The appeal of the municipality from a decision of a motions judge who found that the doctrine of laches did not apply to an arbitration proceeding was allowed. While the motions judge was correct when he held that the statutory limitations of the Limitations of Actions Act applied to arbitrations under the Arbitration Act, he erred when he concluded that the equitable defence of laches did not apply when statutory limitations applied. The case was therefore remitted back to arbitrator for determination.

Administrative law – Municipalities – Planning and zoning – Arbitration – Laches – Limitations – Judicial review – Delay – Jurisdiction – Standard of review – Correctness – Remedies

Rivergate Properties Inc. v. West St. Paul (Rural Municipality), [2006] M.J. No. 281, Manitoba Court of Appeal, July 20, 2006, Scott C.J.M., Steel and Hamilton JJ.A.

The parties were involved in a lengthy dispute over the residential development of property owned by Rivergate. The parties eventually entered into a development agreement. Rivergate subsequently served notice on the municipality that it wished to arbitrate issues arising out of the development agreement and claim damages for a breach of contract that occurred while the development agreement was in force. The municipality moved to dismiss Rivergate’s claim on the basis of delay. An Arbitrator allowed the municipality’s motion and found that the doctrine of laches applied. Rivergate appealed.

The motions judge allowed Rivergate’s appeal from the Arbitrator’s decision and held that the doctrine of laches did not apply on the grounds that the Arbitrations Act provided a statutory bar. The Municipality appealed.

The Court held that the standard of review of the decision of the motions judge was one of correctness.

The Court held that the limitation periods for arbitration were established by the rules contained in the Limitations of Actions Act. The motions judge was therefore correct when he ruled that the statutory limitation periods in the Limitations of Actions Act applied to the arbitration and that the arbitrator erred when she stated otherwise.

However, the Court held that the grammatical and ordinary meaning of section 31 of the Arbitrations Act was that equitable defences, being part of the law of equity, were available to a party to an arbitration. The Act incorporated the law of equity into arbitration proceedings. As a result, arbitrators are required to consider and apply principles of equity where warranted.

Section 59 of the Limitations of Actions Act also spoke to the continued applicability of equitable principles where a limitation period had not expired. Thus, all equitable defences were available to defendants regardless of the presence of a prescribed limitation period.

The motions judge therefore erred in holding that the equitable defence of laches did not apply when a statutory limitation applied.

The Court then noted that the modern meaning of “laches” meant more than mere delay. It was a defence that required that a defendant could successfully resist an equitable (although not a legal) claim made against him if he could demonstrate that the plaintiff, by delaying the institution or prosecution of his case, had either (a) acquiesced in the defendant’s conduct or, (b) caused the defendant to alter his position in a reasonable reliance on the plaintiff’s acceptance of the status quo or otherwise permitted a situation to arise that it would be unjust to disturb.

The Court held that the Arbitrator was within her authority to dismiss Rivergate’s claims as she did, provided the claims so dismissed were founded in equity or were seeking an equitable remedy. However, issues arose at the appeal hearing as to the nature of Rivergate’s claims. In light of the differing views of counsel and the lack of precision in which the claim for arbitration was structured, the Court was not in a position to identify the nature of Rivergate’s claims for the remedies that it sought. This was a matter for the Arbitrator. Therefore, the Court remitted the issue of the nature of Rivergate’s claims and the remedies sought by Rivergate back to the Arbitrator for further hearing.

The appeal was therefore allowed in part.

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