Babcock & Wilcox Canada Ltd. v. Agrium Inc., 2003 ABQB 1004

• Judge: Bensler, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: July 09, 2003
• Citations: 2003 ABQB 1004;(2003), 347 A.R. 107 (QB)

Babcock & Wilcox v. Agrium Inc. (2003), 347 A.R. 107 (QB)

MLB headnote and full text

Temp. Cite: [2004] A.R. TBEd. JA.038

Babcock & Wilcox Canada Ltd. (plaintiff) v. Agrium Inc. (defendant)

(0101 17513; 2003 ABQB 1004)

Indexed As: Babcock & Wilcox Canada Ltd. v. Agrium Inc.

Alberta Court of Queen's Bench

Judicial District of Calgary

Bensler, J.

December 9, 2003.

Summary:

In August 1999, the plaintiff contracted to perform construction work for the defendant. The agreement stated that any dispute arising from the contract was to be resolved by arbitration. Disputes arose in relation to delays and extra work. On September 27, 1999, the plaintiff and the defendant orally agreed that the plaintiff would complete the construction project notwithstanding the dispute and that any unresolved issues would be settled later by arbitration. The plaintiff filed a Statement of Claim against the defendant on September 25, 2001 and filed a Notice of Arbitration on May 14, 2002. The defendant applied for an order to dismiss the plaintiff's action on the ground that the contract made arbitration a condition precedent to litigation, and that arbitration had not commenced and could not be commenced because time had run out under the Limitations Act.

The Alberta Court of Queen's Bench dismissed the application. The court held that arbitration was not commenced prior to expiry of the limitation period for arbitration, so neither party could invoke rights that arose from the Arbitration Act unless they entered into a new agreement to arbitrate or to extend the limitation period.

Arbitration - Topic 3

General principles - Commencement of arbitration (incl. time for) - The plaintiff contracted to perform construction work for the defendant - The agreement stated that any dispute arising from the contract was to be resolved by arbitration - Disputes arose in relation to delays and extra work - On September 27, 1999, the plaintiff and the defendant orally agreed that the plaintiff would complete the construction project notwithstanding the dispute, and that any unresolved issues would be settled later by arbitration - The plaintiff filed a Statement of Claim against the defendant on September 25, 2001 and filed a Notice of Arbitration on May 14, 2002 - The plaintiff argued that arbitration was commenced on September 27, 1999, or, alternatively on September 25, 2001 or May 14, 2002 - The Alberta Court of Queen's Bench held that arbitration was not commenced on September 27, 1999 - An agreement to arbitrate, should the dispute not be resolved, was merely a recap of the original arbitration clause, and an agreement to resolve disputes at a later date was not sufficient to invoke arbitration - The Statement of Claim did not initiate arbitration because litigation and arbitration were mutually exclusive processes - The notices sent in May 2002 were the only events which could commence arbitration, but by that time the limitation period had expired for the commencement of arbitration - See paragraphs 43 to 48.

Arbitration - Topic 3

General principles - Commencement of arbitration (incl. time for) - [See Limitation of Actions - Topic 4802 ].

Arbitration - Topic 106

Right to arbitration - Conditions precedent - The Alberta Court of Queen's Bench held that an arbitration clause did not make arbitration a condition precedent to litigation in the absence of express or implied terms making arbitration a condition precedent - See paragraph 29.

Arbitration - Topic 115

Right to arbitration - Enforcement - General - The Alberta Court of Queen's Bench discussed the effect of the commencement of a legal action on a contractual right to arbitration - The court stated that "if the defendant has filed a Statement of Defence, then it is evidence it has submitted to the jurisdiction of the court and has ended its right to enter into arbitration under the original contract. If the defendant has not filed a Statement of Defence, then it appears arbitration is still alive, subject to the question of whether the limitations period for arbitration has expired" - See paragraph 34.

Limitations of Actions - Topic 4802

Arbitration - General - Application of Limitations Acts - The Alberta Court of Queen's Bench held that the Arbitration Act incorporated the Limitations Act so as to include a two year limitation period for commencement of arbitration - The court stated that "Section 51(1) of the Arbitration Act means arbitration is equivalent to litigation for the purposes of limitations periods, and the law of limitations periods applies identically to arbitration. In Alberta, the law of limitations periods is governed by the Limitations Act. Consequently, the limitation period for arbitration is governed by the Limitations Act. Section 2(3) of the Limitations Act limits the application of that Act to proceedings before a court created by the Parliament of Canada. However, it does not preclude the adoption of the Limitations Act by other legislation ... In summary, the limitation period for arbitration is established by the rules contained in the Limitations Act" - See paragraphs 22 to 24.

Cases Noticed:

Calgary (City) v. Lafarge Construction Materials (1995), 169 A.R. 363; 97 W.A.C. 363; 32 Alta. L.R.(3d) 255 (C.A.), refd to. [para. 23].

Borowski v. Fielder (Heinrich) Perforiertechnik GmbH et al. (1994), 158 A.R. 213; 22 Alta. L.R.(3d) 366 (Q.B.), refd to. [para. 26].

Scott v. Avery (1856), 5 H.L.C. 811; 10 E.R. 1121, refd to. [para. 27].

Northwestern Utilities Ltd. v. Peyto Oils Ltd. (1983), 49 A.R. 1 (Q.B.), refd to. [para. 28].

Duracool Ltd. v. Wright et al. (2001), 287 A.R. 23 (Q.B.), refd to. [para. 28].

Hudson's Bay Insurance Co. v. Walker (1914), 6 W.W.R. 147 (B.C.C.A.), refd to. [para. 31].

O'Hara et al. v. Wawanesa Mutual Insurance Co. (1990), 108 A.R. 308; 76 Alta. L.R.(2d) 204 (C.A.), refd to. [para. 32].

Ortynsky v. Saskatchewan Crop Insurance Board, [1983] 1 W.W.R. 724 (Sask. Q.B.), refd to. [para. 32].

Cincurak et al. v. Lamoureux et al. (2002), 328 A.R. 1; 8 Alta. L.R.(4th) 354 (Q.B.), refd to. [para. 33].

PP Persero Snd Bhd v. Bimacom Property and Development Sdn Bhd, Suit No. 22-540 of 1998 (High Court, Malaysia), refd to. [para. 35].

Karlsen Shipping Co. v. Sefel J. & Associates Ltd. (1977), 4 A.R. 242; 2 Alta. L.R.(2d) 170 (T.D.), refd to. [para. 37].

Gosford Meats Pty. Ltd. v. Queensland Insurance Co. Ltd. (1970), 72 S.R. (N.S.W.) 547 (New South Wales, Australia, C.A.), dist. [para. 45].

Charles M. Willie & Co. (Shipping Ltd.) v. Ocean Laser Shipping Ltd.; George Roussos Sons S.A. and Ocean Laser Shipping Ltd. (The "Smaro"), [1999] 1 Lloyds Rep. 225 (Q.B.), dist. [para. 45].

Sky Mount Investment Ltd. v. East West-Umi Insurance Ltd., 1994 HKC LEXIS 780 (Hong Kong H.C.), dist. [para. 45].

Nea Agrex S.A. v. Baltic Shipping Co. Ltd. and Inter Charter Co. (The "Agios Lazaros"), [1976] Q.B. 933, dist. [para. 45].

Sport Maska Inc. v. Zittrer, [1988] 1 S.C.R. 564; 83 N.R. 322, refd to. [para. 46].

Statutes Noticed:

Arbitration Act, R.S.A. 2000, c. A-43, sect. 51(1) [para. 22].

Limitations Act, R.S.A. 2000, c. L-12, sect. 2(3) [para. 23].

Counsel:

W.D. Goodfellow, Q.C., for the plaintiff;

L.A. Westersund and P.J. Scheibel, for the defendant.

This application was heard on July 9, 2003, before Bensler, J., of the Alberta Court of Queen's Bench, Judicial Centre of Calgary, who delivered the following judgment on December 9, 2003.