Saskatchewan – availability and final nature of partial discontinuance of claims in arbitration considered

In Poffenroth Agri Ltd. v Brown, 2020 SKCA 68, Saskatchewan’s Court of Appeal held that a notice of discontinuance filed in a civil action was interlocutory, not final, in nature and required leave to appeal.  Observing the limited number of precedents, the Court referred to but distinguished the reasoning and result in Ontario First Nations (2008) Limited Partnership v. Aboriginal Affairs (Ontario), 2013 ONSC 7141 which considered whether an arbitral panel’s decision to accept a claimant’s partial withdrawal of its notice of arbitration was final or not and, if subject to appeal, permitted under Ontario’s Arbitration Act, 1991, SO 1991, c 17.

Poffenroth Agri Ltd. (“PAL”) as plaintiff in a civil action in Saskatchewan’s Court of Queen’s Bench attempted to discontinue its claim against defendant by filing a notice of discontinuance under Rule 4-49 of The Queen’s Bench Rules, Sask Gaz December 27, 2013, 2684 (“Court Rules”). On application by defendant invoking non-compliance with Rule 1-6(1)(a) of the Court Rules, a Queen’s Bench judge struck the notice of discontinuance (Poffenroth Agri Ltd. v Brown, 2020 SKQB 31 (“Chambers Decision”).

PAL filed a notice of appeal of the Chambers Decision but did not seek leave when or before doing so. Defendant applied to quash the appeal, arguing that PAL was not entitled to appeal the Chambers Decision without first obtaining leave from the Court of Appeal to do so.

The Court of Appeal had to determine whether the order which issued from the Chambers Decision was final or interlocutory in nature.  If interlocutory, PAL would require leave to appeal. The Court of Appeal determined that the Chambers Decision was interlocutory in nature, requiring PAL to obtain leave of the Court to appeal but, in the circumstances, dismissed defendant’s application and, exercising its discretion, granted PAL leave to appeal nunc pro tunc.

[11] Generally speaking, there is no right of appeal except as provided by statute. Any right of appeal is governed, and limited, by the statutory framework that creates it. Section 7(2) of the Act confers a general right of appeal to this Court from decisions of the Court of Queen’s Bench, but that general right is limited by s. 8(1), which provides (subject to certain exceptions set out in s. 8(2) that do not apply in this case) that “no appeal lies to the court from an interlocutory decision of the Court of Queen’s Bench unless leave to appeal is granted by a judge or the court””.

PAL argued that the Chambers Decision was final.

The decision to set aside a discontinuance or permit it to stand, says PAL, is one that resolves the question of whether or not an action continues and, as such, determines substantive rights in a final way. Moreover, submits PAL, the right to discontinue an action should be seen as standing on the same footing as the right to bring an action, which it asserts “has always been regarded as a substantive right and not a matter of procedure”. Accordingly, PAL submits, its appeal in this case is as of right and does not require leave”.

The Court of Appeal disagreed, determining that PAL required leave to appeal because such an order was interlocutory.  While a general rule could easily be stated, generalities did not help the Court distinguish interlocutory from final. “As far as I am aware, this Court has never addressed the question of whether the specific type of order at issue in this case is final or interlocutory and there is little in the reported jurisprudence from other provinces directly on point”.

In determining the final or interlocutory nature of the discontinuance, the Court of Appeal considered doctrine and other cases deciding whether the nature of such decisions is either final or interlocutory.  As part of its analysis at paras 13-41, the Court of Appeal considered the decision of Mr. Justice Thomas R. Lederer in Ontario First Nations (2008) Limited Partnership v. Aboriginal Affairs (Ontario), 2013 ONSC 7141 which considered whether an arbitral claimant’s decision to withdraw part of its notice of arbitration was permitted.  In referring to it, among others cited by PAL, the Court observed that “they all appear to be the product of their particular facts” and “none of them contains an analysis that is broad enough to comprehensively encompass the circumstances at hand”.

At paras 30-32 of its own reasons, the Court of Appeal cited paras 14 and 16 of Lederer J.’s reasons from Ontario First Nations (2008) Limited Partnership v. Aboriginal Affairs (Ontario) and observed that “[a]s can be seen, Lederer J. relied on the decision of [Burtch v. Barnes Estate, 2006 CanLII 12955 (ON CA)] as authority for the conclusion that an order determining the validity of a notice of discontinuance is a final order”.

(In Burtch v. Barnes Estate, plaintiff had filed a notice of discontinuance against a municipality but later, when defendants issued third party claims against the municipality, applied for a declaration that her notice of discontinuance was invalid.)

In Ontario First Nations (2008) Limited Partnership v. Aboriginal Affairs (Ontario), the arbitration panel had heard two (2) motions.  The first involved a jurisdiction issue.  The second involved a withdrawal motion filed by claimant, Ontario First Nations.

Lederer J.’s analysis in Ontario First Nations (2008) Limited Partnership v. Aboriginal Affairs (Ontario) comprised two (2) sections: first, at paras 11-17, whether he had jurisdiction to hear the appeals; second, at paras 71-82, whether the Ontario Arbitration Act, 1991, SO 1991, c 17 allowed a claimant to withdraw part of its claims.

Jurisdiction to hear appeals (paras 11-17) – Lederer J. referred to the guidance set out in Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642 regarding jurisdiction and questioned whether the analysis in that decision allowed him to hear the appeal of the two (2) decisions taken by the arbitration panel.  He referred to passages of paras 16 and 18 but each merits citation in full for more context.

[16] To establish the application judge’s jurisdiction to entertain Inforica’s application under s. 17(5), (7) or (8) as an application to set aside the arbitrator’s ruling “as a preliminary question”, Inforica must bring the arbitrator’s ruling that he had jurisdiction to entertain the CGI’s application for security for costs within s. 17(1). Section 17(1) defines the parameters of s. 17, allowing an arbitrator to rule on his “own jurisdiction to conduct the arbitration”. In my opinion, on a fair reading of that language in light of the modern approach that respects the autonomy of the arbitral process and discourages judicial intervention, s. 17(1) is concerned with only the arbitrator’s jurisdiction to entertain the subject matter of the dispute. Asking an arbitrator to decide whether he has jurisdiction to order security for costs does not amount to asking him whether he has jurisdiction to conduct the arbitration. The words “jurisdiction to conduct the arbitration” in s. 17(1) connote jurisdiction over the entire substance or subject matter of the case, not jurisdiction to make interlocutory or procedural orders that do not determine the merits of the dispute and that are made along the way to final resolution of the issues”.

[18] A significant feature of the modern approach limiting access to the courts to review decisions of arbitrators is that there are no appeals from procedural or interlocutory orders. In Environmental Export International of Canada Inc. v. Success International Inc., [1995] O.J. No. 453 (Gen. Div.), at para. 14, MacPherson J. held: “There is nothing in the Arbitration Act providing for appeals from, or applications to set aside, decisions of arbitrators on procedural points. It would be wrong . . . for the courts to invent such a remedy and inject it into the arbitration process”. This principle is reiterated in Tescor Energy Services Inc. v. Toronto District School Board, [2002] O.J. No. 74 (S.C.J.), at para. 30, where Lane J. held: “there is nothing in the Act to permit appeals from or the setting aside of decisions of arbitrators on procedural points”. This is a deliberate policy, “not a lacuna in our law”, to protect the autonomy of the arbitral process. The creation of a power by the courts to intervene on interlocutory rulings by arbitrators “would constitute a most serious reproach to the ability of our system of arbitration to serve the needs of users of the arbitral process”: K/S A/S Biakh v. Hyundai Corp., [1988] 1 Lloyd’s Rep. 187 (Q.B. Com. Ct.), at p. 189, Steyn J.

In light of those passages, Lederer J. then asked whether either of the two (2) decisions before him were interlocutory or final.  He then recorded that the parties asked to adjourn in order to consider that very question, that each party provided supplementary facta and that he re-convened them.

Based on the guidance in Inforica Inc. v. CGI Information Systems and Management Consultants Inc. and the additional facta provided by the parties, only then did Lederer J. pen the passage mentioning Burtch v. Barnes Estate.  It is more complete to describe Lederer J.’s determination as being informed by a broader framework in arbitration and not resting on a single reference.

[16] The order on the withdrawal motion was final because, once it had been made, OLG was no longer able to take part in a proceeding in contravention of what it says is its right. The withdrawal motion relied on rule 23.01 of the Rules of Civil Procedure [RRO 1990, Reg 194]. In Burtch v. Barnes Estate, the Court of Appeal observed that an order determining the validity of a notice of discontinuance is “unquestionably a final order””.

Withdrawal Order (paras 71-82) – OLG argued that the Ontario First Nations was not allowed to withdraw the arbitration against it leaving only the Crown as sole respondent.

The dispute involved the Crown’s appointment to name a representative of Ontario First Nations to a particular board of directors.  Based on the contract in issue, in particular section 2.6 of a revenue sharing agreement, Lederer J. agreed with the arbitration panel that the appointment dispute did not involved OLG.  “The issue is solely and only between Ontario First Nations and the Crown”.

Lederer J. was alert to the terms of section 43(2) of the Arbitration Act which referred to terminating an arbitration if the claimant withdraws the claim.  That section imposes conditions on termination of the arbitration:  “43(2) An arbitral tribunal shall make an order terminating the arbitration if the claimant withdraws the claim, unless the respondent objects to the termination and the arbitral tribunal agrees that the respondent is entitled to obtain a final settlement of the dispute”.

OLG argued that the section only applied to a withdrawal of the entire arbitration.  Lederer J. refused, commenting that the section “should not be read so narrowly”.

In this case, Ontario First Nations (the claimant) wants to withdraw against OLG (the respondent insofar as the withdrawal is concerned). OLG has objected. The complaint is that the Arbitration Panel (the arbitral tribunal) has determined that the respondent does not have a right to a final settlement. No relief is sought against it. In effect, there is nothing to settle. Any other finding would provide a party with no direct involvement in the dispute with the right to continue to participate. The inability of the arbitral tribunal to allow the withdrawal would demonstrate that it was unable to control its own process”.

On the terms of the Revenue Sharing Agreement in issue and the nature of the dispute identified in the arbitration, Lederer J. held that not all the parties to the Revenue Sharing Agreement have a right to participate throughout the particular dispute and arbitration.  He agreed that the arbitration panel, with the terms of the arbitration process set out in the Revenue Sharing Agreement, “have a large measure of control over its process” and concluded that the OLG was a party whose presence was necessary to enable it to adjudicate effectively and completely on the issues in the preceding.

urbitral note – First, Lederer J.’s 2013 decision is cited only a handful of times and, apart from Poffenroth Agri Ltd. v. Brown, 2020 SKCA 68, more for its statement about the obligations of the Crown in commercial contracts.   The decision remains important as it is one of the few dealing with notices to discontinue a part of an arbitration.

Second, Lederer J.’s reasons interpret section 43(2) of the Arbitration Act in light of the dispute raised in an arbitration.  The scope of the “claim” which can be discontinued is interpreted in light of the parties’ contract and the nature of actual dispute.  Lederer J. preserved the arbitral panel’s ability to control its own process and refused to give a narrow reading to the term “claim” in section 43(2).

Third, the Court of Appeal’s reasons provide highly relevant references to distinctions made either way in determining whether certain discontinuances are final or interlocutory and related cases and doctrine which speak to the distinctions.