Proponents of arbitration for construction disputes often cite the process as being superior to litigation in the courts because it is quicker and cheaper. The merits of that proposition are sometimes challenged, particularly with respect to mandatory arbitration and the consolidation of proceedings. In such circumstances, the benefits of arbitration in terms of efficiency and costs appear illusory and there is the significant risk of inconsistent results in multiple proceedings.
This issue was underscored in the recent case of Yellowridge Construction Ltd. v. Somatic HVAC Solutions Ltd. and the Board of Education of School District No. 41 (Burnaby), 2022 BCSC 2377.
In this case, the BC Supreme Court considered a petition brought by a general contractor, Yellowridge Construction Ltd., (“Yellowridge”) who was seeking to consolidate a number of notices to arbitrate commenced in connection with a project undertaken for the owner, the Burnaby Board of Education School District (the “School District”). The notices to arbitrate at issue related to disputes for various change order requests submitted by the subcontractor, Somatic HVAC Solutions Ltd. (“Somatic”).
Pursuant to the change order process in use for the project, the subcontractor, Somatic, was required to submit to the general contractor, Yellowridge, invoices for work and/or materials incurred in connection with any alleged change. Yellowridge would then submit those invoices to the owner, the School District, and to the project consultant who would make a determination as to whether the work or materials detailed a change to the project scope that should be compensated by an adjustment to contract price or time. Yellowridge would then communicate that decision back down to it’s subcontractors, including Somatic.
Somatic disputed two of the consultant’s findings regarding claimed change order requests and, as required by the terms of its contract with Yellowridge, Somatic issued two notices to arbitrate with respect to the same. Yellowridge issued matching notices to arbitrate to the School District pursuant to the terms of the CCDC contract between those parties.
