BC – Leave to appeal on question of law; arbitrator’s error must be “material to result” and appeal must have “arguable merit” – #533

In Escape 101 Ventures Inc. v March of Dimes Canada, 2021 BCCA 313 Justice DeWitt-Van Oosten granted, in part, the Plaintiff’s application for leave to appeal the arbitrator’s award dismissing the Plaintiff’s claims brought pursuant to an asset purchase agreement. The Plaintiff argued that the arbitrator committed errors of law in interpreting the terms of the agreement. Justice DeWitt-Van Oosten found that the arbitrator had misapprehended the evidence, which underlay his conclusions and “laid the foundation for an extricable error of law”. Further, even where an applicant demonstrates that there is an extricable question of law, a court should consider the reasons of the arbitrator as a whole in assessing that error and deny leave unless satisfied that the error was material to the result and the appeal has arguable merit. Justice DeWitt-Van Oosten was satisfied that both these criteria were met. Further, the amount of money at issue met the requirement for leave to appeal in s. 59(4) of the B.C. Arbitration Act, S.B.C. 2020, c. 2, that, “the importance of the result of the arbitration to the parties justifies the intervention of the court”.

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Ontario – Courts decide consent to arbitration de novo, without deference to arbitral tribunal – #532

In Hornepayne First Nation v. Ontario First Nations (2008) Limited Partnership, 2021 ONSC 5534, Justice Fitzpatrick held that a court hearing an application to “decide the matter” of arbitral jurisdiction must decide the question de novo. This was an application to the court under section 17(8) of the Ontario Arbitration Act, 1991. That section provides that, if an arbitral tribunal finds as a preliminary question that is has jurisdiction, any party may apply to the court to “decide the matter”. Justice Fitzpatrick followed the Divisional Court’s decision in Russian Federation v. Luxtona, 2021 ONSC 4605, which interpreted a similar provision in Article 16(3) of the Model Law. He held that the court’s role on such an application is to decide de novo whether the arbitral tribunal had jurisdiction.

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Québec – Arbitration clause cannot be avoided by bringing a class action – #531

In Centre de santé dentaire Gendron Delisle inc. c. La Personnelle, Assurances générales inc., 2021 QCCS 3463, Justice Davis reaffirmed that a valid arbitration clause will be enforced and cannot be avoided by the Plaintiff bringing a class action. In this matter, the Plaintiff sought authorization to bring a class action against various insurance companies under various insurance policies and to be appointed as representative Plaintiff on behalf of dental clinics which claimed business interruption losses caused by the COVID-19 pandemic. Justice Davis dismissed the request for authorization on the basis that it did not meet the requirements of Article 575(2) of the Code of Civil Procedure. However, he said that had he granted authorization, those insured dental clinics covered by an insurance contract containing a valid arbitration clause would have been excluded from the group covered by the class action and referred to arbitration.

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B.C. – Leave to appeal denied where alleged legal errors did not reflect arbitrator’s reasoning – #530

In Ecoasis Resort and Golf LLP v Bear Mountain Resort & Spa Ltd., 2021 BCCA 285, the Applicants (Bear Mountain and related companies) argued on leave to appeal that the arbitrator committed four extricable errors of law relating to whether it was an implied term of a lease that the lessees would have access to limited common property.  The Arbitration Act, S.B.C. 2020, c. 2, like the previous Act, allows appeals on questions of law alone provided they satisfy certain other conditions.  Two of the alleged extricable legal errors concerned whether the arbitrator implied a term based on a wrong principle; the third concerned whether the arbitrator, in interpreting the lease, allowed the factual matrix to overwhelm the words of the contract;  the fourth concerned whether the arbitrator misapplied the law of the duty of good faith by implying a term into the agreement.  On examination, Justice Bennett concluded that none of the alleged errors reflected the arbitrator’s reasoning and, further, “all of the so-called legal issues raised by the applicant, fall into the category of mixed fact and law.  I do not see any extricable question of law arising from the reasons of the arbitrator” (para. 49).   Leave to appeal was denied.

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B.C. Arbitrator’s award set aside on basis that it was “arbitrary and irrational” – #529

In Shahcheraghi v Divangahi, 2021 BCSC 1576, Justice Horsman set aside the award of an arbitrator of the Residential Tenancy Branch (“RTB”) and remitted the matter back to the RTB for a new hearing, either by the same arbitrator or someone else assigned by the RTB.  She found that the arbitrator’s reasons were inadequate for the parties to understand the rationale for the decision:

“[53]… I wish to be clear that my concern with the Arbitrator’s decision is the reasoning process, which in my view is insufficient to serve the basic function of reasons in allowing the parties to understand why the decision was reached…The point is that [certain] issues are unexplored in the Arbitrator’s decision. It is not the role of the reviewing court to re-write the Arbitrator’s reasons so as to arrive at a new rationale that might support the outcome.”

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Ontario – Partial stay; oppression claim arbitration to precede related family law action – #528

In Pezo v Pezo, 2021 ONSC 5406, the applicant Elma Pezo brought two claims: a family law claim against her spouse Kabir Pezo; and an oppression remedy claim against Kabir and his friend Hadis Kozo regarding a business they had all operated together. Kazo sought a stay of all claims against him on the basis that the parties had entered into a Shareholders’ Agreement with respect to the business that contained a mandatory arbitration clause. However, Elma argued that it was invalid because the two claims intersected and had to be heard together, but the arbitration clause did not meet the requirements for a family law arbitration set out in Ontario Regulation 134/07 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17. Justice Kraft disagreed. He found that the arbitration clause covered only the oppression remedy claims and that he had the discretion to grant a partial stay under s. 7(5) of the Arbitration Act because its two pre-conditions had been met: (a) the agreement dealt with only some of the matters in respect of which the proceeding was commenced; (b) it was reasonable to separate the matters dealt with in the agreement from other matters. He stayed the family law claims an ordered an arbitration with respect to the oppression claims to proceed before the action so that the findings of the arbitrator on issues that could affect the family law claim would be before the court.

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