In Bromley v. Getzie, 2023 BCSC 446 (“Bromley”), Justice Brongers remitted an arbitral award to the Arbitrator for reconsideration as a remedy for the arbitrator’s failure to observe the rules of natural justice, pursuant to s. 30 of the (former) British Columbia Arbitration Act, RSBC 1996, c. 55 (the “Act”). Justice Brongers found that the Arbitrator had breached principles of natural justice because he provided inadequate reasons on a “central issue” in dispute between the parties. This is a rare finding, but one which appears to rely, in part, on principles of natural justice as they relate to applications for judicial review in administrative proceedings. Regrettably, scant reasons are provided regarding the decision of Justice Brongers to order remittance of the matter to the arbitrator, rather than to set aside the award, as a remedy for the breach of natural justice.
The underlying dispute – The case arises from a dispute between trustees of a health and welfare benefit plan (the “Plan”). Union and employer trustees of the Plan disputed whether benefits under the Plan should continue in the event of a labour strike. They advanced contrasting positions regarding the effect of a 1993 resolution of the trustees concerning this aspect of the Plan. The dispute created a “dead-lock” as defined under the Plan and therefore initiated a referral of the matter to a “third person” (“Arbitrator”, in this case note). While the dispute involved provisions of the BC Labour Relations Code, RSBC 1996, c 244, there was no dispute between the parties that the 1996 version of the Act applied to the matter submitted to Justice Brongers.
The arbitral awards – The parties initially submitted four questions to the Arbitrator, including a question regarding the dispute referenced above. These four questions were answered in a first award (the “Initial Award”), which neither party sought to challenge. However, the parties jointly sought clarification of the Initial Award because they were not satisfied that it clearly determined how different group members participating in the Plan should be categorized pursuant to the determinations made in the Initial Award. After a case conference, the Arbitrator set out the “clarification question” to be determined in a further award (the “Clarification Award”).
In the matter before Justice Brongers, the union trustees sought leave to appeal the Clarification Award as well as an order setting aside the Clarification Award or, in the alternative, remitting the matter back to the Arbitrator for reconsideration.
Grounds for challenging the Clarification Award – The union trustees cited the following grounds for the remedies it sought:
- Leave to appeal under s. 31 of the Act, alleging that the Arbitrator wrongly relied on the conduct of the employers and the union in interpreting the effects of the 1993 resolution.
- Set aside of the Clarification Award because of arbitral error (a concept that existed under the 1996 version of the Act, which served to define the grounds for set aside of an award) based on breach of the principles of natural justice under ss. 30(1)(a) and 1(d) of the Act, alleging that the Arbitrator failed to provide sufficient reasons (and thus to consider) an estoppel argument raised by the union trustees regarding the 1993 resolution.
- Set aside of the Clarification Award because of arbitral error based on an excess of jurisdiction under ss. 30 and 1(c) of the Act, alleging that the Arbitrator amended – rather than clarified – the Initial Award through the Clarification Award.
On the latter two grounds the union trustees sought, in the alternative, to remit the Clarification Award to the Arbitrator for reconsideration under s. 30(1)(b)of the Act.
The employer trustees opposed all grounds of challenge and asked that the Court deny set aside and instead remit the matter to the Arbitrator for reconsideration in the event the Court found in favour of the union trustees on one of the latter two grounds. They also contended that the union trustees should be granted no remedies at all because they had failed to seek further clarification or bring an application for a reasoned award pursuant to s. 33 of the Act before seeking their remedies from the Court.
Decision of the Supreme Court – In a well-organized decision, Justice Brongers granted the union trustees’ petition, in part, providing relief under the second ground (natural justice), and dismissing all other grounds of challenge against the Clarification Award.
His reasons can be summarized as follows:
- On the request for leave to appeal – not granted because the union trustees failed to identify an extricable error of law. Their contention that the Arbitrator failed to consider the conduct of the unions and employers in coming to his determination regarding the effect, if any, of the 1993 resolution is at best an error of mixed law and fact, from which there is no appeal under the Act.
- On the breach of natural justice – the Arbitrator breached the principles of natural justice insofar as he provided no reasons in connection with an “estoppel argument” raised by the union trustees for the purposes of determining the clarification question addressed in the Clarification Award. Justice Brongers noted that this estoppel argument had been briefed by the parties. In his view, the application of the doctrine of estoppel was among the “central issues” submitted for resolution in the clarification question. He also found that it was not “patently obvious” that the estoppel argument was without merit.
- On excess of jurisdiction – the Arbitrator did not exceed his jurisdiction, which, in Justice Brongers’ view, was defined according to the clarification question fashioned by the Arbitrator and agreed to by the parties. Neither party raised a concern regarding the Arbitrator’s jurisdiction to rule on the clarification question. According to Justice Brongers, the Clarification Award answered the clarification question and there was no basis to find that any statements made by the Arbitrator fell outside his jurisdiction.
On the question of the applicable remedy, Justice Brongers ordered remittance to the Arbitrator for reconsideration, without providing detailed reasons.
On the employer trustees’ argument under s. 33(1), regarding applications for a reasoned award, Justice Brongers found that the employer trustees essentially raised an “exhaustion of all alternative remedies” argument, according to which the union trustees must seek all possible remedies from the Arbitrator before seeking relief from the BC Supreme Court. Justice Brongers held that this argument was based on an administrative law principle and there was no basis to apply such a principle in the arbitration context.
First, the conclusion of Justice Brongers on the issue of natural justice is based, at least in part, on a definition of natural justice developed in administrative law. More specifically, his finding that the Arbitrator failed to observe principles of natural justice due to the absence of reasons on a “central issue” to the dispute relies on the Supreme Court of Canada’s decision in Newfoundland and Labrador Nurses’ Union v Newfoundland and Labrador (Treasury Board), 2011 SCC 62 (see Bromley, para 46(d)). This case concerned judicial review of administrative proceeding and the reliance by Justice Brongers on this case as authority in an application for set aside of an arbitral award is questionable. Notably, the objective of the inquiry on an application for judicial review – to determine whether the result falls within the “range of reasonable outcomes” – requires a more detailed review of the merits than what is permissible in a set aside application. Indeed, in Bromley, Justice Brongers’s findings that the union trustees’ estoppel argument was a “central issue” and that it was not “patently obvious” that such argument was without merit (para 59) seem to require at least some examination of the merits.
Second, Justice Brongers provided scant reasons on the issue of the applicable remedy, that is, his decision to remit the case to the Arbitrator rather than to set aside the Clarification Award. Practitioners reviewing Bromley may be left with thorny questions regarding how the Court’s reasoning in this case should inform an application for set aside brought under the new BC Arbitration Act, SBC 2020, c 2. Under the new Act, the grounds for set aside have been re-cast, and remittance is no longer expressly listed as a remedy in the case of an application for set aside. One may question what impact, if any, these changes have on the use of Bromley as authority for set aside applications based on the absence or inadequacy of reasons brought under the new Act. Would the reasoning of Justice Brongers in Bromley have led him to make the same finding based on one of the grounds for set aside that are listed in the new Act? What impact, if any, did the express availability of a less draconian remedy (remittance) under the 1996 Act have on the finding of Justice Brongers that the reasons in the Clarification Award were inadequate? How would Justice Brongers have exercised his discretion, if any, to order a remedy under the new Act based on this same finding? It will be interesting to see how the analysis and outcome in Bromley are considered in subsequent decisions on applications for set aside brought under the provisions of the new BC Act. Stay tuned.
Finally, it is interesting to compare Justice Brongers’ reasons in Bromley with other cases that have examined the issue of adequacy of reasons in arbitral awards. See our Case Notes on this subject, for example : Ontario – tests for adequacy of reasons and for remitting awards considered and applied – #245; Ontario – adequate reasons serve to justify/explain result so losing party knows why it lost – #320; B.C. – agreement to accept summary reasons is not acceptance of insufficient reasons – #217; Ontario – It’s not cricket: Ontario court emphasizes arbitral awards must include reasons – #580; Ontario – length/brevity of reasons in award not equal to reasonableness/insufficiency – #202.