Alberta – refusal to adjourn hearing respects due process if recognition/enforcement conditions present – #351

In Pearson v. Pearson, 2020 ABCA 260, Alberta’s Court of Appeal distinguished between discretion to grant/refuse an adjournment and discretion which raises issues of procedural fairness. Deference is owed “generally” to the former, provided discretion is exercised judicially and sufficient weight given to all relevant considerations.  The latter raises the question of whether due process was followed and attracts no deference.  Despite disagreement whether a party had counsel of record and that party’s choice not to be ‘present’, the Court held that the party seeking adjournment suffered no prejudice because all the conditions in section 49 of the Arbitration Act, RSA 2000, c A-43 were ‘present’ and “there was no reason to think the outcome would have been different had an adjournment been granted”.

CM and KL, former spouses, had agreed to mediate and arbitrate (i) spousal support and (ii) division of matrimonial property.  Mediation led to an agreement on property division, the terms of which were incorporated into an August 7, 2019 consent award, corrected August 30, 2019.  Their disputes over spousal support went to arbitration, resulting in an August 30, 2019 award, corrected September 13, 2019 (“Award”).

Following receipt of the Award, KL consulted other counsel for an opinion and, eventually, switched from counsel who represented him during the mediation and arbitration (“Former Counsel”) to new counsel (“New Counsel”).  The Court’s reasons set out (i) the give-and-take between New Counsel and Former Counsel regarding access to and use of the file constituted by Former Counsel to represent KL and (ii) exchanges between both sets of KL’s counsel and CM’s counsel.  In both sets of exchanges, counsel disputed the status of New Counsel as “Counsel of Record” given specific provisions of Alberta Rules of Court, Alta Reg 124/2010 and the effect of the ‘unfiled’ Notice of Withdrawal of Lawyer of Record and the extent of Former Counsel’s consent to New Counsel to act and use Former Counsel’s file to represent KL pending resolution of the solicitor’s lien held by Former Counsel.

During the course of these exchanges which took place between October 2 and December 17, 2019, the thirty (30) day period in which to appeal the Award set out by section 46(1) of the Arbitration Act expired.  KL did not file any appeal or application for leave to appeal.

On November 22, 2019, CM’s counsel filed an application to enforce the Award under the Arbitration Act, RSA 2000, c A-43 (“Application”).  CM’s Application was scheduled for hearing December 18, 2019. On December 16, 2019, New Counsel advised CM’s counsel that he wished to appeal the Award.  Between those dates, counsel continued to exchange along the lines described above and New Counsel advised that he sought an adjournment.  CM’s counsel indicated a willingness to consent to a brief adjournment provided KL agreed to adhere to certain payment obligations. KL refused that condition.

At the December 18, 2019 hearing on CM’s Application, New Counsel attended but KL did not.  Purporting to act as amicus curiae, New Counsel applied for an adjournment.  New Counsel also argued, in some respects, the substance of the appeal but objections by CM’s counsel cut short the argument.  See paras 40-43. The chambers judge refused the adjournment and granted CM’s Application to register the Award as an order stating that “none of the conditions that are required to not register these are present”.

On appeal, the Court of Appeal upheld the chambers judge’s orders.

Deference – Referring to Fleming v. Fleming, 2016 ABCA 88 para. 8 and 1038055 Alberta Ltd v. Khatri, 2014 ABCA 421 para. 5, the Court observed that, in general, a decision to grant or refuse an adjournment is a question of discretion and entitled to deference.  Intervention is unwarranted provided the discretion is exercised judicially and sufficient weight given to all relevant considerations. That said, the Court qualified that deference, specifying that “issues of procedural fairness raise the question of whether due process was followed, an issue for which no deference is owed”.

Respect of procedural fairness – The Court provided a series of reasons supporting its determination that refusing to grant an adjournment did not constitute procedural fairness.

The concluding reason of the five (5) relied on by the Court concerned the lack of prejudice to KL from not getting an adjournment.

[44] Fifth, in any event, nothing on this record suggests that Mr. Pearson suffered any prejudice from the adjournment being denied. That is, there was no reason to think the outcome would have been different had an adjournment been granted. That is because s 49 of the Act mandates the enforcement of an arbitration award in circumstances where, as here, none of the enumerated conditions are present. The most that someone acting on Mr. Pearson’s behalf could have done is seek a stay, a remedy available for orders enforced under s 49(3) by virtue of s 49(8): Subway Franchise Systems of Canada, Ltd. v Esmail, 2005 ABCA 350; Comeau v Comeau, 2011 ABQB 69. However, Mr. Pearson’s only grounds for such a remedy would have been his desire to appeal the arbitration award, which was out of time prior to the Application. Section 46(1)(a) of the Act requires that an appeal be commenced within 30 days, a time limit the court has no jurisdiction to extend: Allen v Renouf, 2019 ABCA 250”.

Other reasons – In outlining the other four (4) reasons, the Court recognized that other issues may have complicated the transition between counsel for KL but held that a fee dispute between Former counsel and KL did not prevent New counsel from accepting the retainer.  The Court added that, in any event, CM was not involved in such fee disputes and “ought not be held hostage to the time frame the other party requires, or takes, to sort out issues relating to replacement of counsel”.

The other reasons relied on by the Court included New Counsel’s decision not to accept an adjournment on consent offered by CM’s counsel because the adjournment came with a condition regarding agreement to maintain KL’s payments to CM. Again, the Court held that KL’s interests “were not the sole consideration”.  Exercising discretion “required [the judge] to consider and weigh the prejudice” to CM if KL seeking adjournment defaulted on payment.

The Court also noted that KL personally elected to not attend because he “had important business to attend to that morning”.  The Court acknowledged the reason but remained unpersuaded, noting the lost opportunity. “That was his choice. Had he appeared, he could have asked to represent himself before the chambers judge and consented to the reasonable terms requested for the adjournment. Rule 2.24(2) allows for that very option. That did not happen”.

urbitral note – First, regarding the lack of jurisdiction to extend the thirty (30) day appeal period, see the Arbitration Matters note “Court has no jurisdiction to extend statutory time limit in which to seek leave to appeal award”. In Allen v. Renouf, 2019 ABCA 250, Alberta’s Court of Appeal upheld a chambers judge’s decision to dismiss an application for leave to appeal on the basis that the court had no jurisdiction to extend a statutory time limit set out in the Arbitration Act, RSA 2000, c A-43.  The arbitrator’s reserve of jurisdiction to issue a costs award did not suspend or add to that time period to challenge the earlier award on the merits.  Case law also distinguishes calculating delays based on the ‘date of the decision’ and the ‘making of the decision’ and should apply with equal merit to delays applicable to arbitration awards.

Second, the Court distinguished between an exercise of discretion which “generally” attracts deference and an exercise of discretion which is alleged to breach natural justice.  In the latter case, “issues of procedural fairness raise the question of whether due process was followed, an issue for which no deference is owed”.

Third, the Court demonstrated that discretion required that the decision maker consider and weigh the impact on/prejudice to both parties. One party’s fee dispute should not hold the other “hostage”. 

Fourth, the Court recognized that parties can make choices but those choices come with consequences. Accepting conditions in exchange for an adjournment or deciding not to attend because of “important business” can be choices made by a party but do not restrain discretion to advance dispute resolution despite the choices.  Despite KL’s choice not to be present, Alberta’s Arbitration Act “mandates the enforcement of an arbitration award in circumstances where, as here, none of the enumerated conditions are present”. While a party may choose not to be ‘present’, the order to recognize and enforce an award will issue once the section 49 conditions are ‘present’.

Fourth, the Court identified five (5) reasons and reserved the ‘lack of prejudice due to no difference in the outcome’ to last.  Placing that reason fifth did not give it primacy but also did not disclaim its importance or impact.  Rather, the Court merely enumerated its reasons but did not rank them by priority or present its last, fifth reason as an aside or a subsidiary reason.