In Schreiner v Vistas at Callaghan Ltd, 2022 ABQB 472, Justice Davidson dismissed an application for leave to appeal an arbitral award, in part, on the basis that the issue raised by the applicant was a matter “squarely before the arbitrator” and was decided by her. Section 44(3) of the Alberta Arbitration Act, RSA 2000, c A-43 provides that no appeal lies on a question of law expressly referred to the arbitrator.
The Homeowner and Builder entered into a building contract, which contained two warranties: a limited one-year warranty against “Defects” (as defined in the Warranty Certificate provided by the Builder); and a limited four-year warranty against “Structural Defects” (also defined in the Builder’s Warranty Certificate) provided by the Alberta New Home Warranty Program. The Homeowner took possession of the home on September 27, 2012, and made claims under the Structural Warranty on August 24, 2017. A dispute arose out of claims made by the Homeowner under the Alberta New Home Warranty Program, which a Claims Assessor for the Program concluded did not fall within the Structural Warranty.
The arbitration – On October 17, 2017, the Homeowner commenced an arbitration under the terms of the building contract and an arbitrator was appointed. The arbitrator asked the parties to provide a final list of issues for arbitration on July 15, 2018.
In May, 2019, the Homeowner and the Program agreed to resolve some of the Homeowner’s warranty claims and signed a Release. Thereafter, the Homeowner took the position that she still had the right to pursue by arbitration some of the claims that had been initially advanced under the Structural Warranty but which had not been accepted as Structural Warranty Claims. The Homeowner advanced them as against the Builder as general Contractual Claims. The arbitrator directed the Homeowner to provide a list of the remaining issues, which she did on November 22, 2019.
The arbitrator found that she had the jurisdiction to decide the Contractual Claims, but found that they were out of time. In addition, the arbitrator found that the Release signed by the parties was broad enough to relieve the Builder from any liability for the Contractual Claims – it was not until after the Release was signed that the Homeowner re-characterized her unsuccessful Structural Warranty Claims as general Contractual Claims.
The leave to appeal application – The Homeowner sought leave to appeal the arbitrator’s award on two grounds. First, she argued that the arbitrator failed to consider s. 6 of the Alberta Limitations Act, R.S.O, c L-12. It provides that, where the current claim was made part of a prior claim, the limitation period does not foreclose the litigation of that claim in subsequent litigation. The Homeowner’s position was that the Contractual Claims had been advanced earlier in the proceedings, even if they were then characterized as claims covered under the Structural Warranty. Second, the Homeowner argued that the arbitrator erred in her interpretation of the parties’ intention when they signed the Release. Specifically, she asserted that the parties had conversations prior to the signing of the Release to the effect that the Contractual Claims would not be released in the settlement of the Warranty Claims.
The Builder opposed the leave application on the grounds that: the application should be dismissed because the Homeowner had not served a record; the limitation period for the Homeowner’s claims was a matter placed directly before the arbitrator and was therefore immune from judicial review pursuant to s.44(3) of the Alberta Arbitration Act, RSA 2000, c A-43; and that the issue of the construction of the Release was a matter of mixed fact and law and not subject to appeal under s. 44(2) of the Arbitration Act.
Justice Davidson noted that the arbitration agreement did not provide the parties with the right to appeal the award. Therefore, the Homeowner was permitted to appeal the award only on a question of law under the Act.
Justice Davidson found that the absence of an application record was not fatal to the Homeowner. Rules 3.15-3.16 of the Alberta Rules of Court, Alta Reg 124/2010, set out the procedural rules that apply to originating applications for judicial review; however, he concluded that those rules do not apply to a statutory appeal, therefore, the general rules of procedure govern. Further:
“[18] Even if the rules for judicial review do apply to a statutory appeal, an application for leave to appeal is not the same as an appeal: see Esfahani v Samimi, 2022 ABCA 178. A party applying for leave does not need to submit the evidence that would be required on appeal. A bifurcated process is called for in the Arbitration Act. The parties should not be required to produce the documentation for a full appeal simply to seek leave. To require the parties to fully prepare for and the Court to finally resolve the issue of the appeal at first instance would not promote an efficient and economical determination of the threshold question of leave”.
However, Justice Davidson dismissed the Homeowner’s application for leave to appeal on the limitation period issue. The issue of whether the Contractual Claims were brought within the prescribed limitation period was a matter squarely before the arbitrator and was decided by her. Section 44(3) of the Arbitration Act provides that no appeal lies on a question of law expressly referred to the arbitrator. In addition, whether the Arbitrator correctly applied the law to the facts found was not subject to appeal as it was a question of mixed fact and law; the arbitration agreement did not provide for an appeal on a question of mixed fact and law.
Justice Davidson also dismissed the Homeowner’s application for leave to appeal on the Release issue. The interpretation of the Release was a matter of mixed fact and law, not a question of law. Therefore, no appeal was permitted under the Arbitration Act.
Editor’s Notes:
First, the Alberta Arbitration Act is the only Canadian arbitration legislation that contains the extra hurdle found in s. 44(3), that provides that a “party may not appeal an award to the court on a question of law that the parties expressly referred to the arbitral tribunal for decision”. Commentary on s. 44 is to the effect that even though s. 44(3) is to be narrowly interpreted (to prevent appeals only on the discrete questions expressly put to the arbitrator), it makes an already difficult task to obtain leave to appeal almost impossible. In a 2013 report, the Alberta Law Reform Institute recommended its repeal, in part, on the basis that it was an infringement on party autonomy because the section applies even where the parties’ arbitration clause allows for an appeal on a question of law. The recent Alberta Court of Appeal decision in Esfahani v Samimi, 2022 ABCA 178, refers to this provision but does not comment upon it.
Second, Esfahani v Samimi, 2022 ABCA 178 has been frequently cited on a procedural issue since it was released earlier this year. Essentially, it finds that an application for leave to appeal must be heard separately and before an appeal; the two cannot be heard together. This is not the practice in all provinces (Ontario, for example). For a recent Case Note on this decision see: Appeal process under s. 44(2) of the Arbitration Act clarified – #623.