Canada: Wellman v. TELUS: Supreme Court Emphasizes Enforceability Of Arbitration Provisions

In its recent 5-4 decision in Wellman v. Telus, the Supreme Court of Canada confirmed the enforceability of arbitration provisions in the context of business (i.e., non-consumer) contracts by granting the defendants' request to stay such claims in a proposed class proceeding. Notably, the Supreme Court granted the stay notwithstanding the fact that the class action ― which included both consumer and business claimants who were subject to mandatory arbitration provisions ― was allowed to proceed on behalf of the consumer claimants, whose rights to avail themselves of the class actions regime were preserved by statute.

The decision provides increased certainty and predictability with respect to the enforceability of arbitration agreements between commercial parties and emphasizes the legislature's role in setting policy in the face of competing public policy objectives.


As we have previously written (in earlier blog posts " Ontario Court of Appeal clarifies the impact of arbitration clauses on class proceedings" and " Supreme Court grants leave to appeal"), the underlying class proceeding involved claims by consumer and business customers against the defendants TELUS Communications Inc. and related entities (the Defendants) grounded in an alleged practice of overcharging customers without disclosure. The Defendants' contracts with all customers contained standard terms and conditions, including a mandatory arbitration provision.

The Defendants conceded that the arbitration clause was unenforceable against consumers by virtue of the statutory protections provided by the Ontario Consumer Protection Act. However, the Defendants sought to stay the business customers' claims on the basis that these claimants were subject to a valid and binding arbitration agreement and were not governed by the Consumer Protection Act.

The motion was heard by Justice Conway, who held that section 7(5) of the Ontario Arbitration Act

...grants the court the discretion to determine whether it is reasonable to separate the matters dealt with in an arbitration agreement from the other matters in the litigation. If the court does not consider it reasonable to separate them and refuses the partial stay, all matters may proceed in the litigation, regardless of the arbitration clause.

Finding that it would be unreasonable to separate the business customer claims from the consumer claims in this case, she refused to grant the stay and certified the class.

The Court of Appeal's decision

The Ontario Court of Appeal dismissed the appeal and affirmed Justice Conway's decision. In so doing, Justice van Rensburg, writing for the majority, reviewed the governing jurisprudence and concluded as follows:

Accepting the primacy of arbitration over judicial proceedings where the parties have a contractual agreement to arbitrate does not alter the Griffin analysis or the disposition of the present appeal. Rather, both Seidel and Griffin accept that arbitration agreements will generally be enforced, that any restriction of the parties' freedom to arbitrate must be found in the legislation of the jurisdiction, and that the ability of the court to interfere with this freedom depends on the legislative context.

Having accepted that the applicable legislative framework will govern the interpretation and enforceability of arbitration provisions in a given context, Justice van Rensburg went on to find that the Ontario legislative scheme granted the court sufficient discretionary authority to decline to enforce arbitration provisions in appropriate circumstances. On this basis, she ultimately accepted the lower court's ruling that, in the circumstances of this case, it would have been unreasonable to separate the business customer claims from the consumer claims as it could lead to "inefficiency, risk inconsistent results and create a multiplicity of proceedings."

In a concurring decision, Justice Blair ― while agreeing that Griffin was still binding authority ― expressed reservations about Griffin's correctness due to concerns that litigants might be able to "sidestep" the substantive right to arbitrate non-consumer claims by adding consumer claims to their proceeding. More specifically, given that the protections afforded by Ontario's Consumer Protection Act cannot be stayed in favour of arbitration, he expressed reservations about the potential for non-consumer claimants to bundle their claims together with consumer claimants with a view to avoiding arbitration.

The Supreme Court's decision

Writing for the majority, Justice Moldaver found that section 7(5) of Ontario's Arbitration Act does not grant the court the discretion to refuse a stay of matters that are subject to a mandatory arbitration agreement. Rather, he noted that section 7(1) of the Arbitration Act establishes the general rule that provides for a mandatory stay in favour of arbitration where a proceeding is commenced in respect of a matter governed by an arbitration agreement. While this rule is not absolute, and is subject to a number of exceptions ― including the partial stay provision in section 7(5) of the Arbitration Act ― Justice Moldaver noted that section 7(5) grants the court discretion only if two preconditions are met:  

  • The "proceeding must involve both (1) at least one matter that is dealt with in the arbitration agreement and (2) at least one matter that is not dealt with in the arbitration agreement"; and
  • it is reasonable to separate the matters dealt with in the arbitration agreement from the other matters not dealt with in the agreement.

In this case, Justice Moldaver found that the proceeding involved only one issue (the alleged overcharging), which was covered by the arbitration agreement, and that the first precondition to section 7(5) was therefore not met. Accordingly, as neither section 7(5) nor any of the other Arbitration Act exceptions applied, the general rule of section 7(1) mandating a stay in favour of arbitration applied.

While acknowledging the policy concerns raised by the dissent (including the desire to facilitate access to justice), the majority held that absent "express direction from the legislature," these could not be allowed to overwhelm the objectives advanced by the Arbitration Act. In his view, the dissent's approach would

...undermine the legislature's stated objective of ensuring parties to a valid arbitration agreement abide by their agreement, reduce the degree of certainty and predictability associated with arbitration agreements, and weaken the concept of party autonomy in the commercial setting. It would expand the opportunities for parties to a valid arbitration agreement — even a heavily negotiated one between sophisticated commercial entities — to avoid their agreement and seek relief in court. This would in turn steer parties away from a "good and accessible method of seeking resolution for many kinds of disputes" that "can be more expedient and less costly than going to court"

In conclusion, the majority of the Supreme Court emphasized that "the responsibility for setting policy in a parliamentary democracy rests with the legislature, not with the courts."

The dissent

The dissenting opinion, delivered by Justices Abella and Karakatsanis, interpreted section 7(5) of the Arbitration Act as granting judges broader discretion to grant or refuse a stay in favour of arbitration. In their view, Justice Conway's discretion was properly exercised in allowing the business customers' claims to proceed with the consumer class action.

The dissent characterized the majority's approach as a "textualist" interpretation that did not pay appropriate heed to policy considerations and would result in

... a dispute-resolution universe that has the effect of forcing litigants to spend thousands of dollars to resolve a dispute worth a fraction of that cost; denies others meaningful access to a remedy if they are not prepared, or cannot afford to, engage in a cost-benefit losing proposition; and invites the very proliferation of proceedings a class action was invented to avoid. The result of these disincentives is that business consumers will simply not enforce their rights.


The Supreme Court's decision in Wellman provides much-needed guidance and clarity regarding the appropriate circumstances in which a court will grant a stay under the Arbitration Act. In essence, the decision narrows the instances in which judicial discretion for a partial stay under section 7(5) will apply and portends greater use of the mandatory stay provision under section 7(1) in the context of commercial contracts.

While the case highlights the tension between the policy rationales for enforcing arbitration agreements and those underpinning the class actions regime, the majority decision in Wellman ultimately underscores the central tenet that it is the role of legislature to set policy and navigate these competing objectives ― not the role of the courts.

As we have previously written, Canadian courts have interpreted provincial consumer protection laws as evidencing a legislative intent to permit consumer class proceedings despite the presence of mandatory arbitration provisions. The Supreme Court's decision in Wellman clearly limits this principle to the consumer context and reaffirms the enforceability of such arbitration provisions in the commercial context. This dichotomy between business and consumer contracts will likely feature prominently in future disputes regarding the enforceability of arbitration provisions and the ability of claimants to avail themselves of the class proceedings regime.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Osler, Hoskin & Harcourt LLP
In association with
Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Osler, Hoskin & Harcourt LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions