Québec – court dismisses rare challenge by successful arbitral party and challenge based on arbitral precedent – #137

In PriceWaterhouseCoopers Inc. v. Chamberland, 2018 QCCS 4948, Mr. Justice Bernard Tremblay dismissed a successful arbitral party’s attempt to challenge an arbitral award on the basis that the arbitrator’s reasoning was not consistent with the majority line of reasoning in the subject matter. The arbitral party filed into court several prior arbitral awards involving other parties to support its unsuccessful argument that arbitral precedent justified the court’s intervention.

The underlying award issued under Québec’s Regulation respecting the guarantee plan for new residential buildings, CQLR c B-1.1, r 8 (“Regulation”).  The Regulation applies to plans which guarantee, among other things, a building contractor’s legal and contractual obligations owing to beneficiaries for the sale or construction of new residential buildings. Disputes involving the guarantee are subject to arbitration as a remedy, set out at section 19 and following, including section 20 which states that the arbitrator’s decision is final and not subject to appeal. The Regulation for those arbitrations makes no mention of whether or not the arbitrations, and resulting awards, are confidential.

The Regulation provides for arbitration regarding different types of disputes regarding new residential buildings but also disputes involving administration of the Regulation such as authorization of managers to manage approved guarantee plans (section 43 et seq.) and membership of contractors in guarantee plans (section 78 et seq.)

Two (2) of the sections state that certain awards must be made available to the public:

(i) section 72 – requires the collection and filing of awards by name of a contractor and then making them available on request from the public; and,

(ii) section 113 – requires an arbitral body to post awards involving to the website of the arbitral institution authorized to administer arbitrations under the Regulation.

The Canadian Commercial Arbitration Centre (“CCAC”) qualifies as one such arbitral body. Indirectly, the individual arbitral awards involving the beneficiaries under sections 19 and 35, can become public under (i). For example, see the arbitral decisions posted on the CCAC’s website.  The Regulation which provides for arbitration also enables arbitral parties to access other awards and enables arguments based on precedent.

Despite the access to those other arbitral awards and the claimed existence of a majority line of reasoning as precedent, Tremblay J. refused to endorse a challenge based on inconsistent reasoning or that an award followed an alleged minority line of cases. Concern for precedent did not justify the court’s intervention.

The arbitral award before Tremblay J. involved a claim against a guarantee plan based on latent defects. In an arbitration administered by the CCAC, the beneficiaries were unsuccessful on the basis that their claims had been made outside the limits set in the Regulations. In rejecting their claim, the arbitrator had also given them the benefit of a more lenient interpretation of when amendments would apply to their latent defect claims. Despite that lenient interpretation, the beneficiaries still lost their arbitration.

The successful arbitral party was dissatisfied with the reasoning used to arrive at the result and applied for judicial review of the arbitral award. It demonstrated that, on average, more other awards than not had followed different reasoning in analogous situations. Those awards are listed at footnote 6. By doing so, the party argued that arbitral precedent existed and should be applied, even to successful arbitral parties.

Tremblay J. disagreed.

First, he warned that the courts should not undertake judicial review for which the goal is not to annul or modify an arbitral award but only to review the reasoning in the award, fearful of the precedent which may result from the award.

Second, on the particular legal matrix raised by the arbitration, Tremblay J. did not think it was unreasonable for the arbitrator to follow a minority line of awards. In having done so, the arbitrator applied amendments to the Regulation which came into force after the construction contract was signed but before the latent defects became apparent. Because the approach was not unreasonable, Tremblay J. held that he should not and would not intervene.

Regarding the second ground, Tremblay J. looked to earlier decisions which accepted that an administrative tribunal’s decision to follow a minority line did not, in itself, make the tribunal’s decision unreasonable and open to judicial review. See Domtar Inc. v. Quebec (Commission d’appel en matière de lésions professionnelles), [1993] 2 SCR 756, 1993 CanLII 106 (SCC); Commission de la construction du Québec c. Legault, 2011 QCCS 988 (CanLII) at paras 28-29; and, Goodyear Canada Inc. c. Québec (Commission des lésions professionnelles), 2004 CanLII 14868 (QC CS) at para. 17.

The Supreme Court’s 1993 decision in Domtar Inc. v. Quebec (Commission d’appel en matière de lésions professionnelles) addressed whether jurisprudential conflict in administrative tribunals justifies court intervention and held that, no, it should not. The Court’s reasoning can also counter support advocating for appeals on questions of law in commercial arbitration on the basis for consistency. The full text of the reasons in Domtar Inc. v. Quebec (Commission d’appel en matière de lésions professionnelles) provide insights but, for the purpose of this note, the closing paragraph sums up the Court’s thinking about the “price to pay for the decision-making freedom and independence given to members of these tribunals”. Those comments lend themselves to preserving the confidentiality of arbitration and deflecting post-award attacks disguised as concerns for consistency in reasoning.

This process has led to the development of the patently unreasonable error test. If Canadian administrative law has been able to evolve to the point of recognizing that administrative tribunals have the authority to err within their area of expertise, I think that, by the same token, a lack of unanimity is the price to pay for the decision‑making freedom and independence given to the members of these tribunals. Recognizing the existence of a conflict in decisions as an independent basis for judicial review would, in my opinion, constitute a serious undermining of those principles. This appears to me to be especially true as the administrative tribunals, like the legislature, have the power to resolve such conflicts themselves. The solution required by conflicting decisions among administrative tribunals thus remains a policy choice which, in the final analysis, should not be made by the courts.

Tremblay J. held that the claim that an arbitrator followed a minority line of cases or even  launched a novel line of cases did not suffice to characterize the award as unreasonable.

Even though the arbitral awards were made public by the legislation which enabled the arbitration process and despite an alleged precedent established by those awards, Tremblay J. declined to intervene in the arbitration. Making awards public does not necessarily mean that courts will embrace access as an opportunity to intervene and evaluate an award’s compliance with precedent established by those now-public awards.