COURT OF APPEAL FOR ONTARIO

CITATION: Heller v. Uber Technologies Inc., 2019 ONCA 1

DATE: 20190102

DOCKET: C65073

Feldman, Pardu and Nordheimer JJ.A.

BETWEEN

David Heller

Plaintiff (Appellant)

and

Uber
    Technologies Inc., Uber Canada, Inc., Uber B.V. and Rasier Operations B.V.

Defendants (Respondents)

Michael Wright, Danielle Stampley, Lior
    Samfiru, Stephen Gillman and James Omran, for the appellant

Lisa Talbot and Sarah Whitmore, for the
    respondents

Heard: November 27, 2018

On appeal from the order of
    Justice Paul M. Perell of the Superior Court of Justice, dated January 30, 2018,
    with reasons reported at 2018 ONSC 718.

Nordheimer J.A.:

[1]

The plaintiff appeals from the order of the motion judge that stayed the
    plaintiffs action in favour of arbitration.

I: Background

[2]

The appellant resides in Ontario. He has been licenced to use the Uber Driver
    App since February 2016.
[1]
The appellant has used the Driver App to provide food delivery services to
    people in Toronto. He has never used the Driver App to provide personal transportation
    services. The appellant is 35 years old and has a high school education. He
    earns approximately $400 to $600 per week based on 40 to 50 hours of work delivering
    food for UberEATS driving his own vehicle.

[3]

The appellant commenced this proposed class action on behalf of [a]ny
    person, since 2012, who worked or continues to work for Uber in Ontario as a
    Partner and/or independent contractor, providing any of the services outlined
    in Paragraph 4 of the Statement of Claim pursuant to a Partner and/or
    independent contractor agreement (the Class or Class Members). The Class
    Members provide food delivery services and/or personal transportation services
    using various Uber Apps. For convenience, I will refer to them collectively as
    drivers below.

[4]

In his proposed class action, the appellant seeks a declaration that
    drivers in Ontario, who have used the Driver App to provide food delivery
    and/or personal transportation services to customers, are employees of Uber and
    governed by the provisions of the
Employment Standards Act
, 2000
,
    S.O. 2000, c. 41 (the
ESA
). The claim seeks declarations that Uber
    has violated the provisions of the
ESA
and that the arbitration provisions
    of the services agreements entered into between the parties are void and
    unenforceable. The action also claims damages of $400 million.

[5]

Uber App users (drivers and customers) download the Uber Apps to their
    smartphones. Uber uses GPS to connect customers seeking personal transportation
    using an App for riders (the Rider App) with drivers using an App developed
    for drivers (the Driver App). The Rider App allows riders to request rides at
    their location, track the driver on the way to the location and then rate the driver
    after the ride is completed.

[6]

The UberEATS App allows customers seeking food delivery to order food
    from restaurants and have it delivered by a nearby driver. The App displays
    each restaurants menu, collects each customers order and transmits the orders
    to the restaurants. The restaurant updates the App as the food is prepared.
    Then the App signals to a nearby driver that a delivery is available. Drivers
    willing to deliver the order accept through the App, which provides his or her
    identifying information to the restaurant and the customer. After delivering
    the food, the driver confirms the delivery in the App, which collects the customers
    payment and remits payment to the restaurant.

[7]

Uber requires drivers to create an account online to access the Apps.
    After downloading the Driver App, Uber requires drivers in Ontario (performing
    services by car) to provide copies of the following documents: (i) a valid
    drivers license; (ii) a valid vehicle registration; (iii) proof of eligibility
    to work in Canada; and (iv) valid insurance. After reviewing and verifying the drivers
    documentation and screening results, Uber activates their account.

[8]

The first time a driver logs into the Uber App, he or she must accept a
    services agreement, which appears on the smartphone screen. Drivers accept by
    clicking YES, I AGREE, and confirming acceptance by again clicking YES, I
    AGREE after reading the following: PLEASE CONFIRM THAT YOU HAVE REVIEWED ALL
    THE DOCUMENTS AND AGREE TO ALL THE NEW CONTRACTS. Ubers January 4, 2016
    Driver service agreement with the appellant is 14 pages. The November 29, 2016
    UberEATS service agreement with the appellant is 15 pages.

[9]

Uber determines the maximum fares drivers receive for their work
    according to a base fare amount plus distance (based on GPS data obtained
    through the App), plus applicable time amounts. Uber collects the fares from customers,
    provides customers with a receipt, and remits payment periodically to drivers,
    less Ubers fees.

[10]

Drivers
    can report complaints to Uber through the Apps. Customer Service
    Representatives (CSRs) in the Philippines first receive the complaints. If
    unresolved, they escalate the complaints to CSRs in Chicago, then to Ubers
    legal team. Drivers may also attend in Ontario at an Uber Greenlight Hub,
    which is a support centre staffed with Uber employees, to ask for assistance,
    although the appellant says that the staff there will likely only refer the
    driver back to the App for assistance.

[11]

The
    appellant entered into a Driver services agreement with Rasier Operations B.V.
    on June 7, 2016, and an UberEATS services agreement on December 15, 2016. Each
    agreement contains the following arbitration clause (the Arbitration Clause):

Governing Law; Arbitration. Except
    as otherwise set forth in this Agreement, this Agreement shall be exclusively
    governed by and construed in accordance with the laws of The Netherlands,
    excluding its rules on conflicts of laws. . . . Any dispute, conflict or
    controversy howsoever arising out of or broadly in connection with or relating
    to this Agreement, including those relating to its validity, its construction
    or its enforceability, shall be first mandatorily submitted to mediation
    proceedings under the International Chamber of Commerce Mediation Rules (ICC
    Mediation Rules). If such dispute has not been settled within sixty (60) days
    after a request for mediation has been submitted under such ICC Mediation
    Rules, such dispute can be referred to and shall be exclusively and finally
    resolved by arbitration under the Rules of Arbitration of the International
    Chamber of Commerce (ICC Arbitration Rules). . . . The dispute shall be
    resolved by one (1) arbitrator appointed in accordance with ICC Rules. The
    place of arbitration shall be Amsterdam, The Netherlands. . . .

[12]

Under
    the ICC Mediation Rules, drivers must pay a US$2,000 non-refundable filing fee
    to initiate mediation proceedings against Uber. For disputes valued under US$200,000,
    drivers must pay an additional administrative fee, which may be as much as US$5,000.
    These fees do not cover the mediators fees or legal fees.

[13]

If
    the parties are unable to resolve their dispute through mediation within 60
    days, they must proceed to arbitration under the ICC Arbitration Rules. A driver,
    and any party wishing to join the arbitration, must each pay a US$5,000 filing
    fee.

[14]

Article
    37 of the ICC Arbitration Rules requires the parties to pay an advance on costs
    in an amount likely to cover the fees and expenses of the arbitrators and the
    ICC administrative expenses for the claims which have been referred to it by
    the parties. The payment must be in cash, unless a partys share of the fees
    and expenses is greater than US$500,000, in which case the party may post a
    bank guarantee. The initial US$5,000 filing fee is credited against the
    claimants portion of this advance but is non-refundable. The administrative
    fee component of this advance is at least US$2,500 per party for disputes
    valued at under US$200,000. These fees do not cover counsel fees, travel or
    other expenses related to participating in the arbitration.

[15]

Accordingly,
    the up-front administrative/filing-related costs for a driver to participate in
    the mediation-arbitration process in the Netherlands prescribed in the
    Arbitration Clause is US$14,500. As an UberEATS driver, the appellant earns
    about $20,800-$31,200 per year, before taxes and expenses.

II: The
    decision below

[16]

The
    motion judge granted Uber's motion to stay the action in favour of arbitration.
    In so doing, the motion judge determined that the dispute is both international
    and commercial, such that the
Int
ernational Commercial Arbitration Act
,
    2017
, S.O. 2017, c. 2, Sched. 5 (the
ICAA
) and not the
Arbitration
    Act
, 1991
, S.O. 1991, c. 17 (the
Arbitration Act, 1991
) applied.
    However, the motion judge noted, at para. 35, that "ultimately not much
    turns on this point," because the appellant was unable to demonstrate that
    the exceptions under either Act warranted a denial of Uber's stay motion.

[17]

Applying
    the Supreme Court of Canada's decision in
Seidel v. TELUS Communications Inc.
,
2011 SCC 15, [2011] 1 S.C.R. 531 and this court's decision in
Wellman
    v. TELUS Communications Company
, 2017 ONCA 433, 138 O.R. (3d) 413, the
    motion judge held that courts must enforce arbitration agreements freely
    entered into, even in contracts of adhesion. Any restriction on the parties'
    freedom to arbitrate must be found in the legislation.

[18]

The
    motion judge then concluded that the plain language of the
ESA
does not
    restrict the parties from arbitrating. He also concluded that the arbitrability
    of employment agreements was not a question of pure statutory interpretation
    but instead raised a "complex issue of mixed fact and law," one for
    the arbitrator to decide at first instance under the competence-competence principle.
    Finally, the motion judge rejected the unconscionability exception that the
    appellant advanced under both the
Arbitration Act
, 1991
and the
ICAA
.

III: Analysis

[19]

I
    begin with a brief analysis of the standard of review applicable to the motion
    judges decision. In my view, the standard of correctness applies to his
    decision for two reasons. One is that the central questions raised, including
    the proper application of the provisions of either the

Arbitration A
ct,
    1991
or the
ICAA
are questions of law:
Trade Finance Solutions
    Inc. v. Equinox Global Limited
,
2018 ONCA 12, 420 D.L.R. (4th) 273,
    at para. 31. The other is that the court is being called upon to interpret a
    standard form contract, notably a contract of adhesion, that has ramifications
    beyond just the case at hand and thus the correctness standard also applies:
Ledcor
    Construction Ltd. v. Northbridge Indemnity Insurance Co.
,
2016 SCC
    37, [2016] 2 S.C.R. 23, at para. 46.

[20]

For the reasons that follow, I have concluded that the
    motion judge erred in granting a stay of this action in favour of arbitration. In
    particular, the motion judge erred in principle in his analysis of the existing
    authorities on the issue of when it is appropriate to grant a stay in favour of
    an arbitration provision contained in a contract of adhesion.

[21]

While I have serious reservations about the motion
    judges conclusion that the relationship between the parties here is a
    commercial one, since I agree with the motion judge that nothing much turns on
    whether the
ICAA
or the
Arbitration
    Act, 1991
applies to the Arbitration Clause in issue, I do not intend to
    deal with that issue. I will deal with the other issues in these reasons using
    the
Arbitration Act, 1991
since it is the more commonly referred to
    statute on these matters. I note that neither party suggested that the result
    would differ depending on which statute applies. I add that I would reach the
    same conclusions if I applied the

ICAA
.

[22]

As
    a result, there are two
issues that fall to be
    determined: (i)

whether the Arbitration Clause
    amounts to an illegal contracting out of the
ESA

and is thus invalid and
(ii) whether the Arbitration Clause is unconscionable and thus invalid
    on that separate basis.

(i)
Contracting out

[23]

Section
    7(1) of the
Arbitration Act, 1991
, provides that, if a party to an
    arbitration agreement commences a proceeding in respect of a matter to be
    submitted to arbitration under the agreement, the court shall stay the
    proceeding. However, there are a number of exceptions to that mandatory
    requirement that are found in s. 7(2). One of those exceptions is where the
    arbitration agreement is invalid.
[2]
Here the appellant says that the Arbitration Clause is invalid because it
    amounts to a contracting out of the
ESA
that is, itself, prohibited by
    the
ESA
.

[24]

It
    is not necessary, in deciding the issues raised, to determine whether the
    appellant (and others like him) are employees rather than independent
    contractors. That is the core issue that is to be decided in the action, if it
    proceeds. Rather, what must be decided is whether the Arbitration Clause is
    invalid such that the mandatory stay under s. 7(1) of the
Arbitration Act,
    1991
does not apply.

[25]

In determining that issue, I begin with the structure
    of the
Arbitration Act, 1991
to which I just referred. The
    structure of the statute, on the issue of a stay of proceedings in favour of
    arbitration, is that a court must grant a stay unless one of the five
    exceptions in s. 7(2) applies. If one of those exceptions applies, then the
    court has a discretion whether or not to grant a stay.

[26]

What
    is clear from the structure of the
Arbitration Act, 1991
is that it is
    the court that is charged with making the determination whether one of the
    exceptions in s. 7(2) applies so that the issue of whether to grant a stay
    becomes a discretionary decision, not a mandatory one.
[3]
It is not the arbitrator who makes that call, it is the court  a point that I
    will discuss in more detail below.

[27]

Turning
    to the exceptions then,
it seems to me that one
    must start with the presumption that the appellant can prove that which he
    pleads, that is, that he is an employee of Uber. This is a preliminary motion
    in a proceeding and, like many other preliminary challenges to the courts
    jurisdiction to entertain a claim, the court normally proceeds on the basis
    that the plaintiffs allegations are true or, at least, capable of being
    proven. I note that this is the approach that was taken in
Seidel
where Binnie J. said, at para. 8:

I should flag at the outset two
    issues that this appeal does not decide. Firstly, of course, Ms. Seidels
    complaints against TELUS are taken to be capable of proof only for the purposes
    of this application. We are not assuming the allegations will be proven, let
    alone deciding that TELUS did in fact engage in the conduct complained of.

[28]

The question then
becomes, if the appellant
    (and those like him) is an employee of Uber, does the Arbitration Clause constitute
    a prohibited contracting out of the
ESA
? If it does, then the Arbitration
    Clause is invalid, the mandatory stay under s. 7(1) does not apply, and the court
    may then deny a stay under s. 7(2).

[29]

In
    determining that question, heed must be taken of s.
5 of the
ESA
:

(1) Subject to subsection (2), no employer or agent of an
    employer and no employee or agent of an employee shall contract out of or waive
    an employment standard and any such contracting out or waiver is void.

(2) If one or more provisions in
    an employment contract or in another Act that directly relate to the same
    subject matter as an employment standard provide a greater benefit to an
    employee than the employment standard, the provision or provisions in the
    contract or Act apply and the employment standard does not apply.

[30]

Under
    s. 1(1) of the
ESA
, an employment standard is defined as follows:

employment standard means a
    requirement or prohibition under this Act that applies to an employer for the
    benefit of an employee.

[31]

As
    earlier noted, in his proposed class action, the appellant contends that he and
    his fellow drivers are employees of Uber. If they are employees, then they are
    covered by the
ESA
and are entitled to the benefits provided by the
ESA
.
    Most importantly, for the purposes of this matter, if they are employees, then
    they are not bound by any contractual term that purports to oust those benefits.

[32]

Included
    in the benefits provided by the
ESA
is the right of an employee to
    make a complaint to the Ministry of Labour that his/her employer has
    contravened the
ESA
, pursuant to s. 96(1) of the
ESA
:

A person alleging that this Act has been or is being
    contravened may file a complaint with the Ministry in a written or electronic
    form approved by the Director.

[33]

Only
    two restrictions on that right appear in the
ESA
. One is in s. 98, which
    provides that an employee who commences a civil proceeding may not concurrently
    make a complaint that raises the same issue as the civil proceeding. The other
    is in s. 99(2), which precludes an employee who is a member of a trade union
    from making a complaint. The latter, of course, does not apply to the appellant.
    With respect to the former, I do not accept the submission of Uber that a civil
    proceeding includes an arbitration. There is no reason to interpret the term
    civil proceeding in that fashion. Indeed, the
Courts of Justice Act
,
    R.S.O. 1990, c. C.43, which applies to all civil proceedings in Ontario,
    defines both actions and applications as civil proceedings. Notably it does not
    mention arbitrations. The definitions of actions and applications in the
Rules
    of Civil Procedure
, R.R.O. 1990, Reg. 194 take the same approach.

[34]

Further,
    there is nothing in the
ESA
that suggests that there was any intention
    to include arbitrations within the usual meaning of the term civil
    proceeding. Indeed, certain provisions suggest a contrary conclusion. One is
    s. 8(2) that requires an employee who commences a civil proceeding to give
    notice of that fact to the Director of Employment Standards. It would seem odd that
    notice of an arbitration (which is normally private) would have to be given to
    the Director but that would be the result if arbitrations are included in civil
    proceedings. In fact, s. 8(2), which requires that notice be given to the
    Director before the date the civil proceeding is set down for trial, also
    seemingly equates civil proceedings with actions. Another is s. 101(1) which
    refers specifically to a proceeding before an arbitrator and thus appears to
    draw a distinction between that form of proceeding and what the
ESA
otherwise
    refers to as a civil proceeding. In any event, what is clear is that the
    restriction in s. 98 does not apply to the circumstances of this case.

[35]

If
    an employee makes a s. 96 complaint, then an Employment Standards Officer
    (ESO) must investigate the complaint. The ESO has certain rights and
    authorities when doing so. By way of example, under s. 102(1) of the
ESA
,
the ESO may require the employee and the employer to attend a meeting with
    the ESO. The ESO may also require persons to produce documents under s. 102(4).
    And, in the end result, the ESO may, pursuant to s. 103, issue an order to pay
    wages against the employer if a contravention of the
ESA
has occurred.

[36]

In
    my view, this investigative process constitutes an employment standard as that
    term is defined in the
ESA
. The investigative process, once triggered,
    is mandated by the
ESA
and both the employee and, more importantly the
    employer, are required to participate in that process. The process is thus a
    requirement that applies to an employer for the benefit of an employee and,
    accordingly, meets the definition of an employment standard. In reaching this
    conclusion, I read the words, used in the definition of employment standard, in
    their grammatical and ordinary sense:
Rizzo & Rizzo Shoes Ltd. (Re)
,
[1998] 1 S.C.R. 27, at para. 21.

[37]

Uber
    argued, at the hearing, that s. 96 is not an employment standard because, in
    allowing employees to make a complaint to the Ministry of Labour, it does not
    establish a requirement or prohibitionthat applies to an employer. There are
    two problems with this submission. First, it extracts s. 96 from the relevant
    statutory context and treats it as a stand-alone provision, contrary to the
    modern approach to statutory interpretation adopted by the Supreme Court of
    Canada in
Rizzo
.
Second, it invites an unduly narrow
    interpretation of s. 96 which would, if accepted, authorize employers to
    contract their employees out of s. 96, and thus out of the entire investigative
    process, without offending s. 5(1). That outcome would undermine the protective
    purpose of the
ESA
. It would also run afoul of the Supreme Court of
    Canadas directive regarding the interpretative approach to be taken to the
ESA
.
    As Iacobucci J. said in
Machtinger v. HOJ Industries Ltd.
, [1992] 1
    S.C.R. 986 at p. 1003:

The objective of the Act is to
    protect the interests of employees by requiring employers to comply with
    certain minimum standardsAccordingly, an interpretation of the Act which
    encourages employers to comply with the minimum requirements of the Act, and so
    extends its protections to as many employees as possible, is to be favoured
    over one that does not.

[38]

I
    return then to the point that it is for the court to decide whether the
    exceptions in s. 7(2) of the
Arbitration Act, 1991
apply when an order
    for a stay of a proceeding is sought. Uber argues that this is an issue for the
    arbitrator to determine because it is an issue going to the jurisdiction of the
    arbitrator. Uber invokes the competence-competence principle in support of
    its position.

[39]

I
    do not agree with Ubers position because, in my view, this issue is not about
    jurisdiction. I am aware of the general approach that any dispute over an
    arbitrators jurisdiction should first be determined by the arbitrator but that
    addresses situations where the scope of the arbitration is at issue. That is
    not this case. There does not appear to be any dispute that, if the Arbitration
    Clause is valid, the appellants claim would fall within it. Rather, the issue
    here is the validity of the Arbitration Clause. The answer to that question is
    one for the court to determine as s. 7(2) of the
Arbitration Act, 1991
makes clear.

[40]

In
    light of that conclusion, the competence-competence principle has no
    application to this case and, consequently, I do not need to address the
    arguments made with respect to it.

[41]

Given
    my conclusion regarding the meaning of employment standard, it follows that
    the Arbitration Clause constitutes a contracting out of the
ESA
. It
    eliminates the right of the appellant (or any other driver) to make a complaint
    to the Ministry of Labour regarding the actions of Uber and their possible
    violation of the requirements of the
ESA
. In doing so, it deprives the
    appellant of the right to have an ESO investigate his complaint. This is of
    some importance for, among other reasons, if a complaint is made then the
    Ministry of Labour bears the burden of investigating the complaint. That burden
    does not fall on the appellant. Under the Arbitration Clause, of course, the
    appellant would bear the entire burden of proving his claim.

[42]

I
    am aware that the appellant has not, in fact, chosen to make a complaint under
    the
ESA
but rather has commenced this proposed class action. That fact
    does not alter the analysis, however, for a few reasons. The first reason is
    that, if the Arbitration Clause offends s. 5(1) because it contracts out of the
    investigative process, the provision is invalid, irrespective of what the
    appellant does or does not do.

[43]

A
    second reason is that it is the appellants right, under the
ESA
, to
    avail himself of the civil proceeding exception to the complaint process. It
    is his choice whether to take that route, and he is only barred from making a
    complaint if he chooses to take it. The Arbitration Clause essentially transfers
    that choice to Uber who then forces the appellant (and all other drivers) out
    of the complaints process. I reiterate that, in addressing this issue, we are
    dealing not just with the appellant but with all persons who might be in the
    same position as the appellant. The interpretative process must take that into
    account.

[44]

A
    third reason is that this is a proposed class action. That fact provides the
    obvious reason why the appellant is availing himself of a civil proceeding over
    the complaint process. If the class proceeding is certified, then the central
    issues will be determined, not just for the appellant, but for all persons who
    find themselves in the same position as the appellant. It is well recognized
    that this is one of the central benefits of, and reasons for, the
Class
    Proceedings Act, 1992
, S.O. 1992, c. 6.

[45]

A
    fourth reason flows from the previous two and that is that under the complaints
    process, and also under the proposed class proceeding, the central issues will
    be determined for everyone who finds themselves in the same position as the
    appellant. If the Ministry of Labour were to make a finding regarding the
    appellant, it would be a public finding upon which others could rely. The same
    is true through the class proceeding, if certified, since any decision in that
    proceeding would be binding on the members of the class (except for those who
    opted out). It is clear that there is no ability for a class determination
    under the Arbitration Clause nor is any determination through the arbitration a
    matter of public record upon which others can rely.

[46]

A
    fifth reason is that there is no evidence in this record as to what remedy the
    appellant could expect to obtain if he is successful in the arbitration
    process. The Arbitration Clause requires that the laws of the Netherlands are
    to apply to the arbitration. We do not know how the laws of the Netherlands
    deal with the issues that the appellant has raised. We do not know if the laws
    of the Netherlands would provide greater, lesser, or equal benefits to the
    appellant, if it is determined that he is an employee. If he is an employee,
    then the appellant is entitled to the benefits that are provided by the
ESA
.
    In other words, as an Ontario resident he is statutorily entitled to the minimum
    benefits and protections of Ontarios laws. He should not be left in a
    situation where those benefits and protections are set by the laws of another
    country.

[47]

On
    that latter point, I should address the position taken by Uber that it was the
    appellant who should have, but did not, provide any expert evidence as to the
    laws of the Netherlands and whether an arbitrator there would apply Ontario law
    to the issues raised. I would first point out that Uber also did not provide
    any such expert evidence. It would appear self-evident that it would have been
    a great deal easier for Uber to provide that evidence, if they considered it to
    be important, than it would be for the appellant to do so.

[48]

In
    any event, expert evidence on this point was not required. As the majority in
Douez
    v. Facebook, Inc.
,
2017 SCC 33, [2017] 1 S.C.R. 751 pointed out in
    the context of forum selection clauses, there is no requirement for a party
    trying to avoid a forum selection clause to prove that his/her claim would fail
    in that forum: at para 67. Similarly, I find that in this context, there was no
    requirement for the appellant to prove that his claim would fail, if it was
    arbitrated in the Netherlands, in order to avoid the application of the Arbitration
    Clause.

[49]

I
    conclude, therefore, that the Arbitration Clause is invalid because, based on
    the presumption that drivers are employees of Uber, as pleaded, it constitutes
    a contracting out of the provisions of the
ESA
, a result that is
    prohibited by that statute. I am reinforced in that conclusion when public
    policy considerations are taken into account.

[50]

The
    issue of whether persons, in the position of the appellant, are properly
    considered independent contractors or employees is an important issue for all
    persons in Ontario. The issue of whether such persons are entitled to the
    protections of the
ESA
is equally important. Like the privacy issue
    raised in
Douez
, the characterization of these persons as independent
    contractors or employees for the purposes of Ontario law is an issue that ought
    to be determined by a court in Ontario. As the majority in
Douez
said,
    at para. 37:

After all, the strong cause test
    must ensure that a court's plenary jurisdiction only yields to private
    contracts where appropriate.

[51]

It
    follows from my conclusion on this issue that the mandatory stay provided for
    in s. 7(1) does not apply. Once the Arbitration Clause is found to be invalid
    under s. 7(2), the remedy of a mandatory stay no longer has any application.

(ii)
Unconscionability

[52]

Independent
    of that first conclusion, I would, in any event, find the Arbitration Clause to
    be invalid on the basis of unconscionability. This conclusion would also bring
    the Arbitration Clause within the invalidity exception in s. 7(2).

[53]

The
    motion judge dismissed the unconscionability argument on the basis that there
    was no evidence that Uber preyed or took advantage of Mr. Heller or the other
    Drivers or extracted an improvident agreement by inserting an arbitration
    provision (para. 70). The motion judges conclusion on this issue is flawed
    because, in reaching it, he made palpable and overriding errors of fact.

[54]

Chief
    among those errors is the motion judges finding that most grievances or
    disputes between Drivers and Uber can be dealt with by the dispute resolution
    mechanisms readily available from Ontario and that it will be a substantial
    dispute that entails arbitration in the Netherlands (para. 70).

[55]

What
    the factual record actually shows is that there is no dispute resolution
    mechanism either in Ontario, or elsewhere, short of the Arbitration Clause. The
    other avenues available to a driver, who has a complaint, are located in the Philippines
    or in Chicago. Though accessible from Ontario, they are procedures run by Uber
    personnel and are completely controlled by Uber. They are not, in any way,
    independent grievance or adjudication procedures.

[56]

It
    is also not correct that only a substantial dispute requires arbitration in
    the Netherlands. To the contrary, all disputes require arbitration in the
    Netherlands unless the driver resolves his/her complaint voluntarily with Uber.
    The reason that only a substantial dispute would go to arbitration is a direct result
    of the financial barriers that the arbitration process erects which would
    dissuade drivers with lesser disputes from pursuing that process.

[57]

It
    was also an error for the motion judge to evaluate the impact of the Arbitration
    Clause, in this context, by looking at the collective claim in the proposed
    class action, as opposed to the individual claim of the appellant. The motion
    judge held that there is a significant claim for $400 million, which does not
    make the agreement improvident, in a comparative sense, with the costs of an
    arbitration in the Netherlands.

[58]

However,
    the proposed class action is just that, a proposed class action. It has not yet
    been certified. Until it is certified, it remains, in essence, a single claim
    by the appellant. What makes the Arbitration Clause clearly improvident is the
    fact that any driver with a claim, that might ordinarily amount to nothing more
    than a few hundred dollars, must undertake an arbitration in the Netherlands in
    order to have their rights determined independently. That arbitration must be
    held in Amsterdam, under the law of the Netherlands, and must be conducted in
    accordance with the ICC Rules.

[59]

It
    must be remembered, in this regard, that the evidence shows that the cost of
    initiating the arbitration process alone is US$14,500. This does not include
    the costs of travel, accommodation and, most importantly, counsel to
    participate in the arbitration. These costs are to be contrasted with the
    appellants claim for minimum wage, overtime, vacation pay and the like brought
    by a person earning $400-$600 per week.

[60]

I
    pause at this juncture to address the proper test to be applied in determining
    whether a contractual provision is unconscionable. In Ontario, the existing
    case law establishes that there are four elements to the test. Those elements
    are set out in
Titus v. William F. Cooke Enterprises Inc.
,
2007
    ONCA 573, 284 D.L.R. (4th) 734, at para. 38, recently affirmed in
Phoenix
    Interactive Design Inc. v. Alterinvest II Fund L.P.
,
2018 ONCA 98,
    420 D.L.R. (4th) 335. They are:

1.

a grossly unfair and improvident transaction;

2.

a victim's lack of independent legal advice or other suitable advice;

3.

an overwhelming imbalance in bargaining power caused by the victim's
    ignorance of business, illiteracy, ignorance of the language of the bargain,
    blindness, deafness, illness, senility, or similar disability; and

4.

the other party's knowingly taking advantage of this vulnerability.

[61]

In
    contrast to the Ontario approach, there is some suggestion that the test for
    unconscionability requires only two elements: inequality of bargaining power
    and unfairness. This is the test applied by the British Columbia Court of
    Appeal in
Morrison v. Coast Finance Ltd.
(1965), 55 D.L.R. (2d) 710
    (B.C. C.A). It is also the test applied by Abella J. in her concurring reasons
    in
Douez
,
at para. 115, and appears to be the test applied by
    the dissenting judges in
Douez
, at para. 145. The majority in
Douez
did not address the issue of unconscionability and, consequently, did not
    address the elements of the test.

[62]

I
    do not consider it necessary to resolve the question of whether the decision in
Douez
has changed the proper elements to be applied in determining
    unconscionability in Ontario because, under either test, I find that the Arbitration
    Clause is unconscionable.

[63]

In
    approaching that issue, I start with the approach taken by the majority in
Douez
.
    While I recognize that the clause in question in
Douez
was a forum
    selection clause, I see no reason in principle why the same approach ought not
    to be taken to the Arbitration Clause in this case. I say that because the Arbitration
    Clause here is not, strictly speaking, simply an arbitration provision. It is
    also a forum selection provision and it is a choice of laws provision. It covers
    much more than just the method through which disputes will be resolved. It establishes
    both a foreign forum for the adjudication and a foreign law that will be
    applied in that adjudication. Consequently, the Arbitration Clause should be
    subject to a broader analysis when it comes to the issue of validity,
    especially in a situation where it is part of a contract of adhesion.

[64]

The
    majority in
Douez
set out the approach to determining whether to
    enforce such a clause. The majority applied a two-step approach. At the first
    step, the party relying on the clause must establish that the clause is valid,
    clear, and enforceable, and that it applies to the cause of action before the
    court (para. 28). In this step, the court applies the principles of contract
    law to determine the validity of the clause, including issues such as unconscionability,
    undue influence, and fraud.

[65]

If
    the clause is found to be valid, then, at the second step, the onus shifts to
    the opposing party who must demonstrate strong reasons why the court should not
    enforce the forum selection clause and stay the action. At this stage, the
    court must consider all the circumstances including the "convenience of
    the parties, fairness between the parties and the interests of justice"
    (para. 29).

[66]

Although,
    in my view, the two step approach taken in
Douez
has application to
    this case, that approach has to be adjusted to take into account the statutory
    requirements that flow from the
Arbitration Act, 1991
. One of those requirements
    is found in s. 7(2) which clearly places the onus on the person, who seeks to
    avoid the mandatory stay, to establish that the arbitration provision in issue
    is invalid. So in this case, the onus falls on the appellant to establish
    unconscionability and thus invalidity. It is not Ubers onus to establish
    validity.

[67]

Another
    requirement is that, because the exception in s. 7(2) requires a finding of
    invalidity, there does not appear to be any room for the second step of the
    analysis in
Douez
to apply. That is, if the appellant cannot establish
    that the Arbitration Clause is invalid, the
Arbitration Act, 1991
would
    not allow for a separate finding that the Arbitration Clause is unenforceable
    for other reasons. Indeed, the majority in
Douez
appears to proceed on
    the basis that the forum selection clause was valid but, nonetheless, the majority
    would not enforce it for the reasons they gave. That latter remedy is not
    provided for under the
Arbitration Act, 1991
as a mechanism to avoid
    the mandatory stay.

[68]

In
    any event, in my view, the Arbitration Clause here fails at the first step of
    this analysis. Contrary to the conclusion reached by the motion judge, I find
    that the Arbitration Clause is unconscionable when it is viewed properly and in
    the context in which it is intended to apply. Applying the four elements from
Titus
,
    I conclude as follows:

1.

The Arbitration
    Clause represents a substantially improvident or unfair bargain. It requires an
    individual with a small claim to incur the significant costs of arbitrating
    that claim under the provisions of the ICC Rules, the fees for which are out of
    all proportion to the amount that may be involved. And the individual has to
    incur those costs up-front. Ubers submission that the individual might recover
    those costs, if successful, does not change the impact that flows from the fact
    that these costs must be paid up-front. Further, it should be self-evident that
    Uber is much better positioned to incur the costs associated with the
    arbitration procedure that it has chosen and imposed on its drivers. Additionally,
    the Arbitration Clause requires each claimant to individually arbitrate his/her
    claim and to do so in Ubers home jurisdiction, which is otherwise completely
    unconnected to where the drivers live, and to where they perform their duties. Still
    further, it requires the rights of the drivers to be determined in accordance
    with the laws of the Netherlands, not the laws of Ontario, and the drivers are
    given no information as to what the laws of the Netherlands are.

2.

There is no
    evidence that the appellant had any legal or other advice prior to entering
    into the services agreement nor is it realistic to expect that he would have. In
    addition, there is the reality that the appellant has no reasonable prospect of
    being able to negotiate any of the terms of the services agreement.

3.

There is a
    significant inequality of bargaining power between the appellant and Uber  a
    fact that Uber acknowledges.

4.

Given the
    answers to the first three elements, I believe that it can be safely concluded
    that Uber chose this Arbitration Clause in order to favour itself and thus take
    advantage of its drivers, who are clearly vulnerable to the market strength of
    Uber. It is a reasonable inference that Uber did so knowingly and
    intentionally. Indeed, Uber appears to admit as much, at least on the point of
    favouring itself when drafting the Arbitration Clause. Its rationale in support
    of that favouring, i.e. that it chose this particular arbitration process in
    order to provide consistency of results, is an unpersuasive one.

[69]

Consequently,
    all four elements of the
Titus
test for unconscionability are present
    in this case. It follows that, if the two-step test found in
Douez
were
    to apply, it would also be met.

[70]

It
    seems to me that the fundamental flaw in the approach adopted by the motion
    judge to this issue is to proceed on the basis that the Arbitration Clause is
    of the type involved in normal commercial contracts where the parties are of
    relatively equal sophistication and strength. That is not this case. As the
    majority in
Douez
noted, forum selection clauses often operate to
    defeat consumer claims (para. 62). The same can be said of the Arbitration Clause
    here  it operates to defeat the very claims it purports to resolve. And I reiterate
    that this Arbitration Clause is much more than just a simple arbitration
    provision.

[71]

I
    would add that, for the purposes of this analysis, I do not see any reasonable
    distinction to be drawn between consumers, on the one hand, and individuals
    such as the appellant, on the other. Indeed, I would note that, if Uber is
    correct and their drivers are not employees, then they are very much akin to
    consumers in terms of their relative bargaining position. Alternatively, if
    Uber is wrong, and their drivers are employees, we are not speaking of
    employees who are members of a large union with similar bargaining power and
    resources available to protect its members. Rather, the drivers are individuals
    who are at the mercy of the terms, conditions and rates of service set by Uber,
    just as are consumers. If they wish to avail themselves of Ubers services,
    they have only one choice and that is to click I agree with the terms of the
    contractual relationship that are presented to them.

[72]

Finally
    on this point, I should mention that the motion judge, in coming to his
    conclusion, relied in part on my decision in
Kanitz v. Rogers Cable Inc.
(2002)
,
58 O.R. (3d) 299 (S.C.).
Kanitz
is entirely
    distinguishable from the situation here. First, in
Kanitz
, there was
    no evidence as to what the costs of initiating the arbitration process would
    be, nor evidence that any particular customer had been dissuaded from
    arbitrating because of the expense. The arbitration provision in
Kanitz
required the arbitration to proceed where the consumer resided and on mutually
    agreeable terms. Consequently, there was no evidence of any significant
    financial or geographic barriers to initiate the arbitration process, as there
    are in this case. I would also note that, subsequent to the decision in
Kanitz
,
    consumer protection legislation in Ontario was amended to preclude arbitration
    in such situations.

[73]

In
    the end result, for the reasons I have given, I conclude that the Arbitration Clause
    is unconscionable and therefore invalid. The invalidity exception in s. 7(2) of
    the
Arbitration Act, 1991
again applies to the Arbitration Clause.

IV: Conclusion

[74]

I
    conclude that the Arbitration Clause amounts to an illegal contracting out of
    an employment standard
,
contrary to s. 5(1) of the
ESA
, if the
    drivers are found to be employees as alleged by the appellant. I reach the separate
    and independent conclusion that the Arbitration Clause is unconscionable at
    common law. On the basis of each finding, the Arbitration Clause is invalid
    under s. 7(2) of the
Arbitration Act, 1991
. The remedy of a mandatory stay
    has no application.

[75]

The
    appeal is therefore allowed and the stay is set aside. The respondent will pay
    to the appellant his costs of the appeal in the agreed amount of $20,000
    inclusive of disbursements and HST.

[76]

The
    parties did not make submissions on what should happen to the costs of the
    motion should the appeal be successful. If the parties cannot resolve that
    issue, they may make brief written submissions. The appellant shall file his
    submissions within 15 days of the date of these reasons and the respondent
    shall file its submissions within 10 days thereafter. No reply submissions are
    to be filed and each partys submissions shall not exceed five pages.

Released: January 2, 2019 K.F.

I.V.B.
    Nordheimer J.A.

I
    agree. K. Feldman J.A.

I
    agree. G. Pardu J.A.

[1]

Since it does not appear necessary, for the purposes of these
    reasons, to differentiate between the various respondents, I will refer to them
    collectively as Uber.

[2]

Similar provisions are found in the
ICAA
.

[3]
The structure of the
ICAA
is essentially the same with the
    result that the approach to the two statutes should be the same:
Ontario
    Medical Association v. Willis Canada Inc
., 2013 ONCA 745, 118 O.R. (3d) 241,
    at para. 26.


COURT OF APPEAL FOR ONTARIO

CITATION: Honsberger v. Grant Lake Forest Resources Ltd.,
    2019 ONCA 44

DATE: 20190125

DOCKET: C65196

Feldman, Pepall and Pardu JJ.A.

BETWEEN

Floyd A. Honsberger

Applicant

(Respondent in Appeal)

and

Grant Lake Forest Resources Ltd.

Respondent

(Appellant)

BETWEEN

Danny Lacasse

Applicant

(Respondent in Appeal)

and

Grant Lake Forest Resources Ltd. and Facts Ltd.

Respondent

(Appellant)

BETWEEN

Trevor Laing

Applicant

(Respondent in Appeal)

and

Grant Lake Forest Resources Ltd.

Respondent

(Appellant)

BETWEEN

Ivan Mousseau

Applicant

(Respondent in Appeal)

and

Grant Lake Forest Resources Ltd.

Respondent

(Appellant)

Paul A. Johnson, for the appellant Grant Lake Forest
    Resources Ltd.

Kenneth Hale, for the respondent Floyd A. Honsberger

Eli Fellman and Brian Blumenthal, for the Landlord and
    Tenant Board

Heard: October 18, 2018

On appeal from the
    order of the Divisional Court (Justice Kiteley, Justice Conway and Justice
    Mulligan), dated October 11, 2017, with reasons reported at 2017 ONSC 6091.

Pepall J.A.:

Introduction

[1]

This appeal addresses the effect of increases of rent by the landlord without
    notice under the
Residential Tenancies Act
, 2006, S.O. 2006, c.17 (
RTA
) where the parties and the premises
    subject to both new and old tenancy agreements are the same.

Facts

[2]

Algoma Central Railway owned land north of Sault Ste. Marie in northern
    Ontario. The land was divided into leased lots on which tenants constructed
    their own cottages. Algoma Central Railway sold one block of leased land to
    Algoma Timberlakes Corporation and another block to Michipicoten Forest
    Products. Michipicoten Forest Products sold its block to the appellant, Grant
    Lake Forest Resources Ltd., in January 2014.

[3]

The respondents Floyd Honsberger, Danny Lacasse, Trevor Laing and Ivan
    Mousseau were tenants of Algoma Central Railway and/or Michipicoten Forest
    Products and are now tenants of the appellant (the Tenants). Each of the
    Tenants has built a cottage on their rental property. There are approximately 435
    similarly tenanted sites on land previously owned by Algoma Central Railway.

[4]

Each tenancy agreement provided for an initial fixed term of one year
    with 19 automatic one year renewals unless either party, at least 30 days prior
    to the year-end, gave notice to the other terminating the agreement at the end
    of that year. The rent was fixed but could be increased annually by a
    percentage increase not greater than the annual percentage increase in the
    Consumer Price Index. Each tenancy agreement contained a clause that provided
    that at the end of the 20th year, the agreement would terminate without any
    right of further renewal.

[5]

When the 20 year agreements expired in 2008 and 2009, believing that the
    tenancy agreements did not fall within the scope of the RTA, the Tenants signed
    new tenancy agreements. The rents were increased significantly for each of the
    Tenants; for example, the annual rent for Mr. Honsberger went from $370.83 to $1,527.00,
    an increase of in excess of 411%. The Tenants were not served with any notices
    of rental increases pursuant to s. 116(1) of the RTA.

[6]

The Tenants paid the new increased rent to the appellant for six to
    eight years.

[7]

In 2010, in
Matthews v. Algoma Timberlakes Corp.
, 2010 ONCA
    468, 102 O.R. (3d) 590, this court determined that leases for cottage sites
    owned by Algoma Timberlakes Corporation and adjacent to those in issue on this
    appeal were governed by the
RTA
and were therefore protected by its provisions.

[8]

In light of that decision, in 2015 and 2016, the Tenants applied to the
    Landlord and Tenant Board (the LTB) for a rent abatement on the basis that
    the rental increases were illegal. Because of the one year limitation period
    under s.136 of the RTA, they only sought repayment for the one year preceding
    the filing of their applications.

Landlord and Tenant Boards Decisions

[9]

The LTB dealt first with Mr. Honsbergers application. In a decision
    that was rendered on January 21, 2016, the LTB concluded that the lawful rent for
    Mr. Honsberger was $1,527.

[10]

By
    interim order dated March 21, 2016, an interim stay of the decision was issued
    by Vice-Chair Charron of the LTB. She then issued a review order on April 29,
    2016. Applying the
Matthews
decision, she noted that the rental
    property was subject to the RTA. She reproduced s. 38 of the RTA entitled
    Deemed renewal where no notice, and observed that the tenancy agreement had
    not been renewed with the same terms and conditions, nor had the tenancy been terminated.
    She went on to state: subsections 116(1) and (4) of the [RTA] prevent a
    landlord from increasing the rent for a rental unit without first giving at
    least 90 days written notice of the increaseif notice is not given any
    increase is void based on the Court of Appeal decision
Price v. Turnbull's
    Grove Inc.
[2007 ONCA 408].

[11]

The
    Vice-Chair held that the increases in rent starting in 2008 and following were
    illegal, as no 90-day notice of rent increase had been given as required by s.
    116(1). She found the lawful rent to be $370.83 and ordered repayment of the excess
    rent collected by the landlord in the one year prior to the application plus
    $45 for costs.

[12]

The
    three other respondents received similar results in their applications, with
    only the amount of overpayment varying slightly.

[13]

The
    appellant appealed to the Divisional Court.

Divisional Court Decision

[14]

The
    Divisional Court heard the four appeals together. The Court concluded that the
    decisions of the LTB were reasonable, and that its finding that the rent
    increases were void warranted deference. Accordingly, the Divisional Court
    dismissed the appeals.

[15]

The
    appellant was granted leave to appeal from that dismissal.

Issues on Appeal

[16]

The
    appellants primary argument is that no notices of rental increases were
    required because s. 120(1) of the RTA prohibits rent increases during the term
    of a tenancy. Counsel submits that the new tenancy agreements were entered
    into when the old agreements had already expired, thus constituting a new term
    of tenancy. The appellant also advances other grounds relating to the LTBs
    reliance on s.38 (1) of the LTA, freedom of contract, and the inadequacy of the
    Divisional Courts reasons. For the following reasons, I would not give effect to
    any of these grounds and would therefore dismiss the appeal.

Analysis

(1)

Standard of Review

[17]

When
    this court considers a decision of the Divisional Court reviewing a decision of
    an administrative tribunal, it steps into the shoes of the Divisional Court
    and asks whether the Divisional Court identified the appropriate standard of
    review and applied it correctly: see
Agraira v. Canada (Public Safety and
    Emergency Preparedness)
, 2013 SCC 36, [2013] 2 S.C.R. 55, at paras. 45-47;
Onyskiw v. CJM Property Management Ltd.
, 2016 ONCA 477, at para. 27.
    Where an administrative tribunal interprets or applies its home statute, the
    standard of review is presumptively reasonableness:
Onyskiw
at para.
    28;
Alberta (Information and Privacy Commissioner) v. Alberta Teachers'
    Assn.
, 2011 SCC 61, [2011] 3 S.C.R. 654, at para. 39.

[18]

Determining
    whether notices of rental increases were required under s. 116(1) of the RTA is
    one of the LTBs core functions. The Divisional Court properly identified and
    applied a reasonableness standard of review. Indeed, the appellant does not
    argue to the contrary.

(2)

Purpose of the Act

[19]

As
    stated by the Supreme Court in
Bell ExpressVu Limited Partnership v. Rex
,
    2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26, citing E.A. Driedger,
Construction
    of Statutes
, 2nd ed. (Toronto: Butterworths, 1983), at p. 87, the words
    of an Act  [are to] be read in their entire context and in their grammatical
    and ordinary sense harmoniously with the scheme of the Act, the object of the
    Act, and the intention of Parliament. This court has described the RTA as
    remedial legislation having a tenant protection focus:
Metropolitan
    Toronto Housing Authority v. Godwin
, 161 O.A.C. 57, at para. 19. As
    remedial legislation, the Act must receive such fair, large and liberal
    construction and interpretation as will best ensure the attainment of the
    object of the Act according to its true intent, meaning and spirit:
Price
    v. Turnbull's Grove Inc.
, 2007 ONCA 408, 85 O.R. (3d) 641, at para. 26.
    See also the
Legislation Act
2006, c. 21, Schedule F, s. 64 (1);
North
    York General Hospital Foundation v. Armstrong

(2004), 69 O.R. (3d)
    603 (Div. Ct.), aff'd (2005), 258 D.L.R. (4th) 85 (Ont. C.A.).

(3)

Statutory Provisions

[20]

Section
    1 of the RTA describes its purpose: to provide protection for residential
    tenants from unlawful rent increases and unlawful evictions, to establish a
    framework for the regulation of residential rents, to balance the rights and
    responsibilities of residential landlords and tenants and to provide for the
    adjudication of disputes and for other processes to informally resolve
    disputes.

[21]

Section
    3(1) states that apart from Part V.1 (which applies to non-profit
    co-operatives), the RTA applies despite any agreement or waiver to the
    contrary. Section 110 of the RTA provides that no landlord shall increase the rent
    charged to a tenant for a rental unit, except in accordance with Part VII of
    the Act, and s.111 provides that a landlord shall not charge more than the
    lawful rent permitted under the Act.

[22]

Section
    113 states that, subject to s.111, the lawful rent for the first rental period
    for a new tenant under a new tenancy agreement is the rent first charged to the
    tenant. Thus, new tenancies with new tenants are explicitly exempted from the
    rental increase provisions of the Act.

[23]

Part
    VII of the Act encompasses section 116. That section requires that notice be
    given prior to a rental increase. Specifically, it states:

116(1) A landlord shall not increase the rent charged to a
    tenant for a rental unit without first giving the tenant at least 90 days
    written notice of the landlords intention to do so.

(2) Subsection (1) applies even if the rent charged is increased
    in accordance with an order under s. 126.

(3) The notice shall be in a form approved by the Board and
    shall set out the landlords intention to increase the rent and the amount of
    the new rent.

(4) An increase in rent is void if the landlord has not given
    the notice required by this section, and the landlord must give a new notice
    before the landlord can take the increase.

[24]

According
    to s.120(1) of the
RTA
,
No landlord may increase the rent charged to a tenant, or to an assignee under
    section 95,
during the term of the tenancy
by more than the guideline
    [emphasis added] subject to certain inapplicable exceptions. The guideline is established
    by the Minister of Municipal Affairs and Housing each calendar year and shall not
    be more than 2.5%. Under s.119, a landlord may only increase the rent once
    every 12 months.

[25]

Section
    38 (1) of Part VII of the
RTA
is entitled Deemed renewal where no notice. That subsection provides:

If a tenancy agreement for a fixed term ends and has not been
    renewed or terminated, the landlord and tenant shall be deemed to have renewed
    it as a monthly tenancy agreement containing the same terms and conditions that
    are in the expired tenancy agreement and subject to any increases in rent
    charged in accordance with this Act.

(4)

Grounds of Appeal

[26]

As
    mentioned, the crux of the appellants argument is that when the Tenants
    entered into the new one-year tenancy agreements, the term of the tenancies was
    severed, and thus the rental increase and notice provisions of the RTA were
    inapplicable, and the new rent lawful.

[27]

There
    are strong factors weighing against the appellants interpretation of the RTA.

[28]

First,
    s. 113 of the RTA expressly permits the establishment of a new rental rate with
    a new tenant. Recognition of a similar carve-out for an existing relationship
    involving the same tenant, the same landlord, and the same premises would undermine
    the purpose of the Act. A renewing tenant is not a new tenant. Put differently,
    the appellants proposed statutory interpretation is inconsistent with the
    scheme of the
RTA

s
    rent control provisions considered as a whole. The structure and purpose of the
Act
would be undercut if at the
    commencement of each year, a landlord could increase the rent simply by
    entering into a new tenancy agreement. A tenancy agreement involving the same
    parties and the same premises requires the landlord to give 90 days notice of
    an increase pursuant to the clear provisions of the RTA. This conclusion is
    also consistent with this courts decisions in
Matthews and Nanne v.
    3011650 Nova Scotia Limited (Michipicoten Forest Resources)
, 2015 ONCA 391.

[29]

Second,
    the words during the term of their tenancy found in s. 120(1) must be read in
    context. The language in this section addresses the
amount
that a
    landlord may charge; it does not detract from or limit the Part VII provisions
    of the
RTA,
including the
    notice requirement. Any increase in rent required notice under s. 116 of the
    Act. Additionally, the increase could not exceed the annual guideline amount.

[30]

Third,
    the appellant did not advance the s. 120(1) argument before either the LTB or
    the Divisional Court. Entirely new issues should typically not be entertained
    on appeal:
Orr v. Metropolitan Toronto Condominium Corp. No. 1056
, 2014
    ONCA 855, at para. 87.

[31]

As
    for the appellants argument that the LTB inappropriately relied on s. 38(1) of
    the Act, the Divisional Court recognized that s. 38(1) was inapplicable to this
    case but agreed with the LTB that the landlord was required to give 90 days
    notice of an increase pursuant to Part VII of the Act. I agree with that determination
    and would not give effect to this ground of appeal. The Divisional Court did
    not err in determining that the decisions of the LTB were reasonable.

[32]

There
    is also no basis for the appellants remaining arguments. As is clear from the
    RTA and particularly s. 3 of the Act, the parties freedom to contract is expressly
    made subject to the RTAs application. The Divisional Court did not err in
    refusing to validate rental increases that, despite their origin in contract,
    were constrained by the provisions of the RTA that required written notice. See
    also
1086891 Ontario Limited v. Barber
, 284 D.L.R. (4th) 568 (Div.
    Ct.).

[33]

Lastly,
    the reasons of the Divisional Court were sufficient. The reasons were
    responsive to the live issues in the case and afforded
meaningful
    appellate review. See
R. v. Sheppard
, 2002 SCC 26
,
[2002] 1 S.C.R. 869
, at para. 24
;
Diamond Auto Collision
    Inc. v. The Economical Insurance Group
, 2007 ONCA 487
,
227 O.A.C. 51
, at para. 11
;
Dovbush v. Mouzitchka
, 2016 ONCA 381
,
131 O.R. (3d) 474
, at paras.
    21-22
; see also
R. v. R.E.M.
, 2008 SCC 51
,
[2008] 3 S.C.R. 3
, at paras. 10-35
and 55
.

[34]

Turning
    to costs, as agreed, there will be no costs order in favour of or against the LTB.
    The appellant shall pay the costs of Mr. Honsberger fixed in the amount of $10,000,
    inclusive of disbursements and HST. This costs award encompasses the costs of
    the leave to appeal motion that was reserved to this panel.

Released: K.F. January 25, 2019

S.E.
    Pepall J.A.

I
    agree. K. Feldman J.A.

I
    agree. G. Pardu J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Kampers v. York Fire &
    Casualty Insurance Company, 2019 ONCA 56

DATE: 20190128

DOCKET: C65473

Brown, Paciocco and Zarnett JJ.A.

BETWEEN

Mary Kampers, Sharral Kampers, Bill Kampers and
    Montana Mason by her litigation guardian Mary Kampers

Plaintiffs (Respondents)

and

York Fire & Casualty Insurance Company

Defendant (Appellant)

Todd J. McCarthy and Richard J. Campbell, for the
    appellant

Karl Arvai, for the respondents

Heard: January 18, 2019

On appeal from the order of Justice Marc. A. Garson of
    the Superior Court of Justice, dated May 25, 2018, with reasons reported at 2018
    ONSC 3000, 81 C.C.L.I. (5th) 80.

REASONS FOR DECISION

[1]

The respondent, Mary Kampers, was injured in 2005 in a motor vehicle
    accident in Las Vegas, Nevada. All claims arising from the accident have been
    settled, with the exception of her entitlement against the appellant, York Fire
    & Casualty Insurance Company, to benefits under the OPCF 44R Endorsement in
    her Ontario motor vehicle insurance policy.

[2]

During a June 30, 2016 pre-trial, counsel for the appellant and counsel
    for the respondents expressed agreement before the pre-trial judge that Ontario
    law applies to their dispute. Both counsel signed a
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194, r. 50.08(3) certificate confirming their
    understanding of the contents of the pre-trial conference report that recorded:
    The choice of law issue is resolved  Ontario law applies.

[3]

The application of Ontario law would mean that the potential recovery
    for damages would be limited by provisions in the
Insurance Act
,
    R.S.O. 1990, c. I-8. If Nevada law applies those statutory limits would not
    operate.

[4]

The way in which the initial consensus regarding the application of
    Ontario law came about is relevant to this appeal.

[5]

In an August 6, 2015 email, the respondents counsel expressed the view
    that Nevada law applies but asked, if you are of a different view, please
    advise. By letter dated June 13, 2016, the appellants counsel wrote to the respondents
    counsel saying:

I am of the view that Ontario law applies to the assessment of
    damages in this matter and, as such, the threshold and the collateral benefits
    provisions of the Ontario Insurance Act would apply. Section 10 of the OPCF 44
    Endorsement in my view is applicable.

[6]

In fact, the view that the threshold and collateral benefit provisions
    of the Ontario
Insurance Act
would apply is contrary to this courts
    decision in
Chomos v. Economical Mutual Insurance Co.
(2002), 61 O.R.
    (3d) 28 (C.A.). According to
Chomos
, properly interpreted, s. 10 of the OPCF
    44R Endorsement provides that questions of threshold and collateral benefits
    are issues of liability to be governed by the law of the place where the
    accident occurred, in this case, Nevada. In his affidavit explaining his view
    on the applicable choice of law at the time, the appellants counsel explained:
    I happen to believe that Chomos had been wrongly decided.

[7]

After the matter was discussed during the June 30, 2016 pre-trial, the respondents
    counsel, unaware of the
Chomos

decision, agreed with the appellants
    counsels position and signed the r. 50.08(3) pre-trial conference report certificate
    described above.

[8]

Subsequent to the June 30, 2016 pre-trial, the respondents counsel
    learned of the
Chomos

decision. When a second pre-trial was
    held on January 25, 2018 the respondents counsel explained that he was now of
    the view that Nevada law should apply. The pre-trial conference report from the
    second pre-trial records: Contrary to note of Leitch J. in pretrial memo of
    June 30/16, choice of law is
not
resolved (emphasis in original).

[9]

The appellant took the position that the parties had reached a binding litigation
    agreement on June 30, 2016, requiring Ontario law to be used. The respondents disagreed
    and brought a motion to determine the law to be applied. The appellant brought
    a cross-motion seeking a declaration that the choice of law question was resolved
    by binding litigation agreement and that Ontario law is to be used.

[10]

The
    motion judge dismissed the appellants cross-motion and declared that Nevada
    law will apply. These are final decisions that the appellant now appeals.

[11]

Of
    note, the appellant does not take issue before us with the motion judges
    finding that
Chomos

governs this case in the absence of a
    binding choice of law agreement. The appellant argues instead that the motion
    judges decision that the parties did not reach a binding litigation agreement is
    both legally incorrect and reliant upon incorrect principles of law, and
    should be overturned based on a correctness standard. It seeks a declaration
    that, as agreed between the parties, Ontario law applies.

[12]

The
    respondents argue that the motion judges decisions were discretionary and based
    on findings of fact that should not be disturbed. They are entitled to
    deference, absent palpable and overriding errors or an error in principle. They
    urge that no such palpable or overriding errors or errors in principle
    occurred.

[13]

We
    agree with the respondents, and dismissed the appeal at the end of the oral hearing,
    with reasons to follow. These are our reasons.

[14]

The
    motion judges decision that what occurred on June 30, 2016 was not a
    litigation agreement, but rather an admission by the respondents counsel based
    on a misunderstanding of the law attracts deference, and we would not interfere.

[15]

The
    exchange of correspondence relating to the applicable law does not reflect a
    negotiation. The relevant communications do no more than express competing views
    about the applicable law. It was in this context that the motion judge had to
    determine whether it was a litigation agreement or a simple admission that
    occurred when the respondents counsel ultimately agreed, after further
    discussion at the June 30, 2016 pre-trial, that Ontario law applies.

[16]

In
    making that determination, the motion judge concluded, as he was entitled to,
    that the respondents would have had no reason to negotiate for the application
    of Ontario law, since the application of Ontario law would clearly prejudice
    the respondents interests. In reaching this conclusion, the motion judge was
    entitled to reject the appellants argument that the respondents may have
    intended to enter a litigation agreement to obtain the mutual benefit of
    litigation efficiency. The respondents counsel swore that there had been no
    discussions about streamlining the process. The motion judge also noted that the
    manner in which the litigation was being conducted is inconsistent with the
    possibility that the respondents would view potential litigation efficiencies
    achieved by applying Ontario law as creating a net benefit or a reason to agree
    to choose Ontario law. Simply put, the respondents agreement that Ontario law
    applies is consistent with a concession or admission, but not a bargain.

[17]

In
    this context, the evidence of the respondents counsel that he had mistakenly
    acquiesced to the defence position, not being aware of
Chomos
,
    resonated. The motion judge was entitled to accept it. The respondents counsel
    was not intending to enter into a litigation agreement, but rather, simply making
    an admission. That being so, as the motion judge put it using the language of
    commercial contracts, there was no
consensus ad idem

between
    the parties to enter a binding agreement to apply Ontario law.

[18]

The
    fact that the respondents counsel signed the June 30, 2016 pre-trial conference
    report certificate does not prove otherwise. A pre-trial conference report is a
    case management tool. According to the terms of r. 50.08(3), when parties sign
    a pre-trial conference report certificate they are confirming their
    understanding of the report and acknowledging their obligation to be ready to
    proceed. They are not entering into a binding litigation agreement with the
    other party. Were that the case, the respondents could argue that when the appellants
    counsel signed the January 25, 2018 pre-trial conference report certificate he
    was agreeing that the choice of law question has
not
been settled. We
    would not interfere with the motion judges conclusion that what was recorded
    in the r. 50.08 report was an admission, not something the parties separately
    negotiated or reduced to writing themselves.

[19]

In
    all of the circumstances, there was ample basis for the motion judge to come to
    the decision he did.

[20]

Nor
    was the discretionary decision by the motion judge to grant leave to the
    respondents to withdraw their choice of law admission, by analogy to
Rules
    of Civil Procedure
,

r. 51.05, based on any palpable or overriding
    errors or errors in principle. The motion judges findings that (1) the
    admission that Ontario law applies was made through inadvertence, (2) it was
    prejudicial to the respondents, and (3) it is possible to compensate the
    appellant in costs for any prejudice that may arise, are supportable. In these
    circumstances, we would not interfere with the motion judges decision to
    release the respondents from their admission.

[21]

The
    motion judge indicated that even if he was wrong and there was a litigation
    agreement, he would exercise his discretion to permit the respondents to resile
    from that agreement. Given that we would not interfere with the motion judges
    conclusion that there was no litigation agreement, or his decision that the
    respondents should be permitted to withdraw their choice of law admission, we
    need not decide whether this alternative decision was in error.

[22]

The
    appeal is dismissed. The appellant shall pay costs to the respondents in the
    amount of $5,000 inclusive of disbursements and applicable taxes, and inclusive
    of costs in the respondents earlier unsuccessful motion to strike this appeal.

David Brown J.A.

David M. Paciocco J.A.

B. Zarnett J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Lochner v. Ontario (Attorney General), 2019 ONCA 52

DATE: 20190125

DOCKET: C65386

MacPherson, Brown and Nordheimer JJ.A.

BETWEEN

Lina Lochner and Silvano Lochner

Appellants/Informants

and

Ontario (Attorney General)

Respondent

Lina Lochner, in person

Hannah Freeman, for the respondent

Heard: December 10, 2018

On appeal from the judgment of Justice Anne Molloy of the
    Superior Court of Justice, dated May 14, 2018.

APPEAL BOOK ENDORSEMENT

[1]

We agree with the reasons and conclusions of Superior Court Justice
    Molloy and Justice of the Peace Wong.

[2]

The appeal is dismissed.