



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



St. Pierre v. Chriscan Enterprises
  Ltd.,









2010 BCCA 78




Date: 20100128

Docket:
CA037703

Between:

Ernie
and Marilyn St. Pierre

Appellants

(Plaintiffs)

And

Chriscan
Enterprises Ltd. and Len Suchocki

Respondents

(Defendants)




Before:



The Honourable Mr. Justice K. Smith





(In Chambers)




On
appeal from: Supreme Court of British Columbia, November 20, 2009
(
St. Pierre v. Chriscan Enterprises Ltd.
, Kelowna Registry 84835)

Oral Reasons for Judgment




Counsel for the Appellant:



A.
  C. Kempf





Counsel for the Respondent:



D.P.
  Church, Q.C.





Place and Date of Hearing:



Vancouver,
  British Columbia

January
  28, 2010





Place and Date of Judgment:



Vancouver,
  British Columbia

January
  28, 2010






[1]

K. SMITH J.A.
:
This is an application for leave to appeal from a judgment staying an action
brought in the Supreme Court in favour of an arbitration pursuant to an
arbitration clause in a building contract.

[2]

The appellants were the owners of some property.
They hired the respondents as project manager to build them a house on what is
essentially a cost plus contract for a fee calculated as a percentage of the
ultimate cost. After the contract had been completed, the appellants discovered
that one of the contracts let by the respondents for a major part of the
construction was to a company in which the respondent Mr. Suchocki was a
principal. The appellants had not been aware of that. They commenced action in
the Supreme Court alleging that this constituted a breach of fiduciary duty as
a result of which the respondents received secret profits.

[3]

The question of the merits of those allegations
is immaterial on this application. The question here is whether there is any
merit in the appellants submission that the chambers judge erred in granting a
stay of proceedings in favour of arbitration. The arbitration clause in
question provided:

In the event of
any disagreement between the parties hereto as to the interpretation of this
contract... such dispute shall be referred to a single arbitrator and settled
pursuant to the terms of the
Commercial Arbitration Act
of British
Columbia...

The clause also referred to disputes as to
the quality of materials and construction arranged by the respondent and to deficiencies,
which are also matters of dispute between the parties but do not bear directly
on the question that I have to determine here.

[4]

The chambers judge decided that whether there
was a fiduciary relationship between the parties in these circumstances that gave
rise to a right to damages based on secret profits depended on an
interpretation of the contract and that it was therefore within the terms of
the arbitration clause and could not be pursued in the trial court. He relied
heavily on a decision of the trial court in
James v. Thow
, 2005 BCSC
809, [2005] B.C.W.L.D. 4918, which considered an arbitration clause that
differed somewhat from the one in question. The arbitration clause considered
in
James v. Thow
provided, so far as it is relevant:

If at any time
any dispute, difference or question shall arise concerning the interpretation
of this Agreement or the rights or liabilities of the General Partner or the
Limited Partners... such dispute, difference or question shall be referred to a
single arbitrator

[5]

The allegations in that case were of fraud and
other similar allegations, and it was held, as I understand the decision in
James
v. Thow,
that they were within the phrase the rights or liabilities of the
General Partner or the Limited Partners in the arbitration clause and therefore
were required to be submitted to arbitration.

[6]

The chambers judge in this case considered that
it was on all fours with
James v. Thow
even though it did not contain
the reference to arbitration of rights and liabilities of the parties to the
contract.

[7]

Mr. Church, in his very thorough submission,
argued that makes no difference because the real question is whether the
contract must be examined and interpreted in order to determine what the
relationship was between the parties for purposes of establishing whether there
was a relationship that would give a right to damages for taking secret
profits. He says that is clear in this case, that without looking at what his
client promised to do under the contract, it is not possible to determine what
the relationship was so as to provide a foundation for the appellants claim,
and that since one must look to the contract for those things it is
self-evident that it is a matter of interpretation of the contract and that it
must go to arbitration.

[8]

Mr. Kempf responds that there is no dispute
about the interpretation of the contract in this case, that it is clear on its
face what the relationship was. He makes the point that if an allegation of
fiduciary duty and secret profit must go to arbitration on a clause such as
this, then even allegations of theft or fraud in contractual situations would
be required to go to arbitration on that wording.

[9]

The test for merits on an application for leave
to appeal is not a high one. I do not have to be satisfied that the appellants
will succeed if the matter goes to appeal, but only that there is an arguable
case. The authority on which Mr. Church primarily relies is a decision of the
trial court in our province, and I have no reason to question the correctness
of the decision, but there has been no appellate pronouncement on this question
in this province and it is an issue that I think may attract the interest of a
division of this Court.

[10]

Taking all of those matters into account, I am
satisfied that the low threshold standard has been met and that the other
criteria that I must take into account on an application for leave to appeal
are satisfied.

[11]

Leave to appeal is granted.

The Honourable Mr. Justice K. Smith


