COURT OF APPEAL FOR ONTARIO

CITATION: Ottawa (City) v. Coliseum Inc., 2016 ONCA 363

DATE: 20160513

DOCKET: C60016

MacPherson, van Rensburg and Miller JJ.A.

BETWEEN

The City of Ottawa

Applicant (Respondent)

and

The Coliseum Inc.

Respondent (Appellant)

W.A. Derry Millar, Keith A. MacLaren and Owen Bourns, for the appellant

Ronald F. Caza and Anne M. Tardif, for the respondent

Heard: February 25, 2016

On appeal from the judgment of Justice Jennifer Mackinnon of the Superior Court of Justice, dated September 9, 2014.

MacPherson J.A.:

A. Introduction

[1] The appellant, The Coliseum Inc. (“Coliseum”), entered into a long-term lease agreement (the “Stadium Agreement”) with the respondent, the City of Ottawa (the “City”). The Stadium Agreement was in relation to Frank Clair Stadium at Lansdowne Park in Ottawa.

[2] A dispute arose between the parties, but it was resolved and the parties signed Minutes of Settlement. A further dispute arose and an arbitrator interpreted the two crucial provisions of the Minutes of Settlement in favour of Coliseum. The City appealed and the application judge granted leave to appeal, allowed the appeal and overturned the arbitrator’s award. Coliseum appeals to this court.

B. Facts

(1) The parties and events

[3] In November 2000, Coliseum and the City signed a lease agreement that allowed Coliseum to use Frank Clair Stadium in Ottawa (a former Canadian Football League home stadium for the Ottawa Rough Riders football team) to operate an indoor sports and recreation facility under a dome. In 2004, there was a dispute between the parties about Coliseum’s right of possession. The dispute was resolved by Minutes of Settlement.

[4] One term of the settlement was that the City could terminate the lease in the event it had bona fide plans to redevelop Frank Clair Stadium. In that case, Coliseum would be given an option to lease Ben Franklin Park, if it was available, or, if not, a similar City-owned property.

[5] As required by the Minutes of Settlement, on November 1, 2010 the City delivered a Notice of Termination of the lease for Frank Clair Stadium to Coliseum in anticipation of its redevelopment of Lansdowne Park. This was delivered with a Notice of Option to lease Ledbury Park as an alternate site, given that Ben Franklin Park was no longer available.

[6] As a result of the delays in the redevelopment of Lansdowne Park, the City revoked its Notice of Termination. Coliseum continued to operate at Frank Clair Stadium for the 2011-2012 season.

[7] The Notice of Termination became effective in 2012. Coliseum objected to the City’s offer of Ledbury Park. Coliseum and the City explored other sites including, promisingly, one on the University of Ottawa campus. Unfortunately, this possible deal fell through before its proposed starting date.

[8] Coliseum was aggrieved by this state of affairs. It felt that the City had breached the Minutes of Settlement. As a result, Coliseum invoked the arbitration clause in the Stadium Agreement:

26. Any dispute as to the meaning or interpretation of any provision of this Agreement hereof shall be submitted to arbitration pursuant to the provisions of the Arbitrations Act…

(2) The arbitrator’s decision

[9] The arbitration proceeded before arbitrator Stephen Cavanagh. The hearing took place over 11 days in September 2013. There were 11 witnesses who testified, including four expert witnesses. The parties tendered about 750 individual documents.

[10] Essentially, the arbitration turned on the arbitrator’s interpretation of paragraphs 5 and 6 of the Minutes of Settlement:

5. Coliseum Inc. acknowledges and agrees that the extension and optional renewal of the Stadium Agreement and the duration of the Coliseum Agreement are all conditional upon and subject to any bona fide redevelopment plans that the City, acting in good faith, may have in relation to Frank Clair Stadium and/or the Coliseum Building, that would prevent Coliseum Inc.’s use of these two facilities for its operations. In such circumstances, the parties will enter into good faith negotiations in an effort to find alternative site(s) appropriate for Coliseum Inc.’s operations. The City shall give Coliseum Inc. twelve months’ notice of termination of the Stadium Agreement and/or Coliseum Agreement. In the case of the Coliseum Building, such notice of termination shall not be given prior to January 1, 2007 and in the case of Frank Clair Stadium, not before January 1, 2010.

6. In the event that the Coliseum Agreement and/or Stadium Agreement is terminated in accordance with paragraph 5 above, and provided that Coliseum Inc. performs the terms, covenants and conditions to be observed in those Agreements, then the City agrees at that time to grant Coliseum Inc. an option to lease (“option to lease”) a portion of Ben Franklin Park at 180 Knoxdale Road in the City of Ottawa. If Ben Franklin Park is, at the time of exercise of the option to lease, the subject of any bona fide redevelopment plan which precludes the installation of an inflatable dome structure of the kind currently operated by Coliseum Inc., then the City agrees to grant an option to lease to Coliseum Inc. for a similar City-owned property within a 10 kilometer radius of Frank Clair Stadium, as shown on Schedule “A” attached, or such other property as the parties may otherwise agree. The option to lease shall be delivered to Coliseum Inc. on or before delivery of the Notice of Termination referred to in paragraph 5 above. The period of the option to lease shall commence from the date of the delivery of the option to lease. The terms and conditions of the new lease shall be determined by the parties within six months of the exercise of the option by Coliseum Inc. with the parties using their best efforts to negotiate a new lease in accordance with the then current market rates and conditions applicable to the leasing and operation of similar types of recreational uses in the City of Ottawa. Failing an Agreement being reached by the parties within this six-month period, either party may apply to have the “current market rates and conditions applicable to the leasing and operation of similar types of recreational uses in the City of Ottawa” determined and fixed by arbitration in accordance with the provisions regarding arbitration set out in the Stadium Agreement. The parties agree to co-operate in order to have such arbitration completed as quickly as possible, and in any event no later than six months following delivery of a request for arbitration by either party.

[11] On February 3, 2014, the arbitrator rendered a 392 paragraph decision. He allowed Coliseum’s claim and awarded damages of $2,240,000 against the City for breach of the Minutes of Settlement. On the question of liability, the arbitrator concluded, at para. 291:

In my view, Coliseum Inc. has established that the City of Ottawa breached the 2004 Minutes of Settlement. The breach was the City’s failure to provide Coliseum Inc. with an option to lease a property which complied with the requirements of both paragraphs 5 and 6 of the Minutes of Settlement. The Ledbury Park site did comply with the requirements of paragraph 6 (in that it was City-owned, within 10 kilometres of Frank Clair Stadium and, as I have found, “similar to” Ben Franklin Park). But I have concluded, as discussed above, that the City of Ottawa did not take meaningful steps to determine that Ledbury Park was “appropriate to the operations of [Coliseum Inc.]”, as required by [paragraph 5].

[12] In the alternative, if the option to lease complied with the Minutes of Settlement, the arbitrator held that the City had waived its entitlement to rely on the option to lease Ledbury Park, or was estopped from relying on it. This was based on the City’s statements and actions in endeavouring to negotiate for other sites that it did not own but that were preferable to Coliseum. The arbitrator said (at para. 261):

[I]n my opinion, it was not open to the City of Ottawa (no matter how well-intentioned it might have been at the time) to explore alternative sites with such energy and zeal in 2010 to 2012, take no steps to advance the Ledbury Park option, but then rely on Ledbury Park as a basis for defeating Coliseum Inc.’s claim.

[13] In its closing submissions, the City asked the arbitrator to reduce any damages award in favour of Coliseum by 40 per cent, because 40 per cent of Coliseum’s revenue was actually that of a separate company called “Soccer7s”. Though the arbitrator had “very significant reservations” on this issue, he rejected the City’s argument. He relied heavily on the fact that the City had been aware of Soccer7s’ involvement for some time and took no prior issue with it and did not address the issue in its pleadings.

[14] The City brought an application to appeal the arbitrator’s decision on the basis of s. 45(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 (the “Arbitration Act”):

45.(1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that,

(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and

(b) determination of the question of law at issue will significantly affect the rights of the parties.

(3) The application judge’s decision

[15] The application judge granted leave to appeal. Applying Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, she held that the City’s proposed grounds of appeal raised extricable legal errors. Thus, the appeal came within the opening words of s. 45(1) of the Arbitration Act which allows leave to appeal on questions of law only.

[16] In addition, both parties agreed, and the application judge accepted, that the criterion in s. 45(1)(a) was met. Finally, the application judge determined that the criterion in s. 45(1)(b) was also met and concluded that: “[a]ll of the alleged errors … are potentially decisive of the outcome of the arbitration.”

[17] Again applying Sattva, the application judge stated: “I find that the standard of review applicable to this appeal is reasonableness.”

[18] The application judge found that the arbitrator’s interpretation of paragraphs 5 and 6 of the Minutes of Settlement was both an error of law and unreasonable. The key portions of her reasons are at paras. 47-51 and 53:

I have reached the conclusion that the Arbitrator erred in law by conflating paras. 5 and 6 of the Minutes of Settlement, and by imposing an overarching objective that an alternative site must be similar to Ben Franklin Park and appropriate to Coliseum’s operations. He overlooked the precise wording of para. 6 that required best effort negotiations of a new lease in accordance with market rates and conditions within 6 months after the exercise of the option by Coliseum. Coliseum did not exercise the option, yet the Arbitrator found that the City was nonetheless obliged to have identified to Coliseum what it was prepared to do to make the site an appropriate one for it. Even though he found that the parties had agreed in the Minutes that Ben Franklin Park was appropriate, he nonetheless held that giving an option to lease Ben Franklin Park would not have been enough to satisfy the requirements of the Minutes, because of the overarching requirement that the replacement site had to be appropriate to Coliseum’s operations.

In my view he erred in this way by overlooking the import of the requirement in para. 6 that Coliseum exercise the option before the site negotiations began, and by finding that the general language of para. 5 overrode the specific language of para. 6. This led him to the error the City describes as enforcing an agreement to agree. Whereas in para. 5 the parties agree to good faith negotiations to try to find an appropriate alternative site, they did not agree in that paragraph or in paragraph 6 to actually find one or that the option to lease the City was required to provide would meet that criteria. The criteria required for the option to lease was that it would be for a portion of Ben Franklin Park or a site similar to it. Once the Arbitrator found that Ledbury Park was similar to Ben Franklin Park, Coliseum had to have exercised the option before the Minutes required the City to indicate through negotiations what it was prepared to do to improve the site for use by Coliseum.

The Arbitrator found as a fact that the City did act in good faith and that the parties were engaged in lengthy negotiations as to possible alternative sites. The Arbitrator also found that Ben Franklin Park was an agreed upon appropriate alternative site, and that Ledbury Park was similar to it within the meaning of para. 6 of the Minutes. He found that in 2004 Ben Franklin Park was undeveloped land as was Ledbury Park and that both would have required significant expenditure to be made ready for use by Coliseum. Whereas Ben Franklin Park was preapproved, Ledbury Park was not. But para. 6 applied to both in requiring Coliseum to exercise the option to lease before the “best efforts to negotiate a new lease” obligation arose.

Third, the Arbitrator speculated as to Coliseum’s intention in entering into the Minutes and used that as a basis for his interpretation of the contract. He says at para. 86: “It is highly unlikely that Coliseum Inc. would have negotiated an arrangement for a replacement site that was little more than vacant land, without any provision that would see it receiving something approximating what it had lost by termination of the Stadium Agreement.”

Yet that is exactly what Coliseum did in accepting Ben Franklin Park as an alternative site to Frank Clair Stadium. There was nothing in the Minutes that guaranteed them a new lease of approximately similar value, only the opportunity to exercise the option to Ben Franklin Park or a similar site, and having done so, to use best efforts to negotiate a lease, failing which either party could require arbitration of the terms of a new lease.

For these reasons I find the Arbitrator erred in law in his interpretation of the Minutes. I also find his interpretation was unreasonable having regard to the inconsistent conclusions the errors led him to. For example, he found that by the Minutes the parties had agreed in advance that Ben Franklin Park was an acceptable replacement for Frank Clair Stadium, meeting the “appropriateness” requirement of para. 5 and he found that providing Coliseum an option to lease Ben Franklin Park would not have met the City’s obligations under the Minutes. He correctly identified that selection of the site was the first step, and that the remaining terms would be the subject of negotiation. In overlooking the requirement for Coliseum to exercise the option to lease, he went farther and found at para. 90(g) that the Minutes contemplated that the parties would agree on the lease of replacement site and then negotiate the terms of the lease. But the Minutes equally contemplated that the parties may not agree on a replacement site, because the obligation to negotiate and possibly to submit the terms of a new lease to arbitration did not arise unless an option to lease was exercised by Coliseum. [Emphasis in original.]

[19] The application judge also concluded, at para. 70, that the arbitrator erred in his application of the doctrines of waiver and estoppel:

I find the Arbitrator erred in law in finding the City precluded from relying on its delivery of the Notice of Option to Lease. This conclusion was also unreasonable. He founded the preclusion in part on the City’s good faith efforts to comply with paragraph 5 of the Minutes. And his conclusion was also inconsistent with the facts as he set them out as to whether the City was unequivocal or had the intention to affect legal relations.

[20] Finally, although it was, strictly speaking, not necessary for the application judge to consider the arbitrator’s damages award in light of her conclusion on the interpretation of the Minutes of Settlement, for the sake of completeness she did so at para. 72:

Although it is unnecessary to address the City’s appeal from the damages awarded I would have reduced the award by the 40 percent of revenue derived from the Stadium Lease by the Soccer7s. The onus was on Coliseum to establish its damages. The Arbitrator had a paucity of evidence as to the relationship between the corporate entities and the extent of Coliseum’s ability to control the flow of revenue to one or other entity. His conclusion in favour of Coliseum on this point was speculative.

[21] Coliseum appeals from the application judge’s decision.

C. Issues

[22] The issues are:

(1) Leave to appeal

(a) Does this court have jurisdiction to review a decision of a Superior Court judge granting leave to appeal an arbitral decision under s. 45(1) of the Arbitration Act?

(b) If the answer to 1(a) is in the affirmative, did the application judge err in granting leave to appeal?

(2) Reasonableness of the arbitrator’s decision

(a) Did the application judge err in finding the arbitrator’s interpretation of the Minutes of Settlement unreasonable?

(b) If the answer to 2(a) is in the negative, did the application judge err in finding the arbitrator’s decision on waiver and estoppel unreasonable?

(c) If the answer to 2(a) is in the affirmative, did the application judge err in finding the arbitrator’s decision not to reduce damages by 40 per cent unreasonable?

D. Analysis

(1) Leave to appeal

(a) Jurisdiction of this court

[23] Coliseum contends that the application judge erred in granting leave to appeal the arbitrator’s award. The City’s response is that this decision is not subject to review by this court. In my view, the City is correct.

[24] With respect to commercial arbitrations, leave to appeal to the Superior Court of Justice is governed by s. 45 of the Arbitration Act:

45.(1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that,

(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and

(b) determination of the question of law at issue will significantly affect the rights of the parties.

[25] Further leave to appeal to the Court of Appeal is governed by s. 49 of the Arbitration Act:

49. An appeal from the court’s decision in an appeal of an award, an application to set aside an award or an application for a declaration of invalidity may be made to the Court of Appeal, with leave of that court.

[26] This court has twice considered the issue of whether a Superior Court judge’s decision granting or refusing leave to appeal from an arbitral award can be appealed to this court.

[27] In Hillmond Investments Ltd. v. Canadian Imperial Bank of Commerce (1996), 1996 CanLII 413 (ON CA), 29 O.R. (3d) 612 (C.A.), this court canvassed a series of cases and concluded that an order refusing leave to appeal is not appealable.

[28] In Denison Mines Ltd. v. Ontario Hydro (2001), 2001 CanLII 5681 (ON CA), 56 O.R. (3d) 181 (C.A.), this court spoke more broadly about orders granting and refusing leave to appeal. Morden J.A. stated, at paras. 6-8:

The non-appealability of decisions refusing or granting leave to appeal is the general rule and, subject to the exception to which I shall refer shortly, it should, as Hillmond held, be applicable to appeals from orders made under s. 45(1) of the Arbitration Act, 1991. The rule flows from the strong implication that, notwithstanding the wording of s. 6(1)(b) of the Courts of Justice Act, a general statute, no appeal is intended from an order made refusing or granting leave to appeal. Any other conclusion would defeat the purpose of s. 45(1), which is to limit appellate recourse to the courts in arbitration matters.

This strong negative implication is reinforced by s. 49 of the Arbitration Act, 1991, which provides for an appeal to the Court of Appeal from a superior court judge's decision in an appeal of an award, but only with leave of the Court of Appeal. It would be incongruous to attribute to the legislature an intention that there be appeals, as of right, from decisions on leave applications under s. 45(1) when no such appeal is provided for with respect to decisions on what may be called the main issue, the correctness of the arbitral decision.

As I have said, the non-appealability of orders refusing leave is the general rule. As Hillmond sets forth on pp. 624-25, the courts have engrafted onto this general rule an exception which is applicable where the judge mistakenly declines jurisdiction.

[29] I agree with this analysis, and especially with the compelling logic in para. 7. In the present case, the application judge granted leave to appeal. The exception of a judge mistakenly declining jurisdiction is not in play. Accordingly, this court has no jurisdiction on this appeal to review the application judge’s decision to grant leave to appeal from the arbitral award.

(b) Application judge’s interpretation of s. 45(1)(a) and (b) of the Arbitration Act

[30] In light of my conclusion in 1(a) above that this court does not have jurisdiction to review the application judge’s leave to appeal decision, this issue does not arise.

(2) Reasonableness of the arbitrator’s decision

[31] The standard of review on appeal from a commercial arbitration award will generally be reasonableness. The leading case is Sattva, wherein Rothstein J. said, at para. 106:

In the context of commercial arbitration, where appeals are restricted to questions of law, the standard of review will be reasonableness unless the question is one that would attract the correctness standard, such as constitutional questions or questions of law of central importance to the legal system as a whole and outside the adjudicator’s expertise.

[32] The reason for this deferential standard, even in appeals that are restricted to questions of law, was explained by Rothstein J. in Sattva, at para. 104:

Appellate review of commercial arbitration awards takes place under a tightly defined regime specifically tailored to the objectives of commercial arbitrations and is different from judicial review of a decision of a statutory tribunal. For example, for the most part, parties engage in arbitration by mutual choice, not by way of a statutory process. Additionally, unlike statutory tribunals, the parties to the arbitration select the number and identity of the arbitrators.

[33] In a similar vein, in Popack v. Lipszyc, 2016 ONCA 135, 262 A.C.W.S. (3d) 841, Doherty J.A. linked the fact of a private consensual arbitration with the need for judicial deference to the result of that arbitration in this fashion, at para. 26:

In addition to the generally applicable principles that urge deference in the review of all discretionary decisions, the nature of the specific order under appeal can also enhance the deference rationale. The application judge exercised her discretion in the context of a review of an award rendered in a private arbitration before a panel chosen by the parties to determine the dispute between them. The parties’ selection of their forum implies both a preference for the outcome arrived at in that forum and a limited role for judicial oversight of the award made in the arbitral forum. The application judge’s decision to not set aside the award is consistent with the well-established preference in favour of maintaining arbitral awards rendered in consensual private arbitrations. [Emphasis added, citations omitted.]

[34] There is nothing in this appeal taking it outside the general rule that judicial review of a commercial arbitration award is conducted on a reasonableness standard. This appeal does not deal with constitutional questions or questions of law of central importance to the legal system as a whole and outside the adjudicator’s expertise.

[35] In my view, Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, remains the leading case on the definition of reasonableness. Bastarache and LeBel JJ. stated, at para. 47:

Reasonableness is a deferential standard animated by the principle that underlies the development of the two previous standards of reasonableness: certain questions that come before administrative tribunals do not lend themselves to one specific, particular result. Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of appreciation within the range of acceptable and rational solutions. A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

[36] Against this backdrop, I turn to the arbitral award and the application judge’s review of that award.

(a) Paragraphs 5 and 6 of the Minutes of Settlement

[37] Based on the above, the crucial question is: did the application judge err by concluding that the arbitrator’s interpretation of the Minutes of Settlement, especially paragraphs 5 and 6, was unreasonable?

[38] The arbitrator found that paragraph 6 of the Minutes of Settlement must be read in light of the more general provisions of paragraph 5. In particular, he found that the City had to provide a site similar to Ben Franklin Park as it was in 2004, provided that the “alternative site(s) [were] appropriate for Coliseum Inc.’s operations” . At that point, the parties would then negotiate the terms of the lease. The arbitrator observed that this interpretation matched Coliseum’s view of what was required by the Minutes of Settlement, but also that of Robin Souchen, the principal negotiator for the City. The arbitrator found that Coliseum reasonably relied on what it was being told by Mr. Souchen, which accorded with the arbitrator’s interpretation of the Minutes of Settlement.

[39] Essentially, the arbitrator found that paragraph 6 of the Minutes of Settlement explained and modified the overarching requirement in paragraph 5 that “the parties will enter into good faith negotiations in an effort to find alternative site(s) appropriate for Coliseum Inc.’s operations.” Paragraph 6 does not define what “find alternative site(s)” means – this is fleshed out in paragraph 6. Accordingly, the words in paragraph 5 are complementary to paragraph 6 – they are a statement of the overarching principle that was intended to govern the parties’ actions in the event of termination and it extended to paragraph 6.

[40] The application judge disagreed with the arbitrator’s analysis. She interpreted paragraphs 5 and 6 of the Minutes of Settlement in a two-step fashion. Paragraph 5 mandated that Coliseum and the City work together in “good faith negotiations” to find an alternative site for Coliseum’s operations if Frank Clair Stadium became unavailable. If those negotiations failed to identify an alternative site, then paragraph 5 was exhausted and paragraph 6 was triggered. At this juncture, the path for the parties narrowed and became more formal or legalistic. The City was required to identify a single alternative site and the parties could then try to negotiate a new lease acceptable to both of them (with arbitration available on its terms).

[41] Without hesitation, I say that the application judge’s interpretation of paragraphs 5 and 6 of the Minutes of Settlement is a possible – even a reasonable – interpretation. However, that is not the relevant point. In my view, the same can be said about the arbitrator’s interpretation.

[42] It is true that the arbitrator’s interpretation does not flow entirely from an analysis of only the words inside the four corners of the Minutes of Settlement. He explicitly relied on some of the evidence he heard during the 11-day hearing to provide background and context to his legal analysis of the Minutes of Settlement.

[43] There is nothing unreasonable about this approach. When assessing reasonableness, it is important to keep in mind some of the principles of contractual interpretation discussed in Sattva. Of particular relevance to this appeal is what Rothstein J. said, at para. 47:

[T]he interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of their understanding”. To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning. [Citations omitted.]

[44] In my view, the arbitrator’s reasoning was entirely faithful to this approach. His reasoning and result simply cannot attract the label “unreasonable”. Accordingly, the application judge erred by setting aside the arbitrator’s interpretation of the Minutes of Settlement and substituting her own. The fact that the application judge’s interpretation is also reasonable does not affect the result, as the arbitrator was owed deference on his reasonable interpretation.

(b) Waiver and estoppel

[45] In light of the conclusion in 2(a) above that the arbitrator’s interpretation of the Minutes of Settlement was reasonable, the issues of waiver and estoppel do not arise.

(c) Damages

[46] Because the application judge allowed the appeal on the contractual interpretation issue, she did not, strictly speaking, need to consider the damages issue. However, for the sake of completeness she did so at para. 72 which, for convenience, I set out again:

Although it is unnecessary to address the City’s appeal from the damages awarded I would have reduced the award by the 40 percent of revenue derived from the Stadium Lease by the Soccer7s. The onus was on Coliseum to establish its damages. The Arbitrator had a paucity of evidence as to the relationship between the corporate entities and the extent of Coliseum’s ability to control the flow of revenue to one or other entity. His conclusion in favour of Coliseum on this point was speculative.

[47] Again, I do not think that the arbitrator’s decision on the damages issue can attract the label “unreasonable”. There was a significant amount of evidence regarding damages before the arbitrator. Each party put forward an expert witness (both of whom were chartered accountants and business valuators). There was, according to the arbitrator, “a large measure of agreement” between the two experts. Coliseum’s expert provided a damages range of $2,240,000 to $5,524,200 and the City’s expert said $2,240,000 to $4,964,700. The City’s own expert witness did not discount his damages assessment to account for Soccer7s.

[48] Only in its closing submissions did the City raise the issue of a potential 40 per cent reduction because of a relationship between Coliseum and Soccer7s. This issue was not pleaded by the City and it clearly took the arbitrator and Coliseum by surprise. Nevertheless, the arbitrator dealt with it and concluded that “although I have very significant reservations on this issue, I have decided that Coliseum Inc.’s damages should not be reduced on account of the privity of contract issue.”

[49] In light of the sparse record, the experts’ damages numbers, and the application judge’s lack of reasons (understandable in light of her conclusion on the main issue), I cannot say that the arbitrator’s award on the damages issue was unreasonable.

E. Disposition

[50] I would allow the appeal and reinstate the arbitrator’s award. The appellant is entitled to its costs of the appeal which, in accordance with the parties’ agreement, I would fix at $36,000, inclusive of disbursements and HST.

Released: May 13, 2016 (“J.C.M.”)

“J.C. MacPherson J.A.”

“I agree. K. van Rensburg J.A.”

“I agree. B.W. Miller J.A.”