Griffin v. Dell Can. Inc., 2010 ONCA 29

• Jurisdiction: Ontario
• Judge: Winkler, C.J.O., Doherty, Feldman, Sharpe and Gillese, JJ.A.
• Neutral Citation: 2010 ONCA 29
• Citation: 2010 ONCA 29,(2010), 259 O.A.C. 108 (CA),98 OR (3d) 481,64 DLR (4th) 199,64 BLR (4th) 199,[2010] OJ No 177 (QL),259 OAC 108,[2010] O.J. No 177 (QL),98 O.R. (3d) 481,(2010), 259 OAC 108 (CA),64 D.L.R. (4th) 199,259 O.A.C. 108
• Date: 26 November 2009
• Court: Court of Appeal (Ontario)

Griffin v. Dell Can. Inc. (2010), 259 O.A.C. 108 (CA)

MLB headnote and full text

Temp. Cite: [2010] O.A.C. TBEd. FE.077

Thaddeus Griffin (plaintiff/respondent) v. Dell Canada Inc. (defendant/appellant)

(C50137; C50474; 2010 ONCA 29)

Indexed As: Griffin v. Dell Canada Inc.

Ontario Court of Appeal

Winkler, C.J.O., Doherty, Feldman, Sharpe and Gillese, JJ.A.

January 20, 2010.

Summary:

Griffin, as representative plaintiff, sought to certify a class action against Dell Canada respecting the sale of allegedly defective Dell notebook computers. Griffin had purchased his computer for business purposes. Dell moved for a stay of proceedings, arguing that the matter should proceed through arbitration because Dell's standard-form sales agreements contained a clause requiring that all disputes be submitted to arbitration.

The Ontario Superior Court, in a decision reported [2009] O.T.C. Uned. 249, granted a certification order conditional on Griffin filing an improved litigation plan and granted him leave to amend to add a second representative plaintiff who was a direct purchaser of one of the computers (i.e., a consumer). The court refused Dell's request for a stay of proceedings. Subsequently, Dell asked the court to reconsider its refusal to stay the proceedings in light of new developments in the jurisprudence.

The Ontario Superior Court, in a decision reported [2009] O.T.C. Uned. 861, dismissed the reconsideration motion, holding that the jurisprudence relied on by Dell would not have changed the court's decision. Dell appealed both the initial refusal to grant the stay and the subsequent refusal to reconsider that decision. A second representative plaintiff, Andrews, was added who fell within the definition of "consumer" under the Consumer Protection Act (CPA). The CPA, which came into effect in July 2005, banned mandatory arbitration clauses in consumer agreements. Andrews had purchased his computer before the effective date of the CPA; however, his computer failed after the CPA came into effect. Therefore, an issue arose on these appeals as to whether the CPA applied to the claim of the second representative plaintiff. Also, the class representatives sought to quash Dell's appeal on the grounds that the body that was to administer the arbitration clause, the National Arbitration Forum, ceased to function with respect to consumer complaints, the appeals were precluded by s. 7(6) of the Arbitration Act and the orders under appeal were interlocutory in nature.

The Ontario Court of Appeal dismissed the class representatives' motion to quash Dell's appeals. The court also dismissed Dell's appeals from the refusal to stay proceedings. The court held that the CPA applied to Andrews' claims (i.e., the consumer claims which accounted for 70% of the claims), such that Dell could not enforce its arbitration clause against those claimants and the class action could proceed. The court also refused a partial stay of the claims not covered by the CPA (i.e., the non-consumer claims) and allowed all the claims to proceed under the umbrella of the class proceeding.

Arbitration - Topic 5

General principles - Arbitration v. class action - [See all Arbitration - Topic 102 ].

Arbitration - Topic 102

Right to arbitration - What matters arbitrable - A motions judge, who had certified a class action against Dell Canada for allegedly selling defective computers, refused Dell's request to stay proceedings based on an arbitration clause in its standard-form sales agreements - One of the representative plaintiffs purchased his computer before the Consumer Protection Act (CPA) came into effect in July 2005, which outlawed standard arbitration clauses in consumer contracts, but the computer failed in 2007 - Dell appealed, seeking to enforce the arbitration clause - At issue was whether the CPA applied such as to prevent Dell from relying on the arbitration clause - The Ontario Court of Appeal, after reviewing the finding in Dell Computer Corp. v. Union des consommateurs (SCC 2007), stated that "... the inevitable conclusion that flows from the court's discussion of the issue is that where, as in the present case, not all the facts giving rise to the claim arose until after the effective date of the legislation, the legislation governs, even though the contract was concluded prior to the effective date ... In the case at bar, until the computers failed, there was no claim but rather 'an ongoing legal situation' that only came to an end when the claims of the purchasers arose upon the failure of the computers. As 'the facts triggering the application of the arbitration clause' did not occur until after July 31, 2005, it follows from Dell [SCC 2007] that the CPA applies and governs those claims" - Thus the CPA excluded the application of Dell's arbitration clause to all "consumer" claims where the alleged defect or malfunction occurred after the effective date of the CPA and, therefore, those claims could proceed by way of class action - See paragraphs 28 to 43.

Arbitration - Topic 102

Right to arbitration - What matters arbitrable - A motions judge certified a class action against Dell Canada respecting allegedly defective Dell notebook computers and refused Dell's request for a stay of proceedings based on an arbitration clause in its standard-form sales agreements - Dell appealed - The Ontario Court of Appeal, after considering the Supreme Court of Canada's analysis in the Quebec case of Dell Computer Corp. v. Union des consommateurs (SCC 2007), found that the Consumer Protection Act (Ont), which outlawed mandatory arbitrary clauses in "consumer" agreements, applied to agreements executed by "consumers" (i.e., 70% of the claimants) in this case - An issue arose as to whether, assuming that Dell (SCC 2007) applied in Ontario and required the remaining non-consumer claims to proceed by way of arbitration, should the claims by non-consumers in this case be stayed (i.e., should a partial stay be granted under s. 7(5) of the Arbitration Act) - The court held that it would not be reasonable to separate the consumer from the non-consumer claims - The court therefore refused a partial stay of the claims not covered by the CPA and allowed all the claims to proceed under the umbrella of the class proceeding - See paragraphs 44 to 62.

Arbitration - Topic 102

Right to arbitration - What matters arbitrable - In Dell Computer Corp. v. Union des consommateurs (SCC 2007), which originated in Quebec, the court dealt with the application and interpretation of mandatory arbitration clauses in consumer contracts - An issue arose as to whether Dell (SCC 2007) applied in Ontario - The Ontario Court of Appeal noted that on more than one occasion it had applied some of the general principles that emerged from the Supreme Court's judgment in Dell - However, by enacting the Consumer Protection Act in Ontario in July 2005 and by outlawing mandatory arbitration clauses in consumer agreements, the Ontario legislature had excluded the application of the reasoning in Dell to agreements covered by the CPA - Because of the conclusions reached in the case at bar, the court held that it was not necessary to decide whether apart from the CPA, Dell would have applied in Ontario - As the CPA applied to all consumer claims arising after July 2005, consideration of the application of Dell in Ontario had been rendered largely academic - To the extent that the application of Dell remained a live issue, the court stated that it was likely to receive further guidance from the Supreme Court when it decided an appeal pending in Seidel v. Telus Communications Inc., a case on appeal from the British Columbia Court of Appeal - See paragraphs 63 and 64.

Arbitration - Topic 162

Agreement to arbitrate - Validity of agreement (incl. consumer protection legislation) - [See first and third Arbitration - Topic 102 ].

Arbitration - Topic 2504

Stay of proceedings - Arbitration clause - Enforcement of - [See all Arbitration - Topic 102 ].

Arbitration - Topic 2507

Stay of proceedings - When available - [See all Arbitration - Topic 102 ].

Arbitration - Topic 2514

Stay of proceedings - Bar to stay - Multiplicity of proceedings - [See second Arbitration - Topic 102 ].

Arbitration - Topic 2514.1

Stay of proceedings - Bar to stay - Class proceedings - [See all Arbitration - Topic 102 ].

Arbitration - Topic 2525

Stay of proceedings - Appeals - [See Arbitration - Topic 3542 and both Arbitration - Topic 8704 ].

Arbitration - Topic 3542

The arbitrator - Appointment - By court - Conditions precedent - A motions judge dismissed a motion by Dell Canada to stay class proceedings against it based on an arbitration clause in Dell's standard-form computer sales agreements - Dell appealed - The representative plaintiffs sought to quash Dell's appeal, arguing that the appeal was rendered moot because the body that was to administer the arbitration clause, the National Arbitration Forum (NAF), ceased to function with respect to consumer complaints thereby rendering the arbitration clause unenforceable - The plaintiffs submitted further that the court had no power to appoint a substitute arbitrator (Arbitration Act, s. 16(5)), where the arbitration agreement provided the arbitration was to be conducted only by a named arbitrator - The Ontario Court of Appeal refused to quash Dell's appeal - Presumably, the NAF would continue to function in other capacities - Further, s. 16(5) did not apply as the agreement did not name NAF as the arbitrator, rather that the arbitration was to be "administered" by NAF - The gap created by the NAF's demise was filled by s. 10(1)(b) of the Arbitration Act which allowed the court to appoint an arbitrator where the person with the power to appoint the arbitral tribunal did not do so - The court stated that while the demise of NAF erected a practical hurdle in the way of consumer arbitrations, as a matter of law, the court did not agree that the appeal had been rendered moot - See paragraphs 20 to 24.

Arbitration - Topic 8704

Judicial review - Practice - Appeals - Jurisdiction - A motions judge dismissed a motion by Dell Canada to stay class proceedings against it based on an arbitration clause in Dell's standard-form computer sales agreements - Dell appealed - The representative plaintiffs moved to quash the appeal, arguing that it was precluded by s. 7(6) of the Arbitration Act - Section 7(6) provided that "there is no appeal from the court's decision" on a stay application - The Ontario Court of Appeal refused to quash the appeals - The court stated that it was well-established in the jurisprudence that s. 7(6) did not preclude an appeal from an order refusing to grant a stay on the ground that the matter was not subject to arbitration - As the motions judge found that the matter was not subject to arbitration, it followed that s. 7(6) did not bar an appeal to the Court of Appeal - See paragraph 25.

Arbitration - Topic 8704

Judicial review - Practice - Appeals - Jurisdiction - A motions judge dismissed a motion by Dell Canada to stay class proceedings against it based on an arbitration clause in Dell's standard-form computer sales agreements (Arbitration Act, s. 7) - Dell appealed - The representative plaintiffs moved to quash the appeal, arguing that the order under appeal was interlocutory in nature - The Ontario Court of Appeal held that an order denying a s. 7 stay was final for the purposes of appeal and therefore that an appeal was available to the Court of Appeal pursuant s. 6(1)(b) of the Courts of Justice Act - See paragraph 26.

Consumer Law - Topic 5

General - Application of consumer protection legislation - [See first and third Arbitration - Topic 102 ].

Consumer Law - Topic 227

Consumer contracts - General - Nullity of contract or reduction of obligations - Dispute resolution (incl. mandatory arbitration clauses) - [See first and third Arbitration - Topic 102 ].

Courts - Topic 2286

Jurisdiction - Bars - Academic matters or moot issues - [See Arbitration - Topic 3542 ].

Courts - Topic 7446

Provincial courts - Ontario - Court of Appeal - Jurisdiction - General - [See both Arbitration - Topic 8704 ].

Practice - Topic 5729

Judgments and orders - Final judgments and orders - What constitute - [See second Arbitration - Topic 8704 ].

Practice - Topic 8858

Appeals - Bar or loss of right of appeal - Moot issues - [See Arbitration - Topic 3542 ].

Practice - Topic 8984

Appeals - When appeal available - From final judgment or order - [See second Arbitration - Topic 8704 ].

Statutes - Topic 6745

Operation and effect - Commencement, duration and repeal - Prospective enactments - Effect on matters in progress - [See first Arbitration - Topic 102 ].

Cases Noticed:

Dell Computer Corp. v. Union des consommateurs et al., [2007] 2 S.C.R. 801; 366 N.R. 1; 2007 SCC 34, refd to. [para. 7].

Muroff v. Rogers Wireless Inc., [2007] 2 S.C.R. 921; 365 N.R. 177, refd to. [para. 7].

Smith v. National Money Mart Co. et al. (2005), 204 O.A.C. 47; 258 D.L.R.(4th) 453 (C.A.), leave to appeal refused (2006), 352 N.R. 404; 223 O.A.C. 394 (S.C.C.), refd to. [para. 8].

MacKinnon v. National Money Mart Co. et al. (2004), 203 B.C.A.C. 103; 332 W.A.C. 103; 50 B.L.R.(3d) 291; 2004 BCCA 473, refd to. [para. 8].

MacKinnon v. National Money Mart Co. et al., [2008] B.C.T.C. Uned. C28; 293 D.L.R.(4th) 478 (S.C.), refd to. [para. 11].

Smith Estate et al. v. National Money Mart Co. et al., [2008] O.T.C. Uned. B73; 57 C.P.C.(6th) 99 (Sup. Ct.), refd to. [para. 12].

Smith Estate et al. v. National Money Mart Co. et al. (2008), 243 O.A.C. 173; 92 O.R.(3d) 641 (C.A.), refd to. [para. 12].

MacKinnon v. National Money Mart Co. et al. (2009), 267 B.C.A.C. 276; 450 W.A.C. 276; 304 D.L.R.(4th) 331; 2009 BCCA 103, refd to. [para. 13].

Seidel v. Telus Communications Inc., [2009] 5 W.W.R. 466; 267 B.C.A.C. 266; 450 W.A.C. 266 (C.A.), refd to. [para. 13].

Huras v. Primerica Financial Services Ltd. (2000), 137 O.A.C. 79 (C.A.), refd to. [para. 25].

Mantini v. Smith Lyons LLP et al. (2003), 174 O.A.C. 138; 64 O.R.(3d) 505 (C.A.), refd to. [para. 25].

Inforica Inc. v. CGI Information Systems and Management Consultants Inc. (2009), 254 O.A.C. 117; 97 O.R.(3d) 161 (C.A.), refd to. [para. 25].

Radewych v. Brookfield Homes (Ontario) Ltd. et al., [2007] O.T.C. Uned. D70 (Sup. Ct.), affd. [2007] O.A.C. Uned. 403; 2007 ONCA 721, refd to. [para. 48].

Johnston v. Goudie et al. (2006), 212 O.A.C. 79 (C.A.), refd to. [para. 49].

Penn-Co Construction Canada (2003) Ltd. v. Constance Lake First Nation et al., [2007] O.T.C. Uned. L48 (Sup. Ct.), refd to. [para. 49].

New Era Nutrition Inc. v. Balance Bar Co. (2004), 357 A.R. 184; 334 W.A.C. 184; 245 D.L.R.(4th) 107 (C.A.), refd to. [para. 49].

Frambordeaux Developments Inc. v. Romandale Farms Ltd. et al., [2007] O.T.C. Uned. O13 (Sup. Ct.), refd to. [para. 49].

Markson v. MBNA Canada Bank (2007), 224 O.A.C. 71; 85 O.R.(3d) 321 (C.A.), refd to. [para. 58].

Dancap Productions Inc. et al. v. Key Brand Entertainment Inc. et al. (2009), 246 O.A.C. 226; 55 B.L.R.(4th) 1 (C.A.), refd to. [para. 64].

Jean Estate et al. v. Wires Jolley LLP (2009), 310 D.L.R.(4th) 95 (Ont. C.A.), refd to. [para. 64].

Statutes Noticed:

Consumer Protection Act, S.O. 2002, c. 30, Schedule A, sect. 7, sect. 8 [para. 32].

Authors and Works Noticed:

Article, Developments in the Law: Access to Courts (2009), 122 Harv. L. Rev. 1151, pp. 1170 to 1175 [para. 30].

Eisenberg, Theodore, Miller, Geoffrey P., and Sherwin, Emily, Mandatory Arbitration for Customers but not for Peers: A Study of Arbitration Clauses in Consumer and Non-Consumer Contracts (2008), 92 Judicature 118, generally [para. 30].

Saumier, Geneviève, Consumer Arbitration in the Evolving Canadian Landscape (2008), 113 Penn St. L.R. 1203, p. 1226 [para. 31].

Watson-Hamilton, Jonette, Pre-Dispute Consumer Arbitration Clauses: Denying Access to Justice? (2006), 51 McGill L.J. 693, p. 743 [para. 30].

Counsel:

Mahmud Jamal, Jean-Marc Leclerc and Catherine Weiler, for the appellant;

Joel P. Rochon, Sakie Tambakos and Sonya Diesberger, for the respondent.

This appeal was heard on November 26, 2009, before Winkler, C.J.O., Doherty, Feldman, Sharpe and Gillese, JJ.A., of the Ontario Court of Appeal. Sharpe, J.A., delivered the following decision for the Court of Appeal on January 20, 2010.