In Bear Mountain Resort & Spa Ltd. v. Ecoasis Resort and Golf LLP, 2025 BCCA 368, the B.C. Court of Appeal dismissed a review application from a Chambers Judge’s decision refusing leave to appeal an arbitral award under subsection 59(4) of B.C.’s Arbitration Act, SBC 2020, c 2 [Act]. The Court found no error in the Chambers Judge’s conclusion that the eight grounds the applicant raised concerned questions of mixed fact and law, which cannot be appealed under the Act.
Background – As of this writing, the Chambers Judge’s decision is unavailable online and the Court provided scant background on the parties and their dispute. What we do know is that they have been in one since April 2020. After the respondent (Ecoasis) sued the applicant (Bear Mountain) in court, the parties agreed to submit their dispute to arbitration.
The arbitration was bifurcated. In a liability award, the arbitrator apparently found Bear Mountain committed “various breaches of contract” [para. 4]. Bear Mountain tried and failed to obtain leave to appeal the liability award. In his damages award, the arbitrator awarded Ecoasis a cumulative $2,058,017.63. Part of this sum was for a loss of opportunity to obtain certain other contracts.
Chambers Judge’s decision – Bear Mountain alleged an ambitious eight extricable legal errors in the damages award, that the arbitrator had: “(1) erroneously awarded damages against an entity that was not a party to the operations agreement; (2) applied an incorrect legal principle when assessing Ecoasis’ mitigation efforts; (3) assessed damages and applied contingency reductions based on speculation only; (4) made a liability finding against Bear Mountain contrary to conclusions reached in the liability award; (5) improperly assessed and awarded damages for this additional liability; (6) misapprehended the evidence about which entities were parties to the contract; (7) misapprehended the evidence of an expert witness about whether rental payments should have been factored into that witness’s calculations; and (8) misapprehended the content and impact of certain receiver reports.”
The Court summarized the Chambers Judge’s basis for rejecting Bear Mountain’s characterization of these alleged errors at paragraphs 10-15 of its reasons. I will not detail them here (but will come back to the nature of the alleged errors in my Contributor’s Notes below). In conclusion, the Court noted that the Chambers Judge identified no extricable error of law.
Panel decision – A three-judge panel unanimously upheld the Chambers Judge’s conclusions that none of the eight grounds of appeal raised an extricable question of law. On the review application, Bear Mountain narrowed its argument, focusing on three alleged errors: (1) the arbitrator relied on pure speculation in assessing damages; (2) the arbitrator made a new and contradictory finding of liability; and (3) the arbitrator misapprehended the evidence.
On the first ground, the Court provided a fairly detailed account of the arbitrator’s reasoning and the evidence. It found the arbitrator in fact dealt with relevant evidence and explained why he preferred that which he relied upon. Specifically, Bear Mountain’s allegation that the arbitrator relied only on summary documents and failed to consider the underlying evidence was unsubstantiated.
On the second ground, the Court rejected Bear Mountain’s argument that the arbitrator effectively exceeded his jurisdiction by awarding damages relating to a liquor license despite finding, in the liability award, that Bear Mountain had no contractual obligation to transfer the license to Ecoasis. The Court stated that Bear Mountain had “misinterpreted” the award. Based on the limited information contained in the reasons, it seems the distinction between the Court’s reading and Bear Mountain’s reading is nuanced.
On the third ground, the Court disagreed that the arbitrator had misapprehended the evidence. The Court recognized that a misapprehension of evidence is an error of law when it occurs. It simply was not impressed with Bear Mountain’s argument that it occurred here. It went through each of the alleged misapprehensions and showed where it saw the evidentiary foundation in the record.
Before concluding, the Court referred to the oft-cited Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, para. 45:
“[45] Courts should … exercise caution in identifying extricable questions of law because mixed questions, by definition, involve aspects of law. The motivations for counsel to strategically frame a mixed question as a legal question — for example, to gain jurisdiction in appeals from arbitration awards or a favourable standard of review in appeals from civil litigation judgments — are transparent … A narrow scope for extricable questions of law is consistent with finality in commercial arbitration and, more broadly, with deference to factual findings. Courts must be vigilant in distinguishing between a party alleging that a legal test may have been altered in the course of its application (an extricable question of law …), and a party alleging that a legal test, which was unaltered, should have, when applied, resulted in a different outcome (a mixed question).”
The Court then noted that “the questions of law that Bear Mountain says arise from the damages award are not clearly discernible” (emphasis added). It dismissed the application, with costs.
Contributor’s Notes
The Court relied on the oft-cited passage from Teal Cedar that courts should “exercise caution in identifying extricable questions of law because mixed questions, by definition, involve aspects of law”, and that “[a] narrow scope for extricable questions of law is consistent with finality in commercial arbitration and, more broadly, with deference to factual findings” [para. 45].
As far as caution in identifying extricable errors, it is hard to disagree with the notion that courts should not be careless in taxonomizing legal questions. The standard of review varies depending on a question’s classification as law, fact or mixed. In the arbitration context, under some domestic arbitration statutes, whether an appeal lies at all depends on this. No doubt courts should exercise care at this step.
The comment about a narrow conception of extricable errors of law being “consistent with the finality of commercial arbitration” bears a little more scrutiny. Respectfully, this seems to be an instance of the tail wagging the dog. Whether something is (or ought to be considered) a question of law has nothing to do with whether the first instance adjudicator is a judge, an administrative decision-maker or an arbitrator. The Supreme Court has many times told us what a question of law is, a question about whether the decision-maker identified and applied the correct legal test. In Canada (Director of Investigation and Research) v. Southam Inc., 1997 CanLII 385 (SCC), [1997] 1 SCR 748, that Court said:
“35 Section 12(1) of the Competition Tribunal Act contemplates a tripartite classification of questions before the Tribunal into questions of law, questions of fact, and questions of mixed law and fact. 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. A simple example will illustrate these concepts. In the law of tort, the question what “negligence” means is a question of law. The question whether the defendant did this or that is a question of fact. And, once it has been decided that the applicable standard is one of negligence, the question whether the defendant satisfied the appropriate standard of care is a question of mixed law and fact. I recognize, however, that the distinction between law on the one hand and mixed law and fact on the other is difficult. On occasion, what appears to be mixed law and fact turns out to be law, or vice versa.
….
39 … Because the Tribunal must be judged according to what it does and not according to what it says, the import of the respondent’s submission is that the Tribunal erred in law. After all, if a decision-maker says that the correct test requires him or her to consider A, B, C, and D, but in fact the decision-maker considers only A, B, and C, then the outcome is as if he or she had applied a law that required consideration of only A, B, and C. If the correct test requires him or her to consider D as well, then the decision-maker has in effect applied the wrong law, and so has made an error of law.”
The Supreme Court has reaffirmed this understanding many times, including in Teal Cedar itself [e.g., Teal Cedar, para. 43; Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 SCR 633, para. 49; R. v. Kerr, 2004 SCC 44, [2004] 2 SCR 371, para. 20]. If the Court wanted to take the drastic step of narrowing the very concept of a question of law specifically in the arbitration context, one would have expected: 1) irresistibly clear language and reasoning supporting this (Teal Cedar falls short of doing this); and 2) more importantly, some guidance on the new boundaries of the category. The Supreme Court has done neither of these things. To the contrary, it cites Southam in both Sattva and Teal Cedar as the test for what constitutes a question of law. To suggest the Court meant to actually narrow the category in spite of this is, creative, to say the least.
Nevertheless, it seems that some courts have taken the Supreme Court’s comment in Teal Cedar about construing this category narrowly as furthering commercial arbitration’s objective as a prescription rather than a description. In some cases, courts appear to suggest, though do not come right out and say it, that in appeals from arbitral awards, the question of law category is actually narrower than when the first instance is a court [e.g., 719491 Alberta Inc v The Canada Life Assurance Company, 2021 ABQB 226, paras. 21-22; Allard v The University of British Columbia, 2021 BCSC 60, para. 20; 1852998 ONTARIO LIMITED v. HCC No. 227, 2021 ONSC 21, para. 23].
And this seems to be borne out in the jurisprudence. Although I have not conducted an exhaustive study, I have observed that courts, especially appellate courts, almost never find extricable errors of law in arbitral awards. In contrast, they seem a lot more prepared to find them in lower court decisions. Taking Ontario as an example, I am unaware of a decision since the Supreme Court of Canada issued Sattva in which the Court of Appeal upheld a finding that an arbitrator committed an error of law (extricable or otherwise) in contract interpretation. But it has found the Superior Court to have done so many, many times [e.g., Niagara Falls Shopping Centre Inc. v. LAF Canada Company, 2023 ONCA 159; Austin v. Bell Canada, 2020 ONCA 142; Ottawa (City) v. ClubLink Corporation ULC, 2021 ONCA 847; Orillia (City) v. Metro Ontario Real Estate Limited, 2021 ONCA 291; Pinnacle International (One Yonge) Ltd. v. Torstar Corporation, 2024 ONCA 755; 402 Mulock Investments Inc. v. Wheelhouse Coatings Inc., 2022 ONCA 718; Meridian C C Intl Inc. v. 2745206 Ontario Inc., 2022 ONCA 12; Herold Estate v. Canada (Attorney General), 2021 ONCA 579; Lozon v. Lozon, 2023 ONCA 645; Fuller v. Aphria Inc., 2020 ONCA 403; Johnston v. McLean, 2024 ONCA 791; Krebs v. Cote, 2021 ONCA 467, and many, many more]. Are arbitrators just that much better at interpreting contracts than superior court judges?
Recognizing that the sample size of arbitration cases is far smaller, one would have expected that in the past 11 years since Sattva (and even before), the Court of Appeal might have found a legal error arising in an arbitral award. Apparently not. There is some reason to suggest, then, that courts actually do narrow the aperture of what constitutes a question of law where arbitral awards are concerned.
There is no principled basis for this, including the finality objective cited in Teal Cedar. As I have written elsewhere, parties who contract for an appeal from their arbitration process have exercised their party autonomy to retain a judicial offramp rather than maximize finality. Especially where parties explicitly opt into (or do not opt out of) appeal rights in an arbitration agreement, you really need to disbelieve your lying eyes to maintain that those parties were concerned with finality over access to the courts on appeal. This is a valid articulation of party autonomy. And when it comes to arbitration, party autonomy trumps all (except fairness).