B.C. – court qualifies parties’ agreement to require only summary reasons as “penny-wise and pound-foolish” – #381

In Nolin v. Ramirez, 2020 BCCA 274, B.C.’s Court of Appeal set aside part of an arbitration award which rested on the arbitrator’s dismissal of a party’s evidence as suspicious in one context and reliance on it in another.  The handling of the evidence was so inconsistent that the Court found it “impossible to understand how the arbitrator came to his conclusion” on the related issues and the arbitrator provided no justification in the summary reasons agreed to by the parties.  Without more explanation in the brief reasons and unable to reconcile the findings and conclusions, the Court set aside that portion of the award related to the handling of that evidence.

The appeal involved a challenge to two (2) of six (6) orders issued by the decision in first instance Nolin v. Ramirez, 2019 BCSC 934 regarding the appeals of the two (2) arbitration awards, the Property Award and the Parenting Award. For more background on the underlying dispute and the decision in first instance, see the earlier Arbitration Matters note “Agreement to accept summary reasons is not acceptance of insufficient reasons”.

In first instance, on the leave to appeal applications, the chambers judge:

a) set aside the arbitrator’s conclusion estimating the value of Appellant’s vehicles and equipment;

b) dismissed the appeal from the arbitrator’s imputation of income to Appellant in the amount of $75,000.00;

c) allowed the appeal from the arbitrator’s award of lump-sum spousal support;

d) dismissed the appeal from the arbitrator’s valuation of investment account;

e) dismissed the appeal from the arbitrator’s award characterizing a particular parcel of land as family property; and,

f) dismissed the appeal from the Parenting Award.

On appeal to the Court of Appeal, only (d) and (e) were challenged.

(a) Standard of review – The Court paused, at paras 30-39 to determine whether the Supreme Court of Canada’s December 2019 decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 applied to the standard of review of family law arbitration awards under section 31 of the now-repealed Arbitration Act, RSBC 1996, c 55 (“Former Arbitration Act”).  The latter has been replaced, effective September 1, 2020, with the Arbitration Act, SBC 2020, c 2.

[37] In this case, if the statutory appeal mechanism contemplated in Vavilov captures s. 31(3.1) of the Arbitration Act[, RSBC 1996, c 55], the standard of review is palpable and overriding error for questions of mixed fact and law where the legal principle is not readily extricable: Housen v. Nikolaisen, 2002 SCC 33[, [2002] 2 SCR 235] at paras. 26–37. If Vavilov does not apply, the standard of review is reasonableness: see McMillan v. McMillan, 2015 BCSC 2177, aff’d [McMillan v. McMillan] 2016 BCCA 441, where Punnett J. relies on [Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (CanLII), [2014] 2 SCR 633]”.

The Court observed that neither the majority nor the dissent referred to Sattva Capital Corp. v. Creston Moly Corp. or Teal Cedar Products Ltd. v. British Columbia, “let alone the word “arbitration””.

Having identified the issue raised by the release of Vavilov and the parties’ views on its application to their appeal, the Court observed that, to its knowledge, “no appellate court has considered the issue” and declined to be the first appellate court to do so.

In my opinion, it makes no difference in this case whether the standard of review is reasonableness or palpable and overriding error, as the result would be the same. Since it is unnecessary to decide the obviously complex question, I will leave it to another day”.

(b) Concession on key fact – Respondent agreed that the arbitrator had made an error in the valuation of the investment account, overlooking a concession made by Respondent concerning a capital loss that ought to have been factored into the valuation of the account.  Despite being a question of fact, the error was manifest and was conceded by Respondent.  The Court held that the concession was justified by the documentary evidence and ordered that an appropriate deduction be made from the equalization order.

(c) Unreasonable handling of facts – In the Property Award, the arbitrator was asked to determine whether a particular parcel of land was or was not party of the family property.  The legal owner registered against title was Appellant’s mother but Respondent argued that the land was actually purchased by Appellant and, therefore, ought to be valued as part of the family property. 

The onus lay with [Appellant] to demonstrate that the Sunningdale Property was excluded property under s. 85 [of the Land Title Act, RSBC 1996, c 250]. The arbitrator needed to decide whether it was a gift from [Appellant’s mother] or whether [Appellant] owned the property all along”.

The Court disagreed with the arbitrator’s handling of certain evidence by the arbitrator was so inconsistent as to be unreasonable and warrant its intervention. In particular, the arbitrator held that Respondent’s evidence did not convince him that the stock portfolio was beneficially owned by Appellant but found that same evidence to be compelling when considering the half interest in the parcel of land.

[55] It is, in my view, impossible to understand how the arbitrator came to his conclusion regarding the half interest in the Sunningdale Property, after concluding that the stock portfolio was not beneficially held by Mr. Nolin. In addition, no mention is made of a key witness, Lon Nolin, and no justification was provided in the summary reasons for this conclusion. Sunningdale was not specifically mentioned in the reasons, other than in the context of “all real property”. The issue of who held the beneficial interest was not mentioned, except at para. 41, where the arbitrator found, “I do not accept the evidence relating to any other exclusion relating to the real property”.

[56] It is true that the arbitrator clearly stated that when it came to financial matters he accepted the evidence of Ms. Ramirez, and not that of Mr. Nolin—yet, he relied on Mr. Nolin’s evidence rather than Ms. Ramirez with respect to the ownership of the stock portfolio and the $400,000 family debt to Lon Nolin. Those findings and conclusions are difficult to reconcile with the finding that Sunningdale was family property.

[57] In my view, the arbitrator committed a palpable and overriding error when he dismissed the evidence of Ms. Ramirez as suspicious in one context, and then relied on it to find Sunningdale was family property. I consider his conclusion to have also been unreasonable”.

The Court then held that the chambers judge in first instance erred when finding that the arbitrator’s decision on the parcel of land was reasonable.

The Court noted that the parties did not want the matter to be referred back to the arbitrator and that there is “a logical evidentiary foundation for this Court to decide the issue” based on the evidence determined otherwise by the arbitrator.

(d) Costs – The Court noted that Respondent’s concession did impact the appeal but could have been made earlier.  Appellant was compelled to appeal and made full submissions before the concession was made.  Respondent was awarded costs of the appeal as the successful party.

urbitral notes – First, though not described as such, the concession appeared to reduce the fact to a clerical or calculation error which might otherwise have qualified for a post-award under section 27(1)(c) but was not argued as such.

Second, the parties had agreed to brief reasons but, in doing so, compromised the ability of the arbitrator to explain and the opportunity for the courts to understand the reasoning behind the result.