The Owners, Strata Plan LMS 1665 v. 1265493 BC Ltd.

2025 BCCA 351 The Owners, Strata Plan LMS 1665 v. 1265493 BC Ltd.

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: The Owners, Strata Plan LMS 1665 v. 1265493 BC Ltd., 2025 BCCA 351 Date: 20251001 Docket: CA50891 Between: The Owners, Strata Plan LMS 1665 Appellant (Respondent) And 1265493 BC Ltd. and 1276291 BC Ltd. Respondents (Claimants) Before: The Honourable Justice Gomery (In Chambers) On appeal from: An order of an arbitrator pursuant to the Arbitration Act, S.B.C. 2020, c. 2, dated June 29, 2025 (1265493 BC Ltd. v. The Owners, Strata Plan LMS1665). Oral Reasons for Judgment Counsel for the Appellant: S.D. Coblin M. Hashmi Counsel for the Respondents: C.A. Clark L.J.M. Sun Place and Date of Hearing: Vancouver, British Columbia October 1, 2025 Place and Date of Judgment: Vancouver, British Columbia October 1, 2025 Summary: The appellant seeks leave to appeal an arbitral award which it alleges is tainted by five extricable errors of law. Held: Leave to appeal allowed with respect to the following alleged errors: (1) whether the arbitrator erred in holding that s. 42 of the Evidence Act permits delivery to be inferred from the contents of invoices that do not contain any express notation that they were sent or delivered; and (2) whether the arbitrator erred in dismissing the appellant's set off claim on the basis of a material misapprehension of the evidence. The other alleged errors do not qualify as errors of law arising from the award.

Two of the criteria in s. 59(4) of the Arbitration Act are satisfied, and there is no reason to exercise the discretionary power to refuse leave. GOMERY J.A.: Overview [1] The appellant and respondents are neighbours. The appellant is a residential strata housing complex. The respondents own a neighbouring mall in Richmond, B.C. The neighbouring properties share certain common amenities, including a multi‑level parking garage. Their respective rights and obligations vis‑à‑vis one another are addressed in a reciprocal easement agreement (the "REA"). It contains an arbitration clause. [2] The parties submitted to arbitration the respondents' claim for contribution for common area costs. The appellant disputed the claim. The arbitrator awarded the respondents 90% of their claim or $159,706.80 together with indemnity costs. [3] The appellant seeks leave to appeal. It maintains that the award is tainted by five distinct errors of law. [4] This Court only has jurisdiction to grant leave and hear an appeal in respect of a question of law arising out of an award: MSI Methylation Sciences, Inc. v. Quark Ventures Inc., 2019 BCCA 448 at para. 72; Seylynn (North Shore) Phase II GP Ltd. v. Seylynn (North Shore) Properties Phase II Limited Partnership, 2025 BCCA 330 at para. 45. [5] In my view, only two of the errors alleged by the appellant engage such a question of law. The first alleged

error involves the extent of the business records exception to the hearsay rule contained in s. 42 of the Evidence Act, R.S.B.C. 1996, c. 124: in particular, whether delivery of an invoice (or similar business record) can be inferred in the absence of any statement in the invoice that it was delivered. The second involves what the appellant says was a material misapprehension of the evidence leading to dismissal of a claim for set off. [6] For the reasons that follow, I grant leave to appeal in respect only of these issues. Legal framework [7] The arbitration is governed by the Arbitration Act, S.B.C. 2020, c.

2. Pursuant to s. 59, parties to an arbitration have a right of appeal to this Court by consent or with leave of a justice on a question of law arising from an award, so long as the arbitration agreement does not prohibit it. On an application for leave, the applicant must satisfy three requirements: 1) The appeal must be based on a question of law arising out of the award; 2) The justice must be satisfied that one of three circumstances identified in s. 59(4) of the Act exists; and 3) The justice must be prepared to exercise the residual discretion implicit in the phrase "the court may grant leave ". Seylynn at para. 44, citing MSI Methylation at para. 54. [8] This Court has taken "a narrow approach to appellate intervention in commercial arbitration" (Desert Properties Inc. v. G&T Martini Holdings Ltd., 2024 BCCA 320 at para. 10), because restraints on leave to appeal uphold the benefit of finality that arbitration offers: On Call Internet Services Ltd. v. Telus Communications Company, 2013 BCCA 366 at para.

35. Has the appellant identified questions of law arising out of the award? [9] Questions of law are distinguished from questions of fact and questions of mixed fact and law. As the Court explained in Seylynn at para. 46, legal questions are about "what the correct legal test is"; factual questions are about "what actually took place between the parties"; and questions of mixed fact and law are about "whether the facts satisfy the legal tests", that is, they involve "applying a legal standard to a set of facts". In the context of a question of mixed fact and law, careful analysis may reveal a question of law that is "extricable" and therefore appealable, but courts approach this exercise with caution "because mixed questions, by definition, involve aspects of law" and "[a] narrow scope for extricable questions of law is consistent with finality in commercial arbitration and, more broadly, with deference to factual findings": Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 at para. 45. [10] In principle, questions of law are usually distinguished from questions of fact by their generality, and the answers have precedential value: MSI Methylation at para. 72(c). In this regard, it must be borne in mind that, apart from standard form contracts, the meaning of a contractual provision is a question of fact, not law: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53

at paras. 50-55; Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37 at paras. 4 and 24. [11] In the absence of generality, a separate category of legal question arises where an arbitrator has misapprehended evidence that was important to the result: Escape 101 Ventures Inc. v. March of Dimes Canada, 2022 BCCA 294 at paras. 47-77. Such an error must be plainly identifiable but need not be apparent on the face of the award: paras. 74 and 78-96. [12] I should say that, in my view, the misapprehension category would not encompass a supposed misinterpretation of contractual language couched by an applicant for leave to appeal as a misapprehension of evidence. Escape 101 Ventures involved an undisputed misapprehension of evidence of post‑contractual conduct relied upon by the arbitrator. The line of authority holding that misapprehension of evidence that goes to the core of the outcome is an extricable error of law, cited in Escape 101 Ventures at paras. 43-44, does not extend to alleged errors of contractual misinterpretation. [13] As noted, the appellant alleges five errors in the Award. They are: 1) The arbitrator failed to give meaning to the key terms of the REA; 2) The arbitrator misinterpreted s. 42 of the Evidence Act; 3) The arbitrator erred in his assessment of damages; 4) The arbitrator erred in applying the principles of unjust enrichment; and 5)

The arbitrator erred in disallowing the appellant's counterclaim on a basis inconsistent with his reasoning in allowing the respondents' claim. [14] I will first address the alleged errors 1, 3, and 4. Then I will turn to the alleged errors 2 and 5. Alleged errors 1, 3, and 4 [15] None of these alleged errors qualify as errors of law arising from the award. [16] Alleged error 1 fails to qualify because the REA was not a standard form contract and the meaning assigned to its terms is a question of fact, not law. The appellant submits that the arbitrator failed in various ways to have regard to and correctly apply legal principles of contractual interpretation. These arguments are all either factual or engage questions of mixed fact and law. They are particular to the specific terms of the REA and circumstances of this case, and lack generality. [17] Alleged error 3 concerns the arbitrator's assessment of damages and focuses on his decision to discount an element of the claim by 10% to reflect costs that the respondents accepted were not properly claimable. He stated, at para. 74: The Claimants conceded that security costs relating to the office building were not properly claimable. It was suggested by counsel for the Claimants that the amounts set out in the invoices be arbitrarily adjusted to reflect that. I therefore reduce those costs by 10%. [18] The alleged error is, at

most, a question of mixed fact and law. The arbitrator's reasoning in para. 74 is evidence-driven. It involves an assessment of the evidence as a whole and parallels reasoning frequently adopted by trial judges in assessing damages. The appellant argues that the assessment of damages described in this passage was "untethered from the legal framework governing damages", but that is not obvious on the face of the award. [19] Alleged error 4 concerns what the arbitrator described as some comments regarding a claim advanced in the alternative. The comments are not essential to the award. Whatever the nature of the question raised, it is not one arising from the award. Alleged error 2 [20] In my view, alleged error 2 implicates a question of law arising from the award. [21] One of the issues before the arbitrator was "whether Articles 17 and 19.7 of the Easement Agreement bar the Claimants' claims" (at para. 43 of the Award). The arbitrator construed the articles in question as imposing a requirement that would be satisfied "if a statement in writing [containing] particulars of the expenditures incurred had been delivered" (at para. 65). The arbitrator therefore identified an issue as to whether the respondents' invoices were delivered to the appellant (at para. 67). [22] The arbitrator noted that neither party tendered evidence from their respective property managers regarding the

delivery of the invoices (at para. 70). There were covering emails for three of eight invoices, establishing that these invoices were delivered. For the remaining five, there was only the evidence of the respondents' witness, Mr. Zhu, that the invoices were created in the ordinary course of the respondents' business. The arbitrator quoted s. 42 of the Evidence Act and stated: 69. Prima facie therefore, the invoices were sent on the dates shown on them, and are accurate. [Emphasis added.] [23] The invoices are addressed to the appellant but do not contain any express notation that they were sent or delivered. The arbitrator's reasoning is clear. He considered that s. 42 permitted delivery to be inferred from the contents of the invoices. [24] In my view, whether s. 42 permits the inference drawn by the arbitrator qualifies as a question of law. The arbitrator's answer would have implications for the conduct of commercial litigation generally, in which proof of delivery is often required. A determination of the issue by this Court will have precedential value. [25] The respondent submits that the issue does not arise because s. 28 of the Arbitration Act expressly confers on an arbitrator a discretion to decide evidentiary matters without applying the law of evidence other than the law of privilege. [26] I disagree. The arbitrator relied on s. 28 in rejecting an objection to the whole of Mr. Zhu's evidence. In addressing the question of delivery, he did not invoke s. 28 but chose instead to be guided by s. 42 of the Evidence Act. It is at least arguable that he erred in law in following the path he did, and it is not clear what he would have decided had he found it necessary to resort to s.

28. Alleged error 5 [27] Alleged error 5 concerns the arbitrator's treatment of the appellant's claim for a set off. There were two parts to the claim. The first involved a claim for contribution toward the costs of maintaining and replacing a fire panel in the appellant's building. The arbitrator dismissed this claim because he found that there was nothing in the evidence to suggest that the fire panel was a part of the common property. [28] The appellant submits that there is an inconsistency in the arbitrator's reasoning on this point, because the arbitrator permitted recovery for security patrols that extended beyond the common property. [29] The second part of the appellant's set off claim was to recover costs incurred by the appellant in connection with a secured part of the parking facility. The arbitrator rejected the claim, describing the secure parking area as one for the appellant's sole benefit. This reasoning engaged his assessment of the evidence. The arbitrator stated: 85. The Strata also claims for a variety of costs apparently related to the Strata's Gated Parking, including a caretaker, maintaining its security gate, repairing sprinklers, a security and fire watch, electricity costs, and security cameras. Ms. Chiu references no documents in support of these costs. I also note that all of these costs pertain to the Strata's gated parking area (which is for the sole benefit of the Strata) and are thus not subject to cost sharing.

86. The Strata is not entitled to a set off. [Emphasis added.] [30] The appellant submits that the description of the secure parking area as one held "for the sole benefit of the Strata" reveals a material misapprehension of the evidence. It points to evidence that a commercial tenant had the use of the secure parking area and three stalls designated within in. [31] In my opinion, the appellant's objection grounded in an alleged inconsistency of reasoning does not raise an extricable question of law. As with alleged error 1, the difference in treatment complained of is grounded in the arbitrator's interpretation of the REA. [32] On the other hand, I am persuaded that the contention that the conclusion in para. 85 of the award is grounded in a misapprehension of the evidence raises an extricable question of law. It is debateable whether the alleged misapprehension, if made out, is critical to the arbitrator's conclusion. He also refers to the absence of documentary evidence substantiating the claim. However, this is a question to be addressed on the hearing of the appeal, if leave is granted. Is at least one of the criteria in s. 59(4) satisfied? [33] In my view, two of the criteria in s. 59(4) are satisfied in respect of alleged error 2. [34] The first is that, under s. 59(4)(a): 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, [35] The arbitrator's use of s. 42 to satisfy the delivery requirement led to his allowing the claim in respect of the five of eight invoices in respect of which delivery was not otherwise established. It would appear that more than half the claim, and presumably half the award, is in issue. The arbitration is important to the parties, and the issue is sufficiently important to the result to justify court intervention. If the appellant's position is sound--a point on which I express no opinion--intervention may prevent what the appellant could fairly view as a miscarriage of justice: Sattva at para. 70. [36] The second criterion is that, under s. 59(4)(c): the point of law is of general or public importance. [37] As already noted, the ability to infer delivery from the bare contents of a business record such as an invoice has implications for the conduct of commercial litigation generally, and is therefore a point of general importance. [38] As to alleged error 5, it is plainly not of general or public importance. Its potential financial significance is unclear. Standing alone, I would not consider that any of the criteria would be satisfied in respect of alleged error 5. Viewed in context together with alleged error 2, I come to a different conclusion because I am satisfied that, if leave to

appeal is granted on alleged error 2, there would be the possibility of a miscarriage of justice if I were not to allow the appellant to pursue its argument on alleged error 5 as well. How should I exercise my discretion to grant or refuse leave? [39] I exercise my discretion to grant leave in this case because the requirements of s. 59 are otherwise satisfied and there is no good reason to refuse leave. In Sattva at para. 92, Justice Rothstein, speaking for the Court, held that the discretionary power to refuse leave where the requirements of s. 59 are otherwise satisfied should be exercised with caution. The respondents do not argue against granting leave to appeal on this basis. [40] Recognized considerations bearing on the exercise of the Court's discretion to refuse leave include: conduct of the parties; existence of alternative remedies; undue delay; and the urgent need for a final answer: Sattva at para.

91. None of these considerations is present to suggest that leave should be refused in this case. While there would undoubtedly be a benefit to finality, the parties have pursued their litigation to this point with due deliberation and no particular sense of urgency. Disposition [41] Accordingly, I grant leave to appeal in respect of the issues I have identified. For clarity, I would frame the issues as follows: 1. Whether the arbitrator erred in holding that s. 42 of the Evidence Act permits delivery to be inferred from the contents of invoices that do not contain any express notation that they were sent or delivered.

2. Whether the arbitrator erred in dismissing the appellant's set off claim on the basis of a material misapprehension of the evidence. [42] Costs will be in the event of the appeal. "The Honourable Justice Gomery"