Simon's Megalomaniacal Legal Resources

Arbitration - Court Appeals [s.45]

. Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C.

In Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C. (Ont CA, 2023) the Court of Appeal considered the arbitration court appeal provisions under both s.45 and s.49 of the Arbitration Act in a mucky, convoluted context. Section 45 provides for appeals to the Superior Court, with or without leave to appeal, as the parties agree - or no appeal, also if the parties agree. If a Superior Court appeal is heard and decided, further appeal lays to the Court of Appeal - with leave [s.49].

Here, the appellant sought leave to appeal to the Superior Court, which was denied - but then they further sought an appeal of that denial (which is not normally allowed). The respondent in that appeal sought to quash it, which - surprisingly - was denied. The Court, drawing upon the Denison case, drew a distinction between denial of appeal grounded on the merits of the leave to appeal motion versus denial on it on Arbitration Act availability. In the former case the Court of Appeal could hear an appeal from a denial of leave to appeal (whew):

[1] When an arbitration agreement provides that an award made under it may be appealed on a question of law, a party dissatisfied with the award may appeal on such a question to the Superior Court of Justice as of right. But when no such appeal is provided for in the arbitration agreement, a party may only appeal an award on a question of law with leave of that court, and only “[i]f the arbitration agreement does not deal with appeals on questions of law”: Arbitration Act, 1991, S.O. 1991, c. 17, ss. 45(1) and (2) (the “Arbitration Act”).[1]

[2] In other words, the Arbitration Act contemplates three different scenarios regarding appeals to the court on questions of law. The arbitration agreement may expressly provide for, be silent on, or preclude such appeals. In the first scenario there is an appeal as of right; in the second, there is an opportunity to appeal but only with leave; and in the third, there is no appeal or right to seek leave to appeal at all.

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[22] If the Superior Court has decided an appeal, either because leave to appeal was granted by the Superior Court or because there was an appeal to that court as of right, s. 49 of the Arbitration Act provides for a further appeal, with leave, to this court. But, as TEBC emphasizes, that is a process available only when the Superior Court has entertained and decided an appeal − the Arbitration Act does not provide for an appeal to this court from a refusal by the Superior Court to grant leave to appeal and thus to entertain an appeal at all.

[23] TEBC places heavy reliance on Hillmond Investments Ltd. v. Canadian Imperial Bank of Commerce (1996), 1996 CanLII 413 (ON CA), 29 O.R. (3d) 612 (C.A.), in which an appeal to this court from the refusal of a Superior Court judge to grant leave to appeal an arbitration award was quashed: at p. 626. The Hillmond court, at pp. 617-18, gave a number of reasons for doing so: the Arbitration Act does not grant a right of appeal from an order refusing leave to appeal; the appellant could not rely upon s. 6(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”), which provides for an appeal to this court from a final order of a Superior Court judge, as the refusal by the lower court to grant leave to appeal was an interlocutory order; and allowing an appeal from a refusal to grant leave to appeal defeats the object of arbitration by frustrating the legislated impediment to appeals.

[24] However, Hillmond was distinguished in Denison Mines Ltd. v. Ontario Hydro (2001), 2001 CanLII 5681 (ON CA), 56 O.R. (3d) 181 (C.A.). In Denison, the appellant had applied to a Superior Court judge for leave to appeal an arbitration award; leave to appeal was refused. The appellant appealed the dismissal of its application for leave to this court. The respondent’s motion to quash the appeal, relying on Hillmond, was dismissed.

[25] The court in Denison acknowledged the general rule that no appeal lies from an order granting or refusing leave to appeal. However, it also held that there was an established exception to that general rule where the appeal from the refusal to grant leave to appeal is premised on a submission that the judge refusing leave to appeal mistakenly declined jurisdiction to consider whether leave to appeal was warranted: at para. 8. The court went on to hold that in these circumstances the order declining leave to appeal is final within the meaning of s. 6(1)(b) of the CJA: at para. 21.

[26] The key distinction between these two authorities is that in Denison, unlike in Hillmond, the judge had dismissed the leave to appeal application holding that the parties’ arbitration agreement precluded appeals − the parties had contracted out of any right of appeal − and that s. 45(1) was not available as a route to seek leave to appeal. She had not gone on to consider the grounds on which leave to appeal was sought, as she in effect considered herself to be without jurisdiction to do so based on her interpretation of the appeal provisions of the arbitration agreement. The appeal to this court from that decision was premised on the application judge’s interpretation, and therefore her declining of jurisdiction, being mistaken.[4]

[27] The case at bar is indistinguishable from, and is governed by, Denison. As in Denison, here the application judge interpreted the arbitration agreement as precluding appeals, rendering s. 45(1) of the Arbitration Act unavailable to BIM. Given his interpretation of the arbitration agreement, he did not consider whether the grounds of appeal raised by BIM were deserving of leave. He therefore declined to exercise any jurisdiction to consider whether leave to appeal should be granted. The main point of BIM’s appeal to this court is its contention that the application judge misinterpreted the arbitration agreement as precluding appeals and therefore mistakenly declined jurisdiction to consider whether leave to appeal should be granted under s. 45(1).

[28] TEBC argues that Denison is distinguishable because there the parties had agreed not to argue the grounds for leave until the application judge decided whether the arbitration agreement precluded appeals, whereas here the parties argued the grounds for leave at the same hearing that they argued whether the contracts precluded appeals.

[29] It is not germane how many issues the parties put before the application judge − what is germane is that the application judge declined to exercise any jurisdiction to consider whether BIM’s grounds were deserving of leave to appeal, having decided, as a preliminary issue, that the contracts precluded appeals, which made s. 45(1) of the Arbitration Act unavailable. On the authority of Denison, an appeal on the question of whether he mistakenly declined jurisdiction lies to this court.

. Tall Ships Development Inc. v. Brockville (City)

In Tall Ships Development Inc. v. Brockville (City) (Ont CA, 2022) the Court of Appeal addressed a case where they held that an application judge had 'stretched' their interpretations to reach a 'question of law' (by finding an 'extricable' legal issue), which allowed the respondent to access a statutory court appeal right under s.45 [appeals on questions of law when provided in the arbitration agreement] of the Arbitration Act:

[2] Central to this appeal is the fact that the parties agreed that the decision of the arbitrator was to be final, subject only to appeals on questions of law under s. 45(2) of the Arbitration Act, 1991, S.O. 1991, c. 17 (“Arbitration Act”). The application judge erred by characterizing questions of mixed fact and law as extricable questions of law. Moreover, in characterizing the same arguments as breaches of procedural fairness falling under s. 46 of the Arbitration Act, the application judge effectively bootstrapped the substantive arguments. This court has recently emphasized the narrow basis for setting aside an arbitral award under s. 46 of the Arbitration Act, which is not concerned with the substance of the parties’ dispute and is not to be treated as an alternate appeal route: Alectra Utilities Corporation v. Solar Power Network Inc., 2019 ONCA 254, 145 O.R. (3d) 481, at paras. 20-27, 40-44, leave to appeal refused, [2019] S.C.C.A. No. 202; Mensula Bancorp Inc. v. Halton Condominium Corporation No. 137, 2022 ONCA 769, at paras. 5, 40.

[3] In this case, the parties selected an arbitrator to deal with a number of issues arising out of a large project with a number of interrelated contracts and agreements. Moreover, they specifically chose to agree that only questions of law would be subject to appeal. As a matter of policy, and as the Supreme Court of Canada has stated repeatedly, judges exercising their appellate powers under s. 45 of the Arbitration Act should be cautious about extricating questions of law from the interpretation process: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 54-55; Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, [2017] 1 S.C.R. 688, at paras. 45-47. Failing to exercise such caution will result in the very inefficiencies, delays and added expense that choosing an arbitral process seeks to avoid. As I will explain in detail below, I conclude that none of the alleged errors made by the arbitrator could properly be considered extricable errors of law. Nor were there any breaches of procedural fairness that could attract review pursuant to s. 46 of the Arbitration Act.

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[15] As I have indicated, this appeal turns on whether the arbitrator fell into any errors of law in the course of determining Brockville’s liability, and in particular, whether the application judge incorrectly categorized questions of mixed fact and law as extricable questions of law. In my view, she erred in so doing. The alleged breaches of procedural fairness depend on the substantive questions of whether the arbitrator fell into errors of law, which, in my view, he did not.

[16] The principle that in exercising their role as appellate courts, judges should not be too ready to characterize particular issues as issues of law because doing so may render the point of consensual arbitration nugatory is of particular importance when, as here, the impugned terms form a relatively small part of a large and complex arbitration decision. As the Supreme Court has stated, “the circumstances in which a question of law can be extricated from the interpretation process will be rare”: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at para. 113, citing Sattva, at para. 55.