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<xTITLE>Canada - Parties can Agree to be Bound by Coin Flips, Ouija Boards and Bespoke Judicial Resolution Processes</xTITLE>

Canada - Parties can Agree to be Bound by Coin Flips, Ouija Boards and Bespoke Judicial Resolution Processes

by Daniel Urbas
December 2020 Daniel Urbas

This article first appeared on Urbas Arbtral, here.

In Keeder v. AlGendy, 2020 ABCA 420, Madam Justice Jolaine Antonio denied leave to appeal consent orders issued from a binding judicial dispute resolution process by which the parties had agreed to either resolve the issue themselves or be bound by the determination of the judge presiding the process. Antonio J.A. held the parties to their contract, applying precedent which held that such decisions are imposed on the parties as a result of their contract rather than the court’s authority. If the settlement falls apart, the parties must sue on their contract. Though the judge issues a determination, the decision is imposed as a result of their contract and not the court’s authority.

The parties, K and A, consented to an order which provided that they were to schedule a binding judicial dispute resolution (“JDR”) to resolve outstanding issues. They entered into a judicial dispute resolution agreement (“JDR Agreement”) by which they agreed to resolve those issues in a binding manner without proceeding to a trial. The parties agreed that the JDR would be confidential and the only documents “to survive” the JDR would be a court order and the signed JDR Agreement. Madam Justice Carolyn S. Phillips conducted the JDR.

K and A signed an acknowledgment of the opportunity to review, inquire, and understand the terms of the JDR Agreement and its impact on their rights, including having received independent legal advice before doing so. Each party attached to the JDR Agreement their respective lawyer’s certificate of legal advice.

The parties identified their JDR as being “in lieu of a Binding JDR” but agreed that if they did not come to an agreement, Phillips J. had the authority to issue binding recommendations, as appears from the following clause:

3. In the event that the parties do not reach an agreement to resolve the matters in these proceedings, Justice Phillips will make recommendations which the parties hereby agree to be final and binding upon both of them by entering into a Consent Order at the conclusion of the JDR. Justice Phillips shall have authority to make any substantive or procedural recommendations related to the outstanding issues outlined in paragraph 5 of [the February 14, 2020 Order], including the issue of costs”.

The JDR resulted in two (2) July 28, 2020 orders (“JDR Orders”). A did not agree with the result and refused to authorize his counsel to sign the consent orders. On August 26, 2020, Phillips J. advised counsel for the parties that the JDR Orders would be filed without A’s counsel’s signature. Phillips J. also issued a September 4, 2020 costs order (“Costs Order”) inKeeder v. Algendy, 2020 ABQB 509. See para. 11 regarding Phillips J.’s list of considerations for issuing costs against A.

A filed a notice of appeal on July 28, 2020. He did so without first obtaining leave to do so, despite the requirements under Rule 14.5(10(d) of the Alberta Rules of Court, Alta Reg 124/2010for appeals of consent orders. A also appealed before the Costs Order issued but still sought to include the Costs Order in his appeal. See para. 13 of the reasons for Antonio J.A.’s approach to the Costs Order.

The procedural circumstances required Antonio J.A. to decide whether or not to grant leave to appeal. As such, her reasons address those thresholds and criteria applicable to the exercise of discretion to grant leave. See para. 12 and Antonio J.A.’s comments on the cases cited, namely: Milner Power Inc v. Alberta Utilities Commission, 2019 ABCA 127para. 10; United Food and Commercial Workers Canada Union, Local No 401 v. Sofina Foods Inc., 2019 ABCA 418para. 26; Thompson v. Procrane Inc. (Sterling Crane), 2016 ABCA 71para. 7;Bissky v. MacDonald, 2019 ABCA 240para. 2; and, McKerness v. Whitson, 2017 ABCA 207para. 7.

A alleged numerous errors of fact and law, the first of which involved the binding effect of the JDR.

A argued that the parties had labeled the JDR as “non-binding” and therefore it could not have a binding effect. Antonio J.A. referred toJ.W. Abernethy Management & Consulting Ltd. v. 705589 Alberta Ltd. and Trillium Homes Ltd., 2005 ABCA 103as “a complete answer to this concern”.

In that case, the parties had entered into a binding mediation agreement which allowed the judge to make a decision binding on them and provided the following:

Where a settlement or other resolution is reached, the parties shall carry out its terms as soon as possible. Such terms shall be binding on the parties and enforceable at law in the same manner as an arbitration award”. 

Though Antonio J.A. reproduced para. 26 of that 2005 Court of Appeal reasons, the adjacent paragraphs give further context and merit inclusion here:

[25] The second flaw in the appellants’ argument is their mischaracterization of the judge’s role in a binding JDR. According to the appellants, a JDR judge imposes a binding decision on litigants in circumstances that violate principles of procedural fairness since JDR’s are generally unappealable and lack procedural safeguards. In fact, the decision is not imposed on the litigants as a result of judicial control; authority for settlement always remains with the parties because they choose to be bound by the judge’s decision.

[26] Litigants are free to resolve a dispute in any manner they wish. They may, for example, agree to flip a coin, consult an Ouija board, or let a third party decide. The parties agree on the mechanism for settlement and are bound by their agreement. In the case of a binding JDR, the parties agree not only to participate in the JDR, but also to implement the judge’s views if they are unable to negotiate a settlement. What makes the JDR “binding” is the parties’ binding contractual commitment: the judge’s decision is imposed on them as a result of their contract, not the court’s authority. Therefore, if the settlement falls apart, the parties must sue on their contract, not enter a judgment based on the judge’s opinion.

[27] An examination of the binding JDR, in this case, confirms that characterization. The parties entered into a Binding Mediation Agreement that provided:

Where a settlement or other resolution is reached, the parties shall carry out its terms as soon as possible. Such terms shall be binding on the parties and enforceable at law in the same manner as an arbitration award. (A.B.II E8, para. 10.)

The parties clearly provided that it was up to them to carry out the terms of the settlement and, if necessary, to apply to the court to enforce the settlement, in a manner similar to s. 6(d) of the Arbitration Act, R.S.A. 2000, c. A-43.

[28] The Binding Mediation Agreement required the JDR judge to prepare a memorandum or letter outlining any settlement or resolution (A.B.II E8, para. 9). The JDR judge sent a letter on judicial letterhead to the parties’ lawyers. He did not issue a memorandum or reasons for decision through the court registry, send his reasons to legal publishers or publish them on the court’s website. There could be no confusion: the JDR judge was providing his opinion, not issuing an adjudicative decision or judgment. The fact a judge expresses an opinion in the course of a binding JDR does not transform those views into a judgment of the court”.

Antonio J.A. commented on party autonomy and the parties’ ability to agree to be bound by a variety of different mechanisms. She held that autonomy to choose a binding process entailed the obligation to abide by the result.

[17] Here, the JDR Agreement authorized Justice Phillips to make recommendations to the parties if they were unable to resolve certain issues, and provided that these recommendations would be made binding on the parties through a consent order. Regardless of how [A] would label the proceedings, its effects were clearly set out in the Agreement, which he signed after receiving independent legal advice. He thereby agreed to be bound by the process and the resulting consent order. He cannot now renege because he dislikes portions of the result. The comments at para 30 of Abernethy apply:

The parties signed a contract agreeing to implement the judge’s opinion as their settlement should they be unable to resolve the dispute. The appellants were represented by competent legal counsel and understood that the judge’s decision, whether they agreed with it or not, would be binding on them and non-appealable. Having freely and willingly entered into a court-sanctioned process that would end the dispute, the appellants cannot turn their backs on their contractual commitment. They received precisely what they bargained for and are bound by their agreement”.

Confidentiality – In addition to the above, at paras 20-21 Antonio J.A. also addressed the confidentiality of the JDR process and the impact of having no record to show to the Court of Appeal. Because no record had been created, she held that “there is no record on which this Court could reach an independent assessment of the alleged trial-like errors”. See also JW Abernethy Management & Consulting Ltd v 705589 Alberta Ltd and Trillium Homes Ltd para. 40.

urbitral note– First, as background to the earlier decision of the Alberta Court of Appeal in J.W. Abernethy Management & Consulting Ltd. v. 705589 Alberta Ltd. and Trillium Homes Ltd., 2005 ABCA 103, the opening paragraph of that decision helps situate the issues:

[1] The Court of Queen’s Bench of Alberta has an effective and popular judicially-assisted settlement process, known as Judicial Dispute Resolution or JDR. The appellants, who were sued by the respondents, agreed to participate in a JDR to resolve their dispute. The parties took it one step further and agreed that if they were unable to negotiate a settlement, they would invite the JDR judge to make a decision that would be binding on them. The JDR proceeded, certain matters were not settled and the judge provided his opinion. The appellants refused to implement the settlement. Among other things, they argued that aspects of the Queen’s Bench JDR process were illegal and the JDR judge’s participation in a “binding” JDR violated s. 56(1) of theJudges Act, R.S.C. 1985, c. J-1”.

The Court summarized appellants’ argument at para. 13.

[13] The appellants say that because the JDR judge was authorized to impose a resolution upon the parties, he was acting as an arbitrator. They submit that s. 56(1) of the Judges Act prohibits judges from acting as arbitrators: while judges are free to facilitate settlement between the parties or to adjudicate matters after a formal hearing, they are precluded from issuing a binding decision when the process falls short of a traditional court hearing. The appellants contend a binding decision in such circumstances offends s. 56(1) since there are no procedural safeguards to maintain the integrity, and appearance of integrity, of the judicial office. The appellants also assert that judges lose judicial immunity when they administer such “short-cut justice” (appellants’ factum at 19, para. 80)”.

Having done so, at para. 14 observed that the argument “misses the mark in two ways” and sets out its analysis at paras 15 et seq.

 

Biography


Daniel Urbas is an experienced litigator, arbitrator and mediator with over 25 years of dispute resolution experience. He has earned a variety of repeat, annual peer recognitions including “Leading Lawyer” in “Commercial Arbitration” in the 2019 edition of the Lexpert ® / American Lawyer Guide to the Leading 500 Lawyers in Canada, “Most Frequently Recommended” in the 2019 edition of The Canadian Legal Lexpert® Directory for Commercial Arbitration, “Thought Leader” in 2019 edition of Who’s Who Legal – Litigation and AV® Preeminent™ by Martindale-Hubbell®.

Daniel focuses exclusively on serving as an arbitrator and mediator.  As arbitrator, Daniel serves as a sole arbitrator, as chair or as party-nominated member of three (3) member arbitration tribunals. His appointments have been made by individual parties, by the parties jointly on consent, by court orders and by various administering institutions including ICC, CCAC and IATA.

A Fellow of the Chartered Institute of Arbitrators (“CIArb”) based in London, UK, as well as a founding Director of the CIArb’s Canada Branch, Daniel is listed on various rosters including general commercial rosters organized by the ICDR, CIETAC and BCICAC and on more specialized, industry/activity specific rosters such as the Canada Transport Agency’s roster.

Daniel’s dispute resolution experience spans a variety of commercial and civil matters, intellectual property (including anti-piracy and anti-counterfeiting litigation) and information technologies, energy (wind, bio), natural resources (mining, forestry, fishing), shareholder disputes, real estate and lease disputes, product liability, construction, distribution and franchise, Aboriginal law matters including treaty and land claims litigation and dispute resolution of agreements relating to governance and natural resource development on native peoples’ territories.

He handled trial and appellate advocacy, as well as urgent and extraordinary applications. He has appeared before the provincial and federal courts, including the Supreme Court of Canada, as well as before arbitration tribunals and various administrative tribunals. Fluently bilingual in both English and French with degrees in both Common Law and Civil Law, Daniel is an active member of the Barreau du Québec, the Law Society of Ontario and the Law Society of British Columbia.  At his former national law firm, up until June 2017, Daniel served as Regional Leader of the International Trade Litigation and Arbitration group and Regional Leader of the Intellectual Property Litigation group. Formerly, Daniel was also Regional Leader of the Commercial Litigation group and National Leader of the Intellectual Property Litigation group.



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