COURT OF APPEAL FOR ONTARIO DATE: 20220915 DOCKET: C69965
Doherty, Huscroft and Harvison Young JJ.A.
BETWEEN
Optiva Inc. Applicant (Appellant)
and
Tbaytel Respondent (Respondent)
Counsel: Eric van Eyken and Andrea Coates, for the appellant Optiva Inc. Alexander D. Rose and Alexandra Urbanski, for the respondent Tbaytel
Heard: March 31, 2022 by video conference
On appeal from the order of Justice W.D. Newton of the Superior Court of Justice, dated April 20, 2021, with reasons reported at 2021 ONSC 2929.
Doherty J.A.:
I Overview
[1] The respondent, Tbaytel (“Tbaytel”), is an independent provider of telecommunication services. Tbaytel decided to update its systems. In June 2016, Redknee Inc., later rebranded as the appellant, Optiva Inc. (“Optiva”), agreed to sell various services and software products to Tbaytel. Tbaytel agreed to purchase a new software package called “Unified 10” for about $8.5 million. The parties expected that the project would be completed by July 2018.
[2] Unfortunately, problems developed. Tbaytel terminated the contract in March 2018, alleging various breaches by Optiva. In the contract, the parties had agreed that disputes arising out of, or in connection with, the contract would be resolved by arbitration. In November 2018, the parties entered into an arbitration agreement, naming the arbitrator and describing the powers of the arbitrator.
[3] The arbitrator ruled that Tbaytel could bring a summary judgment motion in the arbitration. He later held that some of the issues raised could be properly resolved by way of a summary judgment motion. The arbitrator ultimately concluded that Optiva had breached the contract. The arbitrator held that Tbaytel was entitled to terminate the agreement and recover monies paid out under, or in reliance on, the agreement. The arbitrator gave lengthy reasons in support of his conclusions and issued a partial award in February 2020, requiring Optiva to pay Tbaytel about $4,390,000.
[4] Optiva moved in Superior Court for an order setting aside the arbitrator’s award pursuant to ss. 17 and 46 of the Arbitration Act, 1991, S.O. 1991, c. 17 (the “Act”). Optiva also sought leave to appeal on questions of law pursuant to s. 45 of the Act. In reasons released on April 20, 2021, the application judge refused to set aside the arbitrator’s order and dismissed Optiva’s application for leave to appeal.
[5] In October 2021, this court granted leave to appeal from the application judge’s order.
[6] I would dismiss the appeal.
II The Grounds of Appeal
[7] There are four grounds of appeal:
A. Did the application judge err in holding that Optiva’s application was governed by s. 17 of the Act and Optiva had failed to challenge the ruling that Tbaytel could proceed by summary judgment within 30 days of receiving notice of the ruling, as required by s. 17(8)?
B. Did the application judge err in holding that the arbitrator could proceed by way of summary judgment motion?
C. Did the application judge err in holding that the arbitrator did not base his interpretation of the limitation of liability clause on a legal theory not advanced by either party?
D. Did the application judge err in refusing to grant leave to appeal from the arbitrator’s interpretation of the limitation of liability clause in the contract, and/or the arbitrator’s interpretation of the arbitration agreement?
III Procedural History
[8] The arbitrator convened a case management meeting on July 2, 2019. Counsel for Tbaytel indicated Tbaytel proposed to bring a summary judgment motion in respect of at least some of the claims Tbaytel was advancing against Optiva. Counsel indicated that various admissions made by Optiva’s CEO and other executives established many of the material facts and eliminated the need for detailed expert evidence, and extensive and complicated documentary productions.
[9] In the case management meeting, counsel for Optiva raised “a concern” about the availability of a summary judgment motion in the arbitration, but made no objection to the fixing of a timetable for the preparation and filing of the necessary material.
[10] The arbitrator issued a procedural order stating in part:
I accept that a motion for summary judgment to be launched by the Claimant Tbaytel may obviate or reduce the significant time and cost of expansive documentary production that might be required in this arbitration.
[11] The arbitrator set out a timetable for the perfection and hearing of the summary judgment motion. The timetable included the filing of pleadings, affidavits, documents, cross-examinations, if requested, and facta.
[12] Tbaytel filed a Notice of Motion for Summary Judgment and its supporting material as required under the timetable. Optiva did the same. In its written submissions, Optiva took the position that the arbitrator had no jurisdiction to consider a summary judgment motion, absent the consent of both parties. Optiva did not consent.
[13] Tbaytel cross-examined on Optiva’s affidavits. Optiva elected to not cross-examine Tbaytel’s affiants.
[14] On November 21, 2019, after hearing further submissions from counsel, the arbitrator held that he had jurisdiction to proceed by summary judgment motion. In his oral reasons, he concluded:
So the simple answer, in my view, is that I have jurisdiction based on section 20 of the Arbitration Act and section 8.1 of the arbitration agreement, and the lack of exceptions or exclusions.
[15] The arbitrator reiterated his conclusion in his procedural order, dated November 21, 2019:
I have further determined that the Arbitration Act and the Arbitration Agreement directing this Arbitration grant me as Arbitrator, unfettered discretion to rule on all motions with no specified exceptions, and to determine the procedure to be followed in the conduct of this Arbitration, provided that the process is fair and impartial, and will produce a just result.
[16] The arbitrator heard the motion over two days. He concluded that summary judgment should be granted on some of the claims advanced by Tbaytel. The arbitrator provided extensive reasons for that decision in February 2020. In those reasons, he affirmed Tbaytel’s right to terminate the agreement and recover monies it had paid to Optiva as well as other related damages.
IV The Issues
A. Did the application judge err in holding that Optiva was required to challenge the arbitrator’s ruling that Tbaytel could proceed by summary judgment motion within 30 days of receiving notice of that ruling?
[17] Section 17(1) of the Act provides:
An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration …
[18] Section 17(8) requires that:
If the arbitral tribunal rules on an objection as a preliminary question, a party may, within thirty days after receiving notice of the ruling, make an application to the court to decide the matter.
[19] On the application before the Superior Court, Tbaytel submitted that Optiva was required to bring an application in the Superior Court challenging the arbitrator’s preliminary ruling that he could proceed by summary judgment procedure within 30 days of the arbitrator giving notice of that decision. Optiva did not do so, but instead proceeded with the arbitration and challenged the ruling only after the arbitrator had decided the merits against Optiva.
[20] The application judge agreed that s. 17(8) required Optiva to challenge the decision to proceed by summary judgment motion within 30 days of receiving notice of that decision. He went on, however, to conclude that even if Optiva’s challenge had been brought in a timely fashion, he would have dismissed the application. In his view, the arbitrator had jurisdiction to hear the summary judgment motion: Optiva Inc. v. Tbaytel, 2021 ONSC 2929, at paras. 42-46.
[21] On appeal, Optiva submits that s. 17 of the Act has no application to procedural orders like the order made by the arbitrator permitting Tbaytel to proceed with a summary judgment motion. Optiva places heavy reliance on Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642, 97 O.R. (3d) 161.
[22] In response, Tbaytel submits that Optiva repeatedly characterized its challenge to the arbitrator’s ability to proceed by summary judgment motion as a jurisdictional challenge. Optiva argued the arbitrator had no authority to conduct a proceeding by way of summary judgment motion. Tbaytel argues that Optiva cannot resile from that position to avoid its failure to comply with the time limit imposed by s. 17(8).
[23] I cannot accept that Optiva’s characterization of the argument as jurisdictional is determinative. Inforica Inc. is the controlling authority. In Inforica Inc., the responding party in the arbitration asked the arbitrator to make an order for security for costs against the claimant. The arbitrator made that order. The claimant successfully moved in Superior Court to set aside that decision on the ground that the arbitrator had no jurisdiction to make an order for security for costs.
[24] This court reversed the application judge. In doing so, it described the scope and nature of s. 17 of the Act. Specifically, the court held that the arbitrator’s decision ordering security for costs was not a ruling on the arbitrator’s “own jurisdiction” under s. 17(1). Consequently, the ruling did not fall under s. 17(1), and the other parts of s. 17, including the time limit in s. 17(8), had no application.
[25] Sharpe J.A. wrote for the court. He said, at para. 16:
Section 17(1) defines the parameters of s. 17, allowing an arbitrator to rule on his “own jurisdiction to conduct the arbitration”. In my opinion, on a fair reading of that language in light of the modern approach that respects the autonomy of the arbitral process and discourages judicial intervention, s. 17(1) is concerned with only the arbitrator’s jurisdiction to entertain the subject matter of the dispute. Asking an arbitrator to decide whether he has jurisdiction to order security for costs does not amount to asking him whether he has jurisdiction to conduct the arbitration. The words “jurisdiction to conduct the arbitration” in s. 17(1) connote jurisdiction over the entire substance or subject matter of the case, not jurisdiction to make interlocutory or procedural orders that do not determine the merits of the dispute and that are made along the way to final resolution of the issues. [Emphasis added.]
[26] Sharpe J.A., at para. 23, made it clear that the application of s. 17 did not depend on whether a particular order was classified as procedural or something other than procedural:
The issue is not whether the order is, strictly speaking, procedural in nature – the issue is whether the order amounted to a ruling on the arbitrator’s “own jurisdiction to conduct the arbitration”. In my view, it did not and s. 17(8) did not apply to confer a jurisdiction on the application judge, even if the order for security for costs was not, strictly speaking, procedural in nature.
[27] The subject matter of the dispute between Tbaytel and Optiva arose out of the contract and the problems that ensued. The ruling on the availability of a summary judgment motion was a ruling on the procedure to be followed in the arbitration. It was no more a ruling on the merits of the subject matter of the arbitration, than was the ruling in Inforica Inc. on the availability of an order for security for costs. Both matters, whether described as procedural or something else, were incidental to the determination of the merits of the subject matter of the dispute.
[28] Applying Inforica Inc., the arbitrator’s decision to proceed by summary judgment was not a decision under s. 17(1) of the Act. Section 17(8) did not apply to any challenge brought to the arbitrator’s decision to proceed by summary judgment. The application was not out of time. Optiva’s application to set aside the arbitrator’s award was properly brought under s. 46 of the Act.
B. Did the application judge err in holding that the arbitrator could proceed by way of summary judgment motion?
[29] Optiva and Tbaytel, both sophisticated commercial actors, agreed that any disputes arising out of the contract would be resolved by private arbitration. When a dispute did arise, Optiva and Tbaytel, in accordance with the agreement and with the assistance of counsel, prepared an arbitration agreement and entered into arbitration on the terms of that agreement. Pursuant to the agreement, the parties chose their arbitrator. The parties’ fashioning of their own rules governing the conduct of the arbitration and their selection of a mutually agreeable arbitrator implies a very limited role for judicial oversight of the conduct or outcome of that arbitration: Popack v. Lipszyc, 2016 ONCA 135, 129 O.R. (3d) 321, at para. 26.
[30] The agreement fashioned by Optiva and Tbaytel gave the arbitrator broad powers to conduct the arbitration. Section 8 of the agreement describing the Powers of the Arbitrator read in part:
8.1 Without limiting the jurisdiction of the Arbitrator under the Arbitration Act, but subject to the Parties’ agreement, including the dispute resolution provisions, the Arbitrator’s jurisdiction shall include jurisdiction to consider and rule upon all motions during the Arbitration including, without limitation, the power to:
8.1.1 interpret Procedural Orders issued;
8.1.2 provide directions to enforce Procedural Orders or rule on the consequences of a failure to comply with Procedural Orders;
8.1.4 determine any question of law or equity arising in or with respect to within the Arbitration;
8.1.5 determine any question of fact or mixed fact and law;
8.1.6 order production of Documents that are not privileged and that are in the possession, control or power of a Party;
8.1.7 give directions for, or order, the preparation and disclosure of lists of Documents for inspection or otherwise;
8.1.8 give directions, or rule upon, refusals or objections arising from oral discovery;
8.1.9 make orders regarding confidentiality or other conditions regarding any Document or class of Documents or other information produced or exchanged within the Arbitration;
8.1.10 give directions to control the proceedings, including setting time limits, and limiting the number of witnesses, including expert witnesses, that a Party may call, where it is just under the circumstances;
8.1.11 determine the order and manner in which any witnesses shall be examined;
8.1.12 make rulings, directions and generally deal with any and all interlocutory matters and procedural questions relating to the issues within the Arbitration;
8.1.13 interpret the Parties’ agreements, including the Dispute Resolution Provision, and the Arbitration Act; and
[31] Optiva and Tbaytel did not intend s. 8 to be an exhaustive description of the powers available to the arbitrator. To the contrary, the specifically enumerated powers were listed “without limitation” of the broad power to hear “all motions”.
[32] Equally importantly, the parties agreed, in para. 8.1.13, that the arbitrator would interpret the agreement. By doing so, the parties left it to the arbitrator to decide what powers had been given to him by the language used in the agreement, and in particular in para. 8 of the agreement.
[33] The terms of the arbitration agreement between Optiva and Tbaytel were subject to the Act. The relevant provisions of the Act include the following:
Equality and fairness
19(1) In an arbitration, the parties shall be treated equally and fairly.
Procedure
20(1) The arbitral tribunal may determine the procedure to be followed in the arbitration, in accordance with this Act.
Hearings and written proceedings
26(1) The arbitral tribunal may conduct the arbitration on the basis of documents or may hold hearings for the presentation of evidence and for oral argument; however, the tribunal shall hold a hearing if a party requests it.
[34] Generally speaking, arbitrations must be conducted in accordance with the applicable terms of the arbitration agreement entered into by the parties, any rules or procedures applicable to the particular arbitration, and any relevant statutory provisions. The procedures must also treat the parties fairly and equally: Desputeaux v. Éditions Chouette (1987) inc., 2003 SCC 17, [2003] 1 S.C.R. 178, at para. 70; Travis Coal Restructured Holdings LLC v. Essar Global Fund Ltd., [2014] EWHC 2510 (Comm), [2014] All E.R. (D) 240 (Q.B.), at para. 44.
[35] Optiva makes three submissions in support of its position that the arbitrator could not proceed by way of summary judgment motion. First, Optiva argues that the arbitration agreement was silent on the availability of a summary judgment procedure, and that the power to proceed by summary judgment, in the absence of the consent of both parties, could not be inferred from the silence in the agreement. Second, Optiva submits that regardless of the terms of the arbitration agreement, the Act, and in particular s. 26, gave Optiva the right to an oral hearing at which it could present its evidence viva voce and cross-examine the witnesses offered by Tbaytel. Third, Optiva submits that the summary judgment procedure followed by the arbitrator resulted in unfairness to Optiva, warranting the setting aside of the award under s. 46(1) 6 of the Act.
[36] I cannot accept Optiva’s submissions.
(i) The language of the arbitration agreement
[37] While it is true there is no specific reference to a summary judgment procedure in the arbitration agreement, the agreement is far from silent on the arbitrator’s authority to decide on the procedures to be followed in the course of the arbitration. The opening language of para. 8 gave the arbitrator the power to hear “all motions during the Arbitration”. Paragraph 8 goes on to provide numerous examples of the kinds of motions the arbitrator can hear, while expressly indicating that the examples provided in para. 8 were not intended as an exhaustive list of the arbitrator’s powers in respect of the conduct of the arbitration.
[38] The specific power in para. 8.1.12 to determine “any and all” procedural questions is a further indication that the parties intended that the arbitrator should determine the procedure to be followed in the arbitration. It is hardly surprising that the arbitrator, in exercising his power to determine appropriate procedures, would look to the procedures routinely used in civil proceedings under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The advantages flowing from a properly invoked summary judgment process have equal application in the arbitration and the civil trial context: see Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 27.
[39] The specific powers granted the arbitrator in paras. 8.1.10 and 8.1.11 provide a further indication of how broad those powers were intended to be. Under those provisions, the arbitrator could decide the number of witnesses to be called, the time allocated for their testimony, and the “order and manner” in which a witness would be examined. The arbitrator’s power to control the “manner” in which a witness testifies clearly contemplates procedures other than the taking of viva voce evidence before the arbitrator.
[40] In light of the broad powers given to the arbitrator and the structure of para. 8 of the agreement, it was open to the arbitrator to interpret his powers, not by looking for a specific grant of authority in respect of any particular procedure, but instead by looking for language that would remove a specific procedure from among the options available to the arbitrator. Had the parties wished to exclude resort to a summary judgment procedure, or to give either party a veto over the use of that procedure, they would have said so in the agreement. Instead, the parties chose to leave decisions with respect to the manner in which the arbitration would be conducted to the arbitrator.
[41] Apart from the language in para. 8 of the agreement, there is a further reason for rejecting Optiva’s submission that the arbitrator could not proceed by way of a summary judgment motion. Optiva and Tbaytel agreed in para. 8.1.13 that the arbitrator had the power to interpret agreements, including the arbitration agreement. The parties agreed that the arbitrator would decide what the terms of the arbitration agreement, including the terms in para. 8, actually meant. In deciding that Tbaytel could proceed by way of a summary judgment motion, the arbitrator exercised the interpretative powers given to him by Optiva and Tbaytel: Alectra Utilities Corp. v. Solar Power Network Inc., 2019 ONCA 254, 145 O.R. (3d) 481, at para. 40, leave to appeal refused, [2019] S.C.C.A. No. 202. In the circumstances of this case, and in light of the arbitrator’s acknowledged power to interpret the arbitration agreement, the court could set aside the arbitration award based on the arbitrator’s interpretation of the agreement only if satisfied that Optiva was not treated “equally and fairly”, or that the procedure followed “did not comply” with the Act: Arbitration Act, ss. 46(1)6-7.
[42] In summary, Optiva’s interpretation of the arbitration agreement, which would limit the arbitrator’s powers to those specifically granted in the agreement, flies in the face of the language used. Optiva’s interpretation also ignores the fact that the parties gave the arbitrator the power to interpret the language in the arbitration agreement, and in particular the language in s. 8 of that agreement. The arbitrator performed the task assigned to him by the parties.
(ii) The application of the Act
[43] It is common ground that the Act applied to the arbitration and that the parties did not opt out of any relevant provision in the Act: Arbitration Act, ss. 2, 3, 20.
[44] Optiva relies on s. 26 of the Act. For convenience, I repeat the terms of that provision:
26(1) The arbitral tribunal may conduct the arbitration on the basis of documents or may hold hearings for the presentation of evidence and for oral argument; however, the tribunal shall hold a hearing if a party requests it.
[45] As I understand Optiva’s submission, the phrase “may hold hearings for the presentation of evidence and for oral argument” refers exclusively to a proceeding in which evidence is presented viva voce, subject to viva voce cross-examination, and oral argument is made. Optiva submits that any departure from that kind of hearing requires the consent of the parties.
[46] Neither the word “hearing”, nor the phrase “presentation of evidence” are defined in the Act. In the context of civil or administrative proceedings, a “hearing” refers to a proceeding which does not necessarily involve the presentation of viva voce evidence: Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, ss. 1(1), 15(1); Rules of Civil Procedure, s. 1.03. For example, in civil proceedings, a “hearing” includes applications and motions. In the vast majority of those “hearings”, while oral argument is made, evidence is not presented viva voce. There is no reason why the term should have a different meaning in the context of commercial arbitration.
[47] Similarly, the phrase “presentation of evidence” does not connote viva voce evidence only. Counsel who offer a motion record or application record containing affidavits and transcripts of cross-examinations are clearly presenting evidence at the hearing of the motion or application.
[48] The manner in which evidence is presented at a hearing is ultimately a procedural question. While under s. 26 a party has a right to make oral argument, that party has no right to present its evidence in a particular manner. Under the terms of the arbitration agreement Optiva and Tbaytel chose to enter into, it fell to the arbitrator to decide procedural questions, including how evidence should be presented. The arbitrator chose a method routinely and effectively used in civil litigation involving issues and evidence like those raised in this proceeding.
(iii) Fairness
[49] Optiva’s third argument, that the procedure followed by the arbitrator was inherently unfair, is predicated on the submission that proceeding by way of summary procedure without Optiva’s express consent rendered the proceeding unfair. For the reasons set out above, that argument must fail. Optiva agreed that the arbitrator could determine the procedures governing the arbitration.
[50] There is no evidence that Optiva was denied the opportunity to present any evidence that it wanted to present before the arbitrator. There is also no evidence that Optiva did not have a full and fair opportunity to challenge the case put forward by Tbaytel. [1]
C. Did the application judge err in holding that the arbitrator did not base his interpretation of the limitation of liability clause on a legal theory not advanced by either party?
[51] Optiva relied on a limitation of liability provision in the agreement to limit any damages owing to Tbaytel. Tbaytel took the position from the outset of the dispute that the limitation of liability provision applied only to contractual breaches arising out of the “performance of services” under the agreement. Tbaytel maintained that Optiva’s breaches did not occur in the “performance of services”, but rather arose out of the non-performance of the agreement.
[52] The authorities filed by Tbaytel on the limitation of liability issue included the decision in Ticketnet Corp. v. Air Canada, [1993] O.J. No. 289 (Gen. Div.), aff’d in part, (1997), 154 D.L.R. (4th) 271, leave to appeal refused, [1998] S.C.C.A. No. 4. Counsel did not refer to this authority in argument. The arbitrator did refer to Ticketnet in his reasons. He referred to a passage from Ticketnet other than the passage pinpointed by counsel for Tbaytel in his written submissions.
[53] Counsel for Optiva describes the arbitrator’s reference to Ticketnet as introducing a “new theory of liability”. Counsel contends that Optiva did not have any opportunity to address that theory either in evidence or in argument. Optiva argues that the arbitrator’s reliance on a theory of liability first revealed by the arbitrator in his reasons constitutes a fatal failure of due process.
[54] I have no difficulty with the proposition that a decision based on a legal theory a party had no opportunity to address in evidence or argument is a fundamentally unfair decision and cannot stand. That is, however, not what happened here.
[55] The arbitrator considered the limitation liability clause at length in his reasons. In doing so, he engaged in the kind of analysis customarily employed in contractual interpretation. The arbitrator accurately outlined the respective positions of Optiva and Tbaytel. In respect of Tbaytel’s argument, the arbitrator said:
The Claimant [Tbaytel] contends that the damages do not arise out of a breach in the rendering of Services, but from contraventions of the Agreement not necessary for, nor necessarily related to the rendering of Services.
[56] After reviewing the language in the clause and the well-settled law applicable to the interpretation of limitation of liability clauses, the arbitrator explained:
The difficulty with the Respondent’s position is that while “Services” may be broadly defined, the rendering of those broad services may not be similarly or sufficiently broad to encompass what is alleged in this case; particularly if strictly construed. It is my interpretation that by specifying the “rendering of Services”, it is intended that the limitation on liability be circumscribed to breaches arising specifically from those operations and activities naturally and normally generated in Services, and only within those parameters. In other words, the limitation provision applies to losses arising from breaches “in the rendering of Services”; not from breaches committed in not rendering the Services. [Emphasis added.]
[57] Having concluded that the language in the limitation of liability provision restricted its application to losses arising from breaches committed in the actual rendering of services, the arbitrator next considered the nature of the activity said to constitute the breach. He reasoned that a deliberate departure from the terms of the contract could not be seen as part of, or incidental to, the “rendering of Services” under the contract. The arbitrator referred to a passage from Ticketnet in support of this conclusion. As I read the arbitrator’s analysis, his conclusion flowed, not from any novel jurisprudential insight afforded by Ticketnet, but rather from the common sense observation that conscious, wilful conduct in violation of the terms of a contract cannot be characterized as conduct performed “in the rendering of services” under that contract.
[58] The arbitrator did not introduce a new untested theory of liability in his reasons by his reference to Ticketnet. He accepted Tbaytel’s position, advanced throughout the proceedings, that Optiva’s breaches of the contract did not occur “in the rendering of Services” under the agreement. The reference to Ticketnet simply confirmed his interpretation of the language in the agreement, and in particular his conclusion that deliberate misconduct could not be viewed as conduct done “in the rendering of Services” under the agreement.
[59] Even if the arbitrator’s reference to a passage from Ticketnet introduced something new to the argument, it is an overstatement to describe the arbitrator’s reference as a product of his “own legal research”, or the introduction of a “new theory” of liability. Ticketnet was before the arbitrator. Tbaytel relied on the case in support of its interpretation of the limitation of liability clause. Optiva had a full opportunity to address anything of relevance in Ticketnet. Neither the arbitrator, nor counsel were limited to reading only the paragraphs pinpointed by Tbaytel in written argument. More to the point, Ticketnet says no more than that, when interpreting the terms of a contract to determine whether certain conduct is captured by the language of a provision, the nature of that conduct may be relevant. This is hardly a novel or ground-breaking advance in the law governing the interpretation of contracts.
D. Did the application judge err in refusing to grant leave to appeal under s. 45 of the Act?
[60] There was considerable overlap in the arguments made by Optiva seeking to set aside the arbitration award under s. 46 and the arguments seeking leave to appeal that award under s. 45 of the Act. The application judge addressed the application to set aside the award first. His treatment of many of the same issues in the context of the leave to appeal application was considerably briefer.
[61] The application judge described as “without merit” the argument that leave to appeal should be granted on the ground that the arbitrator based his decision on the limitation of liability clause on a legal theory not advanced by the parties. The application judge had addressed and rejected the same argument on the motion to set aside the award earlier in his reasons: Optiva Inc., at paras. 57-64. I have considered that argument in the context of the appeal from the refusal to set aside the arbitrator’s award: see supra, at paras. 51-59.
[62] The application judge also refused to grant leave to appeal on the interpretation of the limitation of liability clause in the contract. He held that this argument did not raise a question of law alone, as required under s. 45 of the Act. In his view, the arbitrator’s interpretation of the relevant clause involved a question of mixed fact and law: see Optiva Inc., at para. 67.
[63] Optiva has a preliminary problem in advancing the submission that the application judge erred in refusing to grant leave to appeal. The refusal to grant leave under s. 45 of the Act is, as a general rule, not appealable to this court. A refusal to grant leave will be appealable if it reflects an erroneous declining of the jurisdiction given to the Superior Court judge to grant leave under s. 45: Denison Mines Ltd. v. Ontario Hydro (2001), 56 O.R. (3d) 181, at paras. 5-8; Ottawa (City) v. Coliseum Inc., 2016 ONCA 363, 398 D.L.R. (4th) 34, at paras. 23-29.
[64] The application judge did not decline to exercise his jurisdiction to determine whether leave to appeal should be granted under s. 45. He refused leave on the merits. He described one argument based on the arbitrator’s alleged reliance on a legal theory not advanced as “without merit”. He referred to the second argument arising out of the interpretation of the limitation of liability provisions in the contract as raising a question of mixed fact and law. Optiva could only obtain leave to appeal on a question of law alone.
[65] Optiva submits that the application judge was wrong in characterizing the contractual issue as one of mixed fact and law. That error, says Optiva, amounts to “an arbitrary decision that is a declination of jurisdiction.”
[66] The rationale underlying restrictions on appeals to this court from the refusal to grant leave to appeal in the Superior Court would be defeated if this court were to engage in an assessment of the merits of the decision refusing leave under the guise of considering whether the court below declined to exercise its jurisdiction. Under the terms of s. 45 of the Act, the question on which leave is given must be a question of law. The characterization of the issue is part of the merits of the leave application. The application judge’s conclusion that the question raised by Optiva involved a question of mixed fact and law, whether right or wrong, was a determination on the merits of Optiva’s application for leave to appeal. That decision is not appealable to this court.
[67] Optiva next submits that the application judge failed to consider Optiva’s arguments that the arbitrator erred in law in his interpretation of the arbitration agreement when he concluded that the arbitrator had the authority to proceed by summary judgment motion. Optiva submits that the application judge’s failure to consider this proposed question of law opens the door to this court granting leave to appeal on that issue.
[68] It is true that the application judge did not consider the argument that the arbitrator erred in law in his interpretation of the arbitration agreement when considering whether to grant leave under s. 45 of the Act. The application judge had, however, considered and rejected virtually the same arguments in the context of Optiva’s application to set aside the arbitrator’s award under s. 46.
[69] For the reasons set out above, I agree with the application judge’s analysis of the arbitration agreement and his conclusion that the arbitrator had the authority to proceed by summary judgment motion. Assuming this court could grant leave to appeal on that issue, no purpose would be served in doing so.
V Disposition
[70] I would dismiss the appeal.
[71] Tbaytel is entitled to its costs of the proceedings in this court. I would award costs in the amount of $30,000, inclusive of relevant taxes and disbursements.
Released: “September 15, 2022 DD”
“Doherty J.A.”
“I agree. Grant Huscroft J.A.”
“I agree. Harvison Young J.A.”
[1] In the appellant’s reply factum, counsel suggested that, in the absence of a discovery mechanism, Optiva was unable to obtain certain information from Tbaytel’s CEO. It is unclear to me whether Optiva argues that an opportunity to discover Tbaytel’s witnesses was essential to a fair proceeding. I am unaware of any support for that proposition. In any event, Optiva had the opportunity to challenge the evidence of Tbaytel’s CEO or elicit favourable evidence from him. Optiva chose not to cross-examine the CEO.
In the reply factum, counsel also suggested that additional expert evidence may have assisted Optiva in answering one of the arguments put forward by Tbaytel in support of its claim that Optiva breached the contract in various ways. As I read the arbitrator’s reasons, Optiva was successful on the issue to which this evidence related.