Court File and Parties

COURT FILE NO.: CV-21-00654447-0000

DATE: 20210820

SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: BAFFINLAND IRON MINES LP and BAFFINLAND IRON MINES CORPORATION, Applicants

AND:

tower-ebc/S.E.N.C., Respondent

BEFORE: L. A. Pattillo J.

COUNSEL: Sam Rogers and Adam Dobkin, for Concassés de la Rive-Sud inc. and Forage et Dynamitage de la Rive-Sud inc., the Moving Parties

Kent E. Thomson and Maureen Littlejohn, for the Applicants, Respondents on the motion, Baffinland Iron Mines LP and Baffinland Iron Mines Corporation

HEARD: By Videoconference: July 9, 2021

ENDORSEMENT

Introduction

[1] This is a motion by Concassés de la Rive-Sud inc. and Forage et Dynamitage de la Rive-Sud inc. (collectively “CRS”) for an order, pursuant to r. 13.01 of the Rules of Civil Procedure, granting them leave to intervene as an added party to the application brought by Baffinland Iron Mines LP and Baffinland Iron Mines Corporation (collectively “BIM”) against the respondent, Tower-EBC/S.E.N.C. (“TEBC”).

[2] For the reasons that follow, the motion is dismissed. In all the circumstances, I am not satisfied that CRS meets the criteria set out in r. 13.01 such that leave should be granted.

Background

[3] CRS is a privately owned drilling, blasting, and crushing corporation headquartered in Lévis Quebec.

[4] BIM owns and operates the Mary River Mine on Baffin Island in Nunavut. To expand its operations, BIM planned to build a railway to transport ore from the Mine to the port at Milne Inlet, a distance of approximately 100 kilometers, together with related infrastructure (the “Project”).

[5] TEBC is a general partnership formed between EBC Inc. and Tower Arctic Limited for the purpose of performing work on the Project.

[6] In May 2017, BIM issued letters of acceptance to TEBC following which the parties entered into two construction contracts to carry out the earthworks for the Project (the “Contracts”). The Contracts contained a clause requiring all disputes which could not be resolved to be determined by arbitration.

[7] In turn, on June 1, 2017, TEBC entered into a sub-contract with CRS for drilling, crushing, and blasting services in connection with the Contracts.

[8] In order to meet the schedule which required CRS to drill, blast and crush approximately 235,000 metric tonnes of crushed stone beginning in the fall of 2017, in September and October 2017, CRS sent specialized equipment to Baffin Island in order to meet the schedule.

[9] The Project experienced lengthy and unanticipated delays in obtaining the permits required under applicable Nunavut law. In the absence of the permits, on September 25, 2018, BIM sent notices of termination to TEBC pursuant to the Contracts.

[10] On July 9, 2019, TEBC, in accordance with the Contracts, commenced the arbitration challenging BIM’s right to terminate the Contracts and claiming damages arising from the termination. Among its claims, TEBC sought recovery of amounts that would be owed to CRS for “outstanding standby charges, the cost of spare parts, and the lost profit”. CRS’ President, and sole owner, Francois Morissette, swore an affidavit in support of TEBC’s claim.

[11] BIM subsequently filed a defence to TEBC’s claim and the arbitration proceeded before a three-member Panel. The hearing on the merits was set for May 20, 2020 to June 5, 2020.

[12] On April 7, 2020, on the consent of the parties, the Panel issued Procedural Order No. 3, which provided, in part, that counsel for CRS could represent CRS witnesses during their testimony at the merits hearing for the purposes of advancing the CRS claim component of TEBC’s claim. CRS’ counsel’s participation was limited to examination-in-chief of CRS’ witnesses, cross-examination and leading re-examination or reply evidence of CRS’ witnesses and cross-examination of BIM’s expert witnesses on evidence relating only to the CRS component of TEBC’s claim.

[13] The Order further provided that CRS, its witnesses and counsel would be bound by the same confidentiality obligations of the parties; that its counsel’s participation would not alter the equal allocation of time at the hearing and that CRS’ counsel would be permitted to attend the hearing when not leading evidence from the CRS’ witnesses.

[14] The Order confirmed expressly that “BIM’s consent to the MT Participation [CRS’ counsel] on the terms above is without prejudice to its position that CRS is not a party to the Arbitration.”

[15] On December 9, 2020, the Panel issued a Partial Final Award finding that BIM had wrongfully terminated the Contracts. The Panel split, however, in respect of the award of damages. The majority awarded TEBC damages in excess of $91 million, excluding interest and costs, which amount included an amount of $12,982,803 on account of CRS’ lost profit and standby charges. A Partial Dissent from one member of the Panel disagreed with portions of the majority’s damage award including the award in respect of CRS.

[16] On January 8, 2021, BIM commenced the application seeking, among other things, an order setting aside the Arbitral Award pursuant to s. 46 of the Arbitration Act, 1991, S.O. 1991, c.17 (the “Act”); an order granting BIM leave to appeal the Arbitral Award under s. 45(1) of the Act; and, if leave to appeal is granted, an order granting the appeal and setting aside or varying the Arbitral Award as necessary. The notice of application was subsequently amended on May 10 and June 17, 2021, to allege procedural unfairness and encompass the Panel’s cost award.

Intervention

[17] Rule 13.01 provides:

13.01 (1) A person who is not a party to a proceeding may move for leave to intervene as an added party if the person claims,

a) an interest in the subject matter of the proceeding;

b) that the person may be adversely affected by a judgment in the proceeding; or

c) that there exists between the person and one or more of the parties to the proceeding a question of law or fact in common with one or more of the questions in issue in the proceeding.

(2) On the motion, the court shall consider whether the intervention will unduly delay or prejudice the determination of the rights of the parties to the proceeding and the court may add the person as a party to the proceeding and may make such order as is just.

[18] The three criteria set out in r. 13.01 (1) are disjunctive, not conjunctive. A person need only satisfy one of the three criteria set out in r. 13.01 (1) to be entitled to apply for leave to intervene: Bennett Estate v. Iran (Islamic Republic of), 2013 ONCA 623 at para. 15.

[19] Even if the moving party establishes one of the requirements in r. 13.01 (1), subsection (2), after requiring the court to consider whether the intervention will unduly delay or prejudice the determination of the rights of the parties to the proceeding, gives the court a discretion as to whether leave should be granted. In exercising that discretion, the court is to consider the nature of the case, the issues that arise, and the likelihood of the proposed intervenor being able to make a useful contribution to the resolution of the appeal without causing injustice to the immediate parties: Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990) 1990 CanLII 6886 (ON CA), 74 O.R. 164 (Ont. C.A.).

Discussion

[20] CRS submits that it meets the criteria set out in r. 13.01(1) in two respects: first, it has an interest in the subject matter of the proceeding and second, it may be adversely affected by a judgment in the application. Further, its intervention will not unduly delay or prejudice the proceeding. In that regard, it seeks to rely on a seven-page affidavit from Mr. Morissette, conduct no more than one and a half hours of cross-examination of BIM’s witnesses, file a 25-page factum and make 70 minutes of oral submissions.

[21] In respect of an interest in the subject matter of the proceeding, CRS relies on BIM’s agreement to its involvement in the arbitration, its involvement in the Project and the award made in the arbitration in respect of its damages. It submits that if the majority award concerning its damages is set aside, it will receive nothing and must re-litigate the quantification of its damages in a new proceeding. On the other hand, if the majority award is upheld, CRS will be entitled to $12,982 million of that award through TEBC. CRS further submits it has also expended a significant amount of time and money in assisting TEBC in its claim in the arbitration.

[22] CRS effectively submits that its financial interest in the outcome is sufficient to establish an interest in the subject matter of the application. In support, it relies on Durham Area Citizens for Endangered Species v. Ontario (Minister of Natural Resources and Forestry), 2015 ONSC 7167 (OSC) and PCL Industrial Management Inc. v. Agrium Products Inc, 2015 SKCA 55 (Sask. C.A.).

[23] I accept that CRS has a financial interest in the outcome or result of the proceeding. In my view, however, that does not amount to an interest in the subject matter of the proceeding. In Steeves v. Doyle Salewski Inc., 2016 ONSC 2223 (ONSC), which, like this motion, was a motion for leave to intervene in an application to set aside an arbitration award, the court dismissed the motion, in part, because while the proposed intervenors may have an interest in the outcome (the ramifications of the decision on other pending proceedings) they did not have an interest in the subject matter of the proceeding.

[24] See too: LPIC v. Geto Investments Ltd., [2002] O.J. No. 378 (S.C.J.) at para. 18.

[25] The cases CRS relies on do not support its position that a financial interest creates an interest in the subject matter of the proceeding. Durham Area Citizens bears no resemblance to this case. There, the proposed intervenor was the proponent of a wind turbine project who enjoyed full party status before the Environmental Review Tribunal. The environmental interest group’s application for judicial review of the Tribunal’s decision inexplicably failed to add the proposed intervenor as a party. Further, it was not contested that the proposed intervenor met the criteria for intervention under r. 13.01(1). Further, PCL Industrial was decided under different procedural rules and factual circumstances and is not relevant to the issue or binding on this court.

[26] The subject matter of the application concerns the construction of the Contracts. BIM alleges in part that the majority of the Arbitral Tribunal improperly acted outside its jurisdiction in awarding TBEC damages in respect of stand-by charges, CRS’ losses and loss of profits on additional quantities of work.

[27] I do not accept that BIM’s allegation that the Arbitral Tribunal lacked jurisdiction to consider TEBC’s claim for CRS’ losses creates a legal interest of CRS in the subject matter of the proceeding. Whether TEBC can pursue a claim for CRS’ losses pursuant to the Contracts is an issue to be decided between TEBC and BIM. CRS is not a party to the Contracts.

[28] Finally, I do not consider that the fact that BIM consented to the Order assists CRS. CRS’ participation in the arbitration was very limited. It was not a party to the arbitration nor was it permitted to make any submissions concerning TEBC’s entitlement to claim damages on account of CRS’ losses. Its role was effectively to permit its counsel to act as co-counsel to TEBC to lead evidence to support TEBC’s claim for CRS’ losses. BIM’s consent to the Order does not amount to an agreement by BIM that CRS has an interest in the subject matter of the application.

[29] CRS has not established that it has an interest in the subject matter of the application which involves the construction of the Contracts between BIM and TEBC.

[30] CRS further submits that it may be adversely affected by a judgment in the proceeding, thereby satisfying the second criteria under r. 13.01 (1)(b). In support it relies on the same financial reasons discussed. If the award is set aside it will no longer be entitled to $12,982 million plus interest on account of its losses.

[31] In order to establish an adverse impact, the proposed intervenor must show an adverse impact in respect of the proceeding in a greater way than any member of the public: McIntyre Estate v. Ontario, [2001] O.J. No. 3206 (C.A. Ch.) at para. 21, citing John Doe v. Ontario (Information and Privacy Officer) (1991), 1991 CanLII 8373 (ON SCDC), 87 D.L.R. (4th) 348 (Ont. Div. Ct.).

[32] Similar to the reasoning in McIntyre, while superficially CRS can show a greater adverse impact than a member of the public in respect of the possible outcome of the application, in my view, the impact is incidental to and separate from the subject matter of the application given the fact that CRS is a non-party to the arbitration and its claim is against TEBC, not BIM.

[33] Turning to the question of whether the proposed intervention will unduly delay or prejudice the determination of the rights of the parties to the proceeding, CRS submits that adding it as a party will not increase the complexity or delay the proceeding. BIM submits that apart from scheduling concerns, CRS’ presence in the application risks prejudicing the court’s ability to efficiently determine the rights of the parties and add to the costs and complexity.

[34] I am unable to determine the issue given the record before me. On the one hand, CRS wishes to be added as a party with full rights to file evidence, cross-examine witnesses, file a full factum, and argue. In the absence of seeing both CRS’ and TBEC’s factums, it is hard to judge whether that will unduly delay or prejudice BIM apart from having two parties opposing rather than one. I am also not certain as to how the argument will be split between TEBC and CRS such that there will be no duplication.

[35] That said, I am prepared to assume that CRS’ intervention will not unduly delay or prejudice the determination of the parties’ rights in the application.

[36] Finally, I turn to a consideration as to whether I should exercise my discretion to grant leave to CRS to intervene.

[37] The dispute in issue is a private matter between two parties to the Contracts, dealt with by way of private arbitration. The courts are reluctant to permit third parties to intervene in purely private and commercial litigation. See: Jones v. Tsige, 2011 CanLII 99894 (ON CA), [2011] O.J. No. 4276 (C.A. Ch.) at para. 26; Authorson v. Canada, 2001 CanLII 4382 (ON CA), [2001] O.J. No. 2768 (C.A. Ch.). In my view, it is more so where private arbitration is involved. The fact that TEBC asserted a damage claim in respect of CRS’ losses and that CRS participated in the arbitration in assisting TEBC does not change the nature of the proceeding. CRS is not a party to the Contracts and was not a party to the arbitration.

[38] I am also satisfied based on the issues that CRS’s intervention will result in no useful contribution to the issues on the application. As noted, the issue of whether TEBC is entitled to claim damages occasioned by CRS, its subcontractor, turns on the provisions of the Contracts. That argument is for TEBC to make. Given BIM’s claims, TEBC will have to address the issue on jurisdiction in any event. Further, any argument by CRS on that issue would simply be repetition, which in my view would result in an injustice to BIM.

[39] CRS submits that it has no control over what arguments TEBC might make and that given its potential claim against TEBC, their interests are not completely aligned. While that may be true on paper, given their relationship, and the fact that they worked together in the arbitration and TEBC was able to make all of CRS’ arguments before the Arbitral Tribunal, there is no evidence to suggest TEBC cannot adequately do so in the application.

[40] For the above reasons, therefore, I am not prepared to grant CRS leave to intervene in the application. CRS’ motion is dismissed.

[41] If the parties cannot agree on costs, I may be spoken to.

L.A. Pattillo J.

Released: August 20, 2021