2257508 Ontario Limited v. Maram Building Corporation, 2015 ONSC 3432

2257508 Ontario Limited v. Maram Building Corporation, 2015 ONSC 3432

COURT FILE NO.: CV-14-4394-00

DATE: 2015-01-19

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 2257508 Ontario Limited c.o.b. as Hunter Electric v. Maram Building Corporation

BEFORE: FAIRBURN J.

COUNSEL: Vito S. Scalisi, for the Applicant

Sean M. Clarke, for the Respondent

HEARD: January 13, 2015

ENDORSEMENT

The Relief Sought

1The applicant 2257508 Ontario Ltd, carrying on business as Hunter Electric [“Hunter”], seeks an order for the appointment of The Honourable Donald R. Cameron Q.C., as an arbitrator in respect to a payment and delay claim arising from a dispute between Hunter and Maram Building Corp. [“Maram”]. The relief is sought by way of s. 10 of the Arbitration Act, 1991, S.O. 1991, c. 17 (the “Act”).

Facts and Argument

2It is not in dispute that Maram contracted with Defence Construction (1951) Limited [“owner”] on February 8, 2012, to build an “All Ranks Dining Facility” at 118 Rafah Crescent, BLDG #S164 in Borden, Ontario. In turn, Maram subcontracted with Hunter on February 29, 2012, to perform portions of the prime contract, namely electrical and communication related work. Hunter performed work pursuant to that subcontract and now seeks payment for the supply of materials and labour, as well as compensation for a delay claim against Maram. Hunter and Maram have been unable to resolve their dispute about the money owing and, therefore, Hunter seeks to have an arbitrator appointed.

3Hunter suggests that Article 19.1 of the subcontract governs. Article 19.1 maintains that “any and all disputes or claims between the Contractor and the subcontractor arising out of this subcontract shall be determined by a single arbitrator acceptable to both”. In the event that Maram and Hunter are unable to agree on a single arbitrator, “then one shall be appointed in accordance with the provisions of the Arbitration Act”. Hunter says that they are unable to agree with Maram, that they have reached an impasse, and that it is time for the court to appoint an arbitrator in accordance with Article 19.1 of the subcontract and s. 10 of the Act. Hunter gave notice of the fact that they wanted to go to arbitration in a letter dated July 2, 2014. In that letter, Hunter suggested the names of three separate arbitrators, one of which is The Honourable Donald R. Cameron.

4Maram’s position is that Article 19.1 of the subcontract does not govern. Rather, relying upon Article 1.2 of the subcontract, which states that it is to be performed in accordance with the prime contract, Maram suggests that the prime contract between it and the owner is the governing document for purposes of this application. Article 1.3 of the subcontract suggests that “[i]n the event of any conflict between the terms of this agreement [the subcontract] and the prime contract, the prime contract shall govern.”

5Maram says that the prime contract stipulates notice conditions if there is to be a claim for extra expense, loss or damage attributable to, among other things, delay. Maram points to clauses in the prime contract that reference certain notice periods: sections 6.5.4, 6.5.8 and 8.3.2. Maram says that Hunter missed these notice periods to make a complaint and they are, therefore, barred from doing so. They also say that ordering arbitration at this stage could give rise to the undesirable effect of having a multiplicity of proceedings and risk inconsistent findings. Maram’s concern arises from the fact that they have retained a consultant and are in the process of reviewing documentation with respect to making a potential claim against the owner. There is no certainty as to whether Maram will make any such claim and, if so, what it will be for.

Findings

6Article 19.1 of the subcontract is clear: “any and all disputes or claims between the Contractor and the subcontractor arising out of this subcontract shall be determined by a single arbitrator …”. Where the parties cannot agree on a single arbitrator, then the matter falls to the Arbitration Act. Section 10 of the Act reads:

10. (1) The court may appoint the arbitral tribunal, on a party’s application, if,

(a) the arbitration agreement provides no procedure for appointing the arbitral tribunal ….

Section 9 of the Act says that if an arbitration agreement does not specify the number of arbitrators who form the tribunal, then it shall be composed of one arbitrator.

7The subcontract does not provide for a procedure for appointing the arbitral tribunal and, as such, it falls to the court under s. 10(1)(a). I do not understand the respondent to dispute this fact. Rather, as I understand the respondent’s position, the only issue is whether the notice provisions within the prime contract have been missed by the applicant, precluding them from invoking s. 10 of the Act. The answer is no. The applicant has been pursuing payment from the respondent. When it became clear that this pursuit was not successful, they wrote a letter dated July 2, 2014, placing the respondent on notice of the need for arbitration to resolve the dispute. To the extent that the notice provisions within the prime contract govern, they have not been breached.

8In any event, as pointed out by counsel to the applicant during oral argument, s. 5.8.6 of the prime contract also contains an arbitration clause. As per Article 1.3 of the subcontract, to the extent that the contracts are inconsistent, then then prime contract governs. At Article 5.8.6 of the prime contract, it is said that the “[c]ontractor shall, at the request of any claimant, submit to binding arbitration those questions that need to be answered to establish the entitlement of the claimant to payment.” In other words, there is a binding arbitration clause within the prime contract which is at least as strong, if not stronger, than that contained within the subcontract.

9Finally, the respondent’s alternative argument that the appointment of an arbitrator could lead to a multiplicity of proceedings and give rise to inconsistent results is unpersuasive against the factual backdrop of this case. While it may well be better to have all claims decided under the umbrella of a single proceeding, there is no other proceeding in sight. Nor is there any certainty that one will ever be commenced. In the circumstances, Hunter should be able to have an arbitrator appointed.

Order

10I order that The Honourable Donald R. Cameron, Q.C. be appointed as an arbitrator in this matter.