Lafarge Canada Inc. v. Edmonton (City), 2012 ABQB 634

Court of Queen ’ s Bench of Alberta Citation: Lafarge Canada Inc. v. Edmonton (City), 2012 ABQB 634 Date: 20121017 Docket: 1103 02391 Registry: Edmonton Between: Lafarge Canada Inc. Respondent (Plaintiff) - and - The City of Edmonton Applicant (Defendant) _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice T.D. Clackson _______________________________________________________ I. Facts [ 1 ] In 2007, the Respondent (Lafarge) contracted with the Applicant (Edmonton) to provide cement pipe at specific times for Edmonton ’ s light rail transit project.

Edmonton alleged that Lafarge failed to supply the pipe in a timely way and set-off the costs it had to pay as a result of Lafarge ’ s delay against Lafarge ’ s invoices. The set-off or charge back amounted to well over half the value of the $1.5 million contract between the parties.

[ 2 ] General condition 13 of the contract provided that: 13. Dispute Resolution : If any disputes arise under the Contract and the parties are not able to resolve it, the parties shall appoint a single arbitrator to conduct an arbitration in accordance with the Arbitration Act .

All costs associated with the appointment of the arbitrator shall be shared equally unless the arbitrator determines otherwise. [ 3 ] In May 2009, approximately 22 months after the dispute arose, the parties entered into a Standstill Agreement to preserve rights of action if their negotiations failed to resolve the matter. [ 4 ] Despite General condition 13 the Standstill Agreement is couched in the language of Court based litigation. It speaks of “ issuance of pleadings ” , “ asserting a defence ” , “ proceedings commenced ” and “ proceedings asserting claims in contract, tort or otherwise ” .

Those are terms commonly encountered in Court based litigation. [ 5 ] On February 2, 2011, Lafarge served notice on Edmonton terminating the Standstill Agreement and enclosing the Statement of Claim it planned to issue. The Statement of Claim was issued and sent to the City on February 14, 2011. On March 15, 2011, Mr.

Lopushinsky of Edmonton, sent an email note to counsel for Lafarge attaching Edmonton ’ s defence and advising: “ I think arbitration may be mandatory but we happy (sic) to discuss future process ” . [ 6 ] Edmonton ’ s defence at para. 11 states: Further, pursuant to general condition 13 of the storm sewer pipe agreement, the parties agreed that any disputes arising thereunder shall be submitted to arbitration. [ 7 ] In July 2011, Lafarge served an Affidavit of Records on Edmonton. That prompted Mr.

Lopushinsky ’ s letter of July 13, 2011, wherein he stated: We believe the contract between the parties has a mandatory arbitration clause and pled that in our Statement of Defence. Further, we believe that there has not been a timely commencement of arbitration proceedings in accordance with

section 51 of the Arbitration Act and the Standstill Agreement dated May 28, 2009 that was terminated by Lafarge several months ago. I advised Cherisse that I thought the City was in a position to apply to stay the action under

section 7 of the Arbitration Act . [ 8 ] The application before me is to strike or stay Lafarge ’ s Statement of Claim and declare that arbitration cannot now be launched as it is statute barred. [ 9 ] Lafarge argues that the Statement of Claim can start arbitration proceedings, or that Edmonton attorned to the jurisdiction of the Court and cannot now insist on arbitration and, in any event, Edmonton has so delayed seeking relief that it should not be allowed to do so now. II. Analysis 1. Can the Statement of Claim be considered to have properly commenced the arbitration? [ 10 ]

Section 23 of the Arbitration Act RSA 2000, c. A-43 provides:

23(1) An arbitration may be commenced in any way recognized by law, including the following: (

a) a party to an arbitration agreement serves on the other parties notice to appoint or to participate in the appointment of an arbitrator under the agreement; . . . (

c) a party serves on the other parties a notice demanding arbitration under the arbitration agreement. [ 11 ] Section 51(1) of the Arbitration Act provides: 51(1) The law with respect to limitation periods applies to an arbitration as if the arbitration were an action and a matter in dispute in the arbitration were a cause of action. [ 12 ] Section 3(1) of the Limitations Act , RSA 2000, c. L-12 provides that a claim is barred: 3(1) . . . if a claimant does not seek a remedial order within (a) 2 years . . . [ 13 ] A remedial order is defined in the Limitations Act at para. 1 (

i) as: . . . a judgment or an order made by a court in a civil proceeding requiring a defendant . . . [ 14 ] It is plain that by virtue of s. 51 of the Arbitration Act , s. 1 (

i) of the Limitations Act , in reference to arbitrations, should be read as saying: . . . a judgment or an order made by an arbitrator in an arbitration . . . [ 15 ] As a result of the Standstill Agreement, Lafarge had to take action within three months of its notice to end the Standstill Agreement. The language of s. 23 of the Arbitration Act is permissive. Arguably, the language does not foreclose the issuance of the Statement of Claim as a commencing document. What is required is notice and, in this case, the Statement of Claim certainly constitutes notice to the other parties.

Furthermore, while the Standstill Agreement ’ s time extension ended as a result of Lafarge ’ s notice, it continues to have a role in the litigious relationship of the parties. Clause 1 of that Agreement provides: 1.

Subject to clauses 2 and 3 hereof, the parties covenant and agree not to assert any limitation period, whether arising pursuant to the legislation or Rules of Court or otherwise from any Canadian jurisdiction, nor any time defence arising from the terms of any contract or any other source including statute, common law or equity, as a defence in any proceedings commenced by one party against the other party herein in respect of the Purchase Order, whether such proceedings assert claims in contract, tort or otherwise. [ 16 ] Clause 3 provides:

Neither party shall be bound by clause 1 of this Agreement in respect of any proceedings not commenced within three months after the date of service of the Termination Notice; but . . . [ 17 ] It is apparent that the parties have agreed that if action is taken in a timely way, within three months, no time defence will be relied upon.

It is of note that Edmonton did not argue that Clause 1 of the Standstill Agreement had no application whatever to the proceedings. [ 18 ] As a result, the Statement of Claim having been issued in time invokes Clause 1 of the Standstill Agreement, thus foreclosing the application made by the City, or the Statement of Claim serves as notice or as a commencing document, in compliance with s. 23 of the Arbitration Act .

Either way, the arbitration has been commenced in a timely way. [ 19 ] Furthermore, since s. 23 of the Arbitration Act is in fact about notice, and there is no reason why issuing a Statement of Claim cannot also constitute compliance with s. 23, then, even though the Court proceedings necessitated by the Statement of Claim must be stayed by virtue of s. 7 of the Arbitration Act , the Statement of Claim also commenced the arbitration, and it remains outstanding. [ 20 ] As a result, I find it unnecessary to address the issues concerning delay and attornment.

The City ’ s application is dismissed. [ 21 ] The parties may address the question of costs on appointment. Heard on the 7 th day of September, 2012. Dated at the City of Edmonton, Alberta this 17 th day of October, 2012. T.D. Clackson J.C.Q.B.A. Appearances: Donald Cranston, Q.C. and Laura Inglis Chubb Bennett Jones LLP for the Respondent (Plaintiff) Allan Delgado The City of Edmonton Law Branch

for the Applicant (Defendant)