{"id":2056,"date":"2024-02-22T12:09:09","date_gmt":"2024-02-22T12:09:09","guid":{"rendered":"https:\/\/blog.nicarb.org\/?p=2056"},"modified":"2024-02-22T12:09:09","modified_gmt":"2024-02-22T12:09:09","slug":"lacuna-matata-should-we-worry-about-a-gap-in-b-c-s-domestic-arbitration-scheme","status":"publish","type":"post","link":"https:\/\/blog.nicarb.org\/index.php\/2024\/02\/22\/lacuna-matata-should-we-worry-about-a-gap-in-b-c-s-domestic-arbitration-scheme\/","title":{"rendered":"Lacuna matata\u2019: should we worry about a gap in B.C.\u2019s domestic arbitration scheme?"},"content":{"rendered":"\n

Author: Osler Hoskin & Harcourt LLP<\/strong><\/a><\/p>\n\n\n\n

Canada\/ February 20 2024<\/p>\n\n\n\n

The Court of Appeal for British Columbia\u2019s decision in\u00a0Bollhorn v. Lakehouse Custom Homes Ltd.,\u00a0<\/em>2023 BCCA 444<\/a>, highlights an apparent \u201clacuna\u201d, or gap, in the domestic arbitration scheme arising out of the combined effect of the\u00a0Arbitration Act<\/em><\/a>\u00a0and the Vancouver International Arbitration Centre\u2019s (VanIAC)\u00a0Domestic Rules for Arbitration<\/a>\u00a0(the Rules). Mr. Bollhorn applied for leave to appeal under the appeal mechanism in the Act, arguing that the arbitrator erred in law when he dismissed his arbitration claim on the basis of\u00a0res judicata<\/em>\u00a0\u2014 that his case had already been heard and resolved. In response, Lakehouse Custom Homes Ltd. argued that even if Mr. Bollhorn was correct, the Court could not hear the appeal: the Rules prohibit parties from appealing an arbitrator\u2019s decision for disputes not exceeding $250,000.<\/p>\n\n\n\n

If both parties are correct, the effect may be a gap in justice for Mr. Bollhorn: his claim will not have been heard on its merits, and no other forum may be available. In the result, the judge in chambers referred Mr. Bollhorn\u2019s application to a division of the court.<\/p>\n\n\n\n

Background<\/strong><\/p>\n\n\n\n

The parties entered into a contract in 2021 for the construction and purchase of a home. The contract included an arbitration clause.<\/p>\n\n\n\n

In early 2022, Lakehouse refused to complete the contract, following several orders directing changes in the contract\u2019s specifications, and disagreement on the amount payable to Lakehouse for those changes. Mr. Bollhorn brought an action in the British Columbia Supreme Court for specific performance, and\u00a0the Court ruled\u00a0<\/a>in his favour.<\/p>\n\n\n\n

Mr. Bollhorn subsequently identified deficiencies in the construction, many of which had been anticipated at the court hearing. When Lakehouse did not fix the deficiencies, Mr. Bollhorn filed a Notice to Arbitrate with the VanIAC.<\/p>\n\n\n\n

On July 30, 2023, the arbitrator dismissed the arbitration proceeding on the basis that it was barred by the doctrine of\u00a0res judicata.\u00a0<\/em>He indicated that the claims that Mr. Bollhorn now pursued in arbitration had previously been put forward by Mr. Bollhorn in the notice of civil claim in the 2022 British Columbia Supreme Court proceeding.<\/p>\n\n\n\n

The Court of Appeal\u2019s decision<\/strong><\/p>\n\n\n\n

Mr. Bollhorn sought leave to appeal to the Court of Appeal from the arbitrator\u2019s decision on the basis that the arbitrator erred in law in concluding that the issues submitted to arbitration were\u00a0res judicata<\/em>, including because his notice of civil claim did not advance a claim regarding the construction deficiencies and the contract assigned disputes regarding deficiencies exclusively to arbitration. Lakehouse asserted that the arbitration scheme did not allow for an appeal in the circumstances.<\/p>\n\n\n\n

Justice Saunders reviewed the arbitration scheme and found that the present case highlighted a gap. The new Act came into force on September 1, 2020. Section 4(a) of the Act generally restricts the court\u2019s involvement in arbitration proceedings in B.C. However, pursuant to s. 59(3), unless otherwise agreed to in an arbitration agreement, a party to arbitration may seek leave to appeal to the Court of Appeal on any question of law arising out of an arbitral award.<\/p>\n\n\n\n

The\u00a0regulation under the Act<\/a>\u00a0appointed VanIAC as the designated appointing authority and VanIAC promulgated its own Rules, which are divided into four parts. Part B \u2014 \u201cExpedited Procedures\u201d \u2014 applies to claims not exceeding $250,000. Mr. Bollhorn\u2019s claim has a value of approximately $95,000.<\/p>\n\n\n\n

Under Part B, R. 27(a) stipulates that there shall be no appeal on questions of law from an award issued under the Expedited Procedures, unless otherwise consented to by both parties.<\/p>\n\n\n\n

Justice Saunders indicated that the parties had revealed a lacuna in the domestic arbitration scheme: if Mr. Bollhorn was correct that the arbitrator\u2019s application of\u00a0res judicata<\/em>\u00a0was an error of law and if Lakehouse was correct that the arbitrator\u2019s decision could not be appealed, then Mr. Bollhorn\u2019s claim of deficiencies under the contract would not have been heard on its merits. Moreover, depending on whether the arbitrator\u2019s decision constituted an \u201caward\u201d, no other forum may be available to Mr. Bollhorn, as the contract assigns disputes regarding deficiencies exclusively to arbitration.<\/p>\n\n\n\n

In the result, Justice Saunders referred the application for leave to appeal to a division of the court.<\/p>\n\n\n\n

Takeaways<\/strong><\/p>\n\n\n\n

The eventual decision of the division may provide greater clarity on the mechanics of B.C.\u2019s domestic arbitration scheme, and the boundaries and repercussions of this apparent gap. While we wait for the division to weigh in, we are left with unresolved questions as to how the current scheme impacts the right of contractual parties to resolution of a claim on its merits.<\/p>\n","protected":false},"excerpt":{"rendered":"

Author: Osler Hoskin & Harcourt LLP Canada\/ February 20 2024 The Court of Appeal for British Columbia\u2019s decision in\u00a0Bollhorn v. Lakehouse Custom Homes Ltd.,\u00a02023 BCCA 444, highlights an apparent \u201clacuna\u201d, or gap, in the domestic arbitration scheme arising out of the combined effect of the\u00a0Arbitration Act\u00a0and the Vancouver International Arbitration […]<\/p>\n","protected":false},"author":1,"featured_media":2057,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[20,14],"tags":[],"class_list":["post-2056","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-arbitration-insights","category-news","col-lg-4 col-md-6"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/blog.nicarb.org\/wp-content\/uploads\/2024\/02\/download-1-1.jpg?fit=382%2C132&ssl=1","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pcb80P-xa","jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts\/2056","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/comments?post=2056"}],"version-history":[{"count":1,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts\/2056\/revisions"}],"predecessor-version":[{"id":2058,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts\/2056\/revisions\/2058"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/media\/2057"}],"wp:attachment":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/media?parent=2056"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/categories?post=2056"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/tags?post=2056"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}