Contractor initiated arbitration for dispute involving traffic control project
The Ontario Superior Court has affirmed an arbitral award involving a dispute over a 2020 unit rate contract, valued at approximately $10 million and based on quantities performed or supplied, for the reconstruction of about 2 km of Simcoe Road 21.
In Tedescon Infrastructure Ltd. v. The County of Simcoe, 2026 ONSC 3548, the project concerned traffic control, road widening, and municipal service installation. Simcoe County appointed Tatham Engineering as project designer and contract administrator.
Tedescon, the road works contractor, sent Tatham claims for compensation and extensions of time due to delays and change orders. Tatham denied multiple claims and extension requests.
While the project continued, Tedescon submitted the issues to arbitration on Mar. 10, 2022.
On Apr. 6, 2023, Tedescon served a notice of default on the county. Tedescon alleged 80 breaches of the agreement and claimed that Tatham failed to act with impartiality.
The arbitrator, a senior construction lawyer, determined that:
After set-off, the arbitrator awarded the county a net amount of $511,243.13, inclusive of taxes. Specifically, the arbitrator considered that:
From the arbitral outcome, Tedescon brought an application, while the county filed a counterapplication.
First, Tedescon applied to set aside and reverse the arbitral award based on ss. 45 and 46 of Ontario’s Arbitration Act, 1991. Under s. 46(1), Tedescon said the arbitral award determined a matter beyond the agreement’s scope and failed to treat Tedescon equally and fairly.
Alternatively, under s. 45(1), Tedescon applied for leave to appeal the arbitral award on a legal question.
Tedescon challenged:
In a preliminary objection to Tedescon’s request, the county alleged that the words “final and binding” in the arbitral agreement excluded any appeal right under s. 45(1).
Second, in a counterapplication, the county sought leave to appeal against the award based on the arbitrator’s legal error in permitting Tedescon’s recovery or credit for damages, including for work already performed, if it had abandoned the contract.
The Ontario Superior Court of Justice denied both Tedescon’s application and the county’s counterapplication.
First, the court rejected Tedescon’s s. 46 grounds, based on jurisdiction and fairness. The court explained that the jurisdictional question did not enable it to address the arbitral decision’s substance or merits.
The court explained that no issues about the procedure’s fairness or the arbitrator’s impartiality arose from Tedescon’s complaints regarding the arbitrator’s math or data entry.
Regarding s. 45(1), the court said the parties could not appeal under this subsection. Based on the parties’ agreement, the court held that the parties consented to resolve their dispute via final and binding arbitration and intended not to pursue the dispute past arbitration.
If it had granted rather than denied Tedescon’s application for leave to appeal, the Ontario Superior Court would have partly allowed the appeal and set aside the arbitrator’s award for the county’s damages claim.
The court also awarded Tedescon the past due amounts for unpaid holdbacks, unpaid quantities for extra supplies of labour and materials, and damages for delay expenses.
The court saw an extricable legal error in the arbitrator’s finding that Tedescon had repudiated the contract. The court explained that:
However, the court would have denied Tedescon’s request for leave to appeal from the calculation issues because the damages accounting or set-offs did not involve pure legal questions.
Lastly, the court would have granted the county’s provisional application for leave to appeal. However, the court would have dismissed the appeal, which also turned on the issue of repudiation.
Enjoy this story? Read the latest alternative dispute resolution news on the main page!
