Court File and Parties

COURT FILE NO.: CV-17-570818 DATE: 20220303

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Michele Bombino (also known as Michael Bombino) and Catherine Patricia Bombino (also known as Catherine Patricia Adlaf) Plaintiffs/Responding Parties – and – Serendipity Homes Inc. and Steven Henry Weiner Defendants/Moving Parties

COUNSEL: Geoffrey R. Cobham, for the Plaintiffs /Responding Parties Sarah Reisler, for the Defendants/Moving Parties – and – Masonry Medics Inc., et al. Third Parties

HEARD: SEPTEMBER 22, 2021

VELLA J.

REASONS FOR DECISION

[1] The defendants (collectively, “Serendipity Homes”) have brought this motion seeking various relief including:

(a) declaratory and injunctive relief enforcing an arbitration clause and dismissing or alternatively staying the action pursuant to r. 20 and 21.01(1)(a) and s. 7(1) of the Arbitration Act, 1991, S.O. 1991, c. 17;

(b) in the alternative, a determination that there is no cause of action as against the individual defendant, Stephen Weiner; and

(c) if necessary, summary judgment dismissing the action on the basis that the claims are statute barred by operation of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

Preliminary Issue: Admissibility of the Affidavit of Catherine Patricia Bombino

[2] Each of the individual plaintiffs swore an affidavit in response to the motion. The plaintiffs will be collectively referred to as the “Bombinos”.

[3] Catherine Bombino (“Catherine”) is the spouse of the co-plaintiff, Michele (“Michele”) Bombino. Her affidavit is largely based on hearsay evidence received from her spouse. Serendipity Homes states that the affidavit is an attempt to shore up Michele’s affidavit and thus violates the rule against oath helping. Furthermore, the affidavit offers little probative value. The suggestion is that Catherine has not put her best foot forward so to speak. They seek an order striking the affidavit in its entirety.

[4] Rule 20.02(1) of the Rules of Civil Procedure permits hearsay evidence on a motion for summary judgment. I decline to strike this affidavit as it is admissible and complies with the summary judgment evidence rules. However, I will place little weight on Catherine’s affidavit which in any event simply supports the direct evidence of her spouse, Michele. While I take Serendipity Homes’ submission that this affidavit offers no new evidence, it was still important since it afforded them an opportunity to cross examine Catherine on any issue relevant to this all-encompassing motion. That opportunity was declined. There is no suggestion that Catherine failed to adduce evidence that would have given rise to an adverse inference. It is clear that she had little direct involvement in the contractual matters at issue.

OVERVIEW

[5] Briefly, this action arises out of a dispute between the parties relating to a construction project. The Bombinos retained Serendipity Homes Inc. to construct a residential house for them to live in located at 23 Dunsmore Gardens in Toronto (the “Project”).

[6] Steven Weiner (“Weiner”) is the sole shareholder, director and officer of Serendipity Homes Inc. In the Construction Management Contract entered into with the Bombinos dated July 4, 2014 (the “Contract”), Weiner was identified as the general manager for this Project. The Contract however was between the Bombinos and Serendipity Homes Inc.

[7] Under the Contract, Serendipity Homes engaged all necessary sub-trades for the work.

[8] The Contract stated that the substantial performance date for completion of the work was March 6, 2015. The parties agree that substantial performance meant that the house would be close to move in condition though minor issues might still be outstanding.

[9] The Contract also had a mandatory arbitration clause to resolve any disputes arising out of the Contract.

[10] The parties agree that the substantial performance date of March 6, 2015 was not met.

[11] Michele agreed under cross examination that by February 5, 2015 he knew that there was no way the house was going to be substantially completed by March 6, 2015. Furthermore, the evidence shows that prior to March 3, 2015, the Bombinos had discovered deficiencies with Serendipity Homes Inc.’s performance.

[12] The evidence demonstrates that the Bombinos threatened legal action for breach of the Contract on April 26, 2016 as reflected by an email from Michele to Serendipity Homes.

[13] The parties also agree, however, that there were many subsequent efforts made by Serendipity Homes to rectify the deficiencies and also intervening periods of acrimony between the parties.

[14] This action was started by way of notice of action issued March 3, 2017 and the statement of claim is dated March 31, 2017. However, the pleadings were not served on Serendipity Homes until in or around May 23, 2017.

[15] It appears that upon receiving the notice of action and statement of claim, Serendipity Homes promptly delivered a notice of intent to defend through prior counsel, though that notice of intent was not filed with the court.

[16] Serendipity Homes then delivered a statement of defence and counterclaim dated February 26, 2019 and the jury notice dated February 26, 2019. The lateness of the delivery of these pleadings was consented to by the Bombinos who agreed to a two-year extension at the request of Serendipity Homes.

[17] In the statement of defence and counterclaim, Serendipity Homes pleaded a limitation period defence, an arbitration clause defence, and challenged the legal tenability of the action as against Weiner in his personal capacity.

[18] Subsequently, Serendipity Homes brought a motion to commence third party claims against 11 parties which was granted November 26, 2019. As a result, third party claims were issued on December 12, 2019 against its sub-trades.

[19] The parties exchanged draft affidavits of documents in early 2021.

[20] This action has not proceeded to examinations for discovery nor did the Bombinos commence an arbitration.

[21] This motion was commenced by way of notice of motion dated May 18, 2021.

ISSUES

[22] The issues are:

(i) Should this matter be stayed or dismissed by operation of the mandatory arbitration clause in the Contract?

(ii) In the alternative, is this proceeding barred by operation of the Limitations Act, 2002?

(iii) In the further alternative, does this proceeding raise a legally tenable claim against Weiner in his personal capacity?

ANALYSIS

Issue 1: Is the Arbitration Agreement Enforceable?

[23] Serendipity Homes submits that this matter must go to arbitration consistent with the Contract and that that is an end of the matter. Serendipity Homes further states that since the time for commencing an arbitration has now long past, the Bombinos have no further ability to advance its claims justifying a dismissal of this action rather than the usual stay.

[24] Serendipity Homes maintains that while it did not specifically draw the arbitration clause to the Bombinos’ attention, Michele was familiar with these types of contracts and had an opportunity to consult a lawyer which he declined. Michele admitted under cross examination that he was familiar with contracts and that it was not uncommon for such contracts to contain arbitration clauses. I find that the Bombinos were aware of the mandatory arbitration clause in the Contract.

[25] Section 7(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 [Arbitration Act] vests jurisdiction in a court to stay a civil proceeding in favour of a mandatory arbitration agreement:

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. (emphasis added)

[26] The Court of Appeal for Ontario has articulated a five-part test for determining whether or not s. 7(1) of the Arbitration Act applies to the dispute in issue in the leading case of Haas v. Gunasekaram, 2016 ONCA 744, 62 B.L.R. (5th) 1, at para. 17:

(a) is there an arbitration agreement? (b) What is the subject matter of the dispute? (c) What is the scope of the arbitration agreement? (d) Does the dispute arguably fall within the scope of the arbitration agreement? (e) Are there grounds on which the court should refuse to stay the action?

[27] Section 11 of the Contract sets out the arbitration agreement:

• disputes between the parties as to the interpretation, application or administration of this agreement or any failure to agree when agreement is called for shall be determined by arbitration and the provisions of the Arbitration Act, 1991 (Ontario) shall apply.
• If the parties cannot agree upon the selection of an arbitrator, then either of the parties hereto may apply to the Court of Queen’s Bench [sic], in the province of Ontario, for the appointment of a single arbitrator.
• The award and determination of the arbitrator shall be binding and the parties hereto, and their respective heirs, executors, administrators, successors and assignees.

Does the scope of the arbitration clause arguably extend to claims of intentional tort made against Serendipity Homes Inc.’s employee, Weiner?

[28] I agree with Serendipity Homes that arbitration clauses with the type of language featured in section 11 is given a “wide compass” and broad meaning (Woolcock v. Bushert (2004), 246 D.L.R. (4th) 139 (Ont. C.A.) at para. 23). There is no doubt that the crux of the dispute as between the Bombinos and Serendipity Homes Inc. falls within the scope of the arbitration clause as directly pertaining the timeliness and quality of the work performed under the Contract.

[29] The issue raised by the Bombinos is whether the dispute as relates to Steven Weiner falls within the scope of section 11. More specifically, the Bombinos state that their allegation that Weiner misappropriated the sum of $13,200 in cash payments made by them and intended to be paid to the subtrades is outside of the scope of the Contract and Weiner’s role as an employee/general manager of Serendipity Homes Inc. Leaving aside the merits of the allegations, is it arguable that the dispute as relates to Steven Weiner falls within the scope of the arbitration agreement?

[30] The allegations that relate to Mr. Weiner’s performance of the obligations under the Contract as general manager do properly fall within the scope of the arbitration agreement, consistent with the proposition that employees are entitled to benefit from any limitation of liability clause found in the contract providing they were acting within the scope of their duties when the allegedly tortious conduct occurred and were performing the services that were provided for in the contract between their employer and the consumer, London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R. 299 at p. 448.

[31] Furthermore, I accept that a limitation of liability clause implicitly extends to employees where the consumer is aware that the subject services are to be performed by employees (Fraser River Pile & Dredge Ltd. v. Can-dive Services Ltd., [1999] 3 S.C.R. 108 at para. 27).

[32] The Bombinos knew that Weiner would be performing the contractual services on behalf of Serendipity Homes Inc.

[33] The analysis relating to limitation of liability clauses applies to arbitration agreements by analogy. It would undermine the purpose of a mandatory arbitration clause in contracts involving a corporate entity to exclude the employees who perform the work that is at the heart of the contractual dispute, providing the tortious conduct or contractual breach was performed within the scope of their employment.

[34] However, the statement of claim also pleads an intentional tort against Weiner. Given Weiner’s denial in evidence of any such intentional wrongdoing, but his inability to produce evidence to support his contention, I cannot resolve this issue with resort to the fact-finding powers under r. 20 of the Rules of Civil Procedure. This issue will involve an assessment of credibility. Nonetheless, I find that this allegation, if proven, would not arguably fall within the scope of the arbitration clause. While Weiner strongly denies that he misappropriated any funds, he was unable to account for the $13,200 which he acknowledged receiving in cash payments (as permitted under the Contract). This issue is best left to a determination with the benefit of viva voce evidence, subject to the balance of my ruling on the remaining issues. However, if these allegations are proven, they fall outside the scope of the arbitration agreement.

Should the court exercise its discretion under s. 7(2) of the Arbitration Act to either dismiss the motion for undue delay or grant summary judgment to dismiss the action because the arbitration proceeding would now time barred?

[35] In any event, on the basis of the evidence before me, I find that this motion was brought with undue delay under s. 7(2)4. of the Arbitration Act, and that the time for commencing an arbitration had not yet expired when the Bombinos’ commenced the claim and Serendipity Homes received notice of it.

[36] In exercising my discretion, I acknowledge that there is a strong public policy reason for requiring parties to abide by their agreement to direct disputes into an arbitration. Arbitrations are generally a more expeditious and less costly dispute resolution mechanism than the court system is. Furthermore, the court should generally hold parties to the bargain they made and enforce their contractual agreements (Armstrong v. Northern Eyes Inc. (2000), 48 O.R. (3d) 442 (Div. Ct.) at para. 25, aff’d [2001] O.J. No. 1085 (C.A.)).

[37] However, s. 7(2) of the Arbitration Act expressly provides exceptions to the general rule that the court “shall” stay the litigation when there is a binding arbitration agreement:

7(2) However, the court may refuse to stay the proceeding in any of the following cases:

1. A party entered into the arbitration agreement while under a legal incapacity.
2. The arbitration agreement is invalid.
3. The subject matter of the dispute is not capable of being the subject of arbitration under Ontario law.
4. The motion was brought with undue delay.
5. The matter is a proper one for default or summary judgment.

[38] Serendipity Homes says that I should exercise my discretion under s. 7(2)5. and dismiss the action because this matter is a proper one for summary judgment based on its contention that the time for commencing an arbitration had already expired prior to it receiving notice of the action. The Bombinos, on the other hand, say I should exercise my discretion under section s. 7(2)4. to decline to enforce the arbitration agreement because the motion was brought by Serendipity Homes with undue delay.

[39] In my view, Serendipity Homes has unduly delayed bringing this motion within the meaning of s. 7(2)4. of the Arbitration Act. In addition, the time for commencing an arbitration had not expired as to the date Serendipity Homes received notice of this claim.

Have the Bombinos brought their action after the arbitration proceeding was already time barred?

[40] Serendipity Homes argues that the time period for commencing an arbitration proceeding expired prior to the effective date of service of the statement of claim and therefore any delay that may have ensued is not relevant to the ss. 7(2)(4) Arbitrations Act analysis. Therefore, summary judgment should be granted dismissing the action since it is now too late to bring an arbitration.

[41] Section 52(1) of the Arbitration Act incorporates the provisions of the Limitations Act, 2002 to establish the applicable limitation period for commencing an arbitration. Interestingly, s. 52(2) of the Arbitration Act permits a court to toll the limitation period for commencing an action where the court terminates an arbitration or otherwise declares an arbitration or the award to be invalid but does not toll the limitation period for commencement of the arbitration where the counterpart action has been stayed or dismissed.

[42] Section 5(1) of the Limitations Act, 2002 sets out the test for determining when it was that a plaintiff ought reasonably to have discovered its claim for purposes of triggering the applicable limitation period.

[43] The difficulty with this submission is that it does not adequately take into account the operation of section 5(1)(a)(iv) of the Limitations Act 2002:

5(1) a claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(iv) that having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[44] In Presley v. Van Dusen, 2019 ONCA 66, 144 O.R. (3d) 305 at paras. 19-20, the Court of Appeal recognized that where the plaintiff is relying on the superior knowledge and expertise of the defendant, and is reasonably relying on the defendant’s efforts to fix the problem, legal action may be inappropriate until such time as those efforts appear fruitless to the plaintiff. The court’s rationale was that if the defendant is able to cure the defect, then there is no reason to commence an action before the court. This rationale recognizes the pragmatic reality and value of allowing parties to try to remedy the situation in this limited context where the plaintiff is reasonably relying on the expertise of the defendant particularly within the context of construction claims. The Bombinos were arguably reasonably relying on the superior knowledge and expertise of Serendipity Homes and Weiner in accepting the efforts to remedy the deficiencies. Indeed, an expertise representation is included in the Contract.

[45] It is accepted by the parties that immediately following the lapsed contractual date of substantial performance, the parties continued to work with one another to complete the project and remedy the deficiencies in a largely cooperative way for a period of time. There is evidence in the responding motion record by way of emails from Weiner assuring the Bombinos that he was attending to the remediation of the various deficiencies on the Project through to in or around December 2016. Furthermore, the evidence demonstrates that of the 15 invoices rendered by Serendipity Homes, totaling approximately $86,652, approximately 6 of them were for services rendered after the date of substantial performance totaling $33,286 which is over one third of the total amount billed. In addition, the contract provided for this type of post substantial performance deficiency work under its remediation representation. In other words, the parties contemplated that there might be deficiencies after March 6, 2015 which would require correction. Weiner admitted under cross examination that as late as December 9, 2016, he continued working with the Bombinos to remedy deficiencies under the contract. There was a period of time on or around April 26, 2016 in which the relationship broke down and the Bombinos threatened legal action, however, that breakdown was temporary and work resumed on the Project.

[46] As of September 11, 2015, Mr. Weiner admitted that he believed that all deficiencies had been rectified, but work continued on the Project.

[47] By letter dated February 17, 2017, Serendipity Homes’ then lawyers advised the Bombinos that in their client’s view all outstanding deficiencies had been corrected and no outstanding work was required under the Contract. According to Michele’s affidavit, it was at this time that the Bombinos concluded that litigation was an appropriate means to seek a remedy for the allegedly outstanding deficiencies under the Contract.

[48] It was not until December 9, 2016, after which the relationship irreconcilably broke down, that litigation (or arbitration) became a reasonable means by which to resolve the dispute. There is evidence in the record that reasonably supports this inference. This means that the Bombinos had until in or around at least December 8, 2018 to commence arbitration proceedings. By this time, Serendipity Homes had notice of the claim for approximately 19 months and took steps referenced above which are tantamount to attorning to the jurisdiction of the court.

[49] The cases relied upon by Serendipity Homes, namely Bell Canada v. Plan Group Inc., 2012 ONSC 42, 109 O.R. (3d) 128 at paras. 59 and 61 and 1757419 Ontario Ltd. v. Argo Property Management Ltd. et al, 2019 ONSC 186 are distinguishable from the facts before me. In Bell Canada the court found that the arbitration would be a nullity due to the expiry of the applicable limitation period based on undisputed facts in the record. In 1757419 Ontario Ltd., the plaintiff had willfully ignored orders repeatedly directing it to commence an arbitration. There are no such orders here.

[50] Serendipity Homes also argued that the limitation period commenced when Michele acknowledged that on February 5, 2015, he knew the house would not be substantially completed by the March 6, 2015 substantial completion date. Using that date, and not accounting for the application of s. 5(1)(a)(iv) of the Limitations Act, 2002, the limitation period for purposes of commencing an arbitration would have expired on February 4, 2017.

[51] I reject the proposition that a limitation period is triggered by an anticipatory breach of contract. It is trite law that if there has been an anticipatory breach or repudiation of a contact, the innocent party to the contract can elect to continue with the contract, insist on performance, and then bring the action when the promised performance does not occur. The innocent party is not required to commence litigation where there is an anticipatory breach of contract.

Was Serendipity Homes’s delay in bringing this motion “undue”?

[52] I agree with the court’s statements in Leon v. Dealnet Capital Corp., 2021 ONSC 3636, at paras 47 and 48:

In weighing whether delay in bringing the motion … is “undue” the court considers “the importance of the policy considerations in favour of a liberal approach to commercial arbitration and judicial deference to arbitration agreements”. [citation omitted]

What constitutes “undue” delay is fact specific and determined by the circumstances of the case. In considering whether a delay was “undue” the court will look to what has transpired during the period of delay to evaluate prejudice or harm that may occur if the stay is granted…

[53] Serendipity Homes relies on the fact that they raised the arbitration defence in their statement of defence and counterclaim, this proceeding is in its infancy meaning the examination for discovery has not occurred, and current circumstances pertaining to the COVID 19 pandemic.

[54] Many courts have affirmed that where the party seeking to invoke the arbitration clause after litigation has been commenced made a tactical decision in delaying the bringing of the motion, that delay will be characterized as “undue”. For example, in Steelrite Construction v. Manshield (NOW) Construction Inc., 2017 ONSC 2303, 77 C.L.R. (4th) 333, the court found that the moving party delayed bringing the application for a stay under s. 7(1) of the Arbitration Act until the limitation period for commencing the arbitration had expired. The court also found that the time for calculating the length of delay was the date the statement of claim was issued and reflected a claim that was arguably within the scope of a binding arbitration clause. The court, at para. 37, used an objective test to assess undue delay. At para. 41 the court found that the applicant made a tactical decision in forcing another party to arbitrate after it knew of the availability of the arbitration defence which “had a consequence of time passing”. The applicant could not now, after the passage of significant time, force another party into a time-barred arbitration.

[55] In other decisions, courts similarly held that where the delay by the moving party seeking to enforce an arbitration clause was caused by a tactical decision, that was sufficient to transform the delay into “undue” delay; see: Allied Accounting v. Pacey, 2017 ONSC 4388, 72 B.L.R. (5th) 163, at para. 6.

[56] In Engels v. Merit Insurance Brokers Inc., Strathy J., in declining the defendants request to stay the proceeding, stated:

More important, subsection 7(2) of the Arbitration Act, 1991, S.O. 1991, c. 17, provides that the court may refuse to stay the proceedings where “the motion was brought with undue delay”. In my view, a party who relies on an arbitration clause should advance that position at the earliest possible opportunity. It is not appropriate to ride the litigation horse down the road until it become[s] inconvenient to do so and then try to mount the arbitration horse. In this case, the defendant has filed a notice of intent to defend and served a jury notice. Although it has raised the issue of the arbitration clause in its statement of defence, it made a previous attack on the pleading, heard by Perell, J., without raising the issue. Perell, J. struck the pleading, with leave to amend. In my view, if the defendant intended to raise the arbitration clause, it should have done so, at a minimum, before Perell, J.

[57] Some courts have couched undue delay in the framework of attornment to the court’s jurisdiction and estoppel, where the moving party took steps to advance/defend the action prior to challenging the court’s jurisdiction in the face of a binding arbitration clause. For example, in 1047358 Ontario Inc. v. Haliburton Broadcasting Group Inc., 2012 ONSC 3115, 4 B.L.R. (5th) 120, O’Neill J. stated at para. 34:

Even if I am incorrect in concluding there is no valid issue for arbitration, I would refuse a stay pursuant to s. 7(2) of the Arbitration Act, 1991 on the following basis:

(i) There is substantial evidence of the parties having voluntarily attorned to this court’s jurisdiction as outline in paragraph 36 of the Plaintiff’s Factum.

(ii) In accordance with s. 7(2)(4) of the Arbitration Act, this court may refuse to stay a proceeding where the motion was brought with undue delay. The Defendants had much earlier opportunities to bring the within motion … earlier after the litigation had commenced. I view this as a case where the Defendants are estopped by their own conduct from bringing a motion for a stay. This is particularly so given that the external accountants reached an agreement in November of 2011, and that nothing further was heard from the Defendants until April of 2012, shortly before the return of the summary judgment motion to court.

[58] The onus is on the party asserting the delay to prove that it was undue.

[59] In my view the appropriate time for calculating the passage of time for purposes of an undue delay allegation is the time at which Serendipity Homes received notice of this claim via service on or about May 23, 2017. The first step taken by Serendipity Homes was to deliver a notice of intent to defend. The fact that Serendipity Homes did not file the notice after it retained new lawyers is irrelevant. The fact is that Serendipity Homes had notice of the claim and the nature of the dispute, hired lawyers and delivered a notice of intent to defend promptly. They then waited for two years to deliver a statement of defence. At the time they filed a statement of defence, they also filed a counterclaim and delivered a jury notice. The fact that the litigation did not advance in an expeditious manner does not justify Serendipity Homes waiting approximately four years after receiving the statement of claim before bringing this motion. There is no suggestion that Serendipity Homes was unaware of the arbitration agreement reflected in the Contract. Its position is further diminished by the fact that it opted to bring a motion to commence third party claims against 11 of its subtrades (including against Bom Tech Ltd., which is owned and operated by Michele) rather than bringing this motion because it was alert to the operation of the Limitations Act, 2002.

[60] I have already determined that by operation of s. 5(1)(a)(iv) of the Limitations Act, 2002, the limitation period for starting an arbitration was triggered in or around December 9, 2016 at the earliest and possibly as late as the letter dated February 17, 2017 from Serendipity Homes Inc.’s then lawyers advising that it believed that all deficiencies had been cured and there was no basis for liability.

[61] I further find that Serendipity Homes took active steps to advance its position in this claim unrelated to enforcing the arbitration clause through the issuance of a counterclaim, third party claims and a jury notice and that this constitutes undue delay in the circumstances of this case. In addition, Serendipity Homes turned its mind to the operation of the Limitations Act in bringing a motion to commence the third-party claims before bringing a motion to stay these proceedings on the basis of the operation of the arbitration agreement, even though it pled this defence. Accordingly, Serendipity Homes failed to bring this motion at the earliest opportunity and in any event took positive steps unrelated to the arbitration defence to effectively attorn to this court’s jurisdiction and is now estopped from relying on the arbitration agreement.

[62] In the alternative, at this motion Serendipity Homes took the position that this matter should be dismissed rather than stayed due to the expiry of the applicable limitation period under the Limitations Act, which is incorporated by s. 52 of the Arbitration Act, thus rendering it too late for the Bombinos to commence an arbitration were this matter to be directed into the arbitration process. Indeed, I find that, in the absence of evidence to the contrary, it is a compelling conclusion that the reason why Serendipity Homes requested a two-year delay in delivering a statement of defence after receiving notice of the claim was that it was content to allow the limitation period for commencing an arbitration to expire and this was a tactical decision informing its delay.

[63] As such the Bombinos have proven on a balance of probabilities that there was an undue delay in bringing this motion. It seems clear that Serendipity Homes’ request to delay the delivery of its defence and counterclaim by the same basic two-year period as prescribed by the Limitations Act, 2002 was also driven by tactical calculations that by then the limitation period would have expired under any analysis. It would be manifestly unfair to permit Serendipity Homes who admitted being well aware of the arbitration agreement, to have lulled the Bombinos into complacency when it requested a two-year delay in delivering its statement of defence that coincided with the expiry of the time within which to launch an arbitration.

[64] At this juncture in the dispute between the Bombinos and Serendipity Homes, it would render an injustice to not permit this matter to be heard on the merits in this forum. I have not been provided with any evidence of prejudice should this litigation be permitted to continue. While prejudice is not relevant to my analysis of whether there is a binding arbitration clause, it is relevant to the exercise of my discretion under s. 7(2)4. of the Arbitration Act. Furthermore, there are now third-party claims advanced by Serendipity Homes for contribution and indemnity against its subtrades relating to the breach of the substantial performance covenant. To coin Justice Strathy, Serendipity Homes has ridden the litigation horse too far down the path to justify a re-routing to an arbitration process.

Issue 2: Is the action barred by the Limitations Act, 2002?

[65] Under the analysis provided in finding that the arbitration proceeding would not be time barred under the Arbitration Act, it is clear that the action was commenced prior to the expiry of the two-year limitation period under the Limitations Act, 2002. The action was commenced within two years of the breach of contract; namely within two years from the substantial performance date specified in the Contract. Anticipatory breach does not give rise to triggering an earlier limitation period under s. 5 of the Limitations Act, 2002.

Issue 3: Are the claims against Weiner pleaded in the statement of claim legally untenable against him warranting dismissal under r. 20?

[66] In addition to the claim based in the intentional tort of misappropriation of funds (deceit) against Weiner, there are claims that allege personal liability against Weiner arising out of breach of the Contract on the basis of direct liability (as the controlling mind of Serendipity Homes Inc.). Serendipity Homes argues that these latter claims are not legally tenable against Weiner as he was carrying out the contractual obligations as an employee on behalf of it.

[67] However, at the motion, counsel for Serendipity Homes made it clear that she was not seeking partial summary judgment relating to some of the claims under the statement of claim.

[68] Accordingly, in light of my ruling regarding the intentional tort claim against Weiner giving rise to a legally tenable claim against him, it is not necessary for me to rule on this discreet issue.

DISPOSITION AND COSTS

[69] Accordingly, the motion is dismissed and this proceeding shall continue through the normal course.

[70] The parties are directed to seek a case conference under r. 50.13 of the Rules of Civil Procedure to assist with establishing a timetable for the timely advancement of this proceeding and the third-party claims.

[71] If costs cannot be agreed upon, the Bombinos shall deliver their cost submissions to the court by no later than 10 business days from the release of this decision. Serendipity Homes will then have 10 business days to respond. The written submissions shall not exceed 3 pages each, double spaced, respectively. The written submissions will be delivered to my judicial assistant.

[72] The parties have not uploaded the cost outlines. I am assuming that the parties have already exchanged cost outlines as required. If not, they are to immediately exchange cost outlines and then provide same to me with their respective cost submissions.

Justice S. Vella Released: March 3, 2022