In Neuhaus Management Ltd v. Huang, 2022 ONSC 5548, the Ontario Divisional Court (Firestone RSJ, Stewart, and Akhtar JJ.) examined how Ontario’s domestic arbitration statute can be incorporated into and be read together with an industry-specific statutory arbitration scheme, the Ontario New Home Warranties Plan Act, R.S.O.1990, c.O.31 (the “Ontario New Home Warranties Act”).
In this case, the parties appealed and cross-appealed the awards of an arbitrator made pursuant to the Ontario New Home Warranties Act. The dispute arose from the breakdown of a purchase agreement for a new build home.
The Court raised two issues on its own initiative on which it sought the parties’ submissions:
- Does the Divisional Court have jurisdiction to hear and determine an appeal from a decision of an arbitrator made under the Ontario New Home Warranties Act?
- If the answer is “yes”, does the Arbitration Act, 1991, S.O.1991, c.17 (the “Arbitration Act”) apply to require that (a) leave to appeal is necessary and/or (b) the appeal is limited to issues of law, where the statute providing for an appeal (in this case s.17(4) of the Ontario New Home Warranties Act is itself silent on these issues but incorporates by reference the Arbitration Act?
On the first question, the Court found that it had jurisdiction. That the appeal lay to the Divisional Court is explicitly stated in s. 17(4) of the Ontario New Home Warranties Act. The Arbitration Act’s conflict provision (s. 2(3)) resolves any conflict as to venue by stating that, in such a conflict, the other statute prevails (here, the Ontario New Home Warranties Act).
On the second question, the Court determined that leave was necessary and the appeal was limited to issues of law because of the ways in which the Ontario New Home Warranties Act had to be read together with the Arbitration Act (at paras. 11 and 14):
“Unlike tribunal decisions, arbitral decisions like the one at issue on appeal are, unless expressly overruled by the governing legislative scheme, subject to the Arbitration Act. Section 45(1) of the Arbitration Act expressly considers appeal provisions for awards which do not specifically provide for appeal rights in the arbitration agreement. Incorporation by reference therefore serves as a qualifying factor in the provision.
Appeal rights, while not expressly stated in [the Ontario New Home Warranties Act], exist by way of the Arbitration Act. The relevant arbitration agreement does not outline appeal routes. Section 17(4) [of the Ontario New Home Warranties Act] governing appeals of the arbitration does not qualify the appeal but simply incorporates the Arbitration Act. The Arbitration Act is clear that arbitration agreements which do not speak to appeal rights may be appealed with leave on questions of law only.”
Update: The motion for leave to appeal was dismissed at 2023, ONSC 1788.
This decision demonstrates how an industry-specific arbitration scheme can be created under one piece of legislation while still relying on aspects of the domestic arbitration statute to play a gap filling role. In this case, the particular issue was appeal rights. Here, the Ontario New Home Warranties Act created certain unique features, like having the appeal lie to the Divisional Court, which sits in panels of three judges, instead of to a single judge of the Superior Court of Ontario.
However, on the issues of leave to appeal and the scope of the appeal (whether it was limited to legal issues or included questions of mixed law and fact), since the Ontario New Home Warranties Act was silent, the Arbitration Act provided the necessary legislative framework. In this way, reliance on the Arbitration Act by incorporating it by reference meant that arbitration in different contexts is a consistent a form of dispute resolution, absent explicit legislation otherwise.
In this decision, the two pieces of legislation were read harmoniously. This can be contrasted with other recent decisions where courts have found conflicting provisions between an arbitration statute and another piece of legislation such as the Bankruptcy and Insolvency Act, RSC 1985, c B-3(see recent Case Note Ontario – Court of Appeal upholds “single proceeding” insolvency model over recourse to arbitration – #660) or the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (see recent case note Ontario – Court denies stay of order authorizing CCAA sale process despite ongoing arbitration – #542). In those decisions, the other piece of legislation prevailed over the arbitration statute.