THUNDER BAY — The Ontario Court of Appeal has dismissed an application to overturn an arbitrator's decision that awarded Tbaytel nearly $4.4 million.
The case dates back to 2016, when Tbaytel decided to update its systems by purchasing a new software package from a Toronto-based supplier for about $8.5 million.
Installation was to be completed by July 2018, but Tbaytel terminated the contract in March of that year, alleging various breaches.
An arbitrator subsequently ruled the contract had been breached, and that Tbaytel was entitled to recover $4.39 million.
The supplier then sought an order in Superior Court setting the arbitration award aside, and seeking leave to appeal.
In April 2021 a Superior Court judge rejected both requests, but the Court of Appeal agreed to review the case, and heard the matter earlier this year.
Its decision was released last week.
A key issue considered in the appeal was whether the arbitrator was right to resolve some of the issues in the case by way of a summary judgment.
In the justice system, summary judgment is a procedural tool available in certain circumstances to expedite a decision without conducting a formal trial.
Tbaytel had proposed in arbitration that various admissions made by representatives of the supplier had established many material facts and eliminated the need for detailed expert evidence and the production of documents.
Counsel for the supplier raised a concern about the availability of a summary judgment motion, but made no objection to the fixing of a timetable for preparing and filing the necessary material.
In written submissions that followed, the company submitted that the arbitrator had no jurisdiction to consider a summary judgment motion without the consent of both parties.
He concluded, though, in a February 2020 decision that summary judgment on some Tbaytel claims should be granted, and that Tbaytel had the right to terminate the agreement and recover money it had paid as well as other related damages.
In Superior Court, the judge who heard the supplier's motion to set aside his order confirmed that the arbitrator had the right to impose a summary judgment, citing a section of the Arbitration Act which states that an arbitral tribunal may determine the procedure to be followed in the arbitration.
In the Court of Appeal, after a hearing in March of this year, the three-judge panel noted that the two parties had negotiated an arbitration agreement as part of the contract, and that their "fashioning of their own rules governing the conduct of the arbitration and their selection of a mutually agreeable arbitrator implies a very limited role for judicial oversight of the conduct or outcome of that arbitration."
They said the agreement gave the arbitrator broad powers, including "jurisdiction to consider and rule upon all motions."
The judges added that had the parties wanted to exclude the availability of a summary judgment procedure, they would have said so in the agreement.
In addition to dismissing the appeal, the court awarded hearing costs of $30,000 to Tbaytel.
TBnewswatch asked TBaytel if it completed the software project with another supplier.
A spokesperson acknowledged the favourable outcome of the court case, but said "we cannot further comment on this outstanding matter."
Josef Finkel, a Toronto-based lawyer who's worked on a broad range of civil and commercial litigation matters, commented earlier this year on the significance of the original Superior Court ruling.
He said it confirms that parties to arbitration may enjoy the potential benefits of the summary judgment process (i.e. efficiency, cost-savings etc) without having to bring their matter before the courts, but subject to the language of the parties' arbitration agreement.
