Alberta – Court of Appeal reiterates policy underlying lack of appeals in arbitration matters absent agreement – #053

An application for leave gave the Court of Appeal in Rusnak v. Canyon Spring Master Builder Inc, 2018 ABCA 2 an opportunity to reiterate the policy behind the lack of an appeal.  Applicants sought to appeal a special chambers judge’s refusal to grant them leave to appeal a final award.  In refusing leave, the Court of Appeal stated that the lack of an appeal was based on a policy decision which favoured streamlining the dispute resolution process. 

Applicants contracted with Respondent for the construction of a residential home.  Their purchase agreement contained the following arbitration clause:

If any dispute arises between the Parties with respect to any matter in relation to this Agreement, the dispute shall be settled through binding arbitration in accordance with arbitration rules adopted by the Program, provided that, where the dispute is in relation to the Builder Warranty, the dispute shall not be referred to arbitration until it has first been referred to and reported on, under the conciliation procedure provided by the Program. A copy of the arbitration rules as adopted by the Program shall be furnished to the parties for the commencement of an arbitration. It is expressly agreed that the arbitration by the single arbitrator shall arbitrator (sic) shall be final and binding on the Parties.

Further to a dispute between the parties over the cost and payment of upgrades and change orders, Respondent initiated arbitration.  That process lead to a final award, described in the reasons for judgment as “extensive and detailed”, in favour of Respondent.  Some of the arbitrator’s rulings, also summarized in the reasons for judgment, demonstrate the arbitrator’s efforts to eliminate further disagreement between the parties and reduce the cost of past disagreements.

Applicants filed an “Originating Notice/Notice of Appeal” in Alberta’s Court on Queen’s Bench.  They argued that the arbitrator had rendered the award beyond the time period provided in the Rules of Arbitration, had exceeded her jurisdiction and had committed errors of law.

The parties proceeded before a special chambers judge who ruled, among other things, that:

– the Purchase Agreement constituted the full arbitration agreement between the parties;

– the Program Arbitration Rules did not form part of that agreement, providing only a set of rules and not an expansion of any of the disputes subject to arbitration; and,

– the Applicants had failed to apply for permission to appeal the award and their proceeding was irregular and struck.

Applicants filed an application for leave to appeal the special chambers judge’s order.  Madam Justice Frederica Schutz heard and dismissed the application.

Schutz JA applied section 44(2) of the Arbitration Act, RSA 2000, c A-43 which provides that if the arbitration agreement does not provide that the parties may appeal an award to the court on a question of law, a party may, with the permission of the court, appeal an award to the court on a question of law.

The parties’ arbitration agreement as produced in their purchase agreement made no provision for appeals.  Leave to appeal was required.

Schutz JA also noted that there is no appeal from a refusal to grant leave. She referred to Cooperators General Insurance Co. v. Great Pacific Industries, 1998 ABCA 272 and Sherwin-Williams Company v. Walls Alive (Edmonton) Ltd., 2003 ABCA 191.

While the reasoning and the result should not surprise commercial arbitration practitioners, the case did include excerpts from those two cases which offered a helpful reiteration of the policy behind Alberta’s domestic arbitration legislation.  Neither excerpt mentions enforcing the parties’ agreement as the key reason but focuses on the result being a policy decision which saves judicial resources and simplifies dispute resolution.

From Cooperators:

. . the policy reasons for not permitting an appeal from a refusal to grant leave by an intermediate appeal court, discussed in such cases as Western Securities and Vinogradov, apply with equal vigour to this case. Those policy reasons include the fact that the intermediate appeal court has been granted, by legislative choice, the power to screen out unnecessary or frivolous appeals. If an appeal were to lie from a refusal to grant leave, an appeal would also lie from a decision to grant leave. This would result in a multiplication of appeals, the very opposite of the result intended by the legislature. This is especially true when arbitration has been used as the primary mechanism of dispute resolution and when the Arbitration Act restricts access to the courts following an arbitral award.

From Sherwin-Williams:

I agree with those observations and add that the adoption of the interpretation advanced by the applicant could lead to an enormous drain on judicial resources. An example will illustrate. Suppose that leave to appeal an arbitrator’s award to a Queen’s Bench judge was refused. A party could apply to a single judge of this Court for leave to appeal the refusal. If successful, the refusal would be considered by a panel of three judges of this Court. If the panel concluded that the Queens’ Bench judge made a reviewable error in refusing leave to appeal, then the matter could be returned to Queen’s Bench to be heard on the merits. If leave to appeal was sought and granted by this Court from the Queen’s Bench decision on the merits, the matter would be considered again by a panel of this Court. In the end, ten judges could have been involved in the leave and appeal process. It is difficult to imagine that this result was intended by the legislature in the context of a statute designed to streamline dispute resolution.