Executive Summary: Key Legal and Evidentiary Issues

• Central issue involves contractual interpretation of a public-private partnership (PPP) agreement on energy efficiency cost responsibilities.

• Arbitration was not mandatory under the contract and required mutual written consent, which was never achieved.

• Respondents took substantive litigation steps before seeking a stay, including cross-examinations and filing affidavits.

• Delay of approximately one year before moving for a stay constituted undue delay under s. 7(2)(4) of the Arbitration Act.

• The court found no arguable case that an arbitration agreement existed between the parties for this dispute.

• Motion to stay proceedings in favour of arbitration was dismissed due to failure on all three statutory and procedural grounds.

Background of the dispute

Halton Healthcare Services Corporation (HHS) and the Respondents—Plenary Health Milton LP, Plenary Health Milton GP Inc., and Plenary Health Milton LP Inc.—entered into a Project Agreement as part of a public-private partnership (PPP) to design, build, finance, and maintain a hospital facility. The dispute centers on the interpretation of the agreement’s “painshare/gainshare” provisions related to energy efficiency performance and associated cost-sharing responsibilities. Specifically, the disagreement involves whether certain cost drivers—like boiler efficiency, transformer performance, and HVAC temperature set points—fall under the obligations of HHS or the Respondents.

Attempted arbitration and commencement of litigation

In December 2022, HHS issued a Notice of Arbitration seeking resolution under the Project Agreement. They proposed a list of experienced commercial arbitrators. After two months, the Respondents suggested a non-lawyer with no arbitral experience. HHS rejected this and insisted on a legally trained arbitrator, which the Respondents declined. As no mutual agreement was reached, HHS commenced litigation via a Notice of Application on April 17, 2023.

Respondents’ motion to stay the application

The Respondents subsequently brought a motion to stay the application under section 7 of the Arbitration Act, 1991, asserting that the dispute should be arbitrated. Justice Papageorgiou identified three legal issues:

1. Whether there was a binding agreement to arbitrate.

2. Whether the Respondents took substantive steps in litigation before seeking the stay.

3. Whether the motion for a stay was brought with undue delay.

Court’s analysis and findings

1. No arbitration agreement in effect
   The court held that arbitration under the Project Agreement was not mandatory but only possible with mutual written consent (per Section 8.1 of Schedule 27). Since no mutual consent existed—and because HHS explicitly informed the Respondents by email on April 17, 2023 that litigation would proceed due to failure to agree—the court found no arguable case that an arbitration agreement existed.

2. Substantive steps taken in litigation
   The Respondents took multiple substantive litigation steps before filing their motion, including:

   • Accepting service of the Application Record.

   • Filing a Notice of Appearance.

   • Participating in Civil Practice Court.

   • Complying with a court-ordered timetable.

   • Filing an affidavit on the merits (Poirier Affidavit, March 28, 2024).

   • Conducting cross-examinations of fact and expert witnesses.

   The court concluded these steps objectively affirmed the court’s jurisdiction, precluding reliance on the arbitration clause.

3. Undue delay
   The Respondents were served in April 2023 but did not signal any intention to bring a stay motion until they served their Responding Motion Record in April 2024. The court emphasized that this delay was significant and unjustified, especially since the Respondents continued to participate in the litigation. Citing Crosslinx Transit Solutions and Peace River Hydro, Justice Papageorgiou found that undue delay under s. 7(2)(4) of the Arbitration Act applied.

Outcome

The motion to stay was dismissed. The Court held that the Respondents failed to satisfy the technical prerequisites for a stay and, alternatively, that statutory exceptions under the Arbitration Act applied on a balance of probabilities. Costs of the motion were reserved to the application judge, and the matter is set for a full-day hearing on June 19, 2025. The decision did not award any damages or costs.