Executive Summary: Key Legal and Evidentiary Issues

• Scope of an arbitrator’s jurisdiction under s. 46(1)3 of the Arbitration Act, 1991 when parties have agreed to a no-appeal “baseball arbitration” and broad freedom on valuation methodology.
• Effect of parties’ email confirmations and procedural dealings with the arbitrator on whether the core arbitration agreement and Schedule “C” were amended to require CICBV-compliant Comprehensive Valuation Reports only.
• Waiver of jurisdictional objections under ss. 4(1) and 17(5) where a party participates fully in the arbitration, consents to admission of a disputed expert report, and only later characterizes the issue as jurisdictional.
• Alleged procedural unfairness under s. 46(1)6 arising from the arbitrator’s acceptance of a purportedly non-CICBV-compliant valuation report and from his late questioning of the respondents’ expert to elicit an express value opinion.
• Challenge to the arbitrator’s use of his own scenario and sensitivity calculations and to the sufficiency and intelligibility of his brief reasons in a final-offer arbitration context.
• Costs consequences of bringing a weak set-aside application in a long-running, high-conflict family business dispute, including scrutiny of “watching brief” costs and proportionality.

Background and facts

This case arises out of a long-running and acrimonious dispute among members of the Stronach family over the value of shares in a closely held family business (“the Family Company”). The parties had been litigating for years on the Commercial List of the Ontario Superior Court of Justice when, on the eve of trial, they reached a settlement agreement dated 24 September 2024. Among other matters, the settlement fixed their respective ownership interests in the Family Company and provided a mechanism to determine the fair market value of the respondents’ agreed shareholding as of 30 June (the valuation date). The settlement embedded a highly particular dispute resolution mechanism: a final-offer or “baseball” arbitration. Under Schedule “C” to the settlement agreement, each side would submit a final monetary offer representing its assessment of the fair market value of the respondents’ percentage interest. The arbitrator would be required to choose one or the other as “more representative of fair market value.” He was expressly barred from splitting the difference or substituting a different number. The parties also agreed there would be no appeals from the arbitrator’s decision on questions of law, fact, or mixed fact and law.

The arbitration agreement and procedural framework

Schedule “C” set out detailed procedural terms: use of a data room for documentary disclosure, reasonable management interviews for the respondents, a maximum five-day evidentiary hearing, and an obligation on the arbitrator to issue an award with brief reasons within 30 days of the hearing’s completion. Critically, paragraph 1 of Schedule “C” defined the scope of the arbitrator’s mandate and preserved methodological flexibility: the parties submitted the question of fair market value of the respondents’ shareholding to final-offer arbitration “on the terms set out herein,” and “nothing herein shall be taken as restricting the arguments any party may make as to the methodology by which fair market value is to be determined.” The arbitrator, Mr. Farley Cohen, is an experienced business valuator, a past Chair of the Canadian Institute of Chartered Business Valuators (CICBV) and a Fellow of the Chartered Institute of Arbitrators. After being retained, he engaged with counsel on procedural points, including document production and management interviews. In a 20 December 2024 email, he asked for confirmation that valuation reports “will be Comprehensive Valuation Reports in accordance with the practice standards of the CICBV,” along with clarifications on consolidation and interviews. Both sides sent brief email confirmations. Several months later, in Procedural Order No. 1 dated 1 May 2025, the arbitrator set out the hearing process and referred expressly to Schedule “C,” repeating the key clause that nothing in the terms restricted the arguments that could be made on valuation methodology. While he dealt with evidentiary mechanics—such as expert evidence consisting of reports with optional examination-in-chief and cross-examination—Procedural Order No. 1 did not state that only CICBV-compliant Comprehensive Valuation Reports could be received, nor did it mention the CICBV at all.

Expert valuation evidence before the arbitrator

The valuation evidence on the core enterprise came principally from two sides: PricewaterhouseCoopers LLP (PwC) for the applicants, and KSV Soriano Inc. (KSV) for the respondents, supported by specialist investment banking firms. The respondents delivered three valuation reports: one from KSV, signed by CICBV member Errol Soriano, and two from investment banks, Innovation Capital and Spectrum Gaming Capital, with industry-specific expertise. It was common ground that only KSV’s report purported to be a Comprehensive Valuation Report under CICBV standards; the investment bankers’ reports were not authored by chartered business valuators and did not purport to meet CICBV standards. Mr. Soriano testified that KSV’s report was indeed a Comprehensive Valuation Report. He also explained that, on his clients’ instructions, he adopted the values generated by the two investment banking reports for certain business components rather than independently valuing those assets himself, though he and his firm were capable of doing so. He acknowledged that had he performed those valuations directly he would have approached them differently, yet he was comfortable relying on the bankers’ expertise. He also testified that he did not assume responsibility for the reasonableness of some of the assumptions underpinning the bankers’ valuations and conceded that this mode of reliance was “unusual” in a Comprehensive Valuation Report. KSV’s written report did not provide a single point opinion on the overall value of the enterprise. Instead, it presented two ranges derived from the investment bankers’ figures, adjusted by KSV. At the end of Mr. Soriano’s testimony, on the last morning of the hearing, the arbitrator pressed him to state a single opinion of value. Mr. Soriano responded that, if required, he would take the midpoints of each of the two KSV ranges and then average those midpoints to generate an overall value for the respondents’ shareholding. For the applicants, PwC’s expert, Chris Polson, challenged KSV’s work as non-compliant with CICBV Comprehensive Valuation standards. He pointed in particular to KSV’s reliance on third-party valuations without an internal necessity determination and without taking responsibility for the underlying assumptions, and to the absence of a clear opinion of value in KSV’s written report, among other alleged deficiencies. In contrast, PwC performed its own full valuation, supplemented by input from other professionals such as real estate appraisers. The applicants nonetheless did not object to the admissibility of KSV’s report. They consented to it being received in evidence and mounted a sustained attack on its weight and compliance with professional standards through cross-examination and competing expert testimony.

The arbitrator’s award

After a five-day hearing with extensive expert evidence on real estate, racing, and gaming businesses, the arbitrator was required to choose which side’s final offer better reflected fair market value as at the valuation date. In his award, he expressly acknowledged that numerous issues had been raised and that he had considered many valuation differences, combinations, and scenarios, but would only discuss those he regarded as material to his ultimate decision. He noted that both sides’ valuation experts relied on work from other professionals: PwC on real estate appraisers, and KSV on real estate appraisers, the investment bankers, a lawyer, and others. He then analyzed key components of value. On land, he compared the differing real estate appraisals and the assumptions about zoning and “highest and best use,” and accepted some of the KSV-side appraisals as more reasonable. On the racing and gaming operations, he scrutinized the Innovation and Spectrum valuations. While he found their value conclusions too high and more akin to “an opening asking price” than to fair market value, he accepted that their valuation techniques were, in principle, acceptable for fair market value assessment. Subject to his criticisms and after considering KSV’s additional analysis of other assets and liabilities, he concluded that KSV’s reliance on the bankers’ valuations was not “fatal” to its overall conclusions. He accepted that Mr. Polson was qualified to conduct PwC’s enterprise valuation and that PwC had also used other professionals. The arbitrator described having considered “a number of scenarios,” including those modeled by both expert firms and additional hybrid scenarios examining varying real estate values, different timing and risk discounts, and different redevelopment assumptions. He clarified that he had not prepared an independent valuation of the respondents’ shareholding but had considered alternative calculations grounded in the evidence and in PwC’s and KSV’s own computations. After assessing the various components of value and applying an appropriate minority discount, he compared the resulting range of reasonable values against the parties’ final offers and selected the respondents’ offer as more representative of fair market value. In line with the final-offer model, he did not publish a specific numerical valuation in his reasons, only the conclusion that the respondents’ offer more closely reflected fair market value.

The court application to set aside the award

Dissatisfied with the result, the applicants applied to the Ontario Superior Court to set aside Mr. Cohen’s award under the Arbitration Act, 1991. They framed their challenge under s. 46(1)3 (award beyond the scope of the arbitration agreement) and s. 46(1)6, read with s. 19, (inequality or unfairness in the process, denial of the opportunity to present or respond to a case). There was no right of appeal and no attempt to invoke the court’s appellate jurisdiction. The core “jurisdictional” argument was that, once the parties had confirmed to Mr. Cohen in December 2024 that they would provide Comprehensive Valuation Reports in accordance with CICBV practice standards, the arbitration agreement—allegedly as amended—required the arbitrator to base his decision solely on CICBV-compliant Comprehensive Valuation Reports. From that premise, the applicants contended that KSV’s report, properly understood, was not CICBV-compliant and therefore could not be received or relied on. By treating the KSV report as admissible and using it in his reasoning, the arbitrator was said to have acted outside the scope of the arbitration agreement and thus beyond his jurisdiction. On the fairness side, the applicants argued that allowing the respondents to rely on a non-compliant valuation report subjected them to unequal evidentiary standards because the applicants had invested in a fully CICBV-compliant report. They further submitted that procedural fairness was breached when the arbitrator, at the very end of the hearing, elicited from Mr. Soriano a new opinion of value (the averaged midpoints) after cross-examination had concluded, thereby depriving them of an opportunity to address or respond adequately to that “crucial” evidence. They also alleged that the arbitrator improperly “cherry-picked” evidence, used his own calculations rather than the expert evidence, and failed to provide sufficiently transparent reasons for choosing the respondents’ offer over theirs.

Waiver of jurisdictional objection and the limits of s. 46(1)3

Justice Myers first addressed a threshold procedural issue: whether the applicants had, by their conduct, waived any right to complain that reliance on KSV’s report was beyond the arbitrator’s jurisdiction or contrary to the arbitration agreement. Under s. 4(1) of the Arbitration Act, a party who participates in an arbitration while aware of non-compliance with the Act or the arbitration agreement and does not object within the specified or a reasonable time is deemed to have waived the right to object. Section 17(5) further requires a party to raise an objection that the tribunal is exceeding its authority “as soon as” the allegedly ultra vires matter arises. The applicants knew by April 2025 that they regarded KSV’s report as non-compliant with CICBV standards; their own expert said so expressly. Yet they did not characterize this as a jurisdictional issue, did not ask the arbitrator to rule on his authority to admit or rely on KSV’s report, and did not object to its admissibility. Instead, they expressly consented to its admission and structured a strategy aimed at undermining its weight on the merits. By proceeding with that approach through the hearing and only later, after losing, recasting the complaint as jurisdictional, they ran afoul of the statutory waiver regime. Justice Myers held that they could not “have it both ways”: if they truly believed the arbitrator lacked authority to receive or rely on anything other than CICBV-compliant Comprehensive Valuation Reports, they were obliged to raise that issue promptly and seek a ruling, not to wait for the outcome and then argue that the award was jurisdictionally tainted.

No amendment to the core arbitration agreement and deference to the arbitrator’s mandate

For completeness, the court also rejected the applicants’ premise that the email exchange about Comprehensive Valuation Reports had amended the underlying arbitration agreement. The foundational task in Schedule “C” was to choose the final offer “more representative of fair market value” based on evidence, and paragraph 1 explicitly preserved unlimited argument over valuation methodology. No one ever purported to amend or delete that clause. Procedural Order No. 1, issued months after the emails, repeated paragraph 1’s wording and contained no restriction limiting evidence to CICBV-compliant Comprehensive Valuation Reports or even mentioning CICBV standards. Against that backdrop, Justice Myers concluded that the parties’ email confirmations reflected procedural understandings and expectations, but did not rewrite the arbitration agreement’s essential terms or impose a jurisdictional condition on the types of expert reports that could be admitted. Even if one assumed a mandatory requirement of CICBV-compliant reports, the applicants’ litigation conduct was inconsistent with that position: they consented to the admission of KSV’s report, consistently treated the question of compliance as an issue of evidentiary weight and professional standards, and never argued before the arbitrator that he was forbidden by the agreement from receiving such evidence. The arbitrator, faced with competing expert testimony about CICBV compliance and valuation methodology, ultimately found that while the investment bankers’ value conclusions were too high, their techniques were acceptable and KSV’s reliance on them was not fatal. Whether that evaluation was correct or reasonable was, under Court of Appeal authority in Alectra Utilities and Mensula Bancorp, outside the purview of a s. 46(1)3 analysis. Section 46(1)3 is a narrow safety valve ensuring the tribunal decides only the disputes submitted to it; it does not provide a disguised right of appeal on law, fact, or the reasonableness of the arbitrator’s interpretation of the agreement or assessment of evidence. On that basis, Justice Myers held that the arbitrator plainly decided an issue properly before him—choosing between the two final offers on fair market value—and had not exceeded his jurisdiction.

No denial of procedural fairness

Turning to the fairness complaints under s. 46(1)6 and the equality and fairness guarantees in s. 19, the court found no procedural unfairness. The applicants were fully aware of KSV’s alleged deficiencies months before the hearing and had a complete opportunity to challenge them through their own expert, extensive cross-examination, and submissions. Their choice to treat the matter as one of evidentiary weight rather than seeking a preliminary ruling on admissibility or jurisdiction was, in the court’s view, a deliberate litigation strategy, not something imposed by the arbitrator. As Justice Akbarali had emphasized in Aquanta Group, s. 46(1)6 is not a “do-over” designed to protect parties from their own tactical decisions. Regarding the arbitrator’s questioning of Mr. Soriano at the very end of the hearing, Justice Myers noted that there is no authority prohibiting an arbitrator in a valuation case from asking clarifying questions of an expert, even if the answers cut against one party’s theory of the case. If the applicants believed that the elicited “opinion” of value required further cross-examination or reply evidence, they had straightforward options in real time: object, seek leave to ask supplementary questions, or request permission to adduce reply evidence. They did none of those things. In those circumstances, it could not be said that the arbitrator denied them any opportunity they actually sought; rather, they never asked. The court therefore found no breach of natural justice, no unequal treatment, and no failure to allow the applicants to present or respond to the case.

Use of calculations and sufficiency of reasons

The allegation that the arbitrator improperly substituted his own calculations for the evidence was also rejected. The award made clear that he had not produced an independent valuation; instead, he considered a range of scenarios built out of the evidence and the experts’ own calculations, testing different real estate values, time horizons, risk discounts, and redevelopment assumptions. In a complex enterprise valuation, especially in a baseball arbitration where one of two offers must be selected, such sensitivity analysis is an integral part of the adjudicator’s task. Justice Myers held that there was nothing improper about this analytic approach. On the sufficiency of reasons, the court stressed the contractual expectation that the arbitrator issue “brief reasons for decision” within 30 days. The arbitrator explained that he would focus in his written reasons on issues he found material; he then walked through the major drivers of value—real estate appraisals, gaming and racing assets, and certain adjustments—before stating that, on that assessment, the respondents’ offer was more representative of fair market value. Particularly in a final-offer framework where the arbitrator is not required to publish a specific number, Justice Myers found this explanation intelligible and adequate. The chain of reasoning could be followed; there was no basis to conclude that the arbitrator had “cherry-picked” evidence to justify a pre-determined outcome.

Outcome and costs

Justice Myers therefore dismissed the application to set aside the award. He also noted there was no need to delay the merits decision pending resolution of the separate motion to seal parts of the court file; that sealing issue was deferred to a later, more focused process involving redacted public materials and further case management. On costs, the respondents, as the successful parties, were presumptively entitled to their costs. Although the court described the set-aside application as very weak—given the absence of any right of appeal, the applicants’ knowledge and conduct regarding KSV’s report, and the narrow scope of s. 46—the judge did not find the kind of “reprehensible” behavior that would justify substantial indemnity costs. He scrutinized the quantum claimed, particularly by Selina Stronach, who had maintained a watching brief. Emphasizing proportionality and the broader implications for access to justice, he held that a silent party with overlapping interests should not reasonably expect to recover very high watching-brief costs merely because the litigants were wealthy and willing to incur them. Ultimately, the court ordered the applicants to pay partial indemnity costs to both respondents: $25,000 to Selina Stronach and $180,000 to Andrew Stronach. In total, the successful respondents recovered $205,000 in costs against the applicants under this decision. The underlying monetary amount of the arbitral award—the actual valuation difference between the parties’ final offers—was not disclosed in the judgment, so the court-ordered financial consequence that can be quantified from the decision itself is limited to this $205,000 costs award in favour of Andrew and Selina Stronach.