Canada – Why Arbitration Needs the Courts – And Vice Versa

In Benke v Loblaw Companies Limited, 2022 ABQB 461, Justice Feasby called for a “culture change” in the courts to “create an environment promoting timely and affordable access to the civil justice system” (quoting Justice Karakatsanis in Hyrniak v Mauldin, 2014 SCC 7 at para. 2) to avoid a “large-scale exodus” from the courts to arbitration. He took an expansive view of the court’s power to decide a case by summary trial as one way to move away from the conventional trial and solve the problem. He also commented on why we should not want all commercial disputes to be decided by arbitration.

The Plaintiff was an employee of the Defendant, and sought a medical exemption from the City of Calgary mask-by law and the Defendant’s mask policy, both of which mandated the wearing of masks in public places to mitigate the risk of COVID-19 transmission. The Plaintiff relied upon an undisclosed medical condition in support of his request for a medical exemption. He obtained a certificate and notes from his doctor which stated that he was exempt from the by-law requirement, but the doctor declined to state that the exemption request had a medical justification. When the Plaintiff refused to wear a mask at work, the Defendant put him on an unpaid leave on the basis that he did not comply with the by-law or the mask policy. The Plaintiff then sued for constructive dismissal. Ultimately, Justice Feasby dismissed the Plaintiff’s action after a summary trial.

But what is interesting from an arbitration practitioner’s perspective, is Justice Feasby’s comments about the relationship between the courts and arbitration, as he considered whether this was an appropriate matter to be determined by way of summary trial.  

The Plaintiff set the action down for summary trial. The Defendant did not object, but left it to the court to decide whether a full trial was necessary, either because of contradictions between the evidence of the Plaintiff and Defendant’s witnesses which might make the judge “unable to find the facts necessary to decide the issues of fact or law”, or it would be “unjust to decide the issues on the basis of a summary trial” pursuant to Rule 7.9(2) of the Alberta Rules of Court, Alta Reg 124/2010.

Justice Feasby noted that, “this raises a common problem that afflicts civil litigation in Alberta”, which is that arbitration offers a more expeditious alternative:

“[6] …The perception amongst the civil litigation bar is that attempting to proceed by way of summary trial, even with the agreement or non-objection of the opposing party, is fraught with risk because the Court may decide after counsel have put in the work to prepare for the summary trial and clients have made corresponding and sometimes significant financial outlays that the matter is not suitable for summary trial… The perception that summary trial is a risky procedure, even when both parties agree, has caused it to be under utilized.

[7] Under utilization of the summary trial process contributes to the problem discussed by Feehan and Wakeling JJA in Hannam v Medicine Hat School District No. 76, 2020 ABCA in the context of summary judgment. Feehan and Wakeling JJA observed that “conventional trials are expensive and plagued by delay”: Hannam at para 46. The length of time that civil matters take to get to trial, they noted, is pushing matters into arbitration. “Until this trend is reversed, Alberta litigants will have a high interest in having access to a workable expedited dispute resolution procedure – summary judgment or summary trial. Or they will continue to take their commercial business elsewhere – private dispute resolution”: Hannamat para 48.

Justice Feasby warned of the dangers of a “large-scale exodus” from litigation in the courts:

[8] Some people might shrug and say “so what?” Who cares if parties opt for arbitration for private dispute resolution? But it matters a whole lot. If private litigants vote with their feet in large numbers and opt out of using the court system, it will undermine the legitimacy of the courts. Why should anyone trust the courts if those who have resources overwhelmingly opt to resolve their disputes elsewhere?

[9] A large-scale exodus from the courts also creates a rule of law problem. The law that governs commerce is, in significant part, the product of the courts. This is true whether the reasons produced by judges are part of the common law or interpretations of statutes. Public reasons are a public good. Arbitration, which is typically conducted in private and sometimes shielded by confidentiality agreements, rarely produces public reasons. Without a steady caseload in the courts, commercial law will cease to develop in tandem with our ever-changing society.

[10] My comments should not be understood as an attack on arbitration. Arbitration has an important role to play resolving private disputes. And it is critically important to recognize that arbitration needs the courts to continue to produce the public reasons that form the law which arbitrators use to decide disputes. Courts should not abdicate their role and allow arbitration to entirely occupy the field of commercial law.

Justice Feasby quoted Justice Karakatsanis in Hyrniak v Mauldin, 2014 SCC 7, who (in the context of a summary judgment motion) called for a “culture change” in order to “create an environment promoting timely and affordable access to the civil justice system” (at para. 2). In Alberta, he said, summary trials are an important part of the solution to how courts can provide more timely and affordable civil justice. Here, neither party intended to call viva voce evidence, and it was possible for Justice Feasby to make findings of fact, despite the contradictory evidence. Further, he found that it would not be unjust to decide the issues by summary trial, given the small amount at issue which rendered the anticipated costs of a full trial “not proportional”.

Justice Feasby heard the matter by way of summary trial and dismissed the Plaintiff’s action – with reasons issued swiftly!

Editor’s Note:

Justice Feasby relied upon the Alberta Court of Appeal decision of Hannam v Medicine Hat School District No. 76, 2020 ABCA 343, which commented upon the value of summary judgment motions and summary trials to decrease both time and costs in litigation under the heading, “Conventional Trials Are Expensive and Plagued by Delay” (paras. 46 to 48). The alternative, the Court stated, is that parties, “will continue to take their commercial business elsewhere – private dispute resolution”.

It is this sentiment, felt across the country in the wake of the COVID-19 pandemic court backlog, that has made more common a specialized form of arbitration – case management arbitration, in which parties agree to have a portion of their dispute (such as an interlocutory motion) decided by arbitration, to speed up the action and get it on the trial list sooner. In other words, the court still has jurisdiction over the parties’ ultimate dispute. For an excellent article on this subject, see Keenberg, Megan and Daniel Brown, “Case management arbitration: A resource for alleviating the backlog”, The Advocates’ Journal, Vol. 40, No. 3, Winter 2021.

author

Lisa C. Munro

Lisa Munro is a partner at Lerners LLP, whose practice is limited to work as an arbitrator in domestic and international commercial arbitrations (both ad hoc and under institutional rules). She brings to this role more than 25 years of experience as counsel in commercial/business litigation and both international and…

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