Dancap Productions Inc. et al. v. Key Brand Entertainment Inc. et al.,

• Jurisdiction: Ontario
• Judge: Sharpe, Armstrong and Watt, JJ.A.
• Neutral Citation: 2009 ONCA 135
• Citation: 2009 ONCA 135,(2009), 246 O.A.C. 226 (CA),55 BLR (4th) 1,[2009] OJ No 572 (QL),246 OAC 226,68 CPC (6th) 34,[2009] O.J. No 572 (QL),(2009), 246 OAC 226 (CA),246 O.A.C. 226
• Date: 28 January 2009
• Court: Court of Appeal (Ontario)

Dancap Productions v. Key Brand (2009), 246 O.A.C. 226 (CA)

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Temp. Cite: [2009] O.A.C. TBEd. FE.054

Dancap Productions Inc., Dancap U.S.A. Investments Inc. and Dancap Private Equity Inc. (plaintiffs/respondents) v. Key Brand Entertainment, Inc., SFX Theatrical Group, Inc., Key Brand Theatrical Management Group, Inc., Theatre Management Group, Inc., Theatre Management Group - Toronto, Corp., TCN Theatre Group, Inc., Fosse NY LLC, Toronto Theatre Ltd., Live Nation Theatrical Group, Inc., Eagle Eye Entertainment USA, Inc., Eagle Eye Entertainment Inc., Live Nation Family Holdings, Inc., Key Brand Family Holdings Inc., and Key Brand Holdings, LLC (defendants/appellants) and Ed Mirvish Enterprises Limited (defendant/respondent)

(C49360; 2009 ONCA 135)

Indexed As: Dancap Productions Inc. et al. v. Key Brand Entertainment Inc. et al.

Ontario Court of Appeal

Sharpe, Armstrong and Watt, JJ.A.

February 13, 2009.

Summary:

The plaintiffs and the defendants, except Ed Mirvish Enterprises Ltd. (collectively "Key Brand"), executed a preliminary Term Sheet outlining the general terms of a participation agreement related to Key Brand's acquisition of theatrical assets, including two Toronto theatres. The parties also entered into an Additional Rights Agreement (ARA) which set out the parties' agreement to negotiate in good faith towards the conclusion of management agreements. The ARA contained an arbitration clause and a forum selection clause providing for the exclusive jurisdiction of the state or United States District courts in California. The Term Sheet did not contain arbitration or forum selection clauses. Following the acquisition of the assets by Key Brand and prior to the finalization of the management agreements, Key Brand sold the Toronto theatres to the defendant Mirvish. The plaintiffs sued Key Brand for damages and injunctive relief in Ontario. Key Brand moved to stay the action. The motion judge dismissed Key Brand's motion. He ruled that the plaintiffs' claims arose solely under the Term Sheet and not under the ARA and that the ARA arbitration and forum selection clauses did not apply. Key Brand appealed. Meanwhile, it obtained an order from the Federal District Court in California requiring the plaintiffs to submit to arbitration the core issue in the Ontario action.

The Ontario Court of Appeal allowed the appeal and stayed the action pending resolution of the arbitration proceedings in California.

Editor's Note: for a related case involving these parties see [2008] O.T.C. Uned. G88.

Arbitration - Topic 2504

Stay of proceedings - Arbitration clause - Enforcement of - The plaintiffs and the defendants, except Ed Mirvish Enterprises Ltd. (collectively "Key Brand"), executed a preliminary Term Sheet outlining the general terms of a participation agreement related to Key Brand's acquisition of theatrical assets, including two Toronto theatres - The parties also entered into an Additional Rights Agreement (ARA) which set out the parties' agreement to negotiate in good faith towards the conclusion of management agreements - The ARA contained an arbitration clause and a forum selection clause providing for the exclusive jurisdiction of the state or United States District courts in California - The Term Sheet did not contain arbitration or forum selection clauses - Following the acquisition of the assets by Key Brand and prior to the finalization of the management agreements, Key Brand sold the Toronto theatres to the defendant Mirvish - The plaintiffs sued Key Brand for damages and injunctive relief in Ontario - Key Brand moved to stay the action relying on, inter alia, the arbitration clause and art. 8 of the Schedule to the International Commercial Arbitration Act (Ont.) - The motion judge ruled that the plaintiffs' claims arose solely under the Term Sheet and the ARA arbitration clause did not apply - Key Brand appealed - Meanwhile, it obtained an order from the Federal District Court in California requiring Dancap to submit to arbitration the core issue in the Ontario action (whether Key Brand had the right to terminate any management rights to the theatres that the plaintiffs might have obtained under either the Term Sheet or the ARA upon the sale of the theatres) - The Ontario Court of Appeal allowed the appeal and stayed the action pending resolution of the arbitration proceedings in California - It was arguable that the plaintiffs' claim was "related to" the ARA - It was not clear or obvious that the dispute between the parties was not governed by the arbitration clause - Costly parallel proceedings that ran the risk of inconsistent results were to be avoided - See paragraphs 28 to 43.

Arbitration - Topic 2507

Stay of proceedings - When available - [See Arbitration - Topic 2504 ].

Cases Noticed:

Dalimpex Ltd. v. Janicki et al. (2003), 172 O.A.C. 312; 64 O.R.(3d) 737 (C.A.), refd to. [para. 32].

Gulf Canada Resources Ltd. v. Arochem International Ltd. (1992), 11 B.C.A.C. 145; 22 W.A.C. 145; 43 C.P.R.(3d) 390; 66 B.C.L.R.(2d) 113 (C.A.), refd to. [para. 32].

Dell Computer Corp. v. Union des consommateurs et al., [2007] 2 S.C.R. 801; 366 N.R. 1, refd to. [para. 34].

Woolcock v. Bushert (2004), 192 O.A.C. 16; 246 D.L.R.(4th) 139 (C.A.), refd to. [para. 38].

Counsel:

Peter Ruby and Tom Friedland, for the appellants;

James Morton and Corey Steinberg, for the respondents, Dancap Productions Inc., Dancap U.S.A. Investments Inc. and Dancap Private Equity Inc.;

Mark Wiffen, for the respondent, Ed Mirvish Enterprises Limited.

This appeal was heard on January 28, 2009, before Sharpe, Armstrong and Watt, JJ.A., of the Ontario Court of Appeal. Sharpe, J.A., released the following decision for the court on February 13, 2009.