Electek Power Services Inc. v. Greenfield Energy Centre Limited Partnership

CITATION: Electek Power Services Inc. v. Greenfield Energy Centre Limited Partnership,

2022 ONSC 894

COURT FILE NO.: CV-20-637621-0000

DATE: 20220208

ONTARIO

SUPERIOR COURT OF JUSTICE

)

BETWEEN:

ELECTEK POWER SERVICES INC.

Applicant

Alan Mark and Christopher I.R. Morrison,

for the Applicant

- and –

Pam Pengelley for the Respondent

GREENFIELD ENERGY CENTRE

LIMITED PARTNERSHIP

Respondent

) HEARD: January 12, 2022

PERELL, J.

REASONS FOR DECISION

Table of Contents

A.

B.

C.

D.

E.

Introduction and Overview .................................................................................................. 2

Methodology........................................................................................................................ 4

Procedural Background........................................................................................................ 4

Standard of Review.............................................................................................................. 5

Evidentiary Background ...................................................................................................... 7

The Witnesses and the Evidentiary Record ......................................................................... 7

The Lost Videorecording..................................................................................................... 9

Factual Background ........................................................................................................... 10

The Contractual Relationship between Greenfield and Electek ........................................ 10

The Incident ....................................................................................................................... 17

The Submission to Arbitration........................................................................................... 18

F.

2

The Arbitrators’ Decision .................................................................................................. 19

The Jurisdiction of Arbitrators........................................................................................... 21

Introduction........................................................................................................................ 21

Contract Formation ............................................................................................................ 21

The Procedural Jurisdiction to Determine the Arbitrator’s Jurisdiction............................ 24

(a) Stay Motions............................................................................................................... 24

(b) Declarations and Injunctions pursuant to s. 48 of the Arbitration Act, 1991 ............. 27

G.

(c) Application for Interpretation under Rule 14.05(3)(h) of the Rules of Civil Procedure

27

(d) The Appointment of Arbitrator(s) .............................................................................. 28

(e) Section 17 (8) Application.......................................................................................... 28

(f)

Section 46 Application ............................................................................................... 29

(g) Appeals ....................................................................................................................... 30

The Competence-Competence Principle............................................................................ 31

The Substantive Law about the Jurisdiction of Arbitrators to Decide Disputes................ 32

(a) Introduction ................................................................................................................ 32

(b) The Existence of an Arbitration Agreement............................................................... 34

(c) The Legality of the Arbitration Agreement................................................................ 34

(d) The Independent Agreement Principle....................................................................... 35

(e) The Interpretation of Arbitration Agreements............................................................ 37

Critique of the Arbitration Panel’s Decision ..................................................................... 38

Is There a Binding Arbitration Agreement between Greenfield and Electek? .................. 40

Summary and Conclusion.................................................................................................. 45

H.

I.

J.

A. Introduction and Overview

Electek Power Services Inc. (“Electek”) brings an application pursuant to s.17(8) of the

Arbitration Act, 1991.¹Electek seeks an Order setting aside a “preliminary question” decision by

a panel of Arbitrators. As an answer to a preliminary question, the Arbitrators decided that they

had jurisdiction to decide the dispute between Electek and Greenfield Energy Centre Limited

Partnership (“Greenfield”). Electek applies to have the Arbitrators’ decision set aside.

¹S.O. 1991, c. 17.

3

By way of overview, the problem in the immediate case arises in the following way:

a.

In 2009, in the context of making a sales pitch to provide goods and services to

Greenfield, which operates an electricity power plant for industries in Sarnia, Ontario,

Electek, which operates a high voltage equipment business in Sarnia, signed a document

entitled “Purchase Order General Terms and Conditions” (“POGTC”). The POGTC

contains an arbitration agreement.

b.

No purchase orders were issued by Greenfield in 2009, and the first purchase order

occurred in 2011. Hundreds of purchase orders followed.

c. In the contracting that occurred after 2011, Greenfield made its purchases of goods

and services from Electek: (a) by issuing a Purchase Order that does not annex the

POGTC; and (b) by signing Electek’s Timesheet, which includes terms and conditions of

sale. Greenfield’s Purchase Orders state that the purchase order is governed by the “Terms

and Conditions already agreed upon between the parties of this purchase order.” The

Electek Timesheets, unlike the Greenfield Purchase Orders, does annex the terms and

conditions of sale.

d.

Sometimes, Greenfield’s Purchase Orders were issued before the goods and

services were supplied. Other times, the Purchase Orders were issued after the goods and

services were supplied. In any event, Electek’s Timesheet was always signed. Electek’s

Timesheet includes a provision that states: “by approving this project Timesheet, you

agree that you have read, understand, and accept [Electek’s] terms and conditions.”

Electek’s terms and conditions do not include an arbitration agreement.

e.

In the contracting that occurred after 2011, Electek had forgotten about the 2009

POGTC. In contrast, Greenfield remembered the POGTC and believed that it governed

the relationship between the contracting parties. Subjectively, after 2011, the parties’

subjective contractual intention was that of ships passing in a foggy night. The ultimate

legal problem of the immediate case is whether - objectively - the arbitration agreement

in the POGTC governed the contractual relationship between the parties.

f.

In 2018, Electek was hired to provide emergency services on transformer GSU #3

at Greenfield’s electricity power plant. Electek provided the services, then Greenfield

signed an Electek Timesheet, issued a Purchase Order, and received an invoice from

Electek for $49,720.

g.

Electek’s work is alleged to have caused $10 million of damages to Greenfield’s

power plant. In 2020, Greenfield claimed compensation from Electek. Greenfield

submitted the dispute to arbitration. Electek disputed the submission to arbitration.

Electek asked the Arbitrators to answer a preliminary question about their jurisdiction. In

2021, the Arbitrators unanimously held that they had jurisdiction to decide the dispute.

h.

The Arbitrators treated the arbitration provision in the POGTC as a separate

contract from the contract in which it was imbedded. The Arbitrators decided that the

2009 POGTC arbitration provision was a valid submission to arbitration to govern the

dispute about the 2018 contract for goods and services. Otherwise, the Arbitrators

expressly did not decide what terms and conditions applied to the 2018 contract for goods

and services that is the subject of the dispute between Greenfield and Electek.

This is a hearing de novo. For the reasons that follow, I set aside the Arbitrators’ decision.

4

B. Methodology

Electek’s application pursuant to s.17(8) of the Arbitration Act, 1991 raises complex legal

problems. My methodology for solving those legal problem is as follows:

 First, I shall describe the procedural background to the application now before the court.

 Second, I shall discuss, the manner of exercising my own jurisdiction on this application.

I shall explain why the immediate application is a de novo hearing of the evidence that was

before the Arbitrators.

 Third, I shall describe the evidentiary background, and I shall address a problem about a

lost videorecording of the testimony at the arbitration hearing.

 Fourth, I shall discuss the factual background. I shall describe: (a) the history of the

contracting between Greenfield and Electek; (b) the incident that gave rise to the dispute

between the parties; (c) the chronology of the submission to arbitration; and (d) the

Arbitrators’ decision.

 Fifth, I shall analyze and explain the law about the jurisdiction of arbitrators including: (a)

the general principles of contract formation; (b) the procedural law associated with an

arbitrator’s jurisdiction; (c) the competence-competence principle; and (d) the four critical

substantive law principles about the jurisdiction of arbitrators that will be determinative of

the jurisdictional problem of the immediate case.

 Sixth, I shall critique the decision of the Arbitrators in the immediate case.

 Seventh, I shall apply the law about the jurisdiction of arbitrators to the facts of the

immediate case and answer the question of whether there is a binding arbitration agreement

between Greenfield and Electek and whether the Arbitrators had jurisdiction to decide the

dispute between the parties.

 Eighth, I shall summarize and conclude this decision.

C. Procedural Background

The procedural background to the application now before the court is the following.

On February 6, 2020, Greenfield delivered a Notice of Arbitration.

In February 2020, Electek delivered a Response to Arbitration Application.

On March 6, 2020, Electek commenced an Application in the Superior Court pursuant to

s.48 of the Arbitration Act, 1991 for a declaration that the arbitration commenced by Greenfield is

invalid.

On March 16, 2020, Electek brought a motion in the Superior Court for an order for an

interim stay of the arbitration until the hearing of Electek’s application pursuant to s.48 of the

Arbitration Act, 1991.

On June 15, 2020, while the Court was operating under emergency protocols because of

the Covid-19 pandemic, Electek sought to schedule its motion for an interim stay of the arbitration.

Justice Myers made the following endorsement:

5

Counsel concede the matter is not a short application. An urgent hearing is not one for

which booking in December is sought. The court is not able to hear complex, lengthy

matters yet [because of the operations protocols of the Covid-19 pandemic] absent urgency.

The competence-competence principle suggests the panel should rule on its jurisdiction

without prejudice to Electek’s right to raise the issue thereafter. This is especially the case

where significant facts are in dispute. There is no short crisp ruling of law that could save

significant trial expense either here or there. Start there. We’ll be here when you get back.

In the summer of 2020, Electek asked the Arbitration Panel, which was comprised of Earl

A. Cherniak Q.C., William G. Horton, and J. Brian Casey, to rule whether the Arbitrators had

jurisdiction to resolve the dispute between Greenfield and Electek.

An arbitration hearing took place on February 3, 4, 5, and 8, 2021. It was a Zoom hearing

recorded by the International Centre for Dispute Resolution (“ICDR”).

The Arbitrators released their decision on March 5, 2021.

On August 16, 2021, Electek brought an application pursuant to s.17(8) of the Arbitration

Act, 1991 for an Order setting aside the Arbitrators’ decision.

D. Standard of Review

Electek’s application is brought pursuant to s.17(8) of the Arbitration Act, 1991.

The parties disagree about the standard of review to be applied by the court on an

application pursuant to. s.17(8). To resolve this disagreement, it is necessary to consider all of s.17.

Section 17 states:

Jurisdiction of Arbitral Tribunal

Rulings and objections re jurisdiction

Arbitral tribunal may rule on own jurisdiction

17 (1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that

connection rule on objections with respect to the existence or validity of the arbitration agreement.

Independent agreement

(2) If the arbitration agreement forms part of another agreement, it shall, for the purposes of a ruling

on jurisdiction, be treated as an independent agreement that may survive even if the main agreement

is found to be invalid.

Time for objections to jurisdiction

(3) A party who has an objection to the arbitral tribunal’s jurisdiction to conduct the arbitration

shall make the objection no later than the beginning of the hearing or, if there is no hearing, no later

than the first occasion on which the party submits a statement to the tribunal.

Party’s appointment of arbitrator no bar to objection

(4) The fact that a party has appointed or participated in the appointment of an arbitrator does not

prevent the party from making an objection to jurisdiction.

6

Time for objections, exceeding authority

(5) A party who has an objection that the arbitral tribunal is exceeding its authority shall make the

objection as soon as the matter alleged to be beyond the tribunal’s authority is raised during the

arbitration.

Later objections

(6) Despite section 4, if the arbitral tribunal considers the delay justified, a party may make an

objection after the time limit referred to in subsection (3) or (5), as the case may be, has expired.

Ruling

(7) The arbitral tribunal may rule on an objection as a preliminary question or may deal with it in

an award.

Review by court

(8) If the arbitral tribunal rules on an objection as a preliminary question, a party may, within thirty

days after receiving notice of the ruling, make an application to the court to decide the matter.

No appeal

(9) There is no appeal from the court’s decision.

In the immediate case, as noted above, after Greenfield commenced an arbitration, Electek

brought an application to the court to stop the arbitration, but relying on the competence-

competence principle, Justice Myers suggested that the matter of the arbitrators’ jurisdiction be

decided by the Arbitrators.

Electek took up this suggestion, and after four days of argument, the Arbitrators decided

that they did have jurisdiction. Electek now returns to the court pursuant to s.17(8), to “make an

application to the court to decide the matter.”

It is Electek’s submission that the s.17(8) application is a hearing de novo using the

evidence submitted to the Arbitrators. With one problem, discussed below, about a lost

transcription of video and audio evidence, Greenfield agrees on the evidentiary record for the

s.17(8) application. Greenfield, however, submits that the s.17(8) application is in the nature of a

judicial review application governed by the principles of appellate and judicial review and in

particular by the principles of judicial review set out by the Supreme Court of Canada in Canada

(Minister of Citizenship and Immigration) v. Vavilov.²

Greenfield, however, is incorrect. The case law establishes that s.17(8) of the Arbitration

Act, 1991 applications and the matching provision under the International Commercial Arbitration

Act, 2017³are hearings de novo.⁴

In this regard, keeping in mind that s.11(1) of Ontario’s International Commercial

Arbitration Act, 2017 is the same as s. 17(8) of Ontario’s Arbitration Act, 1991, in The Russian

²2019 SCC 65.

³S.O. 2017, c. 2, Sched. 5.

⁴Hornepayne First Nation v Ontario First Nations (2008) Ltd., 2021 ONSC 5534; The Russian Federation v.

Luxtona Limited, 2021 ONSC 4604; Lululemon Athletica Canada Inc. v. Industrial Colour Productions Inc, 2021

BCCA 428

7

Federation v. Luxtona Limited,⁵Justice Corbett stated at paragraph 22:

22. The court is “to decide the matter” It is not “to review the tribunal's decision". "The matter",

referenced in both art. 16(1) of the Model Law and s.11(1) of the [International Commercial

Arbitration Act, 2017] is the issue of the tribunal's jurisdiction. This is clear language conferring

original jurisdiction on the court to adjudicate the question of the tribunal's jurisdiction. This

language is not qualified by a privative clause or terms of reference for the application. The court's

task is entirely described by the phrase “decide the matter”.

What is now before the court is a normal application under the Rules of Civil Procedure. It

is not an appeal.

The only procedural difference about this application is that the appeals from it are

circumscribed by the appeal provisions of the Arbitration Act, 1991.

a.

If a court dismisses an application under the Arbitration Act, 1991: (a) because of

the competence-competence principle; or (b) because it decides that the arbitrator has

jurisdiction, then an appeal of that decision is barred by the appeal provisions of the Act.⁶

b.

If a court concludes that a dispute is not subject to arbitration, then an appeal is not

barred by the appeal provisions of the Arbitration Act, 1991. Where there is no arbitration

agreement, the Arbitration Act, 1991 has no application, and it follows that if the court

has decided that the Act is not applicable, then the prohibition against an appeal is equally

not applicable.⁷

Having regard to my decision that there is no arbitration agreement in the immediate case,

my decision de novo can be appealed.

E. Evidentiary Background

The Witnesses and the Evidentiary Record

The matter now before the court is Electek’s application pursuant to s.17(8) of the

Arbitration Act, 1991 to set aside the preliminary question decision of the Arbitrators that they had

jurisdiction to decide the dispute between Greenfield and Electek. The evidence for this application

is a composite of evidence that was proffered before, during, and after the arbitration hearing.

As noted above, before the immediate matter, Electek had brought an application pursuant

⁵2021 ONSC 4604 (Div. Ct.).

⁶See sections: 7(2), 10(2), 15 (6), 16(4) and 17(9). Ontario Medical Assn. v. Willis Canada Inc., 2013 ONCA 745;

Radewych v. Brookfield Homes (Ontario) Ltd., 2007 ONCA 721; SLMSoft.com Inc. v. First Ontario Credit Union

Ltd., [2003] O.J. No. 912 (C.A.), aff’g [2002] O.J. No. 3984 (S.C.J.) If the court grants a stay pursuant to s. 7 (2) of

the Arbitration Act, 1991, then an appeal of that decision is barred by s. 7 (6): Toronto Standard Condominium

Corp. No. 1628 v. Toronto Standard Condominium Corp. No. 1636, 2020 ONCA 612.

⁷Toronto Standard Condominium Corp. No. 1628 v. Toronto Standard Condominium Corp. No. 1636, 2020 ONCA

612; Haas v. Gunasekaram 2016 ONCA 744; Ontario Medical Assn. v. Willis Canada Inc., 2013 ONCA 745;

Griffin v. Dell Canada Inc., 2010 ONCA 29, 98 O.R. (3d) 481, leave to appeal refused, [2010] S.C.C.A. No. 75;

Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642; ,Smith Estate v.

National Money Mart Co., 2008 ONCA 746, leave to appeal refused, [2008] S.C.C.A. No. 535; Woolcock v.

Bushert, [2004] O.J. No. 4498 (C.A.); Mantini v. Smith Lyons LLP (2003), 64 O.R. (3d) 505 at para. 17, (C.A.),

leave to appeal ref’d [2003] S.C.C. No. 344; Huras v. Primerica Financial Services Ltd., [2000] O.J. No. 3772

(C.A.); Simmons v. London (City), [1997] O.J. No. 3073 (Gen. Div.); Deluce Holdings Inc. v. Air Canada (1992), 12

O.R. (3d) 131 (Gen. Div.).

8

s.48 of the Arbitration Act, 1991 to have the arbitration stopped. Justice Myers declined to stay the

arbitration even on an interim basis, and Electek asked the Arbitrators to rule on their jurisdiction.

The parties delivered evidentiary statements for the hearing before the Arbitrators and the

hearing proceeded as a virtual hearing with four days of examinations and cross-examinations.

The parties have now returned to this Court, and the evidence for Electek’s application

pursuant to s.17(8) consists of: (a) the evidence that the parties filed on the initial motion that was

considered by Justice Myers; (b) the evidence both parties proffered for the hearing before the

Arbitrators; (c) transcripts and video recordings of the hearing before the Arbitrators; (d) the

Arbitrators’ decision; (e) several affidavits filed for the purposes of the s.17(8) application; (f) a

joint documentary brief; and (g) compendia.

More precisely, the evidence for the application now before the court consists of the

following:

a.

Max Autio provided a Statement dated September 27, 2020. Mr. Autio is a retired

employee of Greenfield. From 2011 to mid-2013, he was the Chief Operating Engineer

and Operations & Maintenance Manager at Greenfield. He was employed by the facility

operator Ethos Energy (then known as Wood Group). He was examined and cross-

examined at the arbitration hearing.

b.

Lynne Ballard provided Statements dated July 23, 2020 and September 27, 2020.

Ms. Ballard is currently employed by BC Hydro. She is a former employee of Greenfield,

and she worked for it for seven years between 2007 and 2014. She was Plant Service

Administrator/Purchaser, with a major role in implementing Greenfield’s procurement

policies. She was examined and cross-examined at the arbitration hearing.

c.

Charles Batrouny provided an affidavit dated September 12, 2021; i.e., after the

arbitration hearing. Mr. Batrouny is a lawyer with Cozen O’Connor LLP, Greenfield’s

lawyers. He was in attendance for the four days of hearings before the Arbitrators. He

was cross-examined on his affidavit for the purposes of the application pursuant to s.17(8)

of the Arbitration Act, 1991.

d.

Hudson Chalmers delivered an affidavit dated August 16, 2021; i.e., after the

arbitration hearing. Mr. Chalmers is a lawyer with Will Davidson LLP, the lawyers for

Electek. He was in attendance for the four days of hearings before the Arbitrators. He was

cross-examined on his affidavit for the purposes of the application pursuant to s.17(8) of

the Arbitration Act, 1991.

e.

Richard Dejonghe delivered a Statement dated July 24, 2020. From September

2009 to November 2010, he was the Plant Manager at Greenfield, where he was employed

by the facility operator, Ethos Energy. He was examined and cross-examined at the

arbitration hearing.

f.

Rajesh Desai delivered a Statement dated August 4, 2020. Mr. Desai is a Lead

Operator at Greenfield, which is to say that he is the operator in charge during a work

shift. He was examined and cross-examined at the arbitration hearing.

g.

Brad Gray delivered an affidavit dated June 11, 2020 and a Statement dated

August 21, 2020. Mr. Gray was the Chief Operating Officer (“COO”) and Vice President

of Operations for Electek from 2009 to 2011. He was examined and cross-examined at

9

the arbitration hearing.

h. Marinela Kraju delivered an affidavit dated March 16, 2020; i.e., before the

arbitration hearing. Ms. Kraju is an associate lawyer for Will Davidson LLP, the lawyers

for Electek.

i.

C. David Lamoureaux delivered a Statement dated July 24, 2020. Mr.

Lamoureaux is the Regional Managing Counsel for Calprine Corporation which along

with Mitsui & Co. Ltd. own Greenfield.

j.

Shane Maddeford delivered an affidavit dated June 12, 2020. Mr. Maddeford is

Electek’s Director of Technical Services. He performed the work that has given rise to

the dispute between the parties. He was examined and cross-examined at the arbitration

hearing.

k.

Alex Palimaka delivered an affidavit dated July 6, 2020. He also delivered

Statements dated August 21, 2020 and October 7, 2020. Mr. Palimaka is Electek’s

General Legal Counsel. He is also an Electek Vice President. He was examined and cross-

examined at the arbitration hearing.

l.

Lorne Reddy delivered a Statement dated September 30, 2020. Mr. Reddy is the

Facility Manager at Greenfield, a position he has held since August 2015. He was

examined and cross-examined at the arbitration hearing.

m. Tim Valleau delivered Statements dated July 23, 2020 and September 29, 2020.

Mr. Valleau is the Maintenance and TA Planner at Greenfield’s power plant. He is

employed by Ethos Energy which operates the plant on behalf of its owners. He was

examined and cross-examined at the arbitration hearing.

n.

Joe Vandenboom delivered Statements dated August 20, 2020 and October 9,

2020. Mr. Vandenboom was Director of Operations at Electek. Mr. Vandenboom was

examined and cross-examined at the Arbitration hearing.

The Lost Videorecording

As required by the arbitration rules of the ICDR, the hearing was video recorded. For the

arbitration, each witness produced a sworn statement as evidence-in-chief and they were examined

and cross-examined at the hearing, which was a videoconference recorded on Zoom.

However, the recording of February 4, 2021 (Day 2) of the hearing was lost. On that day,

Mr. Autio for Greenfield, Ms. Ballard for Greenfield, Mr. Maddeford for Electek, and Mr. Valleau

for Greenfield were examined and cross-examined.

Mr. Chalmers attended the arbitration hearing as one of the lawyers representing Electek.

For the purposes of Electek’s application pursuant to s.17(8) of the Arbitration Act, 1991, Mr.

Chalmers delivered a 114-paragraph affidavit dated August 16, 2021 reporting on the missing

cross-examination based on his recollection and on notes made at the hearing by him and Electek’s

lawyers.

Mr. Batrouny attended the arbitration hearing as one of the lawyers representing

Greenfield. For the purposes of responding to Electek’s application pursuant to s.17(8) of the

Arbitration Act, 1991, Mr. Batrouny delivered a 55-paragraph, 20-exhibit affidavit dated

10

September 12, 2021, amongst other things, reporting on the missing cross-examination based on

his recollection and on notes made at the hearing by him and Greenfield’s lawyers.

For the purposes of Electek’s application pursuant to s.17(8) of the Arbitration Act, 1991,

Greenfield took the position that Mr. Chalmers’ affidavit should be struck as inadmissible hearsay.

I agree, and, therefore, in reaching my own decision in this matter, I shall not rely on Mr. Chalmers’

or Mr. Batrouny’s report of the testimony of Mr. Autio, Ms. Ballard, Mr. Maddeford, and Mr.

Valleau.

In any event, as the following discussion of the factual background will reveal, what all of

the witnesses, including Mr. Autio, Ms. Ballard, Mr. Maddeford, and Mr. Valleau, subjectively

thought: (a) about the contractual intentions of Greenfield and Electek, respectively; and (b) about

what Greenfield and Electek, respectively, knew or ought to have known about what were the

terms and conditions of the contract or contracts between Greenfield and Electek misses the point

that the task for the court is to determine objectively whether a consensus ad idem was reached

about an arbitration agreement and whether a valid and enforceable arbitration agreement was

established to provide the Arbitrators with jurisdiction to decide the dispute between Greenfield

and Electek. The subjective beliefs of the parties’ witnesses are not determinative. Moreover, what

the documents reveal and what the conduct of the parties revealed is the place to find the objective

truth in the case at bar.

F. Factual Background

The Contractual Relationship between Greenfield and Electek

Greenfield is an Ontario limited partnership. It carries on business in Ontario operating an

electricity power plant. It operates a power generating plant in Sarnia, Ontario. The plant, the

Greenfield Energy Centre, became operational in 2008.

Electek is an Ontario corporation that services high voltage electrical equipment. It was

founded by Joe Vandenboom in 2002. In 2007, Electek was purchased by Bluewater Power

Distribution Co. Mr. Vandenboom became an employee. Brad Gray, Bluewater’s VP of

Operations became Electek’s COO.

Greenfield had elaborate and detailed policies and procedures for procuring goods and

services. Greenfield’s policies and procedures directed that vendors could only become authorized

to contract with Greenfield if they agreed to Greenfield’s contractual terms and conditions. Those

terms and conditions were set out in a document entitled “Purchase Order General Terms and

Conditions” (“POGTC”).

Greenfield’s policy was that it would not contract with a vendor unless the vendor had been

assigned a vendor number and a vendor number would not be assigned unless the vendor had

signed the POGTC.

For present purposes the following provisions of the POGTC, which among other things

included an arbitration agreement, are pertinent.

11

GEC – PURCHASE ORDER GENERAL TERMS AND CONDITIONS

IMPORTANT – READ CAREFULLY

Definitions

“Buyer” shall mean the entity identified as such on the face of the purchase order to which these

terms and conditions are referenced and incorporated into.

“Purchase Order” shall mean the signatory document that specifies the specific purchase to be made

by Buyer, all attachments, referenced specifications, and the General Terms and Conditions.

[…]

“Seller” shall mean the entity identified as such on the face of the purchase order to which these

terms and conditions are referenced and incorporated and which will provide or perform the Scope

of Work.

"Services" shall mean all services including but not limited to all performances provided and, all

equipment and material supplied in connection with the Purchase Order.

“Scope of Work” shall mean the provision of the goods, materials, equipment, parts or services as

specified in and in accordance with the written purchase order and any attachments or amendments

and these General Terms and Conditions.

1. ACCEPTANCE: PURCHASE ORDER CONSTITUTES ENTIRE AGREEMENT

This Purchase Order constitutes Buyer’s offer and may be accepted by Seller only in accordance

with the terms hereof. Any acceptance herein of an offer of Seller, or any confirmation herein of a

prior agreement between Buyer and Seller or any confirmation herein of a prior agreement between

Buyer and Seller is expressly made conditional on Seller’s agreement to the additional or different

terms contained herein. Seller may accept this Purchase Order by commencement of Scope of Work,

shipment of goods, or furnishing of services hereunder. Dispatch of Seller’s acknowledgment form

or other written document will also act as an acceptance if it agrees with this Purchase Order with

respect to the description, amount, price and time of delivery of the goods or services ordered.

Notwithstanding any waiver in any instance, or any oral agreement, or any instructions terms and

conditions that may be contained in any quotation, acknowledgement, invoice or other written

document of Seller, no addition to, waiver for the future or modification of, any of the provisions

herein contained shall be of any force or effect unless made in writing and executed by Buyer.

2 CHANGES

[…]

3. PRICE

[…]

4. SHIPPING

[…]

5. TIME OF THE ESSENCE

[…]

6 DELIVERY/TITLE

[…]

7. RIGHT OF INSPECTION AND REJECTION

[…]

8. ASSIGNMENT

[…]

9. GOVERING LAW

[…]

10 WARRANTY

12

[…]

11. PROJECT SITE

[…]

12. INVOICES

[…]

13.DOCUMENT

[…]

14. PATENT INDEMNITY

[…]

15. INDEMNITY AND INSURANCE

[…]

16. COMPLIANCE WITH LAWS

[…]

17. CHEMICAL SUBSTANCE IDENTIFICATION

[…]

15 [sic]. SAFETY AND HEALTH PROGRAMS

[…]

17. [sic]

[…]

18. CONFIDENTIALITY/TRADE SECRETS

[…]

19. WAIVER

[…]

20. CONSEQUENTIAL DAMAGES

[…]

21. DISPUTE RESOLUTION

The parties agree than any and all disputes or controversies that may arise between the parties arising

out of or related to this Agreement shall be determined by binding arbitration. Any such arbitration

shall be determined before the American Arbitration Association (“AAA”) in accordance with AAA

rules then in effect with each party nominating one arbiter and the two arbiters nominating a third,

and that any arbitration proceedings shall be held in Toronto, Ontario. Judgment upon arbitration

awards may be entered in any court, provincial or federal, having jurisdiction.

22. CURRENCY

[…]

The evidence from several of Greenfield’s employees and from several of Greenfield’s

authorized vendors revealed that goods and services were provided to Greenfield in accordance

with the POGTC.

The evidence from several of Greenfield’s employees and from several of Greenfield’s

authorized vendors was that an authorized vendor methodology was a custom of the trade in the

“Chemical Valley” area of Sarnia, which was the location of numerous power generation facilities.

They testified that the practice of authorizing vendors and of establishing a master contract to

govern and stipulate the terms and conditions for purchases (purchase orders) was a standard, well-

known, and routine practice in Sarnia.

Mr. Palimaka for Electek disagreed about whether master contracts were the custom of the

trade, and he stated in his reply Statement as follows:

2. Electek-Sarnia has 78 industrial customers of which we currently have 14 customers with Master

Service Agreements. All other customers receive our Terms and Conditions with our Quote or

Timesheet, or they provide a Purchase Order in advance with their own Terms and Conditions. None

of our customers use the process which Greenfield is alleging was followed in this case, of having

13

Electek sign Purchase Order Terms and Conditions and having those Terms and Conditions govern

the relationship between the parties for an undefined period of time.

3. The process of contractor qualification for many of our customers is, in fact, managed by third

party service providers, such as ISNetworld and Avetta. In order to become qualified under either

program, Electek is required to submit very similar information to that required by Greenfield under

its Contractor Qualification Package, which is referenced and attached to Exhibit L of Joe

Vanderboom's [sic] Responding Statement, dated August 20, 2020. At this point in time, 17 of

Electek's customers use ISNetworld and 6 customers use Avetta for contractor qualification.

In 2008, Electek approached Greenfield and offered its services. The Plant Administrator

at the time was Lynne Ballard. In accordance with Greenfield’s policies and procedures, it was

Ms. Ballard’s routine practice to provide vendors a copy of the POGTC.

On December 18, 2008 Greenfield and Electek met and although Ms. Ballard was not at

the procurement discussions, she testified that she told Mr. Vandenboom of Electek that Greenfield

required purchase orders that were governed by a document entitled Purchase Order General

Terms and Conditions (POGTC).

Mr. Vandenboom does not recall the conversation. Mr. Vandenboom and Mr. Gray

attended the meeting, which was to solicit work for Electek. Neither had any recollection of the

POGTC being discussed at the initial meeting between Greenfield and Electek. There is no

evidence that Electek’s terms and conditions for contracting were discussed. The purpose of the

meeting was to market Electek as a potential supplier of high voltage goods and services to

Greenfield and the details of the contracting, if any, were left for further discussion.

After the meeting on December 18, 2008, Shana-Rhea Gould, who is an Operation Project

Coordinator at Bluewater, sent Ms. Ballard an email message and others at Greenfield additional

information about Electek, including its standard rate schedule. However, Electek’s terms and

conditions for contracting were not included in this correspondence.

At some time in February or March 2009, Greenfield gave Electek a copy of the POGTC.

Ms. Ballard’s evidence is that Mr. Vandenboom was the intermediary who got the POGTC to Mr.

Gray and then presumably to Ms. Gould. There is documentary evidence that Ms. Gould reviewed

the POGTC in February or early March 2009.

On March 4, 2009, Brad Gray signed the POGTC, and he emailed it to Greenfield. In his

testimony for the arbitration hearing, he admitted reading the POGTC and having the authority to

sign it. In 2020, he testified that he could not recall signing the POGTC. His reconstructed thought

was that he signed the POGTC for anticipated imminent work for a specific job that ultimately

was not procured. There is no evidence about what that specific project might have been.

Mr. Vandenboom did not know how or why Mr. Gray signed the POGTC. Mr. Palimaka,

Electek’s in-house legal counsel, did not know how or why Mr. Gray signed the POGTC. Mr.

Palimaka did not review it before it was signed. Mr. Palimaka testified that he was not aware of

the existence of any master contract between Greenfield and Electek.

There is evidence that Mr. Gray had Ms. Gould review the POGTC before March 4, 2009,

when it was sent to Greenfield, because she sent the following email message to Mr. Gray on

March 3, 2009:

I’ve read through the document. My only concerns are under the Safety & Health Program section.

It states that if we are found to be non-compliant with their H&S performance requirements that

14

work will cease (no big deal) but also that no payment shall be due when we are in non-compliance.

It also states that we are responsible for occupational health monitoring and sampling to determine

levels of exposure to our employees. They are also requesting us to carry Disease coverage on our

insurance for $3M. I am not sure if we carry this coverage now.

Ms. Gould who is still employed by Bluewater did not provide any evidence for the

arbitration hearing.

Electek was not retained for services in 2009, or 2010. There is evidence that in October

2009, Greenfield bid for a contract to install soft-starters on plant motors (900 hours of work), but

nothing came of the bid. The bid was prepared by Barbara Fan, an Electek Engineer, who would

have had to attend at the plant to prepare the bid. Ms. Fan did not provide evidence at the arbitration

hearing.

Documentation for other bids for work by Electek between 2002 to 2011 has been lost.

In 2011, Electek renewed its efforts to market its services to Greenfield. By this time, Mr.

Gray was no longer at Electek. He ended his employment with Electek in June 2011, but he did

consulting work for Bluewater from time to time thereafter.

In the summer of 2011, Mr. Vandenboom contacted Max Autio, Greenfield’s Chief

Operating Engineer. They met on July 26, 2011, and Electek provided Greenfield with a rate sheet

upon which there was the notation “all work will be performed in accordance with the terms and

conditions on the reverse of the Electek customer Timesheet. The Timesheet terms and conditions

does not include a submission to arbitration provision.

On August 8, 2011, in response to Greenfield’s invitation to submit a proposal to do work,

Electek submitted a bid to Ms. Ballard. The bid indicated that work was to be performed in

accordance with Electek’s standard terms and conditions.

Around this time, Mr. Palimaka was given a copy of the POGTC with Ms. Ballard’s

business card attached. He did not recall who gave it to him, but he assumed it was Mr.

Vandenboom. Mr. Palimaka made some notes on the POGTC. However, claiming solicitor and

client privilege, Electek did not produce Mr. Palimaka’s annotations on the POGTC. During cross-

examination, Mr. Palimaka said that Mr. Vandenboom told him that Greenfield’s terms and

conditions were intended to cover all future work. Unaware of the POGTC signed by Mr. Gray in

2009, Mr. Palimaka deposed that the POGTC was never signed by Electek after he reviewed it in

2011.

The 2011 bid was accepted, and Electek provided services on August 10, 2011. Ms.

Ballard, whose responsibilities included rejecting contracts that did not include Greenfield’s

contract terms and conditions, did not reject Electek’s quote and the work went forward. Greenfield

did not issue a Purchase Order, and it paid for the services in accordance with Electek’s rate sheet

fees. Electek was not advised that the POGTC applied.

After 2011, Greenfield issued Purchase Orders without annexing the POGTC. Rather,

Greenfield issued Purchase Orders that stated in a boxed alert that the Purchase Order was

governed by the “Terms and Conditions already agreed upon between the parties of this purchase

order.” Visualize:

15

After the 2011 first contracting, Electek continued to provide services to Greenfield. It

submitted quotes with the notation “all work will be performed in accordance with the terms and

conditions on the reverse of the Electek customer Timesheet” or similar notation.

Annually, Electek provided Greenfield with rate sheets, i.e., a price list for Electek’s goods

and services. The rate sheet set out Electek’s terms and conditions for providing goods and

services. On its written quotes for work, Electek indicated that its work was performed in

accordance with Electek’s standard terms and conditions, which were set out in the quote itself.

Annually, Greenfield provided Electek with a contractor qualification package including

references to the procurement documents that were to be signed by Electek. There is no reference

to the POGTC in the qualifications package although some of the procurement documents reflect

terms of the POGTC. The contracting package itself, however, does not expressly reference the

POGTC and did not include a copy of it.

Electek denies that the POGTC was a master contract, and apart from the POGTC, there

was no master contract between Greenfield and Electek.

Electek had lost its institutional memory of Mr. Gray signing the POGTC, and on an annual

basis it provided Greenfield with a rate sheet, a price list for its goods and services. The Timesheet

noted that all work would be performed pursuant to the “terms and conditions on the reverse side

of the Electek Customer Timesheet.” Before or after work was performed, Electek would provide

Greenfield with a Timesheet, Greenfield invariably signed the Timesheets. Electek was told and

complied with a directive that its invoices refer to Greenfield’s purchase order number.

For present purposes, the following provisions from Electek’s Terms and Conditions are

pertinent:

TERMS AND CONDITIONS

ELECTEK POWER DISTRIBUTION CORPORATION

General Terms and Conditions

The following terms and conditions of sale shall apply to any sale of goods or services by Electek

Power Services Inc. (hereinafter called "Electek") and acceptance of these terms and conditions is

an express condition of such sale. Purchaser shall be deemed to have full knowledge of the terms

and conditions herein and such terms and conditions shall be binding.

1. GENERAL

In the event of any conflict or inconsistency between the terms and conditions of sale herein and the

terms and conditions contained in the Purchaser's order or in any other form issued by Purchaser,

16

whether or not any such form has been acknowledged or accepted by Electek, Electek's terms and

conditions herein shall prevail. No waiver, alteration or modification of these terms and conditions

shall be binding upon Electek unless made in writing and signed by a duly authorized representative

of Electek.

2. QUOTATIONS

Unless otherwise stated, Electek's quotation shall be null and void unless accepted by Purchaser

within thirty (30) days from the date of the quotation. All quoted prices are based on the current

exchange rates, tariffs and costs of manufacture. Unless otherwise stated in the quotation, quoted

prices are subject to change by Electek with or without notice until Purchaser's acceptance.

Customary methods of transportation shall be selected by Electek and such transportation will be at

Purchaser's expense.

3. TAXES

[…]

4. DELIVERY

[…]

5. HEALTH AND SAFETY

[…]

6. FORCE MAJEURE

[…]

7. TITLE

[…]

8. LIMITATION OF LIABILITY

[…]

9. WARRANTY

[…]

10. INSTALLATION

[…]

11. HANDLING OF PCBs

[…]

12. RETURNED GOODS

[…]

13. TERMS OF PAYMENT

[…]

14. CHANGES AND CANCELLATION

Orders accepted by Purchaser and not subject to changes or cancellation by Purchaser, except with

Electek’s written consent. In such cases where Electek authorizes changes or cancellation, Electek

reserves the right to charge Purchaser with reasonable costs based upon expenses already incurred

and commitments made by Electek, including, with limitation, any labour done, material purchased

and also including Electek’s usual overhead and reasonable profit and similar cancellation charges

with Electek’s suppliers.

15. THE AGREEMENT

An acceptance and official confirmation of Purchaser's order by Electek shall constitute the

complete agreement, subject to the terms and conditions of sale herein set forth, and shall supersede

all previous quotations, orders or agreements. The law of the Province of Ontario shall govern the

validity, interpretation and enforcement of these terms and conditions of sale and of any contract of

which these terms and conditions are a part.

In 2015, Electek made its Timesheets digital. For Greenfield to approve Electek’s work, a

computer software prompt stated, “by approving this project Timesheet, you agree that you have

17

read, understand, and accept the terms and conditions.” There was a hyperlink to Electek’s terms

and conditions.

Greenfield accepted this manner of contracting where it would submit Purchase Orders

before or after work was performed and where it would sign Electek’s Timesheets.

By February 2018, Electek had performed over a hundred work assignments for

Greenfield. From 2011 to 2018, Electek’s services were procured by a call-out, by a written

request, or by an accepted bid. Greenfield only rarely provided a Purchase Order before Electek

performed the work. More than 150 Greenfield Purchase Orders were issued, a few of which were

issued before the work was done, but most Purchase Orders were issued after the work was

complete. Electek provided Greenfield with its rate sheet and a Timesheet indicating the work

performed. As already noted above, the Timesheet stated that Greenfield accepted Electek’s terms

and conditions. Greenfield routinely signed the Timesheets.

At no time between 2009 to 2018 was a POGTC annexed to any of Greenfield’s Purchase

Orders issued for Electek. Greenfield, however, believed that Electek was bound by Mr. Gray’s

signature in 2009 on the POGTC. After 2009, on no occasion was Electek orally told that POGTC

applied. Mr. Gray had left his job with Electek, and from 2011 to 2018, Electek was not conscious

of the POGTC.

The Incident

On February 10, 2018, at 4:55 a.m. a transformer relay opened. This indicated a fault

condition at transformer G3 (“GSU #3”), which was manufactured by Pauwels Canada Inc.

Greenfield made an urgent call to Electek to perform emergency services. No Purchase

Order was issued on the 10^th. Shane Maddeford of Electek took the telephone call from Greenfield.

When Electek was called out on February 10, 2018, there was no specific tender or Purchase Order

for the emergency work, and the price that was subsequently charged for the work was in

accordance with the current rate sheet that included reference to Electek’s terms and conditions.

On February 10, 2018, Mr. Maddeford went to Greenfield’s plant. He made a

recommendation, and the transformer was re-energized. The transformer failed immediately.

Greenfield alleges that the re-start triggered a catastrophic failure causing more than $10 million

in damages.

On February 12, 2018, Mr. Maddeford prepared a Timesheet for Electek’s already

performed work.

On February 14, 2018, Greenfield issued a purchase order for the work performed on

February 10, 2018. The purchase order was #GEC-WGTS-11829. The Description of the work

was “ESTIMATED TIME AND MATERIAL FOR ELECTRICAL SUPPORT FOR GSU #3

FAULT INSPECTION AND REPAIRS. NOTES OR SPECIAL INSTRUCTIONS:

ELECTRICAL SUPPORT FOR GSU #3 FAULT WO#30452*2.” The price was $44,000 plus

HST of $5,720 for a total of $49,720.

The Purchase Order was issued by Henry N. Nader of Greenfield. The Purchase Order did

not include a copy of the POGTC. The Purchase Order referenced terms and conditions “already

agreed upon between the parties of this purchase order.” The Purchase Order stated: “’‘Purchase

order number and P.O. line item numbers are required on invoice and all packing slips.’ Please

18

sign purchase order and fax back to 519-867-337.” Electek did not sign the purchase order and fax

it back to Greenfield.

On February 20, 2018, Mr. Valleau of Greenfield approved Electek’s Timesheet for the

GSU #3 work. He did this by electronically clicking the box that stated that Electek’s terms and

conditions applied. In his Reply Statement for the Arbitration hearing, Mr. Valleau’s evidence was

that he did not appreciate what he was doing other than approving work in accordance with the

POGTC. Mr. Valleau stated:

Paragraph 28 of Joe Vandenboom's statement includes a screenshot of a box saying "Approve

Project Timesheet". I would always just click "Approve" to approve the Timesheet. I never took in

the fact that I was being asked to change any T&Cs [terms and conditions] to which Electek had

agreed as an authorized vendor. I never thought or intended to do anything otherwise, and I never

clicked on a link to T&Cs. I did not think that my approving their time was anything but that. After

reading Joe's affidavit, out of curiosity, I went back to a timesheet email in my inbox to confirm that

this box actually appeared. I see that it does. I clicked "Cancel" to see what happens. It simply closes

the window and I see the screen requesting that I "Approve" the time. In other words, the only way

I can approve the time is to click "Approve" twice. If I do not do this, the timesheet will not get

approved and Electek will not get paid. My understanding is that [Greenfield’s] T&Cs are

paramount and govern our vendor relationship; I would not expect that my approving their

timesheets could in any way impact or change this.

Electek’s position is that the reference in Greenfield’s Purchase Order that it identified to

terms and conditions “already agreed upon between the parties” is to Electek’s terms and

conditions and not the terms and conditions in the POGTC.

Greenfield subsequently hired Electek to perform some of the repairs consequent to the

transformer failure.

In March 2018, Electek prepared its invoice, which was sent to Greenfield. The invoice

referenced purchase order #GEC-WGTS-11829.

The Submission to Arbitration

Two years passed after the incident of February 2018. On February 6, 2020, Greenfield

brought a Notice of Arbitration against Electek relying on the arbitration agreement contained in

the POGTC.

By Notice of Arbitration dated February 6, 2020, delivered to the ICDR, Greenfield

commenced an arbitration against Electek, claiming damages for negligence, misrepresentation,

and breach of contract by Electek with respect to work performed on transformer GSU #3.

On February 10, 2020, Electek delivered an Answer to the Notice of Arbitration stating

there was no valid agreement to arbitrate. Electek denied all of Greenfield’s allegations. Electek

specifically advised it did not attorn to this arbitration proceeding and it reserved all its rights.

Almost immediately, Electek brought an application in the Ontario Superior Court of

Justice to stop the arbitration proceeding.

On May 1, 2020, the ICDR appointed Earl A. Cherniak Q.C., William G. Horton, and J.

Brian Casey as the arbitral tribunal.

On June 15, 2020, during the pandemic, the Electek Notice of Application was triaged by

Justice Myers, who made the endorsement set out above, redirecting the parties back to the

19

Arbitrators: “There is no short, crisp ruling of law that would save significant trial expense either

here or there. Start there. We’ll be here when you get back.”

Electek requested the Arbitrators to decide the issue of its jurisdiction over the dispute.

Electek filed witness statements from: (a) Brad Gray, dated June 11, 2020 and August 21,

2020; (b) Shane Maddeford, dated June 12, 2020; (c) Alex Palimaka, dated July 6, 2020, August

21, 2020 and October 7, 2020; and (d) Joe Vandenboom, dated August 20, 2020.

Greenfield filed witness statements from: (a) Max Autio, dated September 27, 2020; (b)

Lynn Ballard, dated July 23, 2020 and September 27, 2020; (c) Rick Dejonghe, dated July 24,

2020; (d) Rajesh Desai, dated August 4, 2020; (e) David Lamoreaux, dated July 24, 2020; Lorne

Reddy, dated September 30, 2020; and (f) Tim Valleau, dated July 23, 2020 and September 29,

2020.

The preliminary hearing was held by Zoom video conference on February 3, 4, 5 and 8,

2021 during which each witness was examined and cross-examined and counsel made opening

and closing submissions.

The Arbitrators’ Decision

On March 5, 2021, the Arbitrators released their award and they decided that they had

jurisdiction over the dispute. In their award, the Arbitrators stated:

34. The Dispute Resolution Clause contained in the POGTC is to be treated as an independent

agreement that may survive even if the remaining terms of POGTC are ultimately found to be invalid

or inapplicable to the Work. In other words, to the extent issues as to validity or applicability of the

POGTC are within the scope of the agreement to arbitrate and are in contention, the arbitration

clause is applicable. In our view, the Greenfield claim does relate to the POGTC and that is therefore

within the scope of the arbitration agreement contained within the Dispute Resolution Clause.

35. Whether or not Mr. Vandenboom and Mr. Gray were of the belief the POGTC was not to apply

to all jobs, including the Work, is to be determined in the arbitration. It is not relevant to the validity

of the Dispute Resolution Clause itself. There is nothing in the clear language of the arbitration

agreement to suggest it was only to be applicable to one job, or that it was applicable only in cases

where the purchase order specifically makes reference to the POGTC. On the contrary, in the

Dispute Resolution Clause “The parties agree that any and all disputes or controversies that may

arise between the parties arising out of or related to this Agreement shall be determined by binding

arbitration.” (Underlining added)

36. It is clear from the evidence that the POGTC was signed by Mr. Gray on the understanding that

it was required in order for Electek to get any work from Greenfield. The extent to which the

language of the POGTC respecting its other terms requires it be referenced in all purchase orders or

that it was job specific need not be determined at this stage of the arbitration. Our sole task is to

determine if the POGTC contained a valid arbitration agreement that is broad enough to cover the

present dispute between the parties.

37. Electek has argued that the POGTC is not an enforceable agreement because it has no effect

until it is attached to a PO and, on its own, lacks essential provisions as to such matters as the scope

of the work to be done and price citing Bawitko Investments Limited v Kernels Popcorn Limited.⁸

This is not an argument that is applicable to the arbitration agreement before us. The arbitration

agreement in the Dispute Resolution Clause speaks generally of a dispute between the “parties” not

⁸[1991] O.J. No. 495 (C.A.).

20

to a “Buyer” and “Seller” as used in the other provisions of the POGTC. It speaks of “any and all”

disputes respecting the POGTC.

38. Electek also argued that the arbitration agreement is essentially unfair because the Dispute

Resolution Clause in the POGTC was not specifically drawn to the attention of Electek, citing

Brentwood Plastics Inc. v Topsyn Flexible Packaging Ltd.⁹and Morgan Trust Company of Canada

v Falloncrest Financial Corporation et al.¹⁰In the former case, the original agreement did not

contain an arbitration clause, but such a clause was added to an invoice for the goods. There is no

basis for the argument here. The POGTC was given to Electek to consider at its own convenience

and was independently reviewed by a senior officer of Electek before it was signed and faxed to

Greenfield. The Dispute Resolution Clause was as prominent in the document as any other clause.

Unlike the case of Dynatec Mining Limited v PCL Civil Constructors (Canada) Inc.,¹¹this is not a

case where the agreement to arbitrate was incorporated by reference. The agreement to arbitrate is

in the Dispute Resolution Clause and forms an integral part of the POGTC. The subsequent

applicability of the POGTC to particular work may be disputed, as it clearly is for the Work in

question in this case, but this does not affect the existence, validity or scope of the Dispute

Resolution Clause which calls for the resolution of the issue of applicability by arbitration. Given

that we are not deciding the issue of applicability of the POGTC to the Work in question at this

stage, we do not need to consider the various cases cited by Electek on that point.

[…]

40. As Greenfield is arguing the POGTC applies to the Work and Electek is arguing that it does not,

there is a dispute “arising out of or related to” the POGTC and it “shall be determined by binding

arbitration.”

[…]

42. In our view, unless subsequently revoked, rendered null and void, or invalid, there is a valid

enforceable arbitration agreement covering this dispute, and this tribunal has jurisdiction to decide

the claim.

43. Electek argues that, even if the Work was governed by a purchase order to which the POGTC

applied, Greenfield had accepted Electek’s Terms and Conditions when its personnel clicked on the

“Approve” button on Electek’s electronic form, thus ending the legal effect of the Dispute

Resolution Clause, at least for this job.

44. There are two problems with this argument. First, as stated above, the arbitration agreement, for

the purposes of jurisdiction is to be treated as a separate agreement from the other terms of the

POGTC. It is not sufficient to argue the POGTC is invalid or inapplicable, it must be shown the

arbitration agreement is invalid or inapplicable. Unless that can be shown, the question of invalidity

or non-applicability of the POGTC for the Work are matters to be decided by the tribunal when the

merits are before us.

45. The “Approve” button clearly referenced the hours worked for the specific job. It does not

contemplate or suggest it is intended to alter the Dispute Resolution Clause between the parties. A

simple approval of the work done cannot be taken as an intention to suspend or nullify a separate

arbitration agreement. By clicking the “Approve” button, at its highest, Greenfield may have been

accepting different terms and conditions for the particular work. That is a matter of contention which

does not relate to our jurisdiction and which we do not here decide. However, Greenfield could not

be taken to have agreed to remove the Dispute Resolution Clause that governs any and all disputes

⁹2014 MBQB 97.

¹⁰[2006] O.J. No. 4603 (C.A.)

¹¹[1996] O.J. No. 29 (Gen. Div.).

21

between the parties relating to the POGTC. Something much more than a reference to Electek’s

Terms and Conditions for this one particular work would be needed.

46. A second problem with Electek’s argument at this stage is that even if accepted, Electek’s Terms

and Conditions are not exclusive and all encompassing. They are applicable only to the extent the

terms and conditions of Greenfield’s Terms and Conditions are in conflict with or inconsistent with

Electek’s Terms and Conditions. Electek’s Terms and Conditions make no mention of any dispute

resolution process. The Dispute Resolution Clause in the POGTC is not inconsistent with anything

in Electek’s Terms and Conditions. It can be read with Electek’s Terms and Conditions

harmoniously and without any inconsistency.

47. The tribunal finds the arbitration agreement has not been invalidated or rescinded by Electek’s

Terms and Conditions, even if they are later found to be applicable to the dispute in this arbitration.

48. In our view, Greenfield’s claim, including liability, the applicability or inapplicability of the

POGTC to the Work in light of events subsequent to the signing of the POGTC, the course of

business dealings and the precise documentation relating to the Work, is a substantive matter within

the jurisdiction of the tribunal to decide.

Disposition

49. For the reasons set out herein, Electek’s motion for a declaration that the Dispute Resolution

Clause contained in the POGTC does not apply to this dispute is dismissed. We have jurisdiction to

decide the claim. We make no finding at this stage in the proceedings as to the applicability of the

other terms contained in the POGTC to the Work at issue.

G. The Jurisdiction of Arbitrators

Introduction

There is a complex and special body of law that governs the jurisdiction of arbitrators to

decide disputes. There are three intertwined and interactive branches to this body of law. The first

branch is the general law of contract that is associated with arbitration agreements. The second

branch is the special procedural and statutory law for determining the jurisdiction of arbitrators.

The third branch is the special substantive law about the jurisdiction of arbitrators that has

developed from the general law of contract and the special procedural and statutory law. As the

discussion below will reveal, the procedural and statutory law is the main source of the substantive

law that governs the jurisdiction of arbitrators.

In this part of my Reasons for Decision I will discuss, the three branches of the complex

general and special law that governs the jurisdiction of arbitrators.

Contract Formation

An arbitration agreement is a contract. Contract law is at the heart of the special law about

the jurisdiction of arbitrators. General contract law about the formation, interpretation,

performance, and enforcement of contracts explains the special law about the jurisdiction of

arbitrators.

A contract does not come into existence until there has been a definite offer and an

22

unconditional acceptance of the offer communicated to the offeror.¹²An enforceable contract also

requires consideration.¹³A contract requires a consensus ad idem, “a meeting of the minds” on the

essential terms of the bargain.¹⁴A party’s signature is one way of manifesting consent where it is

reasonable for the party relying on the signed document to believe that the signer really did

assent.¹⁵

For an agreement to be legally binding, there must be sufficient certainty that the parties

have agreed as to its essential terms.¹⁶To be a good contract, there must be a concluded bargain

and a concluded contract is one which settles everything that is necessary to be settled by

agreement between the parties.¹⁷An agreement to agree or an agreement to negotiate an agreement

is not enforceable.¹⁸

The common law adheres to an objective theory of contract formation under which a

subjective mutual consensus is neither necessary nor sufficient for the creation of an enforceable

contract and a person may be bound by contractual obligations that she did not intend subjectively

to assume. The approach of the common law is to examine objectively how a party’s words and

conduct would appear to a reasonable person in the position of the other party as constituting an

offer, an acceptance, communication of acceptance, or agreement about the terms of an

agreement.¹⁹

When a contract is to be found in a series of communications between the parties and not

in a formal note or memorandum signed as evidence of the contract, "the whole of that which has

¹²Can. Dyers Assn. Ltd. v. Burton (1920), 47 O.L.R. 259 (H.C.J).

¹³Foakes v. Beer (1884), 9 App. Cas. 605, [1881-5] All E.R. Rep. 106 (H.L.); Eastwood v. Kenyon (1840), 11 Ad.

& El. 438, 113 E.R. 482 (Q.B.).

¹⁴Bawitko Investments Ltd. v. Kernels Popcorn Ltd., [1991] O.J. No. 495 (C.A.).

¹⁵Stone v. Polon, [2006] O.J. No. 2981 (C.A.); Tilden Rent-a-Car Co. v. Clendenning (1978), 18 O.R. (2d) 601

(C.A.).

¹⁶Georgian Windpower v. Stelco, 2021 ONSC 3759 at paras. 1212-125; Bidell Equipment LP v. Caliper Midstream

GP LLC, 2019 ABQB 296, aff’d 2020 ABCA 478, leave to appeal to S.C.C. ref’d [2021] S.C.C.A. No. 72; Jamshidi

v. Dependable Mechanical Systems Inc., 2018 ONSC 7101; Di Battista v. Di Battista Farms Ltd., 2012 ONCA 721

at para. 14; Consultate Ventures Inc. v. Amico Contracting & Engineering (1992), Inc., 2007 ONCA 324; Bawitko

Investments Ltd. v. Kernels Popcorn Ltd., [1991] O.J. No. 495 at para. 21 (C.A.); Canada Square Corp. v.

Versafoods (1981), 34 O.R. (2d) 250 at para. 30 (C.A.); Bahamaconsult Ltd v Kellogg Salada Canada Ltd. (1976),

15 O.R. (2d) 276 (C.A.), leave to appeal to SCC refused, [1976] 2 S.C.R. vii.

¹⁷Georgian Windpower v. Stelco, 2021 ONSC 3759 at paras. 1212-125; G. Scammell & Nephew, Ltd. v. Ouston,

[1941] A.C. 251at p. 269 (H.L.); May & Butcher v. The King, [1934] 2 K.B. 17.

¹⁸Cedar Group Inc. v. Stelco Inc. [1995] O.J. No. 3998 (Gen. Div.), aff’d [1996] O.J. No. 3974 (C.A.); Walford v.

Miles, [1992] 2 A.C. 128 (H.L.).

¹⁹Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp. 2020 SCC 29; Chartbrook Ltd. v. Persimmon

Homes Ltd., [2009] 1 A.C. 1101 at para. 39 (H.L.); UBS Securities Canada Inc. v. Sands Brothers Canada Ltd.2007

ONCA 405, leave to appeal to SCC refused, 32173, [2007] S.C.C.A. No. 386; Repap British Columbia Inc. v.

Electronic Technology Systems Inc. 2002 BCSC 539; Scotsburn Co-operative Services Ltd. v. W. T. Goodwin Ltd.,

[1985] 1 S.C.R. 54, at p. 63; Tywood Industries Ltd. v. St. Anne-Nackawic Pulp & Paper Co. Ltd. (1979), 25 O.R.

(2d) 89 (H.C.); Grant v. Province of New Brunswick (1973), 6 N.B.R. (2d) 95 (S.C. (App. Div.); Saint John Tug

Boat Co. v. Irving Refining Ltd., [1964] S.C.R. 614; Hobbs v. Esquimalt and Nanaimo Railway Co. (1899), 29

S.C.R. 450; Smith v. Hughes (1871), L.R. 6 Q.B. 597.

23

passed between the parties must be taken into consideration.²⁰

The test is objective, and the offer, acceptance, consideration, and terms may be inferred

from the parties' conduct and from the surrounding circumstances. The classic statement of the

objective theory comes from Smith v. Hughes,²¹where Blackburn, J. stated:

If, whatever a man's real intention may be, he so conducts himself that a reasonable man would

believe that he was assenting to the terms proposed by the other party, and that other party upon that

belief enters into [a] contract with him, the man thus conducting himself would be equally bound as

if he had intended to agree to the other party's terms.

In UBS Securities Canada Inc. v. Sands Brothers Canada Ltd.²²at paragraph 2, the Court

of Appeal explained the objective test for contract formation by adopting the comments of

Professor Waddams in The Law of Contracts (5th ed.), at page 103, where he stated:

The principal function of the law of contracts is to protect reasonable expectations engendered by

promises. It follows that the law is not so much concerned to carry out the will of the promisor as

to protect the expectation of the promisee. This is not, however, to say that the will of the promisor

is irrelevant. Every definition of contract, whether based on agreement or on promise, includes a

consensual element. But the test of whether a promise is made, or of whether assent is manifested

to a bargain, does not and should not depend on an inquiry into the actual state of mind of the

promisor, but on how the promisor's conduct would strike a reasonable person in the position of the

promisee.

The point made by Professor Waddams was made by Lord Pearce in Henry Kendell and

Sons v. William Lillico and Sons Ltd.²³at p. 113, where he stated:

The court's task is to decide what each party to an alleged contract would reasonably conclude from

the utterances, writings or conduct of the other.

Thus, a determination as to whether a concluded agreement exists does not depend on an

inquiry into the actual state of mind of one of the parties or on the parole evidence of one party’s

subjective intention.²⁴

In performing its task of determining objectively whether the parties have reached an

agreement on the fundamental terms of their bargain, the court should not be too quick to hold that

there is not the degree of certainty in any of the contract’s essential terms needed for a binding

contract.²⁵This does not mean that the court is to make a contract for the parties or to go beyond

the words used by the parties, but it means that if satisfied that there was an ascertainable and

definitive intention to contract with a definite meaning, the court will do its best to make sense of

²⁰Tywood Industries v St Anne-Nackawic Pulp & Paper Co (1979), 25 O.R. (2d) 89 (H.C.J.); Lindsey v. Heron &

Co., [1921] O.J. No. 75, (S.C. (App. Div.); North-west Transportation Co. v. McKenzie (1895), 25 Can. S.C.R. 38

at p. 40.

²¹(1871), L.R. 6 Q.B. 597 at p. 607.

²²2007 ONCA 405, leave to appeal to SCC refused, [2007] S.C.C.A. No. 386.

²³[1969] 2 A.C. 31 (H.L.).

²⁴Peres v. Moneta Porcupine Mines Inc., 2021 ONSC 5798 at para. 29; Olivieri v. Sherman, 2007 ONCA 491;

Lindsey v. Heron & Co., [1921] O.J. No. 75 (S.C. (App. Div.)).

²⁵Rubenstein Bros. (Ontario) Ltd. v. Capmor Capital Corp. (c.o.b. Capmor Capital Leasing), [1994] O.J. No. 186 at

para. 39 (Gen. Div.); Canada Square Corp. Ltd. v. VS Services Ltd. (1981), 34 O.R. (2d) 250 at p. 262 (C.A.).

24

the contract.²⁶

Whether a communication is a definite offer or is a pre-offer, an “invitation to treat” that

is not capable of acceptance depends on the language used and the particular circumstances.²⁷An

acceptance of an offer must be unqualified and unconditional and if the recipient of the offer signs

it with material changes, it is a counter-offer and not an acceptance.²⁸An offer may be accepted in

the manner to be implied from or found in the nature of the offer and the surrounding

circumstances, and the offeror may specify the time and the manner of acceptance.²⁹

Before a court will conclude that a contract has been established, it must be satisfied that

the parties have concluded their negotiations and settled the fundamental terms of their bargain.³⁰

If the essential terms are complete, the court will give effect to the contract and the failure to parties

to agree on minor matters will not invalidate the contract.³¹

Misunderstandings, errors, and other irregularities that may arise during the contract

formation process are generally addressed through the doctrines of mistake, misrepresentation,

frustration, non est factum, illegality, unconscionability, and through the remedies of rectification

and rescission.³²

The Procedural Jurisdiction to Determine the Arbitrator’s Jurisdiction

The matter of determining whether an arbitrator has jurisdiction comes to the court in seven

ways as described below. The seven procedural ways of determining whether an arbitrator has

jurisdiction are: (a) stay motions; (b) applications for declarations and injunctions pursuant to s.48

of the Arbitration Act, 1991; (c) applications for interpretations of the arbitration agreement

pursuant to rule 14.05 of the Rules of Civil Procedure; (d) applications for the appointment of

arbitrators; (e) applications pursuant to s.17(8) of the of the Arbitration Act, 1991; (f) applications

pursuant to s.46 of the Arbitration Act, 1991; and (g) appeals of arbitration awards.

Some but not all of these procedural means are influenced by the competence-competence

principle, discussed in detail below. This principle directs that subject to certain exceptional

circumstances, the court respects that arbitrators have the competence to determine whether they

have the competence (i.e. the jurisdiction) to decide whether they can decide a dispute.

(a) Stay Motions

The first way that a court may determine the jurisdiction of an arbitrator is pursuant to s.7

of the Arbitration Act, 1991. Pursuant to s.7, when a party brings a court action, his or her

opponents may bring an application to have the civil action stayed on the ground that the parties

²⁶Canada Square Corp. Ltd. v. VS Services Ltd. (1981), 34 O.R. (2d) 250 at p. 262 (C.A.); G. Scammell & Nephew,

Ltd. v. Ouston et al., [1941] A.C. (H.L.); Hillas & Co. Ltd. v. Arcos (1932), 147 L.T. 503 (H.L.).

²⁷Can. Dyers Assn. Ltd. v. Burton (1920), 47 O.L.R. 259 (H.C.); North Vancouver v. Tracey (1903), 34 S.C.R. 132.

²⁸Bergman v. Burns (1982), 36 O.R. (2d) 4 (H.C.); Shackleton v. Hayes, [1965] 2 O.R. 250 (C.A.), aff’d [1954] 4

D.L.R. 81 (S.C.C.); (H.C.); Beer v. Lee (1913), 29 O.L.R. 255 (C.A.); Cole v. Sumner (1900), 30 S.C.R. 379.

²⁹Ross v. T. Eaton Co. (1992), 11 O.R. (3d) 115 (C.A.); Schiller v. Fisher, [1981] 1 S.C.R. 593; MacIntyre v.

Commerce Capital Mtge. Corp. (1981), 34 O.R. (2d) 104 (H.C.); Real Estate Centre Ltd. v. Ouellette (1974), 47

D.L.R. (3d) 568 (N.B.C.A.); Parkette Apartments Ltd. v. Masternak [1965] 2 O.R. 350 (H.C.).

³⁰G. Scammell & Nephew Ltd. v. Ouston, [1941] A.C. 251 (H.L.); Murphy v. McSorley, [1929] S.C.R. 542.

³¹Murphy v. McSorley, [1929] S.C.R. 542.

³²Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp. 2020 SCC 29.

25

have agreed that their dispute be arbitrated. The court’s jurisdiction to stay a civil action and allow

the arbitration to proceed is set out in s.7 of the Arbitration Act, 1991, which states:

Stay

7(1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be

submitted to arbitration under the agreement, the court in which the proceeding is commenced shall,

on the motion of another party to the arbitration agreement, stay the proceeding.

Exceptions

(2) However, the court may refuse to stay the proceeding in any of the following cases:

1. A party entered into the arbitration agreement while under a legal incapacity.

2. The arbitration agreement is invalid.

3. The subject-matter of the dispute is not capable of being the subject of arbitration under

Ontario law.

4. The motion was brought with undue delay.

5. The matter is a proper one for default or summary judgment.

Arbitration may continue

(3) An arbitration of the dispute may be commenced and continued while the motion is before the

court.

Effect of refusal to stay

(4) If the court refuses to stay the proceeding,

(a) no arbitration of the dispute shall be commenced; and

(b) an arbitration that has been commenced shall not be continued, and anything done in

connection with the arbitration before the court made its decision is without effect.

Agreement covering part of dispute

(5) The court may stay the proceeding with respect to the matters dealt with in the arbitration

agreement and allow it to continue with respect to other matters if it finds that,

(a) the agreement deals with only some of the matters in respect of which the proceeding

was commenced; and

(b) it is reasonable to separate the matters dealt with in the agreement from the other

matters.

No appeal

(6) There is no appeal from the court’s decision.

In the context of deciding the stay application, the court may decide that the arbitrator has

or may have jurisdiction to decide the parties’ dispute, in which case, the court will grant a stay of

the civil action, and it will remit the case to the arbitrator. Pursuant to the competence-competence

principle on the stay motion, the court may decide to let the arbitrator rule on his or her own

jurisdiction to decide the dispute.

26

Or, in the context of deciding the stay application, the court may decide that the arbitrator

does not have jurisdiction, in which case it will not stay the action. In defined circumstances, the

court may not stay the civil action for statutorily defined reasons, such as the case is suitable for a

summary judgment in which cases, practically speaking, the court will decide the dispute and the

arbitrator’s jurisdiction, if any, is preempted.

Under the Arbitration Act, 1991, the exceptions to granting a stay and the application of

the competence-competence principle are that the court may refuse to stay its own proceedings:

(1) if a party entered into the arbitration agreement while under a legal incapacity; (2) if the

arbitration agreement is invalid; (3) if the subject matter of the dispute is not capable of being the

subject of arbitration under Ontario law; (4) if the motion was brought with undue delay;³³or (5)

if the matter is a proper one for default or summary judgment.³⁴

In Haas v. Gunasekaram,³⁵the Court of Appeal set out a five-part analytical framework

for determining whether an action should be stayed for arbitration: (1) Is there an arbitration

agreement? (2) What is the subject matter of the dispute? (3) What is the scope of the arbitration

agreement? (4) Does the dispute arguably fall within the scope of the arbitration agreement? (5)

Are there grounds on which the court should refuse to stay the action?

Earlier cases about s.7(1) of the Arbitration Act, 1991 had summarized the approach to take

when deciding whether an action should be stayed as first interpreting the arbitration provision,

second analyzing the claim to determine whether it is encompassed by the arbitration provision

and third, if so, then the court must allow the arbitration to proceed, unless one of the exceptions

in s.7(2) applied to the circumstances of the case.³⁶In the seminal case of Heyman v. Darwins

Ltd.,³⁷discussed below, Lord Macmillan stated at p. 370:

Where proceedings at law are instituted by one of the parties to a contract containing an arbitration

clause and the other party, founding on the clause, applies for a stay, the first thing to be ascertained

is the precise nature of the dispute which has arisen. The next question is whether the dispute is one

which falls within the terms of the arbitration clause.

³³Allied Accounting & Tax Services Ltd. v. Pacey, 2017 ONSC 4388; Bouchan v. Slipacoff (2009), 94 O.R. (3d)

741; MDG Kingston Inc. v. MDG Computers Canada Inc., 2008 ONCA 656; Lansens v. Onbelay Automotive

Coatings Corp., [2006] O.J. No. 5470 (S.C.J.); ABN Amro Bank of Canada v. Krupp Mak Maschinenbau GmbH

(1994), 21 O.R. (3d) 511 (Gen. Div.).

³⁴Arbitration Act, 1991, S.O. 1991, c. 17, s. 7(2). Smith v. National Money Mart Co., [2008] O.J. No. 2248 (S.C.J.),

aff’d on other grounds [2008] O.J. No. 4327 (C.A.), leave to appeal refused [2008] S.C.C.A. No. 535; Dewshaf

Investments Inc. v. Buckingham Hospitality, [2005] O.J. No. 6190 (S.C.J.), var’d [2006] O.J. No. 1724 (C.A.); 407

ETR Concession Co. v. Ontario (Minister of Transportation), [2004] O.J. No. 4516 (S.C.J.); Sigfussion Northern

Ltd. v. Cantera Mining Ltd., [2003] O.J. No. 1040 (C.A.); Kanitz v. Rogers Inc., [2002] O.J. No. 665 (S.C.J.);

Kallaur v. Baranick, [1996] O.J. No. 2135 (Gen. Div.); Ottawa Rough Riders Inc. v. Ottawa (City), [1995] O.J. No.

3797 (Gen. Div.).

³⁵2016 ONCA 744 at para. 17. See also: Pezo v. Pezo, 2021 ONSC 5406; Leon v. Dealnet Capital Corp., 2021

ONSC 3636 (Master); Gupta v. Lindal Cedar Homes Ltd. 2020 ONSC 6333; Grandfield Homes (Kenton) Ltd. v.

Chen 2020 ONSC 5230; Leeds Standard Condominium Corp. No. 41 v. Fuller, 2019 ONSC 3900; Rhinehart v.

Legend 3D Canada Inc., 2019 ONSC 3296.

³⁶MDG Kingston Inc. v. MDG Computers Canada Inc., 2008 ONCA 656 at para. 14; Stone v. Polon, [2006] O.J.

No. 2981 (C.A.); Woolcock v. Bushert, [2004] O.J. No. 4498 (C.A.); Mantini v. Smith Lyons LLP (2003), 64 O.R.

(3d) 505 at para. 17, (C.A.), leave to appeal ref’d [2003] S.C.C. No. 344; T1T2 Limited Partnership v. Canada

(1994), 23 O.R. (3d) 66 (Gen. Div.); International Semi-Tech Microelectronics Inc. v. Provigo Inc. (1990), 75 O.R.

(2d) 724 (Gen. Div.); Heyman v. Darwins Ltd. [1942] A.C. 356 (H.L.).

³⁷[1942] A.C. 356 at p. 370 (H.L.).

27

(b) Declarations and Injunctions pursuant to s. 48 of the Arbitration Act, 1991

The second way that a court may determine the jurisdiction of an arbitrator to decide a

dispute is pursuant to s.48 of the Arbitration Act, 1991. Pursuant to s.48, when a litigant brings an

arbitration, his or her opponent may apply under s.48 for a declaration that the arbitration

agreement is invalid and to enjoin the submission to arbitration. The court’s jurisdiction to declare

the arbitration agreement invalid and to enjoin the arbitration is set out in s.48 of the Arbitration

Act, 1991, which states:

Declaration of invalidity of arbitration

48 (1) At any stage during or after an arbitration, on the application of a party who has not

participated in the arbitration, the court may grant a declaration that the arbitration is invalid

because,

(a) a party entered into the arbitration agreement while under a legal incapacity;

(b) the arbitration agreement is invalid or has ceased to exist;

(c) the subject-matter of the dispute is not capable of being the subject of arbitration under

Ontario law; or

(d) the arbitration agreement does not apply to the dispute.

Injunction

(2) When the court grants the declaration, it may also grant an injunction against the

commencement or continuation of the arbitration.

In the context of deciding the declaration/injunction motion, the court may rule on the

arbitrator’s jurisdiction. The analytical framework for deciding whether to enjoin the arbitration

mirrors the analysis used for a stay motion, described above. Pursuant to the competence-

competence principle, the court may decide to let the arbitrator rule on his or her own jurisdiction

to decide the dispute and thus refuse to enjoin the arbitration.

(c) Application for Interpretation under Rule 14.05(3)(h) of the Rules of Civil

Procedure

The third way that a court may determine the jurisdiction of an arbitrator is similar to the

second way and arises when a party initiates an arbitration and one of the other parties named in

the arbitration brings an application pursuant to rule 14.05(3)(d) of the Rules of Civil Procedure

for an interpretation of the alleged arbitration agreement. Rule 14.05(3)(g) also empowers the court

to grant an injunction. Rules 14.05(3)(d) and (g) state:

14.05(3) A proceeding may be brought by application where these rules authorize the

commencement of a proceeding by application or where the relief claimed is,

[…]

(d) the determination of rights that depend on the interpretation of a deed, will, contract or

other instrument, or on the interpretation of a statute, order in council, regulation or

municipal by-law or resolution;

[…]

28

(g) the court may determine the jurisdiction of an arbitrator when a litigant brings an

arbitration and his or her opponent brings a civil action for a declaration that the arbitration

agreement is invalid and to enjoin the submission to arbitration.

In the context of deciding the application under rules 14.05(3)(d) and (g), the court may

rule on the arbitrator’s jurisdiction. The analytical framework for deciding whether to enjoin the

arbitration mirrors the analysis used for a stay motion. Pursuant to the competence-competence

principle, the court may decide to let the arbitrator rule on his or her own jurisdiction to decide the

dispute and thus refuse to enjoin the arbitration.

(d) The Appointment of Arbitrator(s)

The fourth way that a court may determine the jurisdiction of an arbitrator is pursuant to

s.10 of the Arbitration Act, 1991, which authorizes the court to appoint arbitrator(s). Section 10

states:

Appointment of arbitral tribunal

10(1) The court may appoint the arbitral tribunal, on a party’s application, if,

(a) the arbitration agreement provides no procedure for appointing the arbitral tribunal; or

(b) a person with power to appoint the arbitral tribunal has not done so after a party has

given the person seven days notice to do so.

No appeal

(2) There is no appeal from the court’s appointment of the arbitral tribunal.

More than one arbitrator

(3) Subsections (1) and (2) apply, with necessary modifications, to the appointment of individual

members of arbitral tribunals that are composed of more than one arbitrator.

Chair

(4) If the arbitral tribunal is composed of three or more arbitrators, they shall elect a chair from

among themselves; if it is composed of two arbitrators, they may do so.

On an application for the appointment of an arbitrator, the Court must ascertain the nature

of the dispute and whether it falls within the scope of the relevant arbitration agreement.³⁸Once

again, the jurisdictional analysis is similar to the analysis used for a stay motion, and if an arbitrator

is appointed, once again, the court may decide to allow the arbitrator to determine his or her

jurisdiction to decide the dispute between the parties.

(e) Section 17 (8) Application

The fifth way that a court may determine the jurisdiction of an arbitrator is pursuant to

s.17(8) of the Arbitration Act, 1991. Section 17(8) becomes available, among other things, when

a party to an arbitration asks the arbitrator as a preliminary question to rule on his or her own

³⁸Greenfield Ethanol Inc. v. Suncor Energy Products Inc., [2007] O.J. No. 3104 at para. 4 (S.C.J.), aff’d 2007

ONCA 823; Huras v. Primerica Financial Services Ltd., [2001] O.J. No. 3318 at paras. 8 to 10 (C.A.).

29

jurisdiction to decide the dispute. If the arbitrator rules on his or her own jurisdiction as a

preliminary matter, then pursuant to s.17(8) of the Arbitration Act, 1991, a party may make an

application to the court to decide the matter. As the discussion above revealed, the s.17(8)

application is a review de novo.

Sections 17(8) and (9) state:

Review by court

(8) If the arbitral tribunal rules on an objection as a preliminary question, a party may, within thirty

days after receiving notice of the ruling, make an application to the court to decide the matter.

No appeal

(9) There is no appeal from the court’s decision.

On an application under s.17(8), the jurisdictional analysis is similar to that used on a stay

application, except the court cannot avoid deciding the matter of the arbitrator’s jurisdiction by the

competence-competence principle.

For the purposes of the immediate case, as will be described in detail below, the issue of

the jurisdiction of the Arbitrators arises in the context of an application pursuant to s.17(8) of the

Arbitration Act, 1991. Thus, in the immediate case, the competence-competence principle is not a

factor. In the immediate case, the Arbitrators have ruled on jurisdiction, and now it is the court’s

turn to do so de novo.

(f) Section 46 Application

The sixth way that a court may determine the jurisdiction of an arbitrator is pursuant to

s.46 of the Arbitration Act, 1991. Section 46 is available when a party brings an arbitration, the

arbitrator makes an arbitral award, and then the opponent challenges the arbitrator’s award

pursuant to s.46 of the Arbitration Act, 1991, which states:

Setting aside award

46 (1) On a party’s application, the court may set aside an award on any of the following grounds:

1. A party entered into the arbitration agreement while under a legal incapacity.

2. The arbitration agreement is invalid or has ceased to exist.

3. The award deals with a dispute that the arbitration agreement does not cover or contains

a decision on a matter that is beyond the scope of the agreement.

[…]

5. The subject-matter of the dispute is not capable of being the subject of arbitration under

Ontario law.

[…]

On an application under s.46, the jurisdictional analysis is similar to that used on a stay

application, except the court cannot avoid deciding the matter of the arbitrator’s jurisdiction by the

competence-competence principle.

30

(g) Appeals

As the discussion of the substantive law below will reveal, the jurisdiction of arbitrators is

essentially a matter of interpreting the arbitration agreement. As a juridical matter, the

interpretation of contracts is an issue of mixed fact and law.³⁹Pursuant to s.45 of the Arbitration

Act, 1991, depending on the arbitration agreement, a party to an arbitration agreement may have a

right to appeal an arbitrator’s award. Thus, appeals may provide a vehicle for the court to rule on

an arbitrator’s jurisdiction.

Section 45 of the Arbitration Act, 1991 states:

Appeals

Appeal on question of law

45(1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal

an award to the court on a question of law with leave, which the court shall grant only if it is satisfied

that,

(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal;

and

(b) determination of the question of law at issue will significantly affect the rights of the

parties.

Idem

(2) If the arbitration agreement so provides, a party may appeal an award to the court on a question

of law.

Appeal on question of fact or mixed fact and law

(3) If the arbitration agreement so provides, a party may appeal an award to the court on a question

of fact or on a question of mixed fact and law.

Powers of court

(4) The court may require the arbitral tribunal to explain any matter.

Idem

(5) The court may confirm, vary or set aside the award or may remit the award to the arbitral tribunal

with the court’s opinion on the question of law, in the case of an appeal on a question of law, and

give directions about the conduct of the arbitration.

[…]

In the context of appeals, the court’s analysis of the arbitrator’s jurisdiction will apply the

substantive law developed for stay motions, except the court cannot avoid deciding the matter of

the arbitrator’s jurisdiction by the competence-competence principle.

³⁹Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53.

31

The Competence-Competence Principle

As noted above, for some of the procedural branches for a court to determine the

jurisdiction of arbitrators, the court may apply what is known as the competence-competence

principle. Thus, for example, on a stay application, pursuant to the competence-competence

principle, the court may allow the arbitrator to determine whether he or she has jurisdiction to

decide the dispute between the parties to the arbitration agreement.

Pursuant to the competence-competence principle, subject to its exceptions, the court

should allow the arbitrator to determine whether he or she has jurisdiction to decide the dispute.

Under s.17(1) of the Arbitration Act, 1991, which is based a treaty known as the Model Law on

International Commercial Arbitration, arbitrators have the power to rule on their own jurisdiction.

Under what is known as the competence-competence principle, if there is an arguable or prima

facie case that the arbitrator has jurisdiction, the court should defer the issue of jurisdiction to the

arbitrator.⁴⁰

The general rule of the competence-competence principle is that a challenge to the

arbitrator’s jurisdiction should be first resolved by the arbitrator. The exceptions to the general rule

are where the challenge is based solely on question of law. If the challenge to the arbitrator’s

jurisdiction raises questions of mixed fact and law, the court should refer the challenge to the

arbitrator unless the questions of fact require only superficial consideration of the documentary

evidence in the record.⁴¹The competence-competence principle was summarized by the Supreme

Court of Canada in Rogers Wireless Inc. v. Muroff,⁴²as follows:

[W]hen an arbitration clause exists, any challenges to the jurisdiction of the arbitrator must first

be referred to the arbitrator. Courts should derogate from this general rule and decide the question

first only where the challenge to the arbitrator’s jurisdiction concerns a question of law alone.

Where a question concerning jurisdiction of an arbitrator requires the admission and examination

of factual proof, normally courts must refer such questions to arbitration. For questions of mixed

law and fact, courts must also favour referral to arbitration, and the only exception occurs where

answering questions of fact entails a superficial examination of the documentary proof in the

record and where the court is convinced that the challenge is not a delaying tactic or will not

prejudice the recourse to arbitration.

The issue of whether an arbitrator has jurisdiction is a matter of contract formation and

interpretation and the interpretation of a contract is a question of mixed fact and law,⁴³and thus

pursuant to the competence-competence principle, the court should defer to the arbitrator unless

⁴⁰Trade Finance Solutions Inc. v. Equinox Global Ltd., 2018 ONCA 12; Haas v. Gunasekaram 2016 ONCA 744;

Ciano Trading & Services C.T. & S.R.L. v. Skylink Aviation Inc., 2015 ONCA 89; Harrison v. UBS Holding Canada

Ltd., 2014 NBCA 26; Ontario Medical Assn. v. Willis Canada Inc., 2013 ONCA 745, aff’g 2013 ONSC 2253;

Ontario v. Imperial Tobacco Canada Ltd., 2011 ONCA 525; Jean Estate v. Wires Jolley LLP, 2009 ONCA 339;

Dancap Productions Inc. v. Key Brand Entertainment Inc., 2009 ONCA 135; Dell Computer Corp. v. Union des

consommateurs, 2007 SCC 34; Dalimpex Ltd. v. Janicki (2003), 64 O.R. (3d) 737 (C.A.).

⁴¹Heller v. Uber Technologies Inc., 2020 SCC 16 at para. 34; Haas v. Gunasekaram, 2016 ONCA 744 rev’g 2015

ONSC 5083; Blind Spot Holdings Ltd. v. Decast Holdings Inc., 2014 ONSC 1760 at paras. 20–22; Ontario Medical

Assn. v. Willis Canada Inc., 2013 ONCA 745 at paras. 20–23, aff’g 2013 ONSC 2253; Seidel v. TELUS

Communications Inc., 2011 SCC 15; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34 at paras. 84–

86.

⁴²2007 SCC 35 at para. 11.

⁴³Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53.

32

the interpretative question can be answered based on a superficial examination of the documentary

proof in the record.

In numerous cases under the Arbitration Act, 1991, courts have applied the competence-

competence principle and dismissed applications to stay court actions and so have allowed

arbitrators to determine whether a valid arbitration agreement exists and to interpret the agreement

to determine whether the particular dispute between the parties falls within the scope of the

arbitration provision.⁴⁴

The competence-competence principle statutorily overrules an aspect of Heyman v.

Darwins Ltd.,⁴⁵discussed below, the foundational case about the jurisdiction of arbitrators. There

is a proposition in Heyman v. Darwins Ltd. that the arbitrator has no jurisdiction if the arbitration

agreement was void ab initio and thus the arbitrator has no jurisdiction to rule on his or her own

jurisdiction. This proposition arises from the judgment of Viscount Simon, L.C., where he stated:

If the dispute is whether the contract which contains the clause has ever been entered into at all, that

issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into

the contract is thereby denying that he has ever joined in the submission. Similarly, if one party to

the alleged contract is contending that it is void ab initio (because, for example, the making of such

a contract is illegal), the arbitration clause cannot operate, for on this view the clause itself is also

void.⁴⁶

However, under Ontario law, the question of whether or not the parties have entered into a

binding and valid arbitration agreement is capable of being the subject of arbitration and an

arbitrator is empowered to determine whether a valid arbitration agreement exists, in which case

the arbitrator will be deciding whether or not he or she has the jurisdiction to adjudicate the dispute

between the parties.⁴⁷

The Substantive Law about the Jurisdiction of Arbitrators to Decide Disputes

(a) Introduction

Turning to the special substantive law that defines the authority or jurisdiction of

arbitrators, apart from some statutes that require parties to submit their disputes to arbitration, the

jurisdiction or authority of an arbitrator to decide the law and the facts of a dispute is entirely a

matter of contract.

The Arbitration Act, 1991 stipulates the nature of arbitration agreements, which may be

⁴⁴Ontario Medical Assn. v. Willis Canada Inc., 2013 ONCA 745, aff’g 2013 ONSC 2253; Ontario First Nations

Limited Partnership v. Ontario Lottery and Gaming Corp., 2013 ONSC 4166; Kolios v. Vranich, 2012 ONCA 269;

Robert v. Markandu, 2012 ONSC 6891; Nazarinia Holdings Inc. v. 2049080 Ontario Inc. (c.o.b. J.W. Car Care),

2010 ONSC 1766, aff’d [2010] O.J. No. 4674 (C.A.), leave to appeal to S.C.C. ref’d. [2010] S.C.C.A. No. 500;

2162683 Ontario Inc. v. Flexsmart Inc., 2010 ONSC 6493; Dancap Productions Inc. v. Key Brand Entertainment

Inc., 2009 ONCA 135; MDG Kingston Inc. v. MDG Computers Canada Inc., 2008 ONCA 656; Jacob v. Beamish,

[2008] O.J. No. 4175 (S.C.J.); T.J. Whitty Investments Corp. v. Tagr Management Ltd., [2004] O.J. No. 3523

(S.C.J.); AMEC E & C Services Ltd. v. Nova Chemicals (Canada) Ltd., [2003] O.J. No. 2663 (S.C.J.); Dalimpex Ltd.

v. Janicki (2003), 64 O.R. (3d) 737 (C.A.).

⁴⁵[1942] A.C. 356 (H.L).

⁴⁶[1942] A.C. 356 at p. 366 (H.L).

⁴⁷IMG Canada Ltd. v. Melitta Canada Inc. [2001] O.J. No. 2331 (S.C.J.); Ontario v. Abilities Frontier Co-operative

Homes Inc. [1996] O.J. No. 2586 at paras. 36-41 (Gen. Div.), leave to appeal refused [1997] O.J. No. 238 (C.A.).

33

oral or in writing. Arbitration agreements may be an independent agreement or be part of another

agreement. Section 5 of the Arbitration Act, 1991 states:

Arbitration agreements

5(1) An arbitration agreement may be an independent agreement or part of another agreement.

Further agreements

(2) If the parties to an arbitration agreement make a further agreement in connection with the

arbitration, it shall be deemed to form part of the arbitration agreement.

Oral agreements

(3) An arbitration agreement need not be in writing.

“Scott v. Avery” clauses

(4) An agreement requiring or having the effect of requiring that a matter be adjudicated by

arbitration before it may be dealt with by a court has the same effect as an arbitration agreement.

Revocation

(5) An arbitration agreement may be revoked only in accordance with the ordinary rules of contract

law.

From the trite proposition that arbitration is a consensual matter of verbal contracting, four

complex legal principles about the jurisdiction of arbitrators emerge. First, for there to be an

arbitration, an arbitration agreement must exist between the parties.⁴⁸Second, for there to be an

arbitration, the arbitration agreement must be legal; i.e. not illegal and void ab initio.⁴⁹Third, the

existence and validity of an arbitration agreement is independent of any contract in which the

arbitration agreement is imbedded.⁵⁰Fourth, if a legal arbitration agreement exists, it is a matter

of contract interpretation whether the arbitrator has jurisdiction over the particular dispute; if as a

matter of interpretation, the court determines that the particular arbitration agreement does not

apply to the dispute, then the arbitrator has no jurisdiction to decide the arbitration and the

arbitration is invalid.⁵¹

The aggregation of the four principles is that if: (a) there is no contract agreeing to submit

disputes to arbitration; (b) the arbitration agreement is void ab initio because it was illegal; or (c)

the particular dispute is not covered by the arbitration, then there is no obligation to submit the

⁴⁸Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296; Kanda Franchising Inc. v. 1795517 Ontario Inc., 2017

ONSC 7064; Novatrax International Inc. v. Hägele Landtechnik GmbH, 2016 ONCA 771; Secure Solutions Inc. v.

Smiths Detection Toronto Ltd. 2011 ONCA 337; Rampton v. Eyre, 2007 ONCA 331; Stella Jones Inc. v. Mariana

(The), 2001 FCT 1148 ().

⁴⁹Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296; Heller v. Uber Technologies Inc. 2020 SCC 16, aff’g

2019 ONCA 1, rev’g 2018 ONSC 718.

⁵⁰Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296; 2986806 Ontario Ltd. v. Blyth, 2016 ONSC 8087;

Nazarinia Holdings Inc. v. 2049080 Ontario Inc. (c.o.b. J.W. Car Care), 2010 ONSC 1766 aff’d [2010] O.J. No.

4674 (C.A.), leave to appeal to S.C.C. ref’d. [2010] S.C.C.A. No. 500; MDG Kingston Inc. v. MDG Computers Inc.,

2008 ONCA 656.

⁵¹Ontario v. Abilities Frontier Co-operative Homes Inc. [1996] O.J. No. 2586 (Gen. Div.), leave to appeal refused

[1997] O.J. No. 238 (C.A.); Heyman v. Darwins Ltd. [1942] A.C. 356 (H.L).

34

dispute to arbitration and the arbitrator has no jurisdiction.⁵²

(b) The Existence of an Arbitration Agreement

The first principle about the jurisdiction of an arbitrator is that an arbitration agreement

must exist for the arbitrator to have jurisdiction. This principle is demonstrated by Secure Solutions

Inc. v. Smiths Detection Toronto Ltd.,⁵³where the Court of Appeal stated: "If there is no arbitration

provision contracted for at the relevant time, that ends the matter."

In Secure Solutions Inc. v. Smiths Detection Toronto Ltd., the parties had contracts from

1997 to 2010. Over the 13 years of continuous dealings between the parties, there was a written

contract in place only in 2005 and 2007. Only in those two contracts was there a reference to

arbitration. The 2007 contract expired in 2008. It was not renewed. In 2009, Smiths Detection took

the policy decision that their disputes with Secure Solutions would not be arbitrated. They

continued to do business with no written contracts. The terms of the oral agreement reflecting the

issues on which they were ad idem, could only be gleaned from their conduct. The events that

triggered the litigation took place in 2009 and 2010. There was a dispute, and Secure Solutions

sued Smiths Detection. Next, Smiths Detection moved to have the action stayed for arbitration

proceedings. The motion was unsuccessful. Upholding the decision of the motions judge, the Court

of Appeal held it was simply not arguable that there was a meeting of minds that their disputes

would be arbitrated. If there is no arbitration provision contracted for at the relevant time, that ends

the matter.

The first principle is also demonstrated by the cases that hold that a non-party to an

arbitration agreement cannot be compelled to submit to arbitration.⁵⁴A court lacks the jurisdiction

to compel those who are not parties to an arbitration agreement to submit their claims to arbitration,

and an arbitrator cannot make an arbitral award that disposes of the rights between a party and a

non-party to the agreement.⁵⁵

(c) The Legality of the Arbitration Agreement

The second principle about the jurisdiction of an arbitrator is that the arbitration agreement

must be legal for the arbitrator to have jurisdiction. The second principle is demonstrated by the

decisions of the Court of Appeal of Ontario and the Supreme Court of Canada in Uber

Technologies Inc. v. Heller.⁵⁶

⁵²Nazarinia Holdings Inc. v. 2049080 Ontario Inc. (c.o.b. J.W. Car Care), 2010 ONSC 1766, aff’d [2010] O.J. No.

4674 (C.A.), leave to appeal to S.C.C. ref’d. [2010] S.C.C.A. No. 500.; MDG Kingston Inc. v. MDG Computers Inc.,

2008 ONCA 656; Penn-Co Construction Canada (2003) Ltd. v. Constance Lake First Nation, [2007] O.J. No. 3940

(S.C.J.), aff’d 2008 ONCA 768; Fairfield v. Low (1990), 71 O.R. (2d) 599 (H.C.J.); Heyman v. Darwins Ltd. [1942]

A.C. 356 (H.L).

⁵³2011 ONCA 337 at para. 4. See also: Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296.

⁵⁴Kanda Franchising Inc. v. 1795517 Ontario Inc., 2017 ONSC 7064; Novatrax International Inc. v. Hägele

Landtechnik GmbH, 2016 ONCA 771.

⁵⁵Novatrax International Inc. v. Hägele Landtechnik GmbH, 2016 ONCA 771 at paras. 24, 32; Ontario v. Imperial

Tobacco Canada Ltd., 2011 ONCA 525 at paras. 119, 141-42.

⁵⁶2020 SCC 16, aff’g 2019 ONCA 1, rev’g 2018 ONSC 718. Heller v. Uber Technologies Inc. was followed in

Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296. Heller v. Uber Technologies Inc. was distinguished in

Evans v. Mattamy Homes Ltd., 2019 ONSC 3883 (Master), where a stay was granted because the plaintiff did not

35

In a class proceeding, Mr. Heller sued Uber for his entitlements under what he alleged was

an employment contract, but which contract Uber contended was a contracting with an

independent contractor and not an employee. However the contract might be characterized, the

contract between Uber and the Class Members contained an agreement requiring submission to

arbitration to arbitrators situated in the Netherlands. The Ontario Court of Appeal and the Supreme

Court of Canada held that the Class Members’ agreement to submit their disputes to arbitration

was unenforceable on the grounds of unconscionability and thus the class proceeding was not

stayed.

(d) The Independent Agreement Principle

The third legal principle about the jurisdiction of an arbitrator is the principle that an

arbitration agreement is independent from an agreement in which it may be imbedded. This

principle is codified by s. 17(2) of the Arbitration Act, 1991, which states:

Independent agreement

17. (2) If the arbitration agreement forms part of another agreement, it shall, for the purposes of a

ruling on jurisdiction, be treated as an independent agreement that may survive even if the main

agreement is found to be invalid.

To understand the independent agreement principle, it is helpful to understand that an

obligation to arbitrate may arise in three ways: namely: (a) as a statutory obligation; (b) as a

genuine independent contract; and (c) as an agreement embedded in another contract. The

independent agreement principle is the third way that an obligation to arbitrate may be imposed.

As noted by s.17(2) of the Arbitration Act, 1991, the independent agreement principle applies “if

the arbitration agreement forms part of another agreement.”

The independent agreement principle in s.17(2) is a codification of common law

jurisprudence about agreements to arbitrate. As a matter of judicial history, the independent

agreement principle emerged out of a decision of the House of Lords in Heyman v. Darwins Ltd.,⁵⁷

a case in which, ironically, the independent agreement principle actually was irrelevant to the

outcome of the case.

For the present purposes of explaining the independent agreement principle, the pertinent

facts of Heyman v. Darwins Ltd. are that Darwins Ltd. was a steel manufacturer and Heyman was

a distributor of Darwins Ltd.’s product. The distribution agreement had a submission to arbitration

provision. There was a dispute, and Heyman sued Darwins Ltd. for alleged repudiation of the

distribution agreement. Darwins Ltd. successfully moved for a stay of the court proceedings and

argued that the issue about whether the distribution agreement had been breached should be

submitted to arbitration. In the context of that argument, the English Court of Appeal and the

House of Lords rejected the proposition that the arbitration agreement was terminated with the

repudiation of the distribution agreement in which it was embedded.

The judges of the English courts applied and explained the normal law of contract for the

circumstances where future performance of an agreement is not required because the contract has

demonstrate that the arbitration agreement was invalid because of unconscionability or undue influence. See also:

Leon v. Dealnet Capital Corp., 2021 ONSC 3636 (Master); Gupta v. Lindal Cedar Homes Ltd. 2020 ONSC 6333.

⁵⁷[1942] A.C. 356 (H.L.).

36

been terminated. The several judges of the English courts explained that the termination of a

contract does not entail that all the terms of the contract are at an end. Thus, the arbitration

provision is separated from other terms of the contract and has the appearance of being a separate

contract.⁵⁸

The operative legal principle that underlies Heyman v. Darwins Ltd. is perhaps best

expressed by Lord Macmillan. He stated at page 373 of the decision:

Repudiation, then, in the sense of a refusal by one of the parties to a contract to perform his

obligations thereunder, does not of itself abrogate the contract. The contract is not rescinded. It

obviously cannot be rescinded by the action of one of the parties alone. But, even if the so-called

repudiation is acquiesced in or accepted by the other party, that does not end the contract. The

wronged party has still his right of action for damages under the contract which has been broken,

and the contract provides the measure of those damages. It is inaccurate to speak in such cases of

repudiation of the contract. The contract stands, but one of the parties has declined to fulfil his part

of it. There has been what is called a total breach or a breach going to the root of the contract and

this relieves the other party of any further obligation to perform what he for his part has undertaken.

Now, in this state of matters, why should it be said that the arbitration clause, if the contract contains

one, is no longer operative or effective? A partial breach leaves the arbitration clause effective. Why

should a total breach abrogate it? The repudiation being not of the contract but of obligations

undertaken by one of the parties, why should it imply a repudiation of the arbitration clause so that

it can no longer be invoked for the settlement of disputes arising in consequence of the repudiation?

I do not think that this is the result of what is termed repudiation.

As should now be apparent, Heyman v. Darwins Ltd. was not a case where there was a

separate arbitration agreement, and it was not a case in which the validity of the arbitration

agreement was considered independently of the validity of the agreement in which it was

embedded. In Heyman v. Darwins Ltd., there was no suggestion that the distribution agreement in

which the arbitration agreement was embedded was not a properly and validly formed contract.

The controversy in Heyman v. Darwins Ltd. was about the afterlife of a terminated contract.

Heyman v. Darwins Ltd. is authority that a dispute about whether a contract has been vitiated by

allegations of fraud or fraudulent misrepresentation could be within the scope of an appropriately

worded agreement to arbitrate.⁵⁹Subsequent cases have confirmed that an arbitration agreement

survives the repudiation or termination of the contract or allegation that the contract has been

breached and whether a contract has been terminated by breach is an arbitrable issue.⁶⁰

As the discussion later in these Reasons for Decision will reveal and as might be gathered

from the introduction and overview, the independent agreement principle is the source of some of

the problems of the immediate case.

With respect to the case at bar and to the codification of the third principle about the

independence of arbitration agreements as it manifests itself in s.17(2) of the Arbitration Act, 1991,

what needs to be emphasized is that the articulation of the principle that “if the arbitration

⁵⁸The phenomena that some terms of a contract survive the termination of the contract is also illustrated by such

things as exculpatory provisions and confidentiality clauses. See P.M. Perell, “The Afterlife of a Contract” (2008),

34 Advocates’ Quarterly 62.

⁵⁹Nazarinia Holdings Inc. v. 2049080 Ontario Inc. (c.o.b. J.W. Car Care), 2010 ONSC 1766 at para. 47, aff’d

[2010] O.J. No. 4674 (C.A.), leave to appeal to S.C.C. ref’d. [2010] S.C.C.A. No. 500.; Fairfield v. Low (1990), 71

O.R. (2d) 599 at paras. 22-27(H.C.J.).

⁶⁰Nazarinia Holdings Inc. v. 2049080 Ontario Inc. (c.o.b. J.W. Car Care), 2010 ONSC 1766 at para. 35, aff’d

[2010] O.J. No. 4674 (C.A.), leave to appeal to S.C.C. ref’d. [2010] S.C.C.A. No. 500; Rampton v. Eyre 2007

ONCA 331; Campbell v. Murphy (1993), 15 O.R. (3d) 444 (Gen. Div.).

37

agreement forms part of another agreement, it shall, for the purposes of a ruling on jurisdiction, be

treated as an independent agreement that may survive even if the main agreement is found to be

invalid” does not mean that an arbitration agreement does not itself get a pass on the other

principles about the jurisdiction of an arbitrator.

For an arbitrator to have jurisdiction, an arbitration agreement must exist and the dispute

must be within the authority granted to the arbitrator. In other words, since an arbitrator’s

jurisdiction is commensurate with the authority granted by an arbitration agreement, there must be

a legally enforceable arbitration contract covering the subject matter of the dispute. An arbitration

agreement may be a free-standing agreement, or it may be embedded in another agreement, but in

either case, it must be a validly formed agreement.

(e) The Interpretation of Arbitration Agreements

Heyman v. Darwins Ltd. also demonstrates the fourth principle about an arbitrator’s

jurisdiction. The fourth principle is that if a legal arbitration agreement exists, it is a matter of

contract interpretation whether the arbitrator has jurisdiction over the particular dispute. In

Heyman v. Darwins Ltd., having decided that the arbitration agreement existed, the judges of the

English court went on to interpret the arbitration agreement to determine whether it covered the

circumstances of the dispute in the case. Thus, Heyman v. Darwins Ltd. is a seminal case about

the interpretation of arbitration agreements.

Contractual interpretation is an exercise in which the principles of contractual

interpretation are applied to the words of the written contract, considered in light of the factual

matrix.⁶¹The goal of contractual interpretation is to determine the intent of the parties at the time

the contract was made and the scope of their understanding giving the words used their ordinary

and grammatical meaning, consistent with the surrounding circumstances known to the parties at

the time of formation of the contract.⁶²

The case law has developed canons of interpretation or approaches to the interpretation of

arbitration agreements. Arbitration agreements are to be given a large and liberal interpretation.⁶³

If an arbitration agreement is capable of two meanings, one of which provides for arbitration of

the disagreement, the court will generally adopt that interpretation.⁶⁴

An arbitration agreement may be incorporated by reference into a contract, but this must

be done clearly and unambiguously.⁶⁵

⁶¹Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at para. 50.

⁶²Harvey Kalles Realty Inc. v. BSAR (Eglinton) LP, 2021 ONCA 426; Sattva Capital Corp. v. Creston Moly Corp.,

2014 SCC 53 at para. 47; Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4

at paras. 64-65; Skye Properties Ltd. v. Wu, 2010 ONCA 499; Jesuit Fathers of Upper Canada v. Guardian

Insurance Co. of Canada, 2006 SCC 21 at para. 27; Frenette v. Metropolitan Life Insurance Co., [1992] 1 S.C.R.

64; Consolidated-Bathurst Export Ltd. v. Mutual Boiler & Machinery Insurance Co., [1980] 1 S.C.R. 888.

⁶³Hopkins v. Ventura Custom Homes Ltd., 2013 MBCA 67 at paras. 58-64.

⁶⁴Hopkins v. Ventura Custom Homes Ltd., 2013 MBCA 67 at paras. 58-64; Ontario v. Imperial Tobacco Canada

Ltd., 2011 ONCA 525 at para. 60; Wright v. Nova Scotia Public Service Long Term Disability Plan Trust Fund,

2006 NSCA 101 at para. 77.

⁶⁵Morgan Trust Company of Canada v. Falloncrest Financial Corporation, [2006] O.J. No. 4603 (C.A.); St.

Andrew Goldfields Ltd. v. Newmont Canada Limited, [2009] O.J. No. 3266 (S.C.J.); Dynatec Mining Ltd. v. PCL

38

If the language of the contract is ambiguous as to whether the contracting parties have

agreed to submit disputes to arbitration and one of the interpretations provides for arbitration,

courts should privilege that interpretation given the contemporary public policy towards

encouraging parties to submit their differences to consensual dispute resolution mechanisms

outside of the regular court stream as encouraged by the Arbitration Act, 1991.⁶⁶

Some cases have identified arbitration provisions that are narrow and described as

“executory” and concerned just about working out the small or incidental details of a particular

contract as opposed to clauses of a "universal" character that require the contracting parties to

submit all disputes that arise between the contracting parties.⁶⁷Contractual language calling for

the arbitration of disputes “relating to a contract” are interpreted broadly and may depending on

the interpretation of the particular contract extend to tort claims, oppression remedy claims, or

breach of fiduciary claims relating to the contract claims or to the relationship between the

parties.⁶⁸

H. Critique of the Arbitration Panel’s Decision

Strictly speaking, it is not necessary for me to determine the soundness of the Arbitrators’

decision in the immediate case. Since Electek’s Application under s.17(8) is a hearing de novo, the

decision of the Arbitrators is not binding and, strictly speaking, I could ignore it and come to my

own decision based on the same evidence that was put before the Arbitrators. I shall eventually do

just that. However, I shall not ignore the Arbitrators’ decision, and before making my own analysis,

I shall briefly explain why the Arbitrators’ decision in the immediate case is not correct.

The first sentence of paragraph 34 of the Arbitrators’ decision is correct. They correctly

state that the Dispute Resolution Clause contained in the POGTC is to be treated as an independent

agreement that may survive even if the remaining terms of POGTC are ultimately found to be

invalid or inapplicable to the Work.

The next sentence of paragraph 34 of the Arbitrators’ decision, however, is incorrect by

omission or insufficiency. To assert that if the applicability of the POGTC is under contention, the

arbitration agreement is applicable obscures the critical first question that an arbitrator must ask.

Before determining the application of the Dispute Resolution Clause and before determining

whether the dispute between the parties is within the scope of the Dispute Resolution Clause, the

arbitrator must determine whether there exists an arbitration agreement.

As noted above in Haas v. Gunasekaram, the Court of Appeal set out a five-part analytical

framework for determining whether an arbitrator has or may have jurisdiction: (1) Is there an

Civil Construction (Canada) Ltd. [1996] O.J. NO. 29 (Gen. Div.); LED Roadway Lighting Ltd. v. Alltrade Industries

Inc., 2019 NSSC 62.

⁶⁶Greenfield Ethanol Inc. v. Suncor Energy Products Inc., [2007] O.J. No. 3104 at para. 8 (S.C.J.), aff’d 2007

ONCA 823; Canadian National Railway Co. v. Lovat Tunnel Equipment Inc. [1999] O.J. No. 2498 (C.A.); Onex

Corp. v. Ball Corp. (1994), 12 B.L.R. (2d) 151 (Ont. Gen. Div.).

⁶⁷Greenfield Ethanol Inc. v. Suncor Energy Products Inc., [2007] O.J. No. 3104, aff’d 2007 ONCA 823; Ontario v.

Abilities Frontier Co-operative Homes Inc., [1996] O.J. No. 2586 (Gen. Div.).

⁶⁸Leon v. Dealnet Capital Corp., 2021 ONSC 3636 (Master); Advanced Explorations Inc. v. Storm Capital Corp.,

2014 ONSC 3918; Greenfield Ethanol Inc. v. Suncor Energy Products Inc., [2007] O.J. No. 3104, aff’d 2007 ONCA

823; Woolcock v. Bushert, [2004] O.J. No. 4498 (C.A.); Kassem v. Secure Distribution Services Inc., [2004] O.J.

No. 508 (S.C.J.); Armstrong v. Northern Eyes Inc. (2000), 48 O.R. (3d) 442 (Div. Ct.), aff’d [2001] O.J. No. 1085

(C.A.); Ontario v. Abilities Frontier Co-operative Homes Inc., [1996] O.J. No. 2586 (Gen. Div.).

39

arbitration agreement? (2) What is the subject matter of the dispute? (3) What is the scope of the

arbitration agreement? (4) Does the dispute arguably fall within the scope of the arbitration

agreement? (5) Are there grounds on which the court should refuse to stay the action? The

methodology of the Arbitrators in the immediate case skips the fundamental step of determining

whether there was an arbitration agreement. In the immediate case, in a tautological leap, the

Arbitrators skipped over the first analytical step and concluded that because the POGTC, including

its arbitration provision, was in dispute, the dispute was within the terms of the Dispute Resolution

Clause and therefore the Arbitrators had jurisdiction.

Although I articulate the fundamental problem with the Arbitrators’ decision somewhat

differently, I essentially agree with Electek’s criticism of the decision found in paragraphs 12 of

its Factum and paragraph 10 of its Reply Factum; visualize:

12. The Panel conflated the issues of inapplicability and invalidity of the underlying document to

retain jurisdiction. Such analysis sidesteps the required exercise of determining whether there has

been a consensual agreement to submit the specific dispute to arbitration. The circular reasoning

employed by the Panel – that a submission to arbitration can be found based on an arbitration clause

in a set of standard form terms which the Panel has not found to apply to the work in question –

would result in substantial mischief. This is illustrated in the case at bar where Electek is forced to

defend at substantial cost an arbitration proceeding before a three-member panel of the ICDR in the

absence of substantial procedural rights afforded to it under the Rules of Civil Procedure merely

because it is “contended” by the claimant that an arbitration agreement applies.

*****

10 […] [The Arbitration Panel] failed to determine whether or not the POGTC actually applied to

the work which was the subject matter of the dispute. The Panel was required to determine whether

there was consensus ad idem that any dispute that arose about the work performed on February 10,

2018 was to be subject to a binding arbitration and, consequently, there had to be an arbitration

clause that was applicable to that work. The Panel sidestepped this threshold question, by going

down the rabbit-hole that is the doctrine of severability. In order for the doctrine of severability to

apply, there must have been a primary contract containing the agreement to arbitrate which can then

be said to survive if the rest of the contract does not; the severability doctrine does not apply so as

to create an agreement to arbitrate when there was no contract in the first instance. Because the

original POGTCs was not a contract, there was no contract for the arbitration clause to be excised

from.

In the immediate case, the Arbitrators concluded that the matter of what constituted the

terms of the contracting that occurred on February 10, 2018 was an arbitrable matter concerning

their jurisdiction; however, they did not determine whether the POGTC standing alone constituted

a settled arbitration agreement in 2009, and they did not determine whether the POGTC was an

independent part of the contracting that occurred on February 10-14, 2018. The Arbitrators did not

make the first determination at all, and they deferred making a decision about the terms of the

contracting in February 2018 until later in the arbitration.

Thus, with respect, in my opinion, the Arbitrators made two fundamental analytical errors

in their analysis of the POGTC as an independent arbitration agreement because they never

analyzed whether it was a fully formed contract in 2009 or a fully formed contract as part of the

contracting that occurred in February 2018.

A related third fundamental error is that the Arbitrators dismissed Electek’s argument that

the governance of the POGTC, if it existed at all, ended when Greenfield accepted Electek’s Terms

and Conditions when Greenfield’s personnel clicked the “Approve” button on the Timesheet. The

40

Arbitrators dismissed this argument because they concluded that Electek’s Terms and Conditions

are not inconsistent with the POGTC. That, however, is an odd conclusion, given that the

Arbitrators were deferring deciding what were the terms of the 2018 contracting. Moreover, the

conclusion’s correctness is doubtful, but for present purposes, the fundamental error is that the

matter of the consistency of the POGTC with Electek’s Terms and Conditions is not pertinent to

the issue of whether it could be objectively determined by the words and the conduct of the parties

that there was a meeting of the minds about an arbitration agreement.

I agree with the Arbitrators that the matter of what constituted the terms of the contracting

that occurred in February 2018 was an arbitrable matter concerning their jurisdiction; however,

that is no more and no less than an articulation of the competence-competence principle. The

Arbitrators had to go further and actually determine whether they had jurisdiction, which with

respect, I do not think they ever did.

The competence-competence principle is no longer a bar to my determining the jurisdiction

of the Arbitrators, and I shall next demonstrate that there was no arbitration agreement based on

the POGTC, either as an independent contract that came into existence in 2009 or as an

independent contract within the contracting that occurred in February 2018.

As I shall explain, in 2009 the POGTC was not a settled contract; it did not constitute an

independent arbitration agreement. As I shall explain, in 2018, the POGTC did not form a part of

the contracting between the parties; it did not constitute an independent contract. As I shall explain

further below, the Arbitrators did not understand Electek’s argument based on the principle that

for a contract to exist it must be objectively manifested that there was a consensus ad idem, a

meeting of the minds. Rather, by assuming that the POGTC was a contract, the Arbitrators

conflated determining whether a contract has been formed with interpreting what was formed.

In my opinion, in the immediate case, the Arbitrators relied on the independent agreement

principle to skip making an independent decision about the existence of a valid arbitration

agreement that encompassed the particular dispute between Greenfield and Electek about the

contract of services about transformer GSU #3.

I. Is There a Binding Arbitration Agreement between Greenfield and Electek?

As a review of the jurisprudence about the jurisdiction of arbitrators reveals, for an

arbitrator to have jurisdiction, two matters have to be established in law. First it must be established

that there is an arbitration agreement, and second it must be established that the particular dispute

between the parties to the arbitration agreement is within the terms of the arbitration provision.

Typically, the first matter is not controversial, and typically the analysis focuses on the second

matter.

The immediate case, however, is a rare inversion of the typical problem. In the immediate

case, one does not begin by interpreting the arbitration agreement; one begins by determining

whether there is an arbitration agreement to interpret. In the immediate case, first it must be

established that there was an arbitration agreement between Greenfield and Electek. Second, it

must be established that the particular dispute between the parties was arbitrable, which is to say

that the particular dispute between Greenfield and Electek is encompassed by the language of the

arbitration agreement. In the immediate case, in my opinion, the first matter is controversial, and

the second matter is uncontroversial and not seriously contested by Electek.

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In my opinion, whether the dispute about Electek’s work on GSU #3 is encompassed by

the POGTC – if it existed as an arbitration agreement - is not controversial. In the immediate case,

assuming that the POGTC was an arbitration agreement, I agree with the Arbitrators insofar as

they concluded that the dispute about the purchase order issued for GSU #3 was within the

Arbitrators’ jurisdiction or competence to decide. However, as the above critique of the

Arbitrators’ decision reveals, the problem in the immediate case is whether the POGTC was an

independent arbitration agreement either: (a) that was settled in 2009; or (b) that was settled in

2018 as part of the contracting that occurred in 2018.

What is required in the immediate case is an analysis of whether orally or in writing, the

parties entered into an arbitration agreement. As the above critique of the Arbitrators’ decision

reveals, they just assumed that the POGTC was an independent arbitration agreement. The

Arbitrators begged the fundamental question upon which their jurisdiction depended. In a

tautological way, the Arbitrators interpreted the existence of the arbitration agreement as being a

matter of interpreting the POGTC.

To repeat, in a typical case, the analytical step of determining whether there is an arbitration

agreement is rarely a necessary step. In the typical situation, it is a given that there is an arbitration

agreement, and the controversy about an arbitrator’s jurisdiction just requires an analysis of the

nature of the dispute and then an interpretative analysis of the arbitration agreement to determine

whether the scope of the arbitration agreement encompasses the particular dispute. The immediate

case is one of the rare cases where the existence of an arbitration agreement between the parties is

not a given. The case at bar is one of the rare cases where the determination of the arbitrator’s

jurisdiction is dependent upon determining whether an arbitration agreement exists. The question

that must be asked and answered in the immediate case is: Is there an arbitration agreement

between Greenfield and Electek?

In the immediate case, Greenfield submits that the POGTC is the arbitration agreement

between the parties. Its submission has two mutually exclusive branches.

One branch is that the POGTC that was signed by Mr. Gray for Electek in 2009 (and

forgotten thereafter by Electek and remembered thereafter by Greenfield) is an independent

agreement to arbitrate.

The second branch is that the POGTC is an independent arbitration that was part of the

contracting that occurred in 2018 when Greenfield issued a purchase order for goods and services

for work on GSU #3.

Thus, in the immediate case, Greenfield argues that the arbitration provision in the POGTC

is a stand-alone agreement to arbitrate. And, in the immediate case, Greenfield argues that the

POGTC was a part of the contracting that occurred when Electek provided services for transformer

GSU #3.

Electek’s counterargument is that the POGTC, including its Dispute Resolution

Agreement, did not establish a free-standing arbitration agreement and that the POGTC was not a

part of the contracting associated with GSU #3. As I shall explain in more detail below, I agree

with Electek’s arguments. My analysis of the contracting that did occur in the immediate case

leads me to the conclusion that the POGTC did not apply to the Purchase Order issued by

Greenfield. Therefore, in the immediate case, there is no Dispute Resolution Clause and no

arbitration agreement. It follows that the Arbitrators did not have jurisdiction and their decision

42

should be set aside.

Before detailing my analysis, I must address one preliminary matter and I have three

observations.

Before analyzing the merits of the competing arguments about contract formation, I need

to address Greenfield’s argument that Electek is estopped from making its argument. To quote,

from paragraph 4 of Greenfield’s factum:

4. At the hearing, having delved deeply into its ‘battle of the forms’ argument, Electek was gently

nudged by the Tribunal to consider the issue of separability of the arbitration clause. By closing

arguments, the ball finally dropped for Electek, and it expressly directed the Tribunal not to decide

whether Electek’s T&Cs applied to the work in issue. Audaciously, Electek now relies on its own

directive to the Tribunal as the main ground for bringing this Application. Estoppel should apply.

I can quickly say that there is no basis for an estoppel. Greenfield did not change its

evidence, or its argument or its position based on the position that Electek took at the hearing

before the arbitrators or on this application under s.17(8) of the Arbitration Act, 1991. There was

no reliance, let alone detrimental reliance upon which to establish an estoppel in equity.

The s.17(8) application is a hearing de novo; there are no issue estoppels or res judicata

because of the Arbitrators’ decision. Moreover, it is not correct to say that the main ground for

bringing this s.17(8) application is the Arbitrators’ alleged mishandling of the issue of the

separability of the arbitration agreement. The notion of the separability of the arbitration is not the

main reason for the s.17(8) application; the main reason is Electek’s argument that an arbitration

agreement never came into existence.

My first observation is that the undoubted circumstance that there was a contract for goods

and services between Greenfield and Electek and that there is a dispute about whether Greenfield

has a claim for damages for negligence, misrepresentation, and breach of contract must not obscure

or confound the issue of whether treating an arbitration agreement as a separate agreement, it

existed in the immediate case. Although a contract between Greenfield and Electek undoubtedly

existed in the immediate case, the question remains whether an arbitration agreement between

Greenfield and Electek also existed.

The second observation, which is related to the first observation, is that while undoubtedly

there was a valid or legal contract in the immediate case and while the normal law about what

happens to the terms of a contract alleged to be breached undoubtedly applies in the immediate

case, that circumstance should not obscure or confound the issue of whether there was an

arbitration agreement in the immediate case.

Although it was within their jurisdiction to determine whether there was a valid contract

for goods and services between Greenfield and Electek (which was undisputed) and to determine

what were the terms and conditions of that contract (there is, among other things, a dispute about

exculpatory provisions), treating the arbitration agreement as a separate contract, the Arbitrators

still needed to address whether there existed a settled agreement to arbitrate about the contract

associated with GSU #3.

The third observation is that Greenfield’s subjective belief that the POGTC was an

arbitration agreement and Electek’s subjective non-belief that there was no agreement to arbitrate

is not determinative. From the utterances, writing, and conduct of the contracting parties, the court

must determine objectively whether there was a concluded bargain between them with certainty

43

about the essential terms. The subjective beliefs of the parties are not determinative.

These three observations entail that treating the arbitration agreement as a separate

agreement still means that it is necessary to determine whether it existed as a stand alone agreement

or as part of the terms and conditions that applied to the contract of sale of services that occurred

on February 10-14, 2018.

Greenfield’s predominant argument is that the POGTC is a free-standing agreement that

includes an arbitration agreement. Greenfield argues that the arbitration agreement came into

existence in 2009. For a slew of reasons, Electek disagrees with Greenfield’s predominant

argument. I also disagree. In my opinion, in 2009, the POGTC was not a settled contract.

The strongest aspects both logically and passionately of Greenfield’s predominant

argument that the POGTC is a free-standing agreement that came into existence in 2009 is that

Electek signed a copy of the POGTC in 2009 with knowledge that it would not obtain purchase

orders from Greenfield unless it agreed to the POGTC. However, upon analysis, the strength of

this argument dissipates.

By its own written terms, the POGTC was not a free-standing agreement. It was an inchoate

or nascent provision that would be stillborn in the absence of a purchase order that annexed the

POGTC or that clearly incorporated the POGTC by reference. Neither circumstance ever occurred.

The POGTC was never annexed to the purchase orders. There was no incorporation by reference

of the POGTC.

The reference in Greenfield’s purchase orders that the purchase order is governed by the

“Terms and Conditions already agreed upon between the parties of this purchase order” is all of:

(a) too uncertain to be enforceable; (b) ambiguous as to whether the terms and conditions agreed

upon were those of Greenfield or Electek; and (c) not incorporating the POGTC by clear reference.

Treating the Dispute Resolution Clause of the POGTC as a separate contract does not

change the circumstance that it was a nascent or inchoate provision that would be stillborn unless

the parties came to the end of the task of agreeing on a contract of purchase and sale about which

they could have a dispute resolved. Even where there is no uncertainty as to the terms of the

agreement, where the intention of the parties is that their legal obligations are to be deferred until

a formal contract has been approved and executed, the initial agreement is not binding.⁶⁹The point

to emphasize is that the signing of the POGTC, including its Dispute Resolution Clause, was not

a free-standing agreement to arbitrate; it was expressly connected to the issuance of a purchase

order and would have no contractual life until that occurred.

The POGTC was not a master contract, a memorandum of agreement (a MOU), or an open

contract with a formula to settle the financial terms or the specifications or details of performance.

Rather, it was no more than terms to be added if the parties completed the contracting process. The

POGTC might have worked as Greenfield subjectively intended had Greenfield annexed it to its

purchase orders or had Greenfield clearly incorporated the POGTC by reference in its purchase

orders. In those circumstances – which did not exist in the immediate case – applying an objective

standard, a court could conclude that the parties intended the POGTC to govern.

Greenfield argued that it was a business necessity that the terms of its procurement of goods

⁶⁹Georgian Windpower v. Stelco, 2012 ONSC 3759 at para. 123; Bawitko Investments Ltd. v. Kernels Popcorn Ltd.,

[1991] O.J. No. 495 at para. 21 (C.A.).

44

and services be agreed to in advance with qualified, skilled, and approved vendors because it would

have been impossible to carry on business by negotiating each and every procurement, some of

which might require an urgent response. Assuming Greenfield’s business necessities about

procurement are true, then it would have been an easy enough matter to just annex the POGTC to

the purchase orders rather than saving the paper of a one page document by the vague to the point

of incomprehensible statement in bold text in the Purchase Order that “This PO is governed by the

Terms and Conditions already agreed upon between the parties to this purchase order.”

To be clear, it does not matter whether Electek had forgotten that Mr. Gray had signed the

POGTC in 2009. Nor would it have mattered whether Electek remembered that Mr. Gray had

signed the POGTC in 2009 and that Mr. Palimaka had reviewed in 2011. What matters is that an

objective analysis leads to the conclusion that the POGTC as it was used by the words and conduct

of the parties does not establish that it was a settled term of any contract reached by Greenfield

and Electek.

Standing alone, the POGTC was in the nature of an agreement to agree and, therefore, it

lacks contractual force as a free-standing agreement. More precisely, the inchoate nature of the

POGTC was that it envisioned being a part of a contract for goods and services if the parties could

come to agreement about what goods and services were to be procured and about the commercial

or financial terms for the sale of goods and services by purchase order.

Turning to whether the POGTC was a part of the contracting associated with the work done

by Electek in February 2018 with respect to transformer GSU #3. As a matter of contract

formation, the POGTC was negated by the manner of contracting that actually occurred.

Electek’s work was completed before Greenfield issued its Purchase Order. Greenfield did

not annex the POGTC to its Purchase Order. Greenfield agreed to accept Electek’s Terms and

Conditions as governing the particular contracting that occurred associated with the incident on

February 10, 2018 and Electek’s Terms and Conditions did not include an arbitration provision.

Greenfield argues that the Dispute Resolution Clause of the POGTC was a separate or

independent contract and there is no evidence that the parties ever turned their mind to varying

amending the Dispute Resolution Clause in the POGTC signed by Mr. Gray, and, therefore, this

separate contract governed and continued to govern notwithstanding that Greenfield

acknowledged that it agreed to Electek’s Terms and Conditions.

The fatal flaws in Greenfield’s argument are that: (a) for the reasons already expressed

above, severally or taken altogether, none of the POGTC’s terms and conditions including its

Dispute Resolution Clause constituted a settled contract; and (b) since there was no arbitration

contract, it is a non sequitur to discuss whether it was varied or amended by a subsequent

agreement.

The point to note is that from an objective perspective the only contract terms and

conditions that governed the contracting around the unfortunate goods and services contract of

February 10, 2018 were Electek’s contract terms and conditions, which Greenfield accepted when

Mr. Valleau electronically signed the Timesheet, about which it may be observed, there was

nothing stealthy, because if he wanted to review those terms and conditions, they were readily

available to him.

In short, the immediate case is similar to Secure Solutions Inc. v. Smiths Detection Toronto

Ltd., discussed above, where the Court of Appeal held it was simply not arguable that there was a

45

meeting of minds between the parties that their disputes would be arbitrated. If there is no

arbitration agreement contracted for at the relevant time, that ends the matter.

J. Summary and Conclusion

For the above reasons, I hold that the Arbitrators’ decision should be set aside.

By way of summary of those reasons, analyzing the POGTC as an independent contract in

accordance with the objective theory of contract formation and having regard to the words and

conduct of Greenfield and Electek and the contractual/factual nexus in 2009 or in 2018, there was

no arbitration agreement contracted for between Greenfield and Electek. It follows that the

Arbitrators had no jurisdiction.

If the parties cannot agree about the matter of costs, they may make submissions in writing

beginning with Electek’s submissions within twenty days of the release of these Reasons for

Decision, followed by Greenfield’s submissions within a further twenty days.

Perell, J.

Released: February 8, 2022

CITATION: Electek Power Services Inc. v. Greenfield Energy Centre Limited Partnership,

2022 ONSC 894

COURT FILE NO.: CV-20-637621-0000

DATE: 20220208

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ELECTEK POWER SERVICES INC.

Applicant

- and -

GREENFIELD ENERGY CENTRE LIMITED

PARTNERSHIP

Respondent

REASONS FOR DECISION

PERELL J.

Released: February 8, 2022