



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 arbitrators 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 Coliseums 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 Citys 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 arbitrators 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 arbitrators 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 Coliseums 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 Citys
    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 Citys 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 Coliseums
    revenue was actually that of a separate company called Soccer7s. Though the
    arbitrator had very significant reservations on this issue, he rejected the
    Citys 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 arbitrators 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 judges 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 Citys 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 arbitrators 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 Coliseums 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 Coliseums 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 Coliseums 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
    Citys 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
    Citys 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 arbitrators 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 Citys 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 Coliseums
    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 judges 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 arbitrators decision

(a)

Did the application judge err in finding the arbitrators 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 arbitrators 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 arbitrators 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 arbitrators award. The Citys 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 courts 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 judges
    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), 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), 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 judges decision to grant leave to appeal from the arbitral award.

(b)

Application judges 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 judges leave to appeal decision, this
    issue does not arise.

(2)

Reasonableness of the arbitrators 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 adjudicators 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 judges 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 adjudicators 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
    judges 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 arbitrators 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 Coliseums 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 arbitrators 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 arbitrators 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 Coliseums 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 judges 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 arbitrators interpretation.

[42]

It is true that the arbitrators 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 arbitrators 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
    arbitrators interpretation of the Minutes of Settlement and substituting her
    own. The fact that the application judges 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 arbitrators
    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 Citys 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 Coliseums
    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 arbitrators 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. Coliseums expert provided a damages range
    of $2,240,000 to $5,524,200 and the Citys expert said $2,240,000 to
    $4,964,700. The Citys 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
    judges lack of reasons (understandable in light of her conclusion on the main
    issue), I cannot say that the arbitrators award on the damages issue was
    unreasonable.

E.

Disposition

[50]

I would allow the appeal and reinstate the arbitrators 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.


