In a recent British Columbia Court of Appeal decision – CIMIC Morningstar Investments Ltd. v. Chandos Construction Ltd., 2026 BCCA 2– the Court had to determine whether a developer had a right to appeal an arbitrator’s decision ordering the developer to pay its contractor over 6 million dollars in damages. The Court decided there was “no” right to appeal.
Facts
CIMIC, the owner, entered into a contract with Chandos, a contractor, to construct a mixed-use building in White Rock, British Columbia.
There were delays. The parties blamed one another.
An arbitrator found that construction was delayed by the acts or omissions of CIMIC. CIMIC tried to appeal.
Law
Under the Arbitration Act (BC), a party may appeal to the Court of Appeal on any question of law arising out of an arbitral award.
CIMIC argued that the arbitrator erred in law: 1) by holding that the doctrine of promissory estoppel applied; 2) in interpreting the contractual notice requirements; 3) by relying on the “prevention principle”; and 4) by misinterpreting material evidence.
Decision
- CIMIC was estopped from reliance on the “zero days” change order forms.
The owner, CIMIC, argued that the contractor was estopped from claiming delay, since the latter had executed written change orders stating there were “zero” days of delay. CIMIC had prepared a change order template and encouraged the contractor not to claim specific time extensions on the forms, and instead, to advance a global delay claim later on: para 30 of the BCCA reasons.
Those assurances by the owner resulted in Chandos completing many “zero” day change order forms, and waiting over one year to advance a delay claim.
The arbitrator found that the owner was estopped from arguing that Chandos could not pursue damages for delay as a consequence of having completed the “zero” day change order forms.
CIMIC submitted on the leave to appeal application that the arbitrator misstated the test for promissory estoppel, and therefore, made an error of law. The chambers judge (application judge) concluded that the owner’s appeal on the arbitrator’s finding on estoppel was really not on a question of law, but in reality, was a challenge to how the arbitrator applied the legal test, which was a question of mixed fact and law.
Questions of mixed fact and law cannot be appealed where an arbitrator makes a decision. This is different from an appeal of a court decision. - The notice requirement was satisfied.
Under the contract, in case of delay, Chandos was obligated to give a notice of the delay not later than 10 working days after commencement of the delay.
CIMIC had argued that Chandos did not comply with the notice term. Many of the delays identified by Chandos were related to the issues in the first year of the project.
Chandos argued that it could not have issued a formal delay notice any earlier, as the delay claim was evident only one year after the commencement of the project.
The arbitrator reviewed the law on sufficiency of notice, holding that a purposive test should apply, meaning that an actual purpose of the notice provision needs to be considered. The arbitrator stated that compliance with the notice provision must be assessed from a substantive perspective, in the context of the parties’ dealings.
The arbitrator reviewed the correspondence between the parties, and found that the notice requirement was satisfied. Chandos warned CIMIC of the risk of delay, issued multiple delay notices, and discussed the delay issues at in-person meetings.
CIMIC did not challenge the arbitrator’s interpretation of “notice”. Instead, it challenged the arbitrator’s determination that the notice requirement was satisfied. At best, it is a question of mixed fact and law, the Court held. - CIMIC was not entitled to withhold payment under the liquidated damages clause.
Under the contract between CIMIC and Chandos, CIMIC had a right to deduct a daily amount from Chandos’ invoice in case of a delay. Such deductions are typically referred to as “liquidated damages”.
However, here, the arbitrator found that since the delay was caused by CIMIC, it was not entitled to withhold payment owed to Chandos under the “prevention principle”.
The prevention principle precludes an owner from recovering any liquidated damages for delay, if it was the owner’s conduct which prevented the contractor from completing the project on time.
CIMIC argued that the prevention principle should not apply, claiming that the arbitrator did not take into account the requirement of notice of delay under the contract. The Court disagreed.
The Court stated that the arbitrator applied the prevention principle based on the following findings of fact, or mixed fact and law, which are: (1) CIMIC was responsible for significant portions of delay; (2) Chandos fulfilled the notice requirements; (3) Chandos was entitled to an extension; and (4) CIMIC refused to grant the extension: para 50 of the BCCA reasons.
Since the Court found that the notice requirement is a question of fact or mixed fact and law, CIMIC’s argument did not raise an error of law. The application of the prevention principle was a matter of contractual interpretation, and not a question of law. - There was no misapprehension of evidence.
The Court disagreed with CIMIC’s position that the arbitrator misinterpreted material evidence.
Upon review of the evidence on the issue of delay, the arbitrator held that CIMIC’s position lacked documentary evidence. Further, CIMIC’s expert report was equivocal.
The arbitrator preferred the evidence of Chandos’ senior project manager, who gave firsthand evidence.
On appeal, the Court held that CIMIC’s challenge to the arbitrator’s weighing of evidence was also not a question of law.
Conclusion
Courts in British Columbia allow appeals of arbitrator’s awards in only a narrow group of cases, those including questions of law. Arbitration can be a confidential dispute resolution mechanism, that is sometimes faster and less costly than litigation.
However, as this case shows, there is always the risk of an appeal into court, further legal fees, and public exposure, should a party decide to challenge the arbitral award. This could be avoided. The parties to a contract may add a provision that expressly precludes either party from appealing any question of law arising out of an arbitral award: s. 59(3) of the Arbitration Act, SBC 2020, c 2 (BC).
Link to decision: https://www.canlii.org/en/bc/bcca/doc/2026/2026bcca2/2026bcca2.html
