Saskatchewan – terms of reference “supersede” earlier agreement on leave to appeal question of law – #423

In Turpie Farms Ltd. v. 613168 Saskatchewan Ltd., 2020 SKQB 345, Mr. Justice Neil Robertson applied the last of four (4) agreements to arbitrate addressing the parties’ right to appeal on a question of law.  Robertson J. held that the last-signed terms of reference signed by parties’ counsel “superseded” the parties’ earlier agreement and allowed an appeal as of right on a question of law. Though respondent disputed whether the numerous grounds raised a question of law, Robertson J. deferred that issue to the judge hearing the appeal, reasoning that “since leave to appeal is not required, I am not called upon to decide whether the proposed grounds are proper questions of law”.

Turpie Farms Ltd. (“Appellant”) and 613168 Saskatchewan Ltd. (“Respondent”) sought to dissolve a 1997 partnership created by a 1997 partnership agreement (“Partnership Agreement”) regarding a grain and cattle farming operation.  To do so, they entered into a 2012 partnership dissolution agreement (“Dissolution Agreement”).  The Partnership Agreement provided for arbitration as did the Dissolution Agreement.

After entering into the 2012 Dissolution Agreement, Appellant continued the grain farm operation and Respondent continued the cattle farming operation.  Unable to agree on the distribution and valuation of land, the parties agreed to arbitrate.

By March 31 and April 9, 2020 signatures, counsel for the entered into an arbitration agreement (“Arbitration Agreement”) which, among other terms, limited appeals from an arbitration award.

8. Limitation on Appeal

The decision of the Arbitrator shall be final and binding on the Parties. Appeals shall be limited to questions of law and/or jurisdiction and may only be brought with leave of a court of competent jurisdiction, in accordance with subsection 45(2) of The Arbitration Act”.

Counsel for the parties next signed April 22, 2020 terms of reference (“Terms of Reference”) which also spoke to the right of appeal.

8. The Arbitrator shall provide written reasons for his decision which shall be delivered within 10 weeks of receipt of final arguments from the parties and shall be final and not subject to review or appeal other than on a question of law pursuant to section 45 of The Arbitration Act. Subject to the said s. 45 Arbitration Act review or appeal, 168 and TFL acknowledge and agree that the Arbitrator’s decision with respect to the issue identified in paragraph 1 is binding, conclusive and determinative upon them in all subsequent arbitration proceedings and/or court proceedings, if any. The determination constitutes a binding issue estoppel and is not subject to any collateral or subsequent challenge before the Arbitrator or court of competent jurisdiction”.

In his October 6, 2020 award, the arbitrator held that ownership of the land in issue, comprising 59 parcels of land, had never passed to the partnership.  The farmland remained with Appellant and the ranch remained with Respondent.  As such, a land valuation was unnecessary as the land was not subject to division.

By November 5, 2020 originating application, Appellant sought leave to appeal under section 45(2) of Saskatchewan’s Arbitration Act, 1992, SS 1992, c A-24.1.

Robertson J. began his analysis by reference to the provisions of sections 6 and 45 of the Arbitration Act which, respectively, define what constitutes an “arbitration agreement” and address appeals.  Section 6(1) stipulates that an arbitration agreement may be an independent agreement or part of another agreement and section 6(2) stipulates that if parties to an arbitration agreement make a further agreement in connection with the arbitration, that further agreement is deemed to form part of the arbitration agreement.

Section 45(1) concerns those agreements in which the parties stipulate to an appeal, on one or more types of questions.  Section 45(2) concerns those agreements in which the parties do not provide for an appeal on a question of law.

45(1) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law, on a question of fact or on a question of mixed law and fact by notice of motion that briefly states the grounds of the appeal.

(2) If the arbitration agreement does not provide that the parties may appeal an award to the court on a question of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that:

(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and

(b) determination of the question of law at issue will significantly affect the rights of the parties”.

Having identified the legislative provisions, Robertson J. then observed why parties choose arbitration.

[14] Persons choose arbitration for a number of reasons. While they are responsible for the cost of the arbitrator, they get to choose the arbitrator and, if they agree, can tailor the process to meet their individual needs or preferences. Arbitration may be faster and achieve final resolution of the dispute. In the last respect, The Arbitration Act, 1992 in ss. 6 and 45 allows the parties to limit ability to appeal against the arbitrator’s decision”.

Appellant argued that leave was necessary. Robertson J. disagreed.  The sequence of the agreements resulted in the Terms of Reference being the last document signed.  Being the last, its provisions superseded the Arbitration Agreement and no leave was necessary. 

Robertson J. held that section 45(2) only applied if the arbitration agreement does not provide for an appeal on a question of law.  Because the Terms of Reference provide for an appeal, Appellant’s appeal is subject to section 45(1).  “The ability to appeal therefore falls under s. 45(1), which does not require leave of the court. The appeal may therefore be scheduled for hearing on a date selected by the Local Registrar”.

Respondent disputed whether Appellant had raised a question of law, submitting that the grounds involved findings of fact. Robertson J. effectively deferred that argument to the judge hearing the appeal as he was not required to decide on those grounds given that leave was not required.  In doing so, Robertson J. still commented on how numerous grounds of appeal and difficulty articulating the questions might indicate that the question is not a question of law.

[20] The Amended Originating Application, at para. 4, states six grounds of appeal. I would observe that difficulty in framing questions of law may indicate that there is no question of law.

[21] But, since leave to appeal is not required, I am not called upon to decide whether the proposed grounds are proper questions of law. That decision is left to the judge hearing the appeal”.

Robertson J. also deferred the question of costs to the judge hearing the appeal and requested the court’s Registrar to schedule the hearing of the appeal in consultation with parties’ counsel.

urbitral notes – First, though Appellant argued that it required leave to appeal, Robertson J. disagreed, holding that leave was unnecessary because the agreement allowed for an appeal on a question of law.  Though Respondent argued that the appeal did not raise a question of law, Robertson J. disagreed, holding that the judge hearing the appeal would determine whether the question qualified as a question of law.

Second, for different wording in the agreement to arbitrate and different results, see Farm Credit Canada v. National Bank of Canada, 2011 SKQB 321 (appeal dismissed Farm Credit Canada v. National Bank of Canada, 2011 SKCA 129), Home Automated Living, Inc. v. Securtek Monitoring Solutions Inc., 2017 SKQB 249 and Graham Building Services v. Saskatoon (City), 2018 SKQB 336.

Third, the parties had effectively entered into four (4) agreements to arbitrate.