Verbal Arbitration Agreement Valid

Although the arbitration agreement was not in writing, the court gave significant weight to the parties’ intention to resolve their dispute through arbitration. Furthermore, it would not be in keeping with the ordinary rues of contract law to allow one party to unilaterally withdraw from its obligations under such an agreement, where such an option was not contracted for. In this case, the contractor provided glazing to construction projects, and it entered into negotiations with a developer to determine the requirements for the window wall systems to be used in the construction of a condominium project. The contractor provided a quote of $2,997,500 plus HST, which the developer accepted.

Ben Kormos – Walsh Law

The developer took the position that the contractor was required to provide guardrails and privacy screens for the project, which were not included in the contractor’s quote, and which it did not do. The parties agreed to arbitration. Although a tolling agreement was signed in May 2017 to preserve the limitation period, a fully executed tolling agreement was not received by the contractor due to a computer email issue. This led to the contractor issuing a statement of claim.

The statement of claim dealt with the same subject matter as the contemplated arbitration, adding the developer’s directors, given that it was a breach of trust action arising from the construction project. The contractor applied for an order requiring the developer to submit to arbitration the issue of whether contractor was required to supply and install guardrails and privacy screens.

The parties initially agreed to arbitrate, but delays occurred, and the arbitration was rescheduled. An arbitration agreement as defined by the Arbitration Act, 1991 existed, although not in writing. The parties agreed upon the essential terms of the arbitration with the exception of the scope of discovery. The Act gave great weight to the parties’ intentions to resolve disputes through arbitration, and the courts were reluctant to intervene in arbitral proceedings.

The most expeditious way of dealing with the railing issue was the method that the parties originally agreed upon, arbitration, and that might put an end to any further disputes between the parties. The application judge recognized that allowing a court action in an arbitration to proceed when the claims were overlapping might result in an unnecessary duplication of resources. In the event that it became an issue, the parties were not precluded from applying for a stay of the litigation pending the arbitration hearing:

Zenith Aluminum Systems Ltd. v. 2335945 Ontario Inc., 2018 Carswell Ont. 11396, 2018 ONSC 4199 (Ont. S.C.J.).

Submitted by: Ben Kormos