Despite the parties’ agreement that the arbitrator provide only summary reasons, Mr. Justice J. Christopher Grauer in Nolin v. Ramirez, 2019 BCSC 934 determined that the arbitrator’s brief reasons were insufficient to withstand review on a standard of reasonableness. Grauer J. held that even summary reasons require more than just a conclusion. Because he lacked jurisdiction to substitute his own decision for that of the arbitrator and, in the event, could not say that the arbitrator had gotten the issues wrong, he remitted the issues to the arbitrator for reconsideration.
The parties had agreed to hold two (2) separate hearings on issues involving their family law dispute. In both instances, as is often the approach in international commercial arbitration, the parties agreed to provide the evidence-in-chief in written form, subject to cross-examination. That written evidence was provided by way of affidavit.
The parties’ agreement also provided that the arbitrator “will make his final award in writing but will only provide summary written reasons for his decision, unless either of the parties requests full written reasons.”
The first hearing involved financial issues and resulted in a February 18, 2018 award (“Property Award”). The second hearing involved parenting issues and resulted in a March 27, 2018 award (“Parenting Award”).
Petitioner did not request full written reasons until after the arbitrator issued the awards. The arbitrator responded by advising that he would require “a significant additional payment in order to provide such reasons”.
Petitioner appealed both awards. Because the arbitration involved family law issues, section 31(3.1) of B.C.’s Arbitration Act, RSBC 1996, c 55 allows a party to an arbitration in respect of a family law dispute may appeal to the court “on any question of law, or on any question of mixed law and fact, arising out of the award.” Grauer J. indicated that, based on McMillan v. McMillan, 2015 BCSC 2177, (affd McMillan v. McMillan, 2016 BCCA 441) paras 44 and 54, the standard of review on a question of mixed law and fact is reasonableness.
“[54] As a result in considering this appeal it is not open to the court to substitute its own findings of fact for those of the arbitrator. In considering any questions of mixed fact and law and whether the arbitrator applied a particular legal standard or test it is to the facts as he found them. In doing so the court must consider whether the arbitrator’s conclusions fall within an acceptable range with due deference to the arbitrator’s reasoning.”
Grauer J. framed the question before him as “the extent that it is possible to defer where reasoning is largely absent”.
He divided the appeal and his analysis into two (2) portions, dealing first which Petitioner’s challenge against the Property Award and then against the Parenting Award. Petitioner was partially successful on challenging the Property Award but unsuccessful in his challenge to the Parenting Award.
Grauer J. acknowledged at the onset of his analysis the deference owed by the court to the arbitrator for decisions on credibility.
“[14] The arbitrator began by reviewing the facts, noting, “In many ways, this case is incredible – in both senses of that word” (emphasis original). He observed that the parties’ accounts “cannot both be true”, finding the viva voce testimony of the parties and the witnesses called for cross-examination on their affidavits to be very telling.
[15] The arbitrator concluded that Mr. Nolin’s witnesses were entirely unreliable and unhelpful, vague and unbelievable. Wherever the evidence of Ms. Ramirez contradicted that of Mr. Nolin in relation to financial matters, the arbitrator preferred Ms. Ramirez’s evidence. He stressed that his conclusions as to credibility were restricted to the financial issues.”
The arbitrator had been asked to value certain equipment. Only Petitioner provided a value, namely $70,000.00, which went uncontradicted by Respondent and unchallenged by “no evidence beyond suspicions and speculation”. Despite the absence of contradiction and adequate challenge, the arbitration determined that the equipment was valued at $150,000.00.
Grauer J. observed: “It appears that the arbitrator was unwilling to believe Mr. Nolin’s evidence and that of his witnesses. But on what basis could he conclude that the value was $150,000?”
Respondent sought to defend the reasons from review, citing cases which held that findings of fact cannot be disturbed on appeal: Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), [2011] 3 SCR 708, 2011 SCC 62; Kroupis-Yanovski v. Yanovski, 2012 ONSC 5312. Grauer J. did not disagree with that line of reasoning but pointed to the nature of the awards’ reasoning in the case before him.
“[21] In my view, the arbitrator’s reasons, even as summary reasons, are not sufficient. This is because they set out no explanation whatsoever of why, on the evidence, the arbitrator concluded that an appropriate value was $150,000, as opposed to $70,000 (the amount for which Mr. Nolin contends). The number is found nowhere in the evidence, either as a specified amount or as part of an estimated range, and appears to have been plucked out of thin air (see Schenker v Scott, 2014 BCCA 203 (CanLII) at paras 54–57, concerning the importance of relating findings of fact to the assessment of damages). Mr. Nolin is left without a clue as to how and why the arbitrator arrived at that conclusion, other than the knowledge that his own evidence was not accepted.”
Grauer J. did focus in on paras 114-116 of Kroupis-Yanovski v. Yanovski to remind that arbitration may be chosen for being “less costly and speedier that litigating through the court system”, the “arbitrator’s reasons are important so that the losing party knows why he or she has lost and for the purpose of the appeal … The reasons may be brief but they must be sufficient to explain why the arbitrator reached his or her conclusion.”
Grauer J. did not stress the family law context or explain that his approach relied on any considerations particular to family law. The result and reasoning are equally applicable to commercial arbitration cases, despite the Property Award stemming from a family law context.
“[24] The failure of the arbitrator here to offer any kind of explanation for his selection of the value of $150,000 amounts, as I see it, to a failure that, when assessed against the outcome, renders the result unreasonable. It is not possible, as mandated by the Supreme Court in the Newfoundland and Labrador Nurses’ Union case at para 12, to defer with “a respectful attention to the reasons offered or which could be offered in support of the decision”. No reasons were offered, nor is it possible to discern what reasons could be offered, in support of the conclusion to which the arbitrator came. As a result, I am unable to say that the arbitrator’s conclusion falls within “a range of possible, acceptable outcomes which are defensible in respect of the facts and law” (see Dunsmuir v New Brunswick, 2008 SCC 9 (CanLII) at para 47). It follows that the result must be set aside.”
In contrast to that result, Grauer J. disagreed with Petitioner’s challenge to another valuation made by the arbitrator. Unlike the evidence regarding the equipment, “there was a good deal of evidence before the arbitrator.” At para. 30, Grauer J. sums up the arbitrator’s handling of the evidence, demonstrating that even summary reasons can provide a losing party with sufficient reasons.
Petitioner also challenged a third determination made by the arbitrator to award a lump sum amount of spousal support rather than the periodic support. Neither party had argued for a lump sum and Grauer J. held that the result was a departure from their expectations and the default position in the practice area. Grauer J. did not hold that a lump sum was not permitted, even if not argued. Rather, he aligned his analysis with that involving the arbitrator’s handling of the equipment valuation.
“All the arbitrator said was that the case “cries out for lump sum spousal support”. But why? What was it about the case that made it so? In my view, it was incumbent upon the arbitrator to give a brief description of the factors that inspired him to come to his conclusion. As it is, the parties (and particularly Mr. Nolin) are in the dark as what factors were weighed by the arbitrator in arriving at his decision, and are unable to evaluate how he exercised his discretion. The exercise of discretion is not, after all, an arbitrary exercise.”
Grauer J. declined to “guess why” or attempt to “discern the factors” supporting the choice in favour of a lump sum but doing so did not enable him to determine if the arbitrator’s conclusion was reasonable.
“The outcome was certainly possible, but I cannot say that it was acceptable. For the arbitrator to depart acceptably from the usual course required some sort of explanation. None was provided. Even “summary” reasons require more than just a conclusion. This result was, it follows, unreasonable and must be set aside.”
Though Grauer J. dismissed the appeal against the Parenting Award, the reasons include further analysis on the sufficiency of the reasons and provide additional insights.
Due to the limited jurisdiction granted under the Arbitration Act, Grauer J. remitted the Property Award back to the arbitrator for reconsideration and determination. He did not have jurisdiction to substitute his view. Even if he had jurisdiction, Grauer J. remarked that the case was not appropriate for substitution. He noted that he could not say whether the $150,000.00 valuation was wrong or if the lump sum support was not justified. “What I can say is that the awards must be set aside as unreasonable given the absence of explanation for them.”
The appropriate remedy was to remit the findings on equipment valuation and lump sum support for reconsideration and further award. Grauer J. therefore issued an order to that effect, closing with “[t]hat further award should be based upon reasons that comply with the principles I have discussed in this judgment.”
urbitral note – Though the award stemmed from a family law context, the result can apply to other industries. Accepting “summary” reasons does not mean accepting “deficient” reasons. The parties’ agreement does not in and of itself shield the award from review if the reasons provided omit to address key conflicts in the evidence and explain how the determination was made.