Court of Appeal for Ontario

Citation: Lombard Canada Co. v. Axa Assurance Inc., 2007 ONCA 550

Date: 2007-08-02

Docket: M34990

Between:

LOMBARD CANADA CO. Applicant/Appellant

and

AXA ASSURANCE INC. Respondent

Before: JURIANSZ J.A. (In Chambers)

Counsel: William Zener for the applicant/appellant John S. McNeil, Q.C. for the respondent

Heard: May 14, 2007

Reasons for Decision

[1] This is a motion for an order extending the time for serving and filing a Notice of Motion for Leave to Appeal to the Court of Appeal. The motion raises issues concerning the scope of the right to appeal a decision of an arbitration tribunal and requires reconciling earlier decisions of this court. The underlying dispute involves three insurance companies and the Fault Determination Rules, R.R.O. 1990, Reg. 668 (the “Rules”), issued under the Insurance Act, R.S.O. 1990, c. I.8.

[2] Pilot Insurance Company (“Pilot”) has paid and continues to pay statutory accident benefits to its insured as a result of injuries suffered in a motor vehicle accident. An arbitrator was appointed pursuant to s. 275 of the Insurance Act to determine whether Lombard Insurance Co. (“Lombard”) or Axa Assurance Inc. (“Axa”) were liable to indemnify Pilot.

[3] Lombard’s argument to the arbitrator was that Rule 12(4) of the Fault Determination Rules applied. That rule directs that 100% of the fault in a collision between two vehicles driving in opposite directions be allocated to the vehicle that is over the centre line of the road when the accident occurs. The arbitrator concluded that Rule 12(4) did not apply because three vehicles were involved, and the incident was not described in any of the Fault Determination Rules. Thereupon, the arbitrator applied Rule 5(1) of the Fault Determination Rules, which provides that the degree of fault is to be determined in accordance with the ordinary rules of law if an incident is not described in the Rules. The arbitrator found that Lombard’s insured was 100% at fault for the collision and that Lombard was wholly liable to indemnify Pilot.

[4] Lombard sought to appeal the arbitrator’s decision. Its right to appeal is governed by s. 45(1) of the Arbitration Act, S.O. 1991, c. 17, that provides:

If the arbitration agreement does not deal with appeals on questions 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.

[5] The application judge took the view that Lombard’s appeal would involve more than a question of law. He stated that findings of fact were necessary to determine what vehicles were involved in the incident, which of the Fault Determination Rules applied, and, for that matter, whether the incident was even described in the Rules. Consequently, the application judge refused to grant Lombard leave to appeal the arbitrator’s decision.

[6] The application judge went on to state what he would have done had the appeal involved only a question of law. First, he indicated he would have granted leave because he considered that subsections (a) and (b) of s. 45(1) of the Arbitration Act would be satisfied. Second, he indicated he would have dismissed the appeal on its merits because, in his view, the arbitrator had made no error of law.

[7] Lombard now seeks to appeal the application judge’s decision to this court. Section 49 of the Arbitration Act provides:

An appeal from the court’s decision in an appeal of an award, an application to set aside an award or an application for a declaration of invalidity may be made to the Court of Appeal, with leave of that court.

[8] The application judge’s decision was made February 15, 2007. The Notice of Motion for Leave to Appeal to this court was not served until March 7, 2007, after the 15 day period prescribed for doing so, thus making this motion for an extension of time necessary.

[9] The respondent submits the applicant’s Notice of Motion for Leave to Appeal is ill conceived. The respondent submits the issue is not whether the Court of Appeal may grant leave to appeal, but whether Lombard can proceed with any appeal until it has first obtained leave from the Superior Court to appeal the arbitrator’s decision.

[10] Relying on this court’s decision in Hillmond Investments Ltd. v. Canadian Imperial Bank of Commerce (1996), 1996 413 (ON CA), 29 O.R. (3d) 612 (C.A.), the respondent submits that generally there is no appeal from a decision refusing leave to appeal, and that in those exceptional cases where such a right exists, the appeal lies to the Divisional Court. In Hillmond, this court quashed an appeal from a decision refusing leave to appeal an arbitrator’s decision under s. 45(1) of the Arbitration Act. Finlayson J.A. said, at 618, “Allowing an appeal from a refusal to grant leave to appeal defeats the object of arbitration by frustrating the legislated impediment to appeals as of right. The purpose of s. 45 of the Arbitration Act, 1991 is to stop an appeal unless the [Superior Court] grants leave.”

[11] Finlayson J.A. recognized there should be redress in exceptional circumstances. Where a Superior Court judge “mistakenly declines jurisdiction on a leave motion by acting upon a wrong principle, redress should be had to an appellate court”: Hillmond at 624. However, he observed at 625 that this limited right of appeal would be to the Divisional Court, not the Court of Appeal, “because the order, however mistaken, still is not a final order: it remains interlocutory.”

[12] In the subsequent decision Denison Mines Ltd. v. Ontario Hydro (2001), 2001 5681 (ON CA), 56 O.R. (3d) 181 (C.A.), this court took a somewhat different view. In that case, a judge of the Superior Court had found that the parties had agreed there would be no appeal from the decision of the arbitrator. The judge therefore dismissed an application by Denison Mines for leave to appeal from an arbitrator’s award without considering whether leave to appeal should be granted according to the criteria of s. 45(1) of the Arbitration Act. Denison Mines appealed to this court. The respondent, Ontario Hydro, moved to quash the appeal on the grounds that there was no right of appeal or that the refusal to grant leave was an interlocutory decision. Writing for a unanimous court, Morden J.A. re-iterated the holding of Hillmond at para. 6:

The non-appealability of decisions refusing or granting leave to appeal is the general rule and, subject to the exception to which I shall refer shortly, it should, as Hillmond held, be applicable to appeals from orders made under s. 45(1) of the Arbitration Act, 1991. The rule flows from the strong implication that, notwithstanding the wording of s. 6(1)(b) of the Courts of Justice Act, a general statute, no appeal is intended from an order made refusing or granting leave to appeal. Any other conclusion would defeat the purpose of s. 45(1), which is to limit appellate recourse to the courts in arbitration matters.

[13] Morden J.A. went on to explain at para. 8 that there is an exception to this general rule “where the judge mistakenly declines jurisdiction.” However, he took a different view of whether the order dismissing a motion or application for leave to appeal under s. 45(1) was interlocutory or final. He noted, at para. 12, that the leading authority in Ontario on the final/interlocutory distinction is Hendrickson v. Kallio, 1932 123 (ON CA), [1932] O.R. 675 (C.A.), which stands for the principle “that orders that finally determine the issues raised in an application are final orders”. Morden J.A. pointed out that the court in Hillmond did not follow Hendrickson. Morden J.A. reasoned that the decision to deny leave to appeal finally disposed of the moving party’s substantive right to relief and consequently was a final order. The court in Denison Mines refused to quash the appeal.

[14] It is important to note that the appeal that was allowed to proceed in Denison Mines was whether the appellant had the right to seek leave to appeal. Ultimately, this court, in a decision reported at 2002 20161 (ON CA), 58 O.R. (3d) 26 (C.A.), allowed the appeal and remitted the matter to the Superior Court to determine Denison Mine’s application for leave to appeal the arbitration decision.

[15] The respondent also relied on Milton (Town) v. Kalmoni Establishments Inc. (1996), 1996 1534 (ON CA), 31 O.R. (3d) 157 (C.A.), but I did not find the case helpful. In that case, this court held that where a single judge of the Divisional Court refuses leave to appeal a decision of the Ontario Municipal Board, the applicant must move before a full panel of the Divisional Court to set aside the order before seeking recourse in this court. The case concerns a quite different issue.

[16] I regard Denison Mines as stating the applicable legal principle and so conclude that a decision of the Superior Court refusing leave to appeal is a final order. Consequently, s. 6 of the Courts of Justice Act is not an impediment to Lombard’s appeal.

[17] The impediment that the Lombard faces is the rule stated in Hillmond and re-iterated in Denison Mines that there is no appeal from a refusal to grant leave under s. 45(1) of the Arbitration Act, save where the Superior Court judge mistakenly declines jurisdiction.

[18] I turn to that question keeping in mind that the issue I must decide is whether time should be extended to permit the filing of the Notice of Application for Leave to Appeal. In order to assess whether the proposed Application has sufficient merit to warrant an extension of time I must consider whether the application judge mistakenly declined jurisdiction. In doing so I am not determining the merits of the Application for Leave. That would be a matter for a panel of this court had the Notice been filed within time. I assess the merits only in so far it is a relevant factor in deciding whether to grant an extension of time. The Application for Leave would be without merit if there was no right of appeal at all.

[19] In this case, the application judge carefully considered s. 45 of the Arbitration Act and gave detailed reasons why he refused to grant leave to appeal. In my view, it is clear the application judge did not decline jurisdiction but purported to exercise it. The applicant recognizes this and submits that by acting upon a wrong principle the judge declined to exercise proper jurisdiction. The applicant submits the application judge failed to act on the correct principle of how the Fault Determination Rules should be interpreted and applied on the basis of the physical positions of the vehicles at the very moment of impact without regard to the circumstances and their positions leading up to impact. In my view, the application judge considered that contention. He observed there was no language in the Insurance Act or the Rules that refers to the “moment of impact”. Rather, s. 3 of the Rules refers to the “incident”. I see no error of principle that would bring this case within the exception to the general rule that there is no right of appeal from a refusal to grant leave pursuant to s. 45 of the Arbitration Act, 1991.

[20] I take the view that the application judge did not mistakenly decline jurisdiction and, consequently, there is no appeal from his refusal to grant leave to appeal the arbitrator’s decision. Therefore, I refuse to grant an extension of time to file the Notice of Application for Leave to Appeal.

[21] In case this matter proceeds to a full panel, I consider an additional argument advanced by the respondent. The respondent submits that Lombard must first successfully reverse the application judge’s refusal to grant leave to appeal before it can serve and file an application seeking leave to attack his findings on the merits of the arbitrator’s decision.

[22] The application judge’s reasons addressing the merits are akin to a court’s assessment of damages after a finding of no liability in a tort case. His reasons on the merits are without legal effect until his refusal to grant leave has been set aside and replaced with an order granting leave to appeal. Nevertheless, I see no reason why the applicant should not be able to raise both issues in one appeal, provided it is successful on the first issue before the second issue becomes relevant. This would be similar to the unsuccessful plaintiff in a tort case appealing both a finding of no liability and the provisional assessment of damages in one appeal proceeding.

[23] In this case, admittedly the bulk of the Notice served does address the application judge’s findings on the merits. However, para. 2 of the grounds for appeal in the Notice claims that the application judge erred by not finding the applicant’s appeal of the arbitrator’s decision was based on an issue of law only. Therefore, I consider that the Notice identifies both the judge’s refusal to grant leave as well as his provisional findings on the merits. Accordingly, I do regard this argument as an impediment to an extension of time being granted. The sole impediment is that Lombard has no right of appeal.

[24] For these reasons, the application for an extension of time is dismissed with costs in favour of the respondent fixed in the amount of $1,250.00 inclusive of disbursements and GST.

“R.G. Juriansz J.A.”

RELEASED: August 2, 2007