In Stuve v. Stuve, 2020 ABCA 467, Alberta’s Court of Appeal upheld a chambers judge’s refusal to order the parties to engage in binding arbitration, agreeing that a judge has no jurisdiction to impose private arbitration without consent of the parties or an agreement to that effect. The Court held that “[s]pecific legislative language would be required for the court to have the power to require parties to participate in an extra judicial private process such as arbitration”. Neither the Alberta Rules of Court, Alta Reg 124/2010 or the Arbitration Act, RSA 2000, c A-43 empowered the judge to do so. “The parties commenced litigation in the publicly funded courts, and are entitled to access to court processes to resolve their dispute. Citizens have a right to access to the court, which is the public dispute resolution institution”.
S and G engaged in (i) family law litigation involving matrimonial property and spousal support and (ii) civil litigation regarding distribution of corporate assets held through two (2) corporate entities, one of which owned commercial property and another which provided services.
Though the family law litigation had been instituted earlier in April 2015, S and G eventually held it in abeyance pending resolution of the civil action commenced in January 2018. The abeyance arose after the court dismissed S’s application to join the civil action with the matrimonial property action.
In 2019, S and G had agreed to binding judicial dispute resolution, presided by the Associate Chief Justice (“ACJ”), to address unresolved issues in both actions. Due to COVID-19, S and G did not finalize or sign terms for the judicial dispute resolution and the judicial dispute resolution was cancelled.
G wanted to proceed under the terms of a binding judicial dispute resolution before the ACJ. S sought “an expeditious resolution” and proposed arbitration. G refused. S responded with an application to the court under Rule 4.16 of the Alberta Rules of Court, Alta Reg 124/2010 (“Rules”) for an order directing the parties to engage in private arbitration.
Sitting as chambers judge, Madam Justice Doreen A. Sulyma dismissed S’s application. Sulyma J.’s reasons were not posted online at the time of this note but the Court of Appeal at para. 14 of its own reasons outlined the key lines of Sulyma J.’s reasoning. Sulyma J. noted that “there was no urgency, no consent, and no contractual provision that bound the parties to submit to arbitration or mediation so as to allow her to direct them to arbitration”. Her reasons included the determination that “by definition, arbitration is either contractual or at least voluntary”.
S appealed, arguing that Sulyma J. erred in refusing to direct them to arbitration.
Standard of review – The parties agreed that the appeal involved interpretation of Rule 4.16 and was therefore a question of law. Referring to Housen v. Nikolaisen, 2002 SCC 33 (CanLII), [2002] 2 SCR 235 para. 8, the Court held that the standard of review was correctness.
“[8] On a pure question of law, the basic rule with respect to the review of a trial judge’s findings is that an appellate court is free to replace the opinion of the trial judge with its own. Thus the standard of review on a question of law is that of correctness: [Honourable R. P. Kerans in Standards of Review Employed by Appellate Courts (1994)], supra, at p. 90”.
Applicable legislation – The Court reproduced the provisions of Rules 1.2, 1.4 and 4.16 and Rule 4.16’s amendments, as well as sections 2(1), 37, 44, 45 and 49(7) of Alberta’s Arbitration Act, RSA 2000, c A-43, identifying them as applicable to the appeal.
Rule 4.16 contains six (6) paragraphs but only (1) and (4) are reproduced here.
“Rule 4.16(1) The responsibility of the parties to manage their dispute includes good faith participation in one or more of the following dispute resolution processes with respect to all or any part of the action:
(a) a dispute resolution process in the private or government sectors involving an impartial third person;
(b) a Court annexed dispute resolution process;
(c) a judicial dispute resolution process described in rules 4.17 to 4.21;
(d) any program or process designated by the Court for the purpose of this rule”.
“Rule 4.16(4) A case management judge or a case conference judge may, on application or on the Court’s own motion, by order direct that the parties participate in a dispute resolution process”.
Submissions by the Parties – Before undertaking its own analysis, the Court set out the arguments by each of the parties.
S argued that “aside from criminal matters, there is no fundamental right to a trial by a judge, nor is such a right found in the Rules of Court” and that “the combined effect of the Rules, court pronouncements, and lack of right to trial by a judge, dictates that a court has the ability to order parties to arbitration”.
Her additional arguments covered broader grounds.
“[25] [S] relies on the court announcement that accompanied the amendment to rule 4.16 to the effect that arbitrators are independent decision makers appointed by contract to settle a dispute, as an implicit endorsement of arbitration as a process contemplated by rule 4.16 as amended. She argues that the Arbitration Act provides that a matter can be referred to arbitration under “an enactment” (s 1(3)), which includes the Rules of Court; that the Arbitration Act provides for the full panoply of fair hearing processes, including rights of appeal and review (s 44 and s 45); and that arbitration is well suited to family law, especially the timely and cost-effective resolution of disputes. The need for speedy resolution and the delays inherent in family law litigation, overburdened courts, and impacts of Covid support the use of private arbitration as a dispute resolution method. [S] argues the chambers judge’s failure to consider these arguments is an error of law.
[26] Finally, [S] says a court order for arbitration does not mean the court delegates its decision-making authority. Under the Arbitration Act, an arbitrator makes an “award”, not a “judgment”. The court maintains final oversight of the award made by an arbitrator by virtue of s 49 of the Act, specifically, s 49(7) that provides the court with authority to vary the arbitral award remedy if the award has provided a remedy that the court does not have jurisdiction to grant or would not have granted in a proceeding based on similar circumstances”.
In response, G argued that, absent consent or an agreement, the court has no jurisdiction to order parties to engage in arbitration. G added that Rule 4.16 makes no reference to arbitration and, if it did purport to authorize an order to send parties to arbitration, that wording would have been specific. TG argued that the “structure” of the Rules contains no support for court-ordered arbitration and the Arbitration Act confers no jurisdiction on the court to direct parties to arbitration.
The parties’ submissions also addressed whether, in ordering arbitration, the court was effectively delegating its authority. G argued that “the court cannot delegate its authority to a third party unless clearly authorized to do so by legislation, especially bearing in mind arbitration may be cost prohibitive”. S replied, claiming that “ordering the parties to arbitration is not an impermissible delegation of authority since she does not seek binding arbitration, and under the Arbitration Act, the court maintains oversight of arbitral awards under s 49”.
The Court of Appeal dismissed S’s appeal across each of the grounds raised. The Court found no support in the Rules authorizing a judge to order arbitration without consent of both parties.
“The Rules of Court do not provide that a chambers judge has the authority to order that parties to litigation participate in private arbitration, absent consent of both parties or an agreement that it do so. The Rules are premised on the assumption that parties have engaged the court litigation process. Foundational rule 1.2, as argued by [S], does contemplate resolution “in or by a court process””.
The Court found no support in the foundational Rule 1.2 which contemplated resolution “in or by a court process”, adding that “[r]esolution by private arbitration is not resolution “in or by a court process””.
Rules 4.16(3) and 4.16(4) combine to authorize a court to refer the parties to non-binding dispute resolution but not the form sought by S.
The Court also found no support in section 49(7) of the Arbitration Act. That provision applies when a court, enforcing an award, determines that a remedy contained in the award is not one which it can grant and, therefore, authorizes the courts to reframe remedies or remit the award to the arbitrator with the court’s opinion. “Section 49 is neither intended nor designed to facilitate court ordered arbitration of litigation while leaving the court with the ultimate authority to decide the dispute”.
The Court referred to Durocher v. Klementovich, 2013 ABCA 115, one of its earlier decision in which addressed “whether the court has power to direct arbitration absent consent”.
“[15] The appellant objects to this last provision, arguing that the trial judge has no jurisdiction to impose binding arbitration on the parties without their consent. The appellant refers to Practice Note 7, which specifically provides in para. 37.C that the Court can “delegate decision-making to a Parenting Expert . . . where both parties to the action have consented.” The Practice Note obviously requires the consent of the parties because it is a principle of access to justice that the parties can bring any dispute they may have to the Court. The Court has the jurisdiction to resolve those disputes, and it would be extraordinary to decline to decide, much less to compel the parties to submit to a private adjudicator: Zacks v Zacks 1973 CanLII 137 (SCC), [1973] SCR 891 at pp. 906-7; Mainfroid v Mainfroid, 1926 CanLII 232 (AB CA), [1926] 3 WWR 617 at p. 618, [1926] 4 DLR 1060 (Alta SC, App Div). The power to grant corollary relief given by the Divorce Act, RSC 1985, c. 3 (2nd Supp.) to a “court of competent jurisdiction”, does not permit the delegation of that power to private arbitrators. An obligation to submit to arbitration must be founded in a statute or an agreement: Sport Maska Inc. v Zittrer, 1988 CanLII 68 (SCC), [1988] 1 SCR 564 at p. 588”.
The Court set the bar clearly for cases in which legislation would authorize such authority to impose alternative dispute resolution on parties and also raised a constitutional issue.
“[38] Specific legislative language would be required for the court to have the power to require parties to participate in an extra judicial private process such as arbitration. Further, delegation of the court’s decision-making jurisdiction to a non-section 96 court raises constitutional concerns: Zacks v Zacks, 1973 CanLII 137 (SCC), [1973] SCR 891”.
The Court underlined the right of litigants to access publicly funded dispute resolution.
“[39] The parties commenced litigation in the publicly funded courts, and are entitled to access to court processes to resolve their dispute. Citizens have a right to access to the court, which is the public dispute resolution institution. [S] has provided no authority to support the proposition that the court can order the litigants to arbitration”.
The Court added that the current COVID-19 situation altered none of the above reasoning.
“[40] Of course, neither the exigencies of the pandemic nor the shortage of judicial resources provides the jurisdiction to the courts to delegate their authority to decide lawsuits commenced under the Rules of Court to private arbitration, absent legislative authority to do so”.
The Court then turned to S’s argument that, on the facts of S’s and G’s particular circumstances, they had already waived their right to a trial before judge. By agreeing to binding judicial dispute resolution, S argued that S and G had effectively removed concerns for the court to impose arbitration on them.
“[S] argues that even if the court has no jurisdiction to order arbitration without consent, the concerns about ordering arbitration disappear where the parties have opted out of the court process and agreed to binding judicial dispute resolution as they have waived their right to trial and any right to appeal. Further, a binding judicial dispute resolution judge is not acting as a judge: she is not bound by the rules of evidence, nor subject to oversight by the courts or by appeal, nor bound by the rules of natural justice and so a binding judicial dispute resolution cannot be ordered. Here, the parties already agreed to opt out of quasi judicial processes. In essence, says [S], a binding judicial dispute resolution judge is acting as an arbitrator”.
Again, the Court disagreed, underlying a key distinction regarding the judicial dispute resolution conducted before the ACJ in the Rules.
“First, it is incorrect to suggest that a judge acting in her capacity as a judicial dispute resolution judge is an arbitrator. This is a judicial dispute resolution process, a judge is involved in judicial duties, and it is resolution of the dispute in or by a court process that is required under rule 4.16. Second, it is incorrect to suggest that because the parties have agreed to a binding judicial dispute resolution, they have given up their entitlement to court processes, so the judge can order a private third party to resolve the dispute”.
S argued that an earlier decision, Hasham v. Kanji, 2020 ABCA 283, qualified as precedent in favour of ordering arbitration but the Court distinguished its application and its reasoning. The Court limited that decision to an issue of security for costs to challenge the order made in chambers and not an endorsement of the authority purportedly exercised in chambers.
The Court dismissed the appeal, determining that Sulyma J. was correct in determining that the Rules did not authorize a Court of Queen’s Bench judge to order private arbitration of disputes without consent of the parties or an agreement.
No costs were ordered. “Given that the court record does suggest that mediation/arbitration was ordered in [Hasham v. Kanji, 2020 ABCA 283], and counsel genuinely sought an answer to the jurisdiction question as a matter of practice and law given limited court resources, each party will bear its own costs”.
urbitral notes – First, New Brunswick legislation provides that a judge of New Brunswick’s Court of Queen’s Bench can serve as arbitrator for questions involving compensation required to be paid under that province’s Expropriation Act, RSNB 1973, c E-14.
See the earlier Arbitration Matters note “Justice of the court serves as statutory arbitrator in land expropriation dispute” regarding McMackin v. Village of Salisbury, 2019 NBQB 99. In that case, Mr. Justice George S. Rideout served as arbitrator under the provisions of the Expropriation Act to resolve a dispute between a landowner and a municipality in New Brunswick following the latter’s expropriation of part of the land. Despite its “arbitration” label, the process set out in the legislation and Rideout J.’s reasons appears indistinguishable from a court proceeding. Without more information, the “arbitration” set out in the legislation does not qualify as an ‘alternative’ to dispute resolution offered by the court.