In A.L. Sims and Son Ltd. v. British Columbia (Transportation and Infrastructure), 2022 BCCA 440, Justice Dickson held that a material misapprehension of evidence going to the core of the outcome of an arbitral award can amount to an extricable legal error on which a party can seek leave to appeal from the arbitral award. Sound familiar?
In this case, the provincial Ministry of Transportation and Infrastructure awarded the applicant, a road construction contractor, the contract for a road building project. The parties proceeded to arbitration after disputes arose about alleged differences in the character of the work from what was reasonably anticipated based on the tender documents. The arbitrator dismissed the applicant’s claims for additional compensation and an extension of time on the project, among other things. The applicant sought leave to appeal the arbitral award under s. 59 of the Arbitration Act, S.B.C. 2020, c. 2 alleging arguable errors with respect to 13 questions of law, including that the arbitrator had forgotten, ignored or misconceived evidence in a manner that affected the result.
The parties argued over the scope of appealable legal errors in an arbitration award, and in particular, whether misconceiving evidence in a manner that affected the result amounted to a legal error only if it is apparent on the face of the award. The parties disagreed on the interpretation of the B.C. Court of Appeal’s leave decision in Escape 101 Ventures Inc. v. March of Dimes Canada, 2021 BCCA 313. (The appeal had not yet been decided at 2022 BCCA 294 when this application was argued.) Justice Dickson summarized the parties’ positions. The applicant argued as follows:
“[78] In March of Dimes (Leave Application), Justice DeWitt-Van Oosten granted the applicant leave to appeal the dismissal of a claim brought under an asset purchase agreement on the basis that a question arose as to whether the arbitrator committed a legal error in interpreting a contractual provision by misapprehending the evidence in a manner that affected the result: at paras. 26–33. In doing so, she observed that contractual interpretation involves questions of mixed fact and law, and therefore an arbitral award that depends on contractual interpretation is only appealable where the applicant identifies an extricable question of law. Citing Sattva and Sharbern Holding Inc. v. Vancouver Airport Centre Ltd., 2011 SCC 23, she went on to state that an arbitrator applying an incorrect legal principle, failing to consider an element of a legal test or a relevant factor, and forgetting, ignoring or misconceiving evidence in a manner that affects the result can amount to an extricable error of law for purposes of s. 59: at paras. 20–21”.
The respondent argued that the scope of appealable legal errors was much narrower:
“[79]… In advocating for a narrower interpretation, the Ministry relies on Ecoasis Resort and Golf LLP v. Bear Mountain Resort & Spa Ltd., 2021 BCCA 285 regarding the importance of restraint in assessing applications for leave to appeal arbitral awards to preserve the integrity of the arbitration system as a forum for speedy and final adjudication. According to the Ministry, if a purported question of law arises from the “arbitral proceeding” rather than from the “arbitral award” it is not reviewable under s. 59. Instead, a review involving the record may be permissible on a set aside application to the BC Supreme Court under s. 58 of the Arbitration Act. The Ministry also says the scope of review for questions of fact and questions of mixed fact and law is not the same in the arbitration context as in the civil litigation context, and s. 59 is more restrictive than its predecessor provision in the 1996 Act. In particular, it says, the test for legal error based on a material misapprehension of evidence in the civil litigation context, as described in Sharbern, does not apply to an arbitral award under s. 59 of the Arbitration Act.
[80] In support of its restrictive interpretation of s. 59, the Ministry points to English arbitration law, which it argues is the source of British Columbia’s leave provision, citing MSI Methylation Sciences, Inc. v. Quark Venture Inc., 2019 BCCA 448 at para. 57. It also contends March of Dimes (Leave Application) is mistaken to the extent it suggests that a question of law arises under s. 59 where an arbitrator forgets, ignores or misconceives evidence in a manner that affects the result but is not apparent on the face of the award.”
Justice Dickson noted that after the parties had argued the application before her, the Court allowed the appeal in the March of Dimes on the basis that the arbitrator misapprehended the evidence and that misapprehension was central to his reasoning, which constituted an error of law subject to appeal. Justice Dickson held that she was bound by that decision – and in any event she agreed with it – and so a material misapprehension of evidence going to the core of the outcome of an arbitral award can amount to an extricable legal error:
“[81]…In reaching its conclusion, the Court considered and rejected the restrictive interpretation of s. 59 the Ministry proposes on this application. It also found the material aspects of s. 59 were unchanged from those of s. 31 in the 1996 Act, its predecessor leave provision.
[82] The respondent in March of Dimes (Main Appeal) has sought leave to appeal to the Supreme Court of Canada. Nevertheless, I am bound by this Court’s decision in that case, which is fully and persuasively reasoned and with which I agree. Specifically, I agree that a material misapprehension of evidence going to the core of the outcome of an arbitral award can amount to an extricable legal error for purposes of s. 59 of the Arbitration Act.”
Contributor’s Notes:
The distinction between errors of fact and errors of law is an important one given that appeals from arbitral awards are generally limited to errors of law. As this blog has previously noted, it can be queried whether characterizing a material misapprehension of the evidence as an extricable question of law can be reconciled with Sattva and the policy objectives of finality and deference to factual findings in arbitration that were espoused in that case (see B.C. – Material misapprehension of evidence is an extricable error of law – #662). The distinction between law and fact appears to be perpetually drawn, only for these two concepts to be drawn back together again.
As noted in the quote above, the Supreme Court of Canada is currently considering whether to grant leave to hear the March of Dimes decision. If the Supreme Court grants leave, it may well grapple with the different approaches and strains of case law identified by the parties here – and the fact that the British Columbia Court of Appeal appears to be an outlier on this issue.