ONTARIO
SUPERIOR COURT OF JUSTICE
SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: CV-14-504264 and 5 other actions
DATE: June 11, 2015
RE: Carillion Construction Inc. v Imara (Wynford Drive) Limited and AGA Khan Foundation Canada/ Fondation AGA Khan Canada
BEFORE: Master C. Albert
COUNSEL:
B. Reynolds, S. Vogel and K. Kirkpatrick for moving parties Imara and AGA Khan Foundation, fax: 416-361-2741
B. Bowles and J. Quigg, for the responding party Carillion, fax: 416-368-3467
W. Sybrous for the responding party Flynn and as representative amicus curiae for subcontractor and sub-subcontractor lien claimants, fax: 905-639-8017
MOTION HEARD: February 11, 2015
Master C. Albert
[1] Does arbitration trump litigation if it would cause a multiplicity of proceedings and exclude necessary parties?
[2] The Aga Khan Foundation selected Toronto as the venue for its landmark Aga Khan Museum of Islamic arts and culture and adjacent Ismaili Centre. Multiple contractors, subcontractors and sub-subcontractors participated in the construction, many of whom claim that they have not been paid.
[3] As of February 11, 2015 when the motion was argued more than 50 construction lien claims had been registered against the property claiming payment for services and materials supplied in the aggregate amount of over $70 million dollars. More than thirty-five civil actions have been brought together in a single reference conducted as a form of class action pursuant to sections 57 through 60 of the Construction Lien Act, R.S.O. 1990, c.C.30 (the “Act”).
[4] Imara (Wynford Drive) Limited as developer and AGA Khan Foundation Canada/ Fondation AGA Khan Canada as land owner, collectively referred to in these reasons as “Imara”, ask the court to stay the five court actions issued by Carillion Construction Inc. (“Carillion”) as construction manager in one contract and as general contractor in four contracts, and divert the dispute as between Imara and Carillion to arbitration pursuant to contractual arbitration provisions. The subcontractors and sub-subcontractors who registered lien claims would not be parties to the arbitration. Imara, in its own thirty-five million dollar civil action against Carillion and in its defence and counterclaim in the five Carillion lien actions, raises issues of delay, deficiencies and completion costs. Carillion, in turn, raises the same issues in its pleadings in response to the actions brought by many of the subcontractors.
[5] The issue central to this motion to stay some but not all of the court actions to allow some but not all of the claims to be arbitrated is whether the Carillion lien claim actions, which are included in the construction lien reference, should be stayed while Imara and Carillion participate in a private arbitration that excludes many lien claimants who have an interest in the outcome of the arbitration. The arbitrator will be required to make findings of fact and liability and quantify damages arising from delay, deficiencies and incomplete work. This motion raises concerns of a multiplicity of proceedings and potential unfairness to Carillion and many of the other lien claimants.
[6] For the reasons that follow I conclude that on the facts and circumstances of this case the motion for a stay must be dismissed.
I. Relevant facts (See Schedule “A”: Chronology)
a. Significant dates and events
[7] The Aga Khan Foundation, having selected Toronto as the venue for the project, purchased land at 59 and 75 Wynford Drive, Toronto. Imara (Wynford Drive) Limited is the developer. Both the Aga Khan Foundation and Imara are owners as defined by the Act.
[8] On December 11, 2007 Imara and Carillion contracted for Carillion to act as construction manager on the project. I refer to this contract as the “CM contract”.
[9] On April 29, 2010 Imara and Carillion executed four separate contracts for Carillion to act as general contractor pursuant to individual guaranteed maximum price contracts for each of the four components of the project: the Aga Khan Museum, the Ismaili Centre, a central parking garage and landscaping/ site services. I refer to these as the “GMP contracts”.
[10] The project was not completed by the contractual completion date of November 20, 2012. The certificate of substantial completion was published on February 14, 2014.
[11] On December 30, 2013 Carillion's formally asked Imara's Project Consultant to approve change orders authorizing additional payment for work that Carillion claims as changes and extras to the original scope of work. Imara provided its responding submissions to the Project Consultant on January 7, 2014. On January 17, 2014 the Project Consultant issued his findings rejecting the change orders.
[12] On March 31, 2014 Carillion registered five construction liens, one arising from the CM contract and four arising from each of the four GMP contracts. On May 15, 2014 Carillion issued five construction lien actions and registered five certificates of action for each of its respective lien claims. Particulars of the lien claims and corresponding actions are set out in Schedule “B”.
[13] On April 22, 2014 Imara issued civil action CV-14-502128 against Carillion for claims arising from the project, claiming five million dollars ($5,000,000.00) for breach of the CM contract plus ten million dollars ($10,000,000.00) for breach of the GMP contracts plus thirteen million dollars ($13,000,000.00) in damages for delay plus seven million dollars ($7,000,000.00) for inconvenience, disruptions and loss of productivity for a total claim in contract and in negligence of thirty-five million dollars ($35,000,000.00). I refer to this as the “Imara civil action”. Imara explains that it issued the Imara civil action because it wanted to publicly clarify its position regarding the state of construction of the high profile project.
[14] On May 14, 2014 Carillion issued five lien claim actions, one for each of the five lien claims registered against the property. Imara pleaded the same causes of action in its counterclaim against Carillion in the five lien claim actions as it pleaded in the Imara civil action[1]. Imara acknowledges that if the five Carillion lien actions are stayed then Imara’s civil action should also be stayed.
[15] Carillion intends to issue third party claims in the Imara civil action against many of the subcontractors where Imara claims damages for delay, deficiencies and incomplete work. Carillion also proposes to seek leave to issue third party claims against Imara in the subcontractors' counterclaims where delay, deficiencies and completion are in issue.
[16] Imara and Carillion settled the issue of holdback. The Carillion lien claim amounts were reduced once holdback was released on June 16, 2014, as reflected in the summary at Schedule “B”.
[17] On June 26, 2014 one of the subcontractor lien claimants, 975866 Ontario Limited o/a Tagg Industries, obtained a judgment of reference under the Act in action CV-14-498371 from Justice Archibald, referring its construction lien claim to the construction lien master under section 58 of the Act. The Act creates a class action type of proceeding. Sections 57, 58 and 60 of the Act, read together, join as parties to the construction lien reference all persons entitled to notice of trial. By reason of these statutory provisions all lien claimants in the 50 plus lien claims registered against the project became parties to the reference. The reference commenced on November 24, 2014 before me.
[18] Imara asserts that settlement negotiations continued through to November 20, 2014 when Imara issued a notice terminating negotiations. On November 24, 2014 Imara delivered a notice of arbitration, incorporating by reference the statement of claim in the Imara civil action.
[19] Also on November 24, 2014 the parties to the reference attended the first hearing for directions in the reference trial. On the same date Carillion registered five additional lien claims for finishing work.
[20] Beginning with the first lien claim registered on September 19, 2013 by Cofely Adelt Ltd. for $739,772.31 and up to the date of the motion hearing on February 11, 2015 over forty lien claims had been registered against the project by subcontractors and sub-subcontractors, with a total of over thirty-five million dollars of lien claims registered by twenty two lien claimants other than Carillion. Including the Carillion lien claims more than fifty lien claims have been registered for a total of over seventy million dollars in lien claims, although some of the amounts claimed by subcontractors and sub-subcontractors are likely subsumed in one or more of the Carillion lien claims.
[21] All of the lien claims by lien claimants other than Carillion have been vacated upon the posting of security to stand in the place of the lien claims. By the time the motion was heard, a few of the smaller lien claims had been settled and discharged. The summary attached as Schedule “B” to these reasons provides particulars of the lien claims registered prior to the date of the motion hearing, together with details where the lien claims have been vacated or discharged. Lien claim actions by subcontractors who named Imara as a defendant were discontinued as against Imara upon the posting of security to vacate the lien claims. However, Carillion intends to seek leave to add Imara as a third party to subcontractor lien claims where issues of delay, deficiencies and incomplete work are raised.
[22] There is no contractual relationship between Imara and the subcontractors. The subcontractors are not invited to participate in the proposed arbitration. Nor are they prepared to pay the cost of private arbitration. If the dispute between Imara and Carillion is arbitrated privately the subcontractors and sub-subcontractors would be excluded from participating. All parties acknowledge that delay, deficiencies and incomplete work are issues in many of the lien claim actions and counterclaims, with Imara, Carillion, the subcontractors and the sub-subcontractors each blaming one or more of the others.
(Decision continues with analysis and concluding reasons exactly as in the source.)
BETWEEN:
Carillion Construction Inc.
Plaintiff (Responding)
- and -
Imara (Wynford Drive) Limited
Defendant (Moving)
- and -
Flynn Canada Ltd.
Amicus curiae (Responding)
REASONS FOR DECISION:
MOTION TO STAY
Master C. Albert
Released: June 11, 2015