QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2017 SKQB 249 Date: 2017 08 22 Docket: QBG 1409 of 2017 Judicial Centre: Regina BETWEEN: HOME AUTOMATED LIVING, INC. and SECURTEK MONITORING SOLUTIONS INC. Counsel: Breanna Mussell for the applicant Stephanie Yang for the respondent JUDGMENT KALMAKOFF J. August 22, 2017 INTRODUCTION [1] This is an application by Home Automated Living, Inc. [HAL], seeking leave to appeal the decision of an arbitration panel. The arbitration panel was constituted to resolve commercial contractual dispute between HAL and the respondent, SecurTek Monitoring Solutions Inc. [SecurTek]. [2] For reasons that follow, I have determined that HAL’s application for leave must be dismissed. FACTUAL BACKGROUND [3] HAL and SecurTek had contractual relationship which began in February of 2008. HAL produces software, technology and services related to home automation. SecurTek, Sasktel subsidiary, wanted to have the exclusive right to market, licence and distribute HAL’s products in Canada. Accordingly, the parties entered into three separate contracts designed to accomplish those business goals. They were (i) the International Distribution and Software Licence Agreement [IDSL]; (ii) the Software Customization Agreement [SCA] and (iii) the Escrow and Software Modification Agreement [ESMA]. These contracts each provided, among other things, that any disputes which could not be resolved between the parties would be settled by binding arbitration. [4] The IDSL was the primary operating agreement or contract between HAL and SecurTek. It was signed for three year term, and was automatically renewed for successive three year terms, unless either party cancelled the contract, in writing, at least 60 days prior to the renewal date. [5] The relevant portions of the IDSL dealing with cancellation or termination of the contract read as follows: 2.2 The term of the licence granted under this Agreement shall commence upon execution of this Agreement by SecurTek and shall continue thereafter for period of three (3) years. This agreement shall automatically renew unless either party cancels in writing at least sixty (60) days prior to the renewal date. SecurTek may terminate this Agreement for cause. This licence may be terminated by HAL for cause. SecurTek agrees upon termination of this Agreement to return the HALhms and all documentation together with all copies in any form in its possession. For cause shall be defined as either party not complying with the terms and conditions found in this agreement. 8.1 The term of this Agreement shall be from February 22, 2008 and continue in accordance with 2.2 herein. 8.2 This Agreement may be terminated at any time upon one hundred and eighty (180) days written notice by either party. Both parties agree to make reasonable commercial efforts to ensure any subsequent transition following termination is effectively concluded with minimal disruption. [6] It is clear from the wording of those provisions that there were three options for terminating the IDSL: (1) by giving notice 60 days prior to the renewal date, (i.e. 60 days prior to February 21, 2011, or February 21, 2014, etc.); (2) at any time, for cause; and (3) in other circumstances, by giving 180 days notice. [7] In this case, the agreement between the parties reached the renewal date in February of 2011 without incident, so the IDSL was automatically renewed for second three-year period. [8] In July of 2012, the parties executed contract that modified the IDSL. It was titled Modification to the International Distribution and Software Licence Agreement [MIDSL]. As one would gather from the title, it modified portions of the IDSL. [9] The IDSL contained clause relating to the minimum sales target that SecurTek was required to meet in order to maintain its exclusive distribution right. It read as follows: 4.3 Minimum sales SecurTek Agrees that it must make an average of at least 25 sales of the HALhms per month over each quarterly period in order to maintain an exclusive distribution right. SecurTek shall at HAL’s discretion lose exclusive distribution rights herein for failure to reach this goal. [10] The MIDSL, which the parties executed on July 9, 2012 amended the minimum sales requirement in clause 4.3, by substituting the following provision: 4.3 Minimum sales SecurTek Agrees that it must make 25 new sales of the HALhms per month in order to maintain exclusive distribution rights granted herein, or purchase the equivalent in new pre-paid licences of HALhms. [11] Eventually, dispute arose. The licences referred to in clause 4.3 sold for $1,000.00 each. HAL took the position that clause 4.3, as it appeared in the MIDSL, required SecurTek to pay HAL minimum of $25,000.00 per month, regardless of how many licences SecurTek actually sold. SecurTek took the position that, if it failed to sell 25 licences, it simply lost the right to exclusive distribution, rather than being obligated to pay HAL for 25 licences regardless of how many were sold. HAL alleged that SecurTek was not meeting its sales obligations, and demanded payment of the shortfall. [12] SecurTek eventually gave notice to HAL, on December 13, 2013, that it would not be renewing the agreements at the end of the three year term which expired on February 21, 2014. [13] HAL took the position that SecurTek breached the contract by failing to comply with the term regarding payment for licencing fees, and also that SecurTek failed to properly terminate the contract, thus making it liable for any products received from HAL that were not paid for. [14] Accordingly, as per the terms of the contracts, an arbitration panel was constituted, and appointed to resolve the dispute. [15] The arbitration panel, in 2-1 decision, ruled that the IDSL, as amended by the MIDSL, did not impose an obligation on SecurTek to purchase set number of licences from HAL. Accordingly, HAL’s claim was dismissed. [16] SecurTek also counter-claimed against HAL. The majority of the panel ruled that, given its disposition of HAL’s claim, the counter-claim was moot and, in any event, did not prove that SecurTek had suffered any damages. SecurTek takes no issue with this finding. POSITION OF THE PARTIES [17] HAL argues that leave to appeal the arbitrators’ decision should be granted, because it is proposing to appeal on the basis of errors in law in the arbitration panel’s majority decision. HAL takes the position that the agreements signed with SecurTek, although not specifically referring to right of appeal on such basis, contain an implied condition that permits the parties to appeal arbitrators’ decisions, with leave, on the basis of errors in law. As such, HAL says that s. 45(2) of The Arbitration Act, 1992, SS 1992, A-24.1 [Act] permits the application, and that it has met the criteria to be granted leave. [18] SecurTek argues that leave to appeal should not be granted, for number of reasons. First, it argues that its contracts with HAL contain dispute resolution mechanism (final and binding arbitration) which “contracts out” of s. 45(2) of the Act. As such, HAL cannot seek leave to appeal. In the alternative, if the right to seek leave to appeal is not abrogated by the language of the contracts, SecurTek argues that the questions HAL proposes to raise on appeal are questions of mixed law and fact, rather than questions of law, and even if they are questions of law, they are not of sufficient importance to compel the court to grant leave under s. 45(2). 1. HAL cannot seek leave to appeal, because HAL and SecurTek explicitly “contracted out” of any right to appeal decisions of the arbitration panel. [19] In this case, the relationship between HAL and SecurTek was governed by contracts. Those contracts set out very clear and well-defined procedures for dispute resolution. In fact, the IDSL, SCA and ESMA all contained identical clauses in that respect. Under the heading “Arbitration”, at Clause 26, the IDSL reads as follows: 26.1. The parties agree that they will use their best efforts to amicably resolve any dispute arising out of or relating to this Agreement. The parties shall meet and discuss any disputes prior to the initiation of an arbitration and shall grant the alleged wrong doer an opportunity (30 day minimum) to cure any defects. 26.2 Any controversy, claim or dispute that cannot be so resolved shall be settled by final and binding arbitration in accordance with the expedited rules of the American Arbitration Association (AAA), however the AAA’s services shall not be used, and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. Said AA rules shall be modified as follows: no in person hearings shall be required with all hearings via telephone unless both parties agree otherwise; discovery shall be limited to 30 requests total; Each party will file single brief outlining its point of view and submitting any facts; said brief may be no longer than ten (10) pages double spaced with one (1) inch margins, eleven (11) point times new roman font; the factual attachments, table of contents, authorities shall not be part of said ten (10) pages. 26.3. Any such arbitration shall be conducted through the use of briefs only and at the discretion of the arbitrators there may be telephonic hearings. In person hearings shall not be allowed. Each party may make one set of each type of discovery request and one dispositive motion. There shall be three arbitrators where each party shall choose one arbitrator and those two arbitrators shall choose the third who shall be in charge of the panel. No Court shall have subject matter jurisdiction over this matter until after the arbitrators has (sic) rendered reasoned opinion. The arbitrators’ decision shall be final without any possibility of appeal other then (sic) on the issues of whether this arbitration clause is valid. The arbitration shall be expedited and must be concluded within sixty (60) days. [Emphasis Added] [20] Clauses 26.1, 26.2 and 26.3 of the SCA, and clauses 5.1, 5.2 and 5.3 of the ESMA, respectively, contain identical wording. [21] It is clear that these contracts are “arbitration agreements”, within the meaning of ss. 2(a) and of the Act. Section 45 of the Act deals with appeals from decisions of arbitrators in such circumstances. It reads, in part, as follows: 45(1) If the arbitration agreement so provides, party may appeal an award to the court on question of law, on question of fact or on question of mixed law and fact by notice of motion that briefly states the grounds of the appeal. (2) If the arbitration agreement does not provide that the parties may appeal an award to the court on question of law, party may appeal an award to the court on 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. [22] In the circumstances of this case, s. 45(1) of the Act does not give HAL the right to appeal the decision of the arbitration panel, because the agreements in place between HAL and SecurTek do not provide for right of appeal. [23] The question is whether s. 45(2) permits HAL to obtain leave to appeal on question of law, notwithstanding the absence of such provision in the agreements. HAL takes the position that this section provides the ability to obtain leave. SecurTek, on the other hand, argues that while s. 45(2) may permit parties to obtain leave to appeal in some cases, it does not apply here, because the parties intentionally “contracted out” of it. [24] Section of the Act provides that parties to an arbitration agreement may agree, expressly or by implication, to vary or exclude any provisions of the Act (subject to certain exceptions which are not applicable to this case). It is trite law that parties who have commercial contractual relationship, which contains an arbitration agreement for dispute resolution, can, by agreement, abrogate appellate review of the arbitrator’s decision: Bank of Nova Scotia Span West Farms Ltd., 2003 SKQB 306 (CanLII), 237 Sask 175; Chypiska Aspen Homes Ltd., 2010 SKQB 376 (CanLII), 365 Sask 160. In Labourers' International Union of North America, Local 183 Carpenters and Allied Workers Local 27 (1997), 1997 CanLII 1429 (ON CA), 34 OR (3d) 472 (WL) (Ont CA) the court noted at paras. 22-23 that “final and binding” clauses, such as the ones used in the agreements between HAL and SecurTek, while not necessarily precluding judicial review, certainly reflect an intention to exclude all rights of appeal, even those conferred by statute. [25] Parties to contract can, in essence, agree to structure dispute resolution mechanisms in any fashion they want. This may include eliminating statutory appeals. As read the relevant jurisprudence, where the language used in the agreement between parties is clear and precise, and indicates clear intention on their part to treat the decision of an arbitrator as final and binding, the balance tips very heavily in favour of finding that the parties intended to eliminate any ability to appeal from the arbitrator’s decision. The use of the words “final and binding” demonstrates that the parties have made the choice to resolve disputes through the expeditious process of arbitration; choice which reflects an intention to avoid the prospect of potentially protracted and costly litigation, even if it means there is chance they will be bound by an unfavourable decision from the arbitrator. [26] In this case, the language used in the agreements between HAL and SecurTek, in my view, could not be more clear. It says that the “arbitrators’ decision shall be final without any possibility of appeal”, save for on the question of whether the arbitration clause itself is valid. It is obvious from the wording of the clause that the parties had turned their minds to the question of dispute resolution, and intended that the arbitrators’ decision would not be subject to appeal, except on that very narrow issue. There is simply no other reasonable interpretation of such wording. [27] Furthermore, the fact that the parties referred to one, and only one, specific instance in which an appeal would be permissible is significant. It leads me to conclude that the absence of reference to any other circumstances in which appeal would be permitted was not inadvertent, but intentional. If the parties had intended, for instance, to allow an appeal from the arbitrators’ decision based on an error of law, they could easily have said that in the agreements. They did not. Therefore, must conclude that they had no intention to permit an appeal on that basis. [28] For the same reason, reject HAL’s argument that the ability of the parties to appeal an arbitrators’ decision based on an error of law must be implied as term of the contract. It is fair to say that the terms of contract cannot always be confined to those expressly stated, and each case must be decided on its own facts and circumstances. The context and background of contract should always be carefully considered, along with the precise terms written into it, when considering whether it is appropriate to find an implied term. [29] The general presumption in contractual interpretation is that parties have expressed every material term which they intended to govern their agreement: Benfield Corporate Risk Canada Ltd. Beaufort International Insurance Inc., 2013 ABCA 200 (CanLII), [2014] WWR 772. Generally speaking, as the Supreme Court of Canada noted in Canadian Pacific Hotels Bank of Montreal, 1987 CanLII 55 (SCC), [1987] SCR 711, terms of contract may be implied where such terms (i) are necessary to give business efficacy to contract (i.e., they are terms which the parties would obviously have assumed to be part of the contract); (ii) can be implied as matter of custom or usage (which requires evidence that the parties would have understood such custom or usage to be applicable); or (iii) can be implied as legal incidents of particular class or kind of contract (i.e. terms implied in law). [30] The court can imply terms that are in the nature of things that “it goes without saying”, and are necessary to give business efficacy to the transaction: Highwood Distillers Ltd. Panorama Public Industrial Communications Ltd., 2005 ABCA 107 (CanLII) at para 13, 363 AR 239. The implication of the term must have certain degree of obviousness to it, and if there is evidence of contrary intention on the part of either party, the implied term may not be found: M.J.B. Enterprises Ltd. Defence Construction (1951) Ltd., 1999 CanLII 677 (SCC), [1999] SCR 619 [M.J.B. Enterprises]. While it is clear that there are some cases in which term must be implied in order to ensure that the intention of the parties is not defeated, the court does not have licence to reconstruct contract on equitable principles, or from the point of view of what the parties should reasonably have contemplated. [31] With the greatest of respect to the position advanced by HAL, a term permitting an appeal from the arbitrators’ decision on an error of law simply does not fall into the category of the obvious, or something that “it goes without saying”, in the factual matrix of this case. Such an implied term is not akin, for instance, to the implied term of good faith in contractual negotiation, or the implied term of good workmanship in contracts for repair or renovation work, or the implied term of reasonable notice of termination in contracts of employment. [32] Furthermore, term should generally not be implied where it is inconsistent with the express terms of the contract: M.J.B. Enterprises; Fort Frances (Town) Boise Cascade Canada Ltd., 1983 CanLII 47 (SCC), [1983] SCR 171. In the context of this case, the contractual language the parties used is clear: they intended to resolve disputes by way of final and binding arbitration. They clearly stipulated that such resolution would not be subject to appeal, unless there was question of validity of the arbitration clause itself. Implying term which would permit an appeal based on an error unrelated to the validity of the arbitration clause would be inconsistent with the express terms of the contract. Accordingly, can see no basis upon which to imply an additional term, such as the right to appeal from an error of law made by the arbitrator. [33] Finally, on this point, HAL has argued that the terms of the arbitration agreement were altered by correspondence of counsel. Correspondence, it says, which effectively nullified the “final and binding” nature of the arbitration clauses. In particular, HAL points to the exchange of correspondence between Will Egan (counsel for SecurTek at the time) and Robert MacKay (counsel for HAL at the time). This correspondence, as read it, was in the vein of setting out the procedures to be followed during the arbitration. Questions of what material would be filed for the arbitration panel to consider, timing, and governing law were addressed. In that regard, Mr. Egan’s letter to Mr. MacKay, dated May 5, 2014, ended with the following: 5. The governing law is to be the Province of Saskatchewan. 6. Arbitrators’ decision will be final. [34] To that, Mr. MacKay responded with letter dated September 8, 2014. He proposed slightly different procedure, with slightly different timelines than did Mr. Egan, but ended his letter with the following: Generally, the contract shall govern, then the rules provided by the American Arbitration Association then the laws of the province of Saskatchewan. [35] In response to that, on September 11, 2014, Mr. Egan wrote: have reviewed your letter outlining the proposed procedures and forms and can advise that they are acceptable to SecurTek. [36] HAL argues that because Mr. Egan’s first proposal included the words “Arbitrators decision will be final”, and Mr. MacKay’s response did not specifically agree to that term, but instead said “Generally the contract shall govern…”, should conclude that HAL was not agreeing to the finality of the arbitrators’ decision and, as such, cannot be taken to have abrogated its right to appeal. [37] With respect, cannot accede to this argument. The language of the agreements, in my view, is so clear with respect to the arbitration clauses, and the finality of the arbitrators’ decision, that it cannot be overridden by vagueness or inadvertent omission. The intention expressed in the arbitration clauses of the agreement is clear, and it would take an equally clear statement to convey different intention. Furthermore, the final sentence of Mr. MacKay’s letter says “[g]enerally the contract shall govern” (emphasis added) and, as have repeated several times, the contract was very clear about the finality of the arbitrators’ decision and the very limited nature of potential appeals. [38] Accordingly, find that the provisions of the agreement between the parties (the IDSL, the SCA, and the ESMA) exclude the right of appeal on questions of law, pursuant to s. 45(2) of the Act. HAL cannot appeal the arbitrators’ decision, and the application must be dismissed. 2. HAL’s appeal would not be permitted by s. 45(2) in any event, because it raises question of mixed law and fact, rather than question of law. [39] My finding on the first issue is dispositive of the application, but even if my conclusion in that respect had been different, would still not have granted HAL’s application for leave. That is because the issues upon which HAL seeks leave to appeal are questions of mixed fact and law, not pure questions of law. [40] Section 45(2) provides that leave to appeal an arbitrators’ decision may be granted only on questions of law. It does not permit appeals on questions of fact, or questions of mixed fact and law. This distinction is one of significance. The scope of appeals permitted by arbitration legislation is narrow, because arbitration is intended to be complete alternate dispute resolution mechanism, rather than simply an extra layer of litigation: Student Assn. of the British Columbia Institute of Technology British Columbia Institute of Technology, 2000 BCCA 496 (CanLII), [2000] 10 WWR 256; Boxer Capital Corp. JEL Investments Ltd., 2015 BCCA 24 (CanLII), [2015] WWR 481 [Boxer Capital]. [41] Questions of law are questions about what the correct legal test is. Factual questions are questions about what actually took place between the parties. Mixed questions are questions about whether the facts satisfy the legal test. In other words, they involve applying legal standard to set of facts: Teal Cedar Products Ltd. British Columbia, 2017 SCC 32 (CanLII) at para 43 [Teal]; Canada (Director of Investigation and Research) Southam Inc., 1997 CanLII 385 (SCC), [1997] [42] Questions of contractual interpretation are almost always regarded as questions of mixed fact and law: Boxer Capital at para 9. In Sattva Capital Corp. Creston Moly Corp., 2014 SCC 53 (CanLII), [2014] SCR 633 [Sattva] Justice Rothstein made this point very clearly. He wrote: 50 With respect for the contrary view, am of the opinion that the historical approach should be abandoned. Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix. 51 The purpose of the distinction between questions of law and those of mixed fact and law further supports this conclusion. One central purpose of drawing distinction between questions of law and those of mixed fact and law is to limit the intervention of appellate courts to cases where the results can be expected to have an impact beyond the parties to the particular dispute. It reflects the role of courts of appeal in ensuring the consistency of the law, rather than in providing new forum for parties to continue their private litigation. For this reason, Southam Inc. identified the degree of generality (or “precedential value”) as the key difference between question of law and question of mixed fact and law. The more narrow the rule, the less useful will be the intervention of the court of appeal: If court were to decide that driving at certain speed on certain road under certain conditions was negligent, its decision would not have any great value as precedent. In short, as the level of generality of the challenged proposition approaches utter particularity, the matter approaches pure application, and hence draws nigh to being an unqualified question of mixed law and fact. See R. P. Kerans, Standards of Review Employed by Appellate Courts (1994), at pp. 103-108. Of course, it is not easy to say precisely where the line should be drawn; though in most cases it should be sufficiently clear whether the dispute is over general proposition that might qualify as principle of law or over very particular set of circumstances that is not apt to be of much interest to judges and lawyers in the future. [para. 37] 52 Similarly, this Court in Housen found that deference to fact-finders promoted the goals of limiting the number, length, and cost of appeals, and of promoting the autonomy and integrity of trial proceedings (paras. 16-17). These principles also weigh in favour of deference to first instance decision-makers on points of contractual interpretation. The legal obligations arising from contract are, in most cases, limited to the interest of the particular parties. Given that our legal system leaves broad scope to tribunals of first instance to resolve issues of limited application, this supports treating contractual interpretation as question of mixed fact and law. 53 Nonetheless, it may be possible to identify an extricable question of law from within what was initially characterized as question of mixed fact and law (Housen, at paras. 31 and 34-35). Legal errors made in the course of contractual interpretation include “the application of an incorrect principle, the failure to consider required element of legal test, or the failure to consider relevant factor” (King, at para. 21). Moreover, there is no question that many other issues in contract law do engage substantive rules of law: the requirements for the formation of the contract, the capacity of the parties, the requirement that certain contracts be evidenced in writing, and so on. 54 However, courts should be cautious in identifying extricable questions of law in disputes over contractual interpretation. Given the statutory requirement to identify question of law in leave application pursuant to s. 31(2) of the AA, the applicant for leave and its counsel will seek to frame any alleged errors as questions of law. The legislature has sought to restrict such appeals, however, and courts must be careful to ensure that the proposed ground of appeal has been properly characterized. The warning expressed in Housen to exercise caution in attempting to extricate question of law is relevant here: Appellate courts must be cautious, however, in finding that trial judge erred in law in his or her determination of negligence, as it is often difficult to extricate the legal questions from the factual. It is for this reason that these matters are referred to as questions of “mixed law and fact”. Where the legal principle is not readily extricable, then the matter is one of “mixed law and fact” .... [para. 36] [43] However, it is important to note that the mere fact that an arbitrators’ decision dealt with matter of contractual interpretation does not inevitably mean that the issues involved are questions of mixed fact and law, rather than questions of law. As Justice Gascon noted, in Teal, while questions involving application of facts are not always mixed questions, the court must be careful to maintain the proper distinction. At paras. 44-47 he wrote: 44 That said, while the application of legal test to set of facts is mixed question, if, in the course of that application, the underlying legal test may have been altered, then legal question arises. For example, if party alleges that judge (or arbitrator) while applying legal test failed to consider required element of that test, that party alleges that the judge (or arbitrator), in effect, deleted that element from the test and thus altered the legal test. As the Court explained in Southam, at para. ... if decision-maker says that the correct test requires him or her to consider A, B, C, and D, but in fact the decision-maker considers only A, B, and C, then the outcome is as if he or she had applied law that required consideration of only A, B, and C. If the correct test requires him or her to consider as well, then the decision-maker has in effect applied the wrong law, and so has made an error of law. Such an allegation ultimately challenges whether the judge (or arbitrator) relied on the correct legal test, thus raising question of law (Sattva, at para. 53; Housen, at paras. 31 and 34-35). Accordingly, such legal question, if alleged in the context of dispute under the Arbitration Act, and assuming the other jurisdictional requirements of that Act are met, is open to appellate review. These “extricable questions of law” are better understood as covert form of legal question where judge’s (or arbitrator’s) legal test is implicit to their application of the test rather than explicit in their description of the test than as fourth and distinct category of questions. 45 Courts should, however, exercise caution in identifying extricable questions of law because mixed questions, by definition, involve aspects of law. The motivations for counsel to strategically frame mixed question as legal question for example, to gain jurisdiction in appeals from arbitration awards or favourable standard of review in appeals from civil litigation judgments are transparent (Sattva, at para. 54; Southam, at para. 36). narrow scope for extricable questions of law is consistent with finality in commercial arbitration and, more broadly, with deference to factual findings. Courts must be vigilant in distinguishing between party alleging that legal test may have been altered in the course of its application (an extricable question of law; Sattva, at para. 53), and party alleging that legal test, which was unaltered, should have, when applied, resulted in different outcome (a mixed question). 46 From this standpoint, the characterization of question on review as mixed question rather than as legal question has vastly different consequences in appeals from arbitration awards and civil litigation judgments. The identification of mixed question when appealing an arbitration award defeats court’s appellate review jurisdiction (Arbitration Act, s. 31; Sattva, at para. 104). In contrast, the identification of mixed question when appealing civil litigation judgment merely raises the standard of review (Housen, at para. 36). 47 Given these principles, question of statutory interpretation is normally characterized as legal question. In contrast, identifying question, broadly, as one of contractual interpretation does not necessarily resolve the nature of the question at issue. Contractual interpretation involves factual, legal, and mixed questions. In consequence, characterizing the nature of the specific question before the court requires delicate consideration of the narrow issue actually in dispute. In general, though, as the Court recently explained in Sattva, contractual interpretation remains mixed question, not legal question, as it involves applying contractual law (principles of contract law) to contractual facts (the contract itself and its factual matrix): para. 50. [44] In this case, the questions that HAL seeks to raise on appeal are, at best, questions of mixed fact and law. While HAL alleges, among other things, that the majority’s decision failed to properly apply the ratio of the Supreme Court of Canada in Sattva, each of the proposed grounds of appeal cited deal with how the majority of the arbitration panel applied the legal standard set out in Sattva to the facts they found. The errors that HAL alleges were made by the majority do not relate to the application of an incorrect principle, failure to consider required element of legal test, or failure to consider relevant factors. Instead, HAL’s proposed grounds of appeal relate to the way in which the majority weighed certain factors, and applied the legal standard. Such proposed grounds of appeal, according to the leading authorities, are thus mixed questions, not pure questions of law. [45] This also applies to HAL’s argument that the majority erred in law by failing to consider the effect of the termination clause of the contract. In my view, the majority’s language is clear, throughout its reasons, that it considered the whole of the contract. This must be taken as including the termination clause. Furthermore, the issue of the termination clause was not relevant to the central issue of whether SecurTek was obligated by the IDSL or MIDSL to purchase certain number of licences from HAL. [46] Accordingly, HAL’s proposed grounds of appeal do not raise a pure issue of law. Even if I had found that HAL and SecurTek had not contracted out of s. 45(2) of the Act, HAL’s application for leave to appeal would have to be dismissed on that basis. CONCLUSION [47] For the foregoing reasons, HAL’s application is dismissed. SecurTek is entitled to the costs of this application. J. J.D. KALMAKOFF
HELD: The application for leave to appeal was dismissed. The court found that a term permitting an appeal from an arbitrator’s decision on an error of law did not fall into the category of the obvious and was not the same as an implied term, such as that of good workmanship in contracts for repair. The contractual language used by the parties was clear that they intended to resolve disputes by final and binding arbitration. Even if it had found that the parties had not contracted out of s. 45(2) of the Act, the application for leave would have been dismissed because the proposed grounds of appeal did not raise a pure issue of law.