I-NetLink Incorporated et al. v. Broadband Date:, 2014 MBCA 38

Citation: I-NetLink Incorporated et al. v. Broadband Date: 20140424 Communications North Inc., 2014 MBCA 38 Docket: AI 14-30-08136 IN THE COURT OF APPEAL OF MANITOBA BETWEEN : ) I-NETLINK INCORPORATED and ) D. G. Hill CHARLIE CLARK ) for the Applicants ) (Applicants) Applicants ) C. R. MacArthur, Q.C. and ) A. Glinter ) for the Respondent - and - ) ) Chambers motion heard: BROADBAND COMMUNICATIONS ) April 10, 2014 NORTH INC. ) ) Decision pronounced: (Respondent) Respondent ) April 24, 2014 ) BEARD J.A. I.

THE ISSUE [ 1 ] The applicants, I-NetLink Incorporated and Charlie Clark (collectively I-Net), have applied under s. 48 of The Arbitration Act , C.C.S.M., c.

A120 (the Act ) for leave to appeal the decision of a judge of the Court of Queen’s Bench (the application judge) denying leave under s. 44(2) of the Act to appeal the preliminary award of the arbitrator. [ 2 ] The basis for the appeal to this court, if leave is granted, is that the application judge failed to apply the proper test for an application for leave to appeal under s. 44(2) of the Act and that he, in fact, decided the leave application as if he were sitting on the appeal itself, applying the test that would have applied on the appeal. II.

THE FACTS [ 3 ] I-Net and the respondent, Broadband Communications North Inc. (Broadband) entered into a contract pursuant to which I-Net was to construct and install a network of towers and their foundations in northern Manitoba to bring internet access to communities in that region. A dispute arose between the parties as to what building standard was to govern the construction.

While an action was commenced in the Court of Queen’s Bench, the parties agreed to submit the dispute to arbitration under the Act . [ 4 ] The parties agreed to postpone all but one of the issues, being the determination of the construction standard for the towers and their foundations, and submitted that preliminary issue to the arbitrator for determination. Once that issue is resolved, the arbitration will resume to determine whether I-Net did in fact build the towers and their foundations to that standard and, if not, for the quantification of damages owing to Broadband.

I-Net counterclaimed in the Queen’s Bench action for amounts it says remain owing under the contract. [ 5 ] The arbitrator released his preliminary award, and I-Net applied to the Court of Queen’s Bench under s. 44(2) of the Act for leave to appeal that award, alleging a number of errors in law. That application was dismissed, and I-Net filed this motion for leave to appeal that decision to this court. III. THE LEGISLATION [ 6 ] The relevant provisions of the Act are as follows: Appeal on question of law with leave

44(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 mayappeal 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. Further appeal to Court of Appeal 48 An appeal from the court’s decision in an appeal of an award, an application to set aside an award or an application for adeclaration of invalidity may be made to The Court of Appeal, with leave of that court. IV.

THE PARTIES’ POSITIONS [7] Both parties agree that the general rule applicable to appealing a decision to grant or deny leave to appeal under s. 44(2)of the Act is that no appeal lies from that decision, with the exception that an appeal will lie if the tribunal mistakenly declinedjurisdiction. This is based primarily on decisions from Ontario considering mirror provisions to ss. 44(2) and 48 of the Act, which arefound in ss. 45 and 49 of the Ontario arbitration legislation, the Arbitration Act, 1991, S.O. 1991, c. 17. (See Hillmond Investments Ltd.v.

Canadian Imperial Bank of Commerce (1996), (ON CA), 29 O.R. (3d) 612 (C.A.); Denison Mines Ltd. v. OntarioHydro (2001), (ON CA), 56 O.R. (3d) 181 at paras. 5-8 (C.A.); Metropolitan Toronto Condominium Corp. No. 879 v.Mereshensky, 2012 ONCA 73 (QL); and Jeffrys v. Veenstra, 2004 MBCA 6 at para. 5.) [8] I-Net argues that the application judge applied the wrong test, deciding the leave application based on the testapplicable on the appeal, rather than applying the test applicable to a leave application.

Their position is that, by applying the testapplicable on appeal and, therefore, deciding the matter as if on appeal, the application judge mistakenly assumed the jurisdiction of anappeal judge and, therefore, mistakenly declined to exercise the jurisdiction of a judge hearing an application for leave to appeal. Because he mistakenly declined jurisdiction, this matter comes within the exception to the general rule that there is no appeal from adecision on a leave application under the Act.

It acknowledges that this is an evolution of the exception as it now exists, but it argues thatthe law is constantly evolving and this is an appropriate evolution in order to prevent a serious injustice. [9] Broadband replies that to mistakenly decline jurisdiction means that the application judge must essentially refuse tohear the leave application on its merits when he or she had the jurisdiction to do so.

An error in principle in determining whether or notto grant the leave application on its merits does not constitute an error of declining jurisdiction; rather, if a judge exercises his or herjurisdiction by hearing an application for leave on its merits and dismissing it, he or she will not be considered to have mistakenlydeclined jurisdiction, even if there are errors in the exercise of that jurisdiction. V. ANALYSIS [10] At issue here is the

interpretation of the words “declining jurisdiction” and whether a decision that, in the end, mistakenlydenies an application for leave to appeal on its merits equates with declining jurisdiction to consider the application. [11] The principles regarding the exception for declining jurisdiction were set out by the Supreme Court of Canada inCanadian Utilities Ltd. et al. v.

Deputy Minister of National Revenue, (SCC), [1964] S.C.R. 57 (at p. 63): It appears to me to have been consistently held in our courts and in the courts of England that where a statute grants a right of appealconditionally upon leave to appeal being granted by a specified tribunal there is no appeal from the decision of that tribunal to refuseleave, provided that the tribunal has not mistakenly declined jurisdiction but has reached a decision on the merits of the application.

In the case at bar it is clear that the learned President considered the applications for leave to appeal on their merits and reached theconclusion that the questions on which leave was sought were not questions of law and that, in any event, this was not the kind of case inwhich leave should be given.

In no sense did he decline jurisdiction. .... [12] As stated above, this issue has been considered more recently on several occasions by the Ontario Court of Appeal inrelation to arbitration legislation in Ontario that mirrors ss. 44(2) and 48 of the Act, and that court has consistently held that, where thejudge considered the leave application and rendered a decision on the merits of the application, the judge did not decline jurisdiction and,therefore, leave to appeal does not lie from that decision. (See the decisions cited in para. 7 herein.) [13] Morden J.A. dealt with the meaning of “jurisdiction” in Denison Mines (at para. 10):

I appreciate that in many cases the meaning of “jurisdiction” can be fraught with difficulty. In the present case, however, I think that the principle stated by Cartwright J. can be applied with some degree of confidence. He distinguished between declining jurisdiction and reaching a decision on the merits of the application. In the present case, the parties did not argue the merits of the application before Macdonald J. By agreement they argued whether or not Macdonald J. had jurisdiction to grant leave to appeal.

If she had decided that she had jurisdiction, they would have continued the hearing of the application on the merits. I think that the exception applies. [ 14 ] In considering I-Net’s request that I extend the reach of this exception to the general rule, it is important to consider the reason for the rule. The general rule was explained by Finlayson J.A., for the court, in Hillmond Investments as follows (at p. 618): ….

Modern systems of alternative dispute resolution, commonly referred to as A.D.R., are designed to help parties solve disputes efficiently without resort to formal litigation and with a minimum of judicial interference. Allowing an appeal from a refusal to grant leave to appeal defeats the object of arbitration by frustrating the legislated impediment to appeals as of right. The purpose of s. 45 of the [Ontario] Arbitration Act, 1991 is to stop an appeal unless the Ontario Court (General Division) grants leave.

The function of the General Division as a check on unnecessary or frivolous appeals is defeated if the Court of Appeal may hear an appeal from the General Division’s refusal to grant leave. The Court of Appeal could then hear every case. .... [ 15 ] Discussion about the purpose of the Act , which was enacted in its current form in 1997, and the role of the courts in arbitration can be found in this court’s decision in Hopkins v. Ventura Custom Homes Ltd. , 2013 MBCA 67 at paras. 11-16 , 294 Man.R. (2d) 168.

One of the underlying intentions identified by the Minister of Justice and Attorney General, at second reading of the bill, was to harmonize arbitration law across Canada (see para. 12). [ 16 ] It is true that rules that impose finality on litigation can cause unfairness to litigants, such as I-Net, who may have a valid claim but are prevented from advancing that claim by the operation of those rules.

This is not, however, a new or unexpected outcome; rather, it is a prejudicial effect of the rule that must be balanced against the rule’s benefits. [ 17 ] In this case, the rule against permitting an appeal of a decision determining a leave application is a long-standing rule that was in effect long before the current legislation was enacted in 1997. It is supported on a principled basis that remains valid today. I am not convinced that the evolution proposed by I-Net, while innovative, is one that should be adopted by the courts.

If there is to be a right to appeal a decision on a leave application made under s. 44(2) of the Act , that right should come from a change in the legislation and not by way of a change or evolution of the current rules by the courts. [ 18 ] Finally, in this case, the prejudice or injustice to I-Net is very limited. The arbitrator’s preliminary award now at issue is just that – an award on a preliminary question.

The arbitration will proceed to a final award and I-Net, if it still feels aggrieved, can apply for leave to appeal that award to the Court of Queen’s Bench under s. 44(2) and to this court under s. 48 of the Act . VI. DECISION [ 19 ] For these reasons, I am dismissing this application for leave to appeal with costs to Broadband. J.A.