COURT FILE NO.: CV-23-00701340-00CL DATE: 20231114 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Competition Motors Limited Applicant – and – Toyota Canada Inc. Respondent
Jonathan C. Lisus, Rahool P. Agarwal and Michael A. Currie for the Applicant Geoffrey B. Shaw, Eric Mayzel and Sarah Kemp for the Respondent
HEARD in Toronto: October 26, 2023
PENNY J.
REASONS FOR DECISION
Overview
[1] The applicant brings this application under ss. 46(1)3 and 6 of the Arbitration Act, 1991 to set side the arbitral award of an Appeal Panel issued under the National Automobile Dealer Arbitration Program (“NADAP”) Rules.
[2] The principal issue is jurisdiction. Section 46(1)3 of the Arbitration Act, 1991 provides that a court may set aside an arbitral award if the “award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement.”
[3] There are two jurisdictional questions raised:
(1) does the application raise an issue of jurisdiction at all? and (2) if so, did the Appeal Panel exceed its jurisdiction?
[4] The issue of procedural fairness was raised briefly in the applicant’s factum but was not referred to by the applicant at all in oral submissions. I will address the procedural fairness issue later in these reasons.
[5] In addition to its response to the application on the merits, the respondent raised several issues by way of a preliminary motion to strike the application, including the first issue mentioned in paragraph 3(1) above. At the outset of the hearing, I advised the parties that I would hear from the applicant first and the respondent second on all issues, including the issues raised in the respondent’s motion to strike.
[6] For reasons I will explain below, the application to set aside the Appeal Panel decision for want of jurisdiction is dismissed. I am not satisfied the issue raised on the application is a question of true jurisdiction. Even it is, however, the Appeal Panel did not exceed its jurisdiction. The Appeal Panel was entitled to reach the conclusions that it did under the NADAP Rules.
Background
[7] The applicant, Competition Motors Limited (CML), is an authorized dealer of Toyota vehicles and products based in London, Ontario.
[8] The respondent, Toyota Canada Inc. (TCI), is the Canadian manufacturer and distributor of Toyota vehicles and products.
[9] CML and TCI are parties to a Dealer Sales and Service Agreement and a Franchise Agreement. TCI is the franchisor. CML is the franchisee.
[10] The underlying dispute arose out of a proposed sale by CML of its dealership to a third party, AutoCanada Inc. AutoCanada is a publicly traded company on the Toronto Stock Exchange, with a market capitalization of approximately $1 billion. It owns and operates approximately 65 franchised dealerships in Canada, representing different automobile manufacturers – original equipment manufacturers, or OEMs.
[11] Under the terms of the franchise agreement with TCL, CML was required to obtain TCI’s consent to the proposed sale. TCI could not unreasonably withhold its consent to any proposed change of ownership.
[12] In August 2021, CML notified TCI that it had entered into a conditional agreement to sell the assets of CML to a limited partnership owned by AutoCanada. This was part of a larger transaction involving the sale of CML and 11 other car dealerships who had all joined a group called Autopoint.
[13] Before deciding whether to grant or refuse consent, TCI needed certain information which it considered necessary for an informed consideration of the request. It provided lists of the information required. AutoCanada responded to these requests. Further information, including financial statements, performance metrics and organizational documents reflecting the contemplated organizational structure were forwarded by AutoCanada to TCI over the ensuing days and weeks.
[14] On October 6, TCI notified CML that it would not consent to the proposed transaction. There were further exchanges of correspondence but by the end of October, the parties had engaged litigation counsel and entered the arbitration process.
[15] The issue for determination on the arbitration was whether TCI unreasonably withheld consent to the transfer of CML’s dealership to AutoCanada. This question also engaged questions of TCI’s good faith performance of the agreement. It is common ground that the burden of proof lay with CML, the applicant in the arbitration proceedings, to show that TMI’s consent had been unreasonably withheld. It is also common ground that the test for “unreasonable withholding of consent” was articulated by Cullity J. in 1455202 Ontario Inc. v. Welbow Holdings Ltd., [2002] O.J. No. 1885: “it is not necessary for [the party entitled to withhold consent] to prove that the conclusions which led it to refuse consent were justified, if they were conclusions that might have been reached by a reasonable person in the circumstances”.
[16] The arbitrator (whom I will call the Tribunal) found that TCI had not acted in good faith and that it unreasonably withheld consent. The Appeal Panel reversed the Tribunal’s decision, finding that TCI had acted in good faith and that the withholding of its consent was reasonable.
[17] The Tribunal was a retired judge of the Ontario Superior Court of Justice. The Appeal Panel was made up of three retired judges of the Court of Appeal for Ontario.
NADAP Rules
[18] The NADAP Rules were created in order to establish a national program for the resolution of disputes between auto dealers and auto manufacturers. These Rules provide a detailed and comprehensive code for the resolution of dealer/OEM disputes and are binding on the dealers and the OEMs. The Rules apply to all disputes and where a conflict arises between the Rules and the particular dealer agreement, the Rules govern.
[19] It is common ground that the parties were bound by the NADAP Rules and that they followed the procedures and processes provided for in these Rules. It is not in dispute, for example, that the subject matter of the parties’ dispute fell withing the purview of the NADAP Rules. Among other things, the Rules provide for arbitration of a dispute about:
the refusal by a MANUFACTURER to reasonably provide its prior approval to a request to sell an interest in the DEALER, or to transfer such interest in the DEALER pursuant to the succession provisions contained in the DEALER AGREEMENT…
[20] Part IX of the Rules provides for an appeal to a panel of three arbitrators. Rule 102, setting out the standard of review on an appeal, contains the language which is at the heart of this application. It provides that, “The standard of review on appeals shall be the correctness of the Arbitrator’s decision, whether on questions of fact or law ” (emphasis added).
The Tribunal’s Decision
[21] The Tribunal reviewed the history of the party’s dealings with one another, including a “A3 signed document” that reflected internal communications of TCI personnel about CML’s pending transaction with AutoCanada. In particular, the Tribunal concluded that TCI had a strong aversion to public company ownership of its dealerships and that AutoCanada’s status as a public company was a problem for TCI. The Tribunal concluded that it was TCI’s aversion to a public company owning a TCI dealership that drove its decision to deny consent to the transfer of the North London Toyota dealership from CML to AutoCanada. He concluded that the withholding of consent to the transfer was not made in good faith and was unreasonable.
Appeal Panel Decision
[22] The standard of review was, naturally, the subject of submissions by counsel to the parties on the appeal and of analysis in the Appeal Panel’s reasons.
[23] NADAP appeal decisions are collected in a private digest, to allow participant OEMs and Dealers to review them. CML relied, in particular, on an appellate arbitral decision called Cowell Imports Inc. v. Jaguar Canada and Land Rover Canada for the proposition that the correctness standard on questions of fact nevertheless requires a “presumption of fitness” – i.e., a measure of deference to the factual determinations made by the arbitrator of first instance. CML submitted then (as it submits now) that Rule 102 requires identification of an error in an arbitrator’s findings; neither the Rules nor the appellate jurisprudence contemplates or permits a hearing de novo.
[24] The Appeal Panel reasoned (at paras. 83 to 85) that:
Commencing a review with a presumption of the fitness of the findings of fact seems to us logically inconsistent with the correctness standard and with the Supreme Court of Canada’s decision in Dunsmuir v. New Brunswick. None of the foregoing NADAP decisions appear to have considered that authority. At paragraph 50 of Dunsmuir, the Court described the standard of correctness as follows:
When applying the correctness standard, a reviewing court will not show deference to the decision maker's reasoning process; it will rather undertake its own analysis of the question. The analysis will bring the court to decide whether it agrees with the determination of the decision maker; if not, the court will substitute its own view and provided the correct answer. From the outset the court must ask whether the tribunal’s decision was correct.
In Dunsmuir, the Supreme Court was describing the standard of correctness in the context of a question of law. That was because of its determination that “questions of fact, discretion and policy as well as questions where the legal issues cannot be easily separated from the factual issues generally attract a standard of reasonableness while many legal issues attract a standard of correctness”. The NADAP Rules provide for a standard of correctness on both questions of fact and questions of law. Since questions of mixed fact and law fall on a spectrum between those two, it follows that decisions involving such questions - including the exercise of discretion - are governed by the same standard under the Rules.
Nonetheless, we agree with CML that the correctness standard does not mean we conduct a trial de novo. We also agree with the Cowell appeal panel, at para. 51, that we may “upset and replace the decision under review if the appellant persuades [us] that there is a better one.”
[25] The Appeal Panel concluded that the Tribunal made three errors: (i) it reversed the burden of proof; (ii) it applied the proper test incorrectly; and (iii) it misinterpreted several provisions of the Dealer Franchise Agreement which set out the basis upon which the OEM may reasonably refuse consent.
[26] The Appeal Panel found (and it was not in dispute) that: (a) the burden was on CML to satisfy the Tribunal that TCI’s refusal to consent was unreasonable; and, (b) the question to be determined was whether a reasonable person (or, in this case, a reasonable OEM in the position of TCI) “could have” (as opposed to “would have”) withheld consent. Both sides recognize these principles. The Appeal Panel found (at para. 90) that:
While the Tribunal stated these principles early in its decision, it did not apply them in its analysis. On our reading of the Tribunal’s reasons as a whole, it seems to us that it called upon TCI to justify its refusal to consent and assessed the matters from the perspective of what it considered to be reasonable.
[27] After explaining its reasons for this finding is some detail, the Appeal Panel summarized its conclusions in paras. 98 and 99:
On our reading of its reasons as a whole, we conclude that the Tribunal erred by reversing the burden of proof and losing sight of the correct question to be addressed. As it set out in paragraph 20, the correct “question is not whether the court would have reached the same conclusion ... or even whether a reasonable person might have given consent; it is whether a reasonable person could have withheld consent.” Regrettably, the Tribunal did not apply the principle it enunciated.
These errors not only irretrievably tainted the Tribunal’s fact-finding exercise, but go to the heart of its decision and vitiate its exercise of discretion.
[28] This conclusion informed the Appeal Panel’s review of the facts and the conclusions drawn by the Tribunal that TCI did not carry out its review in good faith but instead adopted a fixed view from the outset that it would not approve the transaction because the purchaser, AutoCanada, was a publicly traded company. Thus, the Tribunal found that TCI’s decision was “predetermined and it went through the motions and a great deal of trouble to find reasons to deny consent driven by its desire to avoid public ownership”.
[29] On this central finding, the Appeal Panel held, at para. 182:
While we agree with the finding that TCI had a “strong aversion” to such ownership, we do not accept that this aversion to such ownership was, by itself, an impermissible consideration on TCI’s part. As noted earlier, the question is not whether TCI had an aversion to public ownership – “strong” or otherwise – but whether such an approach was one that a reasonable OEM “could” take, and whether TCI allowed that aversion to pre-determined its decision to withhold consent without regard to other factors to be taken into account. We are satisfied TCI’s approach to public ownership of its dealers was one a reasonable OEM could take (indeed, the evidence is that others do, or at least have). We are also satisfied TCI did take other considerations into account in assessing the Proposed Transaction, including the interests CML and Mr. Laurie regarding potential alternative purchasers.
[30] These conclusions are what gave rise to the Appeal Panel’s earlier comment, at para. 46, that:
we have reviewed the same written record upon which the Award was based. Respectfully, we take a different view of the evidence than the Tribunal and conclude that its decision in that regard is wrong.
[31] Similarly, on the question of the Tribunal’s interpretation of several provisions of the Dealer Franchise Agreement, after a detailed analysis of the Tribunal’s conclusion and why it was wrong, the Appeal Panel concluded:
…we are of the view that the Tribunal erred in law in interpreting Article IV(D) of the Dealer Franchise Agreement.
Our interpretation of Articles IV(B) and (D) leads us to conclude that TCI was entitled to take into account a wide range of factors in arriving at its decision.
[32] The Appeal Panel also found, in reversing the Tribunal’s decision (which effectively imposed a duty on TCL to negotiate with a non-party, AutoCanada) that:
TCI owes no duty to AutoCanada, the third-party purchaser - contractual or otherwise. Its common law and contractual duty of good faith towards CML does not require TCI to negotiate amendments to the transaction presented to it for approval.
Analysis
Jurisdiction
CML’s Argument
[33] I agree with Mr. Lisus’ submission that CML’s argument for excess of jurisdiction is simple and straightforward. It is not in dispute that the standard of appellate review under the NADAP Rules is correctness, whether on questions of fact or law. But, the argument goes, appellate review on a standard of correctness is still an error-correcting process, not a rehearing. There is a presumption of fitness of the Tribunal’s factual findings and conclusions. If the industry wanted re-hearings of arbitral awards, it would have called for a hearing de novo in its Rules. Where an appeal panel undertakes a review of the evidentiary record from the tribunal below “unfettered by deference”, it is conducting an impermissible hearing de novo.
[34] Here, CML submits, the reasons of the Appeal Panel make clear that it rejected the presumption of fitness, gave no deference to the Tribunal’s conclusions on matters of fact, and did not conduct an error correcting exercise. The Appeal Panel expressly rejected the presumption of fitness standard adopted by prior NADAP Appeal panels. It erroneously interpreted its authority under the NADAP Rules as permitting it “to review the record through its own lens” and “read and interpret the evidence in a different fashion”. The Appeal Panel was not entitled to reinterpret and overturn primary factual findings without first showing deference to the Tribunal’s findings and then concluding that the Tribunal’s findings were “wrong”.
[35] The Appeal Panel acknowledged that the Tribunal’s factual findings were open to him but nonetheless substituted its own view of the evidence and made different findings. The Appeal Panel drew new and different inferences from the record. Conduct of this kind is the hallmark of a hearing de novo. In its factum, CML cites several examples from the Appeal Panel’s decision to illustrate this point. I will repeat only one:
At paragraph 68, after reviewing TCI’s email exchanges related to the A3 and the Tribunal’s conclusions related to that evidence, the Appeal Panel conceded that “we do not say that the foregoing evidence relied upon by the Tribunal is incapable of being read and interpreted in the fashion it did. However, the standard of review on this NADAP appeal is correctness on both law and fact, and the evidence is also capable of being read and interpreted in a different fashion, which we find to be more persuasive”.
[36] This excerpt (and the others cited) shows, CML says, that the Appeal Panel did not find that the Tribunal’s factual findings were “wrong”. It reconsidered the evidence and read it in a “different fashion” which it happened to find “more persuasive”. This, CML says, is not the proper application of the correctness standard.
[37] CML further submits that the Appeal Panel’s reliance on Dunsmuir was misplaced. Dunsmuir involves an assessment of the standard of review in the context of administrative law. It holds that questions of law attracts a standard of correctness and sets out what that standard means. Elsewhere in that decision, however, the Supreme Court makes it clear that on matters of fact, significant deference is always required.
[38] The Court of Appeal has held that “the court’s authority to set aside an arbitration award under [s. 46(1)(3)] depends on the mandate the arbitration agreement confers on the arbitrator to resolve a particular dispute”: Alectra Utilities Corporation v. Solar Power Network Inc., 2019 ONCA 254 at para 25. Here the Appeal Panel’s mandate was defined in Rule 102. It had no jurisdiction to conduct a hearing de novo. As such, the Appeal Panel acted outside of its jurisdiction.
Analysis
[39] Notwithstanding the able and forceful submissions of CML’s counsel, I am unable to accept this argument.
Does the Application Raise an Issue of Jurisdiction At All?
[40] Section 46(1)3 of the Arbitration Act is engaged only where an arbitral award “deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement”.
[41] The jurisprudence around s. 46(1)3 tells us that:
- this section allows only for “limited review for jurisdictional error”; it is a “narrow basis for setting aside an arbitral award.” It “neither requires nor authorizes review of the substance of an arbitrator’s award”;
- courts should be alert not to “brand as jurisdictional, and therefore subject to broader curial review, that which may be doubtfully so”. Thus, if there is any room for uncertainty, a court ought to err against branding the issue as jurisdictional;
- s. 46 “is not an alternate appeal route and must not be treated as such.” It “cannot be used as a broad appeal route to bootstrap substantive arguments attacking an arbitrator’s findings…” Nor can it be used to pursue “an impermissible appeal of the merits of the arbitral decision, thinly disguised as a procedural grievance,” or as “an attempt at a second kick at the can”; and
- once the jurisdictional question is answered in the negative, in the absence of a right of appeal under s. 45 of the Arbitration Act “the court has no authority to go on to review the arbitrator’s award…”
[42] In my view, neither of the two limiting conditions set out in s. 46(1)3 is met. The underlying dispute unambiguously arose from the alleged refusal by an OEM “to reasonably provide its prior approval to a request to sell an interest in” a dealer. The Appeal Panel was granted, again unambiguously, the authority to hear the appeal under Part IX of the NADAP Rules. The NADAP Rules enshrined a right of appeal from an award of first instance. The Appeal Panel’s decision was, like the Tribunal’s award, focused entirely on the question of whether TCI had unreasonably withheld consent to CML, a matter unambiguously remitted to arbitration under the NADAP Rules.
[43] The “matter” of the right of appeal and the standard of review are dealt with expressly in the NADAP Rules. The Appeal Panel identified the applicable standard of review prescribed in Rule 102: correctness on both questions of fact and law. Having correctly identified the applicable standard of review, it was within the Appeal Panel’s jurisdiction to interpret the requirements of that standard and to apply it accordingly. Whether a reviewing court has properly adhered to the applicable standard of review is a question of law, not a question of jurisdiction: Schnier v. Canada (Attorney General), 2016 ONCA 5 at para. 22.
[44] There being no issue of s. 46(1)3 jurisdiction raised, this court has no authority to set the Appeal Panel decision aside.
[45] However, if I am wrong in this conclusion, I would nevertheless dismiss CML’s application based on my conclusion that the Appeal Panel did not, in any event, exceed the jurisdiction it was granted under Part IX of the Rules. I will address this issue in the next section of these Reasons.
Did the Appeal Panel Exceed its Jurisdiction?
[46] I will begin by stating the obvious. The issue on this application involves the question of the Appeal Panel’s jurisdiction to conduct the analysis, and reach the conclusions, that it did. The merits of the Tribunal’s and the Appeal Panel’s decisions are not relevant to the issues on this application. It is not my role to engage in a review, or even to consider, the relative merits of these decisions.
[47] The dispute turns on what Rule 102 means when referring to “correctness on questions of fact”. The essence of CML’s complaint on excess of jurisdiction involves two basic propositions:
(1) the correctness standard on questions of fact nevertheless requires a presumption of fitness on findings and inferences of fact; and (2) the appeal available under Rule 102 is restricted to an error correcting exercise which required the Appeal Panel, before intervening, to find that the Tribunal was “wrong”. The Appeal Panel identified no errors of fact. Instead, it engaged in a de novo review of the facts and the inferences to be drawn from the evidence to arrive at its own view of the preferred outcome.
1. Correctness standard
[48] The “normal” standard of review on an appeal is set out by the Supreme Court in Housen v. Nikolaisen, 2002 SCC 33. Under the Housen test, the standard of review on questions of law is correctness. An appellate court is thus free to replace the opinion of the trial judge with its own. The standard of review on questions of fact, by contrast, is that findings of fact cannot be reversed unless the trial judge has made a “palpable and overriding error”. Palpable means an error which is obvious; overriding means an error that goes to the core of the outcome of the case. Under the Housen test, this deference must be paid to inferences of fact as well as factual findings.
[49] Apart from the NADAP Rules, the concept of a standard of review on appeal being correctness on both questions of law and questions of fact appears to be an entirely “new species” of review. No authority was cited concerning the content of a correctness standard on questions of fact other than appellate decisions under the NADAP Rules. The Appeal Panel noted that Cowell Imports Inc. v. Jaguar Canada and Land Rover Canada was the main authority upon which CML relied. Paragraph 51 of that decision addresses the review of findings of fact. There, the appeal panel wrote that, “[w]ith respect to primary facts and inferences of fact the correctness review involved a presumption of fitness of the findings under review”. [1]
[50] In this case, the Appeal Panel concluded that commencing appellate review with a presumption of the fitness of the Tribunal’s findings of fact was “logically inconsistent with the correctness standard”. Given the dearth of authority on what correctness means as a standard of review in relation to facts, the Appeal Panel looked to the Supreme Court’s articulation of what the “correctness” standard meant in the context of questions of law. It found helpful analysis in the Supreme Court’s decision in Dunsmuir v. New Brunswick, 2008 SCC 9. There, it was said, at para 50:
When applying the correctness standard, a reviewing court will not show deference to the decision maker’s reasoning process; it will rather undertake its own analysis of the question. The analysis will bring the court to decide whether it agrees with the determination of the decision maker; if not, the court will substitute its own view and provided the correct answer. From the outset the court must ask whether the tribunal’s decision was correct.
[51] The Appeal Panel reasoned that if this is the right approach to correctness on questions of law, it must also be, as directed by Rule 102 of the NADAP Rules, the right approach to correctness on questions of fact.
[52] The Appeal Panel also concluded that since questions of mixed fact and law fall on a spectrum between those two, it necessarily follows that decisions involving a question of mixed fact and law – including the exercise of discretion – are also governed by the same standard under the Rules.
[53] CML is critical of this logic. It submits that elsewhere in the Dunsmuir decision, and in other Supreme Court decisions, the court makes it clear that deference is always owed to the trier of fact on questions of fact. CML’s criticism, however, misses the point. Yes, the quoted Dunsmuir approach is in the context of questions of law, and yes, the court clearly does not apply the same standard to questions of fact, but that is because the Supreme Court was operating in either a “Housen” world of standard of review on appeal or an even more deferential “reasonableness” world of judicial review. It was not operating, or purporting to operate, in a “NADAP Rules” world, where the standard of review is expressly and unambiguously correctness on both questions of law and fact.
[54] In my view, the Appeal Panel was acting within its jurisdiction when it interpreted Rule 102 of the NADAP Rules in the way that it did. Not only is that interpretation entitled to deference under the constraints of s. 46(1)3; it seems to me to have been the correct approach as well. The Appeal Panel’s reliance on the passage cited from Dunsmuir is supported by similar language from Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. In Vavilov, the Supreme Court said (at para. 54) that:
When applying the correctness standard, the reviewing court may choose to either uphold the administrative decision maker’s determination or to substitute its own view: Dunsmuir, at para 50. While it should take the administrative decision maker’s reasoning into account—and indeed, it may find that reasoning persuasive and adopt it—the reviewing court is ultimately empowered to come to its own conclusions on the question.
[55] This is precisely what the Appeal Panel did in this case.
[56] The NADAP Rules were updated in 2012—after the Supreme Court decisions in Dunsmuir and Housen. These Rules were the result of “positive dialogue and negotiations” between large, sophisticated commercial organizations, namely the Canadian Automobile Dealers Association (CADA), the Canadian Vehicle Manufacturers Association (CVMA), and the Association of International Automobile Manufacturers of Canada, drawing on 15 years’ of prior experience under NADAP. Those associations recognized NADAP as “a significant achievement for resolving disputes” and “a fair and effective forum for dispute resolution” with “clear advantages over legislative alternatives.”
[57] By articulating a unique standard of correctness on questions of fact, the NADAP Rules were obviously departing from the Housen standard (and from the reasonableness standard in Dunsmuir). The Rules do not provide for any right of appeal from the decision of an appeal panel. The drafters of the Rules obviously chose to confer on appeal panels a very broad and robust ability to review the decisions of the arbitrators of first instance. Implying into Rule 102 the deferential standard from Housen on the review of facts is, it seems to me, inconsistent with the express mandate laid out in Rule 102 itself. Correctness means that the appellate body will not show deference to the decision maker’s reasoning process; it is rather to undertake its own analysis of, and is ultimately empowered to come to its own conclusions on, the question. Under Rule 102, this approach applies equally to a question of law and to a question of fact.
2. Error Correction
[58] The Appeal Panel agreed with CML that the correctness standard does not mean it was to conduct a trial de novo. The Appeal Panel also concluded, however (like the appeal panel in the Cowell appeal), that it was entitled to “upset and replace the decision under review if the appellant persuades [us] that there is a better one.”
[59] I cannot agree with CML that the Appeal Panel failed to identify any errors. The Appeal Panel expressly found several errors. These are referred to above in the overview of the Appeal Panel’s decision. The Appeal Panel expressly found that the Tribunal reversed the burden of proof and did not apply the right legal standard. The Appeal Panel also expressly found that the inferences and conclusions which the Tribunal drew from the evidence were “wrong”.
[60] The Appeal Panel did not conduct a trial de novo. It accepted the record as it was before the Tribunal. And, it also accepted the “facts” as found by the Tribunal and did not interfere with those “facts”. What the Appeal Panel members did do was re-examine the facts, applying their own view of the correct legal principles, to draw their own (i.e., what were, in their view, correct) inferences from those facts. This lead the Appeal Panel to a different conclusion on the central question in dispute: that TCI’s withholding of consent to the transaction was reasonable in the circumstances. This was all within the mandate of Rule 102 and the “correctness” standard on questions of fact.
[61] For these reasons, the application for an order setting aside the Appeal Panel’s decision on the basis that it lacked jurisdiction is dismissed.
TCI Motion to Strike
[62] Given my conclusion on the two central issues in dispute, it is unnecessary for me to consider the other grounds relied upon by TCI in its motion to strike. I will say only that, apart from the issue of whether the application raised an issue of jurisdiction within the meaning of s. 46(1)3 at all (which was, in any event, best determined in the context of argument on all issues of jurisdiction), I would not have been inclined to grant the motion.
The Procedural Fairness Issue
[63] Section 46(1)6 of the Arbitration Act provides that the Court may set aside an arbitral award if “the applicant was not treated equally and fairly, was not given an opportunity to present a case or to respond to another party’s case or was not given proper notice of the arbitration or of the appointment of an arbitrator.” If the Court determines that an applicant was denied natural justice or procedural fairness, “any resulting award must be set aside”, even if the procedural unfairness would not have impacted the outcome.
[64] No reference was made by CML to this ground of review during oral argument. The factum only has one sentence referring to procedural fairness. That sentence, contained in para. 55, reads:
The consequence of the Appeal Panel exceeding its jurisdiction was procedural unfairness for Competition Motors in a manner engaging s. 46(1)(6) of the Arbitration Act. Competition Motors was entitled to an appeal conducted on the proper standard of review and not a re-hearing.
[65] Because I have found that the Appeal Panel did not exceed its jurisdiction, and applied the proper standard of review, the only basis advanced for the denial of procedural fairness cannot prevail.
Costs
[66] The parties agreed that partial indemnity costs of $100,000 (inclusive of fees, disbursements and all applicable taxes) should be awarded to the successful party. TCI is, therefore, entitled to its costs in this amount.
Penny J.
Released: November 14, 2023
[1] It is accepted by both parties that stare decisis does not apply to decisions of arbitrators under the NADAP Rules.