2023 NBCA 19, 2023 NBCA 19

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 79-22-CA NEW BRUNSWICK HIGHWAY CORPORATION APPELLANT SOCIÉTÉ DE VOIRIE DU NOUVEAU- BRUNSWICK APPELANTE - and - - et - MRDC OPERATIONS CORPORATION RESPONDENT MRDC OPERATIONS CORPORATION INTIMÉE New Brunswick Highway Corporation v. MRDC Operations Corporation, 2023 NBCA 19 CORAM: The Honourable Justice Quigg The Honourable Justice French The Honourable Justice LeBlond Société de voirie du Nouveau-Brunswick c.

MRDC Operations Corporation, 2023 NBCA 19 CORAM : l’honorable juge Quigg l’honorable juge French l’honorable juge LeBlond Appeal from a decision of the Court of Queen’s Bench: July 20, 2022 Appel d’une décision de la Cour du Banc de la Reine : le 20 juillet 2022 History of Case: Historique de la cause : Decision under appeal: 2022 NBQB 141 Décision frappée d’appel : 2022 NBBR 141 Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o. Appeal heard: November 8, 2022 Appel entendu : le 8 novembre 2022 Judgment rendered: March 23, 2023 Jugement rendu : le 23 mars 2023

Reasons for judgment: The Honourable Justice Quigg Concurred in by: The Honourable Justice French The Honourable Justice LeBlond Counsel at hearing: For the appellant: Leonard Thomas Hoyt, K.C., David Duncan Young and Andrew R. Kinley For the respondent: David Foulds and Ahmed Kamel Motifs de jugement : l’honorable juge Quigg Souscrivent aux motifs : l’honorable juge French l’honorable juge LeBlond Avocats à l’audience : Pour l’appelante : Leonard Thomas Hoyt, c.r., David Duncan Young et Andrew R. Kinley Pour l’intimée : David Foulds et Ahmed Kamel THE COURT The appeal is dismissed with costs of $7,500.

LA COUR L’appel est rejeté avec dépens de 7 500 $. The judgment of the Court was delivered by QUIGG, J.A. I. Introduction [ 1 ] Central to this appeal is a decision of a three-member arbitration panel which was tasked with determining a fixed price for the final 10-year period of a 30-year Operation, Management, Maintenance and Rehabilitation Agreement (“OMM Agreement”) relating to the Trans-Canada Highway between Moncton and Fredericton.

The Panel released its decision in July 2020, and an amended award on September 18, 2020. [ 2 ] The New Brunswick Highway Corporation ( “ NBHC”) filed Notices of Preliminary Motions seeking: (1) confirmation that it had the contractual right to appeal the award on questions of law, pursuant to

Section 24.7 of the OMM Agreement; and (2) in the alternative, an order granting leave to appeal the award on questions of law, pursuant to s. 45(1) of the Arbitration Act , R.S.N.B. 2014, c. 100 . [ 3 ] The motions were heard in the Court of Queen’s Bench, as it then was, and a decision was issued on July 20, 2022. Essentially, the motion judge decided: 1) The OMM Agreement did not provide a right to appeal the award, on questions of law or otherwise;

2) The proposed grounds of appeal failed to raise questions of law and, as a consequence, leave to appeal could not be granted under s. 45(1) of the Arbitration Act ; and 3) Even if the proposed grounds of appeal did raise questions of law, leave to appeal should not be granted. [ 4 ] NBHC filed a Notice of Appeal claiming the motion judge erred in law respecting the first and second decisions and it took no issue with the third. [ 5 ] NBHC relied on the following provisions of the OMM Agreement in asserting it had a contractual right to appeal the Award in relation to errors in law: 24.7(

c) Subject to the exceptions set out in the Arbitration Act and monetary claims in excess of Two Hundred Thousand Dollars ($200,000.00) or errors in law, the decision of the Arbitrator shall be final and binding on the parties and shall not be subject to any appeal or review procedure, provided that the Arbitrator has followed the rules and procedures provided herein in good faith and has proceeded in accordance with the principles of natural justice. For greater certainty (but subject to the exceptions set out in the Arbitration Act ), the decision of the Arbitrator with respect to the Renewal Period Fixed Highway OMM Price pursuant to

Section 4.2 (sic) shall be final and binding on the parties. 24.7(

d) If the decision involves the resolution of a monetary claim in excess of Two Hundred Thousand Dollars ($200,000.00) or if there has been an error in law, the decision of the Arbitrator may be appealed by the parties and determined by an action brought in a court of competent jurisdiction. [ 6 ] NBHC’s alternate request for leave to appeal on questions of law is based on s. 45(1) the Arbitration Act , which provides: Appeal of award 45

(1) A party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that (

a) the importance to the parties of the matters at stake in the arbitration justifies an appeal, and (

b) determination of the question of law at issue will significantly affect the rights of the parties. Appel de la sentence arbitrale 45

(1) Une

partie peut appeler à la cour, avec sa permission d’une sentence arbitrale sur une question de droit, et celle-ci n’accorde sa permission que si elle est convaincue de ce qui suit :

a) l’importance pour les parties des questions en jeu à l’arbitrage justifie l’appel;

b) la décision concernant la question de droit litigieuse peut porter atteinte de manière significative aux droits des parties. [ 7 ] I would dismiss the appeal for the reasons that follow. II. Background [ 8 ] NBHC is a provincial Crown corporation formed in 1995 under the authority of the New Brunswick Highway Corporation Act , S.N.B. 1995, c. N-5.11 . The creation of NBHC allowed the Province of New Brunswick to contract with corporations,

like MRDC Operations Corporation (“MRDC”), for the implementation of major highway infrastructure projects. [ 9 ] In the spring of 1998, following its success in a competitive bidding process, MRDC commenced construction on the four-lane highway connecting Fredericton and Moncton (the “Facility”). [ 10 ] The OMM Agreement was a separate contract that provided for MRDC to operate, manage, maintain and rehabilitate the Facility over a 30-year period following its construction. Construction of the Facility began after the OMM Agreement was entered into by NBHC and MRDC.

It was later amended and restated in March 2000. [ 11 ] Under the OMM Agreement, in exchange for MRDC’s operation, management, maintenance, and rehabilitation of the Facility, NBHC would pay MRDC $172,000,000 (in 1998 dollars) for the first 20 years of the 30-year agreement. The first 20-year period of the OMM Agreement ran from January 22, 1998, to January 22,

Section 4.3 of the OMM Agreement delineates the proposal process to determine the price to be paid to MRDC for the final 10-year period, from 2018 to 2028 (the “Renewal Period”). It required MRDC to submit a proposal within a specified time frame and for the NBHC to either approve it or not. In July 2017, MRDC proposed a price of $431,678,136 comprised of 47 line items for the Renewal Period. NBHC did not accept the proposal, and negotiations failed. This triggered the operation of s. 4.3(b)(ii), which states that, in such an event, the matter is to proceed to arbitration pursuant to

Article 24 of the OMM Agreement. As a result, MRDC submitted the dispute to arbitration in May 2018. [ 12 ] In accordance with

Article 24, each party appointed one arbitrator to sit on a three-member panel. MRDC appointed Stephen R. Morrison FCIArb, and NBHC appointed Kenneth B. McCullogh, K.C. These members appointed the former Chief Justice of Canada, the Right Honourable Beverley McLachlin, P.C., C.C., C.St.J., C.Arb FCIArb. to chair the arbitration panel (the “Panel”).

The Panel’s task was to determine a “commercially reasonable” renewal price for the Renewal Period (the “Renewal Price”). [ 13 ] In the summer and fall of 2019, the parties exchanged documents including pleadings, witness statements, responding statements, and expert reports.

Line items that were discussed included: • Insurance costs; • Salt costs; • Pavement costs; • Maintenance and rehabilitation of high-level structures; • Rehabilitation of the Oromocto bridge; • Rehabilitation of standard structures; and • Rehabilitation of culverts. [ 14 ] The parties were able to resolve 29 of the 47 line items before and during arbitration. Pursuant to their obligation to negotiate, they agreed on many of the projected costs for items of the OMM Agreement for the remainder of the Renewal Period. They also agreed on aspects of pricing of disputed items.

Other items and prices remained in dispute. [ 15 ] This formed the basis for the Renewal Price. The remaining items proceeded to a hearing, with viva voce testimony of witnesses and independent experts and oral arguments by counsel, that spanned four weeks in January and February of 2020. The hearing was followed by written closing arguments and replies. [ 16 ] The final Renewal Price claim submitted by MRDC was $438,808,870.

NBHC’s proposal was $164,254,826 after deducting from its proposed Renewal Price a set-off claim for outstanding alleged deficiencies during the first 20 years of the OMM Agreement. [ 17 ] On July 15, 2020, the Panel released its decision, which set the Renewal Price at $307,645,861. This amount was based on the rejection of NBHC’s claim for set-off (relating to the first 20 years of the OMM Agreement). Importantly, the amount included a global risk contingency award (“RCA”) of $32,000,000, which is the target of one of NBHC’s proposed grounds of appeal.

NBHC had argued that a risk contingency be determined for each of the line items that went into the determination of the Renewal Price. The Panel wrote: From the Panel’s perspective, a reasonable approach to monetizing the risk factor is to begin with the projected costs for each disputed item, determine a “worst case” scenario for each of those items, and consign the difference between the projected cost and the worst case scenario cost to a notional “contingency bucket”.

The aggregate of all the amounts in the contingency bucket would represent the worst- case scenario if every risk associated with every disputed item were to occur. Since it is highly unlikely that every adverse risk will materialize, the Panel has applied what it believes, based on all of the evidence and submissions, to be a reasonable discount rate to the aggregate of the amounts consigned to the notional contingency bucket and added the resulting amount as a separate line item representing a monetary risk component. The risk component is then prorated over each of the Renewal Period years.

Finally, the Panel views the margin component as separate and distinct from cost and risk. The Panel has applied a margin component based on evidence of market comparables for similar work. [Panel decision, paras. 21-22] [ 18 ] On September 18, 2020, following written and oral submissions by both parties respecting corrections to be made to the decision, as permitted under s. 44 of the Arbitration Act , the Panel increased the Renewal Price to $311,712,923 in its Corrections Order.

An interest award for retroactive payments, as permitted by s. 1.3 of the OMM Agreement, and a costs award of $5,844,091, both in favour of MRDC, were also made in the Corrections Order. [ 19 ] The above facts gave rise to the August and October 2020 preliminary motions filed by NBHC, which sought, “ if leave to appeal the Award is required pursuant to Sections 24.7(

c) and (

d) of the OMM Agreement […], Section 45(1) of the Arbitration Act and Rule 16.02 of the Rules of Court ,” an order granting it leave to appeal the Award on questions of law. [ 20 ] As noted, the motion judge determined the OMM Agreement did not provide a right to appeal the Panel’s Renewal Price decision on questions of law or otherwise and denied NBHC’s motions for leave to appeal as they did not identify questions of law. She also concluded that, even if the grounds of appeal raised questions of law, leave to appeal should not be granted. This is the decision appealed. III. Relevant Provisions of the OMM Agreement and the Arbitration Act

(1) OMM Agreement [ 21 ] Following are the relevant provisions of the OMM Agreement:

Section 4.3 Preparation of Renewal Period Fixed Highway OMM Price Proposal (

a) The Operator shall prepare and provide to the Project Company for Approval a proposal (the “Renewal Period Fixed Highway OMM Price Proposal”) at least one hundred and eighty (180) days but not more than three hundred and sixty-five (365) days prior to the twentieth (20th) anniversary of the Commencement Date (the “Twentieth Anniversary Date”). The Renewal Period Fixed Highway OMM Price Proposal shall include the following: (

i) a proposed fixed price for the performance of the Highway OMM Work for the remaining ten

(10) Fiscal Years of the OMM Period (containing a breakdown of the fixed price for each such Fiscal Year); (ii) any required changes to the then current Master Programme; and (iii) such other information as may be reasonably requested by the Project Company.

(

b) The Project Company shall have sixty (60) days in which to review the Renewal Period Fixed Highway OMM Price Proposal and within such time shall notify (the “Proposal Notice”) the Operator, that: (

i) the Renewal Period Fixed Highway OMM Price Proposal is Approved; or (ii) the Renewal Period Fixed Highway OMM Price Proposal is not Approved, in whole or in part, together with reasons therefor in which event, the Operator and the Project Company shall, using reasonable commercial efforts, attempt to reach agreement on a modified Renewal Period Highway OMM Fixed Price Proposal within twenty

(20) Business Days following receipt by the Operator of the Proposal Notice or such other period of time that the parties may agree to in writing, failing which, the matter shall be resolved pursuant to

Article 24. (

c) If the Project Company and the Operator have not reached agreement regarding the Renewal Period Fixed Highway OMM Price Proposal prior to the Twentieth Anniversary Date or if the Operator does not provide the Renewal Period Fixed Highway OMM Price Proposal as required under Subsection 4.3(a), the most recent Twenty Year Fixed Highway OMM Price shall remain in effect until the Renewal Period Fixed Highway OMM Price Proposal has been Approved by the Project Company or otherwise resolved in accordance with

Article

Article 24 – Dispute Resolution 24.7 The Decision (

a) Subject to the Arbitration Act , the Arbitrator will make and send a decision in writing to the parties within thirty

(30) Business Days after the conclusion of all hearings referred to in

Section 24.6 unless that time period is extended for a fixed period by the Arbitrator on written notice to each party because of illness or other cause beyond the Arbitrator’s control and, unless the parties otherwise agree, will set out reasons for decision in the decision. (

b) In the case of a panel of Arbitrators, the decision of the majority of the Arbitrators shall be deemed to be the decision of the arbitration panel. (

c) Subject to the exceptions set out in the Arbitration Act and monetary claims in excess of Two Hundred Thousand Dollars ($200,000.00) or errors in law, the decision of the Arbitrator shall be final and binding on the parties and shall not be subject to any appeal or review procedure, provided that the Arbitrator has followed the rules and procedures provided herein in good faith and has proceeded in accordance with the principles of natural justice. For greater certainty (but subject to the exceptions set out in the Arbitration Act ), the decision of the Arbitrator with respect to the Renewal Period Fixed Highway OMM Price pursuant to

Section 4.2 shall be final and binding on the parties. (

d) If the decision involves the resolution of a monetary claim in excess of Two Hundred Thousand Dollars ($200,000.00) or if there has been an error in law, the decision of the Arbitrator may be appealed by the parties and determined by an action brought in a court of competent jurisdiction. 24.8 Jurisdiction and Powers of the Arbitrator (

b) Without limiting the jurisdiction of the Arbitrator at law, the parties agree that the Arbitrator shall have jurisdiction to:

(xi) make an order or orders as to the payment of costs of the arbitration[.] 24.9 Arbitration Act The rules and procedures of the Arbitration Act shall apply to any arbitration conducted hereunder except to the extent that they are modified by the express provisions of

Article 24.

(2) Arbitration Act [ 22 ] The relevant sections of the Arbitration Act are: Correction of award 44

(1) An arbitral tribunal may, on its own initiative within 30 days after making an award or at a party’s request made within 30 days after receiving the award, (

a) correct typographical errors, errors of calculation and similar errors in the award, or (

b) amend the award so as to correct an injustice caused by an oversight on the part of the arbitral tribunal. 44

(2) The arbitral tribunal may, on its own initiative at any time or at a party’s request made within 30 days after receiving the award, make an additional award to deal with a claim that was presented in the arbitration but omitted from the earlier award. 44

(3) The arbitral tribunal need not hold a hearing or meeting before rejecting a request made under this section. Appeal of award 45

(1) A party may appeal an award to the court on a question of law with leave, which Correction de la sentence arbitrale 44

(1) Le tribunal arbitral peut, de son propre chef, dans les trente jours après avoir rendu la sentence arbitrale ou sur demande d’une

partie présentée dans les trente jours de sa réception :

a) corriger dans le texte de la sentence arbitrale des erreurs de typographie, des erreurs de calcul et d’autres erreurs similaires;

b) modifier la sentence arbitrale de manière à remédier à une injustice que le tribunal arbitral a causée par inadvertance. 44

(2) Le tribunal arbitral peut, de son propre chef, à tout temps ou sur demande d’une

partie présentée dans les trente jours de sa réception, rendre une sentence arbitrale complémentaire pour traiter une demande qui a été présentée à l’arbitrage mais qui a été omise dans la sentence arbitrale précédente. 44

(3) Le tribunal arbitral n’est pas obligé de tenir une audience ou une réunion avant de rejeter une demande présentée en vertu du présent article. Appel de la sentence arbitrale 45

(1) Une

partie peut appeler à la cour, avec sa permission d’une sentence arbitrale sur une question de droit, et celle-ci n’accorde sa permission que si elle est convaincue de ce qui suit :

the court shall grant only if it is satisfied that (

a) the importance to the parties of the matters at stake in the arbitration justifies an appeal, and (

b) determination of the question of law at issue will significantly affect the rights of the parties. 45

(2) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law. 45

(3) If the arbitration agreement so provides, a party may appeal an award to the court on a question of fact or on a question of mixed fact and law. 45

(4) The court may require the arbitral tribunal to explain any matter. 45

(5) The court may confirm, vary or set aside the award or may remit the award to the arbitral tribunal, with the court’s opinion on the question of law, in the case of an appeal on a question of law, and give directions about the conduct of the arbitration.

a) l’importance pour les parties des questions en jeu à l’arbitrage justifie l’appel;

b) la décision concernant la question de droit litigieuse peut porter atteinte de manière significative aux droits des parties. 45

(2) Si la convention d’arbitrage le prévoit, une

partie peut appeler à la cour de la sentence arbitrale sur une question de droit. 45

(3) Si la convention d’arbitrage le prévoit, une

partie peut appeler à la cour de la sentence arbitrale sur une question de fait ou sur une question mixte de fait et de droit. 45

(4) La cour peut exiger du tribunal arbitral des explications sur une question quelconque. 45

(5) La cour peut confirmer, modifier ou annuler la sentence arbitrale ou la déférer au tribunal arbitral, accompagnée de son avis sur la question de droit, dans le cas d’un appel sur une question de droit, et donner des directives concernant la conduite de l’arbitrage. IV. Grounds of Appeal [ 23 ] NBHC sets out its grounds of appeal as follows: 1. Did the motion judge err in law in concluding s. 24.7 of the OMM Agreement does not grant an automatic right of appeal on a question of law by: (

a) failing to read the OMM Agreement as a whole and not recognizing the express right of appeal provided for in s. 24.7(

d) of the OMM Agreement for all awards decided through arbitration under the OMM Agreement; (

b) failing to assign meaning to all the terms of the OMM Agreement and specifically the terms “error(

s) in law” and “may be appealed” in ss. 24.7(

c) and (

d) of the OMM Agreement;

(

c) misinterpreting the terms “error(

s) in law,” “may be appealed” and “final and binding” in ss. 24.7(

c) and (

d) of the OMM Agreement, which are terms of art in arbitration and dispute resolution clauses; (

d) interpreting one sentence in s. 24.7(

c) of the OMM Agreement in isolation from the preceding sentence in that section; and (

e) failing to adopt an

interpretation of ss. 24.7(

c) and (

d) of the OMM Agreement that follows the governing principles of contractual

interpretation? 2. Did the motion judge err in law in concluding that NBHC’s preliminary motions did not identify questions of law? V. Standard of Review [ 24 ] NBHC claims the correctness standard of review applies to both grounds. [ 25 ] MRDC submits that the motion judge’s determination that the OMM Agreement does not grant NBHC a right to appeal on questions of law is entitled to deference and reviewable on a standard of mixed fact and law, and that she did not make a palpable and overriding error when she concluded s. 24.7 of the OMM Agreement does not grant NBHC the contractual right to appeal.

MRDC argues, in the alternative, that the motion judge was correct when she concluded there is no contractual right to appeal on questions of law in respect of the Award, the Interest Award or the Costs Award and, in the further alternative, that even if there were a contractual right to appeal on questions of law, the motion judge correctly concluded NBHC did not raise questions of law. [ 26 ] This Court recently discussed standards of review generally in 666917 N.B. Inc. et al. v. Stairs Building

(2004) Ltd. , 2022 NBCA 22 , [2022] N.B.J. No. 115 (QL): The discretionary standard reflects the high standard of deference accorded to discretionary decisions. On appeal, the Court may only interfere with a discretionary judicial decision if it is founded on an error of law, an error in the application of the governing principles, or a palpable and overriding error in the assessment of the evidence: Maisonneuve, Hamelin, Martin Ltd. v. JWT Campground Inc. , [2021] N.B.J. No. 205 (QL) (C.A.), at para. 45 .

With respect to the remaining standards, questions of law are reviewable on the standard of correctness, while questions of fact are reviewable on the standard of palpable and overriding error: Vautour et al. v. Her Majesty the Queen in right of the Province of New Brunswick et al. , 2021 NBCA 4 , [2021] N.B.J. No. 18 (QL) , at para. 31 ; Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235 . Questions of mixed fact and law are reviewable on the standard of palpable and overriding error, unless a question of law is extricable from the mix, in which case the standard of review is correctness.

Instances where a question of law is extricable 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” (see Sattva Capital Corp. v. Creston Moly Corp. , 2014 SCC 53 , [2014] 2 S.C.R. 633 , at para. 53 ; Algo Enterprises Ltd. v. Repap New Brunswick Inc. , 2016 NBCA 35 , 450 N.B.R. (2d) 238 , at para. 18 ; Vautour , at para. 31). [paras. 28-30] [ 27 ] With respect to the standard of review to be employed in the

interpretation of contracts, in The Conduct of an Appeal , 5th ed (Toronto: Lexis Nexis Canada, 2022), the learned authors John Sopinka, Mark A. Gelowitz, and W. David Rankin wrote: 4. Contractual

Interpretation The standard of review on appeals involving the

interpretation of a contract has been significantly altered in recent years. Historically, the

interpretation of contracts was a question of law and was reviewable for correctness on appeal. Over time, that consensus began to break down. Some provincial appellate courts began holding that the

interpretation of contracts may give rise to questions of mixed fact and law, whereas others continued following the historical approach. Ultimately, the Supreme Court of Canada repudiated the historical approach but recognized that correctness review may still be appropriate in certain circumstances.

In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 , [2014] S.C.J. No. 53 at para. 49, [2014] 2 S.C.R. 633(S.C.C.),the Supreme Court of Canada concluded that the historical approach of treating contractual

interpretation as a question of law could nolonger be justified. Instead, the Court held that contractual

interpretation generally involves questions of mixed fact and law. Suchquestions will generally be approached with deference on appeal, if an appeal is even available in the statutory context. Writing for a unanimous Court in Sattva, Rothstein J. offered two reasons for abandoning the historical approach to contractualinterpretation. First, contractual

interpretation had progressed beyond technical rules towards a “practical, common-sense approach” inwhich courts are required to consider the surrounding circumstances or “factual matrix” when interpreting a written contract. Second, thedistinction drawn by previous Supreme Court decisions between questions of law and questions of mixed fact and law suggested thatcontractual

interpretation fell into the latter category. This is because courts interpreting a contract must “ascertain the objective intent ofthe parties – a fact-specific goal – through the application of legal principles of

interpretation.” In addition, Rothstein J. noted that the purpose of the distinction between questions of law and those of mixed fact and law supported theCourt’s conclusion. In general, appellate intervention should be limited to questions that can be expected to have an impact beyond theparties to the particular dispute. In contract, the legal obligations arising from a particular contract are, in most cases, limited to theinterests of the particular parties. At the same time, Rothstein J. recognized that there may be exceptions to the general rule that contractual

interpretation involves issuesof mixed fact and law. First, certain issues in contract law clearly engage substantive rules of law, such as the requirements for theformation of the contract the capacity of the parties, and the requirement that certain contracts be evidenced in writing. Second, it may bepossible to identify an extricable question of law from within what was initially characterized as a question of mixed fact and law.Rothstein J. cautioned that “courts should be cautious in identifying extricable questions of law in disputes over contractual

interpretation.[§2.87-§2.9] [28] In Civil Appeals, vol. 2 (Toronto: Thompson Reuters, 2022), Donald J.M. Brown, K.C., wrote:

Interpretation of Contracts – Presumptively A Question of Mixed Fact and Law Since a contract provides operative legal norms, its construction, typically and historically was classified as a question of law and wasreviewed on the standard of correctness. However, since contract

interpretation is fact-specific, in that today the interpretative principlesare applied in light of the factual matrix, the Supreme Court of Canada in Sattva has held the standard is no longer correctness. Ofcourse, where it is necessary to make findings of fact as, for example, to establish the terms of a contract, other than the implications of aterm, the applicable standard is “palpable and over-riding error”. And, prior to Sattva, it was said that, as a prelude to

interpretation, thedetermination of the true meaning of the words and the factual matrix gives rise to either questions of fact or questions of mixed fact andlaw. As well, it has been said that whether a contract is ambiguous is a question of fact. Moreover, prior to Sattva, some courts said thatquestions of contract

interpretation directly gave rise to questions of mixed fact and law, whereas others, while conceding that theinterpretation of the words is a question of law, went on to say that the application of the contract to the particular facts gives rise to aquestion of mixed fact and law. That latter position is now the proper classification of contract

interpretation questions and accordinglypresumptively they will be reviewable by the “reasonableness” standard of appellate review.

Interpretation of Contracts – Exception: An Extricable Question of Law Of course, characterizing the issue as one of mixed fact and law will not automatically establish the standard of review. Rather, once thefacts have been established, the “correctness” standard may still apply. Primarily, this will be so where the

interpretation is seen asestablishing a precedent as is the case where the contract in question is a standard form contract, and, as such, as constituting an“extricable” question of law reviewable for correctness. As the Supreme Court has noted, “[E]xtricable questions of law include theapplication of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor”.Accordingly, decision-making process errors, such as the improper use of the principles of

interpretation, including the requirement thatthe agreement must be read as a whole, disregarding a “clear, compelling substantive provision”, and errors as to whether evidence of thefactual matrix is used properly in connection with the construction of an agreement, have been said to raise questions of law. [§ 14:25-§14:26] [29] As these excerpts highlight, in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633,the Supreme Court departed from the traditional approach to contractual

interpretation. Reflecting on this change in Corner Brook (City)

v. Bailey , 2021 SCC 29 , [2021] S.C.J. No. 29 (QL) , it observed: Sattva marked a significant change in the jurisprudence. Traditionally, the

interpretation of contracts was a matter of law, not mixed fact and law. This was because

interpretation was seen primarily as an exercise in giving meaning to words. Circumstances were generally relevant to

interpretation only where there was an ambiguity. [para. 17] [ 30 ] Sattva articulates the following principles of contract law: The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement (see Moore Realty Inc. v. Manitoba Motor League , 2003 MBCA 71 , 173 Man. R. (2d) 300 , at para. 15 , per Hamilton J.A.; see also Hall , at p. 22; and McCamus , at pp. 749-50). As stated by Lord Hoffmann in Investors Compensation Scheme Ltd. v.

West Bromwich Building Society , [1998] 1 All E.R. 98 (H.L.) : The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. (p. 115) With respect for the contrary view, I am of the opinion that the historical approach should be abandoned. Contractual

interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual

interpretation are applied to the words of the written contract, considered in light of the factual matrix. The purpose of the distinction between questions of law and those of mixed fact and law further supports this conclusion. One central purpose of drawing a distinction between questions of law and those of mixed fact and law is to limit the intervention of appellate courts to cases where the results can be expected to have an impact beyond the parties to the particular dispute.

It reflects the role of courts of appeal in ensuring the consistency of the law, rather than in providing a new forum for parties to continue their private litigation. For this reason, Southam identified the degree of generality (or “precedential value”) as the key difference between a question of law and a question of mixed fact and law.

The more narrow the rule, the less useful will be the intervention of the court of appeal: […] Similarly, this Court in Housen found that deference to fact-finders promoted the goals of limiting the number, length, and cost of appeals, and of promoting the autonomy and integrity of trial proceedings (paras. 16-17). These principles also weigh in favour of deference to first instance decision-makers on points of contractual

interpretation. The legal obligations arising from a contract are, in most cases, limited to the interest of the particular parties. Given that our legal system leaves broad scope to tribunals of first instance to resolve issues of limited application, this supports treating contractual

interpretation as a question of mixed fact and law. Nonetheless, it may be possible to identify an extricable question of law from within what was initially characterized as a question of mixed fact and law ( Housen , at paras. 31 and 34-35 ). 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. [Emphasis added; paras. 48, 50-53] [ 31 ] Sattva cautions appellate courts not to hasten to identify extricable errors of law in litigation respecting contractual

interpretation: However, courts should be cautious in identifying extricable questions of law in disputes over contractual

interpretation. Given the statutory requirement to identify a question of law in a leave application pursuant to s. 31(2) of the [ Arbitration Act ], the applicant for leave and its counsel will seek to frame any alleged errors as questions of law. The legislature has sought to restrict such appeals, however, and courts must be careful to ensure that the proposed ground of appeal has been properly characterized. The warning expressed in Housen to exercise caution in attempting to extricate a question of law is relevant here:

Appellate courts must be cautious, however, in finding that a trial judge erred in law in his or her determination of negligence, as it is often difficult to extricate the legal questions from the factual. It is for this reason that these matters are referred to as questions of “mixed law and fact”. Where the legal principle is not readily extricable, then the matter is one of “mixed law and fact” ... . (para. 36) Although that caution was expressed in the context of a negligence case, it applies, in my opinion, to contractual

interpretation as well. As mentioned above, the goal of contractual

interpretation, to ascertain the objective intentions of the parties, is inherently fact specific. The close relationship between the selection and application of principles of contractual

interpretation and the construction ultimately given to the instrument means that the circumstances in which a question of law can be extricated from the

interpretation process will be rare. In the absence of a legal error of the type described above, no appeal lies under the [ Arbitration Act ] from an arbitrator’s

interpretation of a contract. [Emphasis added; paras. 54-55] [ 32 ] Therefore, the question before this Court is: did the motion judge’s

interpretation of s. 24.7 of the OMM Agreement reveal an “extricable” question of law? If so the standard of review is correctness, and we can determine the correct

interpretation of the OMM Agreement . Otherwise, her

interpretation is entitled to deference and is subject to a standard of palpable and overriding error. VI. Analysis A. First ground of appeal – Did the motion judge err in concluding the OMM Agreement does not grant a contractual right of appeal on questions of law? [ 33 ] The motion judge held that a plain reading of s. 24.7 of the OMM Agreement indicates there is no right of appeal respecting the Renewal Price. She stated: In my view, a plain reading of

section 24.7 of the OMM Agreement does not grant NBHC an automatic right of appeal on a question of law. The process to arrive at a decision by an Arbitration Panel on The Renewal Price is set out comprehensively in the OMM Agreement and would have included an automatic right to appeal beyond those provided under the Arbitration Act , if that had been the intention of the parties. A review of

section 24.7 of the OMM Agreement is clear that the decision of the Renewal Price by an Arbitration Panel is final and binding on the parties other than pursuant to those exceptions as set out in the Arbitration Act . Pursuant to section 45(1) of the Arbitration Act a party may appeal an Arbitration Award to the Court with leave. In the circumstances of this case NBHC does not have a contractual right to appeal the Arbitral Awards related to the Renewal Price but must rely on the statutory remedies [available] to it under the Arbitration Act . [para. 30] [ 34 ] In other words, the motion judge’s

interpretation was that a plain reading of s. 24.7 does not grant a right of appeal; and, had it been their intention to include a right of appeal for the Renewal Price beyond the exceptions found in the Act , the parties would have provided for it. [ 35 ] NBHC asserts the motion judge made the following errors in concluding a plain reading of s. 24.7 does not grant a contractual right of appeal. Although these mirror the grounds of appeal set out at paragraph 23, I will repeat them here for ease of reference. NBHC states the motion judge: (

a) failed to read the OMM Agreement as a whole and to recognize the express right of appeal provided for in s. 24.7(

d) of the OMM Agreement for all awards decided through arbitration under the OMM Agreement; (

b) failed to assign meaning to all the terms of the OMM Agreement, specifically the terms “error(

s) in law” and “may be appealed” in ss. 24.7(

c) and (d); (

c) misinterpreted the terms “error(

s) in law,” “may be appealed” and “final and binding” in ss. 24.7(

c) and (

d) of the OMM Agreement, which are terms of art in arbitration and dispute resolution clauses; (

d) interpreted one sentence in s. 24.7(

c) of the OMM Agreement in isolation from the preceding sentence in that section; and

(

e) failed to adopt an

interpretation of ss. 24.7(

c) and (

d) of the OMM Agreement that follows the governing principles of contractual

interpretation. [ 36 ] MRDC argues that the motion judge’s

interpretation is consistent with the reading of the contract as a whole and with commercial principles and that it reflects good business sense in the context of the factual matrix. [ 37 ] The parties agree with the principles of contractual

interpretation the motion judge was required to apply. However, they disagree on whether the motion judge properly applied these principles in arriving at her decision. [ 38 ] When interpreting a contract, the main objective is to give effect to the intentions of the parties. In determining these intentions, the words of the contract form the starting point. That said, individual words and phrases must be read in the context of the entire agreement. A contract should be construed as a whole, and effect should be given to all its provisions.

This means that, when possible, the provisions of a contract should be reconciled in a manner that eliminates inconsistencies. In Sattva , Rothstein J. wrote for the Court: 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. [para. 64] See also Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust , 2007 ONCA 205 , [2007] O.J. No. 1083 (QL), at para. 24 . [ 39 ] It is also a fundamental principle of contractual

interpretation that contracts must be interpreted in accordance with sound commercial principles and good business sense. The words of a contract should be interpreted in the context of the surrounding circumstances in which the parties reached their agreement. In Sattva , the Court wrote: Regarding the first development, the

interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of their understanding” ( Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada , 2006 SCC 21 , [2006] 1 S.C.R. 744, at para. 27 , per LeBel J.; see also Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) , 2010 SCC 4 , [2010] 1 S.C.R. 69, at paras. 64-65 , per Cromwell J.).

To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning: No contracts are made in a vacuum: there is always a setting in which they have to be placed [...].

In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating. ( Reardon Smith , at p. 574, per Lord Wilberforce) [para. 47] See also Directcash ATM Management Partnership et al. v. Maurice’s Gas & Convenience Inc. et al. , 2015 NBCA 36 , [2015] N.B.J. No. 142 (QL). [ 40 ] In my view, applying these principles of contractual

interpretation to s. 24.7 of the OMM Agreement confirms that the parties intended there be no right to appeal an arbitral award relating to the Renewal Price, except on questions of law with leave of the court. Reading ss. 24.7(

a) and (

c) together does not support an automatic contractual right of appeal regarding disputes that concern the Renewal Price. I will address each of the errors NBHC contends were made in the order they were alleged.

(1) Did the motion judge fail to examine the OMM Agreement as a whole? [ 41 ] When s. 24.7(

c) of the OMM Agreement is read in its entirety, the words used in its second sentence differentiate a Renewal Price award from other arbitral decisions with respect to the right to appeal errors of law. Although the first sentence refers to both “the exceptions set out in the Arbitration Act ” and “errors in law,” the second sentence relating to the Renewal Price only makes reference to “the exceptions set out in the Arbitration Act .” [ 42 ]

Section 45 of the Act provides that, unless there is an express agreement by the parties that expands the scope for appeal, an arbitral award can only be appealed with leave of a court on a question of law. Had the parties intended there be a right to appeal an arbitral award relating to the Renewal Price on a question of law, they would have repeated the phrase “or errors in law” in the second sentence of s. 24.7(c).

The omission of those words, coupled with continued reference to the “exceptions” under the Arbitration Act , make it apparent there was no right to appeal a Renewal Price arbitral award while preserving a party’s right to seek leave to appeal on a question of law notwithstanding the “final and binding” nature of the decision. [ 43 ] If the second sentence of s. 24.7(

c) were to be read in the context of both ss. 24.7(

c) and (d), there would be no reason to include the second sentence of s. 24.7(

c) unless the parties intended the Renewal Price award to be treated differently than all other arbitral awards when it came to rights of appeal. Had it been the intention of the parties that there be an automatic right to appeal a Renewal Price arbitral award on a question of law, there would be no need to distinguish it from other arbitral decisions. Such a result would have flowed automatically from either the first sentence of s. 24.7(

c) or s. 24.7(d). Interpreting the last sentence of s. 24.7(

c) as requiring leave to appeal a Renewal Price award on a question of law ensures that the words used in that sentence are given meaning. If we were to interpret s. 24.7(

c) as NBHC suggests, it would render the second sentence useless or purposeless. The first sentence of s. 24.7(

c) provides that, but for the exceptions set out in the Act , monetary claims in excess of two hundred thousand dollars ($200,000) or errors of law, there can be no appeal. If the Renewal Price were to be treated the same as other arbitral decisions, there would be no reason to make specific provision for it. The second sentence is only given meaning if it is interpreted to mean that Renewal Price decisions are not subject to the monetary claims and errors of law exceptions. If the intention of the parties was as NBHC argues, they would have included the same “for greater certainty” wording in both s. 24.7(

a) and(d). They did not. [ 44 ] As submitted by MRDC, interpreting the last sentence of s. 24.7(

c) as distinguishing a Renewal Price arbitration from other arbitral disputes under the OMM Agreement is also consistent with the fact that the process to determine the Renewal Price is a unique feature of the OMM Agreement, which is subject to its own distinct pre-arbitration process. [ 45 ] Interpreting the OMM Agreement as limiting a party’s right to appeal a Renewal Price award to questions of law with leave also accords with sound commercial principles. [ 46 ] MRDC makes its case on this point as follows in its written submissions: (

a) the OMM Agreement provides that the Renewal Price must be completely re-set for the final 10 years of the OMM Period; (

b) until the Renewal Price is established, MRDC does not know how much it will receive from the Province to carry out MRDC’s obligations during the final 10 years of the OMM Period, and NBHC does not know how much it will be required to pay; (

c) while such uncertainty exists, it is very difficult for either party to budget and for MRDC, in particular, to optimize its plans for maintaining and rehabilitating the Facility; (

d) the OMM Agreement provides that MRDC may not submit its Renewal Price Proposal – and thus begin the Renewal Price setting process – until the final year of the Initial Period; (

e) given the sheer scope and factual and technical complexity of the Renewal Price Proposal, and the amounts in issue, it was a virtual certainty that the Renewal Price would not be agreed or determined prior to the expiry of the Initial Period (in this case, the Award was released approximately 2.5 years following the end of the Initial Period and this Appeal will be heard more than 4.5 years into the Renewal Period); and

(

f) the OMM Agreement provides that, until such time as the Renewal Price is agreed or determined, NBHC need only pay MRDC thesame Annual Fixed OMM Price that it paid during the last year of the Initial Period. [para. 59] [47] In my view, the process to be used to determine the Renewal Price makes a strong commercial and businesscase in favour of the conclusion that the parties intended an arbitral award setting the Renewal Price to be final and binding on theparties and only subject to appeal in very limited circumstances (i.e. where a court could be convinced to grant leave to appeal on aquestion of law), based upon the plain and ordinary meaning of the words. [48] Again, it is apparent that the parties included the Renewal Price in the second sentence of s. 24.7(

c) todistinguish it from other arbitral decisions. A plain reading of that provision demonstrates that the monetary claims and errors of lawexceptions do not apply to Renewal Price decisions. As such, there is no contractual right to appeal Renewal Price decisions. It isimperative we keep in mind that every contract is unique unless it is a standard form contract. [49] In this case, the motion judge clearly considered the full text of s. 24.7 in the context of the OMM Agreementas a whole as well as the surrounding commercial circumstances and the factual matrix.

She summarized the parties’ respective positionsand quoted from their written submissions. The motion judge clearly decided questions of mixed fact and law and, in doing so, she madeno palpable or overriding error. [50] NBHC asks this Court to do exactly what the Supreme Court explicitly warned against: create questions of lawfrom the questions of mixed fact and law that were before the Panel and the motion judge (see Teal Cedar Products Ltd. v.

BritishColumbia, 2017 SCC 32, [2017] 1 S.C.R. 688). [51] The jurisprudence unquestionably instructs that only in rare cases is it permissible for an appellate court toreview a lower court’s contractual

interpretation on a standard of correctness. This is not one of them. I add that even if I had applied thecorrectness standard, I would not have found error.

(2) Did the motion judge err in failing to assign meaning to all the terms of the OMM Agreement? [52] NBHC argues the motion judge failed to assign meaning to all the terms of the OMM Agreement because shedid not expressly “mention, explain or describe the importance of” the phrases “error(

s) in law” and “may be appealed” in its ss. 24.7(c)and (d). [53] In Stairs Building, this Court wrote: Both parties agree courts should consider the surrounding circumstances of a contract when interpreting it. In Sattva Capital Corp. v.Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, the Supreme Court wrote the

interpretation of a contract is inherently factspecific: The shift away from the historical approach in Canada appears to be based on two developments. The first is the adoption of an approachto contractual

interpretation which directs courts to have regard for the surrounding circumstances of the contract – often referred to asthe factual matrix – when interpreting a written contract (Hall, at pp. 13, 21-25 and 127; and J.D. McCamus, The Law of Contracts (2nded. 2012), at pp. 749-51). The second is the explanation of the difference between questions of law and questions of mixed fact and lawprovided in Canada (Director of Investigation and Research) v. Southam Inc., (SCC), [1997] 1 S.C.R. 748, at para. 35,and Housen v.

Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 26 and 31-36. […] [para. 39] [54] It is clear from the decision that the motion judge considered and understood NBHC’s arguments concerningthe meaning of the phrases “error(

s) in law” and “may be appealed.” She outlined the respective positions of the parties, demonstratingshe had considered all arguments including NBHC’s submissions regarding the phrase “for greater certainty” and the effect of thephrases “final and binding,” “errors in law” and “may be appealed.” With these considerations in mind, the motion judge determined that

a plain reading of s. 24.7(

c) did not provide an automatic right of appeal on a question of law. I would dismiss this ground of appeal.

(3) Did the motion judge err by incorrectly interpreting “terms of art”? [ 55 ] NBHC asserts the phrases “error(

s) in law,” “may be appealed” and “final and binding” are all “terms of art,” which are commonly found in arbitration contracts. It suggests the inclusion of these phrases means the parties provided for express rights of appeal. NBHC referenced numerous cases to support its contention, but none are authority for such a broad proposition. I agree with MRDC that these terms are ordinary phrases, and the motion judge did not misconstrue them. [ 56 ] Among the 50 cases cited by NBHC, the only one that uses the phrase “term of art” is the decision of the Court of Appeal of Alberta in IFP Technologies (Canada) Inc. v.

EnCana Midstream and Marketing , 2017 ABCA 157 , [2017] A.J. No. 666 (QL), which involved a standard form contract. In that case, a fundamental issue was whether the term “working interest” with respect to oil and gas leases had any meaning in Canadian oil and gas law. The Court found the phrase was a “legal term of art with a specific meaning in the oil and gas industry [...] which [the] Court should uphold in keeping with what were undoubtedly the parties’ mutual intentions when the subject contract was concluded” (para. 1).

The case before us is distinguishable because NBHC is attempting to transform ordinary phrases into fixed or standardized phrases having immutable legal meanings. [ 57 ] NBHC’s argument that the motion judge committed a reviewable error in law by failing to “explain” the “terms of art” in her decision is without merit. [ 58 ] The motion judge did not misconstrue the phrases in question, and I would dismiss this ground of appeal.

(4) Did the motion judge improperly “isolate” terms? [ 59 ] NBHC alleges the motion judge “improperly isolated” the phrases “for greater certainty” and “final and binding” in the second sentence of s. 24.7(

c) of the OMM Agreement in deciding there is no contractual right to appeal the Award. [ 60 ] As stated earlier, the motion judge considered the language of the OMM Agreement as a whole (including all of s. 24.7), the commercial practicalities as well as the factual matrix and concluded there was no contractual right of appeal. [ 61 ] NBHC relies on the decision of the Court of Appeal for Ontario in 1298417 Ontario Ltd. v. Lakeshore (Town) , 2014 ONCA 802 , [2014] O.J. No. 5449 (QL), in support of the following principles of

interpretation that it says apply to the phrase “for greater certainty”: (

a) when placed at the beginning of a sentence, the phrase “for greater certainty” indicates that the words that follow are intended to provide a fuller understanding of the previous sentence; (

b) the words that follow the phrase “for greater certainty” cannot change the meaning and intent of the words that precede it; and (

c) the phrase suggests that the words that follow should be read consistently with the words that precede it. [ 62 ] NBHC argues that interpreting s. 24.7(

c) to restrict appeals to questions of law with leave offends these principles. However, 1298417 Ontario Ltd. does not support NBHC’s position and can be distinguished on its facts. [ 63 ] In that decision, the Court of Appeal for Ontario determined the trial judge made extricable legal errors when interpreting a clause in an agreement in isolation rather than construing the clause as a whole. At issue on appeal was the trial judge’s

interpretation of the words “additional capacity” in a contractual provision:

The provision at issue […] states: The Municipality hereby grants and approves the allocation of additional capacity in the Existing System so as to allow for full development of the St. Clair Shores Subdivision, in compliance with the existing zoning provisions for the said Subdivision. For greater certainty, said additional capacity shall be deemed to have been expressly reserved for the benefit of the St. Clair Shores Subdivision, and the Municipality shall not, prior to completion of full development and build out of residential and commercial buildings in the St.

Clair Shores Subdivision, grant and/or approve additional capacity in the Existing System for lands outside of the St. Clair Shores Subdivision. [Emphasis added; emphasis in original omitted; para. 5] [ 64 ] In reading the sentence that begins with “for greater certainty,” the trial judge ascribed a different meaning to the term “additional capacity” than to the same term in the previous sentence.

Not only was the trial judge’s reading of the sentence in question inconsistent with his reading of the previous sentence, it also resulted in an illegal, unenforceable contract, which could not have been the intention of the parties. [ 65 ] In the case before us, no similar issue exists. As submitted by MRDC in its written submission regarding 1298417 Ontario Ltd. : […] Interpreting sections 24.7(

c) and 24.7(

d) as restricting appeals of a Renewal Price award to questions of law with leave, does not require the same terms to be given different meanings from one sentence to the next; nor does it render sections 24.7(

c) or 24.7(

d) illegal and unenforceable. Furthermore, interpreting the second sentence of

section 24.7(

c) as requiring leave to appeal a question of law in the context of a Renewal Price award is entirely consistent with the OMM Agreement, the legislative scheme set out in the Act , and the weight of jurisprudence emphasizing the need for judicial deference to decisions of commercial arbitrators. [para. 86] [ 66 ] I agree. NBHC’s suggestion with respect to the inclusion of the phrase “for greater certainty” would result in the second sentence having no other purpose than to repeat the first sentence verbatim. That would not be consistent with sound interpretive principles. [ 67 ] Reading the OMM Agreement (specifically its

Article 24 respecting dispute resolution) as a whole does not favour recognition of an automatic right of appeal on the Renewal Price. The sentence that begins with “for greater certainty” cannot be overlooked in the context of the surrounding provisions. [ 68 ] When the OMM Agreement was crafted over 20 years ago, the price for the first two thirds of the contract was $172,000,000 (in 1998 dollars). It is reasonable that the parties understood that the Renewal Price for the last 10 years would also be in the millions of dollars, well above the $200,000 referenced in

Article 24. It is reasonable to interpret that, by adding the “for greater certainty” language, the parties meant to clarify that simply because the Renewal Price exceeds $200,000, there was no automatic right to appeal an arbitral decision relating to its assessment. [ 69 ] Also unsupported by an

interpretation of the OMM Agreement as a whole is NBHC’s additional argument that the phrases “for greater certainty” and “final and binding” were included in the last sentence of s. 24.7(

c) in order to make clear that the arbitration of the Renewal Price was to be treated as a “valuation” with respect to appeals. [ 70 ] To characterize the Renewal Price as a “monetary claim” would be incorrect, in my opinion. An attempt to find jurisprudence that defines what exactly constitutes a “monetary claim” provided limited results. Regardless, the simple

definitions/descriptions of “claim” support my opinion of an “incorrect characterization.” In Canadian Abridgment Words & Phrases , two cases discussed the word “claim”: In practice the word “claim” and the phrase “cause of action” relate to the same thing and have one meaning. [ Minick v. Trow 83 NY 514, 516]

A claim in a just juridical sense, is a demand of some matter as of right, made by one person upon another to do or to forbear to do someact or thing as a matter of duty. [Prigg v. Commonwealth 16 Pet. 541] [71] Furthermore, in Province of New Brunswick v. Grant Thornton, 2020 NBCA 18, [2020] N.B.J. No. 70 (QL),Drapeau J.A. wrote: First, s. 5(1)(

a) applies to a “claim”, which is defined in s. 1(1) as “a claim to remedy the injury, loss or damage that occurred as a resultof

an act or omission”. In Johnson v. Studley, 2014 ONSC 1732, [2014] O.J. No. 1232 (QL), Justice Perell observed a “less circular andmore useful definition for ‘claim’ would be that a ‘claim’ is a cause of action, which is the fact or facts which give a person a right tojudicial redress or relief against another” (para. 54). He refers to the following cases in support of that understanding of the word“claim”: Lawless v. Anderson, 2011 ONCA 102, [2011] O.J. No. 519 (QL), at para. 22, Rouleau J.A. for the Court; and Aguonie v.Galion Solid Waste Material Inc., (ON CA), [1998] O.J. No. 459 (C.A.) (QL), at para. 24.

I agree with thatinterpretation and the underlying equation between a claim and a cause of action, which Justice Perell defines, correctly in my view, as afact situation that gives a person a right to a judicial remedy against another. The discoverability rule relates to causes of action, notpotential or possible causes of action. Likewise, s. 5(1)(

a) applies to claims, not “potential” or possible claims. [para. 93] [72] Although reversed on other grounds, the Supreme Court confirmed Drapeau J.A.’s reasons regarding the terms“cause of action” and “claim.” In Grant Thornton LLP v. New Brunswick, 2021 SCC 31, [2021] S.C.J. No. 31 (QL), the Court wrote: In arguing that the legislature ousted the common law rule, Grant Thornton points to some linguistic differences between the commonlaw rule and s. 5.

It emphasizes the fact that the common law rule uses the term “cause of action”, whereas s. 5 uses the term “claim”.According to Grant Thornton, these concepts are distinct: the former refers to a set of facts entitling a plaintiff to a remedy from thecourt, while the latter is “purely a limitations concept” with “only two factual components (wrongful conduct and resulting damage)”(A.F., Grant Thornton LLP and Kent M. Ostridge, at para. 65, quoting D. Zacks, “Claims, Not Causes of Action: The Misapprehensionof Limitations Principles” (2018), 48 Advocates’ Q. 165, at p. 165).

I recognize that the distinction between “claim” and “cause of action” could be meaningful in some circumstances; but in my view, it isnot so here. In fact, the LAA’s own wording shows that the use of “claim” does not rule out a shared meaning with “cause of action”.Section 1(1) defines a claim as a “claim to remedy the injury, loss or damage that occurred as a result of

an act or omission”. In short, s.1(1) indicates that the legislature's use of the term “claim” focuses on a set of facts giving rise to a remedy, which is the same meaningthat Grant Thornton attributes to the term “cause of action”. This

interpretation is supported by the French text of s. 5(2) of the LAA, which reads in part as follows: “[l]es faits ayant donné naissanceà la réclamation sont découverts le jour où le réclamant a appris ou aurait dû normalement apprendre ”. In addition, the French text of s.1(1) defines “ réclamation” as “[r]éclamation pour obtenir réparation de préjudices, de pertes ou de dommages survenus par suite d’unacte ou d’une omission”. As is apparent, the wording of the French text supports my

interpretation of the English text, and confirms that“claim” in s. 5 means “cause of action”, namely: discovering the facts giving rise to a claim to obtain relief for the injury, loss or damagethat resulted from

an act or omission. This is the legal equivalent of “a set of facts entitling a plaintiff to a remedy”, the definition of a“cause of action” put forward by Grant Thornton. More probative are the Hansard Debates preceding the enactment of the LAA. When asked why the statute uses the term “claim” insteadof “cause of action”, the Minister of Justice explained: In a sense, it is really just semantics.

Tim Rattenbury, who works for the Office of the Attorney General, and I had a good discussion.The word “claim” is just another way to characterize bringing forward your matter for purposes of litigation. “Cause of action” is thesame thing. The standardization of these particular ways of characterizing an action before the courts is simply semantics. (New Brunswick, Legislative Assembly, Journal of Debates (Hansard), 3rd Sess., 56th Assem., June 17, 2009, at p. 50 (Hon. Mr. Burke)) In other words, according to the Minister, using “claim” instead of “cause of action” amounts to a distinction without a difference.

Whilenot in itself determinative, the Minister’s statement can hardly be taken as evidencing the “clear legislative language” needed to oust orlimit the common law rule (see Godfrey, at para. 32). If anything, it demonstrates the opposite.

[Emphasis in original; paras. 36-39] [ 73 ] There may be cases where the term “claim” cannot be equated to “cause of action,” but this is not one of those. [ 74 ] The commercially reasonable contract price for the Renewal Period which resulted from the Arbitration process is not a “monetary claim.” The Renewal Price is not a claim under the OMM Agreement; it is simply a contract price. [ 75 ] As MRDC points out in its written submission, the word “valuation” is absent from the main body of the OMM Agreement, whereas the words “arbitration” and “arbitrator” are used repeatedly.

Article 24 provides that arbitration will involve: (

a) the appointment of an arbitrator or arbitral panel; (

b) the exchange of pleadings; (

c) the filing of evidence; and (

d) the conduct of an oral hearing.

Section 4.3 expressly provides that this is the arbitration process to follow should the parties be unable to agree. [ 76 ] As a result, I do not agree with NBHC that the OMM Agreement can be interpreted to mean that an arbitration held to decide the Renewal Price would constitute a “valuation.” I would dismiss this ground of appeal.

(5) Did the motion judge err by failing to set out, refer to or follow the governing principles of contractual

interpretation? [ 77 ] NBHC contends the motion judge failed to “set out, refer to or follow” the governing principles of contractual

interpretation. In my view, this amounts to an insufficiency of reasons ground. It is well established that courts of appeal, when considering the sufficiency of reasons, should read them as a whole in the context of the evidence, the arguments and the hearing. In R. v. R.E.M. , 2008 SCC 51 , [2008] 3 S.C.R. 3, the Supreme Court wrote: These purposes are fulfilled if the reasons, read in context, show why the judge decided as he or she did. The object is not to show how the judge arrived at his or her conclusion, in a “watch me think” fashion. It is rather to show why the judge made that decision.

The decision of the Ontario Court of Appeal in Morrissey predates the decision of this Court establishing a duty to give reasons in Sheppard . But the description in Morrissey of the object of a trial judge’s reasons is apt. Doherty J.A. in Morrissey , at p. 525, puts it this way: “In giving reasons for judgment, the trial judge is attempting to tell the parties what he or she has decided and why he or she made that decision” (emphasis added). What is required is a logical connection between the “what” – the verdict – and the “why” – the basis for the verdict.

The foundations of the judge’s decision must be discernable, when looked at in the context of the evidence, the submissions of counsel and the history of how the trial unfolded. Explaining the “why” and its logical link to the “what” does not require the trial judge to set out every finding or conclusion in the process of arriving at the verdict. Doherty J.A. in Morrissey , at p. 525, states: A trial judge’s reasons cannot be read or analyzed as if they were an instruction to a jury. Instructions provide a road map to direct lay jurors on their journey toward a verdict.

Reasons for judgment are given after a trial judge has reached the end of that journey and explain why he or she arrived at a particular conclusion. They are not intended to be, and should not be read, as a verbalization of the entire process engaged in by the trial judge in reaching a verdict. The judge need not expound on matters that are well settled, uncontroversial or understood and accepted by the parties. This applies to both the law and the evidence.

Speaking of the law, Doherty J.A. states in Morrissey , at p. 524: Where a case turns on the application of well-settled legal principles to facts as found after a consideration of conflicting evidence, the trial judge is not required to expound upon those legal principles to demonstrate to the parties, much less to the Court of Appeal, that he or she was aware of and applied those principles. [Emphasis added; some emphasis in original; paras. 17-19] [ 78 ] In F.H. v. McDougall , 2008 SCC 53 , [2008] 3 S.C.R. 41, the Supreme Court set out the guidelines to follow when rendering a decision.

After referring to R. v. Sheppard , 2002 SCC 26 , [2002] 1 S.C.R. 869 , on the meaning of adequate reasons, Rothstein J. wrote that the duty to give adequate reasons, as summarized by Binnie J. in R. v. Walker , 2008 SCC 34 , [2008] 2 S.C.R.

245 , requires a judge to justify and to explain the result, to tell the losing party why he or she lost, to provide for informed consideration of the grounds of appeal and to satisfy the public that justice has been done (see McDougall , at para. 98 ). [ 79 ] Similarly, in T.L. v. A.C. , 2013 NBCA 24 , 402 N.B.R. (2d) 373, this Court found that a trial judge had correctly applied the appropriate legal principles despite not clearly articulating them in his decision.

The Court based its conclusion on the judge’s references to the parties’ briefs, which identified and outlined these principles. [ 80 ] As noted above, in this case, the motion judge abundantly referred to, and quoted from, both parties’ briefs throughout her decision. She also quoted numerous relevant passages from Supreme Court jurisprudence setting out the applicable legal principles. There is no merit to this ground of appeal, and I would dismiss it. B.

Second ground of appeal – Did the motion judge err in concluding NBHC’s grounds of appeal did not identify questions of law relating to the arbitration awards? [ 81 ] This ground focused largely on the RCA (in the initial arbitration award), the costs award, the corrections order and the interest award, with respect to which NBHC submits there are numerous questions of law.

(1) Risk contingency award [ 82 ] NBHC contends there are questions of law arising from the Panel’s determination of the RCA: (

a) the Panel made inconsistent findings because the RCA is inconsistent with the Initial Award; (

b) the Panel double-compensated MRDC for risk; (

c) the Panel disregarded and failed to consider relevant evidence regarding the inclusion of global risk amounts; (

d) the Panel formulated and applied the RCA in an arbitrary and illogical manner without evidential support; (

e) there was a breach of natural justice when the Panel adopted the RCA approach without allowing the parties to comment on it. [ 83 ] I will now turn to each sub-issue regarding the errors that were alleged to have been made in determining the RCA. (

a) Inconsistent findings [ 84 ] The motion judge makes some general findings with regard to NBHC’s attempts to craft errors of law which are irrelevant to the extricable question of law it purports to have identified. She wrote: NBHC has gone to great lengths to set out the Arbitration Panel’s

interpretation and assessment of the various items highlighted which they allege amount to “errors in law”. However, the Court is struck by the fact that all of these comments turn upon NBHC’s

interpretation of the facts and their disagreement with the approach taken by the Arbitration Panel. It is important to step back and consider the process that the Arbitration Panel went through in crafting the extremely detailed Initial Arbitral Award much of which centered upon the assessment of the best available evidence of projected costs into the future.

The Arbitration Panel was tasked with the calculation of the Renewal Price for ten years from 2018 – 2028 for the operation,maintenance, management, and rehabilitation of 200 kms of a four-lane highway. The task was painstaking and involved enormousefforts on behalf of MRDC and NBHC in presenting their best assessment of what the Renewal Price should be and why.

The Court isleft with the impression that NBHC has identified all the items in the Initial Arbitral Award, the Costs Order, the Corrections Order andthe Interest Award that they do not agree with and have attempted to craft “errors in law” for the manner these factual findings came tobe.

These are not, in my respectful view, true questions of law as contemplated in the Arbitration Act. [pars. 33-34] [85] The Panel was required to consider and determine several questions of fact and mixed fact and law afterconsidering thousands of documents, written and oral testimony from 39 fact and expert witnesses, and extensive oral and writtensubmissions. [86] As MRDC listed in its written submission, the questions of fact and mixed fact and law that the Panelconsidered and decided included the following with respect to the RCA: (

a) whether a commercially reasonable price should include a contingency; and (

b) a reasonable quantum for any contingency. [87] The Panel’s decision involved extensive consideration of the factual matrix before it. In my view, as I explainbelow, there were no extricable errors of law that would allow this Court to intervene. [88] NBHC argues that the Panel made “legal errors” in including the RCA in the Renewal Price. [89] A review of the record reveals the motion judge clearly considered each of these arguments – again quotingexcerpts from NBHC’s written submission on the motions – before rejecting them. She found NBHC had not raised “true questions oflaw” in its preliminary motions. She determined NBHC’s position was based on its own

interpretation and its disagreement with thePanel’s approach. She observed that the Panel’s decision was “extremely detailed,” “centered upon the assessment of the best availableevidence,” considered the evidence and arguments of both parties and calculated the Renewal Price as precisely as possible (paras. 33,37).

In support of these comments, she referred to Teal Cedar Products Ltd. for the proposition that the Supreme Court has confirmedthe need to exercise caution in determining whether issues raise true questions of law (see Teal Cedar Products Ltd., at paras. 45-47). [90] Because Teal Cedar Products Ltd. reaffirms Sattva, the motion judge’s reliance on it demonstrates she had theSattva principles firmly in mind when she made her decision. She was aware that courts must be cautious in identifying questions of lawand that, when a legal principle is not easily extricable, the issue is one of mixed law and fact.

Also, in most cases, it should be clearwhether the dispute is over a general proposition that might qualify as a principle of law or over a particular set of circumstances. Themotion judge wrote: The Arbitration Panel in this matter was made up of three extremely qualified individuals. The detail provided in each of the InitialArbitral Award, Corrections Order, Costs Award and Interest Award speak to the laborious nature of this project.

Faced with thedaunting task of fixing a Renewal Price for the parties, the Arbitration Panel considered the evidence of experts, the arguments ofseasoned lawyers representing both parties and crafted, with as much precision as possible, a Renewal Price of what is admittedly amoving target. The complexity of the issues considered by the Arbitration Panel is apparent when reviewing their findings in the InitialArbitral Award. This was not a simple arbitration. This Court must therefore determine if it is appropriate to grant leave to NBHC in these circumstances.

Justice Russel in MacPherson v.N.B.P.E.A., (NB KB), 2000 CarswellNB 196, [2000] N.B.J No. 222, 226 N.B.R(2d) 243, discussed the granting ofleave pursuant to section 45(1) of the Arbitration Act. Justice Russel reviewed the approach to be taken by the Court when asked toconsider a request for leave under section 45(1) at paragraphs 17 to 20 as follows: [17] Section 45(1) of the Act says:

“45(1) A party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that (

a) the importance to the parties of the matters at stake in the arbitration justifies an appeal, and (

b) determination of the question of law at issue will significantly affect the rights of the parties.” [18] The two subsections must first be satisfied by the appellant and while it is apparent his legal account is of critical importance to himit may be that the question of responsibility for the legal fees is not a question of law that will “significantly affect the rights of theparties.” Nevertheless, I err on the side of the appellant in determining these two issues. [19] The British Columbia Commercial Arbitration Act at s. 31(2) contains wording somewhat similar to our s. 45(1).

In determiningwhether leave should be granted Lambert, J.A., in Domtar Inc. v. Belkin Inc., (BC CA), [1989] B.C.J. No. 1714 (C.A.),went on to discuss what he calls “residuary discretion”: “I have set out, at the beginning of

Part VII, the reasons why I think there must be a residuary discretion to grant or refuse leave after theconditions for avoiding the disentitlement under subsection 31(2) are met by compliance with paras. (a), (

b) or (

c) of that subsection.The next question is to consider the scope of the residuary discretion. The answer must grow out of a consideration of the purpose anddesign of commercial arbitration. “As I have indicated, the general approach to the residuary discretion under s. 31 does not seem to have been before this court before. “If the decision of the arbitrator in such cases is so obviously wrong that he cannot have reached his decision on a matter of substance bya considered decision-making process, which is what the parties have contracted for, then leave should be granted.

Otherwise, it shouldbe refused.” [20] That principle seems to assume the court is hearing only a leave application. Here the court has been asked to grant leave and, ifgran

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