A judge in chambers was not entitled to substitute his view of good business sense or to consider the weight to be given to evidence in setting aside a decision of an abritrator in a commercial dispute where the parties to the dispute had agreed in advance that the decision would be “final and binding”

22. April 2008 0

Administrative law – Arbitration and award – Decisions of administrative tribunals – Arbitration Board – Jurisdiction of court – Compliance with legislation – Evidence

Weyerhaeuser Co. v. Hayes Forest Services Ltd., [2008] B.C.J. No. 108, British Columbia Court of Appeal, January 24, 2008, R.T.A. Low, P.D. Lowry and E.C. Chiasson JJ.A.

Two companies, Weyerhaeuser Company Limited (“Weyerhaeuser”) and Hayes Forest Services Limited (“Hayes”), entered into a timber supply execution agreement that contained a commitment to arbitrate in accordance with the terms of the Commercial Arbitration Act, R.S.B.C. 1996, c. 55, which provides that an arbitral award is “final and binding on all parties” but gives parties a right to appeal to the court “any question of law arising out of the award”. The Act also has a limited privative clause.

The core of the dispute was the accounting treatment of planning, engineering, road building and other forest development costs in the calculation of the “gain” that Weyerhaeuser was to pay Hayes for managing and performing timber harvesting in the operating area. The matter proceeded to arbitration. Hayes was dissatisfied with the award and appealed. The Chambers judge overturned the arbitrator’s decision, finding it would not make good business sense for Hayes to settle on the basis determined by the arbitrator and that the arbitrator’s conclusion on this point amounted to an error of law. Weyerhaeuser appealed this decision by the Chambers judge.

Appeal allowed. The issue, as decided by the arbitrator, was whether there was a settlement. He had before him evidence concerning the costs proposed by Hayes, the costs expended and a document that he considered reflected the arrangement between the parties. Whether the settlement made good business sense was a factor that the arbitrator was entitled to take into account in determining whether the settlement had been made, along with all other relevant evidence that bore on the subject. If there was no evidence to sustain his conclusion or if his conclusion was not reasonably supportable on the available evidence, the judge could have concluded the arbitrator made an error in law, but the judge was not entitled to substitute his view of good business sense or to consider the weight to be given to evidence concerning Hayes’ anticipated per cubic metre cost.

To stay current with the new case law and emerging legal issues in this area, subscribe here.