The parties entered into a contract for the construction of a house in 2021. The contract included an arbitration clause. In early 2022, when Lakehouse refused to complete the contract due to changes in the contract’s specifications and disagreement on the costs of those changes, Mr. Bollhorn brought an action in the British Columbia Supreme Court for specific performance. During the court hearing, he anticipated deficiencies that he said required rectification. The Court ruled in Mr. Bullhorn’s his favour and granted his request for specific performance.

When the deficiencies were not rectified to his satisfaction, Mr. Bullhorn filed a Notice to Arbitrate with VanIAC. He sought a determination of the deficiencies identified in the walk‑through, quantification of the cost to him of remedying such deficiencies, and certain orders concerning payment. On July 30, 2023, the arbitrator dismissed the arbitration on the basis that it was barred by the doctrine of res judicata. The arbitrator held that Mr. Bollhorn had already raised his claim of deficiencies in the Supreme Court proceedings.

Mr. Bollhorn sought leave to appeal the arbitrator’s decision under the Act. He argued that the arbitrator erred in law when he dismissed his arbitration claim on the basis of res judicata, because his Supreme Court action did not advance a claim for construction deficiencies and the contract assigned disputes over deficiencies exclusively to arbitration. In response, Lakehouse argued that even if Mr. Bollhorn was correct, the Court could not hear the appeal because the Rules prohibit parties from appealing an arbitrator’s decision for disputes not exceeding $250,000.

Although the Act limits generally restricts the court’s involvement in domestic arbitrations under section 4(a), a party to arbitration may seek leave to appeal to the Court of Appeal on any question of law arising out of an arbitral award under section 59(3). Rule 27(a) under Part B of the Rules stipulates that there is no appeal on questions of law from an award arising for disputes not exceeding $250,000, unless otherwise consented to by both parties. Mr. Bollhorn’s claim was approximately $95,000.

After the hearing of the leave to appeal application, Madam Justice Saunders requested and received submissions from the parties on the character of the arbitrator’s decision as an “award”. She considered these submissions in reviewing the Act and materials filed.

Madam Justice Saunders wrote in the decision at paragraphs 11 and 12 the following:

[11]    There is considerable force, in my view, to Mr. Bollhorn’s assertion of an error of law in the application of res judicata:

1. the deficiency walk‑through followed well after the court hearing of the claim for specific performance;
2. the contract assigns disputes about deficiencies exclusively to arbitration;
3. the court pleadings do not appear to advance a claim for deficiencies; and
4. the court order addressed only two substantive issues – title to the property, and the markup and taxes payable to Lakehouse on the change orders.

[12]   There is also considerable force, in my view, to Lakehouse’s assertion that the arbitration scheme does not allow for an appeal, even in these circumstances.

She found at paragraph 22 that the parties, through their submissions, revealed a gap in the domestic arbitration scheme, indicating that “in the event Mr. Bollhorn is correct that the application of res judicata was an error of law, and Lakehouse is correct that the decision cannot be appealed, Mr. Bollhorn’s claim under his contract will not have been heard on its merits, contrary to the expectation implicit in the contract’s arbitration clause. Further, in that event, depending on whether the decision is an “award”, no other forum may be available to him because the contract assigns this dispute exclusively to arbitration.”

Madam Justice Saunders referred the application for leave to appeal to a division of the court. While we wait for a decision, we are left with this unresolved issue in the gap of the arbitration schemes.

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A Vancouver stock promoter who was once featured in Canadian Business magazine has received a conditional sentence of two years less a day to be served in the community after being convicted of income tax evasion.

In October, a B.C. Supreme Court jury found Damien Reynolds, 52, guilty on all three counts of the indictment — defrauding the Canadian and B.C. governments by evading income taxes, failing to remit GST and HST, and attempting to defraud government officials.

The Crown alleged in the indictment that Reynolds had evaded income taxes from 2003-17, but, for sentencing purposes, Justice Gordon Weatherill found that Reynolds had failed to report his income in only two of those years, in 2004 and ’05, and involving a total of $609,000 in income.

The judge also concluded the father of four had failed to collect $121,000 in GST and HST, and had attempted to defraud the governments of a “substantial” amount of money. The Crown claimed that the amount was $4.1 million, but the judge said he could not determine the amount, only that it was substantial.

Described in court as a “deal-making entrepreneur,” the 2008 profile of Reynolds in Canadian Business magazine dubbed him “Kid Rock.” He was a director of dozens of junior companies mainly in the mineral exploration industry.

The Crown called for a sentence of 3 1/2 years and argued that Reynolds was motivated by greed and that the magnitude of the fraud was significant, involving many companies with international operations, takeovers and international stock transactions.

The defence argued that a conditional sentence order of 20 months to be served in the community would serve the goals of denunciation and deterrence.

Reynolds’ lawyer submitted 32 letters of support describing the offender as being a man of outstanding character, a loving, dedicated and doting father, and a trusted friend who is fiercely loyal.

In imposing sentence, the judge said that with the exception of him being motivated by greed, he accepted the aggravating factors as outlined by the Crown as being present in the case.

He noted that Reynolds was an entrepreneur who left the details to others, retained the services of accountants and lawyers to handle his tax matters, but added that there was no question that his moral culpability was high.

The judge said he also accepted that the mitigating factors as put forward by the defence, including that Reynolds had a “tumultuous” childhood with his father attempting to kill his mother by stabbing her with a screwdriver, were present.

“In addition while there is no guilty plea in this case, the evidence proffered by the Crown was by any measure profoundly complicated and fraught with difficulty,” he said during the sentencing Monday in Vancouver.

Weatherill said he was “particularly impressed” by the volume and content of the letters of support and character references provided to him: “They demonstrate that but for the offences for which he is now being sentenced, Mr. Reynolds is a man of good behaviour who is unlikely to reoffend.”

Conditions of his sentence include a curfew and that he perform 200 hours of community service. He must also pay a fine of $121,000, but due to the fact that he’s in the midst of bankruptcy proceedings, he has been given a year to pay that off.

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This article contains general information only and is not intended to provide a legal opinion or advice. Please consult a lawyer for matters related to your situation before relying on any of the statements made in this article.

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