Court of Appeal Decision of the Week

What Is the Effect of a Tribunal “Termination Order”?

Case: Tresoro Mining Corporation v. Mercer Gold Corp. (B.C.), 2018 BCCA 160 (CanLII)

Keywords: Arbitration Clause; Termination Order; Final Award; Arbitration Act, RSBC 1996, c 55

Synopsis:

The Appellant, Mercer Gold Corp., applies to vary an order staying its amended counterclaim pending conclusion of arbitration proceedings. Arbitration proceedings become “unnecessary or impossible” as per Rule 34(3) of the B.C. International Commercial Arbitration Centre’s rules when the Appellant fails to pay arbitration fees and the Arbitration Tribunal issues a “termination order”. The application to lift the stay is dismissed on the basis that this “termination order” actually constitutes a “final award” under the Arbitration Act, RSBC 1996, c 55.

On appeal, the Appellant submits the Chambers Judge erred by, inter alia, characterizing the termination order as a final award. The Court of Appeal allows the appeal.

Importance:

For an appellate lawyer, perhaps the sweetest words one can read from a panel (depending on what side one is on) are found at para. 46 of the decision:

While this Court generally will apply a deferential standard in reviewing a discretionary decision, it may intervene where it is manifest from the judge’s reasons that the court misdirected itself or came to a decision based on an error of law or an error in principle, failed to give any or sufficient weight to all relevant considerations, or where the decision is so clearly wrong as to amount to an injustice: Elsom v. Elsom, 1989 CanLII 100 (SCC), [1989] 1 S.C.R. 1367 at 1374‒5; Penner v. Niagara (Regional Police Services Board), 2013 SCC 19 (CanLII) at para. 27, citing Friends of the Oldman River Society v. Canada (Minister of Transport), 1992 CanLII 110 (SCC), [1992] 1 S.C.R. 3; and Dhillon v. Pannu, 2008 BCCA 514 (CanLII) at para. 28.

So what allowed the Court of Appeal to depart from its ordinarily deferential standard? In this case, it all boils down to language and the significance of a “termination order”. Rule 34(3) provides as follows:

The arbitration tribunal may order the termination of the arbitration where it finds that the proceedings have become unnecessary or impossible. (See para. 31).

The Court of Appeal found that, properly characterized, a termination order is really just a procedural step in the arbitration process. They do not determine or address an issue on its merits. Considering the Arbitration Act, the Court of Appeal found the termination order could not be considered an “award” and did not determine substantive issues raised in the Appellant’s counterclaim. (See para. 33). Yet, in the court below, the termination order was considered to have dismissed the Appellant’s counterclaim on the merits for “want of prosecution”. (See para. 34).

The Court of Appeal noted the Trial Judge’s concern that, by lifting the stay and allowing the Appellant to proceed with its counterclaim against the individual defendants, the Appellant benefits from deliberately failing to pay its share of the arbitration fees to “thwart” the process. (See para. 34).

That being said, citing Premium Brands Operating GP Inc. v. Turner Distribution Systems Ltd., 2011 BCCA 75 (CanLII) at para. 4, the Court of Appeal concluded that the Arbitration Tribunal simply could not have dismissed the counterclaim for want of prosecution:

Based on Premium Brands and the definition of “award” in the Arbitration Act, the tribunal could not dismiss the amended counterclaim for want of prosecution as found by the judge below. Therefore, those claims, as they relate to Mr. Pierce and the other individual defendants in the underlying litigation, remain outstanding. (See para. 37).

The Court of Appeal determined that the effect of the order under appeal was to “permanently foreclose” the Appellant from obtaining a determination of its claims against the personal defendants on their merits – a result that amounted to an injustice. (See para. 44). As such, the Court of Appeal allowed the appeal and granted the Appellant’s application to lift the stay order.

Counsel for the Appellant: Craig Dennis, Q.C. (Dentons Canada LLP, Vancouver)

Counsel for the Respondents: Allan Doolittle and Victoria Broughton (Gudmundseth Mickelson LLP, Vancouver)

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Posted: Wednesday, May 02, 2018