Pearce v. UPI Inc., 2006 CanLII 15143 (ON SCDC)

COURT FILE NO.: 05-DV-1082

DATE: 2006/05/08

SUPERIOR COURT OF JUSTICE – ONTARIO

(DIVISIONAL COURT)

RE: LINCOLN PEARCE and SHERRI PEARCE and UPI INC

KEMAR MECHANICAL LIMITED and WATER AND EARTH SCIENCE ASSOCIATES LTD. and KEMAR MECHANICAL LIMITED, MARSH CANADA LIMITED and AMERICAN HOME ASSURANCE COMPANY and LUMBERMEN’S MUTUAL CASUALTY COMPANY

BEFORE: The Hon. Mr. Justice C. T. Hackland

COUNSEL: James Thomson, for the Appellant, UPI Inc.

James D. Wilson, for the Plaintiffs/Respondents, Lincoln Pearce and Sherri Pearce

J. Stephen Cavanagh, for the Respondent/Third Party, Kemar Mechanical Limited

HEARD: May 2, 2006

ENDORSEMENT

1The Appellant UPI Inc. (“UPI”) appeals Master Beaudoin’s order dated January 12, 2005, in which he dismissed UPI’s motion for summary judgment seeking dismissal of the Plaintiffs’ claim. By the same order, the learned Master allowed the summary judgment motion of Kemar Mechanical Limited (“Kemar”) seeking to dismiss the Plaintiffs’ claim against Kemar as well as the third party claim of UPI Inc. against Kemar. The Plaintiffs do not appeal the Master’s order striking their action against Kemar.

2UPI’s appeal of the Master’s order refusing to dismiss the Plaintiffs’ claim is not properly before me, sitting as a single judge of the Divisional Court under s. 19(1)(c) of the Courts of Justice Act, because the order is interlocutory, see V.K. Mason Construction Ltd. v. Canadian General Insurance Group Ltd. (1998), 42 O.R. (3d) 618 (C.A.). As such, the appeal should have been brought under s. 17(a) of the Courts of Justice Act before a Superior Court judge within seven days of the order being granted, as required by Rule 62.01. The Master’s order also dismissed UPI’s third party claim against Kemar and that is a final order which is properly before me. Because a third party claim is not technically part of the same “proceeding” as the main action, s. 19(2) of the Courts of Justice Act does not confer jurisdiction to transfer the interlocutory appeal to the Divisional Court to be heard together with the appeal from the Master’s final order. The relevant provisions are as follows:

Divisional Court jurisdiction

19.(1) An appeal lies to the Divisional Court from,

(c) a final order of a master or case management master. R.S.O. 1990, c. C.43, s. 19 (1); 1994, c. 12, s. 6; 1996, c. 25, ss. 1 (2), 9 (17).

Combining of appeals from Superior Court of Justice

(2) The Divisional Court has jurisdiction to hear and determine an appeal that lies to the Superior Court of Justice if an appeal in the same proceeding lies to and is taken to the Divisional Court. R.S.O. 1990, c. C.43, s. 19 (2); 1996, c. 25, s. 9 (17).

3It is obviously in the interests of justice that the Master’s order be reviewed in its entirety by the same court and, in my opinion, I have the power to so order under the court’s inherent jurisdiction. An analogous case is Piscione v. Poston et al. (1986), 12 C.P.C. (2d) 154 (H.C.J.). Accordingly, I order that both the interlocutory and the final components of Master Beaudoin’s order will be heard by me as a single judge of the Divisional Court.

The Plaintiffs’ Claim

4The Master concluded that there is a triable issue as to whether or not UPI had effectively communicated to the Plaintiffs the fact of their enrolment in the SuperHeat Program (which provided for an annual cleaning and conditioning of their furnace). This gave rise to the further triable issue as to whether better communications would have, as the Plaintiffs allege, led them to co-operate in scheduling a maintenance visit with the possible discovery of the problem with the oil tank, thereby avoiding the oil spill and resultant damages.

5I am of the opinion that the Master was correct in this ruling. The existence and scope of UPI’s duty to communicate information about their furnace maintenance program to their customers can only be properly adjudicated when a trial judge has weighed all of the relevant evidence in light of the case law which establishes the principles for the recognition of a duty of care in tort law. Foreseeability and proximity are the key concepts on which the existence of a duty of care is dependent and normally should be characterized as triable issues, see Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263. I do not accept the Appellant’s argument that no such legal duty could exist in the circumstances. UPI’s appeal against the Master’s order refusing summary judgment to dismiss the Plaintiffs’ claim, is dismissed

The Third Party Claim

6The Appellant UPI argues that if it can be found liable for deficiencies in its communications about the SuperHeat furnace maintenance program to its customers, there is a triable issue as to whether it is entitled to contribution or indemnity from its sub-contractor, Kemar, to whom UPI had contracted, for portions of the period leading to the oil spill, the function of communicating with UPI’s customers, such as the Plaintiffs. The Master, in very careful reasons, concluded that there was no genuine issue for trial as between UPI and Kemar and therefore dismissed UPI’s third party claim against Kemar.

7The Master was of the view that the evidence did not establish or indeed suggest any breach on Kemar’s part of its contractual obligations to UPI. UPI’s representative, Ms. Deines, in her affidavit filed on UPI’s behalf, specifically deposed that UPI’s position was that both UPI and Kemar had fully performed their duties to the Plaintiffs. The Master noted that the contract between UPI and Kemar imposed obligations different from and more restrictive than the obligations which may exist as between the Plaintiffs and UPI. Moreover, well before the oil spill, Kemar terminated its efforts to contact the Plaintiffs (after repeated unsuccessful attempts) and handed the matter back to UPI, who then pursued its own efforts to contact the Plaintiffs. It is argued that Kemar was not dealing with the Plaintiffs at the time of the oil spill and therefore any duty of care had terminated.

8One must be cautious in summary judgment motions to avoid weighing the evidence and making findings of fact, including in the context of interpreting a contract. Given the Plaintiffs’ theory and the Master’s correct view that its application to the facts involves triable issues, a trial judge could conclude that a more effective approach to communicating with the Plaintiffs should have been attempted, thereby avoiding this loss. Part of Kemar’s functions as UPI’s service provider was to communicate with customers in order to arrange service visits. If a court concluded that there were deficiencies amounting to negligence, in the way this function was carried out by Kemar, then UPI could be held responsible. In that event UPI’s right of indemnification against Kemar under the indemnification provision of the UPI/Kemar contract, or at common law, would be in issue. It would involve an interpretation of that contract in light of the trial judge’s findings, including a consideration of the parties’ intentions and findings as to whether there existed any implied obligations concerning customer notification. These are triable issues.

9Ms. Deines’ affidavit says nothing more than what one sees in many third party claims i.e., the assertion that the Plaintiffs’ allegations are unfounded. There is no suggestion that if UPI was found liable for acts Kemar carried out, or omitted to carry out, that indemnification would not be sought. Indeed the existence of the third party claim is by its inherent nature, a claim for contribution and indemnity which can be maintained even in the absence of allegations of negligence in the third party claim.

10In the circumstances of the Plaintiffs’ claim, and considering the rather novel theory being advanced, one cannot be definitive at this stage of the action as to the existence and scope of UPI’s duty of care and of Kemar’s indemnity obligation, if any, and as to what findings of fact and conclusions of law may trigger this obligation. On that basis, I am of the opinion that the Master was in error in allowing Kemar’s summary judgment motion dismissing UPI’s third party claim. The standard of review is that set out by the Divisional Court in Hudon v. Colliers Macaulay Nicolls Inc., [2001] O.J. No. 1588, 147 O.A.C. 163: where a Master’s order is a final order, the judge hearing the appeal is entitled to conduct a rehearing and, after according some deference to the Master’s expertise in the field, to substitute his or her discretion for that of the Master, see also 1286110 Ont. Ltd. v. College Manning Professional Centre Inc. (2005), 78 O.R. (3d) 463 (Div. Ct.).

11In the result, the appeal is dismissed against the Master’s order whereby he refused the Appellant UPI’s motion for summary judgment dismissing the Plaintiffs’ claim. The appeal is allowed and the Master’s order is set aside to the extent that he granted summary judgment to the Respondent Kemar, dismissing UPI’s third party claim against Kemar.

12Any party seeking costs of this appeal will forward a brief written submission within 10 days of the release of this endorsement and any party may respond within 10 days thereafter.

The Hon. Mr. Justice C. T. Hackland

Released: May 8, 2006

COURT FILE NO.: 05-DV-1082

DATE: 2006/05/08

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: LINCOLN PEARCE and SHERRI PEARCE and UPI INC

KEMAR MECHANICAL LIMITED and WATER AND EARTH SCIENCE ASSOCIATES LTD. and KEMAR MECHANICAL LIMITED, MARSH CANADA LIMITED and AMERICAN HOME ASSURANCE COMPANY and LUMBERMEN’S MUTUAL CASUALTY COMPANY