In Giacchetta v Beck, 2024 ABKB 481 (CanLII) (“Giacchetta”), the Court held, in the context of an arbitration conducted under Alberta’s Arbitration Act, RSA 2000 c A-43 (the “Act”), that it is an error of law for an arbitrator not to consider all the evidence. Here, the arbitrator stated that he had rendered his award without considering all the evidence and said that, “there may have been an obligation on my part to have requested a copy once I realized that I did not have it…”. This resulted in a finding that the arbitrator’s reasons were insufficient, which also amounted to an error in law.
The dispute –After the parties’ common law relationship ended, they entered into an arbitration agreement that allowed for appeals on errors of law only. Section 44(1) of the Act permits the court, when the arbitration agreement so provides, to hear appeals of arbitration awards on questions of law, questions of fact or questions of mixed law and fact. As the arbitration agreement in this case limited appeals to questions of law, only errors of law were subject to appeal.
The parties filed separate appeals of the award, which were heard together. The Husband’s appeal alleged that the arbitrator had erred in law by failing to review all the materials provided and failing to give reasons. These arguments were based in part on the fact that the arbitrator did not review the Husband’s affidavit of records, although it was sent to opposing counsel and it was referenced in the Husband’s affidavit. This was clear from an e-mail sent by the arbitrator, in which he admitted that he had issued his award without having this evidence:
“The absence of this affidavit in my own file appears to be related to a change in counsel and an innocent omission. In that sense, I believe the affidavit of records was properly brought into evidence by Bruce. Since I cannot find it in my file, there may have been an obligation on my part to have requested a copy once I realized that I did not have it…”
The decision – The Court found that appeals pursuant to s. 44(1) of the Act are subject to the appellate standard of review. The Court therefore applied the standard of correctness to the questions of law it considered, in line with the decision of the Alberta Court of King’s Bench in Esfahani v Samimi, 2022 ABKB 795 (CanLII), which held, post Vavilov, that the standard of review for appeal of arbitral awards on issues of law is correctness (paragraph 85).
The Court considered what constituted an error of law, relying on Housen v. Nikolaisen, 2002 SCC 33 (CanLII) at paragraph 36:
“Where, for instance, an error with respect to a finding of negligence can be attributed to the application of an incorrect standard, a failure to consider a required element of a legal test, or similar error in principle, such an error can be characterized as an error of law, subject to a standard of correctness.”
The Court also relied on Ball v. Imperial Oil Resources Limited, 2010 ABCA 111 (CanLII) at paragraph 28, where the Court held that coming to a conclusion on the basis of no evidence, or failing to consider relevant evidence, amounts to an error of law. The Court therefore concluded that the arbitrator committed an error of law by issuing his award without having reviewed all the evidence.
Satisfied that the failure to consider all the evidence of the record constituted an error of law, the Court evaluated whether the arbitrator had done so. The Court noted that the arbitrator himself said that he had issued the award without having reviewed the records included in the affidavit of records. The Court further noted that, even if affidavits of records do not in an of themselves constitute evidence in court, “this is not always true in the context of arbitration where the rules of evidence need not be strictly adhered to”.
The Court also rejected the Wife’s argument that a distinction should be made between relevant evidence and irrelevant evidence, finding that since the entire affidavit of records was missing, some relevant evidence was necessarily included in the evidence not considered it would, “at a minimum, create a situation where the trier of fact does not know what they have missed and is unable to assess what evidence is relevant or not”.
The Court held that the failure to consider evidence was intertwined with the failure to give sufficient reasons. The arbitrator’s reasons relating to two issues were not sufficient to permit a review on appeal, which amounted to an error of law. The Court stated that this was “perhaps not surprising” as the arbitrator had not reviewed the entirety of the affidavit of records.
The Court set aside the award on merits (and the subsequent cost award) and directed that the matter proceed through arbitration again before a different arbitrator. The Court directed that the same record submitted to the arbitrator be submitted to the new arbitrator, with no additional evidence and no updated briefs, unless specifically requested by the new arbitrator.
Contributor’s Notes:
The analysis of the Court on the sufficiency of reasons centered mainly, not on the arbitral award itself (which the Court otherwise described as providing “sufficiently intelligible reasons for many portions of his analysis”), but on statements made by the arbitrator in which he mused about the affidavit of records that “there may have been an obligation on my part to have requested a copy once I realized that I did not have it”.
The arbitrator’s own confirmation that he did not review or even have some of the evidence submitted by one of the parties in his files was fatal to the award in this case. The Court concluded that it was obviously not possible in the circumstances for the arbitrator to know whether some of the missing evidence had an impact on his analysis. Absent direct statements from arbitrators establishing such a failure as in this case, it will likely be hard for parties to establish that an arbitrator failed to “consider the entirety of record”.
Interestingly, the Court did not refer to Subsection 38(1) of the Act, which is also found in other Canadian provinces and is inspired by the UNCITRAL Model Law, requiring arbitrators to “state the reasons on which (the award) is based”. Still, this case is helpful to define the standard for sufficiency of reasons in Canada in that the Court confirmed that failure to “consider the entirety of the record” constitutes an error in law’ The failure resulted in delay and additional costs – not even connected to the appeals- to the parties.