ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 4804-11A1

DATE: 2013/07/12

B E T W E E N:

BONDFIELD CONSTRUCTION COMPANY LIMITED

James A. LeBer and Marcia J. Oliver, for the Plaintiff

Plaintiff

• and -

LONDON POLICE SERVICES BOARD

Wade Sarasin, for the Defendant

Defendant

• and –

CS & P ARCHITECTS INC., WASYLKO ARCHITECT INC. and CHORLEY & BISSET LTD.

Third Parties

P. John Brunner, for the Third Parties, CS & P Architects Inc., Wasylko Architects Inc.

Mark Galati, for the Third Party, Chorley & Bisset Ltd.

HEARD: June 18, 2013

HOCKIN J.

[1] Bondfield Construction Company Limited (“Bondfield”) is a general contractor and construction manager. In August, 2007, Bondfield entered into an agreement with London Police Services Board (the “Board”) for the renovation and expansion of its headquarters in London.

[2] Work commenced on the signing of the agreement but in November, 2007, the project was delayed when the layout documents for the duct work and the make-up air vents were not delivered. As well, there was a delay in the work when asbestos was discovered. Bondfield alleges that these two problems added 17 weeks to the project.

[3] The language of the contract is the language of the Standard Construction Document CCDC-2 1994 as amended. The dispute resolution part of the contract contained an arbitration provision. After the layout and asbestos problems were discovered, Bondfield retained counsel to advance its damages claim. Steps were taken under the dispute resolution process provided for in Part 8 of the contract but time passed and “to prompt more efficient responses from the Board”, this action was commenced by statement of claim issued on July 29, 2011. There was prompt service on the Board. Its statement of defence and counterclaim was delivered November 24, 2011. The Board inter alia, pleads that the action is out of time. There remains in abeyance, pending the outcome of this, the Board’s motion for partial summary judgment dismissing the ‘delay’ claim.

[4] Bondfield remains eager to arbitrate its dispute with the Board. Therefore, the objective of this motion, the motion to stay, is to compel the Board’s return to an arbitral process to resolve the delay claim.

[5] The background to the delay and asbestos claims is the following. At several site meetings through 2007 and 2008, mention was made by Bondfield of the layout and asbestos delays. By correspondence dated May 30, 2008, Bondfield gave notice to the architectural consultant Wasylko its claim for delay. By report dated January 31, 2009, Mr. Wasylko set out his findings on the claim and recommended that the dispute be resolved pursuant to the contracts’ dispute resolution process. Other problems intervened including claimed deficiencies in the work which prompted the Board to withhold contract funds. On June 10, 2010, counsel for Bondfield wrote to the Board with an invitation to enter into a dispute resolution process which could involve an “independent third party” to avoid the length and expense of litigation. The Board was asked to speak to their law firm on this.

[6] On July 14, 2010, counsel to the Board wrote to Bondfield’s firm to indicate that the Board’s decision was to follow the contract’s dispute resolution process. In fact, the Board asked the consultant to make findings at that point on the Board’s claim of deficiencies. The consultant’s decision and findings by report were provided to the parties October 14, 2010. Counsel for Bondfield by correspondence dated November 3, 2010 delivered its “dispute” to the consultant’s report and suggested that a “Project Mediator” be appointed to assist. On November 12, 2010, the Board’s lawyer suggested someone.

[7] Time passed and by correspondence dated June 6, 2011, counsel for Bondfield delivered to the Board’s law firm a claim’s brief which included particulars of the layout and asbestos delay claims. Counsel to the Board referred the brief to the consultant for a report on June 20, 2011. On July 18, 2011 counsel for the Board indicated that he hoped for an answer on the claim from the Board by the middle of that summer. On July 29, 2011, this action was commenced “to prompt more efficient responses from the Board with the view to proceeding with the mediation once it could be arranged”: para. 32 of Mr. Leber’s affidavit.

[8] As noted, the statement of claim was served and the Board’s defence was in the hands of Bondfield’s law firm by November 24, 2011.

[9] Carriage of the matter for the Board through 2012 was with litigation counsel. Counsel for Bondfield reminded him that there had been some thought given to appointing a mediator and that the consultant consulted in January, 2009, in his report, recommended following the contract’s dispute resolution process to conclude the dispute. There was no answer from the Board to Bondfield’s invitation to turn to Part 8 and so this motion was organized.

[10] The issues are those set out in the moving party’s factum:

1. Does Part 8 of the General Conditions of the Contract constitute an arbitration argument pursuant to the Arbitration Act, 1991;

[11] The clear and unambiguous language of clause 8.2.6 of Part 8 allows for a final resolution of a dispute which falls within the contract by arbitration. Clause 8.2.6 reads as follows:

By giving a notice in writing to the other party not later than 10 working days after the date of termination of the mediated negotiations under para. 8.2.5, either party may refer the dispute to be finally resolved by arbitration under the latest edition of the Rules of Arbitration of CCDC 2 Construction Disputes. The arbitration shall be conducted in the jurisdiction of the Place of the Work.

[12] See also Brock University v. Stucor Construction Limited 33 C.L.R. (3d) 182 (S.C.J.) per Cavarzan J. This case involved the identical contract language. The language of the Standard Construction Document CCDC-2 1994 at paras. 19-22, as follows:

19 The Contract provides that all disputes under the Contract are to be resolved pursuant to the dispute resolution provisions of the Contract. Those provisions contemplate a three-step process by which the dispute must first be submitted to the Consultant for that person’s decision and finding. A party who disputes that finding may within 15 working days send notice of dispute of the finding, an event which triggers mediation. If the mediation is unsuccessful either party may refer the dispute to be finally resolved by arbitration.

20 The preliminary dispute resolution techniques leading up to binding arbitration do not, in my view, alter the character of the dispute resolution provisions of the Contract. The intention of the parties is that disputes will be resolved ultimately by binding arbitration.

21 This interpretation of Part 8 of the Contract is consistent with contemporary law which accords to such provisions a large, liberal and remedial interpretation to give effect to the intention of the parties. See: Automatic Systems Inc. v. E.S. Fox Limited [1995] O.J. No. 461 [Gen. Div.]; Merit Sinclair Developments v. O.R. Haemet Sephardic School, [1998] O.J. No. 5225 [Gen. Div.].

22 Similar dispute resolution provisions have been considered and have been found to be an “arbitration agreement” as defined in the Arbitration Act, 1991. See, in particular, Atyscope Richmond Corp. v. Vanbots Construction Corp., [2001] O.J. No. 638 (S.C.J.).

2. Is Bondfield entitled to rely upon the contract, in particular Part 8 and entitled to an order to stay the action?

[13] The Plaintiff Bondfield seeks to stay the action pursuant to s. 7 of the Arbitration Act, 1991, S.O. 1991, c. 17 and s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C-13.

[14] Section 7 of the Arbitration Act is unavailable to the plaintiff. The section reads as follows:

7.(1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding. 1991, c. 17, s. 7(1).

[15] The ability to move to stay is limited to “another party” to the agreement and the party who has not initiated the proceeding. This is not the plaintiff but the defendant Board. Only the Board could move under s. 7(i) for an order to stay.

[16] However, s.106 of the Courts of Justice Act is available to any party to the action. The section reads as follows:

A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.

[17] The question is whether in this case the court should exercise this jurisdiction to return the dispute to the dispute resolution process set out in Part 8 of the contract.

[18] The defendant Board resists on three bases.

[19] The first is that this motion was brought too late; there has been undue delay. Section 7(2).4 of the Arbitration Act, applies. The second is that the dispute resolution provisions have been “discharged”. There is no reason to invoke the dispute resolution process at this point. See para. 21 of the Board’s factum.

[20] I have concluded that the motion should succeed and the action should be stayed. The statement of law by Newbould J. in EDF (Services) Ltd. v. Appleton and Associates and Appleton and Associates International Lawyers Inc., 2007 36078, [2007] O.J. No. 3281, (ON S.C.) at paragraphs 36, 37 and 42 represents an applicable statement of the law:

[36] After the appointment for the assessment of Associates’ account was served, EDF by its solicitors in Ontario served notice on June 25, 2007 that EDF was invoking the arbitration provisions set out in the Retainer Agreement. Under the law of Ontario, it is not for the court on an application for a stay of proceedings to reach any final determination as to the scope of the arbitration agreement or whether a particular party to the legal proceedings is a party to the arbitration agreement. Those are matters within the jurisdiction of the arbitral tribunal. Only where it is clear that the dispute is outside the terms of the arbitration agreement, or that a party is not a party to the arbitration agreement, should the court reach any final determination in respect of such matters on an application for a stay of proceedings. Where it is arguable that the dispute falls within the terms of the arbitration agreement or that a party to the legal proceedings is a party to the arbitration agreement, the stay should be granted and those matters left to be determined by the arbitral tribunal. See Dalimpex Ltd. v. Janicki (2003), 2003 34234 (ON CA), 64 O.R. (3d) 737, para. 21.

[37] In Dell Computer Corp. v. Union Des Consommateurs, 2007 SCC 34, 2007 S.C.C. 34, a case dealing with a class action under the Civil Code of Quebec, the claim was referred to arbitration. While that case did not expressly purport to be a case decided under our common law principles, it is a case of our Supreme Court and therefore instructive. Deschamps J. for the majority laid down a general rule that a challenge to the arbitrator’s jurisdiction must be resolved first by the arbitrator unless the issue is based solely on a question of law. She stated:

First of all, I would lay down a general rule that in any case involving an arbitration clause, a challenge to the arbitrator’s jurisdiction must be resolved first by the arbitrator. A court should depart from the rule of systematic referral to arbitration only if the challenge to the arbitrator’s jurisdiction is based solely on a question of law.

If the challenge requires the production and review of factual evidence, the court should normally refer the case to arbitration, as arbitrators have, for this purpose, the same resources and expertise as courts. Where questions of mixed law and fact are concerned, the court hearing the referral application must refer the case to arbitration unless the questions of fact require only superficial consideration of the documentary evidence in the record.

[42] … Where parties have agreed by contract that they will have claims decided by arbitrators, it is the policy of the Ontario courts to require that to be done. …

[21] As well, there is this useful instruction by Trafford J. in Cityscape Richmond Corp. v. Vanbots Construction Corp., [2001] O.J. No. 638, 8 C.L.R. (3d) 196, at para. 19:

19 In determining the arbitration application, it is helpful to begin with a brief statement of its essential principles. The Act entrenches the primacy of arbitration proceedings over judicial proceedings once the parties have entered into an arbitration agreement. This legislation provides a forceful statement signaling a shift in public policy and attitude towards the resolution of disputes in civil matters through consensual dispute resolution mechanisms. See Ontario Hydro v. Dennison Mines Limited, [1992] O.J. No. 2948 (Blair, J.). The Act is designed to encourage parties to resort to arbitration as a method of resolving their disputes in commercial and other matters and to require them to hold to that course once they have agreed to do so. See Buck Brothers Limited v. Frontenac Builders Limited, [1994] O.J. No. 37 (Sutherland, J.). Section 8(2) of the Act empowers the arbitral tribunal to determine any questions of law that arise during the arbitration. Section 17(1) of the Act empowers the tribunal to decide questions of its own jurisdiction including questions respecting the existence or validity of the arbitration agreement itself. Section 31 gives the tribunal broad powers to decide disputes in accordance with law and equity and makes reference to the power to order specific performance, injunctions and other equitable remedies. Arbitration clauses are to be given a large, liberal and remedial interpretation to effectuate the dispute resolution goals of the parties. They survive the completion of the contract as well as a fundamental breach. See Automatic Systems Inc. v. E.S. Fox Limited (1995), 19 C.L.R. (2nd) 35 (S.C.J.).

[22] The defendant Board’s complaints of delay and non-compliance with the time limits set out in Part 8 are at best mixed questions of fact and law which are matters for the arbitrator. One should not overlook the general discretion of the arbitrator to decide questions on the basis of law and equity and in the case of Part 8 of the contract, the guiding theme of flexibility and fairness which manifests itself in General Condition 1.3.2 of the contract in these words:

1.3.2 No action or failure to act by the Owner, Consultant, or Contractor shall constitute a waiver of any right or duty afforded any of them under the Contract, nor shall any such action or failure to act constitute an approval of or acquiescence in any breach there under, except as may be specifically agreed in writing.

[23] In short, the Board’s complaints of delay and a failure to follow the time limits or Bondfield’s answer of acquiescence may be dealt with by the arbitrator. The parties accepted the Standard Construction Document CCDC-2. They should now be governed by its language and their submission to a dispute resolution process which includes arbitration.

[24] I see no prejudice in this result. One would have thought this was the better course in any event.

[25] Therefore an order may issue that this action be stayed pursuant to s. 106 of the Courts of Justice Act. Costs submissions, short, as follows: Bondfield by month’s end; the Board by August 15, 2013. Counsel may suggest a figure for costs thrown away in addition to the costs of this motion.

“Justice P.B. Hockin”

Justice P. B. Hockin

Released: July 12, 2013