Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of GC18’s mediation/arbitration clause as either imposing a 30-day deadline to request mediation or instead creating a minimum 30-day period to attempt informal resolution before mediation.
• Characterization of GC18 as a standard form arbitration clause and the resulting application of a correctness standard of review to its interpretation.
• Proper approach to determining the scope of “any dispute … arising out of or relevant to” the agreements, and whether detailed factual findings on the parties’ multi-month interactions were appropriate at the appointment stage.
• Allocation of decision-making between courts and arbitrators on questions of arbitral jurisdiction, including whether it is sufficient that a dispute “arguably” falls within the arbitration agreement.
• Interaction between the dispute resolution clause and the Board’s contractual right to terminate if the architect is involved in “alternative dispute resolutions,” and whether a strict 30-day mediation trigger would create commercially unreasonable consequences.
• Whether the evidence of correspondence about performance concerns and fees showed disputes that had been resolved, were time-barred, or remained live and referable to mediation and arbitration.

Background and parties

J.P. Thomson Architects Ltd. is a long-standing architectural services firm that had provided services to the Greater Essex County District School Board for nearly five decades. The Board operates schools in Windsor, Ontario and surrounding municipalities. In 2016, Thomson successfully obtained two key arrangements with the Board: approval as a vendor of record to bid on rotational work alongside other firms, and a specific contract to provide architectural services for two new schools. Both arrangements arose from the Board’s requests for proposals, which incorporated a standard form Ontario Association of Architects (OAA) dispute resolution clause, GC18.

The dispute resolution clause in GC18

GC18 was the then-standard dispute resolution clause from the OAA 600, 2008 Agreement as amended. It provided a multi-step process for handling disputes arising out of or relevant to the agreement. First, it stated that any dispute “which cannot be resolved by the parties within thirty (30) days of the dispute arising, shall be referred to mediation, upon the request of either party.” It then required the parties to select a mediator from the list of approved mediators of the Ontario Superior Court of Justice in Windsor and stipulated that mediation would take place within 30 days of the mediator’s selection. If the parties failed to select a mediator within 30 days of a notice of mediation, either party could proceed to arbitration. If mediation did not resolve the dispute within 30 days following the mediator’s selection, either party could request binding arbitration pursuant to the Arbitration Act, 1991 by serving an “Arbitration Notice” stating the subject matter of the dispute with reasonable particularity. The clause also set strict 10-business-day periods for appointing an arbitrator, with recourse to a judge of the Superior Court to make the appointment if the parties failed to do so, and it gave the arbitrator power over the costs of the arbitration. Importantly, although it imposed time limits for certain procedural steps (such as holding mediation and appointing an arbitrator), GC18 did not expressly impose a deadline for requesting mediation or serving an Arbitration Notice.

Deterioration of the commercial relationship

Relations between Thomson and the Board deteriorated over time. In August 2020, the Board sent Thomson a notice expressing dissatisfaction with Thomson’s performance and requesting an action plan to address its concerns. Thomson responded and provided the requested plan. However, in March 2021, the Board issued a second notice, stating that Thomson had failed to adequately address its concerns and that, as a result, Thomson would be ineligible to bid on any further work from the Board for a period of two years. This communicated a serious and ongoing impairment of Thomson’s access to Board projects.

Fee dispute and further correspondence

In parallel with the performance concerns, a dispute arose over Thomson’s fees on a particular project. In June 2021, Thomson requested that its fees be calculated based on the actual cost of construction rather than the lower pre-construction estimate originally used. On July 28, 2021, the Board partially accepted this position by agreeing that the original estimate should be increased to reflect construction costs, but not to the full extent Thomson sought. Thomson asked the Board to reconsider, but on September 23, 2021, the Board confirmed its refusal to adjust the fee further. That position entrenched a continuing disagreement over the proper calculation of Thomson’s remuneration for its services.

Thomson’s mediation and arbitration steps

By letter dated October 12, 2021, Thomson invoked its rights under GC18 and requested mediation. It did so in response to a series of Board letters over the previous 15 months that, in its view, evidenced a broader dispute about both its performance and its fees, and the impact of the Board’s decisions on its ongoing relationship and ability to secure work from the Board. The Board refused to appoint a mediator, taking the position that there was no dispute eligible for mediation under GC18 because, in its reading of the clause, any request for mediation had to be made within 30 days of a dispute arising. On that analysis, either any dispute had been resolved within 30 days or more than 30 days had elapsed before Thomson’s October 2021 request. When Thomson later served a notice to arbitrate, the Board again relied on this interpretation to deny any obligation to proceed. In March 2022, Thomson applied to the Superior Court of Justice for an order appointing an arbitrator under GC18 and s. 10(1) of the Arbitration Act, 1991.

The application judge’s interpretation of GC18

The application judge dismissed Thomson’s application. She interpreted the opening sentence of GC18 as unambiguously requiring a party to request mediation within 30 days of a dispute arising and saw this as consistent with a perceived purpose of the clause to deal with disputes “promptly when they arise.” Applying that understanding, she examined the detailed history of correspondence and concluded that the disputes referenced in Thomson’s October 12, 2021 request were either resolved or out of time. With respect to the August 2020 performance notice, she held that any dispute created by that notice was effectively resolved when Thomson supplied an action plan. For the March 2021 notice imposing a two-year ineligibility period, she found that Thomson’s failure to give notice within 30 days that it was dissatisfied precluded it from asserting months later that the matter remained in dispute. In her view, Thomson was obliged by GC18 to make its dissatisfaction known and request mediation within 30 days of the March 2021 letter. She applied a similar analysis to the fee dispute. In her reasoning, any dispute over Thomson’s fees was resolved when the Board first set out its position in July 2021, and the 30-day period to request mediation was not reset simply because Thomson sought to revisit that position. Accordingly, she concluded that Thomson could not rely on the Board’s September 23, 2021 refusal to adjust fees as a basis for a timely mediation request. Having found that any live disputes had either been resolved or fallen outside her reading of the 30-day window by the time of the October 2021 mediation request, she held that Thomson had lost its contractual right to proceed with mediation and arbitration and dismissed the application to appoint an arbitrator.

Appellate standard of review for GC18

On appeal, the Court of Appeal treated the interpretation of GC18 as a question of law reviewable on a correctness standard. GC18 was a standard form arbitration clause drawn from the OAA’s template contract, not a bespoke provision negotiated specifically for Thomson and the Board. As such, its interpretation has general precedential value beyond the parties to this case, and there was no meaningful factual matrix unique to them that would affect the interpretive exercise. In those circumstances, appellate courts are not confined to a deferential standard but may substitute their own view of the correct interpretation. The court noted that ordinary principles of contractual interpretation govern arbitration clauses: the wording must be read in the context of the agreement as a whole, and the preferred meaning should align with sound commercial principles and good business sense.

Re-reading the 30-day language in GC18

The Court of Appeal held that the application judge erred in law in reading GC18 as imposing a rigid 30-day deadline for a party to seek mediation. Analysing the text of the first sentence, it emphasized that the phrase “within thirty (30) days of the dispute arising” modifies the preceding phrase “which cannot be resolved by the parties,” not the later phrase “shall be referred to mediation.” Properly construed, the sentence establishes a minimum 30-day period for the parties to attempt to resolve a dispute themselves before invoking mediation, rather than a maximum period in which they must request mediation or forfeit their rights. To read GC18 as creating a hard cut-off would, in the court’s view, require reading words into the clause that were not there. The broader scheme of GC18 reinforced this interpretation. The clause explicitly imposes specific time limits on some steps—such as holding mediation within 30 days of selecting a mediator, selecting an arbitrator within ten business days of an Arbitration Notice, and applying to the court if an arbitrator is not appointed in time—but it contains no express deadline for requesting mediation or serving an Arbitration Notice. Instead, it conditions arbitration on there having been an unsuccessful mediation lasting at least 30 days. The structure is therefore one of staged escalation: an initial period of informal negotiation, followed by time-limited mediation, then arbitration if needed.

Commercial context and termination risk

The court also considered the commercial context and interaction of GC18 with the Board’s termination rights under the requests for proposals. The Board had reserved the right to terminate if Thomson became involved in “any actual pending or threatened suits, actions, litigation proceedings, arbitrations, alternative dispute resolutions, investigations or claims.” The Board in fact invoked this term in May 2022 to terminate the remaining contract. If GC18 were interpreted to force a party to request mediation within 30 days of any unresolved issue, Thomson would face an untenable choice whenever a disagreement arose that could not be quickly resolved: either trigger a formal dispute resolution mechanism that could give the Board a basis to terminate, or allow the 30-day window to expire and permanently lose access to mediation and arbitration for that issue. The Court of Appeal held that such a reading would be commercially unreasonable and inconsistent with the evident purpose of the clause—to encourage informal resolution before escalating, not to penalize parties who try to manage long-term, complex relationships without immediately resorting to formal proceedings.

Who decides the scope of the dispute?

Although its conclusion on the proper meaning of GC18 was enough to dispose of the appeal, the Court of Appeal went on to identify a further error in principle in the application judge’s approach to the scope of the dispute. The judge had correctly acknowledged the principle that where it is at least arguable that a dispute falls within the terms of an arbitration agreement, questions about the full scope of the dispute and the tribunal’s jurisdiction are ordinarily left to the arbitrator under the competence-competence doctrine. Despite this, she engaged in a detailed factual review of the entire 15-month history between the parties and made findings about which issues were resolved, which were live, and which fell outside the time she believed GC18 allowed. The Court of Appeal held that this went too far. Under GC18, the arbitrator has jurisdiction over any dispute “arising out of or relevant to” the agreement. At the court-appointment stage, it was sufficient that Thomson had advanced disputes that were at least arguably covered by the clause. It was for the arbitrator, not the application judge, to delineate the complete scope of the dispute and determine the limits of arbitral jurisdiction.

Outcome and final orders

In light of its interpretation of GC18 and its view of the proper role of the court, the Court of Appeal allowed the appeal and granted Thomson’s application. It ordered that mediation proceed within 60 days of the date of its order, preserving Thomson’s right to seek arbitration under GC18 if the parties fail to resolve their disputes through mediation. The court also addressed costs. It awarded J.P. Thomson Architects Ltd., as the successful appellant, its costs of the appeal fixed in the all-inclusive amount of $15,000. No damages award or quantified monetary compensation was determined in this appellate decision, and the precise total amount of any costs relating to the earlier application was left to be agreed between the parties or, failing agreement, to be determined following brief written submissions. Accordingly, the only specific monetary figure ordered in favour of the successful party on this appeal is $15,000 in all-inclusive costs, and any further costs or damages amounts cannot be determined from this judgment alone.