. v. Wellman (2019), 2019 CarswellOnt 4913, 2019 CarswellOnt 4914, 2019 SCC 19, 2019 CSC 19, Wagner C.J.C., Abella J., Moldaver J., Karakatsanis J., Gascon J., Côté J., Brown J., Rowe J., and Martin J. (S.C.C.); reversed (2017), 2017 CarswellOnt 8100, 2017 ONCA 433, K.M. Weiler J.A., R.A. Blair J.A., and K. van Rensburg J.A. (Ont. C.A.).

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