In Vancouver School District No. 39 v Kingsgate Property Ltd., 2026 BCCA 98, the Court, in the context of an appeal of an arbitral award interpreting a lease provision in a rent renewal dispute, held that the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration v Vavilov, 2019 SCC 65 (“Vavilov”), applies to appeals of arbitral awards on questions of law brought pursuant to statutory appeal rights. As a result, in British Columbia, a correctness standard of review now applies to arbitral appeals on questions of law. This decision adds to the increasing, and increasingly inconsistent, body of Canadian appellate case law on Vavilov’s impact on the standard of review applicable to appeals of arbitral awards.
Background – This appeal arose from an arbitral award in a commercial rent renewal dispute.
The Board of Education of School District No. 39 (Vancouver) (“VSB”), as lessor, and Royal Oak Holdings Ltd. (“Royal Oak”), as lessee, were parties to a 1972 lease of land upon which Royal Oak was to build a mall. The lease was for an initial 25-year term and contained 10-year renewal options, up to a total of 99 years. The lease provided that rent for each renewal term would be based on the market value of the land.
Following the expiry of the initial lease term in 1997, a dispute arose as to the market value of the land for the 1997-2007 renewal term. VSB and Royal Oak arbitrated the dispute, which resulted in a 1999 arbitral award respecting the interpretation of the market value provision of the lease.
In 2005, Royal Oak assigned its rights under the lease to Kingsgate Property Ltd. (“Kingsgate”). Kingsgate and Beedie Development LP (“Beedie”) together agreed to observe Royal Oak’s lease covenants.
A further dispute arose as to the market value of the land for the 2017-2027 renewal term. VSB commenced an arbitration in 2020, resulting in a 2022 arbitral award in which the tribunal majority interpreted the market value provision of the lease differently from the interpretation given in the 1999 award.
Kingsgate and Beedie applied for leave to appeal the 2022 award pursuant to s. 31 of the Arbitration Act, RSBC 1996, c 55. The Supreme Court of British Columbia granted leave to appeal the award on two questions of law which related to the proper interpretation of the 1999 arbitral award and whether the doctrine of issue estoppel should have been applied. For further detail on the leave decision, see this previous Arbitration Matters case note by Jonathan Eades: B.C. – Issue estoppel may bind tribunal to prior arbitration award – #741 – Arbitration Matters.
In December 2024, a judge of the British Columbia Supreme Court set aside the 2022 arbitral award, finding that the award was based on “an erroneous conception of the issues to which estoppel applied”. Declining to remit the matter of valuation to the tribunal, the chambers judge instead applied issue estoppel and interpreted the market value provision of the lease in a manner consistent with that in the 1999 arbitral award.
The standard of review –
(i) The Supreme Court decision – In considering the standard of review to apply to the 2022 arbitral award, the chambers judge stated that British Columbia courts had not yet determined at an appellate level whether the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration v Vavilov, 2019 SCC 65 (“Vavilov”), which addressed the standard of review applicable to appeals from administrative tribunals, had changed the standard of review for appeals of commercial arbitration awards from the framework set out in Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53 (“Sattva”), and Teal Cedar Products Ltd. v British Columbia, 2017 SCC 32 (“Teal Cedar”).
Under that framework, the standard of review applicable to appeals of arbitral awards on questions of law is reasonableness, unless (among other things) the question is one that would attract the correctness standard (e.g. constitutional or jurisdictional questions). Under the Vavilov framework, the appellate standards set out in the Supreme Court of Canada’s decision in Housen v Nikolaisen, 2002 SCC 33 dictate the standard of review applicable to appeals of arbitral awards on questions of law. Where a party appeals an arbitral award on a question of law pursuant to statutory appeal rights which provide for court supervision, Vavilov dictates a correctness standard. This is because the British Columbia Arbitration Act, SBC 2020, c 2 provides for appeals of arbitral awards.
The chambers judge determined that it was unnecessary to determine the appropriate standard of review in this case, as both parties argued that they would succeed in the appeal regardless of whether a correctness or reasonableness standard applied.
(ii) The Court of Appeal decision – VSB appealed the chamber judge’s decision to the Court of Appeal for British Columbia. In a split decision, that Court dismissed the appeal.
The Court took this opportunity to decide whether Vavilov changed the standard of review framework for appeals of arbitral awards. Following a review of academic commentary (including a 2021 article from the Canadian Journal of Commercial Arbitration co-authored by my fellow Arbitration Matters contributor James Plotkin) and court decisions from different Canadian provinces, the majority and minority justices of the Court ultimately agreed that Vavilov’s revised framework does apply to court appeals from arbitral awards, such that appeals under the Arbitration Act are subject to the appellate standards set out in Housen v Nikolaisen, 2002 SCC 33. This means that where a party appeals an arbitral award on a question of law pursuant to statutory appeal rights which provide for court supervision, a correctness standard applies.
Therefore, the Court held that the standard of review applicable to the two questions of law for which leave to appeal was granted was correctness. The standard applicable to the chambers judge’s decision not to remit the case to arbitration (which was discretionary, not a question of law) was reasonableness.
The majority and minority justices diverged on their application of the standard. The majority dismissed the appeal, agreeing with the chambers judge that the 2022 arbitral panel had erred in freshly interpreting the lease’s market value provision and in considering irrelevant factors when deciding not to apply the doctrine of issue estoppel such that the lease interpretation from the 1999 award would be maintained. The minority would have allowed the appeal in part, on the basis that the 2022 arbitral tribunal did not err in its application of issue estoppel or in interpreting the lease.
Commentary:
Firstly, and as noted in Jonathan’s previous Arbitration Matters case note on the leave to appeal decision in this case (see B.C. – Issue estoppel may bind tribunal to prior arbitration award – #741 – Arbitration Matters), the timing of the arbitration underlying this decision is noteworthy. The arbitration which led to the 2022 arbitral award was commenced weeks before British Columbia’s Arbitration Act, RSBC 1996, c 55, was repealed and replaced by the Arbitration Act, SBC 2020, c 2. This meant the award was subject to the former statute’s definition of “court” as “the Supreme Court”, which governed the forum for arbitral appeals. Had the award been subject to the new statute, then pursuant to s. 59(2), the appeal properly would have gone directly to the Court of Appeal (with leave). This is unlikely to have impacted the result of the court’s standard of review analysis, as both statutes expressly provide for court involvement in the appeal process.
Secondly, the split decision in this appeal arguably undermines the rationale for the court’s determination that a correctness standard of review should apply to appeals from arbitral awards on questions of law. The BC Court of Appeal notes, at paragraph 162, that where parties opt to not exclude the statutory right to appeal (as permitted by s. 35 of the old arbitration statute, and s. 59 of the new arbitration statute), this signals that they prioritize “legal accuracy” from the arbitration, and this supports the appropriateness of applying a correctness standard. However, the concept of “legal accuracy” is a moving target; a fundamental feature of the common law system that it develops and evolves. This reality is highlighted in this case by the court’s split decision. If the majority and minority justices could not agree on what was the legally accurate result, it is difficult to justify the idea that applying a correctness standard necessarily leads to more accurate or correct outcomes.
Finally, this decision joins the growing body of appellate case law on the impact of Vavilov on the standard of review applicable to appeals of arbitral appeals. These decisions are not consistent. The BC Court of Appeal’s decision in this case is consistent with the decision of the Court of Appeal for the Northwest Territories in Northland Utilities (NWT) Limited v Hay River (Town of), 2021 NWTCA 1. However, it is inconsistent with the Manitoba Court of Appeal’s decision in Buffalo Point First Nation v Buffalo Point Cottage Owners Association Inc., 2025 MBCA 72, where the court held that the reasonableness standard of review set out in Sattva and Teal Cedar remains applicable in the wake of Vavilov.
For more detail on the Northland Utilities case, see N.W.T. – Court applies Vavilov to commercial arbitration awards subject to statutory right of appeal – #419 – Arbitration Matters. For discussion on the Buffalo Point First Nation case, see Manitoba – First CA finding reasonableness standard applies to commercial award appeals – #921 – Arbitration Matters. The BC Court of Appeal’s decision in this case may be disappointing to some in the arbitration community, as it favours the correctness standard of review which affords less deference to arbitral awards and elevates the court’s role in supervising the arbitration process. This may encourage more appeals of arbitral awards in BC than if a more deferential standard were to apply. However, there remains hope that the increasing disparity in appellate interpretations of Vavilov across the provinces will entice the Supreme Court of Canada to revisit the issue and set a national standard that recognizes the principle of finality in commercial arbitrations and affords further deference to arbitral awards.