B.C. – No unfairness for procedural irregularity, no jurisdiction to review facts – #763

In Anins v. Anins, 2022 BCCA 441 (leave to appeal refused 2023 CanLII 64855 (SCC)), the Court of Appeal for British Columbia upheld a lower court decision dismissing a petition to set aside a family arbitral award based on errors of law and procedural unfairness. The Court of Appeal agreed with the B.C. Supreme Court that the Arbitrator did not cause any unfairness in failing to make a procedural direction in writing, nor were his reasons insufficient for omitting reference to certain statutory provisions. The Court of Appeal also agreed that the appellant’s grounds for appeal on the merits raised pure questions of fact. These were not appealable under B.C.’s then-applicable domestic arbitration statute.

The arbitration – As part of settling their matrimonial litigation, a husband and wife agreed to a med-arb (baseball arbitration) process. Under this process, the mediator/arbitrator would choose from the parties’ respective offers on any issue they could not resolve through mediation. The parties agreed on much in the mediation, but could not resolve certain issues pertaining to the parenting arrangement and how certain property should be valued. 

After hearing the parties’ submissions, the parties made their final offers, which each of them revised once before the arbitrator rendered an award with “summary reasons”. 

The first-level petition/appeal (B.C. Supreme Court) – The husband filed a petition challenging the award and the arbitral process before the B.C. Supreme Court. He made a preliminary argument that the Court should review the award on the appellate standard in light of Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. Like dozens of courts across the country before, the Court declined to decide the standard of review, instead saying the appeal failed on any standard. 

The Court concluded the husband was effectively challenging the fairness of the entire arbitration process. One of these challenges related to the fact that the Arbitrator provided only “summary reasons”. But the Court observed this is exactly what the parties bargained for in their med-arb agreement. The agreement permitted either party to request full written reasons before the Arbitrator rendered his final award, but neither party did so.

The second-level appeal (B.C. Court of Appeal) – On appeal before the B.C. Court of Appeal, the husband advanced arguments based in procedural fairness and also alleged errors of law. 

He raised three arguments: 

1) the Arbitrator’s procedural directions were not given in writing, which led to confusion about the final offer process, which prejudiced him as he was self-represented.

2) The Arbitrator’s summary reasons did not reference certain provisions in the Family Law Act, S.B.C. 2011, c. 25.

3) The Arbitrator failed to grapple with some of his submissions, including the valuation of family and excluded property, and made findings of mixed fact and law unsupported by the evidence.

These, the husband said, were errors the B.C. Supreme Court judge failed to recognize.

The Court of Appeal disagreed. It succinctly summarized its reasoning at paragraphs 14 and 15: 

[14]      The arbitration process included viva voce evidence, cross-examination of the parties, oral submissions which supplemented prior written argument, and a significant amount of documentary and expert evidence, much of which was not before the judge or this Court. This Court has no jurisdiction to entertain such appeals.

[15]      In my view, substantially all of the appellant’s arguments have as their source his dissatisfaction with the facts that underlie the arbitrator’s decision to select [the wife’s] final offer as opposed to his own.”

With respect to the Arbitrator’s failure to provide written directions, which was in fact required under the procedural rules, the Court of Appeal concluded that any violation was immaterial. The Arbitrator re-opened the process because the husband himself submitted a revised final offer. Fairness required that the wife have an opportunity to do likewise. Although the Arbitrator does not appear to have provided a written direction, this in no way prejudiced the husband.

The Court of Appeal also considered immaterial the fact that the Arbitrator’s summary reasons did not expressly reference two of the Family Law Act’s pertinent provisions. The Arbitrator’s reasons demonstrated he applied the right legal framework. In light of this, the Court of Appeal also rejected the husband’s argument that the Arbitrator omitted any reference to the Family Law Act resulted in him failing to grapple with his submissions.

The husband also alleged the Arbitrator erred in law in valuing the couple’s excluded property. The Court of Appeal agreed with the B.C. Supreme Court that the valuation exercise was a question of fact, and thus not reviewable.

Contributor’s Notes:

First, this is yet another case in which a court, though asked to identify the standard of review on appeal from an arbitral award, declined to do so because the standard would not affect the outcome. In this case, the B.C. Supreme Court judge relied on the principle that a court should avoid addressing a question of law unnecessary to deciding the appeal. This is a time-honoured common law tradition. 

And the B.C. Supreme Court judge was quite right to apply the principle in this instance. He concluded the issues the husband raised were pure questions of fact. These fall outside the appeal provision in the Arbitration Act, RSBC 1996, c 55 (now repealed and replaced with the Arbitration Act, SBC 2020, c 2). Under that statute, appeals from family law awards were limited to questions of law and mixed fact and law. Accordingly, the Court lacked jurisdiction to consider the purely factual grounds the husband raised. When there is no jurisdiction, the standard of review simply does not arise. If the question does not arise, the court should not answer it.

But courts sometimes also decline to assess the standard of review when jurisdiction is established, and the appeal of an award proceeds on the merits. I respectfully suggest that, in those cases, the court should identify the standard of review. 

The nature of a court’s inquiry is different when reviewing a decision (arbitral award or otherwise) for correctness versus reasonableness. On a correctness review, the court steps into the first-instance decision-maker’s shoes and decides the issue afresh. In contrast, review on a reasonableness standard calls for an examination of the decision itself in light of the evidentiary record and procedural history. The court determines not whether the decision is “right” or “wrong”, but whether, in light of the factual, legal and procedural constraints catalogued in Vavilov [see paras. 105-125], the outcome falls within a “range of possible, acceptable outcomes which are defensible in respect of the facts and law” [Vavilov, para. 86, citing Dunsmuir v. New Brunswick, 2008 SCC 9, para. 47]. 

Whether reasonableness review even coherently maps onto “appeals” on questions of law and/or mixed fact and law is a question for another day (spoiler alert: not at all clear that it does). The fact is that the Supreme Court of Canada imported administrative law reasonableness into appeals from arbitral awards in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53. Some courts say Vavilov changes that and others do not. Regardless of who is right, reasonableness and correctness are two different things. If so, then should courts not be transparent about the reviewing framework they use? If transparency is desirable—ironically, transparency is part of the reasonableness standard [Vavilov, paras. 15 and 95-96]—then the standard of review is something the court should decide in each case.

Second, this case is another that shows courts will not set aside an arbitral award for a minor and non-prejudicial procedural irregularity. Based on the Court of Appeal’s reasons, it seems the Arbitrator may have technically run afoul of a rule requiring him to provide written procedural directions. When he allowed the wife to make a second offer, he apparently did not do so in writing. However, since that technical non-compliance had no negative effect on the process’s fairness, the Court of Appeal rightly rejected it as a ground to set the award aside.

This is consistent with the approach in administrative law as set down by the Supreme Court of Canada in Mobil Oil Canada Ltd. v. Canada-Newfoundland Offshore Petroleum Board, 1994 CanLII 114 (SCC) [Mobil Oil]. Although its holding is arguably narrower on a close reading, courts rely on Mobil Oil for the following proposition: a reviewing court should not quash and remit a matter to an administrative tribunal when the procedural fairness violation could not have affected the outcome. I note that the Court of Appeal in the present case is saying something slightly different—the procedural irregularity, failing to provide a written procedural direction, actually created no unfairness in the first place. However, the Court of Appeal’s approach is consistent with Mobil Oil in that both decisions decline a remedy when granting it would be futile.