Court of Appeal for Ontario

Date: 20220216 Docket: C69360

Before: Strathy C.J.O., Roberts and Sossin JJ.A.

Between:

Feltz Design Build Ltd. Plaintiff (Respondent)

and

Kevin Gary Larson a.k.a. Kevin Larson, Larson Properties Partnership Group, Bennington Financial Corp., Cosman Mortgage Capital Corporation and Olympia Trust Company Defendants (Appellants)

Counsel: Eric Kerson, for the appellants Martha Cook, for the respondent

Heard: February 14, 2022 by video conference

On appeal from the judgment of Justice A. Duncan Grace of the Superior Court of Justice, dated April 1, 2021, with reasons reported at 2021 ONSC 2469.

Reasons for Decision

Overview

[1] This appeal arises from a decision granting partial summary judgment arising out of a construction lien dispute. The appellant Larson Properties Partnership Group (“LPPG”) had retained the respondent Feltz Design Build Limited (“Feltz”) to provide construction services in relation to a property in Stratford, Ontario.

[2] A dispute between the parties arose over alleged deficiencies in the construction work undertaken by Feltz and LPPG’s refusal to provide payment for the work done.

[3] In September 2019, Feltz registered a lien against the property for the unpaid fees. In January 2020, Feltz brought an action against the defendants for damages due to breach of contract and breach of trust. In October 2020, Feltz moved for summary judgment against the defendants LPPG and its principal, Mr. Larson under r. 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 but not as against the other defendants.

[4] The motion was heard in January 2021. In an endorsement dated April 1, 2021, the motion judge granted summary judgment to Feltz against LPPG and Mr. Larson and ordered, inter alia, LPPG and Mr. Larson to pay Feltz $530,764.88 for breach of contract and breach of trust.

[5] Subsequent to the decision on the summary judgment motion, in January 2022, on consent of the appellants, the remaining aspects of the action against two of the other three defendants (Bennington Financial Corp. and Cosman Mortgage Capital Corporation) were resolved by order of Rady J., including the lien enforcement proceedings. The third defendant, Olympia Trust Company, has been noted in default.

Analysis

[6] The appellants raise two grounds of appeal. First, the appellants argue that the motion judge erred in failing to find a genuine issue requiring a trial. Second, the appellants argue that the motion judge erred in finding that this matter was appropriate for partial summary judgment.

The motion judge did not err in finding no genuine issue requiring a trial

[7] We would not give effect to the first ground of appeal.

[8] The motion judge identified the proper standard on a motion for summary judgment under r. 20 of the Rules of Civil Procedure, citing Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 and stating, at para. 22, “[i]f the record assembled by the parties allows the motion judge to make necessary findings of fact, apply the law and reach a fair and just determination on the merits, there will be no need for a trial.”

[9] The motion judge explained his finding that summary judgment was appropriate by reference to the evidentiary record, at paras. 23-26:

[23] A substantial evidentiary record was compiled by the parties for the purposes of this motion. The affidavits of Hainsley Bailey, the project manager of Feltz and of Mr. Larson conflicted in various respects. When faced with allegations of delay, substandard work and unjustified billings, it is difficult to avoid an initial impression that the matter is unlikely to be ripe for a summary determination.

[24] However, the record did not end with the initial exchange of affidavit material. The plaintiff filed a supplementary motion record that contained an affidavit of the Consultant’s representative, Robert Ritz. That affidavit provided important context for the payment certificates and the certificate of substantial completion.

[25] Cross-examinations were conducted. A transcript of the lengthy cross-examination of Mr. Larson was filed. The plaintiff’s solicitor filed a helpful factum. That was the only one the court received.

[26] Based on the totality of the record, I am of the view this case can be decided justly at this interlocutory stage. [Footnote omitted.]

[10] On the record before him, the motion judge found that the defendants accepted that they owed Feltz money for the work completed under the contract but disputed the quantum.

[11] The motion judge did not accept the defendant’s basis for disputing the quantum. The motion judge stated that counsel for the defendants had conceded the weakness of the defendants’ argument that Feltz had offered an “all in” contract and then charged more than had been quoted. The motion judge specifically rejected LPPC’s submission that the agreement with Feltz was a fixed price contract, noting that the contract provided for an hourly rate for Feltz employees.

[12] Having rejected LPPC’s submission on that issue, the motion judge found that the contract required payment to be made on the certification of LPPC’s consultant architect, who was to determine the amount owing by LPPC and to issue certificates of payment. After the dispute arose between the parties, the architect became involved and certified that Feltz’s work had been substantially performed and Feltz was entitled to payment of the balance of the contract price.

[13] The motion judge concluded his review of the record on the breach of contract claim by finding that “LPPC owes Feltz the unpaid balance but is simply unwilling or unable to pay”: at para. 39.

[14] With respect to the breach of trust claim, the motion judge found that LPPC received funds impressed with a trust for the benefit of Feltz and failed to account for and remit those amounts notwithstanding certificates of substantial completion of Feltz’s work, contrary to the trust obligation established under s. 7 of the Construction Act, R.S.O. 1990, c. C.30.

[15] The motion judge found LPPC liable for breach of trust for the full amount of the outstanding debt, and that Mr. Larson was jointly liable given his knowledge and control over LPPC’s operations.

[16] The motion judge’s findings are entitled to deference and clearly were available on the record. We find no error in the motion judge’s analysis or conclusion.

There is no basis for appellate intervention on the partial summary judgment issue

[17] With respect to the second ground of appeal, the granting of summary judgment was not “partial” with respect to the appellants. Rather, the judgment addressed the liability of the appellants and Feltz’s claims against them in their entirety. The partial nature of the summary judgment, to the extent it can be characterized as such, related to the fact that other parties had encumbrances against the property as well and were included as defendants.

[18] The appellants argue that in granting judgment for Feltz against the appellants, the motion judge did not address the narrow circumstances in which partial summary judgment will be warranted: see Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, at para. 34; Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at para. 34; and Heliotrope Investment Corporation v. 1324789 Ontario Inc., 2021 ONCA 589, at para. 32. The factors to be considered in such a determination include whether the matter to be resolved by summary judgment could be bifurcated from the remaining litigation, dealt with in an expeditious and cost-effective manner, and whether the possibility of inconsistent findings by different courts could be avoided: Butera, at para. 34; Malik v. Attia, 2020 ONCA 787, at para. 62.

[19] In this case, however, the respondent argues that the appropriateness of the partial summary judgment is no longer a live issue.

[20] As set out above, subsequent to the motion judge’s decision, the parties have resolved the outstanding aspects of the litigation, with the exception of Olympia Trust Company, which has been noted in default. Consequently, the respondent takes the position that the partial summary judgment is now a full summary judgment decision.

[21] The respondent relies on Maystar General Contractors Inc. v. International Union of Painters and Allied Trades, Local 1819, 2008 ONCA 265, 90 O.R. (3d) 451, where this court held an appeal to be moot where the underlying basis for the appeal had fallen away as a result of post-judgment developments: at para. 28.

[22] The appellants accept that there remains no concern regarding partial summary judgment with respect to the two defendants where the action by Feltz has been dismissed, but contend that since the action with respect to Olympia Trust Company remains alive, the partial summary judgment ground of appeal remains live as well.

[23] In the alternative, the respondent contends that the motion judge’s granting of partial summary judgment was appropriate in the circumstances under the standard set out in Hryniak.

[24] In our view, there is no basis for appellate intervention on this issue in this case. The concerns set out in Baywood Homes, Butera and Heliotrope do not arise in this case. No aspect of the liability toward Feltz remained in doubt following the judgment granted by the motion judge. The issue of any remedies for or against the other encumbrancers was a separate and discrete question, and one which for all intents and purposes is no longer extant.

Disposition

[25] For these reasons, we dismiss the appeal.

[26] Feltz is entitled to costs, which are set at $12,500 all inclusive.

"G.R. Strathy C.J.O."

"L.B. Roberts J.A."

"L. Sossin J.A."