Unreasonable Exclusion of Claims by Arbitrator

Another example, this time from the Manitoba Court of Appeal, of a decision-maker stretching language too far.

In Darcis v. Manitoba, 2012 MBCA 49, an arbitrator was the guilty party, in respect of an agreement concluded between the Nisichawayasihk Cree Nation, Canada, Manitoba and the Manitoba Hydro-Electric Board. This agreement was an exception to a comprehensive settlement agreement concluded in 1977 in respect of damage to local communities caused by major hydro-electric projects. 

It permitted claims by individuals with a connection to the Community of South Indian Lake, in the following terms:
SIL Claim means a claim for loss or damage caused by an Adverse Effect advanced by a Claimant who, at the Date of this Agreement, or at the date the damage or loss arose

(a) was not ordinarily resident on Reserve but only if the damage or loss arose within the SIL Trapline Zone; or

(b) was ordinarily resident at or near the Community of South Indian Lake regardless of where the damage or loss arose.
Many individuals who had moved away from the Community claimed that they had suffered economic, social and cultural losses. The arbitrator concluded, however, that these claims were not permissible under the agreement, as they did not arise “within the SIL Trapline Zone”. Essentially, the arbitrator imposed the geographic limitation, SIL Trapline Zone, contained in subparagraph (a) on subparagraph (b). She commented that subparagraph (b) “thereby would not, on its face, appear to apply to individuals who may formerly have been residents of the community of South Indian Lake but were no longer ordinarily resident there”. Moreover, she held, because the word “or” had to be read as disjunctive, subparagraph (b) should be read as an exception. Thus subparagraph (a) was the relevant provision governing claimants not ordinarily resident on Reserve.

The Court of Appeal held that this was an unreasonable interpretation of the agreement. An additional condition had been read into subparagraph (b):

[63] The effect of her conclusion was to create a new qualifier to be able to claim under subpara. (b).  Not only does a claimant have to have been ordinarily resident on the “Date of this Agreement” or the date the loss or damage arose, but, according to the arbitrator, the claimant must continue to reside at South Indian Lake to be able to claim under subpara. (b) for loss or damage not arising within the SIL Trapline Zone 

This stretched the language of the agreement too far. Had the arbitrator offered some explanation (from the purpose of the agreement, for example), her decision might have passed muster, but her failure to do so proved fatal:

[66] To summarize, an analysis of the arbitrator’s reasoning demonstrates that she failed to give effect to all the words of the SIL Claim definition, particularly the words “regardless of where the damage or loss arose” in subpara. (b).   She failed to consider the “qualifiers” that she identified early in her analysis and created a new qualifier for claims that may be made by those who qualify as ordinarily resident under subpara. (b).  As a result, I cannot say that she provided the necessary justification for her conclusion.  Nor can I say that her analysis is transparent or intelligible in the sense that “[t]ransparency requires a decision maker to clearly state the basis for the decision reached [and] [i]ntelligibility requires a decision maker to reach a result that clearly follows from the reasons provided” (Jakutavicius v. Canada (Attorney General), 2011 FC 311 (CanLII), 2011 FC 311 at para. 31, 30 Admin. L.R. (5th) 30).

This conclusion seems sound. To stretch language is one thing. Not to explain the stretching is quite another.

It is nonetheless striking that the Court of Appeal did not refer to the second element of the reasonableness standard set out by the Supreme Court of Canada in Dunsmuir. Given the presence of the disjunctive “or”, could it really be said that the arbitrator’s conclusion that two separate categories had been created did not fall within a range of acceptable outcomes? Probably not, because of the arbitrator’s failure to square her conclusion with some of the language of the agreement.

This demonstrates that one should be careful about falling back on epigrams about ranges of reasonable decisions and the like. The onus is always on the applicant to point to some shortcoming in the decision-maker’s reasoning process or conclusion. Absent this, simply raging against the ‘unreasonableness’ of a decision will be unavailing. For his or her part, the respondent had better be able to offer an explanation for whatever shortcoming has been identified. Otherwise, like the arbitrator here, they will find it difficult to convince a reviewing (or appellate) court.

This content has been updated on June 11, 2014 at 09:48.