Procurement Disputes: A Block on the Road to Litigation

construction law

It is said that “All roads lead to Rome.” In the construction law context, this idiom may be modified to “All roads lead to court.”  Contractors and subcontractors often attempt to find ways to resolve their disputes that avoid litigation.  One of the most popular methods is by including mandatory arbitration.  However, when one party is unhappy with an arbitrator’s decision, that party may apply to the B.C. Supreme Court for leave to appeal the arbitrator’s decision. 

In recent years courts and legislatures have attempted to narrow the scope of appeals from arbitrators’ decisions.  The goal is to provide parties with quick decisions that are insulated from costly and time-consuming appeals.  In British Columbia, the Arbitration Act limits the right to have a court review a decision to questions of law. A party must first file a petition for leave of the court to have an arbitrator’s decision reviewed.  Only those which have some merit and are of significance to the parties will be permitted to proceed.  In addition, the recent Supreme Court of Canada decision in Sattva Capital Corp. v. Creston Moly Corp. (“Sattva”) reiterated the strong deference that should be given to arbitrators’ decisions.  An appellant is required to demonstrate that the appeal involves a question of law and the standard of review is one of reasonableness.

Sattva’s application in the construction law context was recently considered in the decision of Bricor Mechanical Ltd. v. St. Pierre (2015 BCSC 296).  The case involved a dispute between a contractor and a subcontractor.  The subcontractor installed a driveway snowmelt system which did not operate properly.  The terms of the contract required that any dispute be resolved by arbitration.  The arbitrator ruled in favour of the contractor.  The subcontractor brought a petition seeking leave for judicial review of the decision.

The petition cited two errors in the arbitrator’s decision. The first alleged that the arbitrator failed to consider the contractor’s contributory negligence.  The Court found that this was an attempt to overturn findings of fact, because the arbitrator had not found any facts to support contributory negligence.  Relying on the Sattva decision, the Court dismissed the appeal on this ground. 

The second ground of appeal was that the arbitrator did not articulate the difference between the duty of care and the standard of care owed by the subcontractor.  The Court dismissed this ground of appal by finding that while the arbitrator used the language of torts in part of the decision, it was in fact a finding that the subcontractor breached its duty under the contract, which was a legally sound decision.  As a result there was no arguable case that an error in law had occurred.  The subcontractor’s appeal was dismissed with costs.    

Whether you are a contractor, subcontractor or counsel advising the parties, it is essential to consider the impact of all clauses in a construction contracts.  Dispute resolution clauses can be especially important.  For those seeking for a more in-depth look at construction law and procurement in particular, including an informative section on subcontractors, consider attending PBLI’s upcoming program “Procurement: The Real World” on April 29th, 2015

To view all upcoming PBLI programs click here.


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Alix Golgoni, Director of Marketing & Communications 



Posted on March 30, 2020  |  Comments (0)

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