The Appeal of a Limited Record: Christie Building Holding Company, Limited v. Shelter Canadian Properties Limited, 2022 MBKB 239
Christie Building Holding Company, Limited v Shelter Canadian Properties Limited (“Christie Building”), is the latest decision from the Manitoba Court of King’s Bench weighing in on the ongoing debate of whether the standard of review framework in Canada (Minister of Citizenship and Immigration) v. Vavilov, applies to commercial arbitrations.
In Christie Building, Joyal C.J. found the standard of review for arbitral awards continues to be the reasonableness standard. As such, this case adds to the body of case law supporting the position that Vavilov may not have implicitly overturned the reasoning in Sattva Capital Corp. v. Creston Moly Corp. and Teal Cedar Products Ltd. v. British Columbia.
Christie Building also demonstrates that, three years after Vavilov, there is ongoing uncertainty regarding the standard of review to be applied to arbitral awards. This uncertainty is particularly pronounced in provinces where the Court of Appeal has yet to weigh in on the issue, and adds to the debate around whether the reasonableness standard or the correctness standard best serves the underlying purposes of private, commercial arbitration. For additional background on this debate see our previous post on this issue.
Christie Building concerns the appeal of two arbitral awards in relation to a commercial dispute between Christie Building Holding Company, Limited (“Christie”) and Shelter Canadian Properties Limited over a property development project.
The arbitration proceedings included 43 days of contentious hearings, six fact witnesses, two experts, and thousands of pages of documentary evidence. However, despite the lengthy hearings and voluminous documentary evidence, no formal record was produced during the arbitration. In particular, only five of the thousands of documents referenced during the proceedings were marked as exhibits. The “Arbitration Record”, which the parties prepared by agreement, consisted only of the pleadings. Moreover, the parties, desiring to keep the costs of the arbitration low, made audio recordings of the proceedings for their own use, but intentionally did not create an official transcription of the recordings or provide the recordings to the arbitrator.
Two arbitral awards were issued; the main award dated June 17, 2020 and a second award for costs dated August 31, 2020. Both of the awards went against Christie, who decided to appeal. As the arbitration agreement between the parties did not contain a right of appeal, Christie was required to seek leave to appeal pursuant to section 44(2) of the Arbitration Act.
Manitoba Court of King’s Bench Decision
Standard of Review is Reasonableness
The primary question in a leave to appeal a commercial arbitration award is whether there exists a question of law that can be appealed:
Assessing whether the issue raised by an application for leave to appeal has arguable merit must be done in light of the standard of review on which the merits of the appeal will be judged. This requires a preliminary assessment of the applicable standard of review.
Acknowledging the existing debate as to whether the standard of review framework was reformulated by Vavilov, Joyal C.J. ultimately found the standard of review continues to be reasonableness, as set out in Sattva and Teal Cedar.
In coming to this conclusion, Joyal C.J made three key findings:
- The majority of the Supreme Court of Canada in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District clearly stated that the effect of Vavilov on the standard of review of an arbitration award has not been considered or finally decided. Only three of the nine justices were willing to find that Vavilov implicitly overruled Sattva and Teal Cedar.
- The constitutional considerations justifying deference by the judiciary to the legislature in the context of administrative law do not apply in the context of private commercial arbitrations, because the parties’ participation is consensual and the legislature has no role in the appointment of the decision-maker.
- There are compelling practical reasons for the application of the reasonableness standard. Specifically, one of the defining features of private arbitration is that the parties can consent to proceedings that are less formal and procedurally different from court proceedings. For example, as long as the parties agree, they can decide not to have formal transcripts of their proceeding or not tender formal exhibits, creating a less structured “record” than would be created through litigation.
Regarding his third finding, Joyal C.J. explained that on an application of the correctness standard, if any errors of law are found, the appellate court is required to conduct and substitute its own analysis based on the record. Necessity would, therefore, require the parties ensure a formal record was preserved during the arbitration proceedings, if an appeal was contemplated:
The margin of maneuver for the parties (even with consent and agreement) to favour a more informal approach to the record and the recording of the evidence will be significantly more limited.
In anticipation of that prospective need for a more meaningful record in the event of an identified error arising from a question of law, parties to an arbitration will in the future, inevitably feel obliged and be required to ensure a more formalistic and transcribed court-like record.
Joyal C.J. found that the necessity of having to keep a formal more litigation-like record, should the correctness standard be applicable to appeals of arbitral awards, was antithetical to one of the core principals of private, commercial arbitration – i.e., the freedom to structure arbitration proceedings in the manner best suited to the parties’ needs:
Arbitrations (a forum chosen by private contracting parties for the efficiency and economy they provide) could very quickly become, in significant ways, less distinguishable from the more formal and rigid processes and adjudications of a court of law. The result and potential change seems a far distance away from what the still recent reasoning in Teal Cedar seems to understand and endorse about the objectives and possible advantages of a commercial arbitration for private contracting parties. (emphasis added)
The issue of a proper record was particularly relevant in the leave application brought by Christie. Much of Christie’s argument in its application for leave focused on the arbitrator’s approach to issues connected to contractual analysis and contractual interpretation. However, the record as Joyal C.J. found it to exist, did not include any evidence of the “factual matrix” of the contract:
Put simply, apart from what is summarized in the decisions, there is no record of virtually any of the voluminous documentary and viva voce evidence that was adduced.
As a result, if leave to appeal was granted on any of the proposed questions of law, there would be a practical limit to what the court could do on appeal, especially on a correctness standard of review, since the court did not have access to any of the evidence presented at the arbitration.
No Questions of Law of Arguable Merit
In assessing whether the issues raised in the application for leave raised a question of “arguable merit”, Joyal C.J. applied the standard of reasonableness guided by the factors for reasonableness review articulated by the Supreme Court of Canada in Vavilov:
I note that the Supreme Court of Canada made clear that the reasonableness review is to be concerned with both the decision making process and its outcomes. To be reasonable, the court must be able to trace the decision maker’s reasoning without encountering any fatal flaws in its overarching logic.
Joyal C.J. held that, properly framed, the alleged errors raised by Christie were exclusively questions or fact, or at most, questions of mixed fact and law. In particular, Christie’s primary argument, that the “factual matrix overwhelmed the words of the [contract]” was a question of mixed fact and law, since the weight attributed to facts by an arbitrator does not give rise to questions of law, unless the decision-maker interpreted the factual matrix in isolation from the words of the contract, “effectively creating a new agreement”.
Having found no questions of law of arguable merit, Joyal C.J. dismissed Christie’s application for leave to appeal.
Three years after Vavilov, there is still debate over whether the standard of appeal for arbitral decisions is reasonableness or correctness. Although the depth of the reasoning in Christie Building suggests that parties in Manitoba may be able to rely on the decision to argue for the reasonableness standard of review, few decisions dealing with this question have been issued by the Manitoba courts – and none by its Court of Appeal. For a discussion of the Manitoba courts applying the correctness standard see our previous post.
The reasons in Christie Building caution parties that, given the uncertainty as to which standard of appeal will be applied, extra thought should be turned towards how the record of the arbitration is assembled and maintained. In cases where the reasonableness standard is found to apply, like Christie Building, a sparse and informal record may be sufficient. However, where the correctness standard is found to apply, in order to have a meaningful right of appeal, parties will need to ensure that they have a sufficiently robust record of the arbitral proceeding.
Further, Christie Building is a reminder that parties negotiating arbitration agreements must carefully consider the legislative scheme applicable in the seat of the arbitration, when deciding how to address appeals of future arbitral awards. Where, like the Manitoba Arbitration Act, the legislation allows the parties to by-pass the step of making an application for leave to appeal and may directly appeal an award to the court on a question of law, parties and their counsel may need to weigh the benefits of finality of an award against having a contractual right of appeal.
Christie Building Holding Company, Limited v Shelter Canadian Properties Limited, 2022 MBKB 239 [Christie Building]
Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 [Vavilov].
Sattva Capital Corp. v. Creston Moly Corp. 2014 SCC 53 [Sattva].
Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 [Teal Cedar]
Christie Building at paras 12-14.
Christie Building at para. 17.
 The question of what constitutes “the record” for the purposes of Christies application for leave to appeal was heard by Joyal, C.J. in Christie Building Holding Company, Limited v. Shelter Canadian Properties Limited, 2021 MBQB 77 [Christie Building 2021]. In that case, Joyal C.J. determined that “the record” was limited to only the documents that both parties had agreed were part of the official record or marked as exhibits during the arbitration proceeding.
Christie Building 2021, 2021 MBQB 77 at paras. 17-18.
Christie Building Holding Company, Limited v. Shelter Canadian Properties Limited, 2021 MBQB 77 at para. 19.
Christie Building Holding Company, Limited v. Shelter Canadian Properties Limited, 2021 MBQB 77 at paras. 20-23.
Christie Building at paras. 18 and 23.
 C.C.S.M. c. A120. Christie also sought to set aside a portion of the first award pursuant to ss. 45(1)(f) and (g) of the Arbitration Act. The court held that there was no basis to set aside any part of the first award.
Christie Building at paras. 27-31
Christie Building at para. 80, citing Sattva at para. 75.
Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7 at paras. 45-46.
Christie Building at paras. 87-89.
Christie Building at para. 91.
Christie Building at para. 94.
Christie Building at para. 93.
Christie Building at para. 94.
Christie Building at para. 94.
Christie Building at para. 52.
Christie Building at para. 55.
Christie Building at paras. 56, 92-93.
Christie Building at para. 98.
Christie Building at para. 112.
Christie Building at paras. 119 and 129.
Christie Building at paras. 178-179.
arbitration arbitration clauses international arbitration commercial arbitration Arbitration awards Arbitral Award dispute standard of review appeal