In 719491 Alberta Inc v Canada Life Assurance Company, 2021 ABCA 419, a three-member panel of the Court of Appeal of Alberta denied the applicant’s requests (i) for permission to appeal the chambers judge’s order refusing leave to appeal the arbitration award (the “Leave to Appeal Request”)and (ii) for permission to appeal the chambers judge’s dismissal of its application to set aside the award (the “Set Aside Request”). As a preliminary matter on the Leave to Appeal Request, the applicant asked the Court to reconsider its previous decision in Sherwin-Williams Company v. Walls Alive (Edmonton) Ltd., 2003 ABCA 191(“Sherwin-Williams”), which held that leave to appeal decisions are not appealable to the Court of Appeal under s. 48 of Alberta’s Arbitration Act, RSA 2000, c A-43 (the “Arbitration Act”). Section 48 provides, in relevant part, that an appeal from the decision of the Court of Queen’s Bench on an appeal of an award (s. 44) may be made to the Court of Appeal with leave. However, based on the case law on the test for leave to reconsider a previous decision, which includes whether the decision has some “obvious, demonstrable flaw,” the Court denied leave and ruled that it did not have jurisdiction to hear the Leave to Appeal Request. The Court similarly rejected the applicant’s Set Aside Request based on the finding that the chambers judge did not err in holding that the arbitrator did not exceed his jurisdiction.
The case arose in the context of a commercial landlord and tenant dispute over the value of land, which determined the annual rent under the parties’ 99-year ground lease. 719491 Alberta Inc. (the “Tenant”) and The Canada Life Assurance Company (the “Landlord”) went to arbitration. The arbitrator determined that the “Land Market Value,” as defined in the lease, was $20,850,000. The Tenant applied to Alberta’s Court of Queen’s Bench pursuant to the Arbitration Act (i) to set aside the award under s. 45(1)(c) [the award deals with a matter that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the arbitration agreement], or, in the alternative, (ii) for leave to appeal the award on a question of law under s. 44(2) [leave to appeal may be permitted on a question of law].
With regard to s. 45(1)(c), the Tenant argued that the arbitrator had exceeded his jurisdiction by failing to give effect to a “clear admission” in both parties’ pleadings that the lease created an income-sharing arrangement as opposed to landlord and tenant relationship.
Under s. 44(2), the Tenant argued that the arbitrator made several errors of law, including a failure to consider certain surrounding circumstances in interpreting the lease, misinterpreting certain legal restrictions in determining the appropriate Land Market Value, and failing to interpret the lease in a commercially reasonable manner.
The chambers judge concluded that the arbitrator did not commit any error of law and did not exceed his jurisdiction, and thus dismissed the Tenant’s application in its entirety.
The Leave to Appeal Request – The Court denied permission to reconsider the Court’s earlier decision of Sherwin-Williams, which held that s. 48 of the Arbitration Act does not bestow the Court with jurisdiction to hear an application for permission to appeal where the Court of Queen’s Bench has refused to grant leave to appeal. Section 48 provides that “[a]n appeal from the Court of Queen’s Bench decision under section 44, 45 or 47 may, with the permission of a justice of the Court of Appeal, be made to the Court of Appeal.”
The Court cited with approval Justice Costigan’s observation in Sherwin-Williams that to allow appeals of leave to appeal decisions would “lead to an enormous drain on judicial resources” as illustrated by the following example (at para. 38):
“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.”
As a result of declining to reconsider Sherwin-Williams, the Court ruled that it had “[74] … no jurisdiction to hear [the Tenant’s] application for permission to appeal the chambers judge’s refusal to grant leave to appeal the award under s. 44(2).”
The Set Aside Request – The Court outlined the test for permission to appeal the chambers judge’s refusal to set aside the award, as set out in ENMAX Energy Corporation v TransAlta Generation Partnership, 2020 ABCA 68 at paragraphs 21-22. The test is:
- whether the question is reasonably arguable;
- whether deciding the question is likely to affect the result of the litigation;
- if the answer is likely to be of interest to others or likely to influence later suits; and,
- whether there is any independent reason not to re-litigate the question or limit the scope of the appeal (the “ENMAX Test”).
Regarding the first part of the ENMAX Test, whether the question is reasonably arguable, the Tenant alleged that in finding that the parties’ legal relationship was that of a landlord and tenant as opposed to an income-sharing arrangement, the arbitrator decided “[78] … a different dispute than the one that was before him and he therefore exceeded his jurisdiction.” In relying, in part, upon the Supreme Court of Canada’s decision in Desputeaux v Éditions Chouette (1987) inc, 2003 SCC 17 at paragraph 35 for the proposition that the arbitrator’s mandate should be given a liberal interpretation and includes issues with a close nexus to the primary dispute between the parties, the chambers judge ruled that the arbitrator did not make a jurisdictional error in his characterization of the parties’ relationship.
Based on its review of the parties’ arbitration agreement and pleadings, and the reasons of the chambers judge, the Court found “[84] … no arguable merit to the question of whether the chambers judge erred in finding that the arbitrator’s decision did not go beyond the scope of the issues to be determined.”
The Court then briefly considered the remaining factors of the ENMAX Test (para 85), and dismissed the Tenant’s Set Aside Request “[86] … for permission to appeal on the question of whether the chambers judge erred in finding that the arbitrator did not exceed his jurisdiction.”
Contributor’s Notes:
First, the relevant sections from Alberta’s Arbitration Act referred to by the Court are as follows:
Appeal of award
44 (2) 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.
Setting aside award
45(1) On a party’s application, the court may set aside an award on any of the following grounds:
…
(c) the award deals with a matter in dispute that the arbitration agreement does not cover or contains a decision on a matter in dispute that is beyond the scope of the agreement;
Further appeal to Court of Appeal
48 An appeal from the Court of Queen’s Bench decision under section 44, 45 or 47 may, with the permission of a justice of the Court of Appeal, be made to the Court of Appeal.
This case highlights a significant difference between the domestic and international arbitration acts of Canada’s provinces and territories. In addition to providing for the setting aside of awards, domestic arbitration acts allow for awards to be appealed – typically on questions of law and with leave of the court. In contrast, under international commercial arbitration acts no appeals are allowed. By way of contrast, the only recourse provided against international awards is the setting aside of the award for procedural or jurisdictional irregularities (see Article 34 of the Model Law on International Commercial Arbitration, which has been incorporated in every international arbitration act across Canada).
Second, with respect to the Tenant’s arguments to reconsider Sherwin-Williams, the “bulk” of its submissions related to arguments that the decision contains “[56] … several obvious, demonstrable flaws.” While the Court rejected these arguments, its following reasons are noteworthy:
[61] The Tenant also argues that when the legislature intends to oust this Court’s jurisdiction it does so with clear limiting language, which is absent in s. 48. It points to five sections of the Arbitration Act–ss. 7(6), 10(2), 15(6), 16(4) and 17(10)–as examples of express language prohibiting appeals from decisions of the Court of Queen’s Bench. The language in those sections is “there is no appeal from the court’s” decision. It says by choosing not to include such language in s. 48, the legislature must not have intended to limit the decisions under s. 44 which could be appealed to this Court. Therefore, when the Court of Queen’s Bench denies leave to appeal, that determination can be further appealed to this Court with leave.
…
[63] While the Tenant is correct that those other sections of the Arbitration Act provide an express prohibition on appeals from certain decisions of the Court of Queen’s Bench, the fact that Costigan JA did not consider this argument in Sherwin-William is not an obvious, demonstrable flaw providing a basis for this Court to reconsider the decision.
[64] Express reference to there being “no appeal” may be necessary under those provisions which do not involve an initial application for permission to appeal to the Court of Queen’s Bench. However, given the long-standing rule that there is no appeal from an intermediate appellate court’s refusal to grant leave to appeal, it may not be necessary to include such express language in s. 48 in respect of appeals under s. 44.
…
[67] … [quoting Calgary (City) v Resman Holdings Ltd, 2016 ABCA 81 para 33] Because the Legislature has expressly provided that a judge of the Court of Queen’s Bench must determine whether permission to appeal should be granted and has not provided for an appeal of such a decision to [the Court of Appeal], [the Court of Appeal] lacks jurisdiction to do so.” …
[68] Section 44(2) of the Arbitration Act similarly provides that a judge of the Court of Queen’s Bench is to determine whether permission to appeal an arbitrator’s award should be granted pursuant to s. 44(2). Although s. 48 sets out the matters over which this Court has jurisdiction, it does not provide for an appeal of the Court of Queen’s Bench’s refusal to grant leave to appeal. …
[69] Finally, the Tenant argues that Sherwin-Williams failed to consider the important error-correcting and law-settling functions of this Court. It says Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 confirms that legislatures intend and expect that courts assigned appellate responsibility will discharge that function. However, “that function” must be exercised in the context of the authority of this Court. This Court is a statutory court that must act within the jurisdiction granted to it.
[70] To conclude, there is no obvious, demonstrable flaw in Sherwin-Williams that would justify this Court reconsidering the decision.“