Arbitration — Agreement to arbitrate — Enforcement, defences, abandonment.
Application by the plaintiff for an order appointing an arbitrator. The plaintiff and the defendant made an agreement to submit their dispute to arbitration. Subsequently, the plaintiff offered to accept resolution by either arbitration or the court, the defendant chose the court, and the plaintiff initiated a court process. The plaintiff now sought to have the court appoint an arbitrator pursuant to section 17 of the Commercial Arbitration Act.
HELD: Application denied. The agreement to submit the dispute to arbitration had been abandoned by mutual consent of both parties.
Statutes, Regulations and Rules Cited:
Commercial Arbitration Act, R.S.B.C. 1996, c. 55, s. 17.
Counsel:
| Bruce E. McLeod, for the petitioner. Leonard C. Dudley, for the respondent. |
¶ 1 LOWRY J.:— Two councils of Scouts Canada, the Provincial and the Victoria Regional, have fallen into a dispute as to which is the intended beneficiary of the residue of the estate of the late Moir Christie who died in 1994 and by his will generously bequeathed a very substantial sum of money as follows:
|
I GIVE all the residue of my estate to the BOY SCOUTS OF CANADA, having an office in the City of Victoria, in the Province of British Columbia, for use in the Province of British Columbia. |
The dispute does not end there but extends to the choice of forum for its resolution. The Provincial Council seeks the appointment of an arbitrator and maintains that it and the Regional Council entered into an arbitration agreement by which they are bound. The Regional Council insists there was no agreement to arbitrate and it presses to have the dispute resolved by the court.
¶ 2 The question to be decided now is twofold: whether the two councils agreed to arbitrate their dispute over Mr. Christie's gift and, if so, whether it is an agreement that the Provincial Council can rely upon in having the court appoint an arbitrator pursuant to s. 17 of the Commercial Arbitration Act, R.S.B.C. 1996, c. 55.
¶ 3 On September 18, 1997 the Provincial Council filed a petition seeking:
| (a) |
A declaration that [it] is solely entitled to the residue of the Estate of Alexander Moir Christie pursuant to Rules 10(1)(b) and (d) of the Rules of Court; |
||
| (b) |
In the alternative, for an Order that Martin R. Taylor, Q.C. be appointed arbitrator pursuant to Commercial Arbitration Act ...; and |
||
| (c) |
Costs. |
The facts upon which the relief sought is based are stated as follows:
| 7. |
On January 18, 1996, the executor of the Deceased's estate filed a petition (the "Executor's Petition") in British Columbia Supreme Court (Victoria Registry No. 960216) seeking construction of paragraph 5 of the Will to determine whether the residue of the Deceased's estate was to pass to Provincial Council or Victoria Regional Council. |
||
| 8. |
On February 15, 1996 the parties agreed that the residue of the Deceased's estate would be transferred by the Executor to Scouts Canada, to be held by the financial management committee of the petitioner (the "Management Committee") in trust for the parties until their entitlement under paragraph 5 of the Will is determined. The parties agreed to resolve the issue of their respective entitlement by negotiation or arbitration. |
||
| 9. |
The distribution of the Deceased's estate by the executor has been concluded. The Management Committee now holds the residue of the Deceased's estate, totalling $724,055.39 as of May 31, 1997, in trust for the parties. |
||
| 10. |
The parties have been unable to agree on their entitlement to the residue of the Deceased's estate. The parties have now agreed to have this issue resolved by the court. |
¶ 4 The stated agreement to resolve the issue of entitlement is contained in a letter of February 14, 1996, sent by the solicitors for the Regional Council to the solicitors for the Provincial Council proposing that the funds be held by the former pending a resolution of proprietary interest by either negotiation or arbitration. Apparently with the Provincial Council's concurrence, the executor's petition was then disposed of by an order of February 15, 1996, directing that the funds be distributed to the Victoria office of Scouts Canada. Negotiations between the two councils apparently proved fruitless so, on March 11, 1997, through solicitors, the Provincial Council informed the Regional Council of its wish to proceed to arbitration and forwarded a form of arbitration agreement for review. That was followed by the Provincial Council suggesting that Mr. Taylor be the arbitrator and proposing various dates when it had been determined he was available. The response was that the Regional Council had not yet decided whether it wished to have the matter resolved by the court or by arbitration. On June 17, 1997, the Provincial Council's solicitors wrote in part as follows:
|
Our clients agreed on February 14, 1996 to have this matter determined by either negotiation or arbitration. ... I infer from your correspondence that your client may now prefer to have the matter resolved in court. Before proceeding with a court application I request confirmation of your client's position regarding the agreement to arbitrate. Do you wish to have the issue resolved in court or by arbitration? My client is prepared to proceed by either route. |
¶ 5 The Regional Council's solicitors stated in response that their client wished to have the issue resolved in court.
¶ 6 The Provincial Council then issued its petition and in the last paragraph of the facts stated, as quoted, that the parties had agreed to have the issue of entitlement resolved by the court.
¶ 7 I am prepared to assume, without deciding, that there was an agreement to arbitrate made in February 1996 and that the notice to concur in the appointment of an arbitrator required by s. 17(1) or the Act was given in March 1997 thereby entitling the Provincial Council to apply to the court for the appointment of an arbitrator. However, it is my view that the agreement to arbitrate was mutually rescinded when the Provincial Council offered to accept either a resolution by the court or by arbitration, the Regional Council chose the court, and the Provincial Council initiated court process stating that the parties had agreed to have the issue resolved by the court. The alternative relief sought - arbitration - was no longer available and has no place in the petition.
¶ 8 Counsel make no reference to authority on the point, but I find support for my conclusion in Chitty on Contracts, 27th ed. (London: Sweet & Maxwell, 1994) vol. 1 at 15-036:
|
Circumstances may nevertheless exist where the court is entitled to infer that the agreement to submit the dispute to arbitration has been abandoned or rescinded by mutual assent of the parties. But to justify such an inference it must be shown that the claimant so conducted himself so as to entitle the respondent to assume, and that the respondent did assume, that the contract was agreed to be abandoned sub silentio. |
¶ 9 In their authoritative text The Law and Practice of Commercial Arbitration in England, 2nd ed. (London: Butterworths, 1989) Sir Michael J. Mustill (now Lord Mustill) and Stewart C. Boyd write at 506-07:
|
Little time need be taken over an explicit verbal renunciation. This is likely to be rare in practice. In theory, however, there can be no doubt that if the orthodox doctrines are applied, a party who states that he no longer wishes his disputes to be submitted to arbitration gives his opponent the option to choose whether or not he will maintain the agreement in existence. If he wishes, he can accept the statement as a wrongful renunciation of the contract to arbitrate, and bring the individual reference to an end. |
¶ 10 The subject was addressed by the English High Court in The "World Era" [1992] 1 Lloyd's Rep. 45 at 53 were Hobhouse J. said:
|
In an arbitration the abandonment has to be established on ordinary contractual principles including words or conduct which objectively leads to the conclusion that there was an intention to abandon or withdraw the claim from the jurisdiction of the arbitrators. |
¶ 11 Reference might also be made to Tracomin v. Neilsen, [1984] 2 Lloyd's Rep. 195 (Q.B.) and André et Compagnie v. Marine Transocean Ltd., [1981] 1 Q.B. 694 (C.A.) and the authorities cited therein, where the indirect repudiation of an arbitration agreement, such as can occur as the result of a long passage of time, is discussed.
¶ 12 The Provincial Council's application for the appointment of an arbitrator is then denied. The Regional Council is entitled to its costs of the application. I do not consider that they should be paid out of the estate and there will be no order to that effect.
LOWRY J.
QL Update: 971201
cp/d/sfr