nan QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2012 SKQB 399 Date: 2012 09 27 Docket: Q.B.G. No. 1597/2011 Judicial Centre: Saskatoon BETWEEN: BILL LAIDLAW, and MNP LLP (formerly operating as MEYERS NORRIS PENNY CO. CHARTERED ACCOUNTANTS LLP and MEYERS NORRIS PENNY LLP) Counsel: Grant J. Scharfstein, Q.C. for the plaintiff Brian G. Kapusianyk, Q.C. for the defendants FIAT MILLS J. September 27, 2012 [1] The defendant, MNP LLP (“MNP”), seeks a stay of the action pursuant to s. 8 of The Arbitration Act, 1992, S.S. 1992, c. A‑24.1. The plaintiff, Bill Laidlaw, is chartered accountant. By way of merger/purchase agreement dated September 14, 2000, he joined the partnership of MNP and became subject to the partnership agreement dated June 1, 1999. The merger agreement provided the courts of Saskatchewan would have exclusive jurisdiction to determine all disputes and claims arising between the parties. The merger agreement provided in part at clause 2.11 that: This Agreement shall prevail if and whenever there is any conflict or any inconsistency between the provisions of this Agreement and the MNP Partnership Agreement (as may be amended hereafter). [2] Subsequent to signing the merger agreement, new partnership agreement signed by the parties contained the following relevant clauses: 2.01 Effect This Agreement shall be deemed to amend and restate the existing Partnership Agreement and replace all prior Agreements entered into between the Parties hereto. 4.11 Existing Agreements The Partners acknowledge that the Partnership has entered into and is bound by the terms of the agreements which are listed on Appendix D, which is attached to and forms part of this Agreement. Appendix lists number of agreements, including merger agreements, that remain in force but did not include the merger agreement of the plaintiff. 17.01 Arbitration At any time while this Agreement and any of its provisions are in force, should any dispute or question arise between Partner and either another Partner or the Partnership concerning the interpretation of this Agreement or any part thereof which cannot be resolved by agreement among those Parties, then such dispute or question will be submitted to arbitration as herein provided by one Partner giving notice to the other Partner in dispute or if to the Partnership, to the C.E.O. ... [3] MNP gave notice to the plaintiff that his partnership arrangement would be terminated effective September 30, 2009. On May 10, 2011, the plaintiff’s solicitor sent letter to the C.E.O. of MNP, the relevant portions of which read: dispute has arisen between Mr. Laidlaw and Meyers Norris Penny LLP concerning his termination from the partnership and his entitlement to his capital account and buy‑out. Pursuant to Article 17.01 of the November 7, 2000 Partnership Agreement, this letter shall serve as formal notice that Mr. Laidlaw requires his dispute with Meyers Norris Penny LLP to be referred to arbitration. [4] On November 9, 2011, the plaintiff’s solicitor commenced claim against MNP. Relevant portions of the claim are: 6. Effective September 1, 2000, Laidlaw was admitted as principal partner of MNP, subject to the terms and conditions of the MNP Partnership Agreement dated November 7, 2000 (the “Partnership Agreement”). 16. MNP breached the terms and conditions of the Partnership Agreement by: (i) Failing to pay to Laidlaw the income owed to September 30, 2009; (ii) Failing to pay to Laidlaw his capital account; (iii) Failing to pay to Laidlaw the withdrawal proceeds. There is nothing in the claim that alleges the breach of the merger agreement or purports to rely on the merger agreement for the purpose of establishing cause of action. There is no material that discloses what happened to the arbitration request put forward by the plaintiff in May 2011, although, clearly, the commencement of the claim by the plaintiff and his opposition to this application for stay pending arbitration shows he does not wish to proceed with arbitration. On January 19, 2012, the Chief Executive Officer of MNP provided notice to arbitrate pursuant to the partnership agreement to the plaintiff. [5] Relevant sections of The Arbitration Act, 1992, supra, are: 8(1) Subject to subsection (2), if party to an arbitration agreement commences proceeding with respect to matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding. (2) The court may refuse to stay the proceeding in any of the following cases: (a) party entered into the arbitration agreement while under legal incapacity; (b) the arbitration agreement is invalid; (c) the subject-matter of the dispute is not capable of being the subject of arbitration pursuant to Saskatchewan law; (d) the motion was brought with undue delay; (e) the matter is proper one for default or summary judgment. [6] MNP argues that pursuant to s. 8(1), the Court shall stay the action unless s. 8(2) applies, and it argues that nothing in that section is relevant to the case. [7] The plaintiff argues number of issues. The first relates to whether the arbitration agreement is invalid as it applies to the relationship of the parties. The plaintiff submits that there are two agreements in play the merger agreement and the partnership agreement and that by virtue of clause 2.11 of the merger agreement, that agreement would prevail if there is conflict between the partnership agreement and the merger agreement. The plaintiff points out the conflict exists in clause 1.5 where it gives Saskatchewan and its courts exclusive jurisdiction to determine “all disputes and claims arising between the parties. The plaintiff submits that that clause is in direct conflict with the arbitration clause, which purports to give an arbitrator the authority to resolve disputes and interpret law according to the Province of Alberta. [8] The choice of law and method of resolution contained in the merger agreement relates to that agreement and the rights arising to the parties out of it. The problem with the plaintiff’s argument is that the statement of claim does not rely on the merger agreement other than for the choice of law. The claim is solely based on the new partnership agreement, alleging breach thereof. It seeks damages under the new partnership agreement. No relief is sought under the merger agreement. Yes, there may be potential conflict between the partnership agreement and the merger agreement, but that conflict is of no consequence when no action is being taken and no damages sought under the merger agreement. [9] Secondly, the plaintiff submits that any question of law must be determined by the court and, as here, the determination of the validity of the arbitration agreement requires an interpretation of the agreement. The issue must be decided by the courts, and not the arbitrator. He argued that the interpretation and interrelationship of the two agreements is question of law and must be determined by the Court. simple answer to that argument is that the merger agreement is irrelevant to the purpose of the statement of claim as framed. [10] The defendant also argues that clause 2.01 referred to above replaces all prior agreements that are entered into between the parties, including, of course, the merger agreement. That is possible interpretation, but do not have to deal with the issue given my analysis of the applicability of the merger agreement on the question of relevance. [11] In the case of Barber v. Meyers Norris Penny LLP, 2010 SKQB 175 (CanLII), 357 Sask.R. 77, similar application was made by MNP before Malone J. Ms. Barber, member of the partnership, commenced claim seeking monies pursuant to the provisions of the partnership agreement. Malone J. considered the same arbitration clause. He determined that the onus was on the plaintiff to show why stay should not be granted, relying on Dunwoody Co. v. Thiessen (1988), 1988 CanLII 5026 (SK QB), 70 Sask.R. 189, [1988] S.J. No. 485 (QL). The arguments advanced were not the same as those put forward by the plaintiff in this action. It appears the argument pressed strongly was that the partnership agreement could no longer apply as the plaintiff was no longer member of the partnership. Malone J. dismissed that argument, stating that the claim was based solely on the validity of the partnership agreement. That claim was not reproduced. However, the plaintiff here seems to have based his claim totally on the partnership agreement. There are no other provisions in s. 8(2) that apply to this situation that may result in refusal to stay the proceedings. Therefore, the action is stayed pursuant to s. 8(1) of The Arbitration Act, 1992, supra, with costs to the applicant. The draft order filed by the applicant may issue. “R.C. Mills” J.
The defendant seeks a stay of the action pursuant to s. 8 of The Arbitration Act. The plaintiff is chartered accountant who was partner with the defendant. 2000 merger agreement signed by the plaintiff indicated that the Courts of Saskatchewan would have exclusive jurisdiction to determine all disputes between the parties. After the merger, the plaintiff signed new partnership agreement that said arbitration would apply to any disputes between partner and the partnership. HELD: The action was stayed pending arbitration. The plaintiff's statement of claim does not rely on the 2000 merger agreement, the claim is based solely on the new partnership agreement and alleges breaches of the partnership agreement. The partnership agreement clearly states that disputes are to be resolved through arbitration.