Appealing a decision or responding to an appeal? You might want to review the Supreme Court’s recent decision in Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53, which contains important guidance on appellate practice and procedure. The case, out of British Columbia, involved a contractual dispute that went to arbitration and then the courts, with the parties fighting over the proper valuation of a finder’s fee related to a mining development. (See paras 2-10 for an overview of the facts.)
Justice Rothstein for the Court took the opportunity to provide some refreshers and clarifications on matters like leave to appeal and standard of review — crucial areas for all appeals, but ones that don’t often get the attention they deserve. Here are 10 key pointers from the decision on appellate practice and procedure, a few of them especially relevant to contracts and / or commercial arbitration cases:
- Contractual interpretation—or in Justice Rothstein’s words, “determining the legal rights and obligations of the parties under a written contract”—is a question of mixed fact and law, for the purposes of leave to appeal and for the standard of review on appeal. (See paras 43 and 49-51.) As the Court explained at para 50:
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.
- However, there may be an extricable question of law nestled inside the question of mixed fact and law, which could lead to a different result on leave to appeal, and would be reviewed for correctness on the appeal proper. In the contracts context, there may be an “extricable question of law” if the judge (or arbitrator) below applied a wrong principle; did not consider a necessary step or factor in a legal test; or misapplied a substantive rule related to contract formation and formalities (e.g. an issue as to the capacity of the parties, or a requirement that the type of contract at issue be in writing). However, an extricable question of law will be a “rare” occurrence in this context (para 55).
- Taking a purposive and principled approach to assessing the issue can help determine whether it’s a question of law, or a question of mixed fact and law. (See paras 51-52.) As Justice Rothstein explained at para 51:
One central purpose of drawing a 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 a new forum for parties to continue their private litigation. For this reason, Southam identified the degree of generality (or “precedential value”) as the key difference between a question of law and a question of mixed fact and law. The more narrow the rule, the less useful will be the intervention of the court of appeal…
- As a result, an issue of general interest and importance is more likely to be considered a question of law enabling appellate intervention. (See para 51.)
- On the other hand, an issue specific to the parties and their contract is more likely to be a question of mixed law and fact, and will attract appellate deference to the trial court (or the arbitrator, as the case may be). Justice Rothstein stated at para 52:
The legal obligations arising from a 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 a question of mixed fact and law.
- Appeals from commercial arbitration decisions are typically restricted to questions of law, and the standard of review will be reasonableness (much as it is in the judicial review of administrative decisions), “unless the question is one that would attract the correctness standard, such as constitutional questions or questions of law of central importance to the legal system as a whole and outside the adjudicator’s expertise” (para 106).
- A court considering whether to grant leave to appeal must make its decision in light of the standard of review that would apply on the appeal proper: “This requires a preliminary assessment of the applicable standard of review” (para 75).
This means that a party seeking leave must turn its mind to what the standard of review would be if leave were granted and frame its arguments accordingly. In an appeal from commercial arbitration, “the leave inquiry will ordinarily ask whether there is any arguable merit to the position that the arbitrator’s decision on the question at issue is unreasonable…” (para 75).
- The judge deciding whether to grant leave to appeal cannot bind the court deciding the merits of the appeal. First, “the leave court’s assessment of the standard of review is only preliminary and does not bind the court which considers the merits of the appeal” (para 75; emphasis added). Furthermore, any preliminary assessment of the merits by the leave court cannot bind the appeal court (para 122). To confirm: “A grant of leave cannot bind or limit the powers of the court hearing the actual appeal” (para 122). This makes sense, because otherwise, “treating the leave decision as binding would render an appeal futile” (para 124).
Of course, this discussion will only really apply where decisions on leave and on the merits are made in two separate judicial steps, as in commercial arbitration appeals. It will not be a concern in most civil appeals in Nova Scotia, where the same panel of the Court of Appeal will usually decide leave and the merits together.
- The Supreme Court of Canada may refuse leave to appeal “where an issue sought to be argued before it was not argued in the courts appealed from” (para 36).
- If leave is granted, appellants before the Supreme Court can argue an issue on appeal even if it was not listed in the application for leave, unless the Court has set out specific restrictions in the order granting leave and / or the Court in its discretion decides not to hear argument on the issue, e.g. because it was not argued in the courts below; there would be prejudice to the respondent; or the Court otherwise “considers it appropriate” (para 33).