Appealing an Arbitration Award on a Question of Law
PureFacts Financial Solutions Inc. v. Cheung:
In the Ontario Superior Court of Justice decision of PureFacts Financial Solutions Inc. et al. v. Cheung et al.,[1] Newton J. considered whether the Plaintiffs were entitled to leave to appeal from an arbitrator’s award decided against them. The Plaintiffs’ motion was decided based on s. 45(1) of the Arbitration Act, 1991 (the “Act”).[2]
Background
The Defendants were employees of the Plaintiffs who had each signed employment offer letters that contained a non-solicitation provision. After resigning from the Plaintiffs, the Defendants were approached by a former client of the Plaintiffs to respond to a Request for Proposals (“RFP”). The Plaintiff was also approached by the client for the same opportunity. The Defendants were shortlisted but the Plaintiff was not. The Plaintiff asserted that the Defendants used the Plaintiffs’ confidential and proprietary information in their proposal.
The arbitrator concluded that, by simply responding to the RFP, the Defendants did not breach their employment agreements, nor did their actions fall into the “breach of confidence category.”
The Plaintiffs argued that leave to appeal should be granted because the determination of the issues raised by it would have a significant impact on the financial position of the parties and their ability to carry on business. They argued that a different finding on any of the questions of law was likely to change the outcome of the arbitration.
The court’s decision
Section 45(1)(b) of the Act requires that the determination of law at issue will significantly affect the rights of the parties.[3]
Newton J. reviewed the Plaintiffs’ arguments relating to breach of confidence and non-solicitation, along with other errors allegedly made by the arbitrator. The question of whether the information acquired by the Defendants during their tenure with the Plaintiffs and subsequently used by the Defendants in their proposal constituted a breach of confidence involved a determination of the facts before the arbitrator and was therefore a question of mixed fact and law.
The arbitrator clearly acknowledged in his award that the information belonged to the Plaintiffs, and the evidence was that the list of bidders was confidential; there was no evidence that the Defendants knew that the Plaintiffs had been invited to bid.
Conclusion
The motion for leave to appeal was dismissed, and the Defendants were entitled to their costs. The arbitrator applied the correct legal principles. There was no error in law, nor was there an error which would significantly affect the rights of the parties. Newton J. found that the arbitrator’s decision was based upon findings of fact. In other words, Newton J. took an approach consistent with that typically taken by the courts on leave to appeal applications.
[1] 2022 ONSC 961; available online at https://www.canlii.org/en/on/onsc/doc/2022/2022onsc961/2022onsc961.html.
[2] S.O. 1991, c. 17; available online at https://www.ontario.ca/laws/statute/91a17.
[3] Ibid.