



COURT OF APPEAL FOR ONTARIO

CITATION: Ledore Investments Limited (Ross Steel Fabricators
    & Contractors) v. Ellis-Don Construction Ltd., 2017 ONCA 518

DATE: 20170620

DOCKET: C63179

MacPherson, Blair and MacFarland JJ.A.

BETWEEN

Ledore
    Investments Limited, carrying on business

as Ross
    Steel Fabricators & Contractors

Plaintiff (Appellant)

and

Ellis-Don Construction Ltd.

Defendant (Respondent)

W. Ross MacDougall and Robin E. Joffe, for the
    appellants

Angelo D'Ascanio, for the respondent

Heard: June 15, 2017

On appeal from the judgment of Justice J.N. Morissette of
    the Superior Court of Justice, dated August 29, 2016.

By the Court:

[1]

The appellant Ledore Investments Limited appeals from the judgment of
    Morrisette J. of the Superior Court of Justice setting aside a commercial
    arbitration award rendered by arbitrator Larry Banack.

[2]

In a major bridge construction project in southwest Ontario, the
    respondent Ellis-Don Construction Ltd. was the general contractor and the
    appellant was a subcontractor supplying steel to the project.

[3]

The underlying dispute arose out of the final subcontract accounting
    between the parties. There is no dispute that there were delays in the course
    of the project and that some money was owed by the respondent to the appellant,
    and
vice versa
. The respondent wrote to the appellant a number of
    times about the delay and ultimately withheld some funds.

[4]

In the crucial letter, the respondent said:

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
    Steels slippages have had on Ellis-Don and we intend to recover the costs from
    you.

[5]

The parties referred their dispute to a commercial arbitrator. Both
    parties relied on an article (Article 15) of the subcontract to say that the
    other party was estopped from raising certain delay costs claims. The
    arbitrator agreed with both parties assertions on the estoppel issue.

[6]

With respect to Ellis-Dons delay costs claim, the arbitrator said:

I find that while Ellis-Don may have contemplated a delay claim
    in January 1999 and may have discussed amongst its own representatives a
    possible strategy to assert a claim for delay costs in the amount of $400,000,
    there is no proof that it actually did so.
As stated earlier, the intention
    to claim is not the same as a claim
. Further, the failure to advance the
    delay claim in the August 4, 1999 meeting supports my view that Ellis-Don did
    not assert a delay claim in-writing before the final certificate of
    completion. [Emphasis added.]

[7]

With respect to Ross Steels delay costs claim, the arbitrator said:

For many of the same reasons above, Ross Steels claims for
    delay costs cannot be pursued.

[8]

Ross Steel accepted the arbitrators decision. Ellis-Don did not. It
    sought leave to appeal which Leach J. granted on this issue:

Ellis-Don is granted leave to appeal in relation to its
    contention that the arbitrator erred in law in finding that the letters sent by
    Ellis-Don to Ross Steel, (and the letter of January 18, 1999, in particular),
    did not constitute an unsettled claim made in writing, capable of satisfying
    the provisions of Article 15.1 of the parties agreement.

[9]

In relevant part, Article 15.1 of the subcontract provides:

15.1   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.]

[10]

The
    appeal judge allowed Ellis Dons appeal from the arbitrators award. She held
    that the arbitrator did not apply what she called the general principles
    established in
Doyle Construction Co. v. OKeefe Breweries of Canada Ltd.
,
    [1988] 5 WWR 677 (BCCA) (
Doyle
) to determine whether or not the
    requirement of Article 15.1(a) had been satisfied. She continued:

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 courts 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 the
    opposite to that taken by the arbitrator. In doing so, the arbitrator
    misapplied the general principles and considerations established in
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.

[11]

The
    appellant appeals this decision, essentially on two grounds.

[12]

First,
    the appellant asserts that the standard of review of a commercial arbitrators
    decision is reasonableness and that the appeal judge erroneously applied a
    correctness standard. The appellant points to the word erred in the passage
    from the appeal judges decision set out above.

[13]

The
    appellant is correct in the first of these two propositions. The standard of
    review on appeal from a commercial arbitration award will generally be
    reasonableness: see
Sattva Capital Corp. v. Creston Moly Corp
, 2014
    SCC 53 (
Sattva
), at para. 106.

[14]

In
    our view, the appellant is wrong in the second of its propositions on this
    issue. In her reasons, the appeal judge explicitly stated the issue in this
    fashion: The question therefore is whether there is a reasonable legal basis
    for the Arbitrators impugned decision/conclusion. It is true that in one
    place the appeal judge used the word erred in her description of the
    arbitrators decision. However, in light of her explicit framing of the legal
    issue in terms of reasonableness, and reading her reasons as a whole, we are
    satisfied that the appeal judge applied the proper test in her analysis.

[15]

Second,
    the appellant contends that the appeal judge erred by determining that the
    arbitrators decision was unreasonable. We agree.

[16]

We
    begin with two contextual points.

[17]

The
    first contextual point is recognition that there is an important link between
    the fact of a private consensual arbitration and the need for judicial
    deference to the result of the arbitration. As explained by Doherty J.A. in
Popack v. Lipszyc
, 2016 ONCA 135, at para. 26:

In addition to the generally applicable principles that urge
    deference in the review of all discretionary decisions, the nature of the
    specific order under appeal can also enhance the deference rationale. The
    application judge exercised her discretion in the context of a review of an
    award rendered in a private arbitration before a panel chosen by the parties to
    determine the dispute between them.
The parties selection of their forum
    implies both a preference for the outcome arrived at in that forum and a
    limited role for judicial oversight of the award made in the arbitral forum.
The
    application judges decision to not set aside the award is consistent with the
    well-established preference in favour of maintaining arbitral awards rendered
    in consensual private arbitrations.

[18]

See
    also:
Sattva
, at para. 104; and
Ottawa (City) v. Coliseum Inc
.,
    2016 ONCA 363, at paras. 31-34.

[19]

The
    second contextual point is recognition 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, at para. 47:

Reasonableness is a deferential standard animated by the
    principle that underlies the development of the two previous standards of
    reasonableness: certain questions that come before administrative tribunals do
    not lend themselves to one specific, particular result. Instead, they may give
    rise to a number of possible, reasonable conclusions. Tribunals have a margin
    of appreciation within the range of acceptable and rational solutions. A court
    conducting a review for reasonableness inquires into the qualities that make a
    decision reasonable, referring both to the process of articulating the reasons
    and to outcomes. In judicial review, reasonableness is concerned mostly with
    the existence of justification, transparency and intelligibility within the
    decision-making process. But it is also concerned with whether the decision
    falls within a range of possible, acceptable outcomes which are defensible in
    respect of the fact and law.

[20]

Against
    this backdrop, I turn to the arbitral award and the appeal judges review of
    that award.

[21]

The
    principal focus must be on the arbitrators decision. In our view, his
    interpretation of Article 15.1(a) of the subcontract at paragraphs 52-68 of the
    award is eminently reasonable. The question of whether Ellis-Don advanced a
    claim for delay in writing within the time permitted under the subcontract
    is, by its very nature, a question of mixed law and fact. The question required
    the arbitrator to not only interpret Article 15.1(a), but also to decide
    whether the language contained in Ellis Dons January 18, 1999 (or any other
    letters) was sufficient to constitute a claim. This is precisely what the
    arbitrator did.

[22]

The
    arbitrator was aware of the cases the respondent relies on in this appeal
    (Ellis-Don put them before him and relied on them in argument). In our view,
    the arbitrator did not ignore or misperceive them. Indeed, in terms of the
    principal case relied on by the respondent,
Doyle
, the arbitrators
    decision is not inconsistent with it; his dichotomy between intention to make
    a claim and an actual claim is similar to the distinction in
Doyle
,
    at para. 71, between grumbling display[ing] an intention to claim and an
    actual claim.

[23]

For
    these reasons, the appeal is allowed, the order of the appeal judge is set
    aside, and the arbitrators award is reinstated.

[24]

The
    appellant is entitled to its costs of the appeal fixed at $30,000, inclusive of
    disbursements and HST.

Released: JCM JUN 20 2017

J.C.
    MacPherson J.A.

R.A.
    Blair J.A.

J.
    MacFarland J.A.


