Ledore Investments Limited (Ross Steel Fabricators & Contractors) v. Ellis-Don Construction Ltd., 2017 ONCA 518
On a major bridge project in southwestern Ontario, the respondent Ellis-Don was the general contractor and Ledore was a subcontractor supplying steel to the project. The project was delayed, and Ellis-Don wrote a letter to Ledore stating that:
In addition to impacting the schedule, Ross Steel also forced Ellis-Don to expend substantial monies to accelerate the work in an effort to recover the schedule. We are currently assessing the financial impact that Ross Steel’s slippages have had on Ellis-Don and we intend to recover the costs from you.
The contract contained the following clause:
- As of the date of the final certificate for payment of the prime contract, the contractor expressly waives and releases the subcontractor from all claims against the subcontractor, including without limitation those that might arise from the negligence
or breach of this agreement by the subcontractor, except one or more of the following:
- (a) those made in writing prior to the date of the final certificate for payment of the prime contract and still unsettled; [Emphasis added.]
The question submitted to the arbitrator was whether the letter quoted above satisfied the requirement of clause 15.1(a), i.e. whether Ellis-Don had made a claim in writing to exclude the delay claim from the general application of clause 15.1. The arbitrator held that it had not, finding that while Ellis-Don might have contemplated a delay claim, the intention to claim was not the same as a claim. In so finding, the arbitrator distinguished case law such as Doyle Construction Co. v. Carling O'Keefe Breweries of Canada Ltd. (1988), 27 B.C.L.R. (2d) 89 (C.A.), which governs the sufficiency of notices of claim. The arbitrator held that clause 15.1 did not require a notice of claim, but a claim made in writing. That claim had not been made and, as a result, Ellis-Don had waived its right to recover. Ellis-Don’s appeal was allowed by the Ontario Superior Court of Justice. J.N. Morissette J. held as follows:
- Doyle, provides legal authority for the general proposition that provisions requiring claims to be made in writing should be treated as provisions requiring written notice of claims, contrary to the approach taken by the arbitrator.
- In this Court's view, the arbitrator erred in finding that 'claims made in writing" should not be treated as provisions requiring written notice of a claim.
- As indicated above, not only was there legal authority for that general proposition, but also authority suggesting an approach precisely opposite to that taken by the arbitrator. In doing so, the arbitrator misapplied the general principles and considerations established by Doyle to reach his conclusion that Article 15.1 (a) had been satisfied but instead fashioned and applied his own test in that regard, contrary to the applied legal principles established.
- For all of these reasons, the arbitrator's decision on the ground of appeal on which leave was granted, is set aside. Ellis-Don's letters and in particular the letter of January 18, 1999, did constitute an "unsettled claim made in writing" satisfying the provisions of Article 15.1 of the parties' agreement.
A further appeal to the Court of Appeal was allowed and the arbitrator’s decision reinstated.
To begin with, the Ontario Court of Appeal once again stressed that deference is owed by courts when reviewing arbitral awards, reaffirming its two 2016 decisions in Popack v Lipszyc (“Popack”) and Ottawa (City) v Coliseum Inc. (“ Coliseum”) to the same effect. [NTD: HYPERLINK TO VALO ARTICLE?] The court held that the test for reasonableness, with respect to both tribunal and arbitral decisions, is a highly deferential one, encompassed in the formulation in the still leading case, Dunsmuir v. New Brunswick, 2008 SCC 9. A decision by a tribunal or arbitrator will not be set aside as long as it falls within a range of possible, acceptable outcomes which are defensible in respect of the fact and law.
In applying that standard, the court held that the arbitrator’s interpretation of clause 15.1 was “eminently reasonable”. With regard to the application of Doyle, not only was the arbitrator’s decision not inconsistent with it, but the dichotomy he applied between the “intention to make a claim” and “an actual claim” was held to be similar to the distinction in Doyle between mere grumblings in meeting minutes and the making of an actual claim.
The arbitrator’s decision was therefore reinstated.