Kingsgate Property Ltd. v. Vancouver School District No. 39: Issue Estoppel and Prior Arbitrations under the Same Agreement

The British Columbia Supreme Court’s decision in Kingsgate Property Ltd. v. Vancouver School District No. 39, 2023 BCSC 560 (Kingsgate v. VSD39) has implications for the application of issue estoppel to multiple arbitrations on the same subject matter under the same agreement. Below, we review the case and outline our considerations in respect of the issues reviewed by the Court.

Brief Factual Background

In 1972, Vancouver’s Board of Education of School District 39 (“VSB”), as landlord, entered into a lease with Royal Oak Holdings Ltd. (“Royal Oak”) which included several renewal periods, for a total of 99 years (the “Lease”). Section 29.09 of the Lease prescribed a formula that set the rent for each renewal term as follows:

… eight and one-quarter (8-1/4%) percent of the market value of the SAID LANDS at the date which shall be six (6) months before the expiration of the TERM or the renewal term next preceding the renewal term in respect of which the BASIC RENT has not been agreed upon, as the SAID LANDS would be valued at that time if vacant and ready for immediate development to their highest and best lawful use by a person or persons ready, willing and able to purchase and develop the SAID LANDS for that immediate use and such market value of the SAID LANDS shall be determined by arbitration as provided in Article XXIV. [emphasis added]

As noted above, the Lease expressly provided that the market value of the Property was to be determined by arbitration as described in the agreement. This form of arbitration was triggered twice, and ultimately resulted in the most recent arbitration being appealed to the BC Supreme Court (as discussed below).

1999 Market Value Arbitral Award (the “1999 Award”)

In 1999, VSB and Royal Oak engaged Section 29.09 of the Lease in order to initiate arbitration to determine the market value for the 1997-2007 term. The tribunal appointed by the parties for this arbitration was asked to interpret section 29.09 to consider the market value of the property. The majority of the tribunal interpreted s. 29.09 – and in particularly the reference to “immediate use” – as referring to “outright approval use” in order to determine the Property’s market value.

In doing so, the tribunal rejected the possibility of “discretionary conditional use” under the provision, given that discretionary conditional use would entail a lengthier approval process and therefore was inconsistent with 29.09’s express reference to “immediate use” (as emphasized above). In other words, outright approval allowed for a particular use of the property to immediately commence as of right, whereas discretionary conditional use would have required an indeterminate amount of time before that particular use could commence.

Subsequently, in 2005, Royal Oak assigned the Lease to Kingsgate Property Ltd. (“Kingsgate”), who in turn agreed – along with Beedie Development LP (“Beedie“) as a partner – to perform Royal Oak’s obligations under the Lease.

2022 Market Value Arbitral Award (the “2022 Award”)

In 2022, VSB and Kingsgate initiated arbitration to determine the market value for the 2017-2027 term. Like the 1999 arbitration, the award in the 2022 arbitration was not a unanimous decision. Unlike the 1999 arbitration, however, the majority of the tribunal in 2022 interpreted Section 29.09 of the Lease and concluded that the “immediate use” language referred to the highest and best use for which the property might lawfully be developed as of the applicable valuation date – in other words, “discretionary conditional use” governed rather than “outright approval use.” In this regard, the panel disagreed with the conclusions of the original panel in the 1999 Award.

Importantly for the purpose of this article, the 2022 tribunal considered whether it was bound to follow the 1999 majority’s interpretation of the Lease by virtue of the legal concept known as issue estoppel.

Broadly speaking, issue estoppel entails that the judgement of a court (or in this case, arbitral tribunal) is final and the same legal issues cannot be subsequently re-litigated (or arbitrated) in a separate suit commenced between the same parties (see, for example, Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 at para 54).[1]

Although the tribunal majority noted that issue estoppel would prima facie apply to certain of the 1999 majority’s findings, the majority considered whether it nevertheless should exercise its discretion not to apply the doctrine. The majority concluded that if it were to strictly apply issue estoppel and consider itself bound to follow the incorrect interpretation applied by the 1999 tribunal, that would ultimately “work an injustice” and “frustrate the contractual intentions of both parties.” Therefore, the majority declined to apply issue estoppel in the circumstances.

As a result, the property was valued at $116.5 million; by contrast, had the majority followed the interpretation described in the 1999 Award, the property would have been valued at only $20 million. Kingsgate and Beedie were therefore found liable for significant back rent amounts owing to VSB (a total that was $42 million greater than what it would have been had the 1999 Award been followed).

Unsurprisingly, Kingsgate and Beedie applied for leave to appeal on the basis that the arbitral tribunal had incorrectly refused to follow the doctrine of issue estoppel when making its decision, given that the 1999 Award had already settled the very same issue under the very same agreement.

The Decision of the British Columbia Supreme Court

The decision relevant to this article is in respect of Kingsgate and Beedie’s application for leave to appeal the 2022 Award.

Under s. 31(2) of British Columbia’s old Arbitration Act, 1996 (which applied in this case) – as well as its successor legislation (the Arbitration Act, SBC 2020, c2), for that matter – leave to appeal was available in respect of questions of law if the Court were to determine that one of three conditions was met:

  1. the importance of the result of the arbitration to the parties justifies the intervention of the court and the determination of the point of law may prevent a miscarriage of justice,
  2. the point of law is of importance to some class or body of persons of which the applicant is a member, or
  3. the point of law is of general or public importance.

In addition, the Court noted that the language of the statute indicated that it “may grant leave”, meaning that it held the discretion to deny leave even if the statutory requirements were met.

Before considering this case, however, the Court reviewed (1) what constitutes a question of law, and (2) what the appropriate threshold was in order to assess the question of law at issue in a given case.

In relation to the first issue, questions of law are “about what the correct legal test is”, and although contractual interpretation is generally a question of mixed fact and law, an extricable question of law might be identifiable. The Court observed that, broadly speaking, the more the question can be abstracted from the particular facts of the case and understood as a question of principle, the more likely it is that the question will be characterized as a question of law with general application/precedential value. That being said, the Court also cautioned that precedential value was not a prerequisite to the existence of a legal question, and that as a general proposition, the scope of what constitutes a question of law is relatively narrow.

In relation to the second issue, the Court observed that the legislation requires that a court be satisfied that the determination of that point of law “may prevent a miscarriage of justice”. In that regard, the Court concluded that the appropriate threshold was whether the leave application has “arguable merit”, meaning the issue cannot be dismissed through a preliminary examination. The Court further noted that this assessment is done against the standard of review that would be applied to the appeal itself (if granted), in turn alluding to the uncertainty as to the standard of review applicable to arbitral awards following Vavilov. (Interestingly, we note that courts across Canada have generally appeared reluctant to address this issue, subject to certain exceptions).

Turning to the case at issue, the Court first considered whether the proposed appeal was grounded in a question of law arising out of the award. The Court identified two questions of law:

  1. whether the tribunal majority erred in law in its interpretation of the 1999 Award, and the issue to which estoppel applied; and
  2. whether the 2022 tribunal majority considered irrelevant factors when it decided not to apply issue estoppel.

In respect of the first question, the Court noted that prior case law supports the proposition that issue estoppel and res judicata apply to arbitration proceedings, and that whether a court has erred in applying the principles of res judicata and in purporting to overrule a previous decision have been held to be a question of law. However, the Court also observed that it had not been presented with any case law on whether an interpretation made by an arbitral tribunal in respect of a prior arbitration award for purposes of identifying the issue to which issue estoppel applies is a question of law. As a result, the Court approached this issue from a first-principles basis.

Relying on the distinction between questions of law, questions of fact, and questions of mixed fact as set out in Canada (Director of Investigation and Research) v. Southam Inc., 1997 CanLII 385 (SCC) (“Southam”), the Court acknowledged that the interpretation of a prior arbitral award in a subsequent arbitration proceeding[2] was not about a legal test and therefore, at first glance, did not appear to be a legal question. However, the Court also noted that neither did it fit neatly into the category of a question of fact or a question of mixed fact and law.

Interestingly, the Court instead resolved this ambiguity by concluding that the interpretation of a prior arbitration award to apply issue estoppel resembled the interpretation of a statute, which is a question of law, more closely than it resembled the interpretation of a contract, which is a question of mixed fact and law. The Court explained:

[69]…the questions of interpreting an Award and identifying issues to which issue estoppel applies can be analogized more readily to a question of statutory interpretation—which is a question of law—being the interpretation of legal text with binding force (an Award) to determine the parties’ governing obligations under a legal doctrine (issue estoppel). [emphasis added]

As a result, the Court concluded that the interpretation of an arbitration award by a subsequent panel for purposes of identifying the issue to which issue estoppel relates was a question of law.

Regarding the second question – whether the 2022 tribunal majority considered irrelevant factors in deciding not to apply issue estoppel – the Court’s analysis was brief and straightforward. In particular, the Court determined that since consideration of an irrelevant factor when exercising a discretion conferred by law is an error of law, the second question was therefore also a question of law – such that an appeal was appropriate.

Lastly, the Court turned to the question of whether any of the criteria of s. 31(2) of Arbitration Act, 1996 had been met, and if so, whether the Court would exercise its discretion to nevertheless deny leave.

First, the Court found that the significant financial consequences of the 2022 Award (namely a $42M increase in rent owing), were sufficient to satisfy the “importance of the result to the parties” criterion. Second, the “general importance to the public” criterion applied to clarifying the application of issue estoppel in arbitration proceedings.

Finally, given the Court’s conclusion that both questions were questions of law, the Court then considered whether either or both satisfied the “arguable merit” threshold discussed above. The Court found that there was arguable merit to both proposed questions of law, as the tribunal majority had (1) arguably misinterpreted the 1999 Award for the purpose of identifying the issue to which issue estoppel applied, and (2) considered irrelevant/inappropriate factors in deciding not to apply issue estoppel.

As a result, the Court exercised its discretion to grant Kingsgate leave to appeal the arbitral award. As of the date of publication for this case comment, the appeal remains in progress.


Given that this case involved only an application for leave to appeal, and not the appeal itself, the foregoing is certainly not the final word on the matter. In that regard, we await with interest how these issues are addressed at the actual appeal.

Nevertheless, this decision raises interesting and potentially significant questions as to the finality of arbitration in the context of long-term contractual relationships. As the Court observed, it in fact raises the issue of competing forms of finality – on the one hand, finality in the form of narrow rights of appeal of an award, and on the other hand, the finality of a prior award when there is a subsequent arbitration under the same agreement.

Broadly speaking, appellate case law across Canada has endorsed deference to the decisions of arbitrators in order to promote efficiency and finality in arbitration. Similarly, courts have cautioned against any judicial inclination to readily identifying extricable questions of law so as to situate a matter within narrow appeal routes. To that end, it is notable that British Columbia’s legislation at s. 31(2) creates an additional hurdle to any appeal, by providing the court a residual discretion to deny leave even where the statutory requirements are otherwise met.

However – and bearing in mind that Kingsgate was only required to meet the “arguable merit” threshold (as noted by the Court) rather than fully prove its case on the merits – it is nevertheless notable that British Columbia courts have seemingly demonstrated a greater willingness to push the boundaries of what might constitute an extricable question of law (see, for example, Escape 101 Ventures Inc. v March of Dimes Canada, 2022 BCCA 294, where the British Columbia Court of Appeal concluded that a material misapprehension of the evidence was an extricable error of law).

In any event, the specific questions of law at issue in Kingsgate v. VSD39 are intriguing for the impact they may have on commercial arbitration more generally.

Most significant is the conclusion of the Court that interpretation of a prior arbitration award for purposes of identifying the issue to which issue estoppel applies is a question of law. As the Court’s analysis makes clear, this was a difficult issue to assess because it did not fit comfortably within the scope of a question of law or a question of mixed fact and law. While the Court’s analogizing to statutory interpretation is persuasive in some respects, it raises further questions in other respects. For example, as the Court itself observed, issues of statutory interpretation are not inevitably questions of law – questions about the application of a statute that are “inextricably linked to the evidentiary record at the arbitration hearing” are questions of mixed fact and law, if not questions of fact.

Arguably, then, this suggests that a preliminary battleground (as it relates to the interpretation of a prior arbitration award for purposes of issue estoppel) is the framing of the question as sufficiently abstract and general to avoid the conclusion that it is tied to the particular record of the dispute. Interestingly, this exact issue was raised by VSB in this case (i.e., that Kingsgate was attempting to disguise specific complaints about the 2022 Award as general questions of law), but appears not to have been addressed by the Court. Of note, this might be a re-occurrence of the same issue that arose following the Supreme Court of Canada’s decision in Sattva, where parties sought to re-frame issues as questions of law to fit within the scope of narrowed appeal rights.

Furthermore, it is also worth scrutinizing how similar the interpretation of a prior arbitral award (for purposes of issue estoppel) is to statutory interpretation. Statutes, on the one hand, are intended to be general in nature (i.e., not tied to a particular set of facts). By contrast, arbitral awards are inherently tied to the facts of a case, and fundamentally, originate from a contract. This latter point was perhaps understated in Kingsgate v. VSD39, given the basic proposition that contractual interpretation is generally a question of mixed fact and law.

In that regard, it was notable that the Court concluded that (1) a prior award is not interpreted by a subsequent tribunal against the factual matrix as would be a contract, and (2) nor is such a question inextricably linked to the evidentiary record from the second arbitration. Both of those propositions militated against finding a question of mixed fact and law, although upon review, it appears as though the Court was careful to frame the 2022 Award as having given limited consideration of the factual record of the 1999 arbitration.

Conversely, it seems well-established that that issue estoppel and res judicata apply to arbitration proceedings, and that whether a court has erred in applying the principles of res judicata and in purporting to overrule a previous decision is a question of law.

Read together, the application of issue estoppel (as a form of res judicata) in the arbitration context would seem to be a logical corollary of the two foregoing propositions. In the circumstances, it was perhaps unsurprising that the Court would conclude accordingly, notwithstanding that the question of issue estoppel across multiple arbitrations does not fit comfortably within the framework established by the Supreme Court of Canada in Southam (as noted above) and is arguably distinct in certain respects from an exercise in statutory interpretation.

Ultimately, we view the greatest irony of Kingsgate v. VSD39 as being that the questions at issue in this case could potentially have been avoided by virtue of the Lease clearly providing whether any findings of fact and/or law in a given arbitration under the Lease would be binding on future arbitrations under the Lease.

Parties drafting arbitration agreements that contemplate multiple arbitrations of the same issue(s) would therefore be well-advised to consider this issue carefully, consult a lawyer, and include clear language as appropriate.

Jonathon Obara, summer student, assisted with the preparation of this article.

[1] Issue estoppel (along with cause of action estoppel) is considered a species of the legal doctrine known as res judicata, which has been considered a “at the heart of the administration of justice” (Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, at para. 1) and a “fundamental principle of our system of justice” (R. v. Van Rassel, [1990] 1 S.C.R. 225, at p. 238). In brief, res judicata is intended to prevent matters which have already been decided from being re-litigated. Issue estoppel exists to prevent the same outcome.

[2] Although not explicitly stated by, the Court’s statement on this point was presumably limited to subsequent arbitrations under the same arbitration agreement.

Bill 27, the Money Judgment Enforcement Act: An Overview of Proposed Key Changes to the Enforcement of Money Judgments in B.C.


On May 1, 2023, the BC government tabled Bill 27,  the Money Judgment Enforcement Act (“MJEA”). Long in the making, the MJEA is designed to modernize and simplify the enforcement of money judgments in BC. This legislation targets many of the most common problems with the enforcement process, including: the difficulty of seizing certain types of assets, the need for repeat garnishing orders, and the necessity of going to court for most enforcement matters. While it brings major changes, MJEA will be largely operationalized by existing entities, including court bailiffs who are defined in the new act as “enforcement officers.”

Universal Exigibility

The most fundamental change that the MJEA will introduce is the presumption of universal exigibility. This means that by default, every type of property in which a debtor has an interest may be subject to an enforcement charge, unless the MJEA provides otherwise. This universal rule applies to all manner of personal or real property and marks a significant change from previous legislation, which enumerated specific categories of property that were available for the satisfaction of judgments.

The Money Judgement Enforcement Registry

The biggest structural change that the MJEA will introduce is the creation of the Money Judgement Enforcement Registry (the “Registry”). The Registry will create a universal system for registering judgements that is both public and searchable. Upon receiving a money judgment, a creditor will be able to register it within two years by submitting a judgment statement to the registrar. Once in the Registry, a money judgment can be searched to obtain information such as the amount owing. Judgments that have been registered can also be enforced through instructions to an enforcement officer, eliminating applications to garnish wages or bank accounts and for orders for seizure and sale.

Simplification of the Garnishment Process

As with any enforcement action under the MJEA,  to garnish wages or bank accounts the creditor need only provide instructions to do so to an enforcement officer. Once instructed, the enforcement officer may seize an account by giving notice of seizure to the account debtor. When it comes to garnishing wages, this process works indefinitely; rather than filing repeated applications to Court, once notice of seizure is given, wages will continue to be garnished from the account debtor until the notice of seizure is withdrawn.

Improved Procedures for Seizing Problem Assets

Another area of reform introduced by the MJEA is improved procedures for seizing assets that were difficult or impossible to seize under the previous regime. The MJEA creates new procedures for seizing crops, fixtures, intellectual property, interests under lease, and even trade secrets in certain situations. It also modernizes the procedures for seizing securities and futures contracts.

Mechanisms for the Seizure of Co-owned Real Property

The MJEA creates new procedures for the seizure of co-owned property. Under the MJEA, enforcement officers may seize co-owned property in its entirety and dispose of it. Seizure of co-owned property is based on a new presumption that debtors have equal co-ownership of co-owned property. There are two protections for non-debtor co-owners under the MJEA; they may get an order from the court that the debtor’s interests are less that the presumed equal interest, or they may purchase the debtor owner’s co-ownership interest. The MJEA also introduces mechanism to convert joint tenancies into tenancies in common, for the purpose of disposing of seized property.

Distributable Funds

The MJEA also creates a standard process for the distribution of funds from the seizure of assets. Once an enforcement officer receives money toward a debt, a distributable fund will be created and the funds will be distributed to the creditors in accordance with the MJEA. All monies must go through this distributable fund.


The MJEA will mark a major overhaul to the system of court order enforcement in BC, and is expected to be brought into force through regulation in 2025. For more information or for advice regarding specific concerns about the MJEA or court order enforcement generally, contact Daniel Barber,

Brian Palaschuk, summer student, assisted with the preparation of this article.

The Estate of Arbabbahrami v. MSH International (Canada) Ltd.: Implications for “War” and “Military or Usurped Power” Insurance Exclusions and Force Majeure Clauses


The Ontario Superior Court’s recent decision in The Estate of Arbabbahrami v. MSH International (Canada) Ltd., 2022 ONSC 5723 appears to have implications for the “act of declared or undeclared war” and “act of military or usurped power” exclusions commonly found in insurance contracts, as well as potential ramifications for force majeure claims in the construction context and elsewhere. The case is also relevant to some of the evidentiary issues which may be encountered in the interpretation of such clauses.

Factual Background

In January 2018, Arshia Arbabbahrami (“Arbabbahrami”) moved from Iran to Calgary. As an international student, he was required to purchase an insurance policy which provided accidental death coverage for common carrier accidents (the “Policy”).

In December 2019, Arbabbahrami returned to Iran. On January 8, 2020, he began his return to Calgary by boarding Ukraine International Airlines Flight No. PS752 (“Flight PS752”). Shortly after takeoff, the airplane was downed by missiles fired by Iran’s Islamic Revolutionary Guard Corps (the “IRGC”). Tragically, all of the passengers and crew were killed.

Arbabbahrami’s estate (the “Estate”) made a claim under the Policy’s accidental death benefit. The insurers denied coverage based on the following exclusion:

This policy does not cover losses or expenses related in whole or in part, directly or indirectly to any of the following:


  1. an act of declared or undeclared war, civil war, rebellion, revolution, insurrection, military or usurped power or confiscation or nationalization or requisition by or under the order of any government or public or local authority.

The Estate commenced an action seeking payment under the Policy, as well as other damages. In the context of that action, the Estate brought a motion for partial summary judgment seeking the following coverage:

  • The common carrier accident (Accidental Death and Dismemberment) benefit of $100,000;
  • Repatriation benefits to a maximum of $20,000; and
  • Expenses incurred for travel for members of the immediate family to a maximum of $5,000.

Decision of the Court

Before turning to the Policy language, the Court first considered two sources tendered as evidence in order to permit the key findings of fact necessary to interpret the Policy.

First, the Court considered the expert opinion of a political scientist filed by the insurers which considered whether the actions of the IRGC amounted to “an act of declared or undeclared war, civil war, rebellion, revolution, insurrection, military or usurped power or confiscation or nationalization or requisition by or under the order of any government or public or local authority.” The Court excluded this expert opinion on a number of bases, including the fact that in opining on the interpretation of the words in an insurance policy, the expert was straying far outside of his area of expertise.

Second, the Court considered the Accident Investigation Report delivered by Iran’s Aircraft Accident Investigation Board, as well as the review of the report conducted by a Forensic Examination and Assessment Team at the instruction of Canada’s Minister of Foreign Affairs. Considering these two sources, the Court made the following findings:

  • The Iranian missile operator who launched the missile(s) did not know that he was shooting at a civilian airliner;
  • The missile operator thought that he was shooting at an incoming missile;
  • The Iranian military authorities did not delegate to the missile operator the authority to launch missiles without approval from command;
  • No Iranian official ordered the operator to shoot the missiles, and the operator did not have the necessary approval(s) to fire the missiles;
  • The missile attack on Flight PS752 was not premeditated; and
  • A properly functioning military command and control operation would have prevented the attack on Flight PS752.

The Court then turned to its interpretation of the Policy. Given that the insurers accepted that Arbabbahrami’s death fell within the Policy’s initial grant of coverage, the onus rested with the insurers to establish that one or more of the Policy’s exclusions applied. The insurers relied on two exclusions: (1) losses related to an act of declared or undeclared war; and (2) losses related to an act of military or usurped power.

Losses Related to an Act of Declared or Undeclared War

With respect to the first exclusion, the insurers conceded that there was no state of declared war between Iran and the United States, such that the key question was in fact whether the shooting down of Flight PS752 was an undeclared act of war. On this issue, the Court considered both the dictionary definition of war submitted by the insurers (“a state of usually open and declared armed hostile conflict between nations”), as well as international law norms.

In respect of the latter, the Court accepted the finding of the UN’s Special Rapporteur on extrajudicial, summary, or arbitrary executions that Iran and the United States were not involved in an international armed conflict before or after the American drone strike that killed General Soleimani of the IRGC on January 3, 2020 and the Iranian ballistic missile response on January 8, 2020. The Court considered this to be “strong evidence” that Arbabbahrami’s death should not be excluded as being related to an act of undeclared war.

The Court furthermore observed that to be an act of war, it is not enough that the act occur during a period of hostilities or that the act is one committed by a member of the military during a period of hostilities. In that regard, the Court compared this case to a set of cases involving the sinking of the British ocean liner Lusitania at the outset of World War I.

In relation to the Lusitania, the German government had issued a proclamation declaring the waters surrounding Great Britain and Ireland, including the whole English Channel, to be a war zone. The proclamation declared that every enemy merchant ship found in the war zone would be destroyed. The Lusitania – which was unarmed, carrying non-combatants, and made no attempt to disguise itself – was struck by two torpedoes from a German submarine killing nearly 1,200 civilians. The attack was found to have been “deliberate, and long contemplated, and intended ruthlessly to destroy human life, as well as property”: Re: The Lusitania (1918), 251 F715 (SDNY). The estate of one of the deceased passengers brought an action on his life insurance policy, which claim was denied because the loss was excluded from coverage given that the death resulted from an act of war (see Vanderbilt v. Travelers’ Ins. Co. (1920), 112 Misc 248, 184 NYS 54).

Here, the Court contrasted Flight PS752 to the Lusitania in observing that, among other things:

  • The plane was operated by Ukrainian International Airlines, which was not engaged in any hostilities with Iran;
  • 146 of the passengers killed were travelling on Iranian passports;
  • The airplane was not flying in space that Iran had declared to be a war zone;
  • Iran had not warned that civilian planes in its airspace would be shot down – in fact, it cleared Flight PS752 for take-off;
  • The airplane was not readily identifiable to the missile operator as the Lusitania was to the German submarine captain;
  • The downing of the airplane was not deliberate, long-planned, and intended to destroy human life;
  • The missiles were not launched in accordance with the instructions of a sovereign government, nor were they launched by an operator to whom the government had delegated the authority to make such a decision;
  • Although the Iranian government initially denied responsibility for the downing of the plane, within days, Iranian President Hassan Rouhani tweeted that the “great tragedy and unforgivable mistake” had been caused by human error. Such an acknowledgment was, in the Court’s view, “not how a sovereign government describes its acts of war”.

As a result, the Court concluded that none of the features that made the sinking of the Lusitania  an act of war were present in relation to Flight PS752. Accordingly, the exclusion was not engaged.

Losses Related to an Act of Military or Usurped Power

With respect to the second exclusion, the Court observed that rather than being two separate exclusions (i.e. an act of military or an act of usurped power), this was in fact single exclusion (i.e. “military or usurped power”).

In that regard, the Court noted that this exclusion in fact has a long history in the insurance context, having appeared in insurance contracts since at least 1720, and having been interpreted by Canadian, American, and British courts since that time. In relation to that case law, the Court observed that the following points had been noted in the case law:

  • The phrase “military or usurped power” has been interpreted to create a single exclusion for “losses caused by the military activities of usurping power”. The “or” is read as conjunctive rather than disjunctive; and
  • “Military or usurped power” refers to “an invasion of the kingdom by foreign enemies or an internal armed force in rebellion and assuming the power of government, by making laws, and punishing for not obeying those laws.”[1] In other words, it is the action of an army giving its own law, silencing the law of the land.[2]

Interestingly, the Court did not scrutinize the word “or” in “military or usurped power” despite the fact that “or” is clearly disjunctive; rather, relying on the prior case law, the Court implicitly treated “or” as conjunctive without considering this point in detail. In any event, and in contrast to the foregoing, the Court observed that the Iranian operator who fired the missile did not usurp the power of the military, but rather acted without instructions. This was not the same as usurping the power of the state. Accordingly, this exclusion did not apply either.


As Russia’s invasion of Ukraine makes clear, we live in an increasingly dangerous world. The Court’s guidance on ‘war’ exclusions in insurance policies is therefore welcome, and likely has implications for other areas as well. In particular, we consider that Arbabbahrami may have implications for force majeure clauses, which commonly identify war, civil war, acts of foreign or public enemies, and acts of terrorism (or some variation of the foregoing language) as force majeure events.

Indeed, Russia’s illegal invasion of Ukraine has generated a number of contractual claims for force majeure relief on the basis that the conflict – and the ensuing sanctions imposed on Russia as well as Russian companies and individuals – have allegedly disrupted supply chains and increased the cost of various materials.

However, neither country has formally declared a state of war; Russia characterizes its invasion as a “special military operation” while Ukraine recognizes Russia as a “terrorist state”. Accordingly, there may be some question about whether a force majeure clause identifying ‘war’ as a force majeure event would necessarily be engaged in the circumstances. Arbabbahrami does not create a bright line test with respect to determining what might constitute an undeclared war, but may nevertheless be instructive in identifying the relevant factors that go into making such a determination.

However, it is important to note that Arbabbahrami is an insurance law decision, and therefore engages a specialized body of case law and interpretive principles. Indeed, the Court observed this very fact in Arbabbahrami. Accordingly, it will be interesting to see how, if at all, Arbabbahrami is applied in future.

Finally, this case is a helpful reminder that counsel should be mindful of the proper limits of expert evidence in the interpretation of contractual language.

[1] Drinkwater v The Corporation of London Assurance (1767), 95 ER 863 (KB).

[2] See also Barton v Home Insurance Co. (1868), 42 Mo 156 (SC).

Husky Food Importers & Distributors Ltd v. JH Whittaker & Sons Limited: Ontario’s New Test for Staying Litigation in Favour of Arbitration to Determine the Validity of an Arbitration Agreement


This article considers the Court of Appeal for Ontario’s recent decision in Husky Food Importers & Distributors Ltd v. JH Whittaker & Sons Limited, 2023 ONCA 260 and its implications for the framework to be applied in assessing stay motions in favour of arbitration.

Relying upon the Supreme Court of Canada’s recent decision in Peace River Hydro Partners v. Petrowest Corp, 2022 SCC 41 (“Peace River“), the Court of Appeal considered what standard of proof a party seeking a stay under the International Commercial Arbitration Act (the “ICAA”) must meet to be granted a stay. The Court in Husky concluded that the moving party must only meet the “arguable case” standard, rather than the more onerous balance of probabilities.

Below, we discuss some implications of the Peace River framework for arbitration in Ontario and how it may affect the evidentiary burdens required for both the party seeking a stay, as well as the party seeking to avoid arbitration.

Brief Factual Background

In 2014, Husky Food Importers & Distributors (“Husky“) entered an initial distribution agreement where they would import, distribute, and market in Canada products of a New Zealand confectionary manufacturer named JH Whittaker & Sons (“Whittaker“). Subsequently, between 2016 and 2020, the parties tried to negotiate a formal long-term exclusive distribution agreement regarding Whittaker’s product, and in early 2020, they exchanged drafts of such an agreement.

On April 19, 2020, Whittaker added and redlined an arbitration clause to Schedule G of the draft long-term distribution agreement, which had not appeared in any prior draft (the “Arbitration Clause”). Husky subsequently emailed a further revised draft on May 15, 2020, which removed the redlining in the Arbitration Clause, and included a slight amendment to a separate part of Schedule G. This email was described in Husky’s evidence as one where the changes made in the April 19 draft were “accepted”. Husky also added s. 8.4 to the main body of the draft agreement:

If there is any inconsistency between any provision or term in the main body of this Distribution Agreement and in any schedule annexed hereto, the terms in the main body of this Distribution Agreement shall have paramountcy to the extent of such inconsistency only.

Both the April 19 and May 15 drafts contained s. 8.7 in the main body of the distribution agreement, whereby the parties agreed to submit to the non-exclusive jurisdiction of the courts of New Zealand to hear and determine all disputes arising from or related to the distribution agreement, or any “transactions contemplated [t]herein”.

While the parties discussed the agreement after May 15, 2020, they ultimately did not sign the new long-term distribution agreement (although Husky subsequent pled that the parties had reached an agreement, notwithstanding the lack of signatures). That summer, a dispute arose between the parties, and Husky commenced an action in Ontario on June 3, 2021. Whittaker moved to stay Husky’s action pursuant to s. 9 of the ICAA:

Where, pursuant to article II(3) of the [New York Convention] or article 8 of the [UNCITRAL Model Law], a court refers the parties to arbitration, the proceedings of the court are stayed with respect to the matters to which the arbitration relates. [emphasis added]

Decision of the Court Below

Before the motion judge, Husky took the position that although the parties executed a distribution agreement, the Arbitration Clause did not form part of the agreement because it was inserted “behind” Schedule G and was not part of the standard purchase agreement order form, such that it was not incorporated by reference into the distribution agreement.

Husky furthermore argued that there was no meeting of the minds between the parties that disputes would be arbitrated, and that the Arbitration Clause ultimately had no effect because (1) section 6.2 of the distribution agreement provided that the terms and conditions contained in Schedule G applied “unless otherwise agreed”, and (2) s. 8.7 of the distribution agreement provided that the parties would attorn to the non-exclusive jurisdiction of the New Zealand courts.

In determining that a stay was warranted, the motion judge applied the then-prevailing test set out in Haas v. Gunasekaram, 2016 ONCA 744, which asks the following questions: (1) is there an arbitration agreement? (2) what is the subject matter of the dispute? (3) what is the scope of the arbitration agreement? (4) does the dispute arguably fall within the scope of the arbitration agreement? and (5) are there grounds on which the court should refuse to stay the action?

In the motion judge’s view, the test for whether there was an arbitration agreement was only whether it was “arguable” that the party was subject to an arbitration agreement. It was not necessary for the party seeking the stay to prove the existence of an arbitration agreement on a balance of probabilities.

Applying the Haas framework, the motion judge concluded it was arguable that there was an arbitration agreement between the parties because Husky engaged with the document, removed the redlining from the document, and did not make changes to the Arbitration Clause.

On this basis, the motion judge granted the motion to stay Husky’s action, and referred the parties to arbitration in New Zealand. Although not expressly stated, the implication of the motion judge’s ruling was that consistent with the competence-competence principle, it would be left to the arbitrator to determine whether there was a valid arbitration agreement between the parties.

The Court of Appeal

Husky appealed the motion judge’s decision on two related grounds:

  • first, that the party asking for a stay had to prove the existence of an arbitration agreement on a balance of probabilities, rather than simply whether it was “arguable” that an arbitration agreement existed; and
  • second, that the motion judge erred in that it was not arguable there was an arbitration agreement between Husky and Whittaker, because Husky explicitly rejected the inclusion of an arbitration agreement in the distribution agreement.

In rejecting Husky’s appeal, the Court of Appeal first referred to Peace River to reiterate the proposition that a court should normally refer challenges to an arbitrator’s jurisdiction to the arbitrator, which follows from the competence-competence principle. While exceptions to the principle exist, Husky Foods did not fall under those exceptions.

In rejecting Husky’s position as to the appropriate standard of proof, the Court of Appeal confirmed that the Haas framework was overtaken by the framework adopted by the Supreme Court of Canada in Peace River. Though the Peace River framework was made for domestic arbitration legislation, the Court of Appeal confirmed that the framework was equally applicable to international arbitrations under the ICAA.

In any event, the Peace River framework (which our firm discussed in an earlier article here) first requires the applicant for a stay to establish four technical prerequisites on the applicable standard of proof:

  1. an arbitration agreement exists;
  2. court proceedings have been commenced by a “party” to the arbitration agreement;
  3. the court proceedings are in respect of a matter that the parties agreed to submit to arbitration; and
  4. the party applying for a stay in favour of the arbitration does so before taking any “step” in the court proceedings.

If all four prerequisites are met, the mandatory stay provision is engaged, at which point the party seeking to avoid arbitration must show that one of the statutory exceptions apply. In Husky Foods, there were no applicable statutory exceptions, such that the case turned entirely on the first phase of the analysis.

The Court of Appeal disagreed with Husky’s submission that the ‘balance of probabilities’ standard was the applicable standard of proof for proving the existence of an arbitration agreement in the context of a stay applicable, relying on the proposition articulated in Peace River, that “the standard of proof applicable at the first stage is lower than the usual civil standard… the applicant must only establish an ‘arguable case’ that the technical prerequisites are met.” As such, the Court of Appeal concluded that the motion judge applied the correct legal test for this matter.

Regarding the second ground of appeal, the Court of Appeal summarily rejected Husky’s submission that the evidence demonstrated that it did not agree to submit disputes to arbitration, and that the motion judge ignored certain material facts in Husky’s favour. Instead, the Court of Appeal observed that the motion judge was alive to Husky’s submissions in respect of the allegedly ignored “material facts”, and that in any event, determining the issue of the existence of the arbitration agreement would require a thorough review of the parties’ competing evidence.

Accordingly, Husky’s appeal was dismissed.


Although the result in Husky Foods was perhaps unsurprising, it is nevertheless a welcome affirmation of Ontario courts’ respect for the competence-competence principle and arbitration as a co-equal forum for dispute resolution more generally. Of the same token, maintaining some burden of proof to justify a stay is equally important to preserving the legitimacy of arbitration as a dispute resolution forum, as absent any burden of proof, parties might simply rely upon stay motions (and arbitration) as a delay tactic and abuse of process – outcomes which should of course be avoided.

In that regard, Husky Foods is also welcome for the clarification that it provides with respect to the applicable test for a stay. Under the Haas framework, moving parties were arguably required to meet a higher evidentiary bar of proving the arbitration agreement exists, before moving to the lower, “arguable” standard of whether the dispute in question fell within the scope of the arbitration agreement. Whatever the case, the Haas framework entailed a more comprehensive review by a court of the evidence in order determine whether to grant a stay. By contrast, the Peace River framework consistently relies upon the “arguable” standard in assessing all of the prerequisites for a stay.

Interestingly, however, the application of the Peace River framework requires some elaboration as it relates to domestic arbitration in Ontario, insofar as the Arbitration Act, 1991 is somewhat idiosyncratic with respect to its stay provisions. Readers will recall that Peace River involved the application of British Columbia’s Arbitration Act, 1996, which specifically provided that a party could move for a stay so long as it had not taken “any other step in the [litigation] proceedings”. Similarly, Ontario’s ICAA – which is based on the Model Law – provides that a party may seek a stay “not later than when submitting his first statement on the substance of the dispute”.

By contrast, the Arbitration Act, 1991 provides that a court will stay litigation on the motion of a party to the arbitration agreement; however, it may reject the motion if (among other things) the motion was brought with “undue delay”. The case law appears settled that taking several steps in the litigation constitutes “undue delay”, although it is less clear whether taking a single step (such as filing a statement of defence) in the litigation and then moving for a stay constitutes “undue delay” (see, for example, Leon v. Dealnet Capital Corp., 2021 ONSC 3636 at paras 47-52, and Bombino v. Serendipity Homes, 2022 ONSC 1410 at paras 52-58). It appears that with respect to domestic arbitration in Ontario, the test is far more holistic and flexible; and in any event, the onus is on the party asserting the delay to prove that it was undue. This may be particularly relevant as it relates to construction matters since, for example, a party might need to take certain steps in litigation to preserve statutory rights (such as lien rights).

Finally, it will be interesting to see if parties wishing to pursue litigation will now seek to frame jurisdictional issues as questions of law rather than mixed fact in law, in order to avoid having the jurisdictional issue referred by a court to the relevant arbitrator for determination pursuant to their own jurisdiction. As the Court in Husky Foods observed, challenges to the jurisdiction of an arbitrator must normally be referred to the arbitrator, unless they involve (1) pure questions of law or (2) questions of mixed fact and law that can be determined by a superficial review of the evidence in the record.

Since a “superficial review” is one where the necessary legal conclusions can be drawn from facts that are either evident on the face of the record or are undisputed by the parties, it may stand to reason that parties will attempt to avoid this narrow eye of the needle and instead frame the issue as a question of law in order to create the opportunity to fully brief the issue before a court and persuade the court to hear the challenge (and assume jurisdiction). To some degree, this approach would parallel attempts by parties and appellate courts following Sattva to be overly expansive in identifying extricable questions of law in order to gain jurisdiction in appeals from arbitral awards, which approach was ultimately cautioned against by the Supreme Court in Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32.

Jeffrey Wong (summer student) contributed to the production of this article.

Bruce Reynolds Receives Hall of Fame Award, Sharon Vogel Named Construction Litigator of the Year at 2023 Benchmark Canada Awards

Singleton Urquhart Reynolds Vogel LLP is proud to congratulate named partners Bruce Reynolds and Sharon Vogel on their success at the 2023 Benchmark Canada Awards Gala. Bruce Reynolds received the coveted Hall of Fame award, one of the most prestigious honours in the industry recognizing exceptional lawyers who have made significant contributions to the legal profession, and the community as a whole. Sharon Vogel was named Canadian Construction Lawyer of the Year (for the third year in a row). These awards highlight the outstanding results the firm has achieved for its clients.

Singleton Reynolds is also proud to announce that 19 of its lawyers appear in Benchmark the 2023 edition of Benchmark Canada, an annual directory recognizing Canada’s leading litigators. These lawyers were awarded “Litigation Stars” across various practice areas.

Clients said the following about these lawyers and the firm:

“They are absolutely the first call for construction litigation. …The firm has a …dense combined pool of talent, ranging from senior statesmen to future stars and no shortage of star power in between. One satisfied client testifies, “The lawyers at Singleton Reynolds have a winning mentality. Their knowledge and experience are vast, their work ethic is staggering. They are terrific at responding when needed, and at looking for innovative solutions. They are the consummate professionals but have a very friendly and easygoing manner. Working with this firm is an absolute pleasure,” according to the most recent Benchmark analysis.

Benchmark’s analysis of the firm can be found here.

Congratulations to the following Singleton Reynolds lawyers on their successful inclusion in Benchmark Canada 2023:

Daniel  Barber

Stephen Berezowskyj

Clive Boulton

David Edinger

Jesse Gardner

Catherine Gleason-Mercier

Stuart Hankinson, KC

Robert Hodgins

Jane Ingman Baker

Ronald Josephson

James Little

Avon Mersey, KC

Bruce Reynolds

Melanie Samuels

Betsy Segal

John Singleton, KC

Mark Stacey

Sharon Vogel

Peter Wardle

Benchmark Canada recognizes the top litigation lawyers and firms across the country for the significance of their cases. The results listed are based on extensive interviews with litigators and their clients. For more information, please visit Benchmark Litigation.

About Singleton Urquhart Reynolds Vogel LLP

Singleton Reynolds is a preeminent Canadian construction and infrastructure law firm. Our peers and clients recognize our lawyers as the best in the construction industry. Over forty years of leadership in Canadian construction and infrastructure law is complemented by a broad offering of legal services, with a focus on finding solutions to complex legal problems, and providing service excellence in our approach and execution. While the core of our business remains rooted in construction and infrastructure, we also offer our clients an extensive range of legal services in the fields of commercial litigation, professional liability, product liability, corporate commercial law, commercial real estate, employment and labour law and business immigration.

Nicholas Reynolds Among the Youngest Fellows of the Chartered Institute of Arbitrators

Singleton Reynolds is pleased to congratulate Nicholas Reynolds on being named a Fellow of the Chartered Institute of Arbitrators (FCI Arb). Nicholas is one of only two lawyers in Canada aged 30 years or under to receive this  honour.

The FCIArb designation, which is the final grade of membership awarded by the CIArb, confirms that the titleholder maintains the highest standards of knowledge, skills, and conduct in the practice of arbitration. Nicholas’ practice focuses on arbitration and other forms of alternative dispute resolution in the construction and infrastructure industry, and the FCIArb designation confirms that he will continue to deliver exceptional service in his capacity as counsel to the firm’s clients, and as an arbitrator.

Nicholas is an Associate in the Construction and Infrastructure Law Group. He is experienced in litigation, arbitration, and other forms of alternative dispute resolution, and is skilled at resolving complex legal issues. He has also been recognized by the Alternative Dispute Resolution Institute of Canada (ADRIC) as a Qualified Arbitrator.

Singleton Reynolds Lawyers Named Litigation Stars by Benchmark Canada

Singleton Reynolds is proud to announce that 19 of its lawyers appear in Benchmark Litigation’s 2023 issue of Benchmark Canada, their annual directory recognizing Canada’s leading litigators. These lawyers were named “Litigation Stars” across various practice areas.

Congratulations to the following Singleton Reynolds lawyers on their successful inclusion in Benchmark Canada:

Daniel Barber

Stephen Berezowskyj

Clive Boulton

David Edinger

Jesse Gardner

Catherine Gleason-Mercier

Stuart Hankinson, KC

Robert Hodgins

Jane Ingman Baker

Ronald Josephson

James Little

Avon Mersey, KC

Bruce Reynolds

Melanie Samuels

Betsy Segal

John Singleton, KC

Mark Stacey

Sharon Vogel

Peter Wardle

Benchmark Canada recognizes the top litigation lawyers and firms across the country for the significance of their cases. The results listed are based on extensive interviews with litigators and their clients. For more information, please visit Benchmark Litigation.

About Singleton Urquhart Reynolds Vogel LLP

Singleton Reynolds is a preeminent Canadian construction and infrastructure law firm. Our peers and clients recognize our lawyers as the best in the construction industry. Over forty years of leadership in Canadian construction and infrastructure law is complemented by a broad offering of legal services, with a focus on finding solutions to complex legal problems, and providing service excellence in our approach and execution. While the core of our business remains rooted in construction and infrastructure, we also offer our clients an extensive range of legal services in the fields of commercial litigation, professional liability, product liability, corporate commercial law, commercial real estate, employment and labour law and business immigration.

Limits on the Presumption of Consistent Expression in Contracts: Baffinland Iron Mines v. Tower-EBC


In this article, we consider the Court of Appeal for Ontario’s recent decision in Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C., 2023 ONCA 245 and its impact on the presumption of consistent expression in contractual interpretation. In this case, and in the context of a motion to quash, the Ontario Court of Appeal considered whether two similarly phrased expressions in a construction contract, “finally settled” and “final and binding”, had different meanings. The Court of Appeal found that that these two non-identical terms were to be interpreted to have the same meaning relying on, among other things, the Supreme Court of Canada’s decision in Sattva.

Below, we discuss some of the implications of the contractual interpretation principle in the context of contractual drafting, and consider it in conjunction with other principles utilized in interpreting, among other things, construction contracts.

Brief Factual Background

Baffinland Iron Mines LP and Baffinland Iron Mines Corporation (collectively “BIM”) owned and operated the Mary River Mine on Baffin Island in Nunavut. Tower-EBC G.P./S.E.N.C., (“TEBC”) was a general partnership formed between EBC Inc. and Tower Arctic Limited to perform earthworks on the project for BIM, which includes a railway for the transportation of ore.

To that end, BIM and TEBC entered into two separate FIDIC contracts that were modified in certain respects for this particular project, although relevant to the case, the dispute resolution provisions were not modified from the standard FIDIC language. In relevant part, the dispute resolution provisions provided as follows:

Unless settled amicably, any dispute in respect of which the [dispute adjudication board’s] decision (if any) has not become final and binding shall be finally settled by international arbitration. Unless otherwise agreed by both Parties:

(a) the dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce,

(b) the dispute shall be settled by three arbitrators appointed in accordance with these Rules, and

(c) the arbitration shall be conducted in the language for communications defined in Sub-Clause 1.4 [Law and Language]. [emphasis added]

International Chamber of Commerce (ICC) Rule 35(6) was also relevant to any arbitration under the contracts. Specifically, Rule 35(6), which was incorporated by reference into the contracts, provided in relevant part:

Every award shall be binding on the parties. By submitting the dispute to arbitration under the Rules, the parties undertake to carry out any award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made. [emphasis added]

Ultimately, BIM terminated the contracts with TEBC due to delays. Unsurprisingly, TEBC initiated arbitration (that is, the parties did not first proceed to a dispute adjudication board for a final and binding decision, nor did they agree to settle), challenging the validity of BIM’s right to terminate and claimed for damages arising from the termination.

The arbitral tribunal made an award in TEBC’s favour exceeding $100 million.

Decision of the Court Below

BIM sought leave under the Arbitration Act, 1991 to appeal on the arbitral award, based on alleged errors of law. BIM’s position before the application judge was that the words “final and binding” in the dispute resolution provision of the modified FIDIC contracts related to the dispute adjudication board were intended to prohibit any appeal or otherwise preclude either party from further recourse, whereas the words “finally settled” in respect of the arbitration portion of the dispute resolution clause must necessarily have meant something different given the different choice of words. As a result, in relation to arbitration, BIM argued that the parties must have intended something other than to preclude appeals from any arbitration. TEBC disagreed, asserting that the contracts prohibited any form of appeal from an arbitral award.

The application judge found that the dispute resolution provision precluded any form of appeal as submitted by TEBC. In relevant part, he rejected BIM’s argument that “final and binding” and “finally settled” necessarily meant two different things because different words were used, concluding instead that the two expressions shared the same intent of precluding appeals. He also rejected BIM’s argument that ICC Rule 35(6), whose language BIM acknowledged precluded appeals, was in conflict with s. 20.6 and was overridden by it – in other words, Rule 35(6) supported the proposition that appeals were prohibited. As a result, the application judge quashed BIM’s application for leave to appeal.

The Court of Appeal

On a motion to quash raised by TEBC in respect of BIM’s further appeal, the Court of Appeal heard arguments from both parties as to whether or not it was appropriate for the appellate court to consider a denial of leave to appeal by the Superior Court. While not relevant to this article, the Court of Appeal reviewed the general rule against such further appeals and the specific exceptions to same.

Ultimately, the Court of Appeal decided to hear the motion and in doing so, upheld the application judge’s decision, agreeing that the contracts precluded appeals on any question of law. In relevant part, the Court focused on a key principle of contractual interpretation – namely, the presumption of consistent expression.

In brief, and as noted by the court, although the presumption of consistent expression assumes that identical contractual terms share the same meaning, and different terms are intended to convey a different meaning, a contractual drafter may nevertheless use multiple expressions to convey the same thing.

In that regard, BIM again argued that “final and binding” (which was utilized in respect of decisions of the Dispute Adjudication Board) must mean something different than “finally settled” (which was utilized in respect of arbitration decisions). BIM submitted that the court erred in failing to apply the presumption of consistent expression which required giving “finally settled” a different meaning.

Notwithstanding this presumption, the Court observed that the fundamental holding of the Supreme Court of Canada in Sattva v Creston Moly Corp still governs – namely, that the “primary concern of contractual interpretation is to give effect to the intent of the parties by reading the contract as a whole, giving the words used their ordinary and grammatical meaning”.

To that end, when the ordinary meaning of different words or phrases is the same, the presumption cannot be applied to force a different meaning onto one set of words. The Court observed that “although the presumption of consistent expression may in some cases be helpful in illuminating the parties’ intention, it is important not to treat the presumption as a dominating technical rule of construction that overwhelms the interpretation of a contract based on the ordinary and grammatical meaning of its text.”

Bearing the foregoing in mind, the Court concluded that in relevant part, the terms “final and binding” and “finally settled” both contain the same, critical word – “final”, or “finally”. This word, which yields the same meaning of “admitting of no further disputation”, thereby excluded any right of appeal. In that regard, the Court noted that the presumption of consistent interpretation was in fact applied by the application judge to the key word, and that the addition of the words “binding” and “settled” did not materially change the meaning (although in theory, it might have been possible that a sufficiently clear modifier could have altered the meaning of “final”).

Thus, the presumption applied in this case in relation to the word “settled” in “finally settled” to convey that arbitration would be the ultimate level of recourse (subject to any statutory rights of set-aside, of course).


Overall, the Court in Baffinland reached a relatively straightforward result that is consistent with the state of the law on contractual interpretation following Sattva. As noted in the decision itself, the technical rule of the presumption of consistent expression cannot dominate the fundamental principle that contractual interpretation is primarily concerned with giving effect to the intent of the parties. Thus, while a Court might find (as it did in this case) that the presumption operated in a manner consistent with the parties’ intent in precluding appeals, it is easy to imagine a scenario in which the presumption would have to give way.

That being said, Baffinland does serve as a useful cautionary tale to parties drafting dispute resolution provisions – particular on complex construction projects, where the applicable contract often provides for multiple different forms of dispute resolution either sequentially (i.e., as part of a stepped dispute resolution clause) or as alternatives.

One obvious takeaway for readers is that in drafting dispute resolution provisions, aim to use consistent terminology to the extent possible. Had that been the case in Baffinland, the parties likely could have avoided expending significant resources and time in pursuing the attempted appeal. In other words, there should be no dispute over the differences in language created by the use of terminology such as “final and binding” or “finally settled”. Despite the common sense similarities between these two phrases (and the further inclusion of preclusive language in ICC Rule 35(6)), both parties ultimately had to undergo considerable expense in having to make such arguments before the courts following a lengthy arbitration.

Finally, and further considering the ICC language noted above, drafters would be well advised to be mindful of any potential implications of incorporating other terms or documents by reference into their dispute resolution provisions (and conflict of terms provisions) lest it create any confusion as to priority of terms. This proved not to be an issue in Baffinland given the Court’s finding that the ICC Rules regarding the finality of arbitration were consistent with the dispute resolution provision, it is equally easy to foresee a situation in which such provisions would be in conflict and the contract’s conflict of terms provision(s) are not of assistance. In such a circumstance, parties could easily fall into dispute as to the proper interpretation of the contract with no clear answer. Again, clear drafting – including consideration of the full scope and impact of documents incorporated by reference, such as institutional arbitral rules – is best practice.

Judicial Support for Expert Determination as a Dispute Resolution Alternative: KHM Cardiology Centres v Lambardar

An expert determination is a unique subset of dispute resolution methods, the usage of which appears to be on the rise in Ontario in respect of a myriad of different commercial arrangements. Given that we frequently see expert determinations in the context of construction and infrastructure projects, the manner in which these decisions (as well as related procedures) are considered by the judiciary is of particular importance.

In this article, we consider a recent decision on expert determinations in the context of commercial leasing arrangements. Specifically, in KMH Cardiology Centres Inc. v. Lambardar Inc., 2022 ONSC 7139, the Ontario Superior Court held that experts could determine questions of mixed fact and law, or even questions of law, if parties to a contract have clearly given that expert the authority to do so. Below, we discuss some of the implications of providing experts with this authority in the context of construction industry disputes.


KMH Cardiology Centres Incorporated (“KMH”) is one of Canada’s largest providers of nuclear cardiology services, and was founded by Vijay Kanmar (“Kanmar”). KHM leased three office properties from the respondent, Lambardar Inc. (“Lambardar”), which was also owned by Kanmar and his wife (the “Original Leases”).

Kanmar subsequently sold KMH, and in the course of this sale, new leases for three of the properties were negotiated and signed as part of the transaction whereby Kanmar sold KMH to independent, third-party owners (the “New Leases”). In that regard, the executed New Leases were the product of arms’ length negotiations among sophisticated and well-represented parties. For the purposes of this article, the relevant provisions of each of the New Leases are the same.

Specifically, in relevant part, each New Lease contained language that required Lambardar (as landlord) to estimate KMH’s (as tenant) share of operating costs for the leased property at the beginning of each year. KMH was then required to pay one-twelfth of that total estimated amount each month to cover its operating cost share for that year. At the end of each year, Lambardar would then provide a statement reconciling the actual costs incurred in the year against the initial estimate; in the result, either KMH would pay Lambardar for any shortfall or Lambardar would repay any surplus to KMH.

Following the execution of the New Leases, the parties were unable to agree on the proper calculation of operating costs for the 2017 to 2020 fiscal years. In particular the parties disagreed as to three things: (1) whether the area of the basements on two of the properties should be included in the calculation of the gross leasable office area of the buildings; (2) whether Lambardar was entitled to charge a 15% administration fee on taxes; and (3) whether Lambardar was entitled to charge for the services of its site supervisor provided through a separate corporation.

All of the New Leases contained a term providing that any dispute concerning the accuracy of Lambardar’s reconciliation statement would be referred to an “independent professional consultant” who would be “qualified by education and experience to make such decision”:

If Tenant disputes the accuracy of any Statement, Tenant shall nevertheless make payment in accordance with the Statement, pending resolution of the dispute, but, subject to Section 4.8, the disagreement shall be referred by Landlord for prompt decision to an independent professional consultant approved by the Tenant, acting reasonably, who is qualified by education and experience to make such decision and who shall be deemed to be acting as an expert and not an arbitrator. The consultant’s signed determination shall be final and binding on both Landlord and Tenant. Any adjustment required to any previous payment made by Tenant or Landlord by reason of any such determination shall be made within fourteen (14) days thereof, and the party required to pay such adjustment shall bear all costs of the consultant, except that if the amount to be paid is three percent (3%) or less of the amount in dispute, Tenant shall pay all such costs. [Emphasis added.]

In other words, if KMH had an issue with the accuracy of the reconciliation, it still had to pay in accordance with the reconciliation; however, Lambardar was required to refer the disagreement to an “expert” properly qualified by education and experience, who was to be approved by KMH, for a prompt decision.

In turn, a further provision of the New Leases provided KMH with the right to require Lambardar to provide reasonable backup information for the claimed operating costs utilized in the reconciliation. If KMH was dissatisfied with the accuracy of the backup, it had the right to have its own accountant or auditor attend at Lambardar’s office to conduct an audit, and if such audit did not resolve a dispute, then said dispute would be resolved by the same expert referred to above.

Notwithstanding the “shall be referred” language in the provision provided above, Lambardar refused to appoint an expert, instead taking the position that the disputes were matters of contractual interpretation (that is, of the lease language itself) that required consideration by a court. In that regard, Lambardar took the position that question of interpretation require procedural fairness, party submissions, and a neutral trier; and given the foregoing, the parties could not have intended to give an expert authority to decide questions of law or questions of mixed fact and law. Finally, Lambardar maintained that questions of “accuracy” of the operating costs were limited to simple, arithmetical exercises like adding up a column of numbers drawn from invoices.

The Ontario Superior Court Decision

The Superior Court declared that Lambardar was required under the New Leases to appoint an independent professional consultant (i.e. an expert) to deal with the disputes.

In its analysis, the Court first considered the role of an expert as an alternative dispute resolver, in comparison to an arbitrator or a judge. The Court found that while arbitrators and judges are neutral officials who resolve disputes on evidence submitted via rules and procedures, experts are people appointed to solve a problem themselves based on their subjective knowledge and expertise which are relevant to the circumstances of their engagement. As well, an expert decision is typically fast and inexpensive and, unlike an arbitration or court decision, there are no appeals.

Interestingly, the court also considered that the expert mandate could be broad enough to have some overlap with what may be argued to be within the realm of a legal decision. Specifically, the Court held that the inclusion of some questions of contractual interpretation or even questions of law in a dispute should not be considered a bar to the use of an expert in the resolution of that dispute. Lambardar submitted that the parties could not have intended to give an expert the authority to engage in contractual interpretation and to make decisions of mixed fact and law or decisions of law. The Court disagreed, noting that it could not be assumed that parties must prefer arbitration or court to resolve disputes. In each case, the Court emphasized that one must consider the appointment language in the context of the agreement as a whole to identify the parties’ intentions.

On that point, the Court identified four main reasons in this case why the parties in this case intended that the relevant lease disputes would go to an expert (rather than a court or arbitrator):

  1. First, the expert mechanism was limited specifically to the determination of operating costs in the context of commercial leases. This is a field where plenty of expertise exists and where any number of industry people would know the answer to the issues being posed.
  2. Second, the contract did not specify the appointment of an accountant or a person with any specifically defined expertise; instead, the parties agreed that whoever was to be appointed must be “qualified by education and experience to make such decision” and subject only to the reasonable approval of the other party. The Court found that this indicated that a broader scope of disputes was expected to be considered by such an expert, and that the parties agreed to pick an appropriate expert for each “such decision” required.
  3. Third, the word “accuracy” denoted correctness or meeting a set standard. While it may have meant mathematical correctness, the meaning of “accuracy” was not necessarily so limited.
  4. Fourth, before the parties could appoint an expert, the tenant has a unilateral right to call for documentary backup and then to audit. If the parties were not content with the outcome of an audit, it would not be sensible to conclude that the dispute would then goes to the expert is just adding up a simple column of numbers. Rather, such a dispute would necessarily involve consider of interpretations advanced by each side regarding why their column of numbers was the correct one.

Turning next to a review of certain general principles distinguishing experts from judges and arbitrators, the Court noted in relevant part as follows:

  • Arbitrators and judges are neutral officials who resolve disputes on evidence, which evidence is submitted to them pursuant to rules and established procedures. Experts, on the other hand, do not necessarily hear any evidence or submissions from the parties, and there can be as much or as little process as the parties agree upon;
  • Judges and arbitrators are not supposed to bring their own personal knowledge to bear on the facts, but rather, conduct an adversarial hearing in order to receive evidence; if special expertise is required, the parties will provide expert evidence to help the judge or arbitrator to draw appropriate inferences. By contrast, experts are specifically appointed to solve a problem themselves, based on their own knowledge and expertise;
  • Appeals are available in litigation and sometimes in arbitration, whereas expert determinations are final and binding; and
  • Whereas expert determinations are typically fast and inexpensive, arbitration or litigation will almost always be slower and more expensive.

In addition, the Court noted that there was no dollar limit or any other financial or issue-based threshold and that, since the process called for a “prompt” decision, this would eliminate civil litigation as an option. We note that even an arbitration with the best-laid of plans could hardly be considered as “prompt” in such circumstances.

As a result, the Court concluded that “it is completely within the domain of reasonable commercial parties to take a topic that is well understood in their world, like determining a proper and fair allocation of operating costs, and to decide to leave the resolution of disputes to an expert in the field.”


Although KMH Cardiology was related to commercial leasing, it is nevertheless broadly relevant to the use of expert determination to resolve disputes, including in respect of construction projects. This decision is also arguably relevant when considering the use of project neutrals as well.

First, the Court’s finding that an expert is entitled to render a decision in respect of questions of mixed fact and law, or even questions of law, supports the proposition that an expert can engage in issues beyond purely technical questions without inevitably exceeding the scope of their authority. This is particularly important in circumstances where the technical question at issue is inextricably bound up in an interpretation of relevant contractual provisions, which scenario is not uncommon in construction disputes.

By way of example, an Independent Certifier, Payment Certifier, Consultant or other similar role is often required to make critical decisions on a Project regarding delay, entitlement to compensation, or other contractual entitlement, all of which require consideration of legal principles, contractual interpretation, and relevant facts. With respect to certain issues, these decisions are often final and binding. This decision brings clarity to those roles, and the entitlement of such individuals to make certain decisions, notwithstanding the fact that they may consider some elements that go beyond their technical expertise and would ordinarily be left for an arbitrator or judge.

Furthermore, the Court provided an important clarification in rejecting the blanket proposition that questions of interpretation will inevitably require procedural fairness, party submissions, and a neutral trier. To the contrary, and consistent with the principle of party autonomy, the Court’s conclusions support the proposition that parties to a dispute resolution agreement can craft procedural protections as they see fit, and that an expert will not necessarily be bound by the same procedural limitations as an arbitrator or judge. This is particularly important given that construction experts typically do not have a legal background, and should ideally allay some fear on the part of experts that they will be held to a similar standard as an arbitrator or judge.

That being said, the Court’s analysis also highlights the importance of a contract being very clear and precise with respect to the appointment of an expert decision-maker, including what authority the expert is given. This is particular true given that unlike arbitration, expert determination does not have a statutory framework that exists in the background to provide default rules or parameters. As a result, a poorly-drafted expert determination provision could create ambiguities as to what procedural protections are required of the expert, thus lending itself to further disputes between parties and cast a shadow over the entire process.

On balance, KMH Cardiology therefore provides strong support for the use of expert determination to resolve commercial disputes, and we are of the view that this is particularly relevant for construction projects. In this regard, the decision represents a positive development in an area of law for which there has previously existed limited judicial consideration.

In that regard, allowing parties to give an expert authority to decide questions of mixed fact and law, or even questions of law, without necessarily being bound by fulsome procedural requirements, provides the construction industry with a meaningful supplement to arbitration. As readers are aware, arbitration is commonplace in the construction industry, but may nevertheless be more cumbersome than parties would prefer due to the procedural protections associated with it.

Further, with the recent upswing in arbitration resulting from, among other things, a backlog in the court system, it may soon become more difficult to find available arbitrators given the volume of disputes in the construction industry.

In that regard, the judiciary providing endorsement for expert determinations is a welcome signal not only to the experts looking to grow this part of their business themselves, but also to commercial parties and their counsel looking to craft further alternative dispute resolution processes.  This is one more step by the courts to promote efficiency in dispute resolution, and we look forward to seeing if expert determinations grow as a viable early avenue for the resolution of disputes on construction projects.

Preparation and Persistence: Keys to Success in the Courtroom and the Dojo for Mark Stacey

Entering the field of law requires ability, commitment, and personal sacrifice. Creating a successful practice and scaling the heights to lead one of Canada’s premier law firms, by most accounts, would equate to living your best life.

And then there’s Mark Stacey, Co-Managing Partner at Singleton Urquhart Reynolds Vogel LLP, and Co-Chair of the firm’s Commercial Litigation Group.

Mark helps clients to achieve their goals, and he is recognized as one of Canada’s leading practitioners in complex commercial litigation and business law. Equally impressive about Mark; he has met and bested his professional challenges while training to achieve the hallowed rank of Shihan-dai in the martial art of Shito-ryu Karate.

It’s a signpost on a long, rewarding journey for Mark, who describes his new Shihan-dai status as “assistant master, one step from Shihan, those considered to be masters of their martial art.”

Mark started training after high school and at 19 he travelled to Tokyo to study under Shito-ryu Soke (Grand Master) Seiko Suzuki, thus beginning a relationship that endures to this day. He then returned to Canada and qualified for the BC Karate Team before entering Osgoode Hall Law School.

After law school, Mark resumed intensive karate training and competition. He soon made it back onto the BC Karate Team, and then he joined the Canadian National Karate Team to take part in the Pan American Karate Championships and the World Karate Federation Championships.

Around this time, Mark invited Kaz Hashimoto, his friend and fellow student of Soke Suzuki, to come to Vancouver from Japan and open a karate dojo together. Through this partnership, the Odokan Shito-ryu Karate-do was born, and continues to thrive today, 35 years later, in its East Vancouver home. The dojo is considered to be among the most intensive, successful karate programs in Canada, and its pedigree of many former and current national champions backs up that claim.

Although he no longer competes at an elite level, Mark has continued to train and increase his black belt grading throughout the years. This he does while balancing his teaching responsibilities at the dojo, and of course, the demands of a successful law practice.

“There are a number of parallels that people might find surprising,” says Mark. “Success in karate is a function of preparation—extensive technical and repetitive training to develop a profound skill. This is very similar to the preparation, anticipation, and persistence required to succeed in the courtroom. The difference being that once you’ve stood alone at the ring’s edge at a high-level karate competition, you’re far less likely to be daunted by any challenges faced at trial.”

Mark shares these hard-earned truths with those he instructs at the dojo, and also the young lawyers he mentors at the firm.

In 2018, Mark returned to Tokyo to train with Soke Suzuki. There he was awarded a seventh-degree black belt, along with the rank of Kyoshi, an honorary rank beyond Sensei that is often equated with an associate professor standing.

Of course, the COVID 19 pandemic took a toll on the Odokan dojo, which was forced to shutter for many months. Thankfully those days have passed, and the dojo is once again in full operation, churning out the best and the brightest in Canadian Karate—one of its young students just won a bronze medal at the Junior World Championships in Turkey!

This past February, Mark and Kaz both travelled to Japan to train under Soke Suzuki, now in his late eighties. It was at a ceremony during this visit that Mark was awarded the ranking of Shihan-dai.

“I have now been training in karate for almost 50 years,” says Mark.  “Without a doubt it has been the most powerful single influence in my life.  I greatly enjoy practicing law, but at the most fundamental level, I am a karateka in my heart.”

Aroma Franchise Company v Aroma Espresso: Guidance and Questions on Disclosure Obligations and Reasonable Apprehension of Bias in Arbitration

In the recent decision of Aroma Franchise Company Inc. et al v Aroma Espresso Bar Canada Inc. et al, 2023 ONSC 1827 (“Aroma”), the Ontario Superior Court of Justice provided important guidance in relation to the reasonable apprehension of bias for arbitrators in circumstances where an arbitrator is retained on multiple occasions by the same party or firm. While the court’s guidance, discussed below, should be carefully considered by lawyers and litigants, it also raises a number of further questions.


Aroma Espresso Bar Canada Inc. (“Aroma Canada”) was the master Canadian franchisee of, and therefore acted as middleman in relation to individual Aroma franchisees for, Aroma Franchise Company Inc. (“Aroma Franchisor”). A dispute arose between the two parties regarding their master franchise agreement, which resulted in an arbitration run by a sole arbitrator (the “First Arbitration”) under the International Commercial Arbitration Act, 2017 (given that the Aroma Franchisor was not a Canadian entity) seated in Ontario. Aroma Canada was for the most part the successful party.

However, while the First Arbitration was still in progress, and in fact significantly advanced, the arbitrator was retained by counsel for Aroma Canada as the sole arbitrator on another dispute (the “Second Arbitration”). Neither Aroma Canada nor the Aroma Franchisor was a party to the Second Arbitration.

Just prior to releasing his final award for the First Arbitration, the arbitrator emailed counsel for both parties. In his email, the arbitrator inadvertently copied a lawyer from the same firm as counsel for the respondent, although the inadvertently copied lawyer was not involved in the First Arbitration. This inadvertent inclusion raised a concern in the mind of counsel for Aroma Franchisor.

Through subsequent correspondence, in which the arbitrator acknowledged having inadvertently copied the incorrect counsel, the arbitrator disclosed that he had been retained as arbitrator in respect of the Second Arbitration some time into the First Arbitration. The arbitrator further noted that counsel for Aroma Canada in the First Arbitration had “involvement from time to time” in the Second Arbitration, rather than day-to-day carriage. The arbitrator also expressed the view that there was no overlap in the issues presented by the First Arbitration and the Second Arbitration, and that he was unaware of any connection between the parties in the two arbitrations.

Aroma Franchisor thereafter applied to set aside the arbitrator’s final award, as well as his costs awards, on the basis of a reasonable apprehension of bias stemming from his engagement in and non-disclosure of the Second Arbitration.

The Court’s Decision

In reviewing the set-aside application, the Court canvassed a number of key issues in arriving at its ultimate conclusion that the awards should be set aside and that a new arbitration should be conducted by a new arbitrator.

Disclosure of the Second Arbitration

First, the Court considered whether it was incumbent upon the arbitrator to disclose the Second Arbitration to Aroma Franchisor. Relying on Article 12 of the Model Law (as incorporated into the International Commercial Arbitration Act, 2017) as well as the IBA Guidelines on Conflicts of Interest in International Arbitration, the Court concluded that those authorities necessitated a careful consideration of the circumstances in order to determine whether disclosure was required (in other words, the answer was not immediately obvious based on a review of those authorities). To that end, the Court considered a number of factors, including the following:

  • The expectations of the parties in the selection of the arbitrator. A review of the parties’ contemporaneous correspondence at the time of the arbitrator’s selection revealed that the parties expected that, if a proposed arbitrator had previously been retained or engaged by either party, then that retainer or engagement needed to be disclosed at that time;
  • The extent to which there were any overlapping issues as between the two arbitrations. On this point, the Court observed that there were some overlapping issues (i.e. similar causes of action), which based on the United Kingdom Supreme Court’s (UKSC) decision in Halliburton Company v. Chubb Bermuda Insurance Ltd. [2020] UKSC 48, might give rise to an appearance of bias. However, in this case, there were limited overlapping issues, and the Second Arbitration did not involve a franchise dispute and was in a different industry, such that there was no appearance of bias; and
  • The fact that the arbitrator was a sole arbitrator in both arbitrations (and therefore controlled the outcome in both). The Court did not explore this issue in detail, although the balance of the Court’s analysis suggests that the obligation to disclose was heightened by the fact that the arbitrator exerted greater control over the outcome than he might have done in the context of an arbitral tribunal.

The Court then turned to a review of the applicable institutional rules, including the UNCITRAL Arbitration Rules and the ADRIC Code of Ethics, highlighting that those rules variously require disclosure in circumstances that “could reasonably give rise to justifiable doubts” (emphasis added) as to their impartiality or independence, as well as “might create an appearance of partiality or bias” (emphasis added). Again, although not stated explicitly, the Court’s analysis appears to implicitly suggest that the bar for disclosure is lower than the balance of probabilities.

Finally, the Court turned to Halliburton v Chubb (noted above), considered to be the United Kingdom’s leading case on arbitrator bias. Although not identical to this case, Halliburton involved a very similar scenario in which an arbitrator accepted appointments from the same party in multiple, overlapping cases, arising out of the same incident, without disclosure. While the arbitrator disclosed his prior appointments at the time he was retained in the arbitration at issue, he then did not disclose the subsequent appointment. Although the UKSC determined that the arbitrator should have disclosed the subsequent appointments, it went on to find that this did not create a reasonable apprehension of bias.

Based on the foregoing, the Court in Aroma determined that the arbitrator ought to have disclosed his appointment in the Second Arbitration to the parties in the First Arbitration.

Reasonable Apprehension of Bias

Turning to the key issue of whether there was a reasonable apprehension of bias, the Court observed that the test for determining whether there is reasonable bias in respect of a judge applies with equal force to an arbitrator, despite the fact that their functions differ in several respects: “[W]hat would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude. Would he think that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly.” The Court also considered a number of significant factors, including the following:

  • The threshold for a finding of real or perceived bias is a high one, since it calls into question both the personal integrity of the adjudicator and the integrity of the administration of justice. The grounds must be substantial, and the onus is on the party seeking to disqualify to bring forward evidence to satisfy the test.
  • The presumption of impartiality is high.
  • The inquiry is objective and requires a realistic and practical review of all the circumstances from the perspective of a reasonable person. The courts will not entertain the subjective views of the parties in making such a determination.
  • A challenge based on reasonable apprehension of bias will not be successful unless there is evidence to support the allegation beyond a mere suspicion that the hearing officer would not bring an impartial mind to bear. Mere suspicion is insufficient.
  • When considering bias, context matters. Any review of an arbitrator’s conduct must be considered in context and not through the review of selected excerpts or specifically chosen terms, phrases, or questions posed.

As a result, the Court concluded that the determination of whether a reasonable apprehension of bias exists is extremely fact specific.

It is apparent from the Court’s decision that the high bar noted in the case law and relevant guidelines must be met in order to support a finding of a reasonable apprehension of bias; however, in the circumstances that bar was found to have in fact been met here. In particular, the Court highlighted a number of factors it considered relevant in reaching that conclusion, including the following:

  • In respect of the Second Arbitration, Aroma Canada had not tendered evidence in respect of a number of salient points, including how much the arbitrator was being paid, who had suggested the arbitrator’s appointment, who had reached out to the arbitrator to retain him, and whether the parties to one arbitration were aware of the other arbitration;
  • The optics of Aroma Canada’s lead counsel retaining the arbitrator in the Second Arbitration after the First Arbitration was underway. Although not explicitly stated, the Court’s observation on this point raises questions as to whether the courts are or will be concerned with counsel retaining an arbitrator on multiple occasions and any related objectives of doing so. In that regard, Aroma Franchisor argued that the mere proffering of money to the arbitrator via the Second Arbitration was itself fatal to the arbitrator’s impartiality, which argument the Court did not expressly reject;
  • The fact that the arbitrator was selected for the Second Arbitration despite Aroma Canada’s counsel not having any prior experience with him as an arbitrator prior to the First Arbitration, and despite the availability of other competent commercial arbitrators in Toronto; and
  • The parties’ pre-appointment correspondence (discussed above), in which both parties emphasized the importance of selecting an arbitrator without a pre-existing relationship with either party or their counsel.

Based on the foregoing considerations, the Court determined that there was a reasonable apprehension of bias. In the circumstances, Article 18 of the Model Law was found to have been violated, which qualified as grounds for set-aside pursuant to Article 34(2) of the Model Law. As a result, the Court set aside the awards in the First Arbitration and directed that a new arbitration be conducted by a new arbitrator.

Review of the Decision and Questions Raised

Given the significant impact of the Court’s decision to remit the matter back for an entirely new arbitration, Aroma raises several important issues for further consideration.

First, prior to Aroma, the Halliburton decision was (and still is) considered a persuasive authority in the international arbitration community, and was considered instructive to arbitration practitioners in Canada notwithstanding that it was not a binding authority.

In that regard, it bears noting that in Halliburton, the arbitrator had arguably engaged in conduct that would give rise to an even greater apprehension of bias – there, the arbitrator had accepted appointments in multiple, overlapping matters from the same party, all arising out of the same incident (the Deepwater Horizon incident). Nevertheless, the UKSC found that an objective observer would not have concluded that the arbitrator was biased.

In this case, Aroma Franchisor argued – and the Court appears to have accepted – that Halliburton was distinguishable on the basis that (1) the applicable UK legislation set a higher threshold for removing an arbitrator or setting aside an award – namely, the applicant must show that a substantial injustice has been or will be caused – and (2) the UK legislation did not contain a statutory duty of disclosure, unlike the Model Law.

That being said, this position appears to somewhat understate the relevance of the UKSC’s findings in Halliburton insofar as (1) the test applied by the UKSC for bias was effectively the same as that applied in Aroma, yet the UKSC reached the opposite conclusion (i.e., that there was no bias), and (2) the UKSC found a common law duty of disclosure, such that it was functionally equivalent to the Model Law’s statutory duty (as expressed in the Ontario legislation). Furthermore, in respect of the “substantial injustice” requirement set out in Halliburton, it bears noting that the Court in Aroma similarly observed a finding of real or perceived bias requires “substantial” grounds. In that regard, these thresholds are more similar than they might first appear.

As a result, Halliburton potentially could have been considered as a more persuasive authority in Aroma against a finding of a reasonable apprehension of bias and may be considered as such in future cases.

Second, Aroma’s emphasis on the parties’ expectations as articulated in their pre-appointment correspondence is, in some sense, unfair to the arbitrator, insofar as the Court’s analysis does not suggest that the arbitrator had any knowledge of that correspondence or the importance that the parties had placed on their chosen arbitrator having no business relationship with either party or their counsel.

This issue in fact appears to have been the most important to the Court’s ultimate determination. In that regard, there exists a tension between the Court’s emphasis on the parties’ expectations, and the pre-existing case law establishing that courts will not entertain the subjective views of the parties in assessing a claim of bias. In any event, whereas knowledge by the arbitrator of the parties’ expectations may have militated in favour of a finding of an apprehension of bias (i.e. knowing of the parties’ wishes but acting against them), the opposite is equally true that lack of such knowledge could arguably militate against such a finding.

Third, the Court’s comments regarding the selection of the arbitrator for the Second Arbitration raise an interesting question as to the frequency with which an arbitrator may be appointed by the same counsel or parties. This question is particularly important in specialized practice areas, such as construction law, where there are a limited number of arbitrators with the subject matter expertise and experience to adjudicate such disputes.

To reiterate, the Court was somewhat critical of the fact that the arbitrator was selected for the Second Arbitration despite Aroma Canada’s counsel not having any prior experience with him as an arbitrator, and despite the noted availability of other commercial arbitrators in Toronto.

One the one hand, and as the Court observed, the IBA Guidelines identify three or more appointments by the same counsel within a period of three years as falling within the “orange list” as a problematic-but-not-disqualifying circumstance which may warrant disclosure; in other words, repeated use of an arbitrator may pose problems with respect to using them again. On the other hand, however, the Court appeared to be critical of the fact that Aroma Canada’s counsel had appointed the arbitrator a second time despite having had no experience with him as an arbitrator prior to the First Arbitration.

In the circumstances, these two propositions appear to be in tension insofar as they suggest a fairly narrow range of permissibility – it is potentially problematic to appoint an arbitrator whom counsel has already retained repeatedly, yet it may also be problematic to repeatedly appoint an arbitrator whom counsel has not already retained previously.

Fourth, the Court’s observations as to the optics of Aroma Canada’s lead counsel retaining the arbitrator in the Second Arbitration after the First Arbitration was underway – what the Court referred to as a “bad look” – raises an interesting question as to the presumption of an arbitrator’s impartiality. As noted above, the Aroma Franchisor appears to have argued that the fact money was proffered to the arbitrator via the Second Arbitration was in itself fatal to his role in the First Arbitration, while the balance of the judgment suggests a concern regarding the optics of counsel’s intentions and objectives in selecting the same arbitrator twice.

This raises questions for future decisions as to how the presumption of the arbitrator’s impartiality will be considered, as the Court did not explicitly confirm that the proffering of money is insufficient to ground a finding of bias. To the contrary, it can and should be presumed – which presumption can be rebutted with specific evidence – that the arbitrator will continue to act impartially in such circumstances; arbitration invariably involves remunerating arbitrators, and as such, the presence of remuneration should not in and of itself be disqualifying. Put differently, payment for services rendered by an arbitrator should not be considered the functional equivalent of an inducement.

Practically speaking, in specialized industries, it is not uncommon for a party to appoint the same arbitrator on matters while that arbitrator is already arbitrating prior matters in which the same party is involved. If the use of arbitrators on multiple construction matters were to qualify as grounds for reasonable apprehension of bias, then the pool of available arbitrators would be drastically narrowed. This would no doubt be problematic for the growth of arbitration – at least as it relates to Canadian construction law, particularly as the judiciary continues to work through the backlog of cases created by the COVID-19 pandemic.

As well, and as recognized by the Court in Aroma, arbitrators are not judges, and are remunerated by parties rather than the state; as a result, in our view, precedents applicable to the judiciary are not necessarily fully transposable to the arbitral context. Here the Court’s selection of the test appears to have subordinated the fact that, under the IBA Guidelines, this situation fell into the Orange category, perhaps resulting in a decision that appears inconsistent with the outcome in Halliburton despite their similar factual matrices.

Finally, and as noted above, this issue raises questions as to how courts should interpret the intent of counsel. It is plausible that rather than retaining an arbitrator a second time in order to curry favour, counsel might retain them on the basis that the arbitrator demonstrated a high level of proficiency in their role as arbitrator (competent case management, strong grasp of the issues, etc.).

Given the broad significance of the questions raised by Aroma, we look forward to seeing how it will be subsequently interpreted or applied whether again by the Ontario Superior Court of Justice or in the appellate courts. One thing is clear, however – arbitrators should manage their practices with a strong emphasis on continuous disclosure.

Bruce Reynolds Named Winner of the 2023 Client Choice Construction Award for Canada

Lexology has announced the winners of their annual Client Choice Awards, and we are pleased to announce that named partner, Bruce Reynolds has been named top Construction Lawyer in Canada.  Special thanks to our clients and peers for their feedback:

Here are some sample client quotes:

“Bruce always puts his client’s interests first. He is an excellent advocate and presents his client’s case persuasively and eloquently.”

“Bruce Reynolds is a dynamic and impressive advocate.”

“Bruce is well known in the industry and a very experienced litigator.”

“Bruce Reynolds comes up with innovative solutions and arguments to a legal dispute, and that always brings a fresh perspective to the matter.”

These distinguished awards are based on an extensive survey of in-house counsel and independent market research conducted by Lexology. Through the surveys, clients are asked to rate lawyers in numerous areas of client service including: quality of legal advice, commercial awareness, industry knowledge, strategic thinking, billing transparency, tailored fee structures, value for money, responsiveness, and ethics, among others. To ensure that the results cannot be influenced, law firms are not informed when this initial round of research is conducted.

About Client Choice

Established in 2005, Client Choice recognizes those individuals around the world that stand apart for the excellent client care they provide and the quality of their service. The criteria for this recognition focus on an ability to add real value to clients’ business above and beyond the other players in the market. Uniquely, lawyers can be nominated only by corporate counsel.

About Lexology

Lexology delivers the most comprehensive source of international legal updates, analysis and insights. We publish in excess of 450 articles every day from over 900 leading law firms and service providers worldwide across 50 work areas in 25 languages. Our searchable archive contains more than 1,000,000 articles. Find out more at

About Singleton Urquhart Reynolds Vogel LLP

Singleton Reynolds is a preeminent Canadian construction and infrastructure law firm. Our peers and clients recognize our lawyers as the best in the construction industry. Over forty years of leadership in Canadian construction and infrastructure law is complemented by a broad offering of legal services, with a focus on finding solutions to complex legal problems, and providing service excellence in our approach and execution. While the core of our business remains rooted in construction and infrastructure, we also offer our clients an extensive range of legal services in the fields of commercial litigation, professional liability, product liability, corporate commercial law, commercial real estate, employment and labour law and business immigration.

Sharon Vogel: Titan and Teacher – A Tribute on International Women’s Day

Every year on International Women’s Day Singleton Reynolds profiles a prominent female member of our firm. This year we are honoured to feature named partner Sharon Vogel, one of Canada’s top construction lawyers.

Sharon Vogel said she was going to be a lawyer when she was young – and she delivered. However, her friends in law school would not have predicted Bay Street or that she would end up as a construction lawyer; the most likely predication was that she would land at an NGO somewhere. Sharon, though, decided to give private practice a shot, and ended up inspired by the passion and generosity of the incredible lawyers who interviewed her and who she then worked with. “If this kind of person can practice at a law firm,” Sharon thought “I can too.”

During her articles Sharon met Ken Scott and Bruce Reynolds. Ken had a caring and charismatic personality combined with a razor sharp skill set. Sharon remembers Ken as one of the best cross-examiners she has ever seen, as well as one of the kindest people she has known. Ken took Sharon under his wing and she worked alongside him until he retired on the last day of a long trial they ran together. Bruce Reynolds was also a critical mentor to Sharon, and he was extraordinarily generous in training her and sharing his vast knowledge of construction law. Ken and Bruce’s mentorship and others on their team led her to a rich and fulfilling career helping her clients solve their fascinating problems.

Sharon and Ken appeared at the Supreme Court of Canada together on the Guarantee Co. of North America v. Gordon Capital Corp case while Sharon was eight months pregnant, and Sharon laughingly remembers having to jam into the tiny benches. She also glows at how much fun she had with the case: the complex legal issues, the opportunity to argue in front of the Supreme Court of Canada, observing the “battle of the titans” between Ken and opposing counsel Tom Heintzman.

Today Sharon is a titan herself, and she credits her mentors, her clients, and her “dream team” of Singleton Reynolds partners and associates for the joy she has found in her career. Sharon’s untraditional career made room for all of the things she cares about in her life: not only incredible litigation success, but also academia, writing, mentorship, and family. Her accomplishments include co-authoring with Bruce Reynolds the pre-eminent textbook A Guide to Canadian Construction Insurance Law while on sabbatical in New Zealand, working part-time while she and her husband tag-teamed raising their small children, and recently helping to found the Toronto office of Singleton Urquhart Reynolds Vogel LLP, where Sharon’s name features prominently on the wall.

The early days of Singleton Reynolds were giddy with excitement and enthusiasm for the new venture, and full of pride at joining a group of incredible partners with which to build something new – and remarkable. Today the lawyers at Singleton Reynolds – junior and senior – look to and call on Sharon for her advice, guidance and wisdom as Sharon passes on the legacy of mentorship that shaped her career. The strength of the incredible construction litigation team in Toronto can be attributed to that legacy as passed on by Bruce, Sharon, and now the newest Singleton Reynolds partners.

Sharon’s advice for all young lawyers is to do what they love, find the mentors and champions who will support and encourage them, and to build and sustain the relationships that will bring meaning and joy to their practice of law.

Singleton Reynolds Ranked in Top Tier by Lexpert®

Singleton Urquhart Reynolds Vogel LLP has been named in the Top Tier (Most Frequently Recommended) for Construction Law in both Toronto and Vancouver in The Canadian Lexpert® Directory, with lawyers also listed in multiple categories.

The firm has also been ranked for Infrastructure Law, Commercial Arbitration, Corporate Commercial Litigation, Commercial Insurance Litigation, Directors & Officers’ Liability Litigation, and Professional Liability.

Singleton Reynolds lawyers recognized by Lexpert® include:

Stephen Berezowskyj, Construction Law, Commercial Insurance Litigation, Professional Liability

Jesse Gardner, Leading Lawyer to Watch, Construction Law

Stuart B. Hankinson, Construction Law, Commercial Arbitration, Commercial Insurance Litigation

James Little, Leading Lawyer to Watch, Construction Law

Avon M. Mersey, Aviation Law

Bruce Reynolds, Construction Law (Most Frequently Recommended), Infrastructure Law, Commercial Arbitration

John R. Singleton, Construction Law (Most Frequently Recommended), Commercial Arbitration, Commercial Insurance Litigation,

Sharon Vogel, Construction Law (Most Frequently Recommended), Infrastructure Law

Peter Wardle, Corporate Commercial Litigation, Directors’ & Officers’ Liability Litigation, Professional Liability

The directory results are based on an Annual Survey of in house counsel and lawyers across Canada.

About The Canadian Lexpert® Directory

The Canadian Legal Lexpert® Directory, published since 1997, is based on an extensive peer survey process. It includes profiles of leading practitioners across Canada in more than 60 practice areas and leading law firms in more than 40 practice areas. The publication also features articles highlighting current legal issues and recent developments of importance written by leading practitioners across Canada.

About Singleton Urquhart Reynolds Vogel LLP

Singleton Reynolds is a preeminent Canadian construction and infrastructure law firm. Our peers and clients recognize our lawyers as the best in the construction industry. Over forty years of leadership in Canadian construction and infrastructure law is complemented by a broad offering of legal services, with a focus on finding solutions to complex legal problems, and providing service excellence in our approach and execution. While the core of our business remains rooted in construction and infrastructure, we also offer our clients an extensive range of legal services in the fields of commercial litigation, professional liability, product liability, corporate commercial law, commercial real estate, employment and labour law and business immigration.

Singleton Urquhart Reynolds Vogel LLP Welcomes New Partner, Seema Lal

Singleton Urquhart Reynolds Vogel LLP is pleased to welcome new partner Seema Lal to the firm.

Seema practices in the Construction and Infrastructure and Commercial and Business Litigation practice groups.  She has experience acting for owners, developers, contractors, trades and consultants and has developed experience in all aspects of construction law, with a particular focus on the negotiation and preparation of construction contracts, procurement issues, builders’ liens, and construction dispute resolution, including claims for extras and delays.

She brings over 20 years of experience to her practice at the firm. She seeks to provide strategic legal advice to assist her clients in making informed and effective legal and business decisions. Through her practice and her involvement in industry associations, she has built up an in-depth understanding of the construction sector and the unique issues facing its stakeholders.  She is also experienced in assisting clients with insurance matters and professional liability claims.

Seema is a Fellow of the Canadian College of Construction Lawyers, an association of lawyers who are distinguished for their skill and experience in the practice or teaching of construction law. She has been recognized by The Legal 500 as a leading lawyer in Canadian Construction Law. Seema regularly provides lectures and seminars to various construction industry associations and organizations, and is an adjunct professor at the University of British Columbia.

She is actively involved in the Vancouver community and holds board positions with a number of industry groups and non-profit organizations. She also volunteers with Access Pro Bono and the Multiple Sclerosis Society of Canada’s Volunteer Legal Advocacy Program.

Handley Comes for Lien Court: Immediate Disclosure of Settlement Agreements Altering the Litigation Landscape in the Context of Lien Assignments

Recent case law from the Court of Appeal for Ontario has repeatedly confirmed the strict rule that settlement agreements which “change entirely” the “litigation landscape” must be immediately disclosed.[1] That case law has now impacted a lien matter for the first time.

In GH Asset Management Services Inc. v. Lo, 2022 ONSC 7218 (“GH Asset”), the Court considered whether disclosure of a settlement and assignment agreement was subject to the immediate disclosure obligation set out in Handley Estate v DTE Industries Limited, 2018 ONCA 324 (“Handley”), and if so, whether such disclosure was timely. The Court ultimately determined that the settlement and lien assignment agreement in question was not a settlement that triggered the immediate disclosure requirement. However, it warned that such agreements may trigger the rule in other cases.


The underlying dispute in GH Asset pertained to work allegedly performed by J&J Property Management Services Inc. (“J&J”) at a residential apartment building owned by Jan Ju Lo and Reng Song Lo (the “Los”). The Los entered into a contract with GH Asset Management Services Inc. (“GH Asset Management”) for property management services for the apartment building. GH Asset Management then, by verbal agreement, engaged J&J to perform maintenance and renovation services at the building.

Though GH Asset Management initially paid J&J for its services from the rental income it collected on behalf of the Los, the Los eventually began collecting the rent directly, and no further payments were made to J&J for the services it rendered. Ultimately, J&J registered a claim for lien for its alleged unpaid services, and perfected its lien by commencing an action listing the Los, GH Asset Management, and its principal, as defendants. The Los subsequently delivered a statement of defence, counterclaim, and crossclaim, asserting among other things, that GH Asset Management acted without its authority in engaging J&J. As a result, the Los alleged that it was solely liable for J&J’s damages.

GH Asset Management and J&J ultimately settled J&J’s claim on March 25, 2019, in a document referred to as a “Deed of Assignment of Lien and Lien Action and Undertaking to Produce Documents” (the “Agreement”).[2] In exchange for payment, the Agreement provided that J&J would assign its claims and liabilities related to the apartment building to GH Asset Management and release its claims against GH Asset Management and its principal. In the Agreement, J&J also agreed to provide GH Asset Management with documents and an affidavit. As a result of the Agreement, GH Asset Management was both a plaintiff (given the assignment) as well as a defendant to the action.

The Agreement was not disclosed to the Los until October 8, 2020, when GH Asset Management served a motion record that included a copy of the Agreement. The Los ultimately brought a motion to permanently stay the lien action on the basis of inadequate disclosure of the Agreement.

The Handley Principles

As set out in Handley and subsequent cases, a settlement agreement which “changes entirely the landscape of the litigation in a way that significantly alters the adversarial relationship among the parties to the litigation or the ‘dynamics of the litigation’” must be immediately disclosed.[3] The purpose of the rule is to ensure that other parties receive prompt notification of potential impacts on their litigation strategies, as well as to ensure that the Court can properly control its processes.[4] Courts need to “know the reality of the adversity between the parties”.[5]

Over the past five years, the rule has received significant attention from the Court of Appeal for Ontario, which has consistently confirmed its strictness, as well as the draconian mandatory remedy applied in cases of non-disclosure: a permanent stay of the proceeding. The principles have recently been summarized as follows:

  1. There is a “clear and unequivocal” obligation of immediate disclosure of agreements that “change entirely the landscape of the litigation”. They must be produced immediately upon their completion;
  2. The obligation extends to any agreement between or amongst the parties “that has the effect of changing the adversarial position of the parties into a co-operative one” and thus changes the litigation landscape;
  3. The obligation is to immediately disclose information about the agreement, not simply to provide notice of the agreement, or “functional disclosure”;
  4. Both the existence of the settlement and the terms of the settlement that change the adversarial orientation of the proceeding must be disclosed;
  5. Confidentiality clauses in the agreements in no way derogate from the requirement of immediate disclosure;
  6. The standard for disclosure is “immediate”, not “eventually” or “when it is convenient”;
  7. The absence of prejudice does not excuse a breach of the obligation of immediate disclosure; and
  8. Any failure to comply with the obligation of immediate disclosure amounts to an abuse of process. The only remedy to redress the abuse of process is to stay the claim brought by the defaulting, non-disclosing party.[6]

The Court’s Analysis

In GH Asset the Court held that the Agreement did not constitute a settlement which triggered the rule.

The Court distinguished the Agreement from the various settlements at issue in the recent decisions rendered by the Court of Appeal on the basis that, unlike in those cases, there is statutory authority for the assignment of a lien pursuant to the former Construction Lien Act.[7] Further, the provision in the Agreement requiring J&J to provide evidence and an affidavit was necessary for GH Asset Management to prove the claims J&J assigned to it given that the settlement preceded documentary disclosure by J&J in the action.

As such, the Court found that the Agreement did not alter the adversarial orientation of the parties in a material way:

  • the fact that J&J and GH Asset Management were formally adverse in litigation was not “dispositive of the ‘reality of the adversity’ between them” (i.e. the fact that the parties were adverse on the face of the pleadings was not conclusive of the actual litigation landscape);[8]
  • GH Asset Management and the Los were already adverse in interest prior to the settlement;
  • J&J had not altered its adversarial position: the fact that it was now providing documents and evidence to GH Asset Management, its assignee, was of no moment because the Agreement did not require J&J to tailor any evidence to support GH Asset Management’s newly acquired claim against the Los. It would be open to both the Los and GH Asset Management to argue about how the documents should be treated in determining liability, just as if J&J had remained the plaintiff;
  • GH Asset was not involved in preparing the affidavit of J&J’s principal. Unlike some of the other cases decided under Handley, there was nothing in the Agreement suggesting that the settlement was conditional on GH Asset Management’s approval of the affidavit (sometimes referred to as a “proffer” of evidence), a situation which, in some circumstances, may alter the litigation landscape; and
  • the position of the Los in the litigation was unchanged because GH Asset Management was simply pursuing J&J’s assigned claim as against them.


GH Asset is the first decision of which we are aware that applies the Handley principles – which have been the focus of a sea of recent litigation – in the construction lien context. As noted by the Court in this case, “settlement agreements by their nature will have an impact on the litigation landscape”, and “cooperation between litigants does not necessarily fundamentally alter that litigation landscape”.[9] However, the Court of Appeal has also cautioned that where parties are unclear about their disclosure obligations, they can bring a motion for directions.[10] Given the strictness of the rule and the draconian nature of the remedy, litigants in lien matters would be well advised to become familiar with the Court of Appeal’s recent case law on this issue. As another Court recently held in another Handley decision, “better to be safe than sorry.”[11]

[1] Handley Estate v. DTE Industries Limited, 2018 ONCA 324.

[2] GH Asset Management Services Inc. v. Lo, 2022 ONSC 7218 at para 9.

[3] Poirier v. Logan, 2022 ONCA 350 at paras 47-48; Handley Estate v. DTE Industries Limited, 2018 ONCA 324 at para 39.

[4] Pettey v. Avis Car Inc. (1993), 13 OR (3d) 725 (Ont Gen Div).

[5] Handley Estate v. DTE Industries Limited, 2018 ONCA 324 at para 39 citing Moore v. Bertuzzi, 2012 ONSC 3248.

[6] CHU de Québec-Université Laval v. Tree of Knowledge International Corp., 2022 ONCA 467 at para 55. Additional principles can be found in Crestwood Preparatory College Inc. v Smith, 2022 ONCA 743 at para 43.

[7] See Section 73 of the former Construction Lien Act.

[8] GH Asset Management Services Inc. v. Lo, 2022 ONSC 7218 at para 33.

[9] GH Asset Management Services Inc. v. Lo, 2022 ONSC 7218 at para 43.

[10] Crestwood Preparatory College Inc. v. Smith, 2022 ONCA 743 at para 43(d).

[11] Poirier v. Logan, 2021 ONSC 1633 at para 61 aff’d 2022 ONCA 350.

Edmundo P. Guevara and Catherine Gleason-Mercier join the Singleton Reynolds Partnership

Singleton Reynolds is proud to announce and congratulate our newest partners, Catherine Gleason-Mercier and Edmundo P. Guevara.

Catherine Gleason-Mercier is a passionate advocate who provides business-critical strategic counsel to clients facing complex legal challenges. Catherine’s practice is focused on construction and infrastructure disputes and complex commercial disputes.

Catherine has represented a diverse group of public and private clients in all facets of the contractual pyramid in a wide array of disputes, including complex commercial disputes, construction liens and trusts, bond and insurance claims, contract interpretation, delay and extras claims, and professional negligence. Catherine also routinely advises clients on the avoidance and management of risk in the administration of construction contracts. The core of Catherine’s practice is a commitment to excellent client service and ensuring the advancement of client interests with a strategic focus on achieving overall business objectives.

Edmundo P. Guevara seeks first and foremost to understand his clients’ business and concerns in order to help them efficiently resolve their disputes including through negotiation, mediation, arbitration or litigation in the areas of insurance defence, construction disputes, defence of insurance brokers, commercial and business disputes and personal injury law.

His diverse legal background, which includes acting at various times as solicitor, litigator and consultant to government agencies and international regional development agencies, in addition to having assumed a high-level management position in the Philippine government’s tax agency prosecuting tax fraud and tax evasion cases, provides him with a varied perspective that informs his practical approach to the handling of his clients’ legal issues.

About Singleton Urquhart Reynolds Vogel LLP

Singleton Reynolds is a preeminent Canadian construction and infrastructure law firm. Our peers and clients recognize our lawyers as the best in the construction industry. Over forty years of leadership in Canadian construction and infrastructure law is complemented by a broad offering of legal services, with a focus on finding solutions to complex legal problems, and providing service excellence in our approach and execution.

Rare Example of Partial Summary Judgment in a Construction Matter Upheld

Motions for partial summary judgments are typically frowned upon by the judiciary in Ontario. The Court of Appeal for Ontario has repeatedly held that such motions should be granted only rarely, and only where an issue “may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost-effective manner”.[1] Otherwise, there is a risk that findings made in the summary judgment motion will be inconsistent with findings made following the trial of the balance of the action.[2]

Moreover, where a key witness is facing credibility issues, partial summary judgment motions are almost never granted. Judges prefer to assess credibility in the flesh; it is understandably difficult to assess on a paper record.[3]

However, partial summary judgment, while rarely granted, is not always refused. In its recent decision in Learmont Roofing Ltd. v Learmont Construction Ltd., 2022 ONCA 894, the Court of Appeal upheld a rare example of a successful partial summary judgment emerging from a construction dispute which developed between a general contractor and subcontractor as part of a CCDC stipulated price contract in respect of a commercial roof replacement.

The Decisions

The case involved a dispute between a general contractor (Learmont Construction Ltd.) and a roofing subcontractor (Learmont Roofing Ltd.). Despite their names, the two parties were not related. The subcontractor had agreed to perform all the work for the project. In this arrangement, the contractor would receive the entirety of the payment from the owner (who was not a party to this dispute) and retain 5% of the gross amount of each invoice billed. The subcontractor would then receive 95% of the total amount billed for that work.

The owner paid each of the five invoices rendered by the contractor for the completion of the entire scope of work. The owner did not set off against any invoices and for the purposes of this case appeared to have no concerns with the work performed by the contractor/subcontractor. Despite having received full payment, the contractor only remitted the amount owing to the subcontractor for four of the five invoices (invoices 1, 2, 3 and 5 were paid to the subcontractor in full). The principal of the contractor – Mr. Boer – later explained that he had refused the payment for the fourth invoice because he believed that the contract price had been inflated as part of a corrupt scheme whereby the lead engineer on the project would have his cottage roof installed by the subcontractor at no charge. Mr. Boer deposed to having attended a meeting where this was admitted. Mr. Boer also claimed that the contractor did not have the funds to pay the subcontractor.

The subcontractor commenced an action to recover the amount owing, $138,134 for invoice #4.  The contractor commenced “a myriad of counterclaims”, including for fraud and conversion.

Notwithstanding the rarity of the relief, the subcontractor successfully obtained partial summary judgment on its claim. The motion judge granted the relief finding, among other things, that Mr. Boer’s “speculative allegation” regarding the corrupt scheme was not a genuine issue requiring a trial: there was no evidence that the price had been inflated for the benefit of the engineer, or that the engineer had failed to properly certify the value of the work done. Indeed, the subcontractor provided a cheque representing full payment by the engineer for his cottage roof as well as an email in which the engineer expressed appreciation for the work done and stated that the amount owing would be paid in full. The motion judge also found no “credibility issues” raised by the contractor.

Moreover, Mr. Boer’s suggestion that the contractor did not have the funds to pay the subcontractor the remaining amount was “obviously disingenuous”. The motion judge found that the funds received from the owner had been diverted to Mr. Boer for his personal benefit or the benefit of his holding company. Mr. Boer was therefore “liable for the breach of the [contractor’s] trust obligations under the Construction Act, R.S.O. 1990, c. C.30, as he failed to remit the amount owing to [the subcontractor].”[4] As a result, Mr. Boer and his holding company were jointly and severally liable for the full amount owing to the subcontractor.

Finally, the motion judge rejected the risk of inconsistent findings. Far from being intertwined with the subcontractor’s claim, the slurry of counterclaims made by the contractor were entirely separate.

The Court of Appeal upheld the motion judge’s decision, including her conclusions that there was no risk of inconsistent findings and that the evidentiary record did not give rise to any credibility problems: “We agree that the appellants raised no genuine issues requiring a trial. Further, after reviewing the evidentiary record, the motion judge concluded that it did not give rise to any credibility problems. We see no palpable and overriding error justifying appellate interference with the motion judge’s findings.”[5]


Partial summary judgments are difficult to obtain; it can even be challenging to convince the Court to schedule such a motion. Nevertheless, they remain an option to claimants or defendants in the right circumstances. This may be particularly so when considering clear and apparent breaches of the trust obligations imposed by the Construction Act in circumstances such as those in the present case.

Furthermore, making allegations which would seem to raise credibility issues may not prevent a partial summary judgment where those allegations lack any evidentiary foundation. Moreover, parties should consider carefully whether their claims (or counterclaims) are intertwined with other parts of the litigation. If not, partial summary judgment is an option that warrants further discussion with counsel.

[1] Butera v Chown, Cairns LLP, 2017 ONCA 783 at para 34.

[2] Butera v Chown, Cairns LLP, 2017 ONCA 783 at paras 26-29, 33.

[3] Trotter v Trotter, 2014 ONCA 841 at para 55.

[4] Learmont Roofing Ltd. v Learmont Construction Ltd., 2022 ONCA 894 at para 17.

[5] Ibid at para 21.

Singleton Reynolds Lawyers Recognized in the 2023 Lexpert/ALM 500 Directory

Bruce Reynolds, John Singleton and Sharon Vogel have been featured in the 2023 Lexpert/ALM 500 Guide. This directory profiles lawyers who are identified by peers and clients as “Most Frequently Recommended.”

The identification of leading practitioners for the Lexpert/ALM 500 is based upon comprehensive survey work across the country, which has been ongoing since 1994. The process targets lawyers acknowledged as leaders in their respective fields, lawyers prominent in professional organizations, and lawyers otherwise enjoying significant recognition from their colleagues.

About The Lexpert/ALM 500:

Produced in collaboration with American Lawyer Media, The Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada (the Lexpert/ALM 500 Directory) profiles the “Most Frequently Recommended” lawyers across Canada in approximately 35 practice areas identified via an extensive, annual peer survey.

The Lexpert/ALM 500 Directory features articles highlighting cross-border legal issues and recent developments of importance written by leading practitioners across Canada.

Learn more at:

Tall Ships Development Inc. v. Brockville (City): The Ontario Court of Appeal Reaffirms the Court’s Narrow Basis for Setting Aside Arbitral Awards

In the recent decision of Tall Ships Inc. v. Brockville (City)[1], the Ontario Court of Appeal has again emphasized that courts will be reluctant to set aside arbitral awards under the Arbitration Act where the parties in their arbitration agreement choose only to permit appeals on questions of law.


This matter arose out of a public-private partnership between the City of Brockville (the “City”) and Tall Ships Landing Development Ltd. (“Tall Ships”) with respect to the development of a waterfront property along the St. Lawrence River which included a mixed residential/commercial condominium and a Maritime Discovery Centre attraction (“the Project”). The Project was undertaken to revitalize downtown Brockville. The anticipated total capital cost of the Project was $12,000,000, and the Project had an estimated construction budget of $7,400,000 as set out in the Purchase Agreement.

Various disputes arose between the parties following the completion of the Maritime Discovery Centre which was approximately 6,000 square feet larger than originally designed and approximately $1,800,000 over budget, which included disputes relating to: (1) remediation costs, (2) construction cost overruns, and (3) interest costs (the “Tall Ships Claims”).

Pursuant to the parties’ arbitration agreement, the Tall Ships Claims were submitted to arbitration for resolution. Following a four-week hearing, the arbitrator dismissed the Tall Ships Claims through three separate arbitral awards. Tall Ships appealed the arbitral awards to the Superior Court of Justice. Notably, the arbitration agreement only provided for appeals on questions of law. On appeal, the application judge found in favour of Tall Ships and set aside all three arbitral awards.

The City appealed the application judge’s decision to the Ontario Court of Appeal and argued that the application judge erred in finding errors of law as the questions before the arbitrator were, in fact, questions of mixed fact and law which did not give right to a right of appeal in accordance with Ontario’s Arbitration Act and the parties’ arbitration agreement. Tall Ships, on the other hand, argued that the arbitrator committed extricable errors of law, breached their rights to procedural fairness, and that the application judge was correct in her determination.

Ontario Court of Appeal Decision

The Ontario Court of Appeal allowed the City’s appeal and held that the application judge erred in categorizing the matters at issue as extricable questions of law finding that the issues were questions of mixed fact and law. In reaching its decision, the Ontario Court of Appeal made a number of key observations in relation to each of the Tall Ships Claims, described briefly below.

The Court of Appeal found that judges in exercising their appellate functions “should not be too ready to characterize issues as issues of law because doing so may render the point of consensual arbitration nugatory.”[2] In this regard the Court cited the Supreme Court’s decision in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co, 2016 SCC37, [2016] 2 S.C.R. 23 at para 113 where it was noted that “the circumstances in which a question of law can be extricated from the interpretation process will be rare.”

Remediation Claims

The arbitrator rejected Tall Ships’ claim for environmental remediation costs as the process for claiming such costs were governed by the Brownfields Agreement which provided for a 15-day deadline to provide notices of dispute which was not adhered to by Tall Ships. In addition, the arbitrator held that the remediation claims were statute barred.

The application judge allowed Tall Ships’ appeal and concluded that the arbitrator erred in relying on an implied “time of the essence” clause which was not advanced or argued which violated Tall Ships’ right to procedural fairness and that the reliance on an “unargued theory” was an error of law in accordance with Section 45 of the Arbitration Act.

The Court of Appeal held that the application judge erred in finding that Tall Ship’s right to procedural fairness had been breached, as the arbitrator did not read a time of the essence clause into the contract, but rather considered the Brownfields Agreement and the factual matrix as a whole as part of the arbitrator’s detailed and extensive reasons, and that the arbitrator’s use of the term “time of the essence” was incidental in nature.

The Court of Appeal found that this issue was a question of mixed fact and law which was not subject to appeal.

Construction Cost Overruns Claims

The arbitrator concluded that Tall Ships was responsible for the construction cost overruns under the contract based on the language of the contract and the factual background as Tall Ships did not inform the City of the potential overruns despite its knowledge that the Project would be larger and substantially more expensive than originally estimated. In this regard, the arbitrator held that Tall Ships did not reasonably perform its duty as construction manager and breached its duty of good faith in arbitrarily withholding such information. The arbitrator also dismissed Tall Ships’ claims for unjust enrichment on the same basis as denying the claim in contract.

The application judge allowed Tall Ships’ appeal and held that the arbitrator, among other things, erred in law in concluding that Tall Ships breached certain obligations which were not advanced or argued, failed to apply the appropriate legal analysis for implying contract terms, and misinterpreted the duty of good faith.

The Court of Appeal held that, similar to Tall Ships’ remediation claim, the primary error committed by the application judge was in mischaracterizing the issues as errors of law rather than mixed fact and law. The Court of Appeal explained that the arbitrator’s analysis of this claim involved the interpretation of the contract as a whole within the broader context of the Project as a whole which was a matter of mixed fact and law and which was not subject to appeal.[3] The Court of Appeal also rejected Tall Ships’ unjust enrichment claim on the same basis.

Interest Claims

The arbitrator rejected Tall Ships’ claim for interest costs based on the principle of estoppel as Tall Ships did not advise the City it would be claiming interest on the invoice at the time, and only advanced such a position in its Statement of Claim.

The application judge allowed Tall Ships’ appeal and held that the arbitrator incorrectly held that Tall Ships was required to inform the City of its intent to claim interest, and that the arbitrator’s conclusion relying on the principle of estoppel was unfair.

The Court of Appeal held that the arbitrator committed no extricable error of law, and that this was a finding of mixed fact and law which are not subject to appeal.


The Court of Appeal’s decision highlights the Court’s deference to arbitrators and the arbitral process as a whole.[4] In this regard, and as explained by the Supreme Court of Canada, as a matter of public policy, judges exercising such appellate powers under Section 45 of the Arbitration Act should exercise caution when extracting questions of law from the contract interpretation process as “[f]ailure to exercise such caution will result in the very inefficiencies, delays and added expense that choosing an arbitral process seeks to avoid.”[5]

Overall, the Court of Appeal was clear that the court system should not be treated as an appeal route for parties attempting to set aside an arbitral award. The decision provides parties with increased certainty about the final and binding nature of arbitration decisions.



[1] 2022 ONCA 861.

[2] Tall Ships Development Inc. v. Brockville (City), 2022 ONCA 861 (“Tall Ships”) at para 16.

[3] Note that Tall Ships conceded that it was not able to dispute the arbitrator’s findings that it breached the duty of good faith. See Tall Ships at para 84.

[4] See, for example, Tall Ships at para 2.

[5] Tall Ships at para 3, citing Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 54-55; Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, [2017] 1 S.C.R. 688, at paras. 45-47.