Executive Summary: Key Legal and Evidentiary Issues

• The central issue was whether a two-year contractual limitation period barred the Ministry of Transportation’s claim when the referee decision was released after that period expired.

• The Court found that the contract required a protest and ADR only after the referee decision was rendered, making pre-decision compliance impossible.

• It held that the contractual limitation clause did not clearly or validly oust the statutory limitation period under the Limitations Act, 2002.

• The motion judge’s interpretation led to commercial absurdity by requiring protest of a decision that had not yet been issued.

• The Court of Appeal clarified that standard form contracts with precedential value are subject to correctness review on appeal.

• Summary judgment against the Ministry was overturned and replaced with judgment in its favour, including costs.

Background and procedural history

The Ontario Ministry of Transportation (MTO) entered into a standard form construction contract with J & P Leveque Bros. Haulage Ltd. (Leveque) to rehabilitate a section of Highway 60. The contract included a multi-step dispute resolution process that culminated in a referee decision, followed by the option to protest and engage in alternative dispute resolution (ADR) before litigation. A key provision required any protest and ADR to be initiated within two years of contract completion.

After completing the contract in July 2019, Leveque pursued a claim for an additional $1.8 million due to standby delays and extra working time. The claim went through all required review stages, and in October 2021—more than two years after contract completion—a referee panel issued a decision in Leveque’s favour. MTO immediately protested the decision and pursued ADR, eventually commencing an action to challenge the award.

Leveque moved for summary judgment, arguing that MTO’s lawsuit was out of time based on the two-year contractual deadline. The motion judge agreed, finding that the contract ousted the statutory limitation period and that MTO’s delay was avoidable.

Court of Appeal analysis

The Ontario Court of Appeal allowed the appeal. It applied the correctness standard of review, as the contract was a standard form agreement and its interpretation had broader implications. The Court found that the motion judge had erred in his approach by focusing on whether the referee decision could have been issued within the two-year window, rather than interpreting what the contract required when the decision was actually issued outside that window.

Reading the contract as a whole, the Court concluded that the right to protest and engage in ADR was triggered only after the referee decision was released. It was commercially absurd to require a party to protest a decision that did not yet exist, or to treat a late decision as automatically final and binding.

Further, the Court held that the contractual language did not clearly and unambiguously displace the statutory limitation period under the Limitations Act, 2002. In the absence of such clarity, the statutory limitation applied—and MTO had brought its claim within that time.

Disposition and costs

The Court of Appeal set aside the summary judgment granted to Leveque and substituted a ruling in favour of MTO, allowing its claim to proceed. It also set aside the lower court’s costs order and awarded MTO $72,320 in costs below and $25,000 for the appeal.

This decision reaffirms the principle that standard form contractual limitation periods must be interpreted in line with commercial reasonableness, and that statutory limitation rights cannot be contractually waived without clear and express language.