Québec – award voided for providing insufficient reasoning and imposing unintelligible order – #152

In 9264-3212 Québec inc. v. Moseka, 2018 QCCS 5286, Madam Justice Johanne Brodeur granted judicial review of an arbitral award because it was not executory. Despite applying a deferential standard of reasonable, Brodeur J. sent the parties back to arbitration because the specialized decision maker had omitted to articulate the industry standard he determined was breached and did not explain what result the party had to meet in order to comply with his order.

Brodeur J. granted a judicial review application regarding an arbitration award issued pursuant to an administrative process established for new home owners under Québec’s Regulation respecting the guarantee plan for new residential buildings, CQLR c B-1.1, r 8 adopted pursuant to the Building Act, CQLR c B-1.1.

For earlier ArbitrationMatters notes on this administrative process, see “Québec Court of Appeal endorses arbitration and litigation as independent recourses for different claims related to new residential home disputes“, “Québec courts assert consequences of not undertaking/participating in mandatory legislated arbitration” and “Québec court determines legislated arbitration procedure is mandatory only for commercial party to contract“.

Part of the process governing complaints by beneficiaries under the legislation is the opportunity to have their disputes conciliated and, if necessary, arbitrated, resulting in a “decision” which section 36 stipulates binds the parties and is final and not subject to appeal. See also section 120 for another category of arbitration “award” binding other parties involved in administering the guarantee plans.

In the case before Brodeur J., the parties disputed the conformity of a staircase allowing the new home owners to carry furniture up onto the second floor. The staircase was too narrow and led to an initial complaint and corrective work by the builder. The problem persisted and, as a measure of the staircase’s conformity with an ‘industry standard (“règle de l’art”), the parties presented evidence to the arbitrator regarding the inability to move ‘large’ or ‘Queen-size’ bedsprings/mattresses up the staircase.

After unsatisfactory sessions in conciliation, the builder undertook two (2) arbitration proceedings, leading to separate decisions, dated June 20, 2017 and November 14, 2017, in which the arbitrator rejected the builder’s claims.

Brodeur J. undertook a judicial review of the latter decision and, given the privative clause in the legislation, applied the standard of reasonableness. She relied on Dunsmuir v. New Brunswick, [2008] 1 SCR 190, 2008 SCC 9, and Garantie Habitation du Québec Inc. v. Lebire, 2002 CanLII 23777 (QC CS) among others less recent.

The Award contained statements by the arbitrator confirming the problems raised by the home owners and an order directing the builder to correct for same. The reasons noted that the arbitrator determined that the new home ‘did not respect industry standards’ which ought to allow them to bring a ‘Queen-size bed’ to the second floor and, in its disposition, ordered the builder to ‘proceed with the corrective work within 45 days of receipt of the decision’.

Brodeur J. dismissed the builder’s argument that it was taken by surprise by the mention of the problems with the staircase and other objections made on the manner in which the arbitrator deal with/ignored the builder’s expert’s opinion.

That said, Brodeur J. did focus on the vague wording of the dispositive part of the Award. She referred to Construction Labour Relations v. Driver Iron Inc., [2012] 3 SCR 405, 2012 SCC 65 which instructed courts how to deal with adequacy of the reasons. Brodeur J. noted that the file presented to her prevented her from following the arbitrator’s reasoning and to know the exact nature of the dispositive order.

The conciliator used the term ‘Queen bed’, while the arbitrator used ‘Queen-size bed’ and noted other furniture too large to pass up the stairway. The parties at the hearing debated the nature of both: how thick was each bed frame, were the beds rigid or flexible, what dimensions were the other furniture mentioned?

Brodeur J. referred to Patrice Garant’s text, Droit administratif, 7e ed., (Montréal, Éditions Yvon Blais) 2017, at p. 702, wherein he observed that specialized decision makers issuing decisions in their field of expertise rely on concepts, terms and standards particular to their area of expertise and that those references might appear counter-intuitive to courts. By deference, Brodeur J. noted that courts are prepared to accept that a specialized decision maker determine the existence of an ‘industry standard’ provided that the decision maker clearly express the standard and that the reasons and the dispositive order be unequivocal.

Brodeur J. held that a court can determine whether an award is reasonable by considering its reasons and the transparency of the decisional process regarding the possible results stemming from the facts and law. On the materials before her, she found that the reasoning and the order were unintelligible and insufficiently reasoned because they did not allow one to understand the resolution of the dispute.

At paras 28-35, Brodeur J. spoke to the need for parties to understand exactly what is ordered. If the order is not executory, the builder cannot undertake corrective work because the order imposes an indeterminate and imprecise obligation.

Brodeur J. observed that the court did not know whether a ‘industry standard’ existed but did know that there were different measures for bed frames, none of which were expressed by the arbitrator in the Award. Though the measures might be standard, the courts do not take judicial notice of such measures.

Brodeur J. determined that a professional decision maker must express herself precisely so that a reasonable person can understand what is ordered. Neither the conciliator nor the arbitrator mentioned what was the standard or ‘industry standard’ and how the order would achieve that standard. If the Award is only executory once recognized and enforced by the court, then the Award must be clear for all involved. Brodeur J. acknowledged that the order was not penal in nature but the builder, able to choose the manner in which it respected the order, was entitled to know with sufficient precision what result it had to achieve.

Though the need for corrective work appeared necessary, Brodeur J. granted judicial review of the Award and sent the parties back to arbitration in order to have a new award reasoned in a more clear manner and including a clearer order. Without creating any presumption of partiality and to avoid any debate regarding the neutrality of the arbitrator, she instructed that the dispute be heard by a different arbitrator.