Athan Homes Inc v Phan, 2021 ABQB 119

Court of Queen’s Bench of Alberta Citation: Athan Homes Inc v Phan, 2021 ABQB 119 Date: 20210216 Docket: 1903 06648 Registry: Edmonton Between: Athan Homes Inc. Applicant/Cross-Respondent - and - Jack Phan and Megan Phan Respondents/Cross-Applicants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice S. Leonard _______________________________________________________ I. Introduction [ 1 ] Jack and Megan Phan (the Phans) contracted with Athan Homes Inc. (Athan Homes) to renovate their home.

On February 12, 2019, a dispute arose between the parties that ended their contractual relationship. Mr. Phan changed the locks on his residence and no further work was performed by Athan Homes or its subtrades. On February 13, 2019, Athan Homes filed a builder’s lien against the Phan property in the amount of $743,336.46.

[ 2 ] The dispute between the parties went to arbitration and an award was granted in favour of the Phans (the Arbitral Award). Athan Homes applies for leave to appeal the Arbitral Award, dated July 30, 2020, or in the alternative, seeks to have the Arbitral Award set aside. The Phans oppose these applications and seek an order that the Arbitral Award be entered as a judgment against Athan Homes, as well as an order that Athan Homes’ lien and lis pendens registered against the lands owned by the Phans be discharged. [ 3 ] For the reasons that follow, I decline to grant leave to appeal. II.

Background [ 4 ] Athan Homes, a construction and renovation company, was hired in June 2018 to perform significant renovations to a home newly purchased by the Phans. David Plourde (Plourde) is the president of Athan Homes. The parties entered a cost-plus renovation contract whereby Athan Homes would be paid a 20% builder’s fee on the cost of work (the Agreement). [ 5 ] In mid-July 2018, Athan Homes provided the Phans with an initial budget in the amount of $641,500. By mid-November 2018, this amount rose to $960,200.

In January 2019, the Phans were advised that the budget had further increased to $1,564,400. [ 6 ] The Phans made monthly payments to Athan Homes. They expected to move into their home by Christmas 2018, but this did not occur. The Phans had concerns about the quality of the work being performed by Athan Homes and its subcontractors, and in January 2019 the Phans raised concerns about the December 2018 invoice. [ 7 ] On February 12, 2019, Jack Phan and Plourde met at the Phan residence to review some of the renovation work. A heated argument ensued.

Plourde left the property and later that evening, Phan arranged for the locks on the residence to be changed. The following day, Athan Homes and a number of the subcontractors filed builders’ liens on the property. [ 8 ] Athan Homes commenced a legal action against the Phans; however, the Agreement provided that any dispute between the parties would be decided by way of arbitration.

Upon application by the Phans, Master Birkett, Q.C. stayed the proceedings before the court and directed that the parties proceed to arbitration with Joseph Rosselli, Q.C. acting as arbitrator (the Arbitrator). [ 9 ] The pleadings filed in the civil claim formed the pleadings in the Arbitration. These included the Statement of Claim, the Statement of Defence, the Counterclaim and the Statement of Defence to Counterclaim. The parties also submitted a two-page Memorandum of Issues in Dispute for the Arbitration, dated October 21, 2019 (the Joint Memorandum).

The parties exchanged witness statements and expert witness statements. In all, fifteen witness statements were provided. Fourteen of these witnesses appeared for cross-examination at the arbitration, which was heard over a period of 10 days in June 2020. [ 10 ] The Arbitrator found that Athan Homes fundamentally breached the Agreement and that the Phans had a right to terminate it. The Arbitrator also found that Athan Homes was negligent in its role as contractor. The Phans were awarded $499,190.50 representing their overpayment to Athan Homes plus additional damages of $2,267.23 for a total of $501,457.73.

In a subsequent decision on costs, the Phans were awarded $337,950.12 payable by Athan Homes with interest at the rate of 5% per annum. [ 11 ] The Arbitrator found that Plourde, personally, was not a party to the Agreement and did not breach any duty or standard of care. III. Issues [ 12 ] There are two main issues, with several sub-issues to be determined: 1. Should the Court grant Athan Homes leave to appeal the Arbitral Award? This issue depends on several sub-issues: a.

Is leave to appeal precluded pursuant to section 44(3) of the Arbitration Act , RSA 2000, c A-43 , on the basis that the issue of fundamental breach was expressly put to the Arbitrator for determination? b. Has Athan Homes identified a question of law that warrants granting leave to appeal, pursuant to Arbitration Act section 44(2) ? c. Is there arguable merit to Athan Homes’ position that the Arbitrator’s decision on fundamental breach of contract was unreasonable? d. Has Athan Homes otherwise satisfied Arbitration Act

section 44 ? 2. Should the Court set aside the Arbitral Award, pursuant to

section 45 of the Arbitration Act , on the basis that Athan Homes was not afforded reasonable opportunity to make submissions to the Arbitrator on the issue of fundamental breach of contract? IV. Positions of the Parties A. Athan Homes [ 13 ] Athan Homes argues that the Arbitrator failed to use the correct test for fundamental breach of contract. Athan Homes contends that it is not challenging the factual underpinnings that led the Arbitrator to conclude that the breaches were sufficiently serious to allow the Phans to terminate the Agreement. Athan Homes argues, rather, that the Arbitrator failed to consider the three following additional elements of contractual repudiation:

1. Whether the breaches constituted contractual repudiation by Athan Homes; 2. Whether the Phans elected to affirm the contract or accept the repudiation; and 3. Whether the Phans clearly and unequivocally communicated their election to the Applicant. [ 14 ] Athan Homes acknowledges that in order to be successful, it must also demonstrate that this error in law would change the result of the Arbitral Award.

Athan Homes argues that the evidence before the Arbitrator was insufficient to support a finding that the Phans made an election and communicated that election to Athan Homes. [ 15 ] Although Athan Homes acknowledges that changing the locks terminated its involvement in the project, it argues that changing the locks did not constitute a clear and unequivocal acceptance of the repudiation of the Agreement. Terminating Athan Homes’ involvement in the project is not the same as legally terminating the Agreement. Athan Homes argues that changing the locks can equally be seen as

an act of repudiation on the part of the Phans. [ 16 ] Athan Homes argues that the subsequent communications between counsel support the position that the Phans did not elect to accept any repudiation based on Athan Homes’ alleged fundamental breach of contract.

Although this correspondence was not before the Arbitrator, Athan Homes urges this court to consider it now and find that there is no evidentiary basis upon which to conclude that the Phans elected to terminate the Agreement based on Athan Homes’ fundamental breach. [ 17 ] Relying on section 44(2.1) of the Arbitration Act , Athan Homes argues that leave to appeal should be granted as the matters at stake are sufficiently important to justify an appeal, and determination of this question of law will significantly affect the rights of the parties.

Athan Homes also argues that the issue of fundamental breach of contract was not expressly before the Arbitrator, as contemplated in section 44(3) of the Arbitration Act . As such, Athan Homes is not precluded from appealing the award. [ 18 ] In the alternative, Athan Homes asks the Court to set aside the Arbitral Award pursuant to

section 45 of the Arbitration Act on the basis that it was not afforded a reasonable opportunity to address the issue of fundamental breach of contract. The Joint Memorandum makes no mention of fundamental breach of contract, the evidence did not support a finding of fundamental breach of contract, and the communications between counsel did not contain any allegation of fundamental breach of contract. The Arbitrator could have asked for submissions on this issue, but did not.

As a result, Athan Homes says, it was denied an opportunity to be heard. [ 19 ] Athan Homes argues that if the finding that it fundamentally breached the contract is set aside, the finding in negligence will not survive because this is a finding based in concurrent liability. Athan Homes argues that there is no basis to conclude that any claim in negligence will survive what it says is the Phan’s repudiation of the Agreement. B. Position of the Phans [ 20 ] The Phans’ position is that leave to appeal should be denied. The parties elected to submit to arbitration.

The parties should be bound to the process they have agreed to and the court should be slow to interfere. [ 21 ] The Phans argue that the Arbitrator applied the correct test for fundamental breach of contract. The finding in relation to fundamental breach of contract is not reviewable as it is a question of mixed fact and law.

The facts do not support the proposition that Athan Homes and Plourde did not have notice of the Phans’ termination of the contract. [ 22 ] The Phans contend that even if the court accepted that there was an error of law, this matter’s importance is not elevated simply because it involves money. These parties have no ongoing relationship. As such, the requirements of section 44(2.1) of the Arbitration Act are not met. [ 23 ] The Phans contend that even if the court agrees that the Arbitrator erred in law with respect to fundamental breach of contract, this will not change the result.

The Arbitrator also made a finding that Athan Homes was negligent. The findings with respect to the finding of negligence cannot be upset on appeal. The Phans are entitled to a remedy in negligence. The monetary award, either under fundamental breach of contract, or under negligence, will not change. [ 24 ] The Phans assert that Athan Homes was not denied an opportunity to make representations on the issue of fundamental breach of contract. The issue of fundamental breach of contract was before the Arbitrator. Athan Homes chose not to address fundamental breach of contract.

This does not entitle Athan Homes to a do-over. V. Tests for Leave to Appeal and Setting Aside Award [ 25 ] The Agreement here does not address the potential for an appeal from a decision of an arbitrator, and so any appeal is governed by section 44(2) of the Arbitration Act . Section 44(2) provides that where the agreement between the parties is silent as to appeals, leave to appeal a decision of an arbitral tribunal may only be granted by the court on a question of law. [ 26 ] Section 44(2.1) further provides that leave shall only be granted where the court is satisfied that: (

a) the importance to the parties of the matters at stake in the arbitration justifies an appeal, and (

b) the determination of the question of law at issue will significantly affect the rights of the parties. [ 27 ] Finally, subsection 44(3) provides that “[n]otwithstanding 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.”

[ 28 ] Taken all together, in order to get leave to appeal the Arbitrator’s decision, Athan Homes must establish that its appeal is based on a question of law. Further, Athan Homes must also establish that the matters at stake are of sufficient importance to justify an appeal and that the determination of the question of law will significantly affect the rights of the parties. However, if the question of law was expressly referred to the Arbitrator for decision, then Athan Homes may not appeal the award on that question of law. [ 29 ] Leave to appeal arbitral decisions is rarely granted given the high threshold in

section 44 of the Arbitration Act : 1285592 Alberta Ltd v Moderno Homes Inc , 2018 ABQB 23 at para 7 ( Moderno Homes ). [ 30 ] A question of law is “about the correct legal test, whereas questions of mixed fact and law are about whether the facts satisfy the legal test”: Alberta (Worker’s Compensation Board) v Alberta (Workers’ Compensation Board Appeals Commission) , 2005 ABCA 276 at para 21 ( Appeals Commission ) .

An error of law occurs when the legal test is incorrectly stated, or there is a flaw in its application: Appeals Commission at para 22. [ 31 ] In Alberta Medical Association v Alberta Health Services , 2019 ABQB 82 ( AMA ) Feehan J (as he then was) described what a Court will and will not do at the leave application stage, at para 14: In Creston Moly Corp v Sattva Capital Corp , 2014 SCC 53 (SCC) at para 72 , [2014] 2 SCR 633 (SCC), an appeal that involved commercial arbitration awards, Rothstein J, writing for a unanimous Supreme Court of Canada, held that at the leave stage, “it is not appropriate to consider the full merits of a case and make a final determination regarding whether an error of law was made.

However, some preliminary consideration of the question of law is necessary to determine whether an appeal has the potential to succeed.” The appropriate threshold for assessing the legal question at issue, on a leave application, is “whether it has arguable merit,” in light of the standard of review on which the merits of the appeal will be judged (at paras 74-75). [ 32 ] Generally, the standard of reasonableness will apply to arbitral decisions (except in certain circumstances that do not apply in this case), and so here the Court must consider “whether there is any arguable merit to the position that the Arbitrator’s decision on the question at issue is unreasonable”: Sattva Capital Corp v Creston Moly Corp , 2014 SCC 53 at para 75 .

See also AMA at paras 15-17 . [ 33 ]

Section 45 of the Arbitration Act allows a court to set aside an arbitral award in certain circumstances: 45(1) On a party’s application, the court may set aside an award on any of the following grounds: ... ... (

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; [ 34 ] Section 45(1)(

f) codifies the application of the principles of natural justice during arbitral hearings. If a fair process is not provided during arbitration because a party does not have an opportunity to present its case or respond to another’s case, the Court may set aside an award that results from that arbitration: Ritchie v Ritchie , 2014 ABQB 219 at paras 8 and 38 . VI. Analysis Issue 1: Should the Court grant Athan Homes leave to appeal the Arbitral Award? A.

Is leave to appeal precluded on the basis that the issue of fundamental breach was expressly put to the Arbitrator for determination? [ 35 ] I am of the view that leave to appeal is not precluded by section 44(3) of the Arbitration Act , which provides that a party cannot appeal where the question of law was expressly put to the arbitral tribunal for decision. The Joint Memorandum submitted by the parties to the Arbitrator contains the following list of Contract Termination Issues: repudiation (by the Phans), termination (by Athan), abandonment (by Athan), and the effect of changing locks.

It does not expressly refer to fundamental breach of contract. [ 36 ] I prefer a narrow

interpretation of section 44(3) that gives effect to the word “expressly.” If this

section were interpreted more broadly, it would potentially render section 44(2) meaningless: see Clark v Unterschultz , 2020 ABQB 338 at paras 42-45 . Although the Joint Memorandum asked the Arbitrator to address all factual and legal issues between the parties, this language does not expressly put the issue of fundamental breach of contract to the Arbitrator. Therefore, I find that leave to appeal is not precluded on the basis of section 44(3) of the Arbitration Act . B.

Has Athan Homes identified a question of law that warrants granting leave to appeal? [ 37 ] Athan Homes argues that the Arbitrator failed to consider fundamental breach of contract within the larger concept of contractual repudiation. Further, Athan Homes argues that the Arbitrator failed to consider whether the breaches constituted contractual repudiation by Athan Homes; whether the Phans elected to affirm the contract or accept the repudiation; and whether the Phans clearly and unequivocally communicated their election to the Applicant. Overall, Athan Homes argues that the Arbitrator failed to use the

correct test for fundamental breach of contract. [38] The Phans argue that whether Athan Homes fundamentally breached the Agreement is a question of mixed fact and law, not aquestion of law, and as such, cannot be appealed. [39] In Moderno Homes, Neufeld J noted, at para 8, that disputes involving contractual

interpretation will almost always centre on questions of mixed fact and law.

Similarly, in Shelanu Inc v Print Three Franchising Corp, , 226 DLR (4th) 577(ONCA) the Ontario Court of Appeal held at para 110: “A trial judge’s finding of fundamental breach is a matter of mixed fact and law.” [40] Certainly, a decision or finding of fundamental breach is a matter of mixed fact and law, that is, when a Court applies the lawof fundamental breach to the facts of the case, the resulting decision is one of mixed fact and law. [41] However, whether a decision maker has identified and used the correct legal test is a question of law: Appeals Commission atparas 21-22.

While some of Athan Homes’ arguments do stray into the area of the application of the legal test to the particular facts, I amsatisfied that Athan Homes has identified a question of law that it seeks to appeal, namely, whether the Arbitrator identified and used thecorrect test for fundamental breach of contract. C.

Is there arguable merit to Athan Homes’ position that the Arbitrator’s decision onfundamental breach of contract was unreasonable? [42] Having found that the question of whether the Arbitrator identified the correct test for fundamental breach of a contract is oneof law, I must determine whether there is arguable merit to the position that the Arbitrator’s decision on fundamental breach of contractwas unreasonable.

Having reviewed the Arbitrator’s decision, I conclude that there is no arguable merit to the Athan Homes’ positionthat it was unreasonable. [43] The Arbitrator found that Athan Homes failed to meet its obligations under the contract. Specifically, he found: i. Athan Homes did not adequately determine, confirm, document and communicate the scope of work as theproject progressed: Arbitral Award at para 319; ii. Athan Homes failed to follow a consistent practice of obtaining quotes from trades and providing them to thePhans for approval: Arbitral Award at para 321; iii.

Athan Homes failed to direct and supervise subtrades. This includes failing to supervise repairs: ArbitralAward at paras 324 and 328; iv. Athan Homes did not pay “certain subtrades” or it failed to accurately file liens: Arbitral Award at para 327; v. Athan Homes failed in its duty to inspect the work performed by the parties it had engaged to work on theproject: Arbitral Award at para 333. [44] Although the Arbitrator found numerous instances of breach of contract, this did not end the inquiry. The Arbitrator thenstated the legal requirements for a finding of fundamental breach of contract.

I distill the following elements of fundamental breach ofcontract from the Arbitrator’s decision: “[A] breach that allows an innocent party to treat the contract as at an end” must be fundamental. This depends on a “construction of thecontract and on the facts and circumstances of the case.”: John Barlot Architect Ltd v 413481 Alberta Ltd, 2013 ABQB 288, citing fromSuisse Atlantique Societe v NV Rotterdamsche Kolen Centrale, [1996] 2 All ER 81 (HL). Five factors are used to assess whether a breach is fundamental: (

a) The ratio of the party’s obligations not performed to that party’s obligations as a whole; (

b) The seriousness of the breach to the innocent party; (

c) The likelihood of repetition of such breach; (

d) The seriousness of the consequences of the breach; (

e) The relationship of the part of the obligation performed to the whole obligation; A fundamental breach can arise as a result of a series of breaches; and If one party fundamentally breaches the contract, this entitles the innocent party to accept this as repudiation of the contract: CubbonBuilding Centre Ltd v Gabrysh, 2020 ABQB 219. [45] Having outlined the law of fundamental breach of contract, the Arbitrator then found, at para 369, that Athan Homesfundamentally breached the contract for the following reasons: • there were significant deficiencies...; • there was significant mismanagement of the project...;

• the ratio and relationship of Athan Homes’ obligations not performed to its obligations as a whole were significant; • the breaches... were serious breaches to the Phans; • there was a likelihood of repetition of the breaches; and • the consequences of the breaches were serious. [46] Athan Homes argues that the Arbitrator was required to consider whether the fundamental breach of contract constitutedcontractual repudiation, and in failing to do this, the Arbitrator used an incorrect test for fundamental breach of contract. [47] Courts have held that when a fundamental breach of contract occurs the innocent party is entitled to rely on this as arepudiation of the contract: 1314058 Alberta Ltd v Albers, 2018 ABQB 9 at para 7 and Newel Post Developments Ltd v 1402801Alberta Ltd, 2010 ABQB 660, at para 45.

That is to say, fundamental breach of contract is a contractual repudiation of the contract.

Thislack of distinction between the two concepts was noted by Lord Reid of the House of Lords in Suisse Atlantique Société d’ArmementMaritime SA v NV Rotterdamsche Kolen Centrale, [1967] 1 AC 361 at 397: General use of the term ‘fundamental breach’ is of recent origin and I can find nothing to indicate that it means more or less than thewell-known type of breach which entitles the innocent party to treat it as repudiatory and to rescind the contract. [48] However, courts in Canada have held that in some circumstances, fundamental breach of contract and repudiation can bedistinct concepts.

For example, in Mantar Holdings Ltd v 0858370 BC Ltd, 2014 BCCA 361 (Mantar Holdings) the Court stated at para11: Although circumstances constituting a fundamental breach of contract may sometimes also constitute a repudiation of the contract, thedoctrines of fundamental breach and repudiation are distinct.

A fundamental breach of contract occurs where the failure of one of thecontracting parties to perform a primary obligation under the contract has the effect of depriving the other party of substantially thewhole benefit which the parties intended that the party to receive: see Hunter Engineering Co. v Syncrude Canada Ltd., (SCC)...

Repudiation occurs where a party to the contract, either by words or conduct, evinces an intention not to be bound by thecontract: see Guarantee Co of North America v Gordon Capital Corp, (SCC)... [49] In this case, there was no requirement for the Arbitrator to further articulate in his reasons that the fundamental breach ofcontract amounted to a repudiation of the Agreement because in the circumstances of this case, these terms reflect the same legal conceptand result in the same conclusion: The Phans were entitled to terminate the Agreement. [50] I find that there is no arguable merit to the position that the Arbitrator did not identify and apply the correct legal test forfundamental breach of contract.

In other words, there is no arguable merit to the position that the Arbitrator’s identification and ultimateapplication of the test for fundamental breach of contract, was unreasonable. [51] Athan Homes also take the position that the Arbitrator failed to consider whether the Phans elected to terminate theAgreement and communicated that decision to Athan Homes. [52] Athan Homes’ argument is an attack on the findings of fact made by the Arbitrator, specifically, the Arbitrator’s findings thatthe Phans terminated the contract by changing the locks, and Athan Homes learned of this termination the following day when it and itssubcontractors filed numerous liens against the Phan property.

I note that these findings are all supported by the evidence. [53] To the extent that Athan Homes’ position on this matter relates to the question of whether the correct test for fundamentalbreach of contract was identified, the earlier paragraphs address this.

Any other arguments are attacks on the findings of fact made by theArbitrator and not a question of law. [54] Finally, Athan Homes seeks to rely on subsequent correspondence between the parties’ lawyers to argue that the Phans neverconsidered that the events of February 12, 2019 amounted to a fundamental breach of contract. [55] Athan Homes asks this Court to consider the correspondence between counsel at this stage of the proceedings to argue that theArbitrator’s findings are not correct. None of these materials were before the Arbitrator.

Athan Homes argues that this court shouldconsider the correspondence in the context of this application only to assess whether there is a likelihood that the result would bedifferent following a successful appeal. [56] Although Athan Homes has couched these materials as being relevant only to whether there would be a different outcomefollowing an appeal, what Athan Homes is actually seeking is for this Court to consider new evidence. On an application to consider newevidence, the Court is guided by the requirements of R v Palmer, (SCC), [1980] 1 SCR 759, which are as follows: i.

The evidence should not generally be admitted, if by due diligence, it could have been adduced at trial; ii. The evidence must bear upon a decisive or potentially decisive issue in the trial; iii. The evidence must be credible in the sense that it is reasonably capable of belief; and iv. The evidence, if believed, could reasonably, when taken with other evidence adduced at trial, be expected tohave affected the result. [57] The materials consist of seven letters between counsel between March 4, 2019, and March 26, 2019. The arbitration occurredover a 10-day period in June 2020.

These materials were available to the parties before the arbitration and could have been adduced. Onthat basis alone, I decline to consider the new evidence. However, even if these materials could be considered at this stage of theproceedings, upon review I am not satisfied that they would affect the result. These are communications between lawyers that are

positioning their clients in the context of a dispute. They are not the evidence of the parties. The Arbitrator considered the evidence of the parties, both of whom testified at the arbitration, and made findings based on that evidence. [ 58 ] Athan Homes’ arguments regarding the Phans’ election and their communication of that election are a challenge to the findings of fact made by the Arbitrator. There can be no doubt that the Arbitrator considered both of these issues in context and made findings of fact in that regard.

There is no arguable merit to the position that the Arbitrator’s decision on the question of whether Athan Homes fundamentally breached the contract is unreasonable. D. Has Athan Homes otherwise satisfied Arbitration Act

section 44? [ 59 ] Even if there was some arguable merit to Athan Homes’ position that the Arbitrator committed an error of law, I am not satisfied that the issue is of sufficient importance to the parties to justify an appeal, or that the question of law at issue will significantly affect the rights of the parties, pursuant to section 44(2.1) of the Arbitration Act . [ 60 ] The financial outcome of this matter is undoubtedly important to the parties; however, this is insufficient to justify an appeal. Leave to appeal from a decision of an Arbitrator is rarely granted. According to the Court in Moderno Homes at para 7 : ...This result is especially so when it involves

interpretation of a private commercial contract, because such a decision will not give rise to questions of extraordinary importance and has no precedential value. [ 61 ] Later in Moderno Homes , the Court noted at para 43 : ...In short, subjective importance to the [parties] is not enough. The matters must be of greater importance and more significantly affect the rights of the parties than would otherwise be expected in a typical arbitration. [ 62 ] Athan Homes argues that reversing the Arbitrator’s error would necessarily result in a finding that it was the Phans that repudiated the contract.

This would overturn the Arbitral Award in its entirety. [ 63 ] This argument fails to recognize the important and significant findings of fact made by the Arbitrator. Read as a whole, it is clear that the Arbitrator was of the view that the Phans were the innocent party and that they are entitled to compensation for the damages they have suffered. Further, the Arbitrator made a finding in negligence. Athan Homes has not alleged an error of law in respect of the finding of negligence. This finding would remain untouched on appeal and entitles the Phans to damages.

Issue Two - Should the Court set aside the Arbitral Award on the basis that Athan Homes was not afforded reasonable opportunity to make submissions to the Arbitrator on the issue of fundamental breach of contract? [ 64 ] Athan Homes asks this court to set aside the Arbitral Award, pursuant to

section 45 of the Arbitration Act, on the basis that there has been a breach of natural justice, specifically, the right to be heard. Athan Homes acknowledges that it did not make any submissions on the issue of fundamental breach of contract. It argues that there was no apparent reason to make submissions on this point and the Arbitrator’s failure to request submissions amounts to a denial of an opportunity to do so.

In written argument, Athan Homes puts it this way: The evidence and the correspondence between counsel did not support any potential finding of fundamental breach in any way, notably because the Respondents, either directly or through counsel, never notified the Applicant that they considered the alleged deficiencies to amount to fundamental breach justifying their termination of the Contract on February 12, 2019; rather, they considered the Applicant to have abandoned the project: at para 69. [ 65 ] Although Athan Homes alleges that it had no way of knowing that fundamental breach of contract was a live issue at the arbitration, the Court notes the following: i.

The parties’ pleadings in the Queen’s Bench action were the pleadings in the arbitration; ii. Fundamental breach of contract was included in the Statement of Defence filed on behalf of the Phans; iii. Several pages of argument on fundamental breach of contract were included in the Written Brief of Law filed on behalf of the Phans in support of the arbitration hearing; and iv. Caselaw dealing with fundamental breach of contract was provided to the Arbitrator by counsel for the Phans. [ 66 ] I find that the issue of fundamental breach of contract was before the Arbitrator.

It may not have been argued in the letters between counsel, but given its presence in the pleadings, the written argument of the Phans, and the evidence that supported such a finding, Athan Homes should have been aware that it was an issue before the Arbitrator. This Court does not know why Athan Homes chose not to make submissions on the issue of fundamental breach of contract, but it cannot be said that it was denied its right to be heard.

VIII. Conclusions [ 67 ] I conclude that there is no arguable merit to the position that the Arbitrator’s decision on the question at issue is unreasonable. The Arbitrator identified and applied a legal test for fundamental breach of contract, made findings with respect to the communications between the parties and concluded that the Phans elected to terminate the contract. Athan Homes was aware of this election. Further, Athan Homes failed to otherwise satisfy

section 44 of the Arbitration Act . Leave to appeal is denied. [ 68 ] As well, for the reasons given above, I decline to set aside the Arbitral Award. [ 69 ] The Phans have leave to enter the Arbitral Award, inclusive of costs and interest, in the amount of $893,438.82 as a judgment of this Court pursuant to

section 49 of the Arbitration Act in favour of Jack and Megan Phan and against the Applicant, Athan Homes. [ 70 ] The Builders’ Lien of Athan Homes registered as instrument number 192 036 265 and the Lis Pendens registered as instrument number 192 076 717 shall be discharged from the title of Jack and Megan Phan’s property, which is legally described as Plan 6431RS Block 1 Lot 4. [ 71 ] Given this finding, there is no need to address whether Athan Homes should provide security for the award pending appeal. [ 72 ] The Phans are entitled to costs of this application.

If the parties are not able to agree on the quantum of costs, they are to contact my assistant within thirty days to arrange a time and manner in which that issue may be addressed. Heard on the 19 th day of November, 2020. Dated at the City of Edmonton, Alberta this 16 th day of February, 2021. S. Leonard J.C.Q.B.A. Appearances: Neil Fenna Neil Fenna Professional Corporation for the Applicant/Cross-Respondent Daniel Stachnik, Q.C. Miller Thompson LLP for the Respondents/Cross-Applicants