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Summary

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Arbitration – Appeals – Commercial arbitration awards – Standard of review – Forestry Revitalization Act, S.B.C. 2003, c. 17, permitting Province to reduce by 20% land base and allowable annual cut of forest tenures held by British Columbia forestry companies – Dispute arising between parties concerning compensation owed by Province for “value of improvements made to Crown land” under s. 6(4) of the Forestry Revitalization Act – Arbitrator relying on expert evidence and choosing “cost savings approach” to valuation – Extent to which an appellate court is permitted to interfere with or disregard an arbitrator’s assessment of the evidence when considering an appeal on a question or point of law – Circumstances in which the interpretation of a contractual provision constitutes a question of law as opposed to a question of mixed fact and law – Case remanded to Court of Appeal of British Columbia for disposition in accordance with Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 – What principles of judicial deference attend the selection and application of the standard of review on an appeal under s. 31 of the Commercial Arbitration Act, R.S.B.C. 1996, c. 55, from a commercial arbitration award involving interpretation of a statute? – In what circumstances does the interpretation of a contract against the factual background constitute a question of law for which leave to appeal can be granted from an award, as opposed to a question of mixed fact and law from which no appeal is possible under s. 31 of the Commercial Arbitration Act?

The Forestry Revitalization Act, S.B.C. 2003, c. 17 (the “Revitalization Act” or the “Act”), permitted the Province of British Columbia (“Province”) to reduce by 20% the land base and allowable annual cut of forest tenures held by British Columbia forestry companies, including the applicant, Teal Cedar Products Ltd. (“Teal”). A dispute arose regarding compensation the Province must pay Teal for the “value of improvements made to Crown land” under s. 6(4) of the Revitalization Act. The parties settled Teal’s compensation under the Revitalization Act for the value of the lost harvesting rights. Although the Province had advanced a total of $4 million, the parties did not agree on the final compensation for the value of the related improvements. This dispute went to arbitration under the Commercial Arbitration Act, R.S.B.C. 1996, c. 55 (renamed the Arbitration Act, effective March 18, 2013), as required by the Revitalization Act. The Revitalization Act does not specify a methodology for valuing the improvements so the arbitrator relied on expert evidence and chose a “cost savings approach” to valuation. On April 27, 2011, the arbitrator awarded Teal $5,150,000 (as shown in the calculations in the corrigenda issued June 30, 2011 by the arbitrator), plus compound interest, in addition to the $4 million the Province had already advanced to Teal as compensation for the improvements. The arbitrator denied compensation for improvements relating to one of Teal’s forest licences.

Both parties applied to the Supreme Court of British Columbia for leave to appeal the arbitrator’s award.

Lower Court Rulings