Executive Summary: Key Legal and Evidentiary Issues

• The petitioners sought to set aside two arbitral awards under sections 58(1)(g) and (h) of the Arbitration Act.
   
• Allegations of bias against the arbitrator formed the central issue, assessed under the "real danger of bias" standard.
   
• Multiple specific incidents were raised as evidence of partiality, including witness treatment and procedural rulings.
   
• Contested findings on damages methodology, including contingency discounts applied to business disruption losses, were also challenged.
   
• Receivership proceedings involving the respondent were said to have been improperly disregarded by the arbitrator.
   
• Ultimately, the court found no justifiable doubt as to impartiality and dismissed the petition in its entirety.
   

Facts of the case

Prior to July 8, 2019, Ecoasis Resort and Golf LLP owned the Westin Bear Mountain Golf Resort & Spa near Victoria, British Columbia, including the Hotel and two 18-hole golf courses. On July 8, 2019, Bear Mountain Resort & Spa Ltd. and BM Management Ltd. [named "BM Management Holdings Ltd." in the style of cause; "BM Management Ltd." in the body of the decision — both values preserved as they appear inconsistently in the source] purchased the Hotel from Ecoasis. In connection with the purchase, the parties entered into a Non-Competition Agreement, a Commercial Lease, and an Operations Agreement, all dated July 11, 2019. Disputes arose shortly afterward regarding the Operations Agreement and Commercial Lease, and the parties proceeded to arbitration before Murray L. Smith, K.C. A liability hearing took place in January 2021, resulting in a Partial Final Award on February 26, 2021. A damages hearing followed in 2024, and on April 15, 2025, the Arbitrator issued the Second Partial Final Award, ordering the petitioners to pay Ecoasis $2,058,017.63 plus interest. A Costs Award followed on December 15, 2025, awarding Ecoasis $1,785,936.41. The petitioners' application for leave to appeal eight issues was dismissed by the Court of Appeal on October 28, 2025. Separately, Ecoasis became subject to receivership proceedings, with the receiver's authority extended on July 10, 2025, to include Ecoasis's interest in the arbitration. The petitioners then brought this petition seeking to set aside the Second Partial Final Award and the Costs Award.

Policy and legislative provisions at issue

Section 58(1) of the Arbitration Act, S.B.C. 2020, c. 2, permits a party to apply to set aside an arbitral award on limited grounds. The petitioners relied on section 58(1)(g), which allows an award to be set aside where there are justifiable doubts as to the arbitrator's independence or impartiality, and section 58(1)(h), which applies where a party was not given a reasonable opportunity to present its case or answer the case against it. Section 58(3) clarifies that doubts under subsection (1)(g) arise only where there was a real danger of bias in conducting the arbitration. The petitioners had originally also raised section 58(1)(c), lack of jurisdiction, but abandoned that ground. Section 18(4) of the Act, governing challenges to an arbitrator raised during the arbitration itself, was also referenced in connection with the petitioners' earlier unsuccessful bias challenge before the Arbitrator. Section 50 of the Act, concerning the Arbitrator's discretion to award costs, was relevant to the challenge to the Costs Award.

Reasoning and analysis

Justice Wilkinson applied the test from R. v. Burke, 2002 SCC 55, confirming that "reasonable apprehension," "real likelihood," and "real danger" of bias are interchangeable formulations, assessed from the perspective of an informed person viewing the matter realistically and practically. The court addressed each incident relied upon by the petitioners. The Arbitrator's warning to a petitioners' witness was found to be a reasonable response to concerns about his prior testimony, not evidence of unfairness. Procedural Order #9, issued amid the petitioners' refusal to pay arbitration fees or participate, reflected an attempt to move the matter forward rather than any animus, and caused no prejudice since the petitioners continued their applications afterward. The adverse inference drawn regarding signed guest receipts was supported by unchallenged evidence from two witnesses that the Hotel had possessed but never produced the receipts. On the rent deduction issue, the court noted the petitioners had not asked the respondent's expert to quantify the impact of rent during cross-examination, and it was open to the Arbitrator to fold the issue into the overall discount applied. Regarding the mitigation finding on hotel discounts, the court adopted Justice Winteringham's earlier conclusion that the Arbitrator's statement was tied to the specific facts and did not raise an extricable error, let alone bias. The business disruption damages award, including a 95% contingency discount on golf-related losses and an 85% discount on tennis-related losses, was found to rest on the Arbitrator's evidentiary findings rather than any unprincipled reasoning. The court also held that the Arbitrator had engaged with the receivership proceedings and receiver's reports where relevant, and was not obliged to address every report or every piece of evidence, citing Arbutus Software Inc. v. ACL Services Ltd., 2012 BCSC 1834. Findings concerning Mr. Clarke's conduct and the treatment of the Non-Competition Agreement breach were held to be findings of fact or mixed fact and law, not indicators of partiality. The court further rejected the argument that damages and costs had improperly overlapped, noting the non-solicitation breach was treated only as an aggravating factor at the costs stage. Finally, the Arbitrator's exercise of discretion in the Costs Award, including reliance on one line of authority over another, was found to be a matter of legal preference rather than bias. The court concluded that an accumulation of non-meritorious allegations, or of alleged legal errors, does not amount to a global finding of impartiality.

Ruling and overall outcome

The court dismissed the petition, concluding there was no justifiable doubt as to the Arbitrator's independence or impartiality and no denial of a reasonable opportunity for the petitioners to present their case. Ecoasis Resort and Golf LLP, as the successful party, was awarded its costs of the petition, though the specific amount of those costs was not determined in the reasons; the parties were directed to contact scheduling within 30 days if they could not agree on the type of costs award. Justice Wilkinson observed that the petitioners appeared to have brought the proceeding to delay enforcement of the underlying arbitral awards.