The “Fiasco” Has Gone on Long Enough: Mandatory Mediation/Arbitration

February 28, 2022, MTCC No. 1171 v. Rebeiro (2022 ONSC 503), Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636 (2021 ONCA 360)

Introduction

Thinking about heading straight to the courthouse to resolve a condominium dispute? Think again. Section 132 of the Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”) requires that parties attempt to resolve certain disputes through mediation and/or arbitration before they can seek remedy at the courts. The purpose of this requirement is likely tied to the oft-touted advantages of mediation and arbitration, being that these alternative dispute resolution processes are generally less expensive and quicker than litigation and encourage more amicable solutions.

In recent cases, Ontario courts have confirmed that they will uphold the Act’s “central preference” for alternative dispute resolution. To that end, Ontario courts will look ‘behind the curtain’ to the true “core” of a dispute to determine whether it has jurisdiction to hear the matter without mediation and/or arbitration.

The Cases

In Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, the Ontario Court of Appeal confirmed that Ontario courts will uphold the Act’s central preference for alternative dispute resolution over court proceedings. To that end, Ontario courts will watch for claims that are manipulated or ‘piggybacked’ on other unrelated causes of action in an attempt to avoid the alternative dispute resolution requirements set out in the Act. In this case, the court declined to hear the matter, stating that those issues still outstanding after the conclusion of the alternative dispute resolution processes could proceed to a court hearing.

This tone of respect for the Act’s mediation and arbitration requirements were echoed in MTCC No. 1171 v. Rebeiro. In this case, the Superior Court of Justice (the “Superior Court”) expressed frustration with parties’ attempts to evade the statutory precondition, stating that the “fiasco has gone on long enough”. Again, the Superior Court looked past the dispute on its face and held that the core of the dispute must proceed to mediation and arbitration before being heard by the courts. Accordingly, the Superior Court stayed (i.e., halted) the application and ordered the applicant attempting to evade the mediation/arbitration requirement to pay part of the respondent’s legal costs. 

Which Disputes Must Be Submitted to Mediation and/or Arbitration?

Pursuant to the Act, disputes relating “at their core” to any of the issues below must be submitted to mediation/arbitration before being brought to the Superior Court:

• Disagreements between corporations and owners with respect to the declaration, by-laws, or rules of the corporation
• Disagreement on the budget statement
• An agreement between a declarant and a corporation
• An agreement between two or more corporations
• An agreement between a corporation and an owner pursuant to s. 98 of the Act
• A condominium management agreement

Bottom Line

Ontario courts have recognized that the Act’s central preference is mediation/arbitration, not Superior Court proceedings. Further, Ontario courts are prepared to enforce this legislative intent by looking at the “core” of a dispute to determine whether it should be resolved at mediation and/or arbitration rather than being piggybacked or pigeonholed into the Superior Court.

If a condominium attempts to bypass the Act’s mediation and/or arbitration requirements, they could find themselves with wasted time and money when they are sent back to square one, but also with cost consequences for their failed escape attempt. 

The SV Law Condominium Practice Group has a range of experienced lawyers that can help with such matters. 

Contact us here and a member of our team will be happy to help. 

Written by Fiona Burnett, edited by Jamie Cockburn and Robert Mullin. *This article does not constitute legal advice, always consult legal counsel.