In Terrace Community Forest LLP v Skeena Sawmills Ltd., 2021 BCSC 1522, Justice Milman dismissed an application brought by the petitioner, Terrace Community Forest LLP (TCF), for an order under s. 29(4) of the new British Columbia Arbitration Act, S.B.C 2020, c. 2, to set aside a subpoena requested by the respondent, Skeena, and issued by the arbitrator. The subpoena required TCF to produce documents in an ongoing arbitration under the Act. TCF was not a party to the arbitration, but was a third party and was alleged to have documents that were relevant to the arbitration. Justice Milman’s decision turned on the meaning of the word “or” in s. 29(4), which provides that a subpoena issued to a third party may be set aside on application by the person named in the subpoena to the arbitral tribunal “or” the Supreme Court. Justice Milman held that the word “or” in this context was to be read exclusively, rather than inclusively, because: (a) by its plain meaning, s. 29(4) contemplates an application by the third party in the first instance to either the arbitrator or the court, but not both, and the Legislature could not have intended that a third party could make sequential applications to set aside the same subpoena if dissatisfied with the first answer it received (b) there is no provision in the Act for the third party to bring an appeal or seek a review of an arbitrator’s decision under s. 29(4) and (c) s. 4 of the Act precludes any review of an arbitrator’s order by the court except as provided in the Act.
Continue reading “B.C. – Under new B.C. Act, third party may apply to arbitrator OR court to set aside subpoena issued by arbitrator – #524”B.C. – Scope/excess of authority when arbitrator considers variation of award made based upon incorrect facts – #523
In Marchetti v Lane, 2021 BCSC 1259, Justice Tucker dismissed an application brought by the respondent (Lane) to “change or set aside” an arbitral award under s. 19.18 of the Family Law Act, S.B.C. 2011, c. 25. The case has application to commercial arbitration awards and, indeed Justice Tucker looked to the set aside provisions of the International Commercial Arbitration Act, R.S.B.C. 1996, c. 233 (“ICAA”) to determine whether the award should be set aside on jurisdictional grounds. Lane argued, among other things, that the arbitrator had acted outside the scope of the submission to arbitration and outside her authority in varying an earlier “final” award. He argued that the arbitrator had previously declined to clarify or correct the initial award, so it was final and binding upon the parties and subject only to the statutory right of appeal. The parties had agreed to have all their issues in dispute resolved by arbitration and the award which was the subject of this application related merely to one issue. After considering s. 34 of the ICAA, Justice Tucker found that the first award had been based upon facts that turned out not to have been correct and was therefore incapable of being implemented. In varying that award, the arbitrator did not “purport to correct or clarify the award, but determined the application to vary brought before her while her jurisdiction over the matter remained extant under the terms of the submission to arbitration and the applicable statute”.
Continue reading “B.C. – Scope/excess of authority when arbitrator considers variation of award made based upon incorrect facts – #523”B.C. – Court outlines reasoning process to be followed by arbitrator in interpreting agreement on re-hearing – #521
In Belmont Properties v. Swan, 2021 BCCA 265, the British Columbia Court of Appeal upheld a decision of the BC Supreme Court setting aside an arbitrator’s decision and remitting the dispute for a new hearing. In doing so, the Court of Appeal provided guidance as to the reasoning process to be followed by the arbitrator in interpreting the agreement at issue on the re-hearing.
Continue reading “B.C. – Court outlines reasoning process to be followed by arbitrator in interpreting agreement on re-hearing – #521”B.C. – Portion of arbitral award set aside; re-hearing to be conducted by different arbitrator – #518
In Spirit Bay Developments Limited Partnership v Scala Developments Consultants Ltd., 2021 BCSC 1415, Justice Davies set aside a portion of an arbitral award and ordered a re-hearing on the basis that the arbitrator had erred in his application of the law of unjust enrichment to a construction contract. However, he found that it was necessary to have a different arbitrator conduct the re-hearing because the arbitrator had made findings of credibility adverse to Petitioner (Spirit Bay) representatives and also made several determinations of credibility that were critical of Spirit Bay’s evidence as well as its motivation in advancing some arguments. The arbitrator had “harshly criticized” Spirit Bay’s conduct not only in relation to the disputes in issue, but also within the arbitration, referring to “accounting tactics or tricks” and “tricks by Spirit Bay [which] continued into the hearing”, and characterizing Spirit Bay’s position in respect of one issue as a “ruse or a fiction”.
Continue reading “B.C. – Portion of arbitral award set aside; re-hearing to be conducted by different arbitrator – #518”B.C. – party not abandoning position made in written argument, despite counsel’s failure to object to arbitrator’s contrary understanding – #512
In Eisler v. Connor Clark & Lunn Financial Group Ltd., 2021 BCSC 1280, Justice N. Smith granted, in part, the petitioners’ application for leave to appeal an arbitral award arising out of a dispute with their former employer, CCL. During their employment, the petitioners were paid income from certain funds owned by CCL that had investments in a variety of companies. After the petitioners’ employment was terminated, CCL re-organized the funds and acquired new investments in the fund. It stopped paying income from the fund to the petitioners, as a result of which they commenced an arbitration. The arbitrator found for CCL and the petitioners sought leave to appeal the award. One of the issues before Justice Smith was whether the duty of good faith first recognized in Bhasin v. Hrynew, 2014 SCC 71 was before the arbitrator. The argument that CCL had breached the contractual duty of good faith, through an improper use of its discretion to re-organize the fund and terminate the petitioners’ income entitlement, was contained in the petitioners’ written argument. But when the arbitrator asserted during the arbitration that it was his understanding that the petitioners were not advancing this position, petitioners’ counsel failed to correct him. Nonetheless, Justice Smith found that the issue was properly before the arbitrator.
Continue reading “B.C. – party not abandoning position made in written argument, despite counsel’s failure to object to arbitrator’s contrary understanding – #512”B.C. – Challenge of arbitrator’s interpretation of restrictive covenant in shareholders agreement, relying upon employment contract analysis, not appealable “extricable error of law” – #509
In AES Engineering Ltd. v. Khan, 2021 BCSC 1384, Justice Lamb found that the arbitrator’s determination that a restrictive covenant in a shareholders agreement was unenforceable for ambiguity did not raise an extricable error of law that would provide grounds for an appeal of the final award. The applicant argued that the arbitrator had committed errors of “legal methodology” in interpreting the restrictive covenant, including by applying the principles from the “lens” of an employment contract case. Justice Lamb ruled: “There is nothing to suggest that the arbitrator’s interpretation of the contract in this case is a question of law as opposed to the usual question of mixed law and fact. It is clear from the Award that the arbitrator’s finding of ambiguity turned on the specific wording of the restrictive covenant. There was no evidence before me to suggest that this form of restrictive covenant is a standard form clause such that there might be precedential value to the proper interpretation of the clause which might turn this issue into a question of law that would be appealable under s. 31(1) [of the former B.C. Arbitration Act. R.S.B.C 1996, c. 55]. Further, there is no indication on the face of the Award that the arbitrator considered an incorrect principle in finding the clause was ambiguous: he considered the “ordinary grammatical meaning of the words” and found the clause to be ambiguous. In short, the interpretation of the restrictive covenant in this case is a question of mixed law and fact.”
Continue reading “B.C. – Challenge of arbitrator’s interpretation of restrictive covenant in shareholders agreement, relying upon employment contract analysis, not appealable “extricable error of law” – #509”B.C. – no breach of natural justice where arbitrator invites submissions on new issue but declines to incorporate them in award – #508
In Hotel Georgia Development Ltd. v The Owners, Strata Plan EPS849, 2021 BCSC 1236, Madam Justice Heather MacNaughton held that the arbitrator committed no breach of natural justice by inviting submissions on a new issue which he introduced but then declined to rely on out of fairness to Respondent. “Where an arbitrator considers an approach to an issue that has not been raised by either party, natural justice requires the arbitrator to give the parties an opportunity to comment on the approach. The fact that a party does not make sufficient use, if any, of the opportunity given by the arbitrator is not a breach of natural justice and, accordingly, not a basis for setting aside an arbitral award”. MacNaughton J. observed that the arbitrator had signalled a gap in Claimant’s evidence and sought submissions on his ability to make a quantum meruit award. Despite having invited submissions and effectively granted Claimant an opportunity to compensate for its evidentiary gap, the arbitrator elected not to reproduce the responding submissions in the award. “It would be clearly unfair and prejudicial to the Respondent to have a new legal basis for recovery of common law damages at this stage and I exercise my discretion against pursuing that analysis”.
Continue reading “B.C. – no breach of natural justice where arbitrator invites submissions on new issue but declines to incorporate them in award – #508”B.C. – court issues sealing orders to avoid “defeating parties’ reasonable expectations of privacy in an ongoing arbitration” – #506
In Stewart v. Stewart, 2021 BCSC 1212, Mr. Chief Justice Christopher E. Hinkson issued sealing orders to protect materials filed (i) in a pending arbitration agreed to as part of the settlement of earlier court litigation and (ii) in court when the parties returned to court post-settlement to dispute compliance with the initial settlement. Applying the two (2) part test developed for publication bans in Dagenais v. Canadian Broadcasting Corp., 1994 CanLII 39 (SCC) and applied to confidentiality orders in Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, Hinkson C.J. determined that “disclosure of this information would be likely to undermine the public policy in this jurisdiction of encouraging arbitrations by defeating the parties’ reasonable expectations of privacy in an on-going arbitration”. Hinkson C.J. limited his orders to specific documents and affidavit passages filed either in the ongoing arbitration or in court and referenced the confidentiality provisions in BCICAC’s (now VanIAC) former Revised Domestic Commercial Arbitration Rules of Procedure which applied to the arbitration.
Continue reading “B.C. – court issues sealing orders to avoid “defeating parties’ reasonable expectations of privacy in an ongoing arbitration” – #506”B.C. – arbitration remains mandatory despite option given to only one party to waive arbitration – #503
In Malcolm Drilling Company Inc. v. The Graham-Aecon Joint Venture, 2021 BCSC 1136, Madam Justice Shelley C. Fitzpatrick issued a stay of proceedings despite plaintiff’s objection that only defendant had a peremptory right to refuse arbitration in response to plaintiff’s request to arbitrate. Fitzpatrick J. held that arbitration was mandatory if (i) either party requested it and (ii) arbitration was requested by plaintiff and defendant did not exercise its peremptory right to “waive” arbitration. Fitzpatrick J. also cautioned against an uncritical application of the “dated” approach to jurisdictional issues taken by decisions released prior to Seidel v. TELUS Communications Inc., 2011 SCC 15 (CanLII), [2011] 1 SCR 531, noting that “the persuasiveness of those decisions must be viewed with some skepticism given the more modern approach to arbitration”.
Continue reading “B.C. – arbitration remains mandatory despite option given to only one party to waive arbitration – #503”B.C. – adverse inferences and undocumented terms thwart proof of binding settlement alleged in mediation – #498
In Govorcin Fisheries Ltd. v. Medanic Fisheries Ltd., 2021 BCSC 1092, Mr. Justice Frits E. Verhoeven dismissed Defendants’ claim that the parties had entered into a binding, verbal settlement agreement, determining that Defendants failed to meet the elements of an enforceable settlement set out in Apotex Inc. v. Allergan, Inc., 2016 FCA 155. Despite the complexity of the issues and disputed amount, the parties did not document the terms which Defendants alleged formed the parties’ agreement concluded during mediation. “This case illustrates the difficulty of attempting to prove that a settlement agreement was reached verbally at a mediation, where nothing was signed by the parties signifying their agreement to a settlement, and, further, where there was no consensus between them that a settlement had been achieved”. At the hearing to enforce the alleged settlement agreement, Verhoeven J. also drew adverse inferences based on the “unexplained” absence of “obviously a key material witness” who participated on Defendants’ behalf in the mediation and could have attended to challenge the facts adduced by Plaintiff.
Continue reading “B.C. – adverse inferences and undocumented terms thwart proof of binding settlement alleged in mediation – #498”