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Docket: |
CA029618 |
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Registry: Vancouver |
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COURT OF APPEAL FOR BRITISH COLUMBIA |
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ORAL REASONS FOR JUDGMENT |
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BEFORE THE HONOURABLE |
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April 12, 2002 |
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Vancouver, B.C. |
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BETWEEN: |
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MACDONALD DETTWILER and ASSOCIATES LTD. |
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APPELLANT |
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AND: |
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BYGO INC. |
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RESPONDENT |
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M. Andrews |
appearing for the Appellant |
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B. Cramer |
appearing for the Respondent |
[1] FINCH, CJBC: This is an application for leave to appeal, if required, or alternatively for a declaration that leave is not required. The plaintiff also seeks short leave for making this application, and directions for an expedited hearing of the appeal.
[2] The order sought to be appealed from was pronounced in Supreme Court Chambers by Madam Justice Stromberg-Stein on 25 March 2002. She dismissed the plaintiff's application under s.20 of the Commercial Arbitration Act for an order extending the time within which the plaintiff might deliver notice to the defendant to dispute the defendant's purported termination of an escrow agreement.
[3] The agreement imposing the time limitation, and the events giving rise to this issue, arose in these circumstances, as described by the Chambers judge:
[6] On December 19, 2000, the last day of the escrow period, Bygo sent MDA an escrow termination notice. Bygo indicated it was prepared to continue to evaluate the software and to resolve the problems and offered to postpone the consequences of its termination notice until January 10, 2001 (later extended to January 15, 2001). The terms Bygo proposed for the extension, accepted by MDA on December 20, 2000, formed part of a letter agreement. The relevant term provided:
If MDA intends to dispute any matter arising under the Escrow Agreement, including whether the Escrow Termination Notice complies with Section 6 of the Escrow Agreement, it will do so immediately using the Dispute Resolution Procedures contemplated in Section 7 of the Escrow Agreement. (emphasis mine)
[7] On January 3, 2001 MDA sent a letter to Bygo responding to Bygo's concerns relating to the termination notice. On January 8, 2001 MDA sent Bygo a letter urging it to release CA3.
[8] On January 15, 2001 Bygo informed MDA that it would not revoke the termination notice. On the same date, MDA delivered a notice disputing the termination. Bygo responded that MDA's dispute notice was out of time as it had not been delivered "immediately" after December 20, 2001, as required by the letter agreement.
(my emphasis)
[4] The parties agreed to submit all matters in dispute to arbitration. On 22 August 2001, the arbitrator ruled that the word "immediately" in the agreement, quoted by the Chambers judge in the passage cited above, meant as soon as reasonably possible after 20 December 2000; that the plaintiff's dispute notice was more than 12 days late; and that the defendant was not estopped from relying on the time limit. The arbitrator held only the court had jurisdiction to extend the time limit under s.20 of the Commercial Arbitration Act.
[5] The plaintiff then applied in B.C. Supreme Court for an order extending the time. The judge refused the order. After a careful review of the circumstances, and of the applicable law, she concluded:
[44] While s. 20(c) of the Commercial Arbitration Act provides the court discretion to relieve against the loss of a claim where the failure to take a procedural step within a contractually mandated time results in undue hardship, MDA's dispute was not delivered "immediately", as required by the parties' agreement. Section 20 creates a discretionary power to interfere with vested contractual rights which should not be exercised where a party has provided no explanation for a lengthy delay in applying for an extension of time, where that party has not been misled, and where the resulting prejudice to the other party cannot be adequately redressed. The granting of an extension in this case is inconsistent with the agreement of the parties and with the purpose of s. 20 of the Act. It would not be appropriate for this court to exercise its discretion in favor of MDA to extend the contractual time limit.
[45] MDA's application for an order extending the time to January 15, 2001 to deliver notice to Bygo, disputing Bygo's purported termination of an escrow agreement on December 19, 2000, is dismissed.
[46] There is no merit to MDA's application seeking leave to appeal the arbitrator's determination that he does not have jurisdiction to consider an extension of time and to remit the matter to the arbitrator for determination of whether an extension should be granted.
[47] The petition is dismissed.
[6] In my view, leave to appeal from this order is necessary. The order did not finally resolve the matters in dispute between the parties. The arbitration is scheduled to resume next month. Even if the plaintiff had succeeded on its application in the court below, the arbitration would have proceeded. The order sought to be appealed from is interlocutory, and leave to appeal is therefore required.
[7] I am also of the view that leave to appeal should be refused. I see very little prospect of the appeal succeeding. The Chambers judge said:
[32] While s. 20 of the Act permits the Court to override the contractual agreement between the parties, the proper approach to s. 20 must start from the assumption that when the parties agreed to a contractual time limit they contemplated the effect of their agreement and realized that a claim would be time barred unless brought within the contractual time limit.
[33] There is vested in the court a discretion to extend time where a claim may otherwise be barred where a failure to extend the time would create undue hardship that would be unjust in the circumstances. Simple hardship will not suffice. The Court must be satisfied that such hardship is undue and unjust in the circumstances before it will extend a contractual time limit.
[8] I respectfully agree.
[9] And further:
[40] While MDA says the extension it seeks is only for a few days, in reality any extension would be in the range of 10 to 17 months and arbitration is to resume in May 2002. MDA filed no affidavit evidence of undue hardship. The parties agreed to the time bar; MDA failed to adhere to it. Any hardship suffered by MDA is not undue, but is due to the failure of MDA to take appropriate steps to apply for relief in a timely manner. An extension of time granted a year or more later would render meaningless the parties' agreement and Bygo would be seriously prejudiced. There is no way to adequately redress Bygo's prejudice.
[41] A court should be reluctant to interfere with the agreement of contracting parties, particularly where legal counsel was available to provide advice throughout. There was no conduct on the part of Bygo that would make it unjust to hold MDA to the contractual term to which it willingly agreed with the benefit of consultation of legal counsel. It cannot be said that the consequences of any hardship to MDA is out of proportion to MDA's fault in failing to take timely and appropriate action to apply for relief from the time bar.
[10] Again, I respectfully agree.
[11] The judge's interpretation of s.20 is, in my view, consistent with the law, and with commercial realities. To the extent that her decision involved the exercise of discretion, she appears to have done so on sound principles, and with a correct appreciation of the equities. I consider it very unlikely that a Division of this court would disagree with her conclusion.
[12] The correct interpretation of s.20 of the Commercial Arbitration Act is, as the applicant submits, a matter of general importance to the profession and the commercial community. However, that is only one of several considerations to be taken into account.
[13] I do not think this issue has the great importance for the parties that the applicant suggests. The applicant says the effect of the order appealed from will cause it to lose the benefit of a contractual amendment negotiated between the parties. However, depending on the outcome of the issues which remain to be arbitrated, that time bar issue may well become academic.
[14] Finally, an order for leave to appeal would, in my view, inevitably cause further delay in the hearing and disposition of the arbitration. Even if an expedited date for hearing could be found before resumption of the arbitration on 13 May, it is by no means clear when the decision on such an appeal might be given. The parties have invested considerable time, effort and expense in preparing to meet the May arbitration date, and loss of that date will doubtless render much of the expense incurred to be wasted. There is evidence that the economic consequences of an adjournment to the respondent would be serious, if not terminal.
[15] Having regard for all these factors, and in particular, the lack of merit in the proposed appeal, it would not be in the interests of justice to grant leave.
[16] Leave to appeal is refused. The respondent is entitled to the costs of this application.
"The Honourable Chief Justice Finch"