Larc Developments Ltd. v. Levelton Engineering Ltd. 2010 BCCA 18

Levelton wished to invoke an arbitration clause and seek a stay of proceedings to the third party proceedings commenced against it by Larc. The law in BC is that this application must be made prior to a step being taken in the proceedings or else the ability to make the application is lost.

Counsel for Levelton demanded further and better particulars of the allegations contained in the third party notice and indicated that it would, if necessary, apply for a stay pursuant to the arbitration clause.

Ultimately, Levelton applied for, and was granted, a stay of proceedings. Larc appealed this on the basis that the demand for particulars constituted a step in the proceedings and the stay ought not to have been granted.

The Court of Appeal held that it was clear that a step in the proceedings had been taken. The issue was whether the taking of that step could be “rendered nugatory” by considering whether the party intended to embrace the court’s jurisdiction in the dispute. The Court of Appeal answered that question in the negative and held that a party ought not be able to take advantage of the benefit of the litigation process (in this case, obtaining particulars) while preserving the ability to reject that process in favour of arbitration. In other words, once the party has attorned to the court’s jurisdiction, it is no longer entitled to seek a stay.