A recent British Columbia decision, Kohut v. Yagelniski 2026 BCSC 714, concerned the judicial review of a family arbitration award arising from a “last best offer” arbitration. The case presented an unusual challenge for both the court and the parties because the arbitrator provided no written reasons, leaving the court with no decision to review.
The parties had scheduled several trial dates, but after their final trial date was adjourned, they agreed to submit their outstanding family law disputes to arbitration following an unsuccessful mediation. The mediator subsequently assumed the role of arbitrator and was retained to determine the remaining issues.
During the first week of the arbitration, the parties tendered affidavit evidence as their evidence-in-chief and were cross-examined on their affidavits. The arbitrator also admitted expert evidence, including a preliminary business valuation report and real property appraisals.
At the conclusion of the first week, the parties agreed to abandon the conventional arbitration process in favour of a “last best offer” arbitration. The arbitrator prepared a document entitled Process for Last Best Offer Arbitrations, and two weeks later the parties formally agreed to adopt that procedure for resolving their dispute.
No further evidence was adduced, leaving the evidentiary record confined to the parties’ affidavit evidence, their cross-examinations, and the expert reports already admitted. The anticipated testimony of the business valuator became unnecessary after the parties agreed to exchange “last best offers.” If neither proposal was accepted between the parties, the arbitrator was authorized to select the offer he considered fairest in light of the evidence before him. The parties also expressly agreed that the arbitrator would not be required to provide written reasons for his decision.
The arbitrator advised the parties that the process afforded him no discretion to modify either proposal, combine elements from competing offers, or craft an alternative outcome. His role was limited to selecting one offer in its entirety—an “all-or-nothing” determination. The parties were further advised that, because no reasons would be provided, the resulting award would effectively be insulated from appellate review.
Although the style of cause in Justice Wilson’s reasons described the proceeding as a judicial review of the arbitration award, the reasons repeatedly referred to the matter as an appeal. That distinction is significant. Judicial review is ordinarily the mechanism used to challenge administrative decisions rather than arbitral awards rendered by a judicial decision-maker, and it is generally commenced by petition. Justice Wilson observed that the matter had instead been brought within the existing family law proceeding. As the respondent raised no objection to the procedure, the Court proceeded on the assumption—without deciding—that the chosen process was procedurally appropriate.
Grounds of Appeal
Ms. Kohut advanced 14 grounds of appeal, including allegations that:
- the arbitrator mischaracterized separate property as family property;
- failed to reapportion family property;
- breached the principles of natural justice and procedural fairness;
- exceeded the scope of his jurisdiction;
- misapprehended the evidence;
- improperly accepted the respondent’s final offer; and
- erred in dismissing her claims for prospective and retroactive spousal support, as well as retroactive child support.
The appellant relied on JEA v. VJA, 2022 BCSC 171, arguing that where a party’s final offer is inconsistent with the objectives of the Family Law Act, the arbitrator is entitled—and, by implication, required—to reject that offer in favour of the competing proposal.
The Court’s Analysis
Justice Wilson concluded that both British Columbia and Ontario courts have recognized the legitimacy of “last best offer” arbitration—also known as “baseball arbitration”—citing McLaren v. Casey, 2016 BCSC 169, and Kroupis-Yanovski v. Yanovski, 2021 ONSC 5312.
The Court identified two fundamental obstacles to the appellant’s challenge. First, the arbitrator had issued no reasons, leaving the Court with no legal analysis or factual findings to review. Second, the appellant’s contention that the arbitrator had erred in his findings of fact was untenable because the arbitrator made no findings of fact at all. His mandate was simply to select one of the parties’ final offers.
Justice Wilson also rejected the appellant’s reliance on JEA v. VJA. He held that the decision merely recognizes that an arbitrator retains the discretion to reject an offer that is inconsistent with the Family Law Act and select the competing offer. It does not authorize a reviewing court to revisit the merits of that discretionary choice. Moreover, by abandoning the arbitration hearing in favour of the “last best offer” process before all of the evidence had been completed, the parties left the evidentiary record incomplete, further limiting the scope of any subsequent review.
The appellant also argued that the respondent’s offer improperly prevented any review of child support until 2028 and that this unlawful provision required the entire award to be set aside. The respondent conceded that the provision was unenforceable and advised that he would not seek to rely upon it.
Justice Wilson rejected the appellant’s submission. Relying on s. 19.20(2) of the Family Law Act, he noted that:
“Despite any agreement of the parties to a family law dispute, a provision of an arbitration award that is inconsistent with this Act or the Divorce Act (Canada) is not enforceable.”
The Court held that the offending term was severable. While the provision restricting a future child support review could not be enforced, its invalidity did not undermine the validity of the balance of the arbitration award.
Conclusion
Justice Wilson observed that a different arbitrator might have divided the parties’ property differently or awarded spousal support. However, that was not the issue before the Court. The question was whether the arbitrator committed a reviewable error of law by selecting the respondent’s final offer. On the record before the Court, the appellant failed to establish such an error. The appeal was therefore dismissed, with costs awarded to the respondent following the 10-day arbitration hearing.
Kohut v. Yagelniski demonstrates both the strengths and the weaknesses of “last best offer” arbitration. Perhaps most importantly, the arbitrator ensured that the parties fully understood the unique features and consequences of the process before they elected to proceed.
The case also illustrates several limitations inherent in this form of arbitration:
- the “all-or-nothing” format may produce outcomes that appear inequitable;
- it eliminates the decision-maker’s ability to craft nuanced or tailored remedies;
- it increases litigation risk because the successful outcome is difficult to predict;
- it is generally better suited to disputes involving a single discrete issue than multiple interconnected family law claims;
- it limits the availability of equitable solutions;
- it is ill-suited to cases where credibility findings are central to the outcome; and
- unsuccessful parties may be more dissatisfied with an award that adopts one proposal wholesale.
Balanced against those disadvantages are several well-recognized benefits. “Last best offer” arbitration encourages parties to make realistic and reasonable settlement proposals, narrows the issues in dispute, forces participants to assess litigation risk objectively, discourages decision-makers from simply “splitting the difference,” and can significantly reduce both the time and cost required to resolve a dispute.
**This article was first published in LAW360, a publication of LexisNexis Canada.