Frank v. Vogel & Company LLP, 2012 ABQB 432

Court of Queen ’ s Bench of Alberta Citation: Frank v. Vogel & Company LLP, 2012 ABQB 432 Date: 20100706 Docket: 1001 14242 Registry: Calgary Between: Gary Frank Applicant - and - Vogel & Company LLP Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice P.J. McIntyre _______________________________________________________ 1. Introduction [ 1 ] This is an application for leave to appeal the decision of an arbitrator appointed under the terms of a partnership agreement.

The Applicant Gary Frank is a former partner in the Respondent law firm Vogel & Company LLP (“Vogel”). On August 31, 2009, Mr. Frank voluntarily withdrew from partnership in Vogel. The parties referred the issue of the amount of Mr. Frank’s “buy-out” from the partnership to arbitration proceedings, held in May and in December of 2010. The arbitrator concluded that Mr. Frank was entitled to a buy-out of $519,981 and directed that the parties bear their own costs. Mr. Frank contends that the arbitrator erred in both conclusions.

2. Partnership Agreement [ 2 ] By a Partnership Agreement effective January 1, 2006 (“the Partnership Agreement”) Mr. Frank was admitted to the Vogel partnership, which until then had consisted of Mr. Victor Vogel and Ms. Paule Armeneau.

Section 3.01 governed admission to the partnership: 3.01 New Partners may be admitted to the Partnership upon such terms and at such times as may be agreed by a Special Majority based on the following general provisions: (

a) The purchase price of such proposed Partner’s Partnership Interest shall be based on the proportionate amount of the then current value of the Partnership’s capital account which is mutually agreeable between such proposed Partner and the existing partners (the “Purchase Price”)... [ 3 ]

Section 4.04 governed withdrawal from the partnership: 4.04 General Provisions - Upon the withdrawal of a Partner, whether voluntary or involuntary, the following general provisions shall apply: (

a) All interests of a withdrawing Partner in the Partnership shall end on the Date of Termination; (

b) An accounting shall be taken between the Partnership and the withdrawing Partner, and all payments due shall be calculated as at the Date of Termination; (

d) the withdrawing Partner shall be deemed to have transferred his or her Partnership Interest to the remaining Partners, on a pro-rata basis, as at the Date of Termination; (

e) The Partnership shall pay to the withdrawing Partner the value of such withdrawing Partner’s capital account less receivables and his or her pro-rata share of the Partnerships’s WIP (the “Equity Interest”), as follows... [ 4 ] The phrase “Partner’s capital account” is used in s. 4.04(

e) and and s. 7.01. It is not separately defined in the Partnership Agreement.

Section 7.01, which concerns accounting, states: 7.01 Accounting Records - Proper books of account shall be kept by the Partnership to record all money received and paid out by the Partnership, and all business transactions entered into by the Partnership on its own account, and on behalf of clients. (

a) Annual accounting statements shall be prepared, and shall include a statement of income and expense, a balance sheet, a statement of Partner’s capital account, a statement of net income distribution, a capital cost allowance

schedule for each fiscal year and a statement of income allocation among the Partners... [ 5 ] Unlike “Partner’s capital account”, the “capital account of the partnership” is defined in s. 7.07: 7.07 Capital Account - The capital account of the Partnership shall mean the net book value of the Partnership, calculated in accordance with generally accepted accounting principles and the following:

(

a) There shall be no value for goodwill; (

b) Actual outstanding disbursements (not written off) shall be valued at 90%. (

c) Work in Progress Fees shall be discounted by 40% of Doug Perras’ work in progress fees and 10% of the remaining Work in Progress Fees... [ 6 ]

Section 12.02 addressed dispute resolution: 12.02 Arbitration - All questions arising out of this Agreement shall be referred to Jim McCartney or in the event that he is unable to act, the matter shall be referred to ADR Chambers. The cost of the arbitration shall be determined by the Arbitrator. [ 7 ]

Schedule 1 to the Partnership Agreement set out the respective Partnership Interests as at January 1, 2006. Mr. Frank’s interest at that time was 12.5%. 3. Facts Giving Rise to the Dispute [ 8 ] On January 1, 2008, Ms. Armeneau withdrew from the Partnership. Her interest then was 30%. The partners negotiated a buy-out of $750,000. Ms. Armeneau remained with Vogel as an associate. [ 9 ] On May 27, 2009, Mr. Frank announced his intention to voluntarily withdraw from the Partnership, effective August 31, 2009. No buy-out of his interest had been negotiated before Ms.

Armeneau purportedly returned to the partnership, effective August 1, 2009. This occurred as a result of a special meeting of the partners on August 26, 2009, in which a special majority of the partners (but not Mr. Frank) voted to readmit Ms. Armeneau. In exchange for reducing the buy-out amount owed to Ms. Armeneau by half (ie. by $375,000), Ms. Armeneau was purported to have been given a 15% interest in the Partnership. This effectively lessened Mr. Frank’s interest in the Partnership. [ 10 ] Because the parties were unable to agree on Mr. Frank’s interest, the parties asked Mr. McCartney to arbitrate.

He heard the matter in May, 2010 and issued his Award (“the Award”) on August 27, 2010. Mr. McCartney heard further argument on costs in December 2010 and on December 8, 2010 issued a Supplemental Award. 4. The Award and Supplemental Award [ 11 ] The Arbitrator heard three days of evidence from the parties, Vogel’s bookkeeper, and two accounting experts. There were many pages of documents. The parties did not have a transcript. He concluded that, as of August 1, 2009, Ms.

Armeneau had been validly readmitted to the Partnership, but that two other resolutions passed at the August 26, 2009 Special Meeting, which the Arbitrator concluded were prejudicial to Mr. Frank and intended to lessen his entitlements, were not valid because Ms. Armeneau had not been provided notice nor had she attended the meeting. As a result of Ms. Armeneau’s readmission to the Partnership, the Arbitrator concluded that Mr. Frank’s percentage interest in the Partnership was 14.706%. [ 12 ] On the

interpretation of s. 4.04(e), complexity arose out of the difficulty in interpreting the term “Partner’s capital account”. Vogel contended that s. 4.04(

e) could be read in a way that would mean that the withdrawing partner would receive his capital account less both the receivables and pro-rata share of the partnership’s WIP, resulting in a zero payout to the withdrawing partners, but the Arbitrator concluded that this

interpretation would lead to an absurd result. He concluded at p.3 of the Award that s. 4.04 means that “a withdrawing partner is entitled to two things: first his capital account less receivables, and second, his pro-rata share of the partnership’s WIP.”

[ 13 ] This left the difficult interpretive issue of the meaning of “Partner’s capital account less receivables”. The Arbitrator’s conclusions in this regard are difficult to discern from the initial Award. He noted that s. 7.07 defines Capital Account as the net book value of the Partnership, with no value for goodwill, a 90% valuation of actual outstanding disbursements and a discounting for the work of Doug Perras, an associate with the firm. In the Arbitrator’s Supplemental Award, the implications of the Arbitrator’s reliance on the definition of Capital Account in s. 7.07 becomes clear.

At para.14 of the Supplemental Award, the Arbitrator concluded: Subsection 7.07 defines Capital Account (of the partnership) as the net book value of the partnership and stipulates there shall be no value for goodwill, outstanding disbursements are valued at 90% and WIP is to be discounted as set out. (As noted in the Award, this is not a traditional treatment of the concept of capital accounts.) It is obvious that WIP is taken into account in arriving at the net book value of the partnership, that is, the Capital Account.

It would be double counting if the WIP, already included in the Capital Account, were to be added again in calculating Mr. Frank’s buy-out amount. This would be the flipside of deducting it (resulting in zero payment) and equally unsound. It cannot have been intended by the parties to the Agreement. In the result, the calculation of Mr. Frank’s buy-out amount is not, as he suggested, an algebraic formula based on parsing the words of subsection 4.04(e). [ 14 ] In short, the Arbitrator concluded that s. 4.04(

e) did not mean that Mr. Frank was entitled to the value of his own WIP, plus a 14.7% interest in the total partnership’s WIP because this would essentially be double counting. 5. Issues. [ 15 ] The Application raises the following issues: 1. Has the Applicant satisfied the requirements of s. 44 of the Arbitration Act for leave to appeal? 2. Did the Arbitrator exceed his jurisdiction about the readmission of Ms. Armeneau to the Partnership? 3. If leave is granted, did the arbitrator err in: (

a) Finding that Ms. Armeneau was a partner as of August 1, 2009; (

b) Interpreting s. 4.04 of the Agreement; and (

c) Awarding costs. 6. Leave to Appeal and s. 44 of the Arbitration Act . [ 16 ] Appeals from the decisions of privately appointed arbitrators are governed by s. 44 of the Arbitration Act , R.S.A. 2000, c.A- 43, which provides: 44(1) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law, on a question of fact or on a question of mixed law and fact.

(2) If the arbitration agreement does not provide that the parties may appeal an award to the court on a question 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.

(3) Notwithstanding subsections (1) and (2), a party may not appeal an award to the court on a question of law that the parties expressly referred to the arbitral tribunal for decision.

(4) The court may require the arbitral tribunal to explain any matter.

(5) The court may confirm, vary or set aside the award or may remit the award to the arbitral tribunal and give directions about the conduct of the arbitration.

(6) Where the court remits the award to the arbitral tribunal in the case of an appeal on a question of law, it may also remit to the tribunal the court’s opinion on the question of law. [ 17 ] It is clear from s. 44 of the Arbitration Act that the Legislature intended to restrict judicial intervention in decisions by privately appointed arbitrators. The agreement to arbitrate did not provide for a wide right of appeal as found in s. 44(1). Thus, before leave will be granted, the Applicant must establish: (

a) That the appeal raises a question of law; (

b) That the requirements of s. 44(2) of the Arbitration Act are met; and (

c) That the question of law has not been expressly referred to the arbitrator for decision. (

a) A Question of Law. [ 18 ] The Applicant contends that the Arbitrator erred in interpreting the relevant provisions of the Partnership Agreement, and that errors in contractual

interpretation raise questions of law. He cites the decision of the Alberta Court of Appeal in Dow v. Shell , 2010 ABCA 126 , at para.11-12: The

interpretation of a contract may invoke several standards of review. Some findings of fact may be required. In some cases the trial judge may have to determine which documents, promises, and consideration constitute the contract. There is a limited ability to introduce evidence regarding the circumstances surrounding the formation of the contract. Findings of fact on such issues will only be disturbed on appeal if they disclose palpable and overriding error...

A trial judge's determination of the factual matrix surrounding the contract in light of the evidence as a whole (including if appropriate extrinsic evidence) is a matter of fact, although the determination may be influenced by legal concepts... Once the exact terms and nature of the contract, and the surrounding facts, have been established, the

interpretation of the words of the contract is a matter of law. The

interpretation and application of contract principles to a settled set of facts is a question of law reviewed for correctness. [ 19 ] The Respondent’s position is that the Arbitrator’s

interpretation of the Partnership Agreement involves a question of mixed fact and law, and the Respondent cites to Alenco Inc. v. Niska Gas Storage US, LLC , [2009] A.J. No. 351 (Q.B.) . In that case, leave to appeal under s. 44 of the Arbitration Act was declined because, in the words of Hawco J., at para.23, the arbitrator had “looked to the agreement and applied its terms to a complicated set of facts”, ultimately concluding that the natural gas in dispute between the parties was not “Optimization Gas as defined in the agreement.”

[20] I agree with the Respondent that not every matter of contractual

interpretation should immediately be characterized as aquestion of law. The distinction between questions of law and questions of mixed law and fact can be a difficult one. I adopt the reasonsof Kent J. in Ainsworth Lumber Co. Ltd. v. Grant Forest Products Inc., 2007 ABQB 556, at para.14: Finding the line between a question of law and a question of mixed fact and law is not always easy. It cannot be as simple as saying thatif a legal principle is applied to a set of facts, it is a question of mixed fact and law. Judges do not state legal principles in the abstract.They always apply law to facts.

That is their job. A more helpful method of finding the line is to see if it is possible to extricate a purelegal question. [21] It is possible to take the approach described by Kent J. to the three elements of the arbitrator’s decision that the Applicant ischallenging: the decision to readmit Ms. Armeneau, the

interpretation of s. 4.04 of the Partnership Agreement and costs. [22] On the readmission of Ms. Armeneau to the partnership, in my view it is possible to extricate the pure legal question at issuein the arbitrator’s decision. The fact that a special meeting occurred on August 26, 2009, and that a special majority of the partners, notincluding Mr. Frank, voted to readmit Ms. Armeneau, was not in dispute. What the arbitrator was required to determine was the effect ofthis meeting and vote under the terms of the Partnership Agreement. This is a legal question. [23] Similarly, on s. 4.04 of the Agreement, the question is, simply, the proper

interpretation of “the value of such withdrawingPartner’s capital account less receivables and his or her pro-rata share of the Partnerships’s WIP.” In interpreting this provision of theAgreement, the arbitrator did not have to have regard to extrinsic evidence or a complex set of facts. What was required of the arbitratorwas the

interpretation and application of contract principles to settled set of facts. [24] Finally, on the question of costs, I agree with the Respondent that the awarding of costs involves an exercise of discretion andwill give rise to an error in law in only very narrow circumstances. The Applicant cites Chemerinski v.

Richter, 2010 ABQB 388, whereSanderman J. determined, at para.14, that on review of an arbitrator’s decision it was clear that “she had looked at factors outside thematter referred to her for arbitration in order to determine the responsibility for costs.” It is not clear from the decision what thoseexternal factors were. Here, there is no indication that the arbitrator considered external or improper factors in coming to thedetermination that the parties should bear their own costs.

Nor, in my view, is it entirely clear that the Applicant was the largelysuccessful party and that the arbitrator therefore departed from the general rule that costs follow the event. In this regard, it is noteworthythat it is the Applicant, not the Respondent, who is seeking to appeal the decision of the arbitrator on the merits. [25] The readmission of Ms. Armeneau to the partnership and the

interpretation of s. 4.04 of the Partnership Agreement arequestions that involve extricable legal determinations by the arbitrator that may be subject to appeal. The determination of costs is not. (b) Section 44(2) of the Arbitration Act. [26] There is conflicting authority about the

interpretation of s. 44(2) of the Arbitration Act. In Warren v. Alberta Lawyers’ PublicProtection Association, (AB KB), [1997] A.J. No. 1041 (Q.B.), at paras. 14-17, Dea J. considered the legislativecontext and concluded that an element of public interest is incorporated into the question of the importance of the matter under s. 44(2): The applicant argues that he meets the requirements of these subclauses because if successful he will defeat the Ducommun claim andgain an economic benefit which it now appears he has lost. It seems to me that while on the face of it the applicant's argument is notwithout merit that in context such an

interpretation of the clauses is not warranted. The context I refer to is this: 1.Arbitration is a process of dispute resolution adopted consensually by the parties in preference to what is sometimes perceived as theslower more expensive civil litigation process available at law.

2. While the parties in an arbitration may agree to broad rights of appeal when they fail to do so The Arbitration Act itself restricts the right of appeal to questions of law. Even then it requires leave from the court. 3. The Act discourages appeals in an effort to produce a final and binding decision in a quick and inexpensive proceeding. In this context it is, I think, wrong to conclude that subparagraphs (

a) and (

b) aforesaid are met when "... the importance to the parties ..." means simply a loss or gain of some claim and the "... determination of the questions of law will significantly affect the rights of the parties ..." also means a loss or gain of some claim. Surely in the context some public interest or some resolution of some public issue must be triggered sufficient to warrant overriding the mutual agreement of the parties to restrict appeals to issues of law.

There is not before the court any evidence of that kind. [ 27 ] The idea that s. 44(2) incorporates an element of public interest has been a persistent one. In Co-operators General Insurance Co. v. Great Pacific Industries Inc ., [1998] A.J. No. 132 (Q.B.) , Wilkins J. denied leave to appeal from an arbitrators decision because he could find no element of public interest in the resolution of the dispute, holding at para. 36: If Section 44(2)(

b) has any significance beyond denying leave in relation to a dispute which is frivolous, insignificant or redundant, it must demand more than the resolution of the dispute between the parties. Similarly, in Schultz v. Schultz , [2000] A.J. No. 1395 (Q.B.) , Nash J. denied leave, at para.60: In every litigation and appeal arising therefrom, the issues involved are important to the litigants and the determination of the questions of law do significantly affect the rights of the litigants. The question of law posed by the Applicant, Mr. Schultz, does not trigger a public interest or a resolution of a public issue.

It is only the litigants in the present case who are affected. As noted by the Respondent, the Applicant, if successful, will not suffer a penalty for his failure to disclose the re-zoning of the home quarter and will not have to pay the interests and the costs. He will gain an economic benefit. There is clearly no element of public interest in the resolution of this dispute. Accordingly, I would deny leave to appeal. Johnstone J. adopted the reasoning in Warrren in Oakford v. Telemark Inc ., [2001] A.J.

No. 853 (Q.B.) , at para.14: There must be a public issue or something of public interest to warrant an appeal on a question of law. The mere loss or gain of a claim is insufficient. The only reason for Oakford's appeal is the loss of a claim to money which is insufficient to meet the threshold test established by subsections 44 (

a) and (b). [ 28 ] The rationale behind the incorporation of the public interest into the test for granting leave was described by Sanderman J. in Sherwin-Williams Co. v. Walls Alive (Edmonton) Ltd. , [2002] A.J. No. 1387 (Q.B.) , at para.18: I adopt the reasoning in Warren . It provides a degree of certainty and fairness. The parties agreed to arbitration. No one forced them to embrace this method of resolving their dispute. If either one is dissatisfied with the decision, an appeal should not be allowed if only their interests are at stake.

They should be held to their agreement to avoid the civil litigation process unless it is in the public's interest for the court to allow an appeal to proceed. If the public interest requirement is lacking, the parties should be bound by the decision coming from the dispute resolution mechanism they chose. [ 29 ] More recently, in Alenco , Hawco J. considered the objectives of the Arbitration Act as a whole and held, at para.6: It is generally accepted that one of the objectives of the Act is to minimize judicial intervention in the arbitration process.

Section 6 of the Act limits a Court's intervention to instances where the arbitration process needs to be assisted, to ensure an arbitration is carried out

in accordance with the agreement and to "prevent manifestly unfair or unequal treatment of a party to an arbitration agreement". And at para.29: One of the results of the acceptance of the non-interventionist approach is that the courts of this province have, in addition to the restrictions set forth in

section 6 and section 44(2) of the Act, required that it must also be determined by a court that it is in the public's interest that leave be granted to appeal under section 44(2). [ 30 ] The Applicant points out that, despite this line of authority, there is no language in the Arbitration Act itself that clearly states that an element of public interest is required in determining whether leave to appeal will be granted (a proposition that Hawco J. would agree with, having pointed out that the public interest requirement is in addition to the restrictions set out in s.6 and s. 44(2) of the Act).

This was clearly the conclusion Manderscheid J. came to in Fuhr Estate v. Husky Oil Marketing Co. , 2010 ABQB 495 , at paras. 99-103 : I am inclined to agree with the Applicant that there is nothing in the actual language of the legislation suggesting that there must be a public interest element before leave may be granted. While the Supreme Court has said that statutory

interpretation requires consideration of the context of the legislative provision in question within the legislative scheme, that cannot extend to adding meaning where there is no language, at all, to support that

interpretation. It is clear that the legislature has chosen to limit the Court's intervention in arbitration decisions, emphasizing that where parties have chosen arbitration they should not have access to the Courts except in limited circumstances. This approach is intended to produce final and binding decisions in a quick and inexpensive proceeding. At the same time, meaning must be given to the actual words used in the legislation.

If the legislature intended that leave only be granted if there was a public interest component, it would have said so; instead it stated that leave may only be granted where the matters at stake are so important to the parties it justifies an appeal, and where the determination of the question of law will significantly affect the rights of the parties. I agree that there must some meaning attributed to the words. In Schultz , Nash J. suggested that the issues involved are always important to the litigants and the determination of the questions of law always significantly affect the rights of the litigants.

Her suggestion then was that there must be something else at issue, otherwise leave would always be granted. With respect, that may not be the case. A party may be able to identify an error on a question of law, but that error may not be essential to the decision or may only have a trivial and inconsequential effect of the decision as a whole. Perhaps, as here, the parties allege numerous errors in order to challenge an arbitral decision, but once analyzed the Court finds that there is only one or two questions of law at issue.

If the resolution of those alleged errors will make no practical difference to the end result, the appeal is not justified and the parties' rights will not be significantly affected. Thus I decline to find that s. 44(2)(

a) and (

b) require that a public interest be at issue. [ 31 ] Veit J. recently considered the decision in Fuhr Estate in Zaharko v. Milton , 2012 ABQB 141 . She declined to state whether the approach taken by Manderscheid J. in Fuhr Estate should be preferred to the line of decisions which Manderscheid J. declined to follow. Instead, Veit J. focussed on the requirement under s. 44(2)(b): It is a principle of statutory

interpretation that a court should strive to give meaning to each of the words chosen by a legislator to effect its purpose... Here, the issue of whether the determination of the question of law at issue will significantly affect the parties must mean something different from whether the issue is of importance to the parties and must relate back to the preliminary issue of error of law. For the reasons given above, since I have concluded that the arbitral tribunal made no error of law, there is no need to determine whether the applicants have also met the second part of the test for leave.

In any event, however, if I did have to address the second part of the test for leave, I have concluded that the meaning of the second part of the test must, in the context in which that requirement is adopted by the legislature in the Arbitration Act , include a component of

ongoing assistance to the parties because the question of law, when decided correctly, will assist the parties, or others, in the future. Otherwise, ss. 44(2)(

b) would have no meaning: if there had been an error of law, of course it would significantly affect the rights of the parties to correct the error, even if the error itself were not material in the specific circumstances, in order to guide their future conduct.

The parties, and other realtors, would presumably wish to know what the correct principles were, independent of any specific facts. [ 32 ] The proposition that some element of public interest must be engaged before this Court will exercise its discretion to grant leave to appeal the decision of an arbitrator is now so well established in the law of Alberta that I would, if necessary, be inclined to adopt it here. For the reasons set out by Veit J. in Zaharko , however, it is not necessary for me to do so.

If the meaning of the second part of the requirement is that there is a component of “ongoing assistance to the parties because the question of law, when decided correctly, will assist the parties, or others in the future”, then the Applicant has failed to meet the test. There is nothing at issue here beyond the value of the payout that results from the arbitrator’s

interpretation of the Partnership Agreement. I agree with Hawco J., who held in Alenco at para.32: ...it would set an unacceptable precedent if a disappointed party were entitled to appeal a consensual binding arbitration because it did not like the decision, and because there was a considerable sum of money at stake. [ 33 ] What is clear from these decisions is that considerable deference will be extended to the decisions of arbitrators appointed pursuant to an agreement between the parties. The Courts of Alberta will not and should not lightly interfere with the decision, between parties, to agree to arbitrate and to be bound by the results. (

c) Expressly Referred to the Arbitrator [ 34 ] Although I have denied leave to appeal, I will briefly address the parties’ arguments on s. 44(3) of the Act, and whether the questions at issue were expressly referred to the arbitrator within the meaning of that provision. [ 35 ] I agree with the Applicant that to be meaningful, s. 44(3) must be given a narrow

interpretation. Section 44(3) contemplates a distinction between questions of law that arise while determining the issues that have been put before the arbitrator and questions of law that are clearly and specifically referred to the arbitrator by the parties. If all the questions of law that must be determined during the arbitration fall within the scope of s. 44(3), there would be no need for s. 44(2).

Instead, s. 44(3) provides that when the parties to an arbitration collectively identify a legal issue and agree to refer that issue to the arbitrator, they will in effect be held to the terms of their agreement to allow the arbitrator to determine that issue. [ 36 ] In my view, while the issues of Ms. Armeneau’s partnership status and the

interpretation of s. 4.04 of the Partnership Agreement were ones that arose and were required to be decided in the course of the arbitration, they were not referred to the arbitrator within the meaning of s. 44(3).

Section 45 of the Arbitration Act [ 37 ] The Applicant further relies on s. 45 , which allows the Court to set aside an arbitrator’s award in limited circumstances. The relevant portions of s. 45 provide: 45(1) On a party’s application, the court may set aside an award on any of the following grounds: (

c) the award deals with a matter in dispute that the arbitration agreement does not cover or contains a decision on a matter in dispute that is beyond the scope of the agreement;

(2) If subsection (1)(

c) applies and it is reasonable to separate the decisions on matters covered by the arbitration agreement from the

impugned ones, the court shall set aside the impugned decisions and allow the others to stand.

(3) The court shall not set aside an award on grounds referred to in subsection (1)(

c) if the applicant has agreed to the inclusion of the matter in dispute, waived the right to object to its inclusion or agreed that the arbitral tribunal has power to decide what matters in dispute have been referred to it.

(6) If the ground alleged for setting aside the award could have been raised as an objection to the arbitral tribunal’s jurisdiction to conduct the arbitration, the court may set the award aside on that ground if it considers the applicant’s failure to make an objection in accordance with

section 17 justified. [ 38 ] The Applicant submits the arbitrator exceeded his jurisdiction when he determined that Ms. Armeneau had been readmitted to the partnership effective August 1, 2009 because in his submission, in doing so the Arbitrator effectively re-wrote the agreement under which Ms. Armeneau left the partnership in January 2008, which did not contain an arbitration provision, and because the arbitrator must have also “rewritten the Notice of Special Meeting so as to give notice to admit a new partner”. [ 39 ] Among the issues submitted by the Applicant for arbitration was the following: 5.

Allocation of liability among firm members raises collateral issues concerning parties: a. Paule Armeneau buy out, January 1, 2008; b. Meeting between Vic Vogel and Michelle Brandt in July 2009, without Gary Frank, purporting to re-admit Paule Armeneau PC as partner; c. Special meeting of August 2009 to readmit Armeneau PC to partnership, effective August 1, 2009; d.

Vogel PC, Frank and Brandt: no new partnership agreement with Armeneau PC on so-called readmission to partnership. [ 40 ] It is clear from the foregoing that the Applicant was aware that the Arbitrator would be required to come to a determination on the nature of Ms. Armeneau’s interest in the firm before he could determine the central issues before him, which were the proportion of the Applicant’s stake in the firm and the resulting value of his buy out. The true nature of the Applicant’s objection is not that the question of Ms.

Armeneau’s stake in the firm was outside the Arbitrator’s jurisdiction, but that the Arbitrator’s answer is not to the Applicant’s satisfaction. Having clearly put the issue of Ms. Armeneau’s partnership status to the Arbitrator, the Applicant cannot now be heard to complain that the issue was outside the Arbitrator’s jurisdiction. In any event, as it would have been impossible to determine the value of the Applicant’s interest without a decision on this very point, the matter fell squarely within the jurisdiction of the Arbitrator. 8.

Conclusion [ 41 ] This appeal is barred because it fails to satisfy the tests set out in s. 44(2) of the Arbitration Act . Moreover, the Arbitrator did not exceed his jurisdiction in determining that Ms. Armeneau had been effectively readmitted to the partnership. The Appeal is respect of costs is further barred because it does not involve an extricable legal question appropriate for appeal. [ 42 ] The application for leave to appeal is denied. Heard on the 30 th day of April, 2012. Dated at the City of Calgary, Alberta this 6 th day of July, 2012.

P.J. McIntyre J.C.Q.B.A. Appearances: Zul Verjee Verjee & Associates for the Applicant Eric Groody Code Hunter LLP for the Respondent