B.C. Archives - Page 8 of 17 - Arbitration Matters

November 23, 2021May 4, 2022

BC – correctness standard of review applies on set aside applications on jurisdiction grounds – #555

In lululemon athletica canada inc. v Industrial Color Productions Inc., 2021 BCCA 428, Justice Marchand, for the British Columbia Court of Appeal, dismissed lululemon’s appeal of the chambers judge’s dismissal of its application to set aside the arbitrator’s award made in favour of Industrial Color Productions (“ICP”). The issue was whether the arbitrator had acted outside his jurisdiction in awarding ICP damages that lululemon argued were never claimed in the pleading. Justice Marchand found that the chambers judge had applied the wrong standard of review – the standard of review is correctness and United Mexican States v Cargill, 2011 ONCA 622 remains the leading case on the standard of review for set aside applications on matters of jurisdiction. Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 and Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 were not helpful in this context. However, Justice Marchand found that the chambers judge’s decision to dismiss the set aside application was correct; the arbitrator did not stray outside the scope of the submission to arbitration when the impugned pleading was read generously.

November 10, 2021May 4, 2022

B.C. – Award challenged for legal error, denial of natural justice after baseball arbitration – #552

In 1150 Alberni Limited Partnership v Northwest Community Enterprises Ltd., 2021 BCSC 2053, Justice Groves heard a petition to set aside an arbitral award or, in the alternative, for leave to appeal the award, as well as a cross-petition to enforce the award. The award arose out of a final offer selection arbitration, which required the arbitrator to accept one party’s submission in its entirety and provide reasons. Justice Groves dismissed the set aside and leave to appeal petitions. The arbitrator had not erred in law or in denying the petitioner natural justice; the losing party was simply re-arguing its case. Justice Groves granted an order enforcing the award.

November 8, 2021May 4, 2022

B.C. – Leave to appeal granted; arbitrator found party’s actions estopped him from raising statutory time limit – #550

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.

November 4, 2021May 4, 2022

B.C. – Parties’ “expeditious” settlement process led to 2 arbitrations and multiple court proceedings over 7 years – #549

In Grewal v Mann, 2021 BCSC 1995, Justice MacNaughton denied the defendants’ motion to stay the plaintiff’s appeal of an arbitral award to the B.C Supreme Court, pending determination of their appeal of that Court’s leave decision to the Court of Appeal. She found that there was no prejudice to the defendants and that the lengthy history of the parties’ dispute and their acrimony made it likely that the decision on the appeal of the award (which was to be heard by the B. C. Supreme Court under s. 31 of the former B.C. Arbitration Act, RSBC 1996, c. 55) would be appealed to the Court of Appeal and that both appeals could be heard together. She found that, “it would be more efficient to allow matters to proceed to conclusion in the BC Supreme Court and then, for the parties to decide what appeals they wish to take to the Court of Appeal”. By this point, the parties were seven years away from their 2014 agreement to sever their business relationship “expeditiously”. They agreed to a three-stage mediation and arbitration process that led to a mediated settlement agreement (the terms of which were not memorialized and became contentious), two arbitrations (one which required no written reasons and one which resulted in one page of reasons), one stay of proceedings, and two appeals (so far).

October 12, 2021May 4, 2022

B.C. – Stay of portion of counterclaim not “improper bifurcation”; arbitration agreement bifurcated disputes – #540

In Mazzei Electric Ltd. v Western Canadian Construction Company Ltd., 2021 BCSC 1873, the Plaintiff applied to stay a portion of the counterclaim brought by the Defendant, on the basis that it was covered by the parties’ arbitration agreemeement. Justice W.A. Baker granted the stay while permitting the remainder of the counterclaim to proceed. In reaching her decision, she interpreted and applied a detailed and industry-specific dispute resolution clause, which allowed the parties to commence court proceedings to preserve a lien right. Justice Baker found that the Plaintiff’s lien action did not prevent it from seeking to have the Defendant’s counterclaim on other issues in dispute stayed in favour of arbitration.

September 24, 2021May 4, 2022

B.C. – Stay motion: pleadings sufficient for “arguable case” that arbitration clause applies, despite contrary evidence – #534

In Beck v Vanbex Group Inc., 2021 BCSC 1619, Justice Fleming granted a partial stay of a proposed class action under s. 7 of the Arbitration Act, S.B.C. 2020, c. 2. The issue before her was whether the Defendants had any evidentiary burden to meet to establish an “arguable case” that they were both proper parties to the arbitration agreement, thereby warranting a stay. The Plaintiffs argued that although one of the Defendants was not a signatory to the business agreement upon which they were suing and which contained the arbitration clause, both corporate Defendants were essentially alter egos of one another and both were liable to them. However, they argued that the Defendants’ stay application must be dismissed in the face of the Defendants’ evidence that the two corporate Defendants were entirely separate and one of them was not a proper party to the arbitration agreement. The Defendants agreed that, in the arbitration or at trial, their position would be that one of the Defendants was not a party to the arbitration agreement; however, they were entitled to a stay because: (1) if the Plaintiffs were correct, the action should be stayed; and (2) if the Plaintiffs were not correct, the Plaintiffs had no claim against the non-party Defendant anyway and the action would be dismissed. Justice Fleming agreed that the issues pleaded by the Plaintiffs demonstrated that it was arguable that both corporate Defendants were proper parties, notwithstanding the evidence adduced by the Defendants to the contrary.

September 16, 2021May 4, 2022

B.C. – Leave to appeal on question of law; arbitrator’s error must be “material to result” and appeal must have “arguable merit” – #533

In Escape 101 Ventures Inc. v March of Dimes Canada, 2021 BCCA 313 Justice DeWitt-Van Oosten granted, in part, the Plaintiff’s application for leave to appeal the arbitrator’s award dismissing the Plaintiff’s claims brought pursuant to an asset purchase agreement. The Plaintiff argued that the arbitrator committed errors of law in interpreting the terms of the agreement. Justice DeWitt-Van Oosten found that the arbitrator had misapprehended the evidence, which underlay his conclusions and “laid the foundation for an extricable error of law”. Further, even where an applicant demonstrates that there is an extricable question of law, a court should consider the reasons of the arbitrator as a whole in assessing that error and deny leave unless satisfied that the error was material to the result and the appeal has arguable merit. Justice DeWitt-Van Oosten was satisfied that both these criteria were met. Further, the amount of money at issue met the requirement for leave to appeal in s. 59(4) of the B.C. Arbitration Act, S.B.C. 2020, c. 2, that, “the importance of the result of the arbitration to the parties justifies the intervention of the court”.

September 13, 2021May 4, 2022

B.C. – Leave to appeal denied where alleged legal errors did not reflect arbitrator’s reasoning – #530

In Ecoasis Resort and Golf LLP v Bear Mountain Resort & Spa Ltd., 2021 BCCA 285, the Applicants (Bear Mountain and related companies) argued on leave to appeal that the arbitrator committed four extricable errors of law relating to whether it was an implied term of a lease that the lessees would have access to limited common property. The Arbitration Act, S.B.C. 2020, c. 2, like the previous Act, allows appeals on questions of law alone provided they satisfy certain other conditions. Two of the alleged extricable legal errors concerned whether the arbitrator implied a term based on a wrong principle; the third concerned whether the arbitrator, in interpreting the lease, allowed the factual matrix to overwhelm the words of the contract; the fourth concerned whether the arbitrator misapplied the law of the duty of good faith by implying a term into the agreement. On examination, Justice Bennett concluded that none of the alleged errors reflected the arbitrator’s reasoning and, further, “all of the so-called legal issues raised by the applicant, fall into the category of mixed fact and law. I do not see any extricable question of law arising from the reasons of the arbitrator” (para. 49). Leave to appeal was denied.

September 10, 2021May 4, 2022

B.C. – Statutory arbitrator’s award set aside on basis that it was “arbitrary and irrational” – #529

In Shahcheraghi v Divangahi, 2021 BCSC 1576, Justice Horsman set aside the award of an arbitrator of the Residential Tenancy Branch (“RTB”) and remitted the matter back to the RTB for a new hearing, either by the same arbitrator or someone else assigned by the RTB. She found that the arbitrator’s reasons were inadequate for the parties to understand the rationale for the decision:

“[53]… I wish to be clear that my concern with the Arbitrator’s decision is the reasoning process, which in my view is insufficient to serve the basic function of reasons in allowing the parties to understand why the decision was reached…The point is that [certain] issues are unexplored in the Arbitrator’s decision. It is not the role of the reviewing court to re-write the Arbitrator’s reasons so as to arrive at a new rationale that might support the outcome.”

August 30, 2021May 4, 2022

B.C. – Whole award to be considered when examining for patent unreasonableness – #525

In Potherat v, Slobodian, 2021 BCSC 1536, Justice Crabtree of the British Columbia Supreme Court found that the decision of an arbitrator of the B.C. Residential Tenancy Branch was neither patently unreasonable nor wrong when read as a whole. In determining whether a decision is patently unreasonable, the court is required to examine both the reasons and the outcome. Justice Crabtree quoted extensively from the arbitrator’s reasons; while sentences or paragraphs are sometimes quoted by courts when reviewing arbitral awards, it is rare that large portions of the arbitrator’s reasons are quoted. Justice Crabtree followed Sherstobitoff v. British Columbia (Workers’ Compensation Appeal Tribunal), 2019 BCSC 1659, which held that that reasons “are to be read as an organic whole, not parsed or dissected in search of error”. Justice Crabtree found that the petitioner’s submissions were a parsing of the decision.