Scott Steel Erectors Inc. et al v. Ausenco Engineering Canada Inc. et al, 2026 ONSC 391

CITATION: Scott Steel Erectors Inc. et al v. Ausenco Engineering Canada Inc. et al, 2026 ONSC 391

COURT FILE NO.: CV-23-29374 CV-23-29278 CV-23-29294 CV-23-29305 CV-23-29320 CV-23-29324

DATE: 16 January 2026

ONTARIO

SUPERIOR COURT OF JUSTICE

ONTARIO SUPERIOR COURT OF JUSTICE IN THE MATTER OF the Construction Act, R.S.O. 1990, c. C.30

RE: Scott Steel Erectors Inc v. Ausenco Engineering Canada Inc Ontario Superior Court of Justice, Court File No. CV-23-29374 (note: includes counterclaim of Ausenco)

Tom Cardinal, as Trustee of the Ontario Provincial Council of Carpenters Benefit Trust Fund and Trustee et al. v. Prodigy Gold Inc., Argonaut Gold Inc., Alamos Gold Inc., Ministry of the Northern Development and Mines, Scott Concrete Services Inc., Scott Steel Erectors Inc., Macquarie Bank Limited and Ausenco Engineering Canada Inc. Ontario Superior Court of Justice, Court File No. CV-23-29278 (note: includes crossclaims of Ausenco/SSE and counterclaim of SSE)

United Rentals of Canada, Inc. v. Scott Steel Erectors Inc., Prodigy Gold Inc., Host’s Gold (1) Ltd., Host’s Gold (2) Ltd., Host’s Gold (3) Ltd., and Macquarie Bank Limited Ontario Superior Court of Justice, Court File No. CV-23-29294 (note: default judgement against Scott Steel erectors Inc.)

Michael Melvin as Agent for the Trustees of the Iron Workers Central Welfare Fund and the Iron Workers Ontario Pension Fund v. Prodigy Gold Inc., Ausenco Engineering Canada Inc. and Scott Steel Erectors Inc. Ontario Superior Court of Justice, Court File No. CV-23-29305 (note: includes crossclaim of Ausenco/SSE and counterclaim of SSE)

Mammoet Canada Eastern Ltd. v. Prodigy Gold Inc., Scott Steel Erectors Inc., Scott Concrete Services Inc. and Ausenco Engineering Canada Inc. Ontario Superior Court of Justice, Court File No. CV-23-29320 (note: includes crossclaim of Ausenco/SSE and counterclaim of SSE)

Construction Equipment Co. (Sault) Inc. v. Scott Steel Erectors Inc., Dan Scott, Ausenco Engineering Canada Inc., Prodigy Gold Inc., Host’s Gold (1) Ltd., Host’s Gold (2) Ltd., Host’s Gold (3) Ltd., and Macquarie Bank Limited Ontario Superior Court of Justice, Court File No. CV-23-29374 (note: default judgement against Scott Steel Erectors Inc. and includes crossclaims of Ausenco/SSE and counterclaim of SSE)

BEFORE: rasaiah j.

REASONS ON MOTION

overview

1The hearing of this motion occurred July 17, 2025. Decision was reserved. These are my written reasons.

2Chart of Parties named in the claims.

SCOTT STEEL ERECTORS INC. (“SSE”)

Rocco A. Ruso, Ian Cantor, Jeremie Lachance

SCOTT CONCRETE SERVICES INC. (“Scott Concrete”)

Rocco A. Ruso, Ian Cantor, Jeremie Lachance

DAN SCOTT

Let out of the proceedings on or about January of 2024

AUSENCO ENGINEERING CANADA INC (“Ausenco”)

R. Seumas Woods, Sara Bolourchian

TOM CARDINAL, AS TRUSTEE OF THE ONTARIO PROVINCIAL COUNCIL OF CARPENTERS BENEFIT TRUST FUND AND TRUSTEE (“Council of Carpenters”)

Michael C. Mazzuca, Michael Mandarino, now R. Seumas Woods

PRODIGY GOLD INC.:

All Claims discontinued as against this party

ARGONAUT GOLD INC.:

All Claims discontinued as against this party

ALAMOS GOLD INC.:

All Claims discontinued as against this party

MINISTRY OF NORTHERN DEVELOPMENT AND MINES:

All Claims discontinued as against this party

MACQUARIE BANK LIMITED:

All Claims discontinued as against this party

UNITED RENTALS OF CANADA, INC. (“United Rentals”)

Rob Y. Moubarak, Jonathan L. Frustaglio

HOST’S GOLD (1) LTD., HOST’S GOLD (2) LTD., HOST’S GOLD (3) LTD.

All Claims discontinued as against this party

MICHAEL MELVIN AS AGENT FOR THE TRUSTEES OF THE IRON WORKERS CENTRAL WELFARE FUND AND THE IRON WORKERS ONTARIO PENSION FUND (Iron Workers”)

Tracey Henry, now R. Seumas Woods

MAMMOET CANADA EASTERN LTD (“Mammoet”)

David J. Wilson, now R. Seumas Woods

CONSTRUCTION EQUIPMENT CO. (SAULT) INC. (“CEC”)

Dan J. Leduc, now R. Seumas Woods

3I have underlined and bolded above in the chart of parties, those counsel who were present at the hearing who were participating in the motion. In that same chart, I have put in brackets in bold, how I identify the interested parties, herein as and when referred to by me in this decision.

4This case concerns construction industry work carried out on the Prodigy Gold Inc. project in respect of the Magino Gold Mine (herein “Magino Mine”) located approximately 40 km north of Wawa, Ontario: a subset of a conversion project, converting the underground mine to an open pit mine with a processing facility (herein “EPC Project”).

5Ausenco was retained to carry out part of the EPC Project by Prodigy Gold Inc. and subsidiary Argonaut Gold Inc. A copy of the Ausenco contract with these companies was filed (herein “EPC contract”).

6SSE was a subcontractor retained by Ausenco on February 12, 2021, for: design, supply, and installation of pre-engineered metal buildings, and the structural mechanical and piping steel, as part of the EPC Project; there were three separate subcontracts, two signed with SSE and one with Scott Concrete.

7Copies of the three subcontracts were filed (herein individually referred to by me as “Building Subcontract”, entered into with SSE; “SMP Subcontract”, entered into with SSE and “Concrete Subcontract”, entered into with Scott Concrete).

8The Building Subcontract was initially fixed at $7,294,515.23 plus HST. The SMP Subcontract was initially fixed at $18,330,593.66 plus HST. The Concrete Subcontract was initially fixed at $10,311,446.81 plus HST. There were several change orders subsequently.

9Of note, at the time, regarding Scott Concrete, it was a sister company to SSE. SSE subcontracted this sister company which was a separate entity at the time. However, Scott Concrete was now amalgamated with SSE. Scott Concrete was to supply concrete and concrete-related services.

10SSE hired various other secondary subcontractors and suppliers to carry out their contracted work, including Council of Carpenters, United Rentals, Iron Workers, Mammoet, and CEC.

11On July 23, 2023, SSE registered a lien against title to the Magino Mine in amounts claimed to be owed under all three subcontracts. SSE commenced an action CV-23-00029374-0000, to perfect their lien (“SSE action”). The five said secondary subcontractors also filed liens and commenced actions (see outlined titles of proceedings above). Accordingly, there were six liens total, and six actions.

12Of note, Ausenco had also registered a claim for lien against title to the Magino Mine themselves and commenced an action. The lien and actions were ultimately resolved. Ausenco discontinued their action and deleted their lien.

13Of note, Ausenco obtained and posted six bonds to vacate the six liens, namely of SSE and the five secondary subcontractors in the amount of $39,990,890.50 to clear the title to the Magino Mine. Ausenco delivered a statement of defence and counterclaim in SSE’s action.

14In this case, a motion was brought by Ausenco to consolidate all the actions or try them one immediately after the other, on the basis that all the actions related to the EDC Project/Magino Mine. On September 26, 2024, DeLorenzi J., as he then was, granted an order that the actions be tried one immediately after the other, amongst other relief related to further steps anticipated to occur in the proceedings.

15Pleadings were filed by some in the actions. Pleadings in all six actions are now closed. The chart of parties above provides information on other parties named in the actions and the status of claims involving them, as reflected by the file and/or based on submissions of counsel provided at a case conference that I presided at.

16Additionally, there was a motion brought by Ausenco, heard January 25, and 29, and December 6, in 2024, decided by Varpio J. February 6, 2025. The motion was brought in the SSE action, seeking to discharge/reduce the lien (“lien discharge/reduction motion”) Ausenco was challenging the registration of the lien for the Concrete Subcontract; alleging the liens registered for the Building Subcontract and Concrete Subcontract were out of time; and that the lien was wilfully exaggerated, asking that the lien be discharged in the alternative be reduced.

17The within motion, brought by SSE, summarily, is for payout of holdbacks retained by Ausenco to them, and for a stay of proceeding directing arbitration. As for the specifics, they are set out in the motion in the record filed dated November 7, 2024, and I will not reproduce them here.

18Prior to the hearing of the within motion, at the last court date for this case, the remaining participants/interested parties were identified as SSE, Ausenco, and secondary subcontractors, Council of Carpenters, Iron Workers, CEC, United Rentals and Mammoet.

19Ausenco however, thereafter, was successful in negotiating resolutions with Council of Carpenters, Iron Workers, CEC and Mammoet, which included assignment to Ausenco of their claims/interests and defences to counterclaims, where they were made. Ausenco filed a copy of the resolutions.

20There was default judgment granted with respect to United Rentals. They did not participate in the hearing of this motion.

21The participating motion parties filed volumes of materials which were uploaded to CaseCenter, which I have reviewed.

22At the last court date, Ausenco reserved its right to object to SSE’s late filing of materials dated April 30, 2025, supplemental motion record.

ANALYSIS

Leave to Bring the Within Motion

23This issue was not really contested/challenged by Ausenco in argument at the hearing.

24In any event, I am satisfied that the motion meets the classification as serving to expedite resolution of the issues.

25The issue of the holdback involves 5 other interested parties, secondary subcontractors, not party to the contracts between SSE/Scott Concrete and Ausenco. They unequivocally have an interest in the holdbacks. There are complexities surrounding statutory requirements and ability to bind other subcontractors (these secondary subcontractors) who are not parties to the contracts between SSE/Scott Concrete and Ausenco in any arbitration between these parties.

26It is desirable at this stage to determine if the case should proceed to arbitration or not. The contracts have arbitration clauses, litigation was commenced. If the stay is granted, it is also reasonable to state that substantive issues could be removed from the litigation and could serve to expedite resolution of the issues between SSE/Scott Concrete, and Ausenco.

The Holdback: Declaration of the Holdback Amount (including Calculation); Payout of the Holdback (including to Whom; When, if at any time, does the Obligation Cease, if it does, and consideration of Meritorious Unresolved Issues, if any, of What is alleged to be owed to/by the Payer and impact of same)

Introduction

27SSE sought a declaration setting the amount of the holdback Ausenco was required to maintain in respect of the Subcontracts, and an order requiring Ausenco to pay out the holdback portion owed to SSE, plus interest.

28Ausenco disputes SSE’s calculation of the holdback and payout, contending that Ausenco’s holdback obligations ended when it posted alternate security to vacate the liens; and that even if this was not the case, Ausenco should not be ordered to pay out further monies to SSE where the evidence before this Court raises the issue of whether Ausenco owes SSE anything/their entitlement to deduct amounts.

29In the end, considering all of the above, I am satisfied that I should order payout of the principal amount of the holdback applicable to have been retained in accordance with the Act considering the certifications.

EDC Contract

30In this case, Ausenco and Prodigy certified the lead contract as “substantially performed” as of July 28, 2023, and published the certificate on September 7, 2023.

31No party ever published a notice of non-payment under section 27.1 of the Construction Act within 40 days of this publication to refuse to release holdback payments.

Building Subcontract

32SSE began work on this subcontract in March of 2021.

33In this case, Ausenco, notwithstanding formalistic concerns, effectively acknowledged that as of April 28, 2023, SSE had substantially performed its obligations under this subcontract. Ausenco completed a certificate of substantial performance dated April 28, 2023, and there was a certificate of publication May 3, 2023. This has meaning defined by the Act.

34On the Building Subcontract, I appreciate that Ausenco states there was remaining work to be done, and Ausenco states that SSE ceased supplying services or material as of May 3, 2023; Ausenco states they had to retain other forces to complete the work contemplated by this contract, as well as to remedy defects in SSE’s work; they are pursuing these claims against SSE.

35There were several Change Orders.

36Of note, it is not contested that the Building Subcontract Change Order 1 contains a cross-liability provision that includes a term that for purposes of the Mangino project both Scott Concrete and SSE will be treated as one.

37Change Order 1 addresses Construction Act holdbacks purporting to contractually set out when Ausenco is prepared to release part of holdbacks through the project and how.

Concrete Subcontract

38On this contract, Scott Concrete started work in June of 2021.

39Ausenco on this subcontract, again notwithstanding formalistic concerns, filed a certificate of completion, and a certificate of publication was published, dated February 12, 2023, as totally completed. Whether it was premature or not, and notwithstanding the accompanying letter, and work was still going on at this time (to March of 2023), it was issued. SSE states that they were not concerned, again, relying on Ausenco having communicated to them that they were treating the three subcontracts as one. Issuance of this certification has meaning defined by the Act.

SMP Subcontract

40SSE started work on this subcontract in late April of 2022.

41Ausenco states that at SSE’s request, Ausenco certified substantial performance as of June 1, 2023. Again, notwithstanding formalistic concerns, and the foregoing, Ausenco chose to do it.

42Following this certification, I appreciate that Ausenco states that SSE abandoned the project. Ausenco states they retained other forces to complete the work contemplated by this contract, as well as to remedy defects in SSE’s work. Issuance of this said certification has meaning defined by the Act.

Calculation of the Holdback

43There were various methods of calculation suggested by both parties.

44I reject SSE’s calculations under method one. It is clear that Ausenco is asserting that work was not completed and/or corrections were required, and that issue is not for me to decide on this motion. Method, one assumes full contract price, which does not align with the aforesaid certifications filed on the subcontracts and the Act.

45At the same time, considering the said certifications filed, I reject Ausenco’s submission that the calculation of the holdback is to be based on what SSE has billed for services and Ausenco has accepted as performed.

46I appreciate that SSE states they are entitled to the contract prices and more. SSE described the EDC project as a financial disaster, setting out that, the cost overruns doubled the capital costs of the project from approximately $475 million to $980 million. They state that this caused cashflow issues for Prodigy which delayed Ausenco’s payment of invoices. They also state that Ausenco stopped processing change orders and eventually withheld payment from SSE, including refusing to pay for the delays and extra costs that SSE faced, which they state is related to Ausenco’s mismanagement and Prodigy’s extended blasting activities. This caused disruptions, poor project coordination and delays.

47SSE provided Ausenco with a report, the first Ankura report, on February 13, 2023. Ausenco replied to SSE the next day to schedule a meeting regarding same.

48On May 17, 2023, Scott Steel wrote to Ausenco providing a second report, the second Ankura report, seeking additional funds for cost overruns associated with alleged delay.

49On May 28, 2023, Ausenco responded and described the claims as being “bogus”.

50On June 14, 2023, Ausenco wrote to Scott Steel advising it that Ausenco had issues with Scott Steel having demobilized and effectively ceased work. It demanded that Scott Steel return to work and complete tasks valued at $602,376.

51Ausenco also states that SSE’s subcontractors started complaining that they had not been paid and some of them registered liens; and to ensure progress on the project and to comply with the EPC contract to keep the Magino Mine’s title clear of liens, they paid a number of the secondary subcontractors directly. In Mr. Hood’s chart filed, he notes payment by Ausenco to secondary subcontractors in the amount of $3,968,496.99 (plus HST), however Ausenco has calculated the actual figure is much higher providing, Mr. Grob’s calculation, that they rely on.

52Ausenco acknowledges that the total contract price of services and/or materials supplied by SSE is $44,760,951.57. However, Ausenco calculates even considering SSE’s claim for damages, that SSE owes them $1,330,339.92, explained as being largely because of the direct payments Ausenco made to secondary subcontractors ($7,250,583.14 for work done and $3,315,406.31 to clear liens [setting out the particulars of the liens for: CEC, Iron Workers, Mammoet, United Rentals, and Council of Carpenters cleared October of 2023]), highlighting also the posting of the bond costs, and in part for remedial work/incomplete work, the cost of $1,770,174.21. They submitted a chart of the original subcontract prices, change orders (total $44,760,951.57) and remedial/incomplete work costs ($1,770,174.21); what they paid SSE (namely $33,855,127.40); and what they paid the secondary contractors (already set out above) to demonstrate how they arrived at the figure they state they are owed by SSE.

53Further, of note, SSE asserts that Ausenco’s figures are “bald” and there are no supporting documents to justify their amounts, if the court considered same. Ausenco, has delivered no supporting documentary evidence. Ausenco replies that SSE despite having opportunity (before, at cross-examinations, or after), never asked. With the greatest of respect, I see this as Ausenco’s burden to produce their documents, especially if they seek to rely on such assertions, in response to the motion. Case authority supplied has articulated that bald assertions and unexplained figures cannot justify a reduction in holdback.

54Ausenco highlights that they successfully moved to reduce SSE’s lien on the ground it was wilfully exaggerated. Ausenco highlights comments of Varpio J., namely his expression of doubt on the validity of the delay claims but does recognize, on the Concrete Subcontract, the finding it was at least a triable issue.

55SSE had filed a new breakdown of SSE’s calculation of their lien advancing losses suffered because of delays (delay damages). Ausenco does acknowledge that Varpio J. overall did not find SSE’s lien claim as frivolous, vexatious or an abuse of process.

56The total lien was reduced by Varpio J. to $26,747,526.50 (inclusive of HST); based on triable claims of SSE he accepted for purposes of the motion being $26,747,526.50 (inclusive of HST).

57These claims, in my view, of the parties, outside of the required holdback, are all issues for either litigation or arbitration and are not to be “deducted” from the holdback, more said below. None of the parties’ claims will be defeated simply by payout of holdback. They will still exist and remain pursuable.

58Complaints about having to pursue SSE for amounts that ultimately may be awarded either in litigation or arbitration, firstly, are not evidentiary based. There is nothing to suggest that SSE is insolvent or judgment or award-proof in any way. A holdback statutorily is not security for Ausenco’s claims.

59Part IV of the Construction Act RSO 1990, c. C.30 (“Construction Act”) deals with holdbacks.

60Of note, amendments to the Construction Act in 2019 introduced mandatory holdback release provisions in ss. 26 and 27.1. Prior to the 2019 amendments, owners could delay payment by asserting set-off claims which could go untested for a lengthy period; and this was seen as “an inviting strategy for a payer to seeking bargaining leverage”. The purpose of a holdback is to mitigate the risk of contractor insolvency or opportunistic non-payment, not to serve as a warranty against potential deficiencies or to use it to cover other claims.

61Section 6.5 of the Construction Act governs how and when a contractor must dispute payment which is by delivering a notice of non-payment in specified form for each specific invoice with 14 days of receipt (on an invoice by invoice basis) and if no such form is delivered within that time, the right to assert any set-off or reduction is extinguished; the invoice is deemed accepted and must be paid; s.27.1 is not intended to allow an owner or payer a second chance to raise payment issues: Dalren Limited v Loadstar Trailers Inc., 2024 ONSC 7144, para 23.

62SSE highlights that the vast majority of invoices in this case were never disputed; that Ausenco’s now objections were not raised contemporaneously during the project, were not included in any notice of non-payment, and were never referred to arbitration making them untimely, and unsupported; that even then, no details have been provided – no breakdown, no valuations, no photos, no invoices, no supporting certificates, and no notices of non-payment; relying on Ausenco’s certificates on the subcontracts certifying total or substantial performance on completion of work.

63Ausenco acknowledges that periodic progress draws were submitted for the subcontracts, and after they reviewed them, where Ausenco agreed the work had in fact been completed, SSE was paid. Ausenco held back 10% from payments made on the approved value of the invoiced work. Ausenco prepared and filed a chart of invoices and payments. Ausenco however states they held back $1,026,229.19 on the Building Contract, $1,413,473.43 on the Concrete Subcontract, and $1,428,615.07 on the SMP Contract for a total of $3,868,317.69; and that these amounts are the correct amounts. Ausenco did not holdback any amounts from direct payments that Ausenco made to secondary subcontractors.

64To the extent that Ausenco seeks credit for direct payments, that goes against the unpaid contract balance above the holdback amount but never to reduce the holdback. They ought to have maintained a holdback by the Act.

65Section 26 of the Construction Act imposes a “mandatory” obligation to release the basic holdback once all preserved or perfected liens have expired, been discharged, or otherwise resolved; the only exception is s. 27.1 of the Construction Act which only permits non-payment where the owner publishes a notice of non-payment in a construction trade newspaper within 40 days of substantial performance, and in such a case, the contractor must then refer the matter to adjudication within the prescribed time or pay its holdback in full; and none of these actions/requirements were taken in this case by Ausenco.

66Section 44 of the Construction Act provides for vacating liens, where after they are vacated, liens cease to attach to the premises and to the holdbacks, and the lien becomes a charge on the amount posted. The payer takes the position as if the lien had not been preserved or notice given. The lien and other monies subject to a charge under s. 21 are changed to a charge on the money posted, alternate security. This section allows the lien to be vacated from the property’s title by posting financial security with the intention to balance the interests of the property owners and lien claimants. The lien is not “eliminated” but instead its attachment transferred from the property itself to the bond posted with the court, to ensure funds are available to satisfy their claims if later proven to be valid in court. The lien is the payment dispute not resolved. The posting of a bond by Ausenco, does not defeat the obligation to pay out a holdback. It is a mechanism of security and does not eliminate the requirement to pay out a holdback, only changing how it is maintained.

67Ausenco is a “payer” in accordance with the Act.

68By the Act, Ausenco is to retain a holdback equal to 10 percent of the price of the services or materials as they were actually supplied under the subcontracts until all liens that may be claimed against same expired or were satisfied, discharged, or otherwise provided for under the Construction Act; s. 22(1).

69Accordingly, given the above, I find the holdback is a matter, this court should determine. I deal with the “arbitrable” issue of it later herein. With more details stated later, this argument of Ausenco, in my view, ignores that the other interested parties were not parties to the three subcontracts. United Rentals was not settled by Ausenco at the date of the motion hearing either. The question of the binding nature of a decision on the holdback that ought to have been maintained involving non-parties to an arbitration agreement by an arbitrator conducting such an arbitration between SSE and Ausenco, is a concern on “arbitrability”.

70With respect to the Building Subcontract and the SMP Subcontract, in this case, Ausenco completed a certificate of substantial performance. Section 2(1) of the Construction Act provides that for the purposes of this Act, a contract is substantially performed,

(a) when the improvement to be made under that contract or a substantial part thereof is ready for use or is being used for the purposes intended; and

(b) when the improvement to be made under that contract is capable of completion or, where there is a known defect, correction, at a cost of not more than,

(i) 3 per cent of the first $1,000,000 of the contract price,

(ii) 2 per cent of the next $1,000,000 of the contract price, and

(iii) 1 per cent of the balance of the contract price.

71Accordingly, in this case, at best, completion and/or corrections, by operation/meaning of the statute, by the filing of the certificate, on the Building Subcontract using the contract price of $9,895,356.89 were communicated by Ausenco as not more than $128,953.57 ($30,000: 3% of the first million of the contract price plus $20,000: 2% of the next million of the contract price and plus $78,953.57: 1% of the balance of the contract price). Taken from the contract price, services and materials supplied substantially performed are $9,766,403.32. Ten percent is $976,640.33 plus HST is $1,103,603.57.

72Accordingly, in this case, at best, completion and/or corrections, by operation/meaning of the statute, by the filing of the certificate, on the SMP Subcontract using the contract price of $17,837,230.80, were communicated by Ausenco, as not more than $208,372.31 ($30,000: 3% of the first million of the contract price plus $20,000: 2% of the next million of the contract price and plus: $158,372.31: 1% of the balance of the contract price). Taken from the contract price, services and materials supplied substantially performed are $17,628,858.49. Ten percent is $1,762,885.85 plus HST is $1,992,061.01.

73The Concrete Subcontract was certified as totally completed. Section 2(3) of the Construction Act provides that for the purposes of this Act, a contract shall be deemed to be completed, and services or materials shall be deemed to be last supplied to the improvement when the price of completion, correction of a known defect or last supply is not more than the lesser of,

(a) 1 per cent of the contract price; and

(b) $5,000.

One percent of the contract price is higher than $5,000. Accordingly, at best, completion and/or corrections, by operation of the statute, are $5,000. Accordingly, in this case, at best, by the filing of the certificate, the services and materials supplied deemed to be completed are $17,028,363.48 less $5,000 for a total of $ 17,023,363.48. Ten percent is $1,702, 336.35 plus HST for a total of $1,923,640.08.

74Accordingly, the total holdback in the circumstances of this case with HST, I find is calculable and is $5,019,304.66 ($1,103,603.57 plus $1,992,061.01plus $1,923,640.08).

75It is not disputed that Ausenco has paid Council of Carpenters, Iron Workers, Mammoet and CEC. They are permitted to do so. United Rentals inclusive of HST is owed $78,826.45. Ausenco by the Act can make direct payments to parties “lower down” on the chain who have a valid lien even without a direct contract with them, to resolve claims, they can “bypass” SSE. When they do this, these lien claims are “satisfied” or “otherwise provided for”. SSE is only asking for their portion.

76On the record, both parties seem to accept the total for all the secondary subcontractors’ interests from the holdback is $3,390,061.74 using their lien claim interests.

77Payment into court of the portion of the holdback alleged to be attributable to United Rental’s lien is an acceptable solution. Neither party argued otherwise, although Ausenco was unaware that SSE would ultimately agree to this amount being attributed to United Rentals, they state until the hearing of the motion. This arrangement however, would “provide for” United Rentals’ interest in the holdback. It would be protected.

78Again, with respect to SSE, there is no established applicable s.27.1 Construction Act exception - the certificate of substantial performance on the EPC contract is published; no notice of non-payment was published at all; and as such, the right to withhold the holdback can be considered satisfied or otherwise provided for.

79For all the reasons stated herein, the record does not support that the issue of the quantum of the holdback or whether the principal amount should be paid immediately should proceed to litigation or arbitration, or that the set-off claims are deductible against the holdback currently held.

80Giving credit to Ausenco for paying the four secondary subcontractors and noting that $78,826.45 appears now to be accepted as the portion owed to United Rentals, the remaining holdback, attributable to SSE by my calculation is $1,629,242.92.

81Of note, the figures I have used for this calculation correspond with Ausenco’s s.39 Construction Act response (adjusted as aforesaid, by Ausenco’s certifications/application of statutory provisions in respect of same).

82In my view, based on the facts of this case, and for articulated reasons in this decision, this is the method of calculation I find that should be used in this case.

Immediate Payment

83I have already addressed the set-off/other claims of Ausenco, and how they are not deductible as against the holdback, in this case.

84Further, Ausenco is not unsophisticated in their industry.

85I appreciate the pressures that come within the construction industry, especially large projects such as this one, but Ausenco chose to certify in the manner that they did, on all three contracts.

86While it is correct, in my view, for Ausenco to assert that proper distinct invoices should be issued and Ausenco complains about SSE’s failure to do certain things “properly” such as invoicing or re-invoicing, respectfully, there is much to be said about how Ausenco did not do things properly either, including steps and forms completed on this project. In my view, these types of issues should not be an impediment with respect to payment of holdback principal amount in this specific case; it has been some time since the project has been completed; the figures are known and calculable.

Interest

87As to interest, none would be payable during the retention period of 60 days. The rate of interest is the greater of the amount specified in a contract and the prejudgment interest rate set under the Courts of Justice Act.

88Again, I recognize that proper distinct invoices should have been issued for the holdback to trigger deadlines, because they are a formal part of the payment process. Ausenco states that they received one, on one of the subcontracts, that was adjudicated and thereafter not re-issued by SSE. They also state that no distinct proper invoices were issued for the other two subcontracts. I am prepared to consider this argument on the issue of interest outside of the principal amount, in terms of how it should be dealt with, including if it should be dealt with by me at this time.

89In the Act, a “proper invoice” means a written bill or other request for payment for services or materials in respect of an improvement under a contract, if it contains the contractor’s name and address, date of the proper invoice, and the period during which the services or materials were supplied.

90However, while a factor, standing on this technicality on the facts of this case, even on interest, in my view, should only go so far. The underlying elements are party, notice, amount claimed and for when. Ausenco has known all of this information for some time now, all these things.

91SSE submits they were entitled to be paid the holdback 60 days post publication of the certificate of substantial performance on the EPC contract, on November 7, 2023. However, I accept that Prodigy did not immediately pay Ausenco’s final invoice on the EPC project and an adjudication resulted, in Ausenco’s favour, but not until early 2024 and there were issues with invoicing by SSE. Ausenco also highlights that not all liens were satisfied, discharged, or otherwise provided for until the Fall of 2024, when Ausenco posted bonds to clear SSE’s and the secondary subcontractors’ liens. This is valid, on this issue, namely on triggering and the applicable version of the Act.

92There are also issues with the rate of interest. In this case, only one contract, the Building Subcontract included particulars for interest. Interestingly, the other two stated that same were set out in paragraph 34, but no paragraph 34 exists. This issue is also complicated by the argument of SSE that the contracts were being “treated as one”, which is an issue for litigation or arbitration.

93All these issues lead me to conclude that I ought not to adjudicate interest at this time.

94The issue of “treatment as one” should be decided first before deciding interest (applicable rate will follow); the “treatment as one” is not for me to decide on this motion. Even though Varpio J. made strong comments on this issue, there is no decision yet on that issue.

95Further, given I have calculated the amount, in my view, the issue of interest, if not resolved by the parties, could be dealt with in litigation or arbitration between SSE and Ausenco.

96The above being said, the parties are encouraged to resolve the issue, as it continues to accumulate.

Stay of the Within Action

97SSE sought an order staying SSE’s action initially under either section 7 of the Arbitration Act, 1991 (the “Arbitration Act”) or section 106 of the Courts of Justice Act (the “CJA”) and directing the parties’ disputes be arbitrated. At the hearing, they sought the stay pursuant to s. 106, however submitting that principles related to motions to stay enunciated in cases dealing with s.7 Arbitration Act offered guidance in analyzing stay requests related to construction industry contracts.

98The court can stay an action under s. 106 of the Courts of Justice Act using broad judicial discretion to ensure justice. The court considers judicial economy, prejudice, the balance of convenience, and the merits of the case.

99I see no need to address s.7 of the Arbitration Act any further; as this is a s. 106 stay motion.

100I agree however that I most certainly am not precluded from considering the nature of the claims and articulated policy reasons underlying arbitration, in the context of construction contracts and case authority comments concerning same. Same is very relevant.

101Section 106 of the CJA grants the court a wide discretion to order a stay based on what the courts consider just in the circumstances.

102I find that after a review of all the considerations raised that this is a case which strongly calls for me to exercise my discretion to order a stay, on the facts of this case, on balance, for fairness, efficiency and other reasons as stated herein. The case ought to be “paused”, and arbitration directed, at the very least on jurisdictional issues, and it is appropriate in the circumstances.

103There is no question that all three subcontracts contain arbitration clauses.

104Clauses SCC 8.2 and SCC 8.3 in the Building Subcontract are mandatory alternative dispute provisions; good faith negotiations, followed by mediation, followed by arbitration (single arbitrator; CCDC 40 rules). The clauses start at SCC 8.1. SCC 8.2.5. SCC 8.2.6 however contains provisions and a scenario that agreement to arbitrate is not binding; that either party may refer an unresolved dispute to the courts or any other form of dispute resolution to which the parties agree to use.

105Clause 28 of the Concrete Subcontract is a mandatory alternative dispute provision; written notice, followed by a meeting, followed by arbitration (three-member panel; ICC rules).

106Clause 28 of the SMP subcontract is a mandatory alternative dispute provision; written notice, followed by a meeting, followed by arbitration (three-member panel ICC rules).

Steps in the Proceedings

107SSE registered a lien. SSE initiated an action to perfect the lien. Of note, they are required to do that by the Construction Act if they want that security.

108A lien claim is an enforceable action in the Superior Court of Justice. This act alone is not a waiver based on the case authorities filed. Of note, in this case, the Building Subcontract dispute resolution section notes that asserting a statutory lien and initiating judicial proceedings are not to be construed as a waiver to proceed to arbitration to adjudicate the merits of the claim upon with the lien is based. Specifically, it states, “Nothing in Part 8 of the Subcontract Conditions – DISPUTE RESOLUTION – shall be construed in any way to limit a party from asserting any statutory right to a lien under applicable lien legislation of the jurisdiction of the Place of the Work and the assertion of such right by initiating judicial proceedings is not to be construed as a waiver of any right that party may have under paragraph 8.2.5 of SCC 8.2 – NEGOTIATION, MEDIATION AND ARBITRATION - to proceed by way of arbitration to adjudicate the merits of the claim upon which such a lien is based.

109In this case, there is also the issue of all subcontracts between SSE and Ausenco being “treated as one”, another jurisdictional issue an arbitrator is capable of and has authority to adjudicate, more said later herein.

110Just “participating” in the court proceedings in my view is not enough, it matters what was transpiring at the time, what steps were being taken by whom and why, based on the case authorities filed, which overall look at what the party seeking the stay has done.

111SSE commenced its action the within action November 9, 2023.

112While Ausenco’s actions demonstrated they wanted the dispute to be dealt with by litigation taking steps to move forward, at the same time, SSE was not staying silent on their desire to proceed to arbitration over this process, and regarding the actions of Ausenco in doing so.

113The facts of this case are different from many of the case authorities filed, some of which did not have the motions that this case had or have multiple or complicated claims; or had plaintiffs having no reasonable explanation for not taking action, delaying without anything else going on in the proceeding. Determination of the issue of stay is very fact dependent.

114After SSE filed their claim, SSE states that they were “forced” to file a statement of defence to Ausenco’s counterclaim and did so to avoid being noted in default. I accept this on the record before me.

115SSE’s new counsel was retained in or about November of 2023, and when they came on board, there was Ausenco’s lien discharge/reduction motion to contend with, which was argued over two days, starting January 4, 2024, which motion, was not an inconsequential motion, both as to substance and the physical work that had to be completed in respect of same. The volume of the CaseCenter file speaks for itself. I find it was reasonable to focus on this motion at this time based on the circumstances.

116SSE states their opposition to Ausenco’s lien discharge/reduction motion was defensive, necessary, and does not amount to waiver and I agree. SSE had no choice but to respond to protect its statutory lien rights and to preserve its security. Case authorities have recognized that steps taken to defend against such an “attack” on lien rights are “necessary and justified to preserve [lien] rights and avoid any attempt at a summary dismissal.” A party cannot be taken to have waived its arbitration rights by doing only what was required to protect its lien rights. SSE’s response was defensive, and not inconsistent with intent to arbitrate.

117Shortly after the lien discharge/reduction motion hearing was completed, on the record before me, SSE took initiative to propose arbitration between February to June. It is not unreasonable to take time to attempt to canvass agreement to arbitrate versus diving into a costly motion affecting six proceedings. The request/proposal was not unreasonable. Again, the subcontracts contained arbitration agreements. Of note, the Building Subcontract provides that commencement of a lien claim is not a waiver or cause loss of ability to pursue arbitration. And even SCC 8.2.6 of the Building Subcontract allows parties to proceed to a dispute resolution that they agree to in the case where the dispute resolution scheme compliance has not taken place.

118On February 17, 2024, SSE delivered a request which proposed potential arbitrators, and comments that counsel appreciates “we are waiting for Justice Varpio’ s decision”, but notes there is a mandatory arbitration process. The correspondence expresses that mediation/arbitration makes sense, is more appropriate and beneficial to everyone. The correspondence asks for a response as to whether Ausenco agrees. Ausenco could have agreed, looking at the plain language of Part 8 of the Building Subcontract.

119On March 27, 2024, Ausenco’s counsel replied, and inquired as to SSE’s plan to amend their [statement of] claim while continuing “to wait” for Varpio J.’s decision. Of note, part of the motion included an issue of whether SSE wilfully exaggerated their claim – what they could establish their claim to be on the evidence in that motion. Further, in this correspondence Ausenco’s counsel notifies that they are drafting up their defence based on the existing pleading, stating if they do not get the amended claim by a specified time frame they will respond on that existing pleading. In this letter, counsel states that Ausenco is not interested in arbitration unless SSE “abandons its lien claim”, and taking a position that so long as all the liens are there, a court proceeding is the only route forward”.

120SSE counsel wrote on April 6, 2024, to Ausenco counsel, and suggested that next steps be coordinated after the expected release of Varpio J.’s decision. In this correspondence, counsel categorized Ausenco’s response as conveying an ultimatum (meaning abandoning their lien claim in order for Ausenco to agree to arbitrate); and expressed their position that preserving and perfecting a lien is not a waiver nor does it nullify arbitration. The correspondence notifies of SSE’s intention to arbitrate. SSE counsel raises “stay” to avoid litigating multiple proceedings.

121Ausenco does not reply ever taking a position that waiting for Varpio J.’s decision was not required or necessary, whenever it was suggested by SSE.

122On April 18, 2024, Ausenco’s counsel stated Ausenco was not prepared to wait any longer for an amended claim and delivered their statement of defence and counterclaim.

123SSE counsel wrote on May 8, 2024, inquiring about SSE’s defence to Ausenco’s counterclaim being due and reiterating their position that arbitration should commence once Varpio J. ruled on the discharge motion, and suggesting that their April 6, 2024-correspondence was ignored (SSE counsel raising that perfecting a lien is not a waiver nor does it nullify arbitration). This correspondence was also seeking position on whether default steps would be taken.

124On May 13, 2024, Ausenco counsel replied communicating that they did not agree that Ausenco was required to arbitrate because litigation was commenced and being “prosecuted” suggesting that SSE lost the ability to insist on arbitration when it chose to register a lien and perfect it with an action. At this time, other than pleadings, the only issue being “prosecuted” was Ausenco’s motion to discharge/reduce the lien; they were waiting for Varpio J.’s decision on that. This correspondence states that doing both would be abusive, and that Ausenco would oppose any attempt by SSE to initiate arbitration unless they abandon their lien claim (stating this for the second time). They raise no issue of lack of notice or compliance with contract preconditions for arbitration. While stating they would not note SSE in default “for now” Ausenco counsel communicated (quite clearly) that Ausenco requires a defence and instituted an approximate 6-week deadline.

125The position Ausenco took regarding commencement of the action and “prosecuting” the case, was wrong in law, in my view, that SSE lost the ability to initiate arbitration by the actions that had occurred to that date. SSE at this stage was not “prosecuting” their action but taking defensive action to preserve their lien.

126On June 17, 2024, Ausenco counsel sought cooperation in organizing the actions and reiterated to SSE that Ausenco required the defence to counterclaim as previously stated, but now adding, failing which they will note SSE in default. Accordingly, I think it is fair to state that on June 21, 2024, SSE had to deliver its defence to avoid being noted in default; again, having to take defensive action, prompted by Ausenco. Of note, SSE communicates a position that they were doing so without prejudice to their right to pursue arbitration and that the defence was only being delivered to avoid being noted in default, as Ausenco indicated they would do, if they did not.

127On June 24, 2024, SSE counsel corresponded with Ausenco counsel about Ausenco’s demand for the defence, reiterating that SSE has repeatedly expressed that arbitration is required and communicating that SSE has no intention of prosecuting the lien action it commenced to preserve its lien rights. The correspondence interprets Ausenco as refusing to engage and making inexplicable threats to note SSE in default in breach of the parties’ contract (to arbitrate). The correspondence states that SSE instructed to bring a motion to stay and for release of the undisputed portion of the holdback and communicating a position agreeing that funds should first be allocated to the secondary subcontractors before SSE (clearly recognizing those “lower down on the chain”). The correspondence asks for Ausenco’s position on a motion to stay and for release of the holdback. It is not unreasonable to ask for position before instituting a costly motion. Of note, this correspondence also requests state of account information under s.39 of the Construction Act to obtain information on Ausenco’s position (subsection 4.1) which is relevant to the holdback motion. The correspondence further expresses trust that no further steps will be taken in the action until the motion could be heard. It provides case authority references. It also communicates that the intention of the motion on the holdbacks is to streamline arbitration and/or the lien action, that same would significantly simplify same. It communicates case and statutory authority on the holdbacks. It also points to Ausenco’s statement of defence acknowledging that it has a hold back of $5,019,304.66 and facts regarding the certifications. I accept that at this time SSE’s goal was to reduce the litigation (to pay the secondary subcontractors and to reduce the litigation to a single focus between SSE and Ausenco that could be efficiently addressed through arbitration who they had arbitration agreements with). Ausenco would have 21 days to respond to a s.39 request.

128SSE acknowledges that Ausenco reiterated on July 19, 2024, their assertion that no amounts were owing and advising that they would oppose a stay motion and reiterating their position that SSE forfeited the right to arbitrate by commencing litigation.

129SSE acknowledges that Ausenco replied to the said s.39 request on July 22, 2024, noting there was no identified s.12 retention and/or s.17(3) set-off amounts specified or identified.

130July 26, 2024, SSE makes another s.39 request, answered by Ausenco August 3, 2024. At this point, SSE would have what it needed to pursue the motion for stay and holdback.

131SSE asserts that from this date to September of 2024, however, the parties were exploring ways to address the disputes while the lien discharge/reduction motion remained on reserve. But also, on August 30, 2024, the Divisional Court had released a key decision, and further submissions were sought to be made to Varpio J. on the lien discharge/reduction motion, which were heard December of 2024. This step, again, was related to preservation of SSE’s lien, not to prosecute their action. I agree.

132As to SSE waiting for Varpio J.’s decision to bring the within motion, I do not agree that none of what was in issue before him had no bearing on proceeding straight to arbitration. SSE viewed waiting for the decision as a necessary “inflection” point for determining next steps. I agree. While I appreciate that SSE would not have lost their ability to pursue what they state is owing to them under the subcontracts through arbitration if the lien was discharged (as is the case when a lien has not been property filed or filed at all), of note, in this case, Ausenco in part was raising issues with SSE’s claims themselves, the ability of SSE to claim delay damages under the various subcontracts to hence register a lien in respect of same, “likelihood of success”, and ability to register for Scott Concrete’s work, the “treatment as one”, estoppel issue. The potential findings made by Varpio J., if he made them, could have indeed affected proceeding with arbitration and/or even created a situation of potential inconsistent findings if arbitration proceeded in advance of release of the decision. An arbitrator would decide how much money would be owed by whom to whom and application, interpretation and administration of the contracts. The potential of Varpio J.’s decision causing a shift or creating a significant change to that, was alive. The highlighted potential flaws in SSE’s claims and/or cross-liability/estoppel issues were in fact commented on by Varpio J., including but not limited to Scott Concrete and SSE being “treated as one”, what SSE had proof of or not of in respect of what they were claiming, and even ability to claim delay damages per the subcontracts. The potential for impact on SSE’s claims for arbitration was there.

133Ausenco moved forward and proceeded with a procedural motion (for joinder). When Ausenco brought the joinder motion, SSE did not oppose but the order was granted without prejudice to SSE’s right to move for an order staying their action. This motion prompted SSE to bring its stay motion six weeks later, November 7, 2024, within approximately 3.5 months after Ausenco stated they would oppose a stay.

134As to participating in a conference, having a case conference considering the number of affected parties in this case, the numerous documents to gather, rights to cross-examination engaged on affidavits file, and seeking to set timelines for it, this was reasonable and related to the motion for the stay and the holdback. Of note, at the case conference with respect to the within motion and other steps, was noted as without prejudice to SSE’s position that the disputes should be arbitrated.

135As to the holdback motion, Ausenco raises this motion as SSE’s “active” participation in this proceeding, going against negative obligation not to process substance/non-jurisdictional aspects of its dispute with its contractual counterparty, through litigation. SSE states their motion to compel the release of statutory holdback cannot amount to a waiver or breach because these claims against holdback are not arbitrable. I accept this in this case. The holdback in question involved 5 other parties who are not party to the contracts between SSE and Ausenco. These five parties had an interest in the outcome and are entitled to be at the table and heard. While I agree that some holdbacks can be the subject of arbitration, the arbitrable nature and/or binding effect in this specific case could certainly have been questionable, same involving 5 other interested parties who would not be at the arbitration. Their contracts do not form part of the SSE/Ausenco contract disputes. There are no clauses that draw them in either to arbitration (unlike the head contract with the Owner can for example). Holdbacks further are statutory obligations. Side note, of note, when it comes to owners, the claim must be determined under the statute. Bringing this motion, on these facts, to deal with the holdback, I do not find is a waiver or a breach.

136As to the secondary subcontractors registered liens and claims, and SSE denying their validity and quantum in their defences and counterclaiming against them, this too is part of SSE defending themselves which they are required to do within set timeframes so as not to prejudice themselves. The complaint about SSE issuing a counterclaim ignores that this is a case where factually, Ausenco paid secondary subcontractors directly and admittedly, did not always retain the required holdback; a counterclaim is the only way to maintain a defence to these actions.

137I do not, nor have I ever had the sense from the evidence and positions taken thus far that SSE is not genuinely interested in arbitration or are seeking it for a tactical advantage; or that the delay was undue or that the motions (defending or bringing) can be characterized as active aggressive litigation in this process. On the record before me, SSE has been trying to convince/seek that Ausenco arbitrate for some time. SSE took necessary procedural steps to maintain their rights under the lien regime, took defensive steps when other procedural steps were taken, and their motion for holdback was not arbitrable with five other lien claimants not party to their contracts with Ausenco. I accept on the record before me that SSE was not aware that Ausenco was negotiating settlement with various of the secondary subcontractors prior to bringing their motion, and even asserts that Ausenco viewed the other secondary subcontractors as necessary/interested parties to the motion.

138I find, the overall pace leading to bringing the motion for the stay was not unreasonable considering all of what was going on and transpiring, on the main action and considering there were five related claims being processed. As for the case, Sala v. Jack Aaron & Company Ltd., 2009, this case, in my view, was not as complicated as the circumstances of this case (with multiple related claims being processed regarding the same construction project, lien perfection rights, motion to defend lien, etc.), the subject matter is very different (real estate transaction) to the case at bar and even the language of the arbitration clauses in that case presents as being very different, even the triggering (much more simplistic). It is not helpful or analogous, in my view.

Multiplicity of Proceedings and Processing of Claims

139Ausenco states that SSE’s action is not the only action to consider; there are five other individual lien actions.

140Of note, some of the claims have been dealt with by default judgment or dismissed/discontinued against some parties on the record before me, as set out in the chart of parties.

141Next, Ausenco now has been assigned/has assumed four of the five secondary subcontractor debts claimed in the secondary subcontractor’s actions by settling their claims with them: all but that of United Rentals. Ausenco is now “in charge” of the remaining proceedings. This lessens the issue of concern about other proceedings dealing with the same underlying matters.

142United Rentals has obtained default judgment against SSE. (So has CEC for that matter.)

143There are no ongoing arbitrations in any of the secondary subcontractor claims.

144It is not disputed that the litigation is in the “early stages”, all the claims. Productions are not completed, discovery has not taken place on the main actions; pre-trials have not taken place, and there are no trial dates set for any of the claims.

145Accordingly, it could be a long time before the running claims could or would reach a trial.

146SSE has taken steps to commence arbitration, and a deposit was accepted.

147The work done to date in the litigation is not “lost” and is “transferrable” (prevention of duplication issue). The framing of all disputes/issues and productions already made to date can be utilized at arbitration.

148There is no evidence of impactful harm/significant prejudice caused to Ausenco, if the litigation is stayed at this time.

149In my view, in these circumstances, if jurisdictional issues are adjudicated in favour of arbitration, an arbitration of the interests between SSE and Ausenco could streamline the secondary subcontractor claims and/or narrow the remaining disputes, which could reduce court involvement.

150At the very least there are issues that ought to be decided by an arbitrator first; competence-competence principle.

151For these reasons, I do not find that this issue is one to deny the stay request.

Conduct: Exaggeration of the Lien (Merit of Claim) and Action of Registering for Scott Concrete

152As for Varpio J. made a finding that SSE wilfully exaggerated their claim by over eight million dollars, I noted that Varpio J. did recognize the evidence that SSE was indicating that they agreed that they were estimating on the records that they had, and they did so inaccurately. Of note, Varpio J. while finding that the lien was exaggerated (inaccurate estimates: para. 152), did not find SSE’s claims frivolous, vexatious or an abuse of process (at para. 151); not highly unlikely to succeed regarding the three contracts (at para. 153). Varpio J. did not find that SSE misused the process (para. 153). He accepted that the lien was placed “in the face of the need to place a large and timely lien”.

153As to SSE registering for the Concrete Subcontract, he found a triable issue (promissory estoppel), and that there is an issue for trial regarding the lien associated with delay damages under the Concrete Subcontract based on the facts including Ausenco allegedly paying some of those claims (and possibly under the other contracts: para 153).

154Varpio J. ordered the lien reduced from $39,990,890.50 to the amount of $23,670,377.46 plus HST, namely, $26,747,526.53. By his decision, although there is a typographical error in para. 155, it is clear by reference to other paragraphs, that the lien was not discharged, only reduced as follows: Concrete Subcontract: $1,219,807.79 plus alleged delay damages claimed of $14,551,959.08 plus HST; Building Subcontract: $1,949,835.62 plus HST; and SMP Subcontract: $5,948,974.97 plus HST.

155With these said findings, this is not conduct that would disqualify SSE from the relief they are requesting.

Non-compliance with Orders; Cross-examinations; Productions: Unfair Misconduct)

156Ausenco raises SSE’s conduct in this case yet expecting the court to grant discretionary orders. Ausenco asserts SSE does not come to court with clean hands. SSE has not complied with orders (timetables for delivery of materials and/or cross-examinations, and productions). Ausenco highlights that SSE did not deliver reply evidence in accordance with the timetable ordered; that SSE refused to produce their affiant for cross-examination pursuant to notice for April 30, 2025, but did so on May 9, 2025; that on April 30, 2025 SSE delivered a further affidavit not limited to reply; SSE has not produced its documents as ordered, and SSE failed to deliver and file their factum by the timetable ordered. At the cross-examination, Ausenco states many questions were not answered (for example on steps to notify/seek arbitration), they were refused on advice of counsel.

157These issues to me in the balance do not rise to a level of “unclean hands” or conduct to deny the stay request, on the whole of the circumstances.

158The cross-examinations were ultimately completed, only 9 days late.

159Refusals on cross-examination were not pursued by Ausenco, or productions that may or may not have been fulfilled by any motion. The record before me shows that Ausenco simply reserved the right to argue the late filing of the affidavit filed April 30, 2025.

160The issue of whether a refusal was justified on a cross-examination on a motion for stay and holdback relief, on the basis that counsel interpreted the question as legal argument, as opposed to one attempting to discover facts, or irrelevant to the stay or holdback motion, is not acting in bad faith or unethical; certainly not without a proper motion to determine same.

161On productions, SSE explained the difficulties gathering documents because of the amalgamation between Scott Concrete and SSE. The explanation is acceptable.

162The affidavit for the April 30, 2025-filing, was (admittedly, by Ausenco counsel himself) not referred to very much at all during the motion. Next, for the most part the information in the affidavit is not new surprising information, repeating facts presented on Ausenco’s lien discharge/reduction motion, SSE’s lien, or already known/existing discoverable information in the materials previously filed. Of note, a significant portion of it also presents as legal argument/position, that could have been made on documents already filed, and in my view was unnecessary. Quite frankly there was limited value in this affidavit accordingly. Further, the time that passed regarding the deadline was not gross, 30 days late.

163The motion was argued on time, and Ausenco had opportunity to prepare and file a reply factum. They did not seek to adjourn.

164Overall, I do not find that there was any significant harm to Ausenco related to any of this conduct.

165As such in the grand scheme of things, the conduct complained of does not disqualify SSE from seeking the stay, that they were acting unethically or in bad faith.

166SSE points to conduct of Ausenco. Ausenco had refused to pay out basic holdbacks to parties whose claims were not in dispute, which SSE states kept multiple parties in the action unnecessarily and thus manufacturing the multiplicity it relies on to oppose the stay; that they have adopted an obstructionist approach deliberately for their own benefit. I do not feel the need to address this submission on this specific issue, true or not, as my focus on this motion is the conduct of SSE who is the party claiming the relief.

Arbitration as a Process

167It is not unfair to state that arbitration has long been viewed as the preferred method of resolving disputes in the construction industry. Ausenco did not deny SSE’s submission that the construction industry has long favoured arbitration over litigation as the preferred method of resolving disputes. It clearly was the preferred method in this case, as same is explicitly a term of each of the three subcontracts, and arguably highlights the primacy of arbitration over judicial proceedings.

168There are practical advantages of arbitration suited to complexity, urgency, and the specialized nature of construction projects. This case has complexities related to delay damages, and set-off claims, and is not limited to simple nonpayment of invoices issued.

169Arbitration does provide opportunity to select a decision-maker(s) with technical expertise with construction projects. This point was not denied by Ausenco in their submissions.

170Arbitration has the advantage of reducing delay in resolution of the claims. Case authorities have emphasized the prioritization of efficiency, expediency and procedural flexibility that arbitration offers, along with specialized decision-makers.

171Case authorities submitted have articulated that there are strong public policy reasons in favour of holding parties to their agreement to arbitrate, their chosen process, generally it should be respected; and jurisdictional issues should at the very least be given opportunity to be decided beforehand.

172Allowing arbitration to proceed would not compromise the integrity of any of the claims, as Ausenco has been assigned/assumed the claims, rights and interests of the four secondary subcontractors’ claims that have not been adjudicated on. Again, United Rentals has a default judgment that has not been set aside, granted in 2023.

173As stated in this decision, objectively, I cannot find that SSE has expressly or impliedly affirmed the correctness of litigation or demonstrated a willingness to go along with litigation instead of arbitration. The opposite is true.

174SSE has paid the fee to initiate arbitration. They have taken steps to permit arbitration to proceed if the stay is granted. The deposit has been accepted.

175These considerations favour the stay request.

Failure to Follow Dispute Resolution Processes Outlined in the Agreements

176The question of these alleged failures is live in my view because of the “treatment as one” argument; and potentially related to both parties’ steps and/or lack thereof.

177There are facts and documents outlining SSE’s delivery of two Ankura reports and notice on the Concrete Subcontract and them being accepted by Ausenco as Section 28.1 notice.

178Again, in this case, SSE has explained that they were acting as though all subcontracts were being “treated as one”. The whole process of SSE dealing with Ausenco is complicated by this, the record presents.

179Ausenco prepared s. 39 responses to claims under the Concrete Subcontract but also highlighted their ability to make decisions in the Building Subcontract but, as to giving proper written decisions to trigger dispute resolution in SCC 8 when they did not pay for services they did not agree with, that remains to be determined (as a question of payment under the contract), on the record before me.

180Of note, while I am not finding this for clarity, when SSE did notify Ausenco after this litigation commenced of its intention to arbitrate in a general sense with respect to the statement of claim issues (dealing with SSE’s statement of claim at the time which deals with all three subcontracts), I do not think it is unfair to state that Ausenco acknowledged ability to arbitrate, and that they were asserting it was lost by SSE registering and perfecting their lien only. They did not suggest failure to follow contractual steps/preconditions until the within motion. I have set out the correspondence above. I will not repeat same. The documents filed reflect that Ausenco was communicating an unwillingness to engage and desire to proceed to litigation unless SSE abandoned their lien claim.

181Failure to follow a dispute resolution process in arbitration agreements typically falls within the jurisdiction of an arbitrator to decide rather than a court; an arbitrator is capable and has authority to determine if a failure bars a claim or right to arbitrate is retained. I agree that an arbitrator ought to be given the opportunity to rule first, competence-competence principle.

182In the Building Subcontract, Ausenco’s argument presents as if SCC 8.2.6 resolves the issue, that they were permitted to proceed to court, if the parties did not follow the outlined dispute resolution process which includes mediated negotiations, that in such a case SCC 8.2.5 arbitration agreement is not binding and the dispute can go to the courts. Again, the “treatment as one” issue is live. Also, of note, this provision also states, or any other form of dispute resolution, including arbitration, which the parties have agreed to use. The wording does not bestow a right to a single party or set a mandatory process to chosen by one, meaning even if they are right, that the court would lose ability to consider stay and the request to direct arbitration.

183Accordingly, this is not a consideration that weighs against a stay being granted in favour of directing arbitration.

Issue of Different Arbitration Processes Named in the Subcontracts

184Ausenco raises the differing arbitration provisions in the three subcontracts. The Building Subcontract provides for referral to arbitration under the Rules of Arbitration of Construction Disputes as provided in CCDC 40 in effect of the time of bid closing. Dispute Resolution is found in Part 8, SCC 8.1 to 8.3. The SMP and Concrete Subcontracts have a totally different process, ICC.

185Again, SSE has taken the position that SSE and Scott Concrete were being “treated as one”, and there exists “one broad agreement”. According to Varpio J., there is strong evidence on this issue. On that motion, Varpio J. pointed to written representations made by Ausenco and found that Ausenco was viewing the business arrangement as one broad agreement, on the plain meaning of the written representation. Varpio J. referred to the written representation as “a powerful piece of evidence that Ausenco intended to treat the agreements “as one”.

186A Change Order was issued within the Building Subcontract. Subcontracts with Scott Concrete are pulled directly in and all subcontracts with SSE.

187This is another issue that raises the power of an arbitrator to rule on its own jurisdiction and the issue that courts should generally not interfere with initial jurisdictional rulings. Interpretation, application, and administration of the contracts; this is the wording of the jurisdiction in the Building Subcontract, providing generally that the differences between the parties to the Subcontract as to the interpretation, application, or administration, or any failure to agree, where agreement is called for, that is not resolved in the first instance can be settled in accordance with the dispute resolution in the contract. The SMP and Concrete Subcontract, jurisdiction includes similar and includes issues “in connection with”.

188Deciding on validity or jurisdiction of dispute resolution or applicable process, in this case, presents as included in the jurisdiction of arbitration under all the subcontracts, and with the “treatment as one” issue, these jurisdictional questions at the very least, in this case, should be raised before the arbitrator first: competence-competence principle.

COSTS

189The parties are encouraged to resolve the issue of costs. If they cannot, I will be ordering that they be addressed in writing, with terms and timelines for filing, and delivery to the trial coordinator, carbon copying my assistant.

CONCLUSION

190For reasons set out herein, this Court orders that:

1. Leave is granted to SSE to bring the motion bought for payment of the holdback and stay with direction to undertake arbitration.

2. The motion is granted as ordered herein: the plaintiff has met their burden for same.

3. AUSENCO ENGINEERING CANADA INC., the defendant, without prejudice to claims they may make in arbitration, shall forthwith pay to SCOTT STEEL ERECTORS INC., the plaintiff, on account of holdbacks, the principal sum of $1,629,242.92.

4. The defendant shall pay the sum of $78,826.45 into court on account of the lien claims of United Rentals Canada Inc.

5. The within action and counter claim are hereby stayed until further order of this court, in favour of arbitration, which is hereby directed to be undertaken, at the very least the jurisdictional questions, or more as they may otherwise agree.

6. If the parties are not able to resolve the issue of costs, the issue of costs of the motion shall be dealt with in writing. Within 30 days of today’s date, the plaintiff will prepare, deliver and file to the attention of the trial coordinator, carbon copied to the judicial assistant for Rasaiah J., their written submissions, which shall not exceed 5 pages in length, costs outline/bill of costs, and any relevant offers to settle made. Within 45 days of today’s date, the defendant will prepare, deliver and file to the attention of the trial coordinator, carbon copied to the judicial assistant for Rasaiah J., their written submissions, which shall not exceed 5 pages in length, costs outline/bill of costs, and any relevant offers to settle made.

Rasaiah J.

Released: January 19, 2026

CITATION: Scott Steel Erectors Inc. et al v. Ausenco Engineering Canada Inc. et al, 2026 ONSC 391