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MINES AND MINERALS - Royalties and rents - Contracts - Remedies

Thursday, January 10, 2019 @ 9:05 AM  

Lexis Advance® Quicklaw®
Appeal by Teck Resources from an order granting the respondent leave to appeal an arbitral award on a question of law alone. The agreement between the parties provided for the payment of a mining royalty to the appellant. The arbitrator found the royalty extended over 100 per cent of the gold produced and not over 69 per cent as submitted by the respondent. The chambers judge found the arbitrator erred in law in his interpretation of the agreement and that the error of law had merit. He found the arbitrator had misinterpreted the definition of property in the agreement and that it was an error of law for the arbitrator to fail to assign ordinary meaning to a contractual term.

HELD: Appeal allowed. The decision on the leave application attracted a correctness standard of review. The chambers judge erred by failing to follow the analytical framework to be applied under s. 31 of the Arbitration Act as found in Sattva Capital Corp. v. Creston Moly Corp. and Teal Cedar Products Ltd. v. British Columbia. He did not address whether the respondent had demonstrated an extricable question of law in the arbitrator’s analysis but instead determined the substantive issue of the correctness of the arbitrator’s decision. The alleged error identified by the respondent did not have precedential value beyond the parties. The arbitrator had regard to the factual matrix of the agreement. He was alive to the issue of whether his interpretation of the agreement would accord with sound commercial principles and good business sense. The arbitrator’s interpretation of the agreement was at most a question of mixed fact and law and not a question of law alone.

Richmont Mines Inc. v. Teck Resources Limited, [2018] B.C.J. No. 3761, British Columbia Court of Appeal, R.J. Bauman C.J.B.C., D.M. Smith and E.A. Bennett JJ.A., November 30, 2018. Digest No. TLD-January72019007