Meszaros v 464235B.C. Ltd., 2021 BCSC 2021, concerned a petition to have the Court set aside or, alternatively, to grant leave to appeal, two awards related to costs where a party failed to apply within the time limit provided under the previous B.C. Arbitration Act: Arbitration Act, R.S.B.C. 1996, c. 55. The arbitrator had found that the 30-day time limit for seeking costs could be subject to an estoppel that prevented the petitioner from relying on it to challenge the ability of an arbitrator to make an award of costs outside the time limit. Justice D. MacDonald of the British Columbia Supreme Court denied the application to set aside the award but granted leave to appeal on the issue of whether an estoppel could arise on the facts of this case as found by the Arbitrator.
Sections 11(5) and 11(6) of the previous B.C. Act provided that, if an arbitrator did not address costs, a party could apply for them within 30 days of the award. If no application was made, the parties were to bear their own costs. The award on the merits in this case did not address costs and the respondent, 464235 B.C. Ltd. (the “Company”), applied to the arbitrator for costs 62 days after it was issued. In response, the petitioner sought and ultimately obtained the production of the Company’s solicitors’ file to assess the application. He then filed a response where, in addition to responding to the Company’s costs application, he made his own claim for costs. He then later filed a sur-reply in response to the Company’s reply to his application. It was only then that the petitioner realized that the Company had filed its application outside the time limit (he was largely unrepresented throughout) and promptly raised an objection on that basis. The arbitrator denied the objection and awarded costs. The arbitrator determined that he was not prevented from making a costs award because of the petitioner’s conduct in responding to the application for costs. He found that this conduct gave rise to an estoppel that operated to prevent the petitioner from relying on his legal right to challenge the ability of the arbitrator to make the award of costs.
The petitioner applied to the Court to set aside the costs awards for want of jurisdiction, arguing that sections 11(5) and 11(6) of the previous Act limited the arbitrator’s jurisdiction to award costs. Justice MacDonald found that because the parties could have contracted out of the time limit by virtue of section 44 of the previous Act, sections 11(5) and 11 (6) were permissive (as opposed to mandatory) and private (as opposed to public) in nature. Given this and relying on the authority of Chan v. Lee (Estate), 2004 BCCA 644 and McHenry Software Inc. v. ARAS 360 Incorporated, 2018 BCSC 586, she found that the rights found in sections 11(5) and 11(6) could be subject to an estoppel that would prevent a party from relying on them. As a result, she found that the arbitrator did not exceed his jurisdiction in denying the objection and awarding costs.
However, Justice MacDonald granted leave to appeal the costs award on the basis of the petitioner’s contention that an estoppel not could have arisen on the facts as found by the arbitrator. The previous Act provided that the Court could grant leave to appeal only on a question of law where it satisfied at least one of three other provisions, including one that required that the importance of the result to the parties justifies the intervention of the court and the determination of the issue may prevent a miscarriage of justice. Justice MacDonald found that the issue of whether an estoppel could arise on the facts as found was an extricable legal issue because the challenge on appeal was directed to the “legal conclusion imposed on the facts as found” (para. 57). Having found a legal error, she also found that the appeal could “prevent a miscarriage of justice because the award of costs is significant, and the alleged legal error could affect the result of the case” (para. 63). She noted the point of law raised had arguable merit, in her view, on the basis of the case Newfoundland and Labrador (Attorney General) v. Snow, 2005 NLTD 31, which was cited as authority for the proposition that the mere participation in a legal process initiated by another party is not sufficient to create an estoppel.
The British Columbia Court of Appeal has stated a number of times that leave to appeal should only be granted “where questions of law can be clearly perceived and delineated” to preserve the integrity of the arbitration system. See: Elk Valley Coal Partnership v. Westshore Terminals Ltd., 2008 BCCA 154 at para. 17 recently cited in Allard v. The Owners, Strata Plan VIS 962, 2019 BCCA 45 (CanLII).
The Supreme Court of Canada noted in Canada (Director of Investigation & Research) v. Southam Inc., 1997 CanLII 385 (SCC),  1 S.C.R. 748 (“Southam”) that “the distinction between law on the one hand and mixed law and fact on the other is difficult”. It characterized the distinction as follows at para. 35:
“Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests.”
In this case, Justice MacDonald noted that the issue “on its face” appeared to be one of mixed fact and law and that the arbitrator articulated the correct legal test. However, she characterized the issue (of whether the arbitrator erred by applying the principle of estoppel to the facts as found) as an extricable error of law. Her reasoning was “[the petitioner] is not asking me to engage with the facts. In other words, he challenges the legal conclusion imposed on the fact as found. In my view, this is a question of law.” No authority was cited in support of this conclusion.