L’arbitration in accordance with the guarantee plan regulations for new residential buidings

Since January 1st, 1999, Quebec has a mandatory coverage that affects a large number of new residential buildings. This is the Régie du Bâtiment du Québec (hereinafter RBQ) which deals with the application of the guarantee plan Regulations for new residential buildings.

Whenever there is a default on the part of the contractor to comply with its legal and contractual obligations, either prior or after acceptance of the delivered building, it is important that the beneficiary of the guarantee denounce the situation in writing to the contractor and also transmit a copy of its request to the manager of the guarantee plan. If the intervention of the Contractor is insufficient (or absent), the mechanism of implementation of the guarantee will be triggered and the manager will proceed with the opening of the file upon request of the beneficiary.

If the manager’s intervention does not solve the problem, it will conduct an inspection of the building and will eventually complete a detailed written report of its observations within twenty days of the inspection report. After receiving the report, the beneficiary or contractor dissatisfied with the conclusions of same may refer the matter to arbitration.

First, it is important to know that only three arbitration organizations are duly authorized by the RBQ to hear disputes related to guarantee plans, including:

  • The Canadian Commercial Arbitration Center (CCAC)
  • Le Groupe d’Arbitrage et de médiation sur mesure (GAMM);
  • Soreconi

The request for arbitration must be sent to one of these three organizations within 30 days of receipt of the decision of the manager. That organization will then determine which of its arbitrators shall take charge of the case. Where the application concerns a claim, the arbitration hearing shall begin within thirty days after the filing of the request for arbitration (all subject to availability of everyone involved). In addition, it is important to ensure that the application contains all of the following documents and information: a copy of the contested decision, names and addresses of the parties and the relief sought on the points made in the arbitration decision.

Subsequently, the usual process consists of a pre-hearing conference call wherein the arbitrator shall inform all parties of the rules of procedure and mode of proof that follow, in addition to advising the parties of the time to be allocated to them to make its case at the hearing. As for the parties, they shall inform the arbitrator of the witnesses they intend to call (ordinary or expert) and documents to be produced at the hearing. The arbitrator will also determine the delay to transmit the documents, according to whether the reports emanate from experts or not.

At the arbitration hearing

…the arbitrator often begins with a site visit of the building covered by the guarantee in order to acquire a better understanding of the scope of the relief sought. Then, as is the case in civil litigation before the courts, it is the person who submitted the request for arbitration that must prove the elements included in the application, using his relevant witnesses and experts to support its claims. The arbitrator shall base its decision on the basis of the oral and written evidence submitted, while making sure to be limited to the extent of the applicable guarantee. The arbitrator may also make an appeal to equity if the circumstances are present.

Arbitration ruling is final

The arbitration ruling is final and without appeal and shall be transmitted to the parties within thirty days of the holding of the arbitration hearing. Of course, it is always possible (and recommended) that an agreement be reached between the parties, partially or in full, before the ruling is made. In this case, it is important that the parties inform the arbitrator without delay so that it may be stated in the decision rendered. If problems arise in its execution, the parties may proceed before the Superior Court instance to seek the homologation of the arbitration ruling.

The costs of arbitration depend on the party making the request for arbitration. If this is the contractor, the cost will be borne equally with the manager whatever the result, while if the beneficiary made the request, it is the manager who will pay the costs as long as at least one of the aspects of his claim is made in favor of the beneficiary. Otherwise, it is the arbitrator who will determine the allocation of costs. The arbitrator may also decide that the administrator must pay the fees incurred by the beneficiary for the expertise if it is successful, while other expenses incurred by each party (such as extrajudicial fees of lawyers or transport costs) are the responsibility of everyone.

This text mainly explains the process connected to arbitration.  Please contact us for more details on the types of defects covered by the guarantee contract and deadlines that must be met.


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