Canada: Arbitration Clause Prevents Action By Home Owners From Proceeding To Trial

In Evans v Mattamy Homes Limited, the Superior Court of Justice confirmed the high bar plaintiffs must meet to demonstrate that an arbitration clause in an agreement is invalid and therefore a civil proceeding is permissible to resolve disputes between the parties. The decision will likely apply in proposed class actions with similar facts.

The Plaintiffs in this case signed Purchase and Sale agreements with Mattamy Homes Limited ("Mattamy") in February and March 2017 for preconstruction homes in Oakville. These homes had closing dates in April 2018. This action was initiated by a number of plaintiffs whose homes did not close in April 2018, claiming recession of the agreements or damages in the alternative.

The Purchase and Sale Agreements included an arbitration clause, which required that any dispute between the parties be resolved via binding arbitration. The Plaintiffs argued that the arbitration clause was unconscionable and that Mattamy exercised undue influence over them in reaching the agreement, rendering it invalid pursuant to section 7(2) of the Arbitration Act, 1991.

Mattamy brought a motion to stay the action on the basis that the clause was valid and the Plaintiffs were required to proceed through arbitration rather than litigation, pursuant to section 7(1) of Arbitration Act, 1991.This section requires that the Court stay any proceeding that relates to a dispute which the parties previously agreed to resolve through arbitration. The Court may refuse to stay the proceeding, among other reasons, if the arbitration agreement is invalid.

The onus was on the Plaintiffs to show that the arbitration clause was unconscionable. The Court applied a four-part test to make this determination. 

1. Does the Arbitration Agreement represent a grossly unfair and improvident transaction?

The Plaintiffs argued that the arbitration clause was grossly unfair because it was financially more burdensome for each plaintiff to go to arbitration individually, rather than proceed as a group of plaintiffs in a civil action. The Court compared this claim to Heller v. Uber Technologies Inc. (Uber) and found it to be distinguishable from that case. In Uber, the Plaintiffs were facing an arbitration to be held in the Netherlands. The plaintiffs in Uber were advocating for minimum wage, and so the expense of going to Europe was disproportionate. The Court found there was no such unfairness or disproportionality for the Plaintiffs in the case at hand.

2. Did the plaintiffs obtain independent legal advice or other suitable advice?

The Court was given contradicting evidence by the parties. The Plaintiffs argued that Mattamy would not present them with the Purchase and Sales Agreement until they provided a deposit cheque, and that they were not permitted to consult a lawyer. Mattamy's evidence was that buyers were always granted the opportunity to consult with a lawyer, if they choose to do so, and that the Purchase and Sales Agreement was available upon request. The Court also looked to the fact that some of the Plaintiffs had previously bought homes from Mattamy and were able to consult lawyers in the past. Therefore, the Court was not convinced that adequate legal advice was unobtainable.

3. Was there 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 other similar disability?

The Plaintiffs had not presented any evidence illustrating that they were unable to comprehend the agreement due to any of the considered factors. In fact, there was evidence before the Court showing that at least some of the plaintiffs were cognisant that the agreement would be firm and legally binding. The Court concluded that there was no overwhelming imbalance of bargaining power caused by the Plaintiffs' disposition to any factors considered above. Therefore, the Court found the Agreement was not unconscionable.

4. Did Mattamy knowingly take advantage of the plaintiffs' vulnerability?

No evidence was presented to the Court that would suggest the Plaintiffs were vulnerable and taken advantage of when signing the Agreement.

The Court went on to consider the Plaintiffs' claim that Mattamy exercised undue influence over them.

The Plaintiffs argued that they had felt pressured to sign agreements, and stated that the environment was intimidating. They argued that the fear of losing their lot made them more vulnerable. Mattamy's position was that the pressure the Plaintiffs were feeling of losing their lot was market pressure, and not from Mattamy, as lots were in high demand at the time. The Court agreed with Mattamy and added that the Plaintiffs did not object to the agreements they signed even after leaving the circumstances of the alleged undue influence. The Plaintiffs failed to show that Mattamy abused its power to compel the Plaintiffs to sign the Arbitration Agreement.

The Court therefore found that the Arbitration Agreement was valid and ordered a stay of proceedings. While this case did not involve a proposed class action, it will be relevant to such cases, because defendants often argue that arbitration clauses preclude class proceedings.

This decision affirms that there is a high threshold that plaintiffs must meet to demonstrate unconscionability and undue influence in order for an arbitration agreement to be invalid. It is important to note, however, that real estate transactions are not subject to Ontario's Consumer Protection Act, 2002, which sometimes serves to invalidate arbitration clauses.

About BLG

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.

In association with
Related Topics
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