In CIMIC Morningstar Investments Ltd. v. Chandos Construction Ltd., 2026 BCCA 2, the Court denied leave to appeal pursuant to s. 59 of the Arbitration Act, S.B.C. 2020, c. 2 (the“Act”) with respect to alleged errors of law in an arbitral award concerning liability and damages for construction delays. The arbitrator found that the applicant/owner, CIMIC Morningstar Investments Ltd. (“CIMIC”), had materially contributed to delay through design changes and late approvals and awarded the general contractor $6.5 million in damages, interest, and costs. The Court ruled that none of the four grounds alleged by CIMIC raised questions of law. What CIMC argued were the arbitrator’s misapprehensions of the evidence going to the outcome (which this Court has found constitutes an error of law, most memorably in Escape 101 Ventures Inc. v. March of Dimes Canada, 2021 BCCA 313) was actually a challenge to the arbitrator’s weighing of the evidence.
Background – CIMIC invited bidders to enter a CCDC-2 contract to construct a mixed-use building. CIMIC was responsible for the building design. The successful bidder for the construction works, respondent/general contractor (“Chandos”), entered into a $20 million fixed price contract with CIMIC. The project experienced major delays. In arbitration, CIMIC faulted Chandos’ planning, scheduling, and management. Chandos claimed CIMIC’s deficient and ever-changing design caused the project delays. Both parties claimed substantial damages.
The Arbitral Award –The arbitrator rendered a lengthy award. The Court succinctly summarized the arbitrator’s conclusions:
“[11] In the partial award decision, the arbitrator largely agreed with the position advanced by Chandos. She found that construction was delayed by acts or omissions of CIMIC and its agents. She determined that Chandos complied with the contractual notice requirements applicable to its delay claims and found CIMIC liable for delay and financing costs. In reaching this conclusion, the arbitrator ruled that CIMIC was estopped from advancing the position that Chandos was disentitled to damages for delay based on its completion of contract change forms indicating zero days of additional delay. The arbitrator also rejected CIMIC’s position that it was entitled to invoke a liquidated damages clause when Chandos failed to finish the work by the substantial completion date.”
Leave to appeal decision – The Court summarized the key facts with express reference to the arbitral award. It then set out the legal principles governing leave applications under s. 59 of the Act, noting that the threshold question was whether a question of law “can be clearly perceived and identified.”
The Court then considered whether any of the grounds advanced by CIMIC raised questions of law.
Ground 1: Interpretation of the Contractual Notice Provision
CIMIC maintained the arbitrator erred in law in interpreting the contractual notice requirements applicable to Chandos’ delay claims. The Court cited the arbitrator’s lengthy findings regarding Chandos’ delay notices, delay claims, and delay-related meetings. The Court ruled that the arbitrator’s reasons, read as a whole, reflected a finding that Chandos complied with the notice provision, which was “at best, a question of finding of mixed fact and law” not amenable to appeal.
Ground 2: Application of the Doctrine of Promissory Estoppel
In arbitration, CIMIC argued Chandos’ delay claim should fail due to representations on change order forms stating there were “zero” days of delay. Chandos presented evidence that CIMIC said not to claim time extensions within change orders and to advance a global delay claim at a later time. The arbitrator accepted Chandos’ evidence and found that CIMIC was estopped from relying on the “zero” day change order forms.
CIMIC argued in the leave to appeal application that the arbitrator erred in imposing an estoppel without finding that CIMIC had made “clear and unequivocal” representations.
The Court rejected this argument:
“[37] I do not accept CIMIC’s position that the arbitrator’s failure to use the phrase “clear and unequivocal” in her reasons is properly framed as a question of law. … At most, CIMIC’s complaint is that the arbitrator applied the doctrine of promissory estoppel too loosely, in circumstances in which CIMIC contends that its assurances were not sufficiently “clear and unequivocal”. I therefore agree with Chandos that CIMIC’s promissory estoppel argument, although framed as a question of law in an effort to meet the test for leave to appeal, is, in reality, a complaint about how the arbitrator applied the legal test for promissory estoppel to the facts of the case.”
Ground 3: Consideration of the Prevention Principle
CIMIC sought to appeal the arbitrator’s conclusion that it was not entitled to withhold payment to Chandos under a contractual liquidated damages clause. CIMIC maintained that the arbitrator erred in law by relying on the common law “prevention principle”, i.e., where a fixed completion date is lost due to owner interference, the owner cannot enforce liquidated damages for delay.
CIMIC conceded that success on this ground was contingent on the arbitrator also having erred in finding that Chandos had fulfilled the notice requirements for an extension of time. As in Ground 1, the Court found it had no jurisdiction to disturb the arbitrator’s mixed fact and law finding that Chandos successfully engaged the extension provision in the contract.
Ground 4: Misinterpretation of Material Evidence
CIMIC alleged the arbitrator erred in law by misapprehending evidence that led to the conclusion that Chandos was entitled to an extension of time and reimbursement of delay costs.
In the arbitration, CIMIC contended that Chandos failed to include the time required for mechanical and electrical rough-ins (“M&E rough-ins”) in its baseline schedule. The arbitrator rejected this argument, finding there was “no fact evidence that the M&E rough-ins were not included.”
On leave to appeal, CIMIC maintained that the baseline schedule plainly showed there were no M&E rough ins.
The Court ruled at follows:
“[58]…This argument overlooks the testimony of Chandos’ senior project matter (accepted by the arbitrator), to the effect that M&E rough‑ins were in fact included within the scope of the interior finishing work in the original baseline schedule.
[59]…[W]hat CIMIC describes as a misapprehension of evidence amounting to an error of law is, in reality, a challenge to the arbitrator’s weighing of the evidence. It follows that this ground of appeal does not raise a question of law.
…
[66] With respect to…misapprehension of evidence…in my view, this ground of appeal stands no chance of success. Although CIMIC argues that the arbitrator made findings that without any evidence to support them, I agree with Chandos that CIMIC’s position is based on a selective assessment of the record, and I consider it very unlikely that a division of the Court would be prepared to revisit the arbitrator’s factual findings based on her assessment of the evidence….”
The Court similarly concluded that the other grounds of appeal, had no arguable merit, stood no chance of success, and were bound to fail on the basis of the arbitrator’s factual findings.
Contributor’s Notes:
I restrict my comments to a few points.
First, one of the strengths of this structured decision was the precise and frequent identification throughout to the arbitrator’s factual findings and determinations. This was an award-centric review.
Second, the proposed questions of law alleged to have arisen out of the award were not set out in the Court’s reasons. Instead, four “grounds” of appeal were listed. The precise questions of law that the applicant may have sought leave to argue are not manifest. Leave to appeal decisions that state the applicant’s proposed question(s) of law are easier to track against the requirements of the Act. See the immediate example of Seylynn (North Shore) Development Limited Partnership v. Seylynn (North Shore) MP Ltd., 2026 BCCA 78 at para. 13.
Third, and most substantially, this decision is the latest BCCA case considering misapprehension of material evidence as a question of law in an arbitral context. Readers of Arbitration Matters will recognize this subject is a horse which has been flogged before: see, for instance, B.C. – Material misapprehension of evidence is an extricable error of law – #662 – Arbitration Matters; B.C. – Court adopts award-centric review for questions of law – #869 – Arbitration Matters; and Arbitration Appeals on Questions of Law in Canada: Stop Extricating the Inextricable! (2023) 3 Canadian Journal of Commercial Arbitration No. 2, 138-166.
But the horse is not dead. Not in B.C. Not when the Court summarizes the law as follows:
“[15] An extricable error of law arises where the arbitrator applies an incorrect legal principle; fails to consider an element of a legal test; fails to consider a relevant factor; or forgets, ignores or misconceives evidence in a material way: Escape 101 at para. 21, citing Sattva at para. 53; Sharbern Holding Inc. v. Vancouver Airport Centre Ltd., 2011 SCC 23 at para. 71.”
Neither of the cited Supreme Court of Canada decisions stands for the above statement, not in full. Instead, a mixing and matching of concepts from different regimes has occurred, leading to a summary of law not in keeping with Sattva, the seminaldecision concerning arbitration appeals.
Recall, again, Justice Rothstein stated as follows for a unanimous Supreme Court in Sattva:
“[104]…the AA forbids review of an arbitrator’s factual findings. In the context of commercial arbitration, such a provision is absolute.”
The BCCA cited and accepted this passage in Boxer Capital Corporation v. JEL Investments Ltd., 2015 BCCA 24:
“[10] When leave is granted to appeal an arbitral award, the reviewing court is bound by the arbitrator’s factual findings (Sattva at para. 104). The normal ‘palpable and overriding error’ standard does not apply; the arbitrator’s factual findings simply cannot be disturbed….”[emphasis added]
In Richmont Mines Inc. v. Teck Resources Limited, 2018 BCCA 452, the Court of Appeal stated:
“[9] Teal Cedar and Sattva explained that: (i) the courts’ jurisdiction to grant leave to appeal is limited to questions of law alone; there is no jurisdiction to grant leave to review an arbitrator’s findings of fact or mixed fact and law, even if those findings may be erroneous….” [emphasis added]
In 2020, B.C. repealed and replaced the former domestic arbitration legislation considered in Sattva. In the Act, the cornerstone principle that the arbitrator alone determines the facts was buttressed with a provision not before the courts in Sattva, Boxer, or Richmont.
Under s. 28(1), it is the arbitral tribunal alone who “…decide[s] all evidentiary matters, including the admissibility, relevance, materiality and weight of any evidence, and may draw such inferences as the circumstances justify.” Recall s. 4 states that a court must not intervene in matters governed by the Act, unless so provided. Section 28(1) makes no provision for court intervention or review of evidentiary matters.
Paradoxically, however, following these cornerstone arbitration decisions and the 2020 reforms, questions concerning the misapprehension of evidence are now accepted for appeals under the Act.
The subject decision relies on the passage in B.C. law where arbitration and civil trials were, with respect, conflated. The leave to appeal decision in Escape 101 Ventures Inc. v. March of Dimes Canada, 2021 BCCA 313, stated as follows:
“[21]…A question of law may also arise where an arbitrator has forgotten, ignored or misconceived evidence and that error is shown to have affected the result of the arbitration: Sharbern Holding Inc. v. Vancouver Airport Centre Ltd., 2011 SCC 23 at para. 71. See also Armstrong v. Armstrong, 2012 BCCA 166 at paras. 65–67….”
Neither Sharbern nor Armstrong stand for the proposition set out. Neither case considered the prohibited review of absolute findings of fact of an arbitrator. Instead, factual findings of trial judges were in issue.
Justice Rothstein explained as follows for a unanimous Supreme Court in the review of the trial decision in Sharbern at para. 71:
“…When a question of mixed fact and law is at issue, the findings of a trial judge should be deferred to unless it is possible to extricate a legal error… Within this narrow scope of review, an appellate court may ‘reconsider the evidence’ proffered at trial when there is a ‘reasoned belief that the trial judge must have forgotten, ignored or misconceived the evidence in a way that affected his [or her] conclusion’ and thereby erred in law….”
In Sattva (decided in 2014), Justice Rothstein made no mention of his reasons in Sharbern (decided in 2011). This makes sense. The factual findings in a civil trial are not absolute and appellate review of a trial judge’s findings of fact is not forbidden. In Sharbern, several key findings at trial were indeed overturned following appellate review.
The inquiry in appellate review of arbitral awards takes place in a tightly defined regime tailored to be fundamentally different from appellate review in the civil trial context:
Again, from para. 104 of Sattva: “Appellate review of commercial arbitration awards takes place under a tightly defined regime specifically tailored to the objectives of commercial arbitrations….”
The BCCA in Boxer stated as follows at para. 4: “When sitting on appeal from an arbitral award, a court’s jurisdiction is narrow. The inquiry differs fundamentally from a trial, and even from a judicial review of an administrative decision.”
Notwithstanding such rulings, augmented by s. 28(1), since March of Dimes, parties in B.C. seeking leave to appeal from arbitration awards allege that the arbitrator misconceived evidence. This occurred in the subject decision. Parties are thereby encouraged to place portions of the underlying factual record before the court for review to determine whether the evidence was misconceived.
Other Canadian jurisdictions with similar appeal provisions in arbitration legislation have yet to follow the approach in March of Dimes. There is irony here given that the Act has the most restrictive arbitration appeal regime in the country, with no appeals on questions of fact or mixed fact and law. And yet a body of law has emerged in B.C. that allows appeals on misapprehensions of evidence.
As matters stand, imagine explaining to a client that in a B.C. arbitration appeal, review of the arbitrator’s findings of fact is forbidden, the findings of fact are absolute, the findings of fact simply cannot be disturbed, even if the findings are erroneous. However, if the arbitrator forgets, ignores or misconceives evidence in a material way, an appeal may be brought to review and potentially overturn the arbitrator’s findings of fact.
Until a future appellate decision reconciles the decisions in this area with consideration of sections 4 and 28(1), or until the legislature intervenes again, arbitration evidentiary appeal incertitude will continue on the West Coast.