Court Of Appeal Confirms Setting Aside An Arbitral Award Is A "Tall" Order

• Law Firm: McMillan LLP
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Author: Mr Jeremy Rankin, Connor Campbell and Sezen Izer
• Published date: 15 March 2023

The Ontario Arbitration Act gives parties the right to appeal arbitration awards to the Court on questions of law.¹ The recent Ontario Court of Appeal ("ONCA") decision in Tall Ships Development Inc. v. Brockville (City), 2022 ONCA 5516 emphasizes the Court's reluctance to interfere with arbitration awards where the parties agreed to limit their appeal rights.

Background

The City of Brockville ("Brockville") and Tall Ships Landing Development Ltd. ("Tall Ships") entered into an agreement to develop waterfront property in downtown Brockville (the "Project"). The Project included Tall Ships' performance of remediation work and the development of a condominium building and Maritime Discovery Centre ("MDC").²

Once construction was completed, the MDC was nearly 6,000 square feet larger than designed and approximately $1,800,000 over budget.³ Tall Ships claimed these additional costs from Brockville, in addition to other remediation and interest costs. Brockville denied liability.

The parties submitted Tall Ships' claims to arbitration. The parties' agreement provided that only questions of law would be subject to appeal. The arbitrator dismissed all of Tall Ships' claims by way of three arbitral awards.⁴

Tall Ships appealed the arbitrator's decisions to the Ontario Superior Court of Justice. The application judge allowed the appeal and found in favour of Tall Ships on the basis that the arbitrator made errors of law and made rulings in a manner that was procedurally unfair. The application judge therefore set aside the three arbitral awards and ordered a new arbitrator to be appointed to reconsider the matters.⁵

Court of Appeal Decision

Brockville appealed the application judge's decision to the ONCA. A unanimous panel of judges at the ONCA overturned the application judge's decision. The ONCA held that none of the issues before the arbitrator were properly subject to appeal because,

1. they were questions of mixed fact and law, not extricable questions of law; and
2. there was no procedural unfairness that could attract review under the Arbitration Act.

i. Questions of mixed fact and law

The arbitration agreement between the parties provided that only questions of law would be subject to appeal. The parties did not contract for appeal rights on questions of mixed fact in law (as they could have done per section 45(3) of the Arbitration Act).

The ONCA held that all the issues before the arbitrator were matters of contractual interpretation involving questions of...