Arbitration and Demand for Particulars in Litigation Proceedings

On January 18, 2010, the Court of Appeal for British Columbia (Canada) released its decision in Larc Developments Ltd. v. Levelton Engineering Ltd., 2010 BCCA 18. In this decision, the Court dealt with the issue of when a demand for particulars in a court proceeding would disentitle a party from subsequently seeking or obtaining a stay of the proceeding in favour of arbitration. The answer depends on the language of the request, instead of the stated intent of the party making the request.

If the demand is for information required to prepare a statement of defence, it would constitute a demand for particulars under the rules of court and a step in the litigation proceeding thereby precluding a subsequent stay application in favour of arbitration. However, by making a request for information solely to determine whether a claim is subject to arbitration, the party may still bring a stay application for arbitration because such request does not amount to an acceptance of the litigation process.

In this case, the demand letter was drafted to request information for the preparation of the statement of defence, followed by the party's intent to seek arbitration. The Court held that since the demand constituted a step in the litigation proceeding, the defendant was no longer entitled to seek to refer the matter to arbitration even though such intent was stated in the demand letter: "It cannot undo what has been done".