Greata Ranch Holding Corp. v. Greata Ranch Development Corporation, 2018 BCSC 931

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Greata Ranch Holding Corp. v. Concord Okanagan Developments Ltd. , 2018 BCSC 931 Date: 20180607 Docket: S176664 Registry: Vancouver Between: Greata Ranch Holding Corp. and Greata Ranch Development Corporation Petitioners And Concord Okanagan Developments Ltd., The Crestmark Developments Limited Partnership and One West Holdings Ltd., formerly known as Concord Pacific Group Inc. Respondents Before: The Honourable Mr. Justice Crossin Reasons for Judgment Counsel for the Petitioners: Irwin G. Nathanson, Q.C. Geoffrey B. Gomery, Q.C.

Counsel for the Respondents: David E. Gruber Nicholas T. Hooge Place and Date of Trial/Hearing: Vancouver, B.C. December 6 – 7, 2017 Place and Date of Judgment: Vancouver, B.C. June 7, 2018 Table of Contents I. INTRODUCTION .. 3 II. BACKGROUND .. 3 III. POSITIONS OF THE PARTIES .. 6 The Petitioners . 6 The Petition Respondents . 8 IV. THE LEGAL FRAMEWORK .. 9 Setting Aside Arbitral Awards for Lack of Jurisdiction . 9 Leave to Appeal on Questions of Law .. 10 V. DISCUSSION .. 14 Should the One West Award be Set Aside? . 14 Should Greata be Granted Leave to Appeal? . 17 VI. CONCLUSION .. 21

I. INTRODUCTION [ 1 ] The petitioners, Greata Ranch Holding Corp. and Greata Ranch Development Corporation (collectively “Greata”), seek an order pursuant to s. 30 of the Arbitration Act , R.S.B.C. 1996, c. 55, setting aside a portion of an arbitral award (the “Award”) made by arbitrator K.C.

Mackenzie (the “Arbitrator”) on June 2, 2017. [ 2 ] The challenged portion of the Award is a finding in favour of One West Holdings Ltd. (“One West”) in the amount of $6,221,539 (the “One West Award”). [ 3 ] Greata asserts that the Arbitrator lacked jurisdiction to grant the One West Award in this regard. [ 4 ] Alternatively, Greata seeks leave to appeal the One West Award pursuant to s. 31 of the Arbitration Act on the following question of law: Did the arbitrator err in law in making the One West award having regard to s. 9.1 of the Project Management Agreement and the absence of an approved Budget as defined by s. 7.1 of that Agreement? [ 5 ] The respondents, Concord Okanagan Developments Ltd. and The Crestmark Developments Limited Partnership (collectively “Concord”) as well as One West, take the position that the Arbitrator properly assumed jurisdiction in making the One West Award.

With respect to Greata’s alternative argument, they say that leave to appeal should be denied, primarily on the basis that the proposed appeal does not raise a question of law. II.

BACKGROUND [ 6 ] On January 30, 2007, Greata and Concord entered into a limited partnership agreement (the “LPA”) to form the Greata Ranch Developments Limited Partnership (the “Partnership”). [ 7 ] The Partnership was formed for the purpose of constructing a high end real estate development on a property bordering Okanagan Lake near Summerland, British Columbia (the “Project”). [ 8 ] On February 6, 2007, the Partnership entered into a project management agreement (the “PMA”) with an affiliate of Concord, the Concord Pacific Group Inc., which by name change is now One West.

One West’s role pursuant to the PMA was to provide project management, construction management and marketing services for the Project. [ 9 ] Due to deteriorating market conditions from 2008 onwards, the Project failed to be marketable and, perhaps not surprisingly, various disputes arose. [ 10 ] On May 14, 2012, Greata delivered a notice to arbitrate claiming damages for One West’s alleged breaches of the PMA and a declaration that no amounts were owing from the Partnership to One West. [ 11 ] One West in fact challenged the notice, asserting that it should not have been joined as a party to the arbitration because it was not a party to the LPA and the PMA contained no arbitration agreement. [ 12 ] In an award dated April 23, 2013, the Arbitrator ruled that One West was a proper party to the arbitration.

That award was appealed to the Supreme Court of British Columbia, then to the Court of Appeal. Ultimately, the Court of Appeal upheld the decision of the Arbitrator: One West Holdings Ltd. v. Greata Ranch Holdings Corp. , 2014 BCCA 67 . [ 13 ] The arbitration eventually proceeded in April 2017 with One West as a party. [ 14 ] At the arbitration, One West advanced a counterclaim against the Partnership for payment related to work One West had undertaken in the initial development phase of the Project.

These amounts were contained in an invoice delivered to Greata on December 19, 2011 (the “Invoice”), totalling $6,299,102. [ 15 ] It is the award in relation to this Invoice that is the subject matter of this petition. [ 16 ] The basis of the counterclaim brought by One West was the allegation that the work undertaken by One West on the project had been “abandoned or suspended,” thus, in turn, triggering a right to payment in accordance with s. 9.1 of the PMA, which provides as follows: Abandoned or Suspended Work.

If any work undertaken by [One West] is abandoned or suspended by the Partnership in whole or in part, [One West] will, provided that such work or services is not defective, be paid on abandonment or suspension for the services rendered on account of such work, in accordance with and proportionate to the

schedule of payments of fees and costs set out in the Budget. [ 17 ] “Budget” is a defined term in the PMA. [ 18 ] It is stipulated in s. 7.1 of the PMA that upon execution of the agreement, One West was to submit an itemized Budget detailing the aggregated total costs of the Project. The PMA required that this initial Budget be approved by the Partnership. Thereafter, One West was required to submit an updated Budget to the Partnership’s Management Committee at least 15 days prior to the beginning of each fiscal year. [ 19 ] It was common ground between the parties at the arbitration that a Budget, at least as defined by the PMA, was never adopted.

[ 20 ] One West alleged in the counterclaim that work on the Project had been abandoned or suspended following termination of the PMA, which was triggered by repudiation on the part of Greata. [ 21 ] In the alternative, One West pleaded “the PMA is terminated, by law or implicitly on its terms and those of the LPA, upon dissolution of the [P]artnership”. [ 22 ] In addition, the parties agreed during final submissions that the Arbitrator had jurisdiction to declare the Partnership dissolved pursuant to s. 38 (

f) of the Partnership Act , R.S.B.C. 1996, c. 348. [ 23 ] The Arbitrator issued the Award on June 2, 2017. [ 24 ] The Arbitrator found that there was no repudiation on behalf of Greata and, consequently determined that the Invoice had not been properly issued.

He found that “One West was not in compliance with the terms of the PMA in submitting the invoice”. [ 25 ] The Arbitrator nevertheless rejected the position of Greata that no compensation was owed to One West in the absence of a formally approved budget, and further rejected Greata’s submission that the PMA foreclosed recovery of pre-contractual costs included in the Invoice.

He then found “One West is entitled to claim for costs incurred on the termination of the PMA concurrently with the dissolution of the Partnership”. [ 26 ] The Arbitrator’s finding that One West is entitled to its costs “concurrently with the dissolution of the Partnership” is at the crux of this petition. [ 27 ] Greata asserts that relief on this basis amounts to an “entirely new claim”; a claim, Greata says, the Arbitrator had no jurisdiction to resolve. III.

POSITIONS OF THE PARTIES The Petitioners [ 28 ] The petitioners firmly anchor their position upon the issue of jurisdiction. [ 29 ] The Arbitrator found that One West’s entitlement to be paid was a right that arose concurrently with the dissolution of the Partnership, effective on the date of the Award. Greata submits that the Arbitrator did not have jurisdiction to make this Award, that it amounted to arbitral error, and that it should be set aside. [ 30 ] This relief, Greata argues, was outside of the Arbitrator’s jurisdiction because it was not a claim advanced by One West.

Greata asserts that One West advanced its counterclaim on the basis there had been an abandonment or suspension of work related to the Project pursuant to s. 9.1 of the PMA as a result of an alleged repudiation of the contract; not a dissolution of the Partnership. [ 31 ] The essence of the point taken by Greata is succinctly captured in its written submissions: The Award in favour of One West was an entirety new claim not previously advanced.

The basis of that Award was a fact – the arbitrator’s determination in his Award that the Partnership was dissolved – that was not in existence at the time of the arbitrator’s appointment giving rise to his jurisdiction. This fact was not in existence at the time the case was pleaded and argued. Indeed, this fact was not in existence until the moment the arbitrator rendered his Award.

However, it is the central fact relied on by One West in an attempt to support the Award. [ 32 ] Further, Greata contends that its agreement to place the issue of dissolution before the Arbitrator, and its consent to the dissolution of the Partnership, was conditional. [ 33 ] It is the submission of Greata that the Arbitrator was first required, before making any declaration that the Partnership was dissolved, to resolve the dispute between the Partnership and One West.

Greata contends that the Arbitrator’s failure in this regard is fatal to any reliance on dissolution of the Partnership as the basis for an award. [ 34 ] Alternatively, Greata submits that it should be granted leave to appeal on the following question of law: Did the arbitrator err in law in making the One West award having regard to s. 9.1 of the Project Management Agreement and the absence of an approved Budget as defined by s. 7.1 of that Agreement? [ 35 ] With respect to the leave issue, Greata says that One West’s counterclaim for compensation was based on s. 9.1 of the PMA or, alternatively, on a quantum meruit basis. [ 36 ] Greata takes the position that the Award makes no mention of One West’s alternative quantum meruit argument and does not indicate that the Arbitrator directed his mind to the requirement of s. 9.1 of the PMA: that payments to One West were to be made in accordance with and proportionate to the

schedule of payments set out in an approved Budget. [ 37 ] The conclusion to be drawn from the Award, Greata submits, is that the Arbitrator erred in law to the extent that he failed to consider the requirement for a formal Budget and declared rights inconsistent with the contract that existed between the parties. The Petition Respondents [ 38 ] In response, Concord and One West submit that the question of whether the amount reflected in the Invoice remained owing to

One West, or whether “any other amount” remained owing, was raised by Greata itself in the initial arbitration notice, and in Greata’s further amended statement of claim in the arbitration. [ 39 ] In addition, One West points out that it specifically pleaded in its second further amended statement of defence and counterclaim, inter alia , that “the PMA is terminated, by law or implicitly on its terms and those of the LPA, upon dissolution of the Partnership.” [ 40 ] This, One West argues, plainly placed dissolution of the Partnership as an available basis for the One West Award before the Arbitrator because dissolution of the Partnership terminated the PMA, which necessarily resulted in One West’s unpaid work being abandoned pursuant to s. 9.1. [ 41 ] Further, Concord and One West submit that no arbitral error occurred because their broad grounds of pleaded relief, including a claim for payment on a quantum meruit basis, and the statement in One West’s counterclaim that “[t]he sum of $6,299,102.00 was and is due and owing to One West”, put the question of One West’s entitlement to compensation generally before the Arbitrator.

This broad referral of the issue to arbitration undermines the restrictions on legal reasoning that Greata suggests the Arbitrator was bound by. [ 42 ] Finally, Concord and One West submit that the question of whether the Partnership should be dissolved was properly and unconditionally before the Arbitrator. [ 43 ] If the Arbitrator did lack jurisdiction, Concord and One West argue that the Court should exercise the residual discretion under s. 30(2) and decline to set aside the One West Award.

If any arbitral error occurred, Concord and One West argue that it is a defect in form or technical irregularity, and that no substantial wrong or miscarriage of justice has been demonstrated to flow from a refusal to set the One West Award aside. [ 44 ] With respect to Greata’s alternative relief, Concord and One West say that Greata’s proposed question is not a question of law, but rather a question of contractual

interpretation giving rise to a question of mixed fact and law. [ 45 ] They argue that the Arbitrator, in fact, determined a formal Budget was not a mandatory prerequisite to compensation under the PMA despite s. 9.1, and that this was a reasonable

interpretation. Greata’s question simply asks the Court to reconsider this same issue of contractual

interpretation and does not articulate any particular legal issue or legal test that the Arbitrator failed to apply. [ 46 ] Concord and One West submit that even if Greata’s proposed appeal does pose a question of law, leave should not be granted because none of the criteria in s. 31(2) of the Arbitration Act are met. Specifically, they assert that the One West Award does not amount to a miscarriage of justice and that there is no realistic prospect an appeal will change the result in the case because Greata’s position is commercially unreasonable. IV. THE LEGAL FRAMEWORK Setting Aside Arbitral Awards for Lack of Jurisdiction [ 47 ]

Section 30 of the Arbitration Act empowers the Court to set aside or remit arbitral awards if they have been improperly procured or if the arbitrator has committed an arbitral error. This power is discretionary: Court may set aside award 30

(1) If an award has been improperly procured or an arbitrator has committed an arbitral error, the court may (

a) set aside the award, or (

b) remit the award to the arbitrator for reconsideration.

(2) The court may refuse to set aside an award on the grounds of arbitral error if (

a) the error consists of a defect in form or a technical irregularity, and (

b) the refusal would not constitute a substantial wrong or miscarriage of justice.

(3) Except as provided in

section 31, the court must not set aside or remit an award on the grounds of an error of fact or law on the face of the award. [ 48 ] Arbitral error is defined in s. 1 of the Arbitration Act , and includes circumstances where an arbitrator exceeds their jurisdiction: "arbitral error" means an error that is made by an arbitrator in the course of an arbitration and that consists of one or more of the following: (

a) corrupt or fraudulent conduct; (

b) bias; (

c) exceeding the arbitrator's powers; (

d) failure to observe the rules of natural justice;

[49] An arbitrator’s jurisdiction is founded on the arbitration agreement, the pleadings and the questions posed by the parties: HannaCollision Repair

(1984) Ltd. v. Insurance Corporation of British Columbia, 2010 BCCA 490 at para. 46 [Hanna]. [50] The scope of an arbitrator’s jurisdiction is also informed by the conduct of the parties during the arbitration. Ultimately, whenan arbitrator decides the very issues conferred to arbitration, as evidenced by the parties’ agreement and conduct, the arbitrator will nothave exceeded their jurisdiction or committed an arbitral error: Hanna at paras. 43–44. Leave to Appeal on Questions of Law [51]

Section 31 of the Arbitration Act allows for appeals to the Court on questions of law arising from an arbitral award if all partiesto the arbitration agree, or if the court grants leave. The decision to grant leave is discretionary: Appeal to the court 31

(1) A party to an arbitration, other than an arbitration in respect of a family law dispute, may appeal to the court on any questionof law arising out of the award if (

a) all of the parties to the arbitration consent, or (

b) the court grants leave to appeal.

(2) In an application for leave under subsection (1) (b), the court may grant leave if it determines that (

a) the importance of the result of the arbitration to the parties justifies the intervention of the court and the determination of the point oflaw may prevent a miscarriage of justice, (

b) the point of law is of importance to some class or body of persons of which the applicant is a member, or (

c) the point of law is of general or public importance. …

(4) On an appeal to the court, the court may (

a) confirm, amend or set aside the award, or (

b) remit the award to the arbitrator together with the court's opinion on the question of law that was the subject of the appeal. [52] In Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, the Supreme Court of Canada clarified the approach toidentifying a question of law for the purposes of granting leave under s. 31 of the Arbitration Act.

The majority provided the followingsummary at paras. 43–45 and 47: [43] The process for characterizing a question as one of three principal types — legal, factual, or mixed — is also well-established inthe jurisprudence (Canada (Director of Investigation and Research) v. Southam Inc., (SCC), [1997] 1 S.C.R. 748, atpara. 35).

In particular, it is not disputed that legal questions are questions “about what the correct legal test is” (Sattva, at para. 49,quoting Southam, at para. 35); factual questions are questions “about what actually took place between the parties” (Southam, at para.35; Sattva, at para. 58); and mixed questions are questions about “whether the facts satisfy the legal tests” or, in other words, theyinvolve “applying a legal standard to a set of facts” (Southam, at para. 35; Sattva, at para. 49, quoting Housen v.

Nikolaisen, 2002 SCC33 , [2002] 2 S.C.R. 235). [44] That said, while the application of a legal test to a set of facts is a mixed question, if, in the course of that application, theunderlying legal test may have been altered, then a legal question arises. For example, if a party alleges that a judge (or arbitrator) whileapplying a legal test failed to consider a required element of that test, that party alleges that the judge (or arbitrator), in effect, deleted thatelement from the test and thus altered the legal test.

As the Court explained in Southam, at para. 39: . . . 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 considersonly 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 testrequires 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.

Such an allegation ultimately challenges whether the judge (or arbitrator) relied on the correct legal test, thus raising a question of law(Sattva, at para. 53; Housen, at paras. 31 and 34-35). Accordingly, such a legal question, if alleged in the context of a dispute under theArbitration Act, and assuming the other jurisdictional requirements of that Act are met, is open to appellate review. These “extricablequestions of law” are better understood as a covert form of legal question — where a judge’s (or arbitrator’

s) legal test is implicit to theirapplication of the test rather than explicit in their description of the test — than as a fourth and distinct category of questions. [45] Courts should, however, 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 gainjurisdiction in appeals from arbitration awards or a favourable standard of review in appeals from civil litigation judgments — aretransparent (Sattva, at para. 54; Southam, at para. 36).

A narrow scope for extricable questions of law is consistent with finality incommercial arbitration and, more broadly, with deference to factual findings. Courts must be vigilant in distinguishing between a partyalleging that a legal test may have been altered in the course of its application (an extricable question of law; Sattva, at para. 53), and aparty alleging that a legal test, which was unaltered, should have, when applied, resulted in a different outcome (a mixed question). …

[47] Given these principles, a question of statutory

interpretation is normally characterized as a legal question. In contrast, identifying a question, broadly, as one of contractual

interpretation does not necessarily resolve the nature of the question at issue. Contractual

interpretation involves factual, legal, and mixed questions. In consequence, characterizing the nature of the specific question before the court requires delicate consideration of the narrow issue actually in dispute. In general, though, as the Court recently explained in Sattva, contractual

interpretation remains a mixed question, not a legal question, as it involves applying contractual law (principles of contract law) to contractual facts (the contract itself and its factual matrix) (para. 50) [Emphasis added.] [ 53 ] The court must identify a ground in s. 31(2) that supports the granting of leave to appeal in the event a question of law is properly identified. [ 54 ] In this case Greata relies on s. 31(2)(a).

This requires the court to conclude that the importance of the result to the parties justifies judicial intervention, and that a determination on the point of law may prevent a miscarriage of justice. [ 55 ] In Sattva Capital Corp. v. Creston Moly Corp. , 2014 SCC 53 , the requirements of s. 31(2)(

a) were discussed in detail. The Court’s findings were helpfully summarized by Madam Justice Warren in Conmac Enterprises Ltd. v. 0928818 B.C. Ltd. , 2018 BCSC 360 at para. 27 : [27] In order to rise to the level of a miscarriage of justice for the purposes of s. 31(2)(a), an alleged legal error must relate to a material issue in the dispute, which, if decided differently, would affect the result of the case. Therefore, in deciding whether s. 31(2)(

a) has been met, it is necessary to engage in a preliminary consideration of the merits of the appeal because an appeal with no chance of success would not affect the result of the case. The appropriate threshold for this preliminary assessment is whether the appeal has arguable merit (cannot be summarily dismissed as being without merit) in light of the standard of review on which the merits of the appeal will be judged.

The standard of review applicable to questions of law arising out of a commercial arbitration is reasonableness, unless the question is one that attracts the correctness standard, such as constitutional questions or questions of law of central importance to the legal system as a whole and outside the adjudicator's expertise: see Urban Communications at paras. 58–61 and 63.

Accordingly, "the leave inquiry will ordinarily ask whether there is any arguable merit to the position that the arbitrator's decision on the question in issue is unreasonable, keeping in mind that the decision-maker is not required to refer to all the arguments, provisions, or jurisprudence or to make specific findings on each constituent element, for the decision to be reasonable" : Sattva Capital Corp. v.

Creston Moly Corp. , 2014 SCC 533 at para 75 . [Emphasis added.] [ 56 ] The court retains residual discretion to deny leave even if the statutory criteria of s. 31(2) have been met. [ 57 ] In Sattva , the Court provided the following non-exhaustive list of factors to consider when exercising this residual discretion at para. 91: (

i) conduct of the parties; (ii) existence of alternative remedies; (iii) undue delay; and (iv) the urgent need for a final answer. However, the Court also noted that this residual discretion should be exercised with caution, particularly when the requirements of s. 31(2)(

a) are met. V.

DISCUSSION Should the One West Award be Set Aside? [ 58 ] Greata’s jurisdictional argument relies substantially on the assertion that dissolution of the Partnership was never pleaded as a basis for finding that work on the Project was “abandoned or suspended” within the meaning of s. 9.1 of the PMA. [ 59 ] Basing One West’s entitlement to compensation on dissolution of the Partnership and the resulting termination of the PMA is the overreach of jurisdiction that Greata attributes to the Arbitrator, and characterizes as an “entirely new claim”. [ 60 ] As previously referenced, the possibility that dissolution of the Partnership could be a triggering event for termination of the PMA was raised by One West in its second further amended statement of defence and counterclaim.

The pleading claims: The PMA was terminated on February 27, 2012 as a result of One West’s acceptance of the Partnership’s repudiation. Further or in the alternative, the PMA is terminated, by law or implicitly on its terms and those of the LPA, upon dissolution of the Partnership. [ 61 ] The pleading further claims that work on the Project was suspended in or about 2009 due to adverse economic conditions, and that One West subsequently submitted the Invoice in December 2011 in accordance with s. 9.1 of the PMA.

It is apparent that One West pleaded both that the PMA was terminated as a result of repudiation or, alternatively, dissolution. [ 62 ] One West argues, and I agree, that termination of the PMA effected by dissolution of the Partnership necessarily results in work on the Project being abandoned or suspended within the meaning of s. 9.1.

Section 9.1 of the PMA stipulates that if the Project is abandoned, One West is entitled to compensation for unpaid work. [ 63 ] There is no inconsistency in this chain of reasoning, and the content of the Award, read as a whole, indicates that the Arbitrator relied on this same rationale in making the One West Award. [ 64 ] The Arbitrator found that dissolution of the Partnership was “effective as of the date of [the Award] as the date the parties have accepted the dissolution of the Partnership and resulting termination of the PMA.” [ 65 ] The Arbitrator’s finding that “One West is entitled to claim for costs incurred on the termination of the PMA concurrently with the dissolution of the Partnership” is found at the end of a

section titled “Suspension or Abandonment by the Partnership”. The paragraph where the statement is found presents the Arbitrator’s finding that the PMA was not repudiated when One West submitted the

Invoice, then resolves One West’s contractual entitlement to compensation: The [Management Committee] never addressed suspension or abandonment of the [Project] and there was nothing internal about the [Project] in late 2011 to change the outlook from 2009 and 2010 . . . I do not think there was a suspension or abandonment of the [Project] by the Partnership that met the condition of s. 9.1. One West was not in compliance with the terms of the PMA in submitting the Invoice. It was consequently invalid and the PMA was not repudiated by the Partnership.

One West is entitled to claim for costs incurred on the termination of the PMA concurrently with the dissolution of the Partnership . [Emphasis added.] [ 66 ] The only coherent

interpretation of the Award is that the Arbitrator relied on the logic that dissolution of the Partnership led to termination of the PMA, which necessarily resulted in abandonment or suspension of work on the Project under s. 9.1. Compensation for unpaid work was triggered by that finding. The Award was made on this basis and this is not, with respect, an “entirely new claim”. [ 67 ] Further, I am of the view that the pleadings vested the Arbitrator with broad discretion to justify the One West Award.

This latitude is supported by the arbitration agreement, the pleadings and the parties’ conduct at the arbitration. As a result, the legal reasoning available to the Arbitrator was not restricted. [ 68 ] When initially challenged by One West, the Arbitrator determined that the arbitration agreement was sweeping and expansive. His

interpretation was upheld by the Court of Appeal. It is beyond question at this point that all disputes arising from or in connection with the PMA were properly submitted to arbitration. [ 69 ] I am of the opinion that this is a clear indication the Arbitrator properly assumed jurisdiction over a claim for outstanding payment related to that same contract . [ 70 ] Both parties’ arbitral pleadings are worded broadly. Greata maintained in its initial Arbitration Notice that “the [I]nvoice was not properly rendered and that no money is owing to One West by the Partnership”.

Greata also sought a declaration that neither the amount in the Invoice or “any other amount” was owing to One West. [ 71 ] This phrasing indicates that the issue of whether or not One West was owed the amount cited in the Invoice, or any other amount, was a central issue to be decided in the arbitration and was within the contemplation of Greata as early as the initial arbitration notice in 2012. [ 72 ] In addition to the portion already cited from One West’s counterclaim, the relief requested was articulated as follows: An award against the Partnership in the amount of $6,299,102.00 or alternatively such amount as found to be owing by the Partnership or in the further alternative on a quantum meruit basis. [ 73 ] The scope of relief requested clearly supports the assertion that One West’s entitlement to compensation generally was in issue, and that multiple grounds for relief were put before the Arbitrator. [ 74 ] The dispute regarding One West’s entitlement was properly referred to arbitration and the Arbitrator decided the very issues conferred upon him.

As a result, I do not find that he committed an arbitral error: Hanna at para. 44 . [ 75 ] Greata also argues that their consent to dissolution of the Partnership was exceeded because the Arbitrator failed to resolve the dispute between the Partnership and One West before making any declaration that the Partnership was dissolved. This position appears to be solely based on the following statement Greata made in closing argument before the Arbitrator: Greata accepts that [the Arbitrator has] jurisdiction to exercise [the power conferred on the BC Supreme Court pursuant to s. 38(1) (

f) of the Partnership Act ] in this arbitration and that, in light of everything that has happened, it is just and equitable that the Partnership be dissolved at the conclusion of this proceeding, on terms that protect the partners’ interests. Among other considerations, the Partnership should not be dissolved before the respective claims of the Partnership and One West are resolved, and the accounting issues among the partners fully addressed . [Emphasis added.] [ 76 ] This language does not give rise to a condition precedent or any other limitation that fettered the Arbitrator’s jurisdiction.

There is no imperative language that indicates Greata would withdraw their consent if the remaining issues were not resolved, or any suggestion that the legal reasoning applied by the Arbitrator was foreclosed.

In my view, the submission appears to be an invitation to the Arbitrator to resolve all of the outstanding issues rather than the imposition of a condition precedent. [ 77 ] Certainly, there is no evidence that the parties to the arbitration, or the Arbitrator, were of the view that Greata had imposed preconditions upon the ability of the Arbitrator to dissolve the Partnership. [ 78 ] Accordingly, I do not agree that the Arbitrator’s jurisdiction to dissolve the Partnership was conditional, or that the Arbitrator exceeded his jurisdiction by relying on a route of legal reasoning where dissolution is the starting point or triggering event rather than an incidental result. [ 79 ] Given my findings with respect to jurisdiction, I decline to set the One West Award aside pursuant to s. 30 of the Arbitration Act .

Should Greata be Granted Leave to Appeal? [ 80 ] Greata has posed the following question: Did the arbitrator err in law in making the One West award having regard to s. 9.1 of the Project Management Agreement and the absence of an approved Budget as defined by s. 7.1 of that Agreement?

[ 81 ] The characterization of this question as a question of law is articulated by Greata as follows: “It is an error of law for an arbitrator, by declaring a joint venture at an end, to declare rights that are inconsistent with the existing contract between the parties.” [ 82 ] It is well settled that, generally, questions of contractual

interpretation are questions of mixed fact and law: Sattva at para. 50; Teal Cedar Products at para. 47. [ 83 ] Despite this general rule, courts must examine whether, in the application of a legal test to a set of facts, the underlying legal test has been altered. This may give rise to an extricable question of law.

This examination must be undertaken rigorously to rule out claims where a party is, in fact, alleging that a legal test, which was unaltered, should have resulted in a different outcome: Teal Cedar Products at para. 45. [ 84 ] In Sattva , the Court raised a scenario that Greata submits is analogous to the case at bar at para. 64: [64] I accept that a fundamental principle of contractual

interpretation is that a contract must be construed as a whole (McCamus, at pp. 761-62; and Hall, at p. 15). If the arbitrator did not take the “maximum amount” proviso into account, as alleged by Creston, then he did not construe the Agreement as a whole because he ignored a specific and relevant provision of the Agreement .

This is a question of law that would be extricable from a finding of mixed fact and law. [Emphasis added.] [ 85 ] Greata submits that the Arbitrator made an extricable error of law because the Award, as emphasized in Greata’s written submissions, “does not disclose that the arbitrator directed his mind to the requirement of s. 9.1 of the PMA that any payments to One West were to be made in accordance with and proportionate to the

schedule of payments set out in the Budget.” [ 86 ] I do not agree. [ 87 ] The Arbitrator contemplated the requirements of s. 9.1 in coming to the conclusion that “ One West was not in compliance with the terms of the PMA in submitting the Invoice. It was consequently invalid and the PMA was not repudiated by the Partnership.” This statement discloses that the Arbitrator fully recognized in the Award that the budgeting requirements found in s. 9.1 of the PMA had not been met at the time One West issued the Invoice.

He did not fail to assess them or appreciate their significance. [ 88 ] The Arbitrator also made a number of findings with respect to the informal budgeting that One West presented to the Partnership including: (

i) that Greata did not object to One West’s informal budgeting practice until disputes arose; (ii) that One West had followed its established accounting practices in preparing cost estimates and recording expenditures; (iii) that no loss or damage to the Partnership was caused by the absence of a formal Budget; and (iv) that Greata accepted many of One West’s costs were reasonable. [ 89 ] These findings are drawn from the

section titled “Budget and Financing Issues”, where the Arbitrator discussed why an initial Budget was never adopted, and concluded that it had no effect on the validity of One West’s accounting. [ 90 ] The structure of the Award, read as a whole, clearly indicates that the Arbitrator considered the question of whether One West was entitled to compensation despite the absence of approved Budgets, and determined that One West was entitled to compensation on the basis of its own accounting. [ 91 ] I am satisfied that the Arbitrator turned his mind to the requirements of s. 9.1 of the PMA and decided that, in the circumstances, the absence of a formal Budget did not preclude the possibility of compensation for One West. [ 92 ] In my view, the question posed by Greata, in essence, challenges the Arbitrator’s contractual

interpretation of the PMA, including the application of s. 9.1, and is properly characterized as a question of mixed fact and law. [ 93 ] In any event, even if Greata’s proposed question does raise an issue of law related to the Arbitrator’s justification for the One West Award, I do not find that a determination has the potential to prevent a miscarriage of justice as required by s. 31(2)(a). [ 94 ] As stated by the Court in Sattva at para. 75, to satisfy the requirements of s. 31(2)(

a) the Court must ask “whether there is any arguable merit to the position that the arbitrator's decision on the question in issue is unreasonable, keeping in mind that the decision- maker is not required to refer to all the arguments, provisions, or jurisprudence or to make specific findings on each constituent element, for the decision to be reasonable”.

This statement assumes that the appropriate standard of review is reasonableness, which is not disputed by the Greata or One West. [ 95 ] An arbitrator’s decision is reasonable if it falls within a range of possible, acceptable outcomes that are defensible in respect of the facts and the law: Chriscan Enterprises Ltd. v. St.

Pierre , 2016 BCCA 442 at para. 32 . [ 96 ] I note here that it is not necessary for an arbitrator to meticulously assess all of the arguments advanced by the parties or to make specific findings on each constituent element in order for their decision to be reasonable: Sattva at para. 75, citing Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board) , 2011 SCC 62 at para. 16 . [ 97 ] The Award read as a whole discloses only one reasonable

interpretation of the Arbitrator’s reasoning: dissolution of the Partnership led to termination of the PMA, which resulted in work on the Project being abandoned. He was not restricted from relying on this legal basis for the One West Award, and he detailed many of the arguments, provisions and specific findings he relied on in awarding One West compensation. The structure of his reasoning is not opaque. [ 98 ] In my view, this is precisely the type of circumstance that the Supreme Court of Canada contemplated in Sattva when

discussing the assessment under s. 31(2)(a), and does not, on its own, suggest that the Arbitrator’s decision was unreasonable. [ 99 ] Further, I note that the position taken by Greata is an attempt to hold One West to the strict budgeting requirements of the PMA after a clear choice not to do so in the course of their contractual dealings. I agree with the following statement from One West’s written argument: the Arbitrator’s determination on this issue avoided the commercially unreasonable

interpretation that Greata could execute the PMA, accept an alternative, informal budgeting process by which One West continued to incur costs in performing services under the PMA, but then unilaterally preclude any payment to One West in respect of these or its pre-LPA services by refusing to agree to a Budget. [ 100 ] For these reasons, there is no arguable merit to the position that the Arbitrator’s decision was unreasonable or that an appeal would change the result. [ 101 ] Accordingly, even if the question could be characterized as a question of law, I do not find that a determination on the question would prevent a miscarriage of justice within the meaning of s. 31(2)(

a) and I decline to grant leave of appeal. VI. CONCLUSION [ 102 ] The petition is dismissed. One West is entitled to its costs at Scale B. “Crossin J.”