Comren Contracting Inc. v. Bouygues Building Canada Inc., 2020 NUCJ 2

Nunavunmi Maligaliuqtiit NUNAVUT COURT OF JUSTICE Cour de justice du Nunavut Citation: Comren Contracting Inc. v. Bouygues Building Canada Inc., 2020 NUCJ 2 Date: 20200124 Docket: 08-18-503-CVC Registry: Iqaluit Applicant: Comren Contracting Inc. -and- Respondent: Bouygues Building Canada Inc. __________________________________________________________________ Before: The Honourable Mr. Justice Paul Bychok Counsel (Applicant): S. Cooper Counsel (Respondent): W. K. Kenny, Q. C.

Location Heard: Iqaluit, Nunavut Date Heard: July 26, 2019 Matters: Motion for an Order Appointing an Arbitrator pursuant to s. 11(2) of the Arbitration Act , R.S.N.W.T. 1988 c.A-5 REASONS FOR JUDGMENT (NOTE: This document may have been edited for publication)

I. INTRODUCTION [ 1 ] This decision concerns an issue of contractual

interpretation between a contractor (Bouygues) and a subcontractor (Comren). The subcontract deals with the parties’ respective responsibilities related to the construction of the new Iqaluit International Airport. When issues arose between the parties, Comren attempted to invoke the portion of the subcontract dealing with the mediation and arbitration of disputes. Ultimately, the parties were unable to resolve their disputes. [ 2 ] Comren has applied to this Court for an order compelling Bouygues to submit to arbitration pursuant to the subcontract. Comren has also asked the Court to appoint an arbitrator.

I heard the application on July 26th, 2019. Bouygues argued that Comren did not follow the arbitration timelines set out in the subcontract, and that its application should be dismissed. [ 3 ] For the reasons set out below, I agree with Bouygues that Comren failed to invoke the arbitration process in a way which would have contractually compelled Bouygues to participate. Accordingly, I dismiss Comren’s application. II. BACKGROUND [ 4 ] Comren and Bouygues entered the subcontract in July 2015. Comren agreed to perform certain services and work for Bouygues.

The subcontract provided that if Bouygues resolved an issue in dispute between the parties in a manner unsatisfactory to Comren, then Comren could send Bouygues a written notice of dispute. This notice would contain particulars relevant to the dispute as well as references to the relevant provisions of the subcontract. [ 5 ] The relationship was not an entirely happy one.

Indeed, just two months into the subcontract, Comren sent the first of 23 written “notices of dispute” respecting “unresolved issues under the Subcontract”. [1] The last of these written notices of dispute was sent by Comren to Bouygues on November 26th, 2016. [ 6 ] The subcontract provided that from there, if the notices contained the necessary information, Bouygues was obliged to issue a notice of reply. If the parties could not resolve the dispute, then the parties were to request the help of a project mediator.

The relevant parts of the subcontract were: 8.2.4 If the dispute has not been resolved within 10 Working Days after the Project Manager was requested … the Project Manager shall terminate the mediated negotiations by giving Notice in writing to both parties. 8.2.5 By giving Notice in Writing to the other party, not later than 10 Working Days after the termination of the mediated negotiations under paragraph 8.2.4, either party may refer the dispute to be finally resolved by arbitration under the Rules of Arbitration of Construction Disputes as provided in CCDC [2] … 8.2.6 On expiration of the 10 Working Days, the arbitration agreement under paragraph 8.2.5 is not binding on the parties and, if a Notice in Writing is not given under paragraph 8.2.5 within the required time, the parties may refer the unresolved dispute to the courts or to any other form of dispute resolution, including arbitration, which they have agreed to use. [ 7 ] The record suggests that Bouygues did not reply to these 23 written notices.

On December 2nd, 2016, Comren’s counsel wrote to Bouygues stating that Comren wished to resolve these outstanding issues. When Bouygues still did not respond, Comren’s counsel sent a second email on December 21st, 2016. In the December 21st email, Comren’s counsel stated that because Bouygues’ response was delayed, Comren intended to proceed as if mediation had been requested and failed. Counsel for Comren continued that the 10-day period within which the parties could trigger arbitration pursuant to paragraph 8.2.5 of the subcontract was therefore running, to expire on January 5th, 2017.

[ 8 ] Bouygues’ project manager replied to Comren’s counsel on January 4th, 2017. In that email, Bouygues raised issues with Comren’s 23 notices of dispute, saying that the notices failed to pertain to a contractor’s decision, as required by the subcontract. Bouygues also asserted that the 23 notices failed to contain sufficient information, again as required by the subcontract. [ 9 ] The date identified by Comren as the end of the notice period to trigger arbitration – January 5th, 2017 – came and went without Comren having filed written notice of its intention to send the disputes to arbitration.

Instead, Comren’s counsel waited until January 23rd, 2017 to contact Bouygues. On January 23rd, Comren’s counsel wrote reiterating Comren’s intent to proceed to arbitration. Comren’s counsel then unilaterally purported to set January 30th, 2017 as the new deadline to trigger arbitration pursuant to the subcontract. [ 10 ] Bouygues replied on January 30th stating that Comren had not proceeded according to the terms of the subcontract. Nevertheless, the parties discussed possible mediation and arbitration.

After much correspondence, in which both parties explicitly acknowledged the possibility of arbitration, [3] the parties agreed on mediation. It appears to me that this mediation occurred outside the parameters set out by the subcontract, and instead occurred via independent agreement of the parties. In any case, the mediation was held on June 7th and 8th, 2017.

The mediation was unsuccessful. [ 11 ] If this mediation had occurred pursuant to the terms of the subcontract – and I find that Comren proceeded as if it had – then Comren had 10 working days following the end of the unsuccessful mediation on June 8 to trigger arbitration; that is, Comren had to trigger arbitration by June 22nd. [ 12 ] However, according to the record, the next communication from Comren’s counsel to Bouygues’ counsel did not happen until September 5th, 2017. This date was well after the expiration of the 10 working days contemplated in the subcontract.

Bouygues’ counsel replied the same day to “confirm” that the parties had agreed to Toronto as the place of arbitration. Bouygues was also content with Comren’s first choice for arbitrator, subject to any conflict of interest. [4] The parties continued communicating, but they failed to make any progress in the dispute. The proposed arbitration never happened. [ 13 ] There is some dispute between the parties over the date that Comren formally purported to trigger arbitration upon the failure of the mediation.

However, the record suggests that the earliest Comren may have intended to give notice was on October 4th, 2017. [5] [ 14 ] Central to my decision will be paragraphs 8.2.4, 8.2.5 and 8.2.6 from the subcontract which pertain to mediation and arbitration. III. THE PARTIES’ POSITIONS [ 15 ] I will first summarise very briefly the parties’ respective positions. A.

The applicant, Comren [ 16 ] On July 27th, 2019 Comren filed an application asking this Court to appoint a specific, named, arbitrator to resolve the parties’ dispute at an arbitration hearing to be held in Vancouver. [6] Comren makes the following four arguments to support its claim. [ 17 ] First, Comren says it legally triggered arbitration twice in accordance with paragraph 8.2.5 of the subcontract: first, in the January 23rd, 2017 email to Bouygues and again on October 4th, 2017 [the two ‘triggers’].

As I noted earlier, there is dispute whether the October 4th notice was sent to Bouygues that month, but this is the earliest possible date it could have been sent. Both ‘triggers’ occurred outside the 10-day period contemplated in the subcontract. However, Comren says I ought to give paragraph 8.2.5 a “broad”, “liberal” and “pragmatic”

interpretation. This

interpretation would give effect to the parties’ intentions to have their disputes resolved by

arbitration even though Comren was technically out of time. [7] [ 18 ] Second, Comren says that Bouygues by its conduct “implicitly agreed to waive the strict timelines of the Subcontract” and, therefore, is “estopped from refusing to proceed with the arbitration”. [8] Comren asserts that it acted in good faith throughout its dealings with Bouygues. The record, it continues, shows the parties “mutually agreed to engage in … bona fide negotiations to resolve the issues” without resort to litigation.

In this regard, Comren relies on Lorneville Mechanical Contractors Ltd v Clyde Bergemann Canada Ltd , 2017 NSSC 119 , 279 ACWS (3d) 462 [ Lorneville ] . [ 19 ] Third, Comren asserts that there is no delay, undue harm or prejudice to having the dispute resolved through arbitration. [ 20 ] Lastly, Comren asserts that the Court also has the authority to appoint a specific arbitrator to conduct the arbitration. B. The respondent, Bouygues [ 21 ] Bouygues asserts that Comren failed to comply with the clear timing deadlines in paragraph 8.2 of the subcontract; that Bouygues never waived the timing deadlines in

section 8.2 of the subcontract; that there would be no harm or prejudice to Comren if the dispute were litigated; and that the Court does not have the jurisdiction to appoint an arbitrator. IV. ISSUES [ 22 ] Comren’s application turns on the following three issues: I. Did Comren comply with the timeline requirements of paragraph 8.2.5 such that Bouygues is contractually bound to engage in arbitration? II. If the answer to question one is no, is Bouygues estopped from refusing arbitration given its previous actions and stated willingness to engage in arbitration? III.

If the answer to question two is yes, do I have jurisdiction to appoint the arbitrator? V. ANALYSIS [ 23 ] In the circumstances of this case, my

interpretation of paragraphs 8.2.4, 8.2.5, and 8.2.6 of the subcontract must attempt to give effect to the intentions of the parties when they entered into the subcontract. The role of the interpreting justice is to give to the words used their plain and natural meaning within the factual context of the parties’ relationship. It is not the justice’s role to “rewrite the parties’ contract” or to “relieve one of them from the consequences of an improvident contract” [9] or their careless actions. [ 24 ] There are two key considerations which underpin my analysis.

First, the contract was entered into by two sophisticated corporate entities based on legal advice. Second, the subcontract’s arbitration timing provisions are not unique to this case; they are a standard feature of this type of subcontract. [10] The language of paragraph 8.2.5 is clear and unambiguous. Thus, the only rational inference I can draw is that the officers of each corporate party were completely aware of the content and ramifications of the subcontract’s timing deadlines. [ 25 ] I will now deal with each issue in turn. A.

Did Comren comply with the timeline requirements of paragraph 8.2.5 such that Bouygues is contractually bound to engage in arbitration?

[ 26 ] In my view, the answer is no. (

i) The first Comren arbitration trigger [ 27 ] Comren says it first triggered arbitration in January 2017. [ 28 ] Counsel for Comren wrote to Bouygues on December 2nd, 2016 “to request mediation or resolution” of the 23 notices of dispute sent by Comren to Bouygues pursuant to paragraph 8.2.1. Comren reasserted that the 23 notices had been sent in conformity with paragraph 8.2. Bouygues, counsel continued, had failed to respond to these notices as required by paragraph 8.2 of the subcontract.

Therefore, Comren reasserted that the 23 notices constituted notices of dispute requiring Bouygues to respond within 10 working days. [11] Bouygues did not respond to this email. [ 29 ] Counsel for Comren again wrote Bouygues, this time on December 21st, 2016. Counsel noted that Bouygues had failed to respond to Comren’s December 2nd request for mediation and had failed to appoint a mediator.

Comren’s counsel continued: Given such, we take the position that pursuant to s. 8.2.4 of the Contract and the failure for the dispute to be resolved within 10 working days after the Project Mediator was requested, a Notice in Writing [required from the mediator] ought to be deemed to have been given on December 19, 2016.

Pursuant to s. 8.2.5, please note that we will be exercising our right to refer the aforementioned dispute to arbitration after the 10th working day after receipt of the “Notice in Writing”, which by our calculations is January 5, 2016. [12] [ 30 ] Here, we see Comren taking the position that because Bouygues failed to facilitate mediation, Comren was entitled to proceed as though a mediator had been appointed and mediation had failed. Comren therefore stated that it intended to trigger arbitration under the subcontract by giving Bouygues notice within 10 working days following the deemed failed arbitration.

It calculated that the time in which it could give such notice expired on January 5th, 2017 (there is, presumably, an error in the email quoted with respect to the proper year). [ 31 ] I do not have to decide whether this

interpretation of the subcontract is correct. I will return to this point later in paragraph 37. [ 32 ] Bouygues responded to Comren on January 4, 2017 disputing that Comren had ever correctly triggered the dispute resolution process. Bouygues stated that Comren had failed to ground its 23 notices in a specific decision by Bouygues as required by the subcontract. Furthermore, Bouygues argued that the 23 notices did not contain sufficient particulars, again as required by the subcontract. [ 33 ] Counsel for Comren did not respond to Bouygues until January 23rd.

On January 23rd, Comren’s counsel stated, “if you do not agree to arbitration on or before January 31, 2016, our client will file an application in court seeking to compel you to attend arbitration …” [13] [ 34 ] Bouygues responded on January 30th. Bouygues stated again that Comren had not correctly triggered arbitration – in particular, Comren had failed to make “all reasonable efforts to resolve their disputes by amicable negotiation” of s. 8.2.2”. [14] (sic) [ 35 ] In the face of this continued dispute with Bouygues over the correct

interpretation of the subcontract, counsel for Comren replied on February 7, 2017 again unilaterally extending the limit for agreement to arbitrate from January 31st to February 21st. [ 36 ] Counsel for Bouygues responded to Comren on February 16, 2017 with “instructions” to move the dispute to mediation. However, and significantly as we shall soon see, counsel stated:

I do wish to make clear that our agreement to proceed with the arbitration process at this time as requested by your client is entirely without prejudice to whatever rights that Bouygues might have to raise technical or procedural defences in the arbitration process, including defences relating to timeliness of Comren’s claims and to whether or not Comren properly complied with the subcontract in relation to asserting and maintaining the claims that it will bring forward in arbitration. [15] [Emphasis added] [ 37 ] I stated earlier that I do not need to decide whether Comren’s

interpretation of the mediation part of the subcontract was correct. Even if I assume Comren was correct that it could deem mediation failed and declare the 10-day arbitration referral period to have begun, by its own calculations, Comren was required to give paragraph 8.2.5 notice within 10 working days of December 21, 2016; in other words, by January 5, 2017. Comren did not do so. [ 38 ] Clearly, Bouygues agreed to participate in the arbitration process and to mediation.

However, Bouygues also clearly put Comren on notice, as we see in the quoted paragraph, that Bouygues was not waiving its rights under the subcontract. In my view, Bouygues’ agreement to mediate did not cure Comren’s failure to give timely notice to arbitrate by even its own calculated date (January 5, 2017).

Therefore, Bouygues is not contractually bound to submit itself to arbitration. [ 39 ] I note also that even if Comren had given proper notice, the parties may still have had issues to resolve between them regarding the validity of the 23 so called notices of dispute. (ii) The second Comren arbitration trigger [ 40 ] As events were to unfold, mediation failed on June 7-8, 2017. Given my finding pertaining to the first trigger, I do not have to decide whether it was open to Comren after the failed mediation, to compel Bouygues to participate in arbitration. Comren was, in any case, out of time.

However, If I am wrong on this point, Comren’s actions after the June 2017 mediation also did not conform with the arbitration trigger timelines set out in the subcontract. Those timelines required that Comren refer the dispute to arbitration by June 22nd, 2017. It did not do so. [ 41 ] Instead, Comren says it re-triggered arbitration under the subcontract with its notice to Bouygues dated October 4, 2017. [16] I note here that Bouygues maintains that it never received a copy of that notice until June 2018.

Comren’s counsel was unable to explain how or when the October 4, 2017 notice was communicated to Bouygues at that time. [ 42 ] In any event, as we have already seen, paragraph 8.2.5 of the subcontract required Comren, if it wished to trigger arbitration after the failed June mediation, to provide Bouygues with notice in writing “not later than 10 Working Days after the date of termination of the mediated negotiations under paragraph 8.2.4”. Comren did not give notice within 10 days.

Instead, Comren waited until October 4, 2017 at the earliest - after further months of inconclusive post-mediation discussions with Bouygues - before it gave the paragraph 8.2.5 notice. [ 43 ] As I stated earlier, I must give a plain and ordinary meaning to the subcontract’s terms. According to paragraph 8.2.6, on the expiration of 10 working days following the unsuccessful mediation in June 2017 - with no arbitration notice from Comren to Bouygues - the arbitration provisions of the subcontract no longer bound the parties.

Again, there is no contractual basis upon which I may now compel Bouygues to participate in arbitration. [ 44 ] I turn now to whether Bouygues, by its actions, is estopped from refusing to participate in arbitration. B. Is Bouygues estopped from refusing arbitration given its previous actions and willingness to engage in arbitration? [ 45 ] In support of its position, Comren cited the Lorneville case which featured another dispute between a subcontractor – Lorneville -

and a contractor. In Lorneville , the parties’ attempted to resolve their dispute by negotiations. When that process failed, Lorneville then attempted to invoke the arbitration provisions of the subcontract. The contractor argued that Lorneville could not do so as the time limits to do so under the subcontract had expired.

Justice Smith ruled that Lorneville could, nevertheless, invoke the arbitration provisions of the subcontract: As was the case in IWK Health Centre , the Subcontract contained a clause (8.2.2) that provided that “the parties shall make all responsible efforts to resolve their dispute by amicable negotiations and agree to provide, without prejudice, frank, candid and timely disclosure of relevant facts, information and documents to facilitate these negotiations”.

I agree with counsel for Lorneville that it would be perverse for the Court to fail to give primacy to the arbitration clause in favour of litigation on the basis that the parties did not adhere to the timelines set out in the dispute resolution provisions”. [17] [ 46 ] Lorneville , Comren argued, stands for the proposition that “even where specific requirements have not been complied with, there is still an understood primacy and preference for arbitration over litigation”. [18] [ 47 ] There are strong policy reasons favouring arbitration over litigation of contractual disputes. [19] However, Lorneville is distinguishable on its facts.

In Lorneville , the parties expressly waived the arbitration timeline requirements during their negotiations. [20] The record here shows that Bouygues, unlike Lorneville , did not agree to hold in abeyance the paragraph 8.2.5 timelines during its protracted discussions with Comren over arbitration.

In fact, Bouygues expressly stated that its agreement to enter mediation was “entirely without prejudice to whatever rights that Bouygues might have to raise technical or procedural defences in the arbitration process, including defences relating to timeliness of Comren’s claims”. [21] Therefore, Bouygues’ actions – meaning its lengthy discussions with Comren in 2017 and 2018 about possible arbitration - do not prevent it from asserting its right to litigate the dispute with Comren. [ 48 ] In Lorneville , Justice Smith also found that the subcontractor would suffer irreparable harm if that dispute was not sent to arbitration. [22] There is no evidence before me to suggest that Comren will suffer irreparable harm if the dispute is litigated in court.

C. Do I have jurisdiction to appoint an arbitrator? [ 49 ] In light of my decision that Bouygues cannot be compelled to arbitrate, this issue is moot. VI. CONCLUSION [ 50 ] I dismiss Comren’s application. [ 51 ] I award cost to Bouygues on a solicitor-client basis. Dated at the City of Iqaluit this 24th day of January 2020 ___________________ Justice P. Bychok Nunavut Court of Justice