Ontario – Arbitrator’s stand-alone jurisdiction decision a preliminary “ruling” open to de novo review – #820

In Clost v Rennie, 2023 ONSC 6998, the Court ruled that an arbitration agreement was invalid after  a de novo hearing to “decide the matter” of the arbitrator’s jurisdiction under section 17(8) of the Ontario Arbitration Act, 1991, SO 1991, c. 17 (the “Act”). The Applicant (also referred to in the decision and herein as “Norm”) contended that the arbitration agreement was invalid because it was contained in a lease agreement which he alleged was fraudulent because his signature was forged. The parties first submitted the jurisdictional issue to a sole arbitrator, who found the arbitration agreement to be valid. The Court accepted that a de novo hearing under s. 17(8) of the Act was required, finding that the Arbitrator had rendered a “ruling” on a preliminary question of jurisdiction rather than an “award”, even though the sole question he was asked to determine was jurisdiction. There was an extensive evidentiary record before the arbitrator relative to the jurisdictional issue.  This raised for debate the difference between an “award” and a “ruling” on a preliminary question which can be decided by the Court on a hearing de novo. The Court completed its own review of the extensive evidentiary record and ultimately concluded that the lease (and therefore the arbitration agreement) was fraudulent and invalid and the arbitrator had no jurisdiction  

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Stephanie Reflects (2023): What’s the Standard? Reviews, Appeals and “Decisions of the Matter” – #806

For better or for worse, parties can challenge arbitral decisions through multiple avenues, whether through a review of a preliminary jurisdictional ruling, set-aside application, or appeal. Arbitration case law in 2023 highlighted a striking lack of consistency between the standards of review and appeal applied in each of these different avenues.

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Newfoundland and Labrador – Set-aside application denied where  award meets Vavilov reasonableness test – #793

In Zenda Mount Pearl Square Enterprises Limited Partnership v MP TEI Realty Limited Partnership, 2023 NLSC 142, the Applicant/Respondent in the arbitration applied to set aside an arbitral award arising from a dispute involving the contractual entitlement to refinancing proceeds that the Applicant/Respondent received as a result of a rogue transfer of funds. Section 14 of the Newfoundland and Labrador Arbitration Act, RSNL 1990, c A-14 (the “Arbitration Act”) gives the Court the authority to set aside an arbitral award if it finds that there was Arbitrator misconduct or the award was improperly procured. The Court held that the burden is on the applicant to show that the award is improper as a matter of fact, law, or mixed fact and law, and that the award falls outside out any potential reasonable outcome. The Court’s analysis and reasons looked at whether the decision of the Arbitrator was reasonable, applying Layman v Layman Estate, 2016 NLCA 13 (“Layman”). Focusing, in part, on the Arbitrator’s application of the principles of contract interpretation set out in Creston Moly Corp. v Sattva Capital Corp., 2014 SCC 53 (“Sattva”), the Court concluded that the Arbitrator’s decision to divide the proceeds equally between the parties was reasonable based on the terms of the parties’ agreements. The Court dismissed the set-aside application on the basis that the decision of the Arbitrator, in respect of all of the grounds reviewed by the Court, was reasonable. This case has application to the review (including on set-asides) of arbitration decisions on the basis of reasonableness and the contractual interpretation of commercial agreements. 

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Manitoba – Awards set aside after arbitrator re-wrote parties’ bargain – #790

In Buffalo Point First Nation and Buffalo Point Development Corp Ltd v Buffalo Point Cottage Owners Association, Inc, 2023 MBKB 141, the Court confirmed its earlier decision on the motion for leave to appeal, in which it held that the correctness standard of appeal in Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 (“Vavilov”) applies to review of private arbitration awards appealed under provincial arbitration legislation. The Court held that the arbitrator had erred because he exceeded the jurisdiction granted to him under the parties’ agreement. First, the arbitrator exceeded the jurisdiction to “implement” or “clarify” a Consent Award which the parties had entered into following an earlier dispute. Second, the arbitrator’s award constituted a significant rewrite of the bargain (…) by introducing new concepts alien to the negotiated bargain”. 

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Ontario – No hearing de novo in case of challenge to procedural fairness – #742

In All Communications Networks of Canada v. Planet Energy Corp., 2023 ONCA 319, the Court dismissed the appeal of a judgment upholding an arbitral award in favour of Respondent All Communications Networks of Canada (“ACN”) in the amount of $29,259,787 and made an order enforcing the award. In first instance, Planet Energy Corp. (“Planet”) sought to set aside the arbitral award based on the failure of due process, arguing: (1) that it was not given the opportunity to present its case; and (2) that the Arbitrator’s ruling violated public policy. Before the Court of Appeal, Appellant Planet raised the additional argument that the first instance judge failed to apply the right standard of review. Planet argued that a de novo hearing was required to examine properly the arguments raised against the arbitral award. The Court of Appeal dismissed Planet’s arguments and confirmed that a party seeking to set aside an arbitral award based on a failure of due process must prove that the Arbitrator’s conduct is serious enough to dismiss the application to enforce the award under the law of the enforcing State (here, Ontario). The Court of Appeal also confirmed that a party seeking to set aside an award based on a violation of public policy shall demonstrate that the award offends Ontario’s principles of justice and fairness in a fundamental way.

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B.C. – No error of law where some evidence supports findings of fact – #735

In 1550 Alberni Limited Partnership v. Northwest Community Enterprises Ltd., 2023 BCCA 141, the British Columbia Court of Appeal confirmed the decision of Justice Groves, who refused to grant leave to appeal from an arbitral award that turned largely on the Arbitrator’s interpretation of the parties’ agreement, as modified during the course of its performance. The Court found that the petitioner failed to establish that the proposed appeal raised an extricable question of law – because there was some evidence that supported the findings of fact. In so doing, the Court left the issue of the standard of review of the Arbitrator’s decision following the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, [2019] 4 S.C.R. 653 for another day.

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Ontario –Arbitrator erred by allowing surrounding circumstances to overwhelm written agreement – #733

In Burwell v. Wozniak, 2023 ONSC 1685, Justice Jensen of found that the Arbitrator erred in law by allowing a promise in an email to overwhelm the words of a subsequent formal trust agreement. The Court varied the Arbitrator’s decision about the formation of a trust, holding that the Arbitrator’s reliance on surrounding circumstances while downplaying the words of the subsequently formalized agreement, gave rise to an extricable error of law.

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B.C. – Appeal requires legal errors to affect outcome – #713

In Spirit Bay Developments Limited Partnership v. Scala Developments Consultants Ltd., 2022 BCCA 407 (“Spirit Bay”) the Court affirmed the principle that courts should be reluctant to intrude in arbitral proceedings – even in cases where the award contains unhelpful discursions into irrelevant legal principles and legal errors that don’t affect the outcome. 

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Manitoba – Vavilov inapplicable to arbitration appeals – #709

In Christie Building Holding Company, Limited v. Shelter Canadian Properties Limited, 2022 MBKB 239, Christie Building Holding Company, Limited (“Christie”), applied for leave to appeal two arbitral awards under section 44 of the Manitoba Arbitration Act, CCSM c. A120. Christie asserted six separate grounds for leave to appeal, one of which consisted of four alleged errors of contractual interpretation. It also argued that a portion of the main award should be set aside because: the respondent did not comply with the Arbitration Agreement on issues of document production; that it was not given a fair opportunity to examine parties; and the arbitrator relied on case law not cited by the parties. Chief Justice Joyal dismissed all applications. In holding that none of Christie’s arguments for leave to appeal gave rise to a question of law of arguable merit, he considered the applicable standard of review. He found that “the standard of review on which the merits of this appeal would have to be judged, assuming leave was granted, is reasonableness. Until the Supreme Court of Canada has answered the question of what effect, if any, Vavilov has on Teal Cedar and Sattva, those authorities remain good law and are binding on this court” (paragraph 95). He also stated that if the applicable standard of review was, in fact, correctness, he would have still denied leave as the incomplete record from the arbitration compromised his ability to conduct a meaningful review, even for the narrow purpose of assessing leave. He held it would, therefore, be “unfair to grant leave and proceed with an appeal when a proper and meaningful review would ultimately be impossible” (paragraph 102). This case summary will focus on the analysis of the applicable standard of review.

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Alberta – Alberta never bound by Sattva and Teal Cedar – #705

In Esfahani v Samimi, 2022 ABKB 795, the parties’ marriage broke down and they agreed that certain issues would be decided by way of arbitration and other matters by litigation. The Arbitrator issued an award, which Husband appealed and sought to set aside pursuant to s. 44(1) (appeals) of the Alberta Arbitration Act, RSA 2000, c A-43, but not s. 45 (set asides) of the Act. Ultimately, Justice Marion dismissed the appeal and declined to set aside the award, but varied and remitted certain issues back to the Arbitrator. This Case Note focusses on the following two issues:

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