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BINDING ARBITRATION - Practice and procedure

Tuesday, June 13, 2017 @ 8:36 AM  

Appeal by the plaintiff, Miller Sales & Engineering, from an order staying its action. The plaintiff designed industrial pumping systems for dewatering mines. The defendant manufactured pumps. In 2003, the parties entered into a distributor agreement pursuant to which the defendant agreed to supply various products for distribution by the plaintiff. In 2006, the plaintiff entered into an agreement with another party under which it was to design and supply a dewatering system to be used in a mining operation. In accordance with the distributor agreement, the plaintiff purchased from the defendant a specially designed series of 12 pumps. In 2009, the other party raised concerns regarding the dewatering system, particularly with the design and performance of the pumps. The other party sued the plaintiff, who defended and third-partied the defendant. The plaintiff and the other party settled and the other party assigned its interest in any cause of action to the plaintiff. The claim was then amended. The defendant applied to dismiss or stay the claim on the grounds that the distributor agreement contained an arbitration clause that governed all disputes. The plaintiff argued that the dispute was an assigned claim between the other party and the defendant and therefore the arbitration clause did not apply. The chambers judge found that the parties were bound to arbitrate by virtue of a clause in the distribution agreement. As a result, he stayed the action. The plaintiff appealed, arguing that the chambers judge failed to give legal effect to the settlement agreement and the assignment, which led him to erroneously conclude that the litigation flowed directly from a dispute between the parties and therefore fell under the arbitration clause.

HELD: Appeal dismissed. The chamber judge’s decision was reviewable on the palpable and overriding error standard. The plaintiff’s submissions ignored the broader context in which the settlement agreement and assignment were placed. That context included the steps taken in the litigation and their timing, the wording of the pleadings, and the wording of the settlement agreement and the assignment. The claim was, in pith and substance, a claim by the plaintiff against the defendant which fell under the arbitration clause of the distribution agreement. The chamber judge’s decision to stay the claim was reasonable and entitled to appellate deference.

Miller Sales & Engineering Inc. (c.o.b. Miller Engineering) v. Metso Minerals Industries Inc., [2017] N.W.T.J. No. 32, Northwest Territories Court of Appeal, P.A. Rowbotham, B.K. O'Ferrall JJ.A. and S.H. Smallwood J. (ad hoc), May 12, 2017. Digest No. TLD-June122017006