Capital Power Corporation v. Lehigh Hanson Materials Limited, 2013 ABQB 413

Court of Queen ’ s Bench of Alberta Citation: Capital Power Corporation v. Lehigh Hanson Materials Limited, 2013 ABQB 413 Date: 20130718 Docket: 1201 10911 Registry: Calgary In the Matter of The Arbitration Act, R.S.A. 2000, c. A-43 as Amended And in the Matter of the Genesee Ash Sales Agreement between Epcor Utilities Inc. And Lehigh Portland Cement Ltd. Between: Capital Power Corporation Applicant - and - Lehigh Hanson Materials Limited Respondent _______________________________________________________ Reasons for Judgment of the Honourable Chief Justice Neil Wittmann _______________________________________________________

Introduction [ 1 ] This is an application under ss. 44(2) and 45 of the Arbitration Act , R.S.A. 2000, c.A-43 to appeal or set aside the award made in a private arbitration between the Applicant Capital Power Corporation (“Capital Power”) and the Respondent Lehigh Hanson Materials Limited (“Lehigh”).

Background [ 2 ] In 2002, Epcor Utilities Inc. and Lehigh Portland Cement Limited, the predecessors of Capital Power and Lehigh, respectively, entered into an agreement (“the Agreement”) in respect of the ash generated as a by-product of the operation of a coal-fired electrical generating station (“the Genesee Station”) owned by Epcor’s subsidiary Epcor Generation Inc. The Agreement set out the terms by which Capital Power would sell, and Lehigh would purchase, ash generated by the Genesee Station.

It required Lehigh to purchase a total of 427,000 tonnes of Classified Fly Ash from Capital Power over the first four years, at $8.50 per tonne. In 2004 the parties entered into an Addendum to the Agreement which set a purchase price for “Bottom Ash”, and Capital Power entered into a second agreement with ENX Inc.(“ENX”) for the sale of ash generated at the Genesee Station. The Agreement was amended in 2007 to increase the prices that Lehigh would pay for Classified Fly Ash and Unclassified Ash. [ 3 ]

Section 3.2 of the Agreement is central to this dispute: 3.2 During the term of this Agreement and any renewals or extensions thereof, [Capital Power] will first sell its available Ash to [Lehigh] up to the Annual Purchase Quantity. Subject to

section 3.3 [Capital Power] will not sell Ash, either directly or indirectly, for use in the Restricted Area to any of the following users, markets and enterprises carrying on business in or located within the Restricted Area: (

a) cement manufacturers or suppliers; (

b) ready mix operators; (

c) manufacturers of concrete products; (

d) pre-cast concrete manufacturers; (

e) suppliers of fill material for highway construction; and (

f) the oil and gas industry; however, subject to the provisions of

Section 3.3 hereof, [Capital Power] shall have the right to sell Ash to any other end users of this product within the Restricted Area. [ 4 ]

Section 3.4 describes the quality of the Ash that Capital Power is to provide: 3.4 [Capital Power] shall use its best efforts to supply Ash which meets the current CSA standard CAN/CSA-A23.5-M86 and the pending A3000-98 Cementitious Material Compendium standard for Ash used in concrete and the API standard spec.10 for Ash used in oil well cementing or such other substitute and further standards that are established therefor from time to time during the currency of this Agreement and any extensions or renewals thereof.

Purchaser shall not be obligated to purchase any Ash which fails to meet such standards. [ 5 ] Despite a disagreement over the recovery of costs associated with the construction of an ash classifier at the Genesee site, the parties’ relationship proceeded smoothly until, on July 3, 2010, Capital Power cut off the sale of Ash to Lehigh for a period to September 1, 2010. Capital Power cut off sales of Unclassified Ash to Lehigh again in April 2011. [ 6 ] Under s.15.1 of the Agreement, Epcor and Lehigh were required to bring any disputes arising between them to arbitration:

15.1 In the event of a dispute arising between the parties hereto as to the

interpretation, application, operation or alleged violation of this Agreement or any of the provisions hereof, other than provisions within the absolute discretion of one of the parties, such dispute shall be determined by the arbitration in accordance with the following terms and conditions: (

a) the Party desiring to refer the dispute for arbitration shall notify the other Party in writing of the details of the nature and extent of the dispute; (

b) within seven (7) days of receipt of such Notice, the opposite Party shall by written notice advise the Party so desiring to refer the dispute to arbitration of all matters referred to in the initial notice except those for which the Party admits responsibility and proposes to take remedial action and such Party shall then take remedial action; (

c) the terms of reference for arbitration shall be those areas of the dispute referred to in the initial notice which remain in dispute; ... (

h) the decision of the arbitration committee shall be final and binding upon the Parties hereto;... [ 7 ] Lehigh commenced arbitration proceedings in April 2011. Its Notice of Reference listed 10 matters in dispute, dealing with the supply and purchase obligations of the parties under the 2002 Agreement, and whether the restrictive covenants in the Agreement were illegal and unenforceable under the Competition Act, RSC 1985, c.C-34. Capital Power proposed an additional issue of whether the restrictive covenants in the Agreement are in restraint of trade at common law and therefore unenforceable.

Capital Power also requested a preliminary determination to determine whether four issues set out in Lehigh’s Notice of Reference were within the jurisdiction of the Arbitration Committee (“the Committee”), and in its Interim Award of September 27, 2011 the Committee concluded that three of the four issues fell within its jurisdiction. The Award [ 8 ] The questions put to the Arbitration Panel were: (

a) Is Capital Power entitled, on 45 days’ notice or otherwise, to cancel selling Ash to Lehigh, whether Classified Fly Ash or Unclassified Ash? (

b) Is Capital Power obligated to make its best efforts to produce the quantities of Ash required by Lehigh, whether Classified Fly Ash or Unclassified Ash? (

c) Is Capital Power entitled to sell Ash to any other customer without first making it available for sale to Lehigh? (

d) Is Capital Power entitled unilaterally to reduce, severely or otherwise, the quantity of Ash made available for sale to Lehigh, whether Classified Fly Ash or Unclassified Ash? (

e) If the answer to question (

c) or (

d) is yes, what annual sale quantities of Ash, whether Classified Fly Ash or Unclassified Ash, must Capital Power make available for sale to Lehigh?

(

f) Is the “minimum contract quality” of Ash which Capital Power is obligated to supply to Lehigh anything other than the 82% fines grade previously established? (

g) Does Ash, whether Classified Fly Ash or Unclassified Ash, produced at the Genesee 3 plant fall within the scope of the Agreement? (

f) In light of the answer to these questions, and in light of Capital Power’s reductions in supply of Ash to Lehigh between July 2 and August 31, 2010, and since January 7, 2011, what damages are properly payable by Capital Power to Lehigh? (

i) Have recent amendments to the Competition Act made prima facie illegal and therefore unenforceable the Restrictive Covenant contained in

section 3.2 of the Agreement? (

j) Is the Restrictive Covenant in

section 3.2 of the Agreement a covenant in furtherance of a restraint of trade, and therefore unenforceable as being contrary to public policy? [ 9 ] After a review of the background and the history of the dispute, the Committee divided the Award into three sections: supply and purchase obligations; the enforceability of the restrictive covenant; and damages. (

a) Supply and Purchase Obligations [ 10 ] The Committee identified s.3.2 of the Agreement as crucial to the determination of the supply obligations of Capital Power. “Annual Purchase Quantity” is not defined in the Agreement and its meaning was vigorously debated before the Committee. Capital Power contended that it should be given the same meaning as “Minimum Guaranteed Purchase Quantity”, which was defined in the Agreement to mean the quantity of Ash set out in

Schedule “C” that the Purchaser is obligated to purchase during each year of the Contract”. [ 11 ] The Committee disagreed with this

interpretation. Noting that the normal principles of contractual

interpretation require a consideration of the provision in the context of the entire agreement, the Committee looked to sections 5.1 through 5.6, which address the Minimum Guaranteed Purchase Quantity and concluded: ... the obligation of Capital Power in

Section 3.2 to first sell its available Ash to Lehigh up to the Annual Purchase Quantity is an obligation to first sell to Lehigh what Lehigh requires (orders) during a Contract Year, so long as such quantities are available through the best efforts of Capital Power. [ 12 ] The Committee further concluded that this

interpretation was consistent with the parties’ conduct.

In 2004, when Capital Power entered into the agreement to sell ash to ENX, that agreement contained three separate provisions to the effect that Capital Power could only sell to ENX excess quantities of Ash not purchased by Lehigh, and that Lehigh had the exclusive right, without limitation, to purchase Ash from the Genesee Station in priority to all others. [ 13 ] With respect to the quality of the Ash to be supplied by Capital Power under the Agreement, the Committee considered s.3.4 and in particular the issue of whether the term “established therefor” was to be interpreted as meaning substitute standards established by external bodies or any substitute standard, ie. one established by the parties themselves.

The Committee considered evidence that an 82% fines standard had become accepted for Classified Fly Ash in the concrete market, and that, while there had been no written agreement between the parties regarding this standard, a practice had developed between the parties to adopt it.

The Committee again looked to s.5.1 and s.5.4 of the Agreement, noting that these sections make reference to Lehigh providing Capital Power with its requirements for both quantity and quality of Ash and concluded at p. 13: Thus, if Lehigh orders Classified Fly Ash with fines no less than 82%, and if such Ash is available to Capital Power from EGI through best efforts, then the Committee has concluded that Lehigh is contractually entitled to obtain this quality of Ash from Capital Power.

(

b) The Restrictive Covenant [14] Turning to a consideration of the restrictive covenant contained in s.3.2 of the Agreement, the Committee rejected CapitalPower’s assertion that the covenant is unenforceable on the grounds of ambiguity, looking back to its earlier conclusion that a reasonableinterpretation of the term “Annual Purchase Quality” is possible.

The Committee further pointed out that the parties had experienced nodifficulty in understanding and applying the restrictive covenant over the ten years of its operation. [15] With respect to whether the restrictive covenant is an unenforceable restraint of trade, the Committee located the appropriatetest in Tank Lining Corp. v. Dunlop Industrial Ltd. (1982), (ON CA), 40 O.R. (2d) 219.

The Committee concludedthat the 2002 Agreement did not make Lehigh the exclusive marketer for all Ash produced at the Genesee Station and therefore theAgreement was “a vertical arrangement and, within markets of Western and Northern Canada, an exclusive distribution contract for allcommon uses of Ash,” writing at p. 16: The exclusive distribution contract thus falls outside the categories of restraint that as a matter of legal precedent routinely create seriousconcerns.

They remain subject to the doctrine of restraint of trade, but require the presence of special or unusual elements in order to befound unenforceable. [16] Turning to the other elements in Tank Lining, the Committee found that the restrictive covenant was reasonable in the interestof the parties, that the restraint was no greater than is reasonable to protect Lehigh’s interests in developing the fly ash market andinvesting in a classifier, and that the restraint was not contrary to the public interest and public policy because it was not designed to keepash out of the market and in fact had the effect of increasing the availability of fly ash to the public. [17] The Committee also considered the legality of the restrictive covenant under s.45 of the Competition Act, the relevant portionsof which provide: 45.

(1) Every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges (

a) to fix, maintain, increase or control the price for the supply of the product; (

b) to allocate sales, territories, customers or markets for the production or supply of the product; or (

c) to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product.

(8) The following

definitions apply in this section. “competitor” includes a person who it is reasonable to believe would be likely to compete with respect to a product in the absence of aconspiracy, agreement or arrangement to do anything referred to in paragraphs (1)(

a) to (c). [18] The Committee considered evidence that Lehigh considered Capital Power as a potential competitor in the fly ash market, butconcluded at p. 23: In sum, section 45(1) does not apply to the 2002 Agreement for two reasons. Firstly, the 2002 Agreement does not involve a horizontalrestraint between competitors. The guidelines make it clear that section 45(1) is designed to deal with horizontal restraints rather than

vertical restraints. Vertical agreements between suppliers and customers, such as the agreement between Capital Power and Lehigh, are assessed under the civil provisions of

Part VIII of the Act, which are not part of this arbitration. Secondly, even if the predecessor of Capital Power could be considered to have been a competitor or potential competitor of Lehigh at the time of the making of the 2002 Agreement, the Agreement does not purport to do any of the matters set out in section 45(1). Legislation [ 19 ] An appeal from the decision of a private arbitrator is brought under s.44 of the Arbitration Act . It 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. [ 20 ] A party may also, or in the alternative, apply to set aside an arbitrator’s decision under s.45, the relevant portions of which 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; (

f) the applicant was treated manifestly unfairly and unequally, 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; (

g) the procedures followed in the arbitration did not comply with this Act or the arbitration 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. Alleged Errors [ 21 ] Capital Power contends that the Committee erred as follows: (

a) It exceeded its jurisdiction by determining provisions of the Agreement that were “within the absolute discretion of one of the parties” and were therefore contractually outside the scope of what could be arbitrated; (

b) It failed to give meaning to every term in the Agreement when it interpreted the meaning of “Annual Purchase Quantity”; (

c) It failed to consider or give meaning to the “no waiver” clause in

section 17.1 of the Agreement when it held that the parties, by their conduct, established an 82% fines standard for Classified Fly Ash; (

d) It failed to apply the correct legal test when determining whether the restrictive covenant in

section 3.2 of the Agreement was invalid; (

e) It made errors of statutory

interpretation when determining whether the restrictive covenant at

section 3.2 of the Agreement infringed the Competition Act ; (

f) It erred by failing to consider relevant evidence when making findings of fact and by making findings of fact in the complete absence of evidence; and (

g) It erred by failing to provide adequate reasons for key aspects of the Award. [ 22 ] Before considering these alleged errors in turn, and determining whether leave should be granted in respect of all or any of them, it may be helpful to consider the parties’ arguments in respect of the appeal and set aside provisions of the Arbitration Act , and the sometimes conflicting jurisprudence upon which the parties rely.

Section 44(2) of the Arbitration Act [ 23 ] Under s.44(2), before granting leave to appeal, the Court must be satisfied that the grounds of appeal constitute questions of law; that the importance to the parties of the matters at stake in the arbitration justifies an appeal; and the determination of the question of law at issue will significantly affect the rights of the parties. (

a) A Question of Law [ 24 ] By combined effect of s.44(2) and s.44(3) of the Act, leave may be granted in respect of a question of law, but only if that question of law was not expressly referred to the arbitrator for determination. In the context of the Arbitration Act , how should courts distinguish between unappealable mixed questions of law and fact, unappealable questions of law expressly referred to the arbitrator, and

appealable questions of law? [25] In Frank v. Vogel, 2012 ABQB 432 at para. 20, McIntyre J. held that not every matter of contractual

interpretation should becharacterized as a question of law, in the context of s.44(2). He adopted the reasons of Kent J. in Ainsworth Lumber Co. Ltd. v. GrantForest 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. [26] In describing more fully what she meant by an extricable question of law, Kent J. looked to the decision of the Alberta Courtof Appeal in Workers Compensation Board-Appeals v. Appeals Commission, 2005 ABCA 276, at para. 29: The concept of an extricable legal error can be difficult to understand. In Housen at para. 36, the Supreme Court provided clarification.In that case the alleged error was a finding of negligence, a question of mixed fact and law.

The Court noted that when the error in afinding of negligence can be attributed to the application of an incorrect standard, a failure to consider a required element of a legal test ora similar error in principle, such an error can be characterized as an extricable error of law. However, when the issue on appeal involves atrial judge's

interpretation of the evidence as a whole, or the application of the correct legal test to the evidence, there is no extricableerror of law. [27] I agree with the approach taken by Kent J. in Workers Compensation Board-Appeals. In my view the proper approach to eachof the errors alleged to have been made by the Committee, is to determine whether there is an extricable question of law that may besubject to appeal. (

b) Importance to the Parties, and Significantly Affects their Rights [28] Lehigh has acknowledged that many of the matters at issue are important enough to the parties to justify an appeal. However,it contends that it is appropriate to consider whether the public interest in the matters at issue warrants an appeal or, in the alternative,that the public interest should weigh heavily in what Lehigh contends is the Court's “residual discretion” to deny leave. [29] In Warren v.

Alberta Lawyers Public Protection Association (1997), (AB KB), 56 Alta L.R. (3d) 52(Q.B.), Dea J. considered s.44(2) of the Arbitration Act and held, at para. 17: Surely in the context some public interest or some resolution of some public issue must be triggered sufficient to warrant overriding themutual agreement of the parties to restrict appeals to issues of law. There is not before the court any evidence of that kind. [30] Despite the absence of language in the statute directly supporting the existence of a public interest requirement, thisinterpretation of s.44(2) has taken hold.

Warren was followed and applied in Co-operators General Insurance Co. v. Great PacificIndustries Inc., 1998 ABQB 137, aff’d on other grounds: 1998 ABCA 272, Schultz v. Schultz, 2000 ABQB 866, Oakford v. TelemarkInc., Sherwin-Williams Co. v. Walls Alive (Edmonton) Ltd., 2002 ABQB 999, Lion’s Gate Homes Ltd. v. Shand, 2008 ABQB 15, Alencov. Niska Gas Storage US, LLC, 2009 ABQB 192, Heredity Homes (St. Albert) Ltd. v. Scanga, 2009 ABQB 237, Venneman v. MountainView (County No. 17), 2009 ABQB 540 and Apache Canada Ltd. v. Harmattan Gas Processing Limited Partnership, 2010 ABQB 288.This

interpretation has not been unanimous, however. In Rudiger Holdings Ltd. v. Kellyvone Farms Ltd., 2002 ABQB 601, Kenny J. heldat para. 39: I agree that appeals cannot be granted simply on the basis that one party will suffer an economic loss. Were that the case, leave would begranted virtually as a matter of course. This would be contrary to the aims of the Act, namely to afford the parties recourse to a relativelyinexpensive, timely and binding resolution of their conflicts. However, I have some grave doubts that the Legislature has, by s. 44(2)

mandated that some public interest must be at stake before leave to appeal will be allowed. If that was its intention, I find it odd in theextreme that it chose the phrases “the importance of the matters to the parties” and “significantly effect (sic) the rights of the parties”[emphasis added] to convey this. [31] Similarly, in Fuhr Estate v. Husky Oil Marketing Co., 2010 ABQB 495, Manderscheid J. held, at paras. 99-100: I am inclined to agree with the Applicant that there is nothing in the actual language of the legislation suggesting that there must be apublic interest element before leave may be granted. While the Supreme Court has said that statutory

interpretation requiresconsideration of the context of the legislative provision in question within the legislative scheme, that cannot extend to adding meaningwhere there is no language, at all, to support that

interpretation. It is clear that the legislature has chosen to limit the Court's interventionin arbitration decisions, emphasizing that where parties have chosen arbitration they should not have access to the Courts except inlimited 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 grantedif there was a public interest component, it would have said so; instead it stated that leave may only be granted where the matters at stakeare so important to the parties it justifies an appeal, and where the determination of the question of law will significantly affect the rightsof the parties. [32] In Milner Power Inc. v. Coal Valley Resources Inc., 2011 ABQB 118, Binder J. refused leave on other grounds and thereforewas not required to consider whether there is a public interest required under s.44(2). Nevertheless, he held at paras. 21-22: ...

I question whether the reading of s.44(2)(

a) and (

b) permits such a requirement. Rather, I suspect that the origin of the requirement:see Warren v. Alberta Lawyer’s Public Protection Association (1997), (AB KB), 56 Alta. L.R. (3d) 52, [1997] A.J.No. 1041 at para. 17 and since followed in a number of this Court's decisions, arises from what appear to be unhelpful criteria, that is thatthe court shall only grant leave 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. The above requirements have been deemed to be unhelpful because in almost every case the award is going to be important to the partiesand determination of the question of law will significantly affect their rights. As a result, it appears that Dea J. in Warren added “publicinterest” and thereafter our Court has in effect added to (

a) and (

b) above that the Court “... shall only grant leave if it is satisfied that it isin the public interest to do so”. Accordingly, I suggest to counsel that they forward this matter to the appropriate government departmentor legislative counsel for review and consideration. [33] In Frank v.

Vogel, McIntyre J. also refused leave on other grounds, but it was his view that the public interest requirement isnow so entrenched in the law of Alberta that he would have been inclined to apply it. [34] Most recently, Veldhuis J. considered the question in Central Alberta Rural Electrification Assn. (Contract Policy Committee)v. Fortis Alberta Inc., 2012 ABQB 653 (“CAREA”).

After considering many of the authorities, as well as the Alberta Law ReformInstitute’s report, Arbitration Act: Stay and Appeal Issues, Report for Discussion No. 24 (Edmonton: ALRI, 2012) (“ALRI”), sheconcluded at para. 56: A dominant purpose of the Act, limiting appeals from arbitral awards, can be addressed by a careful reading of section 44(2). In my view,the proper

interpretation of section 44(2) applies high standards to the listed requirements but also recognizes a discretion to refuse leaveeven when those conditions are met, as discussed later in this decision. In exercising the discretion to refuse leave, it may be relevant thata question does or does not have a public interest component. This

interpretation, in my view, is both more workable and more true to theordinary words of the statute than reading in a public interest requirement.

[ 35 ] Insofar as Veldhuis J. concluded that the proper

interpretation of s.44(2) incorporates high standards to the listed requirements, but does not incorporate, in particular, a public interest requirement, I agree. I am not satisfied that there is a sound basis in the statute for the weighing of the public interest as a critical factor in the analysis under s.44(2). What the Act requires, in both its general scheme and under s.44(2) specifically, is a very high standard when considering whether the importance to the parties of the matters at stake in the arbitration justifies an appeal.

Mere pecuniary interest may not suffice, though I do not think it necessary to conclude that a pecuniary interest, no matter how significant, could not suffice on its own. [ 36 ] Lehigh has conceded that, for a good number of the issues raised by Capital Power, the matters are important to the parties and the decision significantly affects their rights.

In CAREA , Veldhuis J. held, at paras. 69 – 70: Where the parties have an ongoing relationship that is significant and will be substantially impacted by the decision on the questions of law, this criterion is more likely to be satisfied than when that kind of relationship does not exist. Nevertheless, an ongoing dispute between the parties is not, of itself, sufficient to raise the case to a level that will satisfy this criterion. The word “significantly” suggests that a case should only meet this criterion when the impact on the rights of parties is more than a usual impact.

This criterion should be rigorous and is not easily satisfied, but also not impossible to satisfy. As with its sister criterion, most cases should not satisfy this standard. [ 37 ] In April 2011, Lehigh exercised its option to renew the Agreement for a second 10-year term. The Committee’s

interpretation of the Agreement, as manifested in the Award, affects not only the potential for damages for past conduct but would govern the parties’ conduct for the next 10 years. The pecuniary impact on the parties could be in the many millions of dollars. In my view it is not necessary to apply this consideration to each of the errors alleged by Capital Power individually and I conclude that the importance of the matters at issue to the parties warrants granting leave.

Section 44(3) of the Arbitration Act [ 38 ] Under s.44(3), leave to appeal will not be allowed in respect of a question of law that the parties have expressly referred to the tribunal for decision. Section 44(3) is unique to Alberta's Arbitration Act , and like s.44(2) , this difficult and unfortunately worded provision has given rise to conflicting decisions.

These decisions have been characterized as taking either the “wide” or “narrow” view of s.44(3): CAREA , at para. 76; ALRI at para. 84. [ 39 ] Under the narrow view of s.44(3), leave will be refused only where a very specific question of law has been put to the arbitrator for decision.

Veldhuis J. in CAREA said at para. 77: “The narrow view includes only discrete questions which have specifically been put to the arbitrator, and does not include subsidiary issues necessary to answer those questions.” [ 40 ] Under the wide view of s.44(3), if the question put to the arbitrator is framed in such a way that it necessarily involves answering a question of law, then leave will be denied. The rationale behind this

interpretation is set out in Fuhr Estate , at para. 111 : It would be exceedingly rare that a party would expressly refer a question like “What is the correct approach to use to determine retroactive support?” or “When can income averaging be used to determine child or spousal support?” Surely, when the question referred to the arbitrator is “the amount of child support", this includes the questions of law and the questions of mixed fact and law required to answer the question.

In my view, if the matter expressly referred to the Arbitrator necessarily includes the question subject to appeal, then it is a question of law that was expressly referred to the Arbitrator. This is in keeping with the Act's purpose of limiting judicial intervention where the parties have indicated their intention to use an alternative dispute mechanism. [ 41 ] In Frank , McIntyre J. concluded, at para. 35: ... 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 to 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), therewould 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 agreeto refer that issue to the arbitrator, they will in effect be held to the terms of their agreement to allow the arbitrator to determine thatissue. [42] Similarly, in CAREA, Veldhuis J. held at para. 89: The Act does not speak of questions “referred”, but rather those “expressly referred”.

I am torn between two extremes: that the wordingof a question referred to an arbitrator extends only to that very particular question, or that it includes every question that must beanswered to resolve the question. The latter would ignore the word “expressly”, which has significant meaning. I find the law in Albertaregarding when a question is “expressly referred” to the arbitrator to be most closely described by the narrow view.

However, a partyshould not be able to escape the restriction simply by tweaking the wording of a question sent to an arbitrator. [43] In ALRI, at p. 34, it is observed that s.44(3) is both unique to Alberta’s Arbitration Act and was not contained in ALRI’soriginal submissions in regard to amendments to the Act in 1991. It was included by the Legislature in what appears to have been anattempt to codify earlier decisions from the Supreme Court of Canada concerning “specific question[s] of law... referred fordetermination” in the context of labour arbitrations. In those decisions (Volvo Canada Ltd. v.

UAW, Local 720, (SCC),[1980] 1 S.C.R. 178., Bell Canada v. Office and Professional Employees’ International Union, Local 131, (SCC),[1974] S.C.R. 335 and Metropolitan Toronto Police Association v. Metropolitan Toronto Board of Commissioners of Police, (SCC), [1975] 1 S.C.R. 630) the Supreme Court of Canada applied what would in the present context be characterized as thenarrow approach. [44] I agree with McIntyre J. that the wide

interpretation of s.44(3) has the potential to render s.44(2) meaningless, and withVeldhuis J. that a wide

interpretation of s.44(3) fails to give proper effect to the word “expressly” in that section, and is most consistentwith the common law authorities the Legislature appears to have been attempting to codify. It is only where the parties have identifiedand referred to the arbitrator a discrete legal issue that s.44(3) will operate to bar an appeal in respect of that issue. Residual Discretion Under s.44 of the Arbitration Act [45] Lehigh argues that, aside from the grounds for refusing leave expressly set out in s.44, the Court enjoys a residual discretionto deny leave.

It relies upon CAREA at paras. 97 - 125, wherein Veldhuis J., after noting that the issue of a residual discretion had notbeen thoroughly addressed in Alberta, considered decisions from Manitoba, Ontario, Nova Scotia, New Brunswick, British Columbiaand England. She concluded, at paras.112-113: A discretion to refuse leave to appeal is consistent with the goal of restricting appeals and ensuring that, before a party can appeal, thevalue to the parties of quick resolution, finality, and efficacy are balanced against the potential merits of the appeal.

The ordinary reading of the provision in the context of the Act and the balance of the case law weighs heavily in favour of there being ajudicial discretion to refuse leave to appeal. That

interpretation makes sense. I conclude that the court retains a discretion to refuse leaveto appeal an arbitral award where it believes such and appeal would not be appropriate. [46] With respect, I have difficulty reconciling this

interpretation of the Act with the use of the word “shall” in s.44(2). In ReManitoba Language Rights, (SCC), [1985] 1 S.C.R. 721, the Supreme Court of Canada held at p. 737: As used in its normal grammatical sense, the word “shall” is presumptively imperative. See Odgers’ Construction of Deeds and Statutes(5th ed. 1967) at p. 377; The

Interpretation Act, 1867 (Can.), 31 Vict., c. 1, s.6(3);

Interpretation Act, R.S.C. 1970, c. I-23, s.28 ("shall isto be construed as imperative"). It is therefore incumbent upon this Court to conclude that Parliament, when it used the word “shall"...intended that those sections be construed as mandatory or imperative, in the sense that they must be obeyed, unless such an

interpretationof the word “shall” would be utterly inconsistent with the context in which it has been used and would render the sections irrational ormeaningless.

[47] In addition, the

Interpretation Act, R.S.A. 2000, c. I-8, states as follows: S.28 (2) In an enactment, (f) ‘shall’ is to be construed as imperative. [48] Moreover, I am not convinced that the authorities cited by Veldhuis J. in CAREA stand for the broad proposition that thisCourt enjoys a residual authority that would allow it to expand upon the grounds listed for denying leave to appeal in s.44. While in ReaInternational v. Muntwyler, (ON SCDC), [2004] O.J.

No. 3969 (Div.Ct.) Matlow J. referred to the Court’s discretionto deny leave to appeal, the actual basis for this exercise of discretion was the applicant’s failure to bring the appeal within the time limitset out in the statute. In Loewen v. Manitoba Teachers Society, 2011 MBQB 60, the Court did not exercise a residual discretion to denyleave to appeal, it ordered the application for leave adjourned sine die because the arbitration had not been completed. In Bank of NovaScotia v.

Span West Farms Ltd., 2003 SKCA 35, Cameron J.A. referred, at para. 6, to the Chambers Judge’s exercise of “discretionarypower to grant leave”, but at para. 7 went on to point out that sections 45(2)(

a) and (b) “contain the statutory criteria governing theexercise of the discretionary power to grant leave”. [49] In Northern & Bluebird Amusement Co. v. 053857 NB Inc., [2001] N.B.J. No. 27 (Q.B.) Rideout J. referred, at para. 27, to a“residual authority” to determine if leave should be granted, but relied upon a number of decisions from British Columbia, decided undera very different statutory regime. The legislation at issue in those decisions (Student Assn of the British Columbia Institute of Technologyv. British Columbia Institute of Technology, 2000 BCCA 496 and Domtar Inc. v. Belkin Inc.

(1989) B.C.L.R. (2d) 257 (C.A.)) mandatesthat the court shall not grant leave unless the requirements set out in the statute are met. That is a different standard from the one in s.44,which mandates that the court shall grant leave if the statutory requirements are met. The former regime arguably leaves room for aresidual discretion; the latter, in view of the proper

interpretation of the word “shall”, does not. [50] This is not to say that leave to appeal the decision of an arbitrator should be easy to obtain or readily granted. The decisions inthis province have consistently held that s.44 sets a high standard for the granting of leave. Parties who agree to resolve their disputesprivately should be entitled to the quick resolution and finality that arbitration often affords. But the Court must factor into the balancethe fact that by virtue of s.3 of the Act, parties are prohibited from contracting out of its appeal and set aside provisions.

This suggeststhat, in addition to efficiency, timeliness and finality, the Legislature placed some value on the ability of parties to appeal, if therequirements for leave can be met. [51] In the result, I am not convinced that the Court retains a discretion to deny leave for reasons not encompassed by s.44 of theAct.

Section 45 of the Arbitration Act [52] Unlike an appeal under s.44(2) of the Act, no leave is required for an application to set aside an award under s.45. Both parties have directed me to J. Brian Casey, Arbitration Law of Canada: Practice and Procedure, 2nd ed. (Huntington NY: Juris, 2011), at p. 414: The setting aside of an award is something different from an appeal. The provisions for setting aside an award can be likened to ajudicial review of procedural matters, not the legal correctness of the decision.

Rather than attacking the tribunal’s judgment, anapplication to set aside an award is a challenge to the fundamental validity of the arbitral process, the result of which, if successful, takesaway the fundamental underpinning of the award. [53] Capital Power contends that despite the apparent difference between the appeal provisions of the Act, which focus on errorsof law, and the set aside provision in s.45, where the focus is on procedure, there is an overlap because “many procedural concerns arealso errors of law”.

Similarly, in Capital Power’s submission, an arbitrator’s decision that is not “in accordance with the law” would fallafoul of s.31 of the Act, which requires arbitrators to make decisions in accordance with the law, and would therefore trigger s.45(1)(g),which allows the Court to set aside an award that does not comply with the provisions of the Act. Capital Power cites in this regardSeneviratne v. Seneviratne (1998), 1998 ABQB 289 , 60 Alta.L.R. (3d) 311 (Q.B.), wherein Hutchinson J. wrote at para. 45 that“The arbitrator is required to get the law right”.

[ 54 ] It is worth noting that Hutchinson J. was not considering the application of s.45 in Seneviratne . He was discussing the standard of review to be applied to the arbitrator’s decision in the event leave to appeal is granted under s.44. The effect of Capital Power’s

interpretation of s.31 and s.45(1)(

g) of the Act would be both to ignore the significant differences between the objectives of s.44 and s.45 , and to render s.44 meaningless. Every error of law would amount to grounds to set aside the Award, notwithstanding s.44, which is clearly intended to limit the court’s intervention, even where the arbitrator may have erred in law, to circumstances in which the test for leave have been met.

For this reason, I reject Capital Power’s contention that “where an arbitrator fails to decide a matter in accordance with the applicable law it fails to comply with the Act, and the award rendered from this non-compliant process should be set aside pursuant to s.45(1)(g).” The Standard of Review for Appeals Under s.44(2) of the Arbitration Act [ 55 ] The parties disagree on the appropriate standard of review, in the event that leave is granted in respect of any of the Committee’s alleged errors. [ 56 ] In my view the proper approach to the issue of the standard review was described very recently by Veit J. in Denali Construction Inc. v.

Tremore Contracting Ltd. , 2013 ABQB 321 , at para. 2 : The Arbitration Act states that appeals of arbitral awards can be taken on questions of law or questions of fact or questions of mixed fact and law.

The standard of review on appeals of arbitral awards varies according to whether the appeal is on a question of law, where the standard of review is indeed correctness, or whether the appeal is on a question of fact or mixed fact and law where the standard is deference unless there has been a palpable and overriding error. [ 57 ] Because the parties did not agree, per s.44(1), to allow appeals on questions of fact or mixed law and fact, they are limited to appeals on questions of law under s.44(2). The standard of review for appeals on questions of law is correctness. The Issues on Appeal: Leave and Merits (

a) The Committee Exceeded its Jurisdiction by Determining Provisions Within the Absolute Discretion of One of the Parties [ 58 ] Capital Power contends that, having interpreted s.5.5 of the Agreement in a manner that essentially puts the amount of ash that it could purchase within Lehigh’s discretion, the Arbitration Panel brought exceeded its jurisdiction under s.15.1 of the Agreement, which precludes arbitration in respect of “provisions within the absolute discretion of one of the parties". It asks that the award be set aside under s.45(1)(

c) of the Act. [ 59 ] The passage at issue in the Committee’s decision is found at p. 7: Because

Section 5.5 says that Capital Power will not be liable if it has made its best efforts to produce the Ash required by Lehigh, it must mean that Capital Power will be liable if it fails to use best efforts to produce the Ash that Lehigh wishes to purchase.

Section 5.5 negates the ordinary liability of Capital Power to supply Ash to Lehigh only in narrow circumstances. The exemption from liability in

Section 5.5 is not limited to situations in which Capital Power fails to produce the MGPQ, because it applies to quantities of Ash which Lehigh “wishes to purchase in any day, month or year”. By definition, the Ash which Lehigh wishes to purchase may exceed the Ash which it is required to purchase under the MGPQ.

Section 5.5 clearly contemplates the supply of Ash beyond the MGPQ, because its final sentence states that Lehigh will not be liable “for failure to purchase any forecast amounts of Ash in excess of the MGPQ.”

Section 5.5 does not suggest that Capital Power has discretion to decide how much Ash will be available to Lehigh. Indeed, its effect is quite the opposite because it is clearly based on the assumption that Capital Power will be liable if it fails to use best efforts to produce the Ash which Lehigh wishes to purchase in addition to the amount that Lehigh is required to purchase. [ 60 ] A number of issues arise out of Capital Power’s submissions with respect to the Committee’s jurisdiction, and s.15.1. First, it

[ 60 ] A number of issues arise out of Capital Power’s submissions with respect to the Committee’s jurisdiction, and s.15.1. First, it is worth noting that it was Capital Power that argued before the Committee that it had discretion to allocate Ash under s.5.6 of the Agreement, and the Committee rejected this argument, holding instead that “its effect is quite the opposite”.

Capital Power did not consider the discretionary nature of the rights under s.5.6 of the Agreement to be outside of the jurisdiction of the Committee until the Committee determined that the discretion operated to the benefit of Lehigh, not Capital Power. [ 61 ] If both parties had concluded, prior to the decision of the Committee, that the discretionary nature of the entitlement under s.5.6 of the Agreement did not fall within the restriction imposed by s.15.1, there was a good reason for this. First, the discretion enjoyed by Lehigh under the Committee's

interpretation of s.5.6 of the Agreement is not appropriately characterized as “absolute”. The general scheme of the Agreement is that Capital Power would advise Lehigh of the amount of Ash that may be available for purchase, that Lehigh would, in response, advise Capital Power of the amount of Ash it wished to purchase, and that Capital Power would thereafter be obligated only to use best efforts to produce the required quantities. I do not construe this as conveying upon Lehigh an absolute discretion. In contrast, a number of provisions in the Agreement expressly provide for an absolute discretion. For example,

section 5.4 allows Capital Power to terminate the Agreement upon proper notice in the event that Lehigh purchases fewer than 35,000 tons of Ash over three years, and s.10.4 allows Capital Power, in its absolute discretion, to determine whether Lehigh vehicles at the Genesee site are interfering with its operations there. In my view, the proper

interpretation of s.15.1, in the context of the entire agreement, its object and intention, is that it was intended to preclude arbitration in respect of those matters alone. [ 62 ] The Committee did not exceed its jurisdiction when it determined that s.5.6 did not “suggest that Capital Power has discretion to determine how much Ash will be available to Lehigh”, and instead concluded that it was Lehigh that it is Capital Power that could be liable in the event that it fails to use best efforts to produce the Ash which Lehigh wishes to purchase. The award will not be disturbed on this ground. (

b) The Committee Failed to Follow Binding Principles of Contractual

Interpretation [ 63 ] Capital Power alleges three errors under this ground: that the Committee failed to give meaning to every term in the Agreement; it failed to interpret provisions harmoniously; and it failed to give meaning to other provisions of the Agreement when it held that the parties had established an 82% fines standard for Classified Fly Ash through their conduct. It seeks leave to appeal under s.44(2) or in the alternative, to set aside the Award under s.45 . [ 64 ] Lehigh concedes that, to the extent that the alleged errors require an inquiry into the proper principles of contract

interpretation and whether the Committee relied upon them, Capital Power has raised issues of law. However, Lehigh contends that Capital Power’s real complaint is with the Committee’s application of contractual principles to the particular words in the Agreement and its factual matrix, which it argues is a question of mixed law and fact. Lehigh further argues that, even under a narrow approach to s.44(3), all of these alleged errors arose out of questions expressly referred to the Committee. [ 65 ] I find it difficult to reconcile Lehigh’s arguments that the errors alleged by Capital Power are (

a) questions of law expressly put to the Committee and in the alternative (

b) questions of mixed law or fact and therefore not subject to appeal. It seems to me that the questions raised under this ground of appeal are extricable questions of law. In view of the importance of the issues to the parties, it is appropriate to grant leave to appeal. [ 66 ] Turning to the merits of the appeal, I do not agree that the Committee erred in equating “Annual Purchase Quantity” with “Contract Year Purchase Quantity”, or that the Committee failed to interpret the provisions of the Agreement harmoniously.

Contract Year Purchase Quantity, as defined in the Agreement, is the amount of Ash actually ordered by Lehigh and supplied by Capital Power. [ 67 ] In determining the meaning of Annual Purchase Quantity and s.3.2 on the whole, the Committee had regard to the appropriate principle of contractual

interpretation, which is to examine the provision in question in the context of the entire agreement. After carefully considering ss. 5.1, 5.4, 5.5 and 5.6, the Committee concluded that Annual Purchase Quantity is, in effect, the amount of ash that Lehigh orders during a Contract Year so long as such quantities are available. Lehigh contends that there is a meaningful difference between Annual Purchase Quantity and Contract Year Purchase Quantity, in that one is the amount of Ash ordered by Lehigh and available per Capital Power’s best efforts, and the other is the amount actually delivered.

I agree with Capital Power that this amounts to a distinction without a difference. However, Capital Power’s

interpretation, which is that Annual Purchase Quantity should be given the same meaning as Minimum Guaranteed Purchase Quantity, suffers from the same defect of giving two different terms in the Agreement the same meaning. This may be consistent with the evidence of Capital Power’s witness, Mr. Topping, who indicated on cross- examination that he had intended to change all references to Annual Purchase Quantity in the Agreement to Minimum Guaranteed Purchase Quantity, but it does not seem to me to be consistent with the other provisions in the Agreement, with commercial sense, or with the subsequent conduct of the parties.

[68] Specifically, I agree with Lehigh that Capital Power’s

interpretation ignores the fact that “Ash” is defined in the Agreement as“all ash produced from the combustion of coal at the Genesee Power Plant”; the fact that Minimum Purchase Quantity is defined as theminimum (ie. not maximum) quantity of Ash that Capital Power is obligated to purchase; the requirement in s.3.2 that Capital Power“first sell its available Ash” to Lehigh; and the proviso in s.5.5 that Capital Power will be liable for a failure to use its best efforts tomake available to Lehigh the quantities of Ash that Lehigh wishes to purchase over and above the Minimum Guaranteed PurchaseQuantity. Moreover, the Committee’s

interpretation is consistent with the terms of Capital Power’s subsequent agreement with ENX.That agreement includes in its

preamble, “Lehigh has the exclusive right to purchase Ash from the Genesee Station in priority to all otherpurchasers of Ash”, and, at

section 2.2: [ENX] acknowledges and agrees that [Capital Power] has an obligation to sell its available Ash to [Lehigh] in priority to [ENX],pursuant to the terms and conditions of the[Agreement], and [ENX] acquiesces to [Lehigh’s] priority claim to the Ash. [69] In determining the meaning of Annual Purchase Quantity, the Committee was confronted with the difficult interpretiveproblem posed by a term of contract that should have been defined, but was not. Capital Power’s proposed

interpretation would havegiven the term the same meaning as Minimum Guaranteed Purchase Quantity. Lehigh’s proposed

interpretation would have given theterm essentially the same meaning as Contract Year Purchase Quantity. In my view the Committee was correct in taking the latter view. [70] Nor am I convinced that the Committee failed to follow binding principles of contractual

interpretation when it concluded thatthe parties had through their conduct established an 82% fines standard for Classified Fly Ash under s.3.4. Capital Power contends that incoming to this determination, the Committee failed to give effect to the non-waiver provision contained at s.17.1 of the Agreement.

Iagree with Lehigh, however, that s.3.4 expressly contemplates that there could be further standards established by the parties forclassified fly ash during the currency of the agreement and that the only question the Committee was required to consider was whetherthose standards had to be expressly imported from external bodies or whether they could be any substitute standards. There was evidenceupon which it was proper for the Committee to conclude that the parties had through their conduct arrived at an 82% fines standard forclassified fly ash. The Committee did not err in this regard. (

c) The Committee Failed to Apply the Correct Legal Test When Determining Whether the Restrictive Covenant Is Invalidas a Restraint of Trade [71] The question referred to the Committee in the terms of reference was: “Is the restrictive covenant in

section 3.2 of theAgreement a covenant in furtherance of a restraint of trade, and therefore unenforceable as being contrary to public policy?” Lehighcontends that Capital Power is seeking to appeal the question of law expressly put to the Committee, contrary to s.44(3) of the Act.

In myview there is an extricable question of law of sufficient importance to warrant the granting of leave, and that question is whether, incoming to its determination that the restrictive covenant was not invalid as a restraint of trade, the Committee applied the proper legaltest. [72] In determining whether the restrictive covenant was invalid, the Committee acknowledged the underlying principles set out inNordenfelt v. Maxim Nordenfeldt Guns and Ammunition Company, Limited, [1894] A.C. 535 and set out as a four stage inquiry in TankLining.

Capital Power contends that in doing so, the Committee applied the wrong test, and that it was incumbent upon the Committee toconsider (1) the nature of the proprietary interest protected by the restrictive covenant; (2) the length or temporal scope of the restrictivecovenant; (3) the geographical scope of the restrictive covenant, and (4) the scope of the activities covered or prohibited by the restrictcovenant. Capital Power relies in this regard upon the decisions of the Supreme Court of Canada in J.G. Collins Insurance Agencies Ltd.v. Elsley Estate, (SCC), [1978] 2 S.C.R. 916 and Shafron v.

KRG Insurance Brokers (Western) Inc., 2009 SCC 6, [2009] 1 S.C.R. 157. [73] In Martin v. ConCreate USL Limited Partnership, 2013 ONCA 72, the Ontario Court of Appeal summarized the principlesapplicable to covenants in restraint of trade, holding at para. 54: The factors relevant in determining whether a restrictive covenant is reasonable are the same in the contexts of the sale of a business andan employment agreement: the geographic coverage of the covenant, the period of time that it is in effect and the extent of the activityprohibited: see Shafron, at para. 43.

And, as the application judge noted, reasonableness is determined in light of the circumstancesexisting at the time that the covenant was made. Those circumstances include the reasonable expectations of the parties about the future

activities and marketplace of the business: see Tank Lining Co. v. Dunlop Industrial Ltd. (1982), (ON CA), 40 O.R.(2d) 219 (C.A.), p. 226. [74] The decisions in Elsley and Shafron do not mandate the mechanistic application of a four-part test to the question of whether acovenant in restraint of trade is valid. What is required is that the decision maker take geographic coverage, duration and scope of theprohibited activity into account in determining whether, on the whole, the restrictive covenant is reasonable.

As the Ontario Court ofAppeal noted in Martin at para. 52, it is also proper to distinguish between restrictive covenants in connection with the sale of a business(where a less rigorous standard will apply) and in the context of employment agreements. At para. 53, the Court further noted that greaterdeference will be given where the parties to the agreement are “knowledgeable persons of equal bargaining power.” [75] The Committee considered both the duration and geographical scope of the restrictive covenant at pps.18-19 of the Award.

Itconsidered the scope of the prohibited activity in the context of its discussion of the vertical nature of the relationship between theparties, and in noting that Capital Power is not completely prevented from selling ash to other parties, as the ENX agreementdemonstrates. The Committee was mindful of the fact that the Agreement was made between knowledgeable, well-advised andsophisticated parties who were competent to assess their respective interests, and gave this consideration the appropriate weight.

In myview, the Committee considered all of the appropriate factors in concluding that the restrictive covenant constituted a valid restraint oftrade, and its decision in this regard was correct. (

d) The Committee Made Errors of Statutory

Interpretation When Determining Whether the Restrictive Covenant Infringedthe Competition Act [76] The question that was put to the Committee was: Have recent amendments to the Competition Act made prima facie illegaland therefore unenforceable, the Restrictive Covenant contained in

section 3.2 of the Agreement? Even on the most narrow reading ofs.44(3), the question now raised by Capital Power is the very question of law that the parties expressly referred to the Committee. Leaveto appeal in respect of this question is therefore denied. (

e) The Committee Erred in Failing to Consider Relevant Evidence When Making Finding of Fact and in Making Findings ofFact in the Absence of Evidence [77] Capital Power contends that the Committee ignored the evidence of its witness Mr. Topping in its determination of themeaning of Annual Purchase Quantity; ignored documentary evidence when it determined that its

interpretation of the Agreement wassupported by the subsequent conduct of the parties; ignored the evidence of its expert when it concluded that there was no evidence ofharm to the public from the restrictive covenant; made an unsubstantiated finding in concluding that it is not unusual for contracts toinclude the Northwest Territories and Yukon as part of the economic unit of Western Canada covered by commercial agreements; andengaged in speculation when it concluded that over the years the parties had no difficulty in understanding and applying the restrictivecovenant. [78] The conduct of the parties subsequent to entering into the Agreement, the determination of whether there is harm to the publicarising out of the operation of the restrictive covenant, the conclusion that commercial contracts commonly include the NorthwestTerritories and Yukon as part of the economic unit of Western Canada, and the parties’ understanding of the restrictive covenant arequestions of fact, not subject to appeal.

In any event, I do not agree with Capital Power that there was no basis for the Committee to makethe findings that it did. The Committee appears to have preferred some evidence over other evidence, which is exactly what a finder offact is supposed to do. With respect to the evidence of Mr. Topping, the Committee applied the proper approach to contractualinterpretation and appears to have rejected what was clearly parol evidence, as it was entitled to do. There is no basis upon which I wouldinterfere with the Committee’s findings in this regard. (

f) The Committee Erred in Failing to Provide Adequate Reasons [79] The Committee’s reasons are intelligible and cogent. There is no basis for interfering with the Award on this ground. Conclusion

[ 80 ] Leave to appeal the Award is allowed only in regard to the issues of whether the Committee erred in its

interpretation of s.3.2 and s.3.4 of the Agreement, concerning the quantity and quality of Ash to be supplied by Capital Power to Lehigh and in regard to the issue of whether the restrictive covenant in the Agreement is invalid as being in restraint of trade. The appeal on those grounds is dismissed. This application is therefore dismissed. Heard on the 21 st day of February, 2013. Dated at the City of Calgary, Alberta this 18 th day of July, 2013. Neil Wittmann C.J.C.Q.B.A. Appearances: D.A. McGillivray, Q.C. L.M. Novinger Grant A.F. Sunter J. Luu for the Applicant B.C. Yorke-Slader, Q.C. A.D. Grosse M.P. Theroux for the Respondent