Arbitration & Fairness

With the COVID-19 court closure still in effect, arbitration has been in the spotlight as an alternative means to obtaining a binding decision in family law litigation matters. A recent Court of King’s Bench decision, Allen v. Renouf, 2020 ABQB 98, one party to the arbitration alleged that the arbitrator had treated them unfairly.

In this case, the parties married in 1986, separated in 2015, and entered into a Mediation/Arbitration Agreement to settle their issues of division of matrimonial property, spousal support, child support, and costs. In 2017, the Arbitrator issued a “Main Arbitration Award” with the issue of costs left to be determined. In 2018, the Arbitrator issued a “Costs Award” of $75,000 against the Mother. Between the date of these two awards, the Arbitrator made approximately 30 further directions, ancillary awards, or orders. The arbitration process was prolonged, difficult, and at times acrimonious.

The Wife applied to set aside the Costs Award pursuant to Section 45(1)(f) of the Arbitration Act, claiming she was treated unfairly and denied natural justice as the Arbitrator refused to grant her further adjournment to file her written submissions on costs and subsequently issued the Costs Award without hearing from her. The Court of King’s Bench dismissed this application.

The Court held that the Wife was not treated manifestly unfairly or unequally, and that she was given every opportunity to present her case. The issue of costs was a discretionary matter and not critical to arbitration as a whole. The Court found that the Wife could have submitted a reply, but she made no attempt to do so within the deadline imposed, nor did she attempt to get an extension for her reply. The Wife was not deprived of opportunity to present her case or to respond to the Husband’s case, and there was no breach of Section 45(1)(f).

The Mediation/Arbitration Agreement did not contain any provision relating to appeals, so Section 44(2) of the Act applied and permitted the court to grant permission to appeal on questions of law. The issues raised in the Wife’s application to appeal the Costs Award did not raise questions of law as required by Section 44(2) of the Act. The Court found that it was not an error of law to refer to settlement proposals made before trial in determining who was the more successful party in litigation. The Arbitrator did not fail to consider the Wife’s offers. There was no error of law in the Arbitration awarding costs of $75,000: while the Arbitrator did not find that the Wife’s conduct was scandalous, contemptuous, or outrageous such that it would warrant solicitor-client costs, he did exercise his discretion to award costs of $75,000 having taken all circumstances into consideration. The Arbitrator had to determine if one party was substantially successful and he determined that the Husband was.

Even if the issues raised by the Wife were questions of law, Court held that she had failed to satisfy that either precondition of Section 44(2.1.)(a) or (b) of the Act necessary for the court to grant permission appeal questions of law.

What can we learn from this case? A party to arbitration that ignores an opportunity to present their case cannot then argue that they were treated manifestly unfairly… COVID-19 or not.