In Green Light Solutions Corp. v Kern BSG Management Ltd., 2025 BCCA 408 2025 BCCA 408 (CanLII) | Green Light Solutions Corp. v. Kern BSG Management Ltd. | CanLII, the applicant sought leave, pursuant to s. 29 of the Court of Appeal Act, S.B.C. 2021, c.6 SBC 2021, c 6 | Court of Appeal Act | CanLII, to vary the order of a chambers judge, who had denied it leave to appeal the costs portion of a final award. Applying s. 59(2) of the British Columbia Arbitration Act, SBC 2020 c. 2 SBC 2020, c 2 | Arbitration Act | CanLII, the chambers judge found that the applicant had failed to identify a question of law. The applicant’s complaint was that there was a breach of the parties’ right to make submissions on costs before the award was made. The Court of Appeal overturned that decision on the basis that the proposed appeal raised a question of procedural fairness, which is a question of law. Moreover, the legislation permits questions of law based on an allegation that a party was not given the opportunity to present its case to be raised in both an appeal and a set-aside application.
The background facts – The dispute arose out of a contract for the construction of a cannabis growing facility. Applicant Green Light Solutions Corp. (“Green Light”) was the owner of the project and Respondent Kern BSG Management Ltd (“Kern”) was the contractor. Green Light refused to pay invoices rendered by Kern because it alleged deficiencies in the work. Kern commenced an arbitration for payment.
The arbitration – The only issue that is relevant to this case note is how costs were determined. Each party sought costs in written submissions made both before the hearing and before the issuance of the award. The arbitrator issued a final award in which the results were mixed and included costs.
The chambers judge decision – Green Light applied for leave to appeal the costs part of the award. Section 59(2) of the Arbitration Act provides that, “a party to an arbitration may appeal to the Court of Appeal on any question of law arising out of an arbitral award”. Green Light alleged five errors of law.
The chambers judge found that leave should be granted only when an extricable question of law can be clearly perceived and articulated. He found that none of the questions raised were issues of law. They were complaints about procedural fairness.
The Court of Appeal – It appears from the reasons that by the time the matter reached this Court, there were two issues: (1) whether questions of procedural fairness are questions of law; and (2) whether questions of procedural fairness may be raised both in appeals and in applications to set aside an award. The Court was asked to decide whether the arbitrator’s failure to give the parties an opportunity to make submissions as to costs after the substantive issues had been decided in the final award was a breach of procedural fairness. It was agreed that this ground could support a set-aside application under s. 58(1)(h) of the Act, although none was brought.
The parties’ positions on these issues were as follows.
Green Light argued that it is well-established in the case law on statutory appeals that questions of procedural fairness are questions of law. Further, there is nothing in the legislation that limits appeals only to questions of law that do not also fall within the set-aside provisions in s. 58(1). Section 59(2) allows for appeals of “any” questions of law. The legislation allows for overlap of the provisions. Also, the Hansard debates show that the Arbitration Act was aimed at efficiency. Requiring questions of procedural fairness to be determined in one court and questions of law to be determined in another where both types of questions are raised is incompatible with that objective.
Kern argued that procedural fairness questions are not questions of law for the purposes of an appeal. It is well-recognized that the Legislature has chosen to limit the scope of appeals from arbitral awards with a view to advancing the central objectives of commercial arbitration, specifically efficiency and finality. The chambers judge’s decision is consistent with those objectives. Further, other justices of the Court of Appeal have found that issues of procedural fairness are not questions of law and fall within the set-aside provision.
The Court of Appeal dealt with the two issues raised as follows.
(1) The question of law issue – The Court of Appeal explained why the issue in this case gave rise to a reviewable question of law:
“[47] In Escape 101 Ventures at paras. 41, Justice Voith referenced a well-developed body of jurisprudence dealing with the interpretation of contracts in the arbitration context, citing: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53; Teal Cedar, Richmont Mines Inc. v. Teck Resources Limited, 2018 BCCA 452; and MSI Methylation Sciences, Inc. v. Quark Venture Inc., 2019 BCCA 448 as examples. These authorities establish that questions of contractual interpretation generally give rise to questions of mixed fact and law and not to extricable errors of law and instruct that courts should exercise caution in identifying extricable errors of law. However, Justice Voith explained that these authorities do not suggest that the Court lacks jurisdiction to review certain types or categories of questions of law under s. 59(2) of the Arbitration Act: at paras. 63–65.
[48] There is a substantial body of jurisprudence in which breaches of procedural fairness and natural justice have been characterized, in the context of other statutory appeal regimes, as questions of law. In other words, the ordinary meaning of ‘questions of law’ includes questions of procedural fairness.” [Emphasis added.]
The Court stated that a breach of procedural fairness can also amount to a jurisdictional error, which is a question of law. However, neither party raised the issue of whether the arbitrator had the jurisdiction to order costs so the Court did not consider it.
(2) The question of “overlap” – The Court found that as a matter of statutory interpretation, there was no legislative intention against overlap. Reading s. 59(2) based on the text, context, and purpose of the language, an appeal concerning, “any question of law arising out of an arbitration award” is not restricted to questions of law that do not fall within s. 58(1), the set-aside provision. The language is broad. The two provisions can overlap without conflict. Interpreting sections 58 and 59 as providing distinct, but overlapping, routes to challenge an arbitral award on a question of law does not damage the general objectives of efficiency or finality. A party seeking to challenge an arbitral award on a question of law under grounds that fall within the set-aside provision will invariably choose to invoke that process because the appeal provision has the additional hurdle of obtaining leave. The narrower interpretation of the appeal provision adopted by the chambers judge would force a party to invoke both the s. 58 and s. 59 processes simultaneously. The interpretation of s. 59(2) that is most consistent with arbitration law’s objectives is one that permits the Court of Appeal to hear appeals on all questions of law, including those that fall within the set-aside provision s. 58(1), and the Supreme Court to hear set-aside applications on the specific grounds listed in s. 58(1).
Ultimately, the Court found a breach of procedural fairness because Green Light was not given an opportunity to make costs submissions after it knew the outcome of the arbitration.
Editor’s Notes:
(1) The “question of law” issue – I find it a surprising proposition that a question of procedural fairness can also be a question of law. The Court referred to its own decision of Escape 101 Ventures Inc. v March of Dimes Canada, 2022 BCCA 294 2022 BCCA 294 (CanLII) | Escape 101 Ventures Inc. v. March of Dimes Canada | CanLIIto support its conclusion.That case holds that a material misapprehension of the evidence (which I call a finding of fact) going to the core of the outcome may also be a question of law. As I have said in a previous case note for Arbitration Matters, in my view, Escape 101 Ventures is wrongly decided: See “Material Misapprehension of Evidence is an Extricable Error of Law: B.C. – Material misapprehension of evidence is an extricable error of law – #662 – Arbitration Matters. Leave to appeal was denied by the Supreme Court of Canada.
Further, the cases cited by the court in this case and in Escape 101 Ventures were decided in different statutory appeal processes. Sattva Capital Corp v Creston Moly Corp, 2014 SC 6332014 SCC 53 (CanLII) | Sattva Capital Corp. v. Creston Moly Corp. | CanLII tells us that context is important. Arbitrations are different from statutory tribunals:
“[104] Appellate review of commercial arbitration awards takes place under a tightly defined regime specifically tailored to the objectives of commercial arbitrations and is different from judicial review of a decision of a statutory tribunal… These differences mean that the judicial review framework developed in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, and the cases that followed it, is not entirely applicable to the commercial arbitration context…”
In addition, the Court of Appeal ignores what Sattva says about questions of law in contract interpretation cases (which it extrapolated from negligence cases where questions of fact must also be extricated from questions of law):
“[53]… Legal errors made in the course of contractual interpretation include “the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor” (King, at para. 21). Moreover, there is no question that many other issues in contract law do engage substantive rules of law: the requirements for the formation of the contract, the capacity of the parties, the requirement that certain contracts be evidenced in writing, and so on.”
The significance of this language is that it refers to questions of law as substantive – not procedural – rules of law. Moreover, the narrower rather than broader interpretation by the Supreme Court of Canada of the nature of the questions that may be appealed is entirely consistent with the Act, section 4 of which expressly states the legislative intention that judicial intervention is limited. Again, context matters.
(2) The “overlap” issue – Escape 101 Ventures did not address the interrelationship between the appeal and set-aside provisions in the Act.
At first blush, the Court of Appeal’s statutory interpretation of sections 58 and 59 has appeal. There is nothing that states that a party may not rely upon the same ground on both appeal and set aside. However, in my view, the Act does not contemplate that a party may invoke both processes at the same time to advance the same grounds. This is the only way the two sections, read together, make sense. Again, context is important.
The Court looked at the history of the Arbitration Act but not the Model Law, whose set-aside provisions were transplanted into the Act without modification. B.C. then grafted on, in a different section, a separate limited and restricted appeal right that does not exist in the Model Law and, no doubt, was influenced by a Canadian litigation culture of appeals to the courts in doing so. The relief that may be granted in appeals and set-aside applications is different. The Act provides two different paths of recourse against arbitral awards – a leave to appeal application goes to the Court of Appeal, while a set-aside application goes to the Supreme Court. In 2020, B.C. repealed and replaced the Arbitration Act, RSBC 1996, c.55 RSBC 1996, c 55 | Arbitration Act | CanLII, which formerly directed both types of recourse against arbitral awards, set-aside applications and appeals, to the B.C. Supreme Court. It is significant that the structure and language of the set-aside provision in both the Model Law and the Act mirrors that of the award enforcement provision of the Act. An award may not be recognized and enforced in another jurisdiction where fairness rights were not protected, but a court which is being asked to recognize and enforce an award must not consider whether the award is wrong. That is the purview of an appeal. Finally, each section has a different purpose; one is to ensure that the merits, or substantive outcome of the award, is correct (or reasonable!). The other purpose is to ensure procedural fairness. For all these reasons, the compartments are watertight to avoid the kind of confusion that arises in this case. This is efficiency rather than inefficiency.
In my view, the Ontario Court of Appeal decisions of Alectra Utilities Corporation v Solar Power Network Inc., 2019 ONCA 254 2019 ONCA 254 (CanLII) | Alectra Utilities Corporation v. Solar Power Network Inc. | CanLII and Tall Ships Development Inc. v Brockville (City), 2022 ONCA 861 2022 ONCA 861 (CanLII) | Tall Ships Development Inc. v. Brockville (City) | CanLII are compelling in their analysis of the distinctions between the appeal and set-aside provisions in domestic arbitration legislation and why there is no overlap. Jonathan Eades wrote a previous case note in Arbitration Matters on Tall Ships: Ontario – Set-aside application can’t bootstrap appeal– #707 – Arbitration Matters. See also an article written by Brian J. Casey on Alectra and published in the Canadian Journal of Commercial Arbitration: 05-Casey, Setting Aside Article.docx.pdf. However, this is a matter of debate.