AACR Inc. v. Lixo Investments Limited, 2018 ONSC 2774

CITATION: AACR Inc. v. Lixo Investments Limited, 2018 ONSC 2774

DIVISIONAL COURT FILE NO.: DC-17-261-0000 DATE: 20180507

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Swinton, Sachs, and Corthorn JJ.

B E T W E E N:

AACR INC. o/a WINMAR TORONTO/BRAMPTON

Plaintiff (Appellant)

– and –

LIXO INVESTMENTS LIMITED and BOLLIGER HOLDINGS CORPORATION and INTACT INSURANCE COMPANY INTACT COMPAGNIE D’ASSURANCE and GRANITE CLAIMS SOLUTIONS LP

Defendants (Respondents)

Mark Abradjian , for the Appellant

Charles Wagman, for the Respondent, Lixo Investments Limited

Paul Omeziri, for the Respondent, Intact Insurance Company Intact Compagnie d’assurance

R. Lee Akazaki, for the Respondent, Granite Claims Solutions LP

HEARD at Toronto: March 21, 2018

THE COURT

Nature of Proceeding

1This appeal is from the May 2017 order of Pollak J. in which she:

a) Dismissed the appellant’s motion for summary judgment against all of the respondents,

b) Granted the motions by the respondents, Intact Insurance Company Intact Compagnie d’assurance (“Intact”) and Granite Claims Solutions LP (“Granite”), and dismissed the action against Intact and Granite.

2As a result, the only remaining defendant in the action is the respondent, Lixo Investments Limited (“Lixo”). The action against Bolliger Holdings Corporation has been discontinued.

3On July 27, 2017, the motion judge ordered that costs on a substantial indemnity basis be paid by the appellant to the respondents Lixo and Granite (Intact having settled costs with the appellant). The appellant seeks leave to appeal the order as to costs. We note that Lixo would not be a party to the proceeding before this Court, but for the motion for leave to appeal the award of costs.

Background

4Lixo owns 86, 88 and 90 Yorkville Avenue (“the Property”). The Property was destroyed as a result of a fire that occurred in January 2014 at an adjacent property. Lixo notified its insurer, Intact, of the damage. Intact retained an independent adjusting firm, Granite, to assist in adjusting Lixo’s claims with respect to losses arising from the fire. A representative of Lixo signed Winmar’s Owner Authorization and Work Order on January 23, 2014 for “temporary repairs or emergency service.” The form states that “[i]t is your responsibility to ensure payment to WINMAR for the Work and any subsequent or other services.”

5The appellant commenced work at the Property in January 2014 and continued its work for a number of months thereafter. Subsequent to and independent of the fire, one of Lixo’s tenants (“Club V”) suffered flood damage as a result of a leak from a municipal water supply. Club V is insured by Intact. The appellant also did work at Club V’s premises.

6Invoices delivered by the appellant to one or both of Lixo and Granite (a) totaled in excess of $200,000, and (b) remained unpaid. Winmar registered a lien against the Property and commenced an action pursuant to the Construction Lien Act, R.S.O. 1990, c. C.30 (the “Act”) against Lixo, Granite, and Intact for payment for work performed.

7Three motions for summary judgment were brought before the motion judge. The respondents, Granite and Intact, moved for summary judgment seeking dismissal of the action against them. The appellant brought a motion for summary judgment against all of the respondents (Lixo, Granite and Intact). Lixo did not oppose Intact’s and Granite’s motions.

Decision of the Motion Judge

8The motion judge dismissed the appellant’s motion for summary judgment and granted Intact’s and Granite’s motions for summary dismissal of the action as against them. In doing so the motion judge made the following findings:

• The only contract for the work done by the appellant was in writing and between the appellant and Lixo (paras. 64-67);

• There are genuine issues for trial as between the appellant and Lixo, including with respect to the work performed by the appellant, the scope of the contract between the appellant and Lixo, and the quantum of the work for which the appellant is entitled to payment from Lixo (paras. 58-59);

• Neither of Intact and Granite is an “owner” of the Property within the meaning of the Act. As a result, the appellant is not entitled to pursue a claim against either of Intact or Granite based on the Act (paras. 69-70); and

• In the context of its claim against Lixo based on the Act, the appellant is not entitled to pursue claims against either of Intact and Granite based in unjust enrichment such as quantum meruit because (a) neither of them obtained any benefit from the appellant’s work, and (b) such claims are outside the jurisdiction conferred by the Act (paras. 68 and 71).

Issues Raised on the Appeal

9The appellant is appealing the motion judge’s decision to grant Intact’s and Granite’s respective motions for summary dismissal of the action as against them. The appellant has not appealed the motion judge’s decision to dismiss its motion for summary judgment.

10The appellant submits that the decisions of the motion judge on the motions for summary dismissal are in error for the following reasons:

a) The motion judge erred in finding that there was no contract between the appellant and both Intact and Granite;

b) The motion judge erred in refusing to allow the appellant to sustain its actions against Intact and Granite, until Lixo’s liability at trial was determined;

c) The motion judge erred in finding that the appellant could not recover against Granite and Intact in an action based on unjust enrichment, such as quantum meruit;

d) The motion judge erred in holding that the appellant ought to have issued separate actions against Intact and Granite for pure contractual and tort damages where such relief was sought against Intact and Granite in this claim under the Act. In particular, the motion judge erred in failing to apply or consider that the Act, as amended, is remedial legislation and ought to be interpreted broadly; and

e) The motion judge erred with respect to her costs order.

Disposition

11We find no merit in any of the grounds of appeal. The appeal is dismissed.

Standard of Review

12The appellant essentially questions the motion judge’s interpretation of the contract and her determination of facts. It also questions her findings regarding the claims founded in unjust enrichment, such as quantum meruit. It does not allege that the motion judge erred in her application of the principles with respect to motions for summary judgment.

13The standard of review is as set out in Housen v. Nikolaisen, 2002 SCC 33, [2002], 2 S.C.R. 235 at paras. 34-36. On questions of law, the standard of review is correctness. On questions of fact it is palpable and overriding error. For issues involving questions of mixed fact and law, where there is an extricable legal principle, the standard is correctness and, where there is not, the standard is one of palpable and overriding error.

Discussion

14With respect to the first ground of appeal, we see no error on the part of the motion judge in finding that there was no contract between the appellant and one or both of Intact and Granite. The appellant argues that the motion judge erred in focusing only on the written document signed by the appellant. We disagree.

15The appellant pleaded in the Statement of Claim that “[o]n or about January 23, 2014, Winmar and Lixo and/or Intact and/or Granite Claims entered into a contract”. In other words, the contract pleaded is the contract made January 23, 2014. Clearly, the agreement signed was between Lixo and the appellant, and not with Intact or Granite. Indeed, in accordance with the law respecting a disclosed principal, the agent (here, Granite) cannot be held liable in contract to the appellant (Lang Transport Ltd. v. Plus Factor (1997), 32 O.R. (3d) 1 (C.A.)).

16Moreover, in cross-examination, the appellant’s representative acknowledged that he knew Granite was acting solely for Intact and that Granite was not an owner of the property.

17Finally, the appellant looks to subsequent conduct to imply terms in the contract. That is contrary to the parol evidence rule, which prevents a party from adding terms to a written contract, at least where it would contradict those written terms−in particular, the term that Lixo is responsible for paying Winmar (Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633 at para. 59).

18Accordingly, there was no error in the finding by the motion judge respecting a lack of contract with Intact and Granite.

19With respect to the second ground of appeal, the appellant is, understandingly, unhappy that its action, commenced against multiple defendants, will proceed to trial against only Lixo.

20At paragraph 30 of her decision, the motion judge considered that by granting Intact’s and Granite’s motions, and dismissing the appellant’s claims against Intact and Granite, the end result would be a partial or staged summary judgment process. The motion judge was aware of the risks associated with such a process. We see no error on the part of the motion judge in dismissing the appellant’s claims against Intact and Granite.

21The evidence of a representative of one or both of Intact and Granite may be required at a trial determining the issues between the appellant and Lixo. Absent a cause of action against either of Intact and Granite, it is not necessary that they remain parties to the action solely for the purpose of producing witnesses at trial. Either of the remaining parties to the action may secure the attendance at trial of representatives of Intact and Granite through the service of a summons to witness.

22The third and fourth grounds require consideration of the nature of the claims advanced against Intact and Granite.

23As discussed above, we conclude that the motion judge did not err in finding that the appellant may advance its breach of contract claim only against Lixo. As a result, the only claims remaining against Intact and Granite are those based in unjust enrichment, such as quantum meruit.

24We find no error on the part of the motion judge in concluding that the claims based in unjust enrichment, such as quantum meruit, cannot succeed. In order to succeed on such claims, the appellant must first prove a real benefit was conferred by it on the respondents (Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629 at para. 30). There is no evidence to support a finding that either Granite or Intact received a real benefit from the work done by the appellant. As a result, the appellant is not in a position to prove the first of the elements required to succeed on claims grounded in unjust enrichment such as quantum meruit.

25Given our findings with respect to the third ground of appeal there is no need to deal with the fourth ground of appeal—namely whether it is, pursuant to the provisions of the Act, open to the appellant to pursue claims founded in unjust enrichment against Intact and Granite.

Leave to Appeal Costs of Granite and Lixo

26The appellant seeks to appeal the costs order of the motion judge dated July 27, 2017, awarding costs on a substantial indemnity basis to Granite and Lixo. Leave to appeal the costs order is required (see s. 133(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43).

27Leave to appeal a costs order is granted sparingly, and only where there is good reason to believe that there has been an error in principle or the costs order is clearly wrong (McNaughton Automotive Ltd. v. Co-operators General Insurance Co., 2008 ONCA 597).

28Where a party seeks to join a costs appeal with an appeal as of right, leave to appeal shall be sought from the panel hearing the appeal as of right (Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 61.03(7)). Therefore, leave is properly sought from the present panel on the appellant’s motion respecting the costs order to Granite.

29With respect to the proposed appeal concerning the costs order in favour of Lixo, we note that s. 71(3)(b) of the Act says, “No appeal lies from … an interlocutory order made by the court”. The Lixo costs order is an interlocutory order of the court. Even if an appeal did lie, the appellant was required to seek leave, from a single judge of the Divisional Court, to appeal the Lixo costs order (s. 19(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43). The appellant is out of time to seek that leave now.

30In any event, there are no strong grounds that suggest the motion judge erred in principle or made an award that was clearly wrong. She concluded that the appellant’s motion for summary judgment was unreasonable, and she ordered substantial indemnity costs of $46,432.47 in favour of Lixo. The motion judge did so in accordance with rule 20.06 of the Rules of Civil Procedure. The motion for leave to appeal the costs awarded to Lixo is denied.

31With respect to Granite, we conclude that there is no good reason to believe that the motion judge erred. She gave a number of reasons for awarding costs of $85,000 in favour of Granite:

• The motion for summary judgment was unreasonable and warranted substantial indemnity costs;

• Granite took the primary role in contesting the appellant’s motion and pursuing the cross-motion for summary judgment, with the result that counsel for Granite incurred significantly more hours than did counsel for Intact;

• The legal argument was unusually complex; and

• The appellant did not take issue with any particular elements of the costs submissions from Granite.

32Leave to appeal the costs order in favour of Granite is denied.

Summary

33The appeal is dismissed and the request for leave to appeal the costs order is denied.

34The appellant shall pay to the respondents their respective costs of the appeal and leave to appeal proceedings before us on a partial indemnity basis, as follows: to Lixo, the sum of $5,000; to Intact, the sum of $8,000 (an amount agreed upon by the parties); and to Granite, the sum of $15,000 to reflect the larger role it took in responding to the appeal.

_______________________________ Swinton J.

Sachs J.

Corthorn J.