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Posted on November 1, 2010 | Posted in Construction

All of the CCDC contracts contain dispute resolution clauses. The CCA standard subcontract contains a similar clause. However, are the clauses always effective? This issue was considered in Tricin Electric Ltd. v. York Region District School Board, a 2009 decision of the Ontario Superior Court of Justice.


The plaintiff was an electrical sub; the defendants were the general and the owner. The sub commenced the action to enforce its claim for lien.

The subcontract was CCA S-1 1994. It contains dispute resolution provisions: a project mediator is to be appointed to deal with disputes and, if mediation fails, the parties agree to arbitrate the dispute.

The general contract was substantially performed and a certificate of substantial performance was published on March 28, 2006. The sub commenced the action January 7, 2009. Although not specifically set out in the reasons for decision, the lien must have been registered, at the earliest, a few months before the action was commenced, probably in November 2008.

The sub claimed that the general owed it $177,000 under the subcontract. The general, relying on a subsequent settlement agreement, claimed that it owed only $45,000.

After the defendants delivered their statements of defence, the sub brought a motion requesting the court to stay the sub’s own action and order the defendants to arbitrate the dispute according to the terms of the subcontract.


The sub did not commence just the lien action. It commenced a separate trust action against the general and its officers and directors and against the general’s surety under a labour and material bond. The sub commenced a third action against the electrical subconsultant, claiming negligence. Notwithstanding this myriad of actions, the sub maintained that it had always intended to arbitrate the matter and had commenced the various actions because it was worried that limitation periods might pass.

The issues in the actions included the timeliness of the lien, the effectiveness of the alleged subsequent agreement between the parties, allegations of negligence against the subconsultant, and the breach of trust allegations.


The judge noted that section 7 of the Arbitrations Act allowed the general and owner to move to stay the proceedings because they were responding to an action that the sub commenced. Although the Act makes no mention of a plaintiff moving to stay its own proceedings, there is jurisdiction in this regard under the Courts of Justice Act. The motions judge did not base his decision on lack of jurisdiction.

Instead, the motions judge refused to exercise his discretion to allow the sub to stay its own proceedings and move to arbitration. He did so for the following reasons:

1.   There had already been a full exchange of pleadings in all of the actions. If a party wants to enforce an arbitration provision, it has a duty to do so on a timely basis without wasting resources in an action.

2.   The parties had not adhered to the protocols under the dispute resolution provisions of the subcontract. There was no attempt to have the matter mediated, no attempt to appoint a mediator, and no attempt, prior to the actions, to have the matter arbitrated. This is not the first time we have seen a court refuse arbitration for this reason.

3.   The dispute resolution provisions were a real-time attempt to deal with disputes arising under the subcontract. In this case, the subcontract had been completed for years. So much for a real-time resolution.

4.   There was a multiplicity of actions dealing with some issues that would be dealt with in the arbitration, but also dealing with issues that would not be.

5.   Although not stated, we also note that there were parties in the actions who would not have been part of the arbitration proceedings (e.g. the owner, the subconsultant, and the directors and officers of the general).

6.   Given points 4 and 5, the requested arbitration would not shorten or resolve the dispute; it would just add another inefficient layer to it.   


The sub was left with its various actions. We do not have sufficient facts to predict the outcome of the actions with any certainty. However, we see the following possible problems for the sub:

1.   The lien seems to be completely out of time. It was registered 2½ years after the certificate of substantial performance was published.

2.   If the lien was untimely, then the sub will be liable for costs of its action against the owner and may even have the contract portion of the action dismissed as against the general. Without a lien, the action adds nothing to the trust action that the sub commenced and would be an abuse of process.

3.   We suspect that there may also be problems of timeliness with the action against the surety. A labour and material payment bond has time limits regarding notification of a claim and the commencement of an action to enforce that claim. If the sub could wait 2½ years to register a claim for lien, it might also have been remiss in meeting its time limits under the bond.

Multiple Actions

We do not understand why the sub commenced a separate action against the subconsultant. It could have joined the subconsultant in the trust action.

We do not understand why the sub added the surety to its trust action. When we are involved with a claim under a labour and material bond and a claim on contract with the principal (i.e. the general), we negotiate a tolling agreement with the surety. Although the surety may have technical defences of timeliness, it will also be unwilling to pay anything to the sub if its principal claims that it owes nothing to the sub. The dispute between the general and the sub must be resolved before the sub looks to the surety and a tolling agreement accomplishes exactly that. The claim against the surety is put on hold until the action with the general is resolved. If the action against the general is settled, as most are, then the action against the surety is unnecessary.

From what we can determine from very terse reasons for decision, the sub was late in enforcing its remedies and then used a shotgun, expensive approach that cost all parties, and ultimately the sub, a lot of unnecessary expense.


You might also query why, if there were no problems with the timeliness of the sub’s claims under the bond, the sub joined the officers and directors under its trust claim and brought a trust claim at all, rather than just a claim under contract. If, at the end of the action, the sub had a judgment against the general, the surety was insolvent (which happens), and the time for bringing a trust claim against the officers and directors had passed, the sub would be looking to its own lawyers for negligence.


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