In Flock Estate v. Flock, 2019 ABCA 194, the Alberta Court of Appeal (Mr. Justice Frans Slatter, Madam Justice Myra Bielby and Mr. Justice Thomas W. Wakeling) overturned the chambers justice’s decision to admit affidavit evidence referring to a related arbitration in respect of which the award was ultimately quashed and found to be a nullity. The Court found there was a distinction on the one hand between—the arbitrator’s opinion and ruling about what should happen in that case (which is not evidence of anything other than his personal opinion) and counsel’s submissions (which is not evidence but argument)—and on the other hand, actual evidence put before the arbitrator. The former held no probative value and was inadmissible. With respect to the latter, the Court held that the sworn testimony given by the parties during the arbitration ”might” be admissible, but that the related exhibits were presumptively inadmissible.
This case concerned a dispute about matrimonial property that was commenced in 1996. In 2002, the parties agreed to arbitrate their dispute about the division of the matrimonial property. A six-day arbitration hearing was completed in September 2003, but the Court of Queen’s Bench set aside the award arising from those proceedings.
The case remained unresolved when one of the parties, Arlene Flock, died in 2014. Litigation persisted. In deciding an application to sever the joint tenancy of the matrimonial home (i.e. the Prospect Avenue property, which the arbitration addressed as part of the matrimonial property in that matter), Mrs. Flock’s Estate filed several affidavits that referred at length to the arbitration proceedings. Mr. Flock brought an application to strike out portions of the affidavits that referred to the arbitration, arguing that the arbitration award had been found to be a nullity. The chambers justice dismissed that application, finding that the arbitration proceedings might be relevant to the parties’ intentions relating to the matrimonial home, and further, because Mrs. Flock was deceased, it was also “necessary” to allow this hearsay evidence.
The Alberta Court of Appeal disagreed. It found that “[i]f the arbitration award had ultimately been upheld, it would be binding on both parties”, but “[s]ince the award was struck, it was ineffectual in crystallizing the interests of the parties” (para. 25). The Court held that the award itself was therefore not relevant and inadmissible, explaining:
[25] … Why it was struck, and whether it is a “nullity” is of little consequence. Having been struck, it has no bearing on the rights of the parties, and is irrelevant: Bobolas v Economist Newspaper Ltd., [1987] 1 WLR 1101 at p. 1105 (CA); Liu v Borden Ladner Gervais LLP, 2018 BCSC 2049 at para. 43. It is highly unlikely that anything in the decision would be admissible as evidence: Marthaller v Lansdowne Equity Venture Ltd., 1997 ABCA 258 at paras. 47-8, 52 Alta LR (3d) 329, 200 AR 226. The arbitrator’s opinion and ineffectual ruling about what should happen to the Prospect Avenue property is not evidence of anything other than his personal, and ultimately ineffective opinion
Counsel for Mrs. Flock’s Estate argued that it did not rely on the quashed findings of the arbitrator, but on some of the arguments made to the arbitrator to demonstrate the intentions of the parties with respect to matrimonial home. The Court answered that “[e]ven if the ‘intentions’ of the parties are directly or indirectly relevant, the arguments of counsel made to the arbitrator are not evidence of anything other than the party’s litigation position at the time” (para. 28). The Court confirmed that “counsel do not give evidence, and what counsel may argue has no probative value” (para. 29). Moreover, “absent any evidence of a binding admission, the arguments made to the arbitrator are closer to a form of pleading than anything else” (para. 29).
Finally, the Court found that while the sworn testimony given by the parties during the arbitration ”might” be admissible, the arbitrator’s recitation of the evidence before him is hearsay.
Thus, the Court of Appeal found that the chambers justice erred in finding that the arbitration materials were admissible. It held that all of the paragraphs in the affidavits relating to the award, counsels’ submissions during the arbitration, and the related exhibits were presumptively inadmissible and should be struck.
Contributor’s note:
The parties subsequently disagreed on the interpretation of the 2019 decision. Mrs. Flock’s Estate continued to include affidavit evidence that Mr. Flock argued ought to have been struck. In a preliminary application (Flock v. McKen, 2020 ABQB 744) to decide on the admissibility of portions of the Estate’s affidavits and brief for the severance application, the Court of Queen’s Bench rejected Mr. Flock’s position that the Court of Appeal intended that all references to the arbitration proceedings must be struck from the affidavit (para. 27).