Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20210531 DOCKET: C68319

Lauwers, Miller and Nordheimer JJ.A.

BETWEEN

Bedros (Peter) Avedian, Claudio Petti and Mario D’Orazio Plaintiffs (Appellants)

and

Enbridge Gas Distribution Inc. operating as Enbridge Gas Distribution, Enbridge Solutions Inc. operating as Enbridge Energy Solutions, Enbridge Inc., Lakeside Performance Gas Services Ltd. operating as Lakeside Gas Services Defendants (Respondent)

and

Alpha Delta Heating Contractor Inc. and Aubrey Leonard Dey Third Parties

and

TQB Heating and Air Conditioning, Brentol Bishop a.k.a. Brent Bishop, Enbridge Solutions Inc. operating as Enbridge Energy Solutions, and Enbridge Inc. Fourth Parties (Respondent)

Counsel: Christine G. Carter, for the appellants Cynthia R. C. Sefton, for the respondent, Enbridge Inc.

Heard: December 2, 2020 by video conference

On appeal from the judgment of Justice Jane Ferguson of the Superior Court of Justice, dated April 13, 2020, and from the costs endorsement dated June 4, 2020.

B.W. Miller J.A.:

Overview

[1] The respondent Enbridge Inc. brought a motion for partial summary judgment less than six months before a ten-week trial was scheduled to begin, and roughly 18 months after the trial had been scheduled. Predictably, the trial date was lost.

[2] As I explain below, in the circumstances of this action, the motion ought not to have been allowed to proceed after the trial had been scheduled. Although that reason would, by itself, be a sufficient basis to allow the appeal, I also agree with the appellants that the motion judge erred in law in concluding there was no issue requiring a trial. The appeal is allowed and the action is restored.

Background

[3] The appellants owned a 251-unit apartment building at 399 Markham Road in Toronto. On September 14, 2010, a fire and explosion caused extensive damage to the building. Earlier that day, three men – including two of the parties to the action below, Aubrey Leonard Dey and Brentol Bishop – arrived at the building without notice and advised the building’s superintendent they would be changing the S203P gas regulators outside the building. The superintendent told the three men that the gas could not be turned off without giving the tenants 24 hours’ notice. Regardless, the men changed the regulators. The meters outside the building were the property of Enbridge Gas Inc., a subsidiary of Enbridge Inc. An investigation later determined that the explosion and fire were caused by improper installation of the S203P gas regulators.

[4] Enbridge Gas Inc. had contracted with Lakeside Gas Services to service the regulators. Lakeside had subcontracted to Alpha Delta Heating Contractor Inc. and Dey. Dey and Alpha Delta had, in turn, retained Bishop and TQB Heating and Air Conditioning.

[5] In 2012, the appellants commenced an action against four defendants, including the respondent. Among other claims, the appellants pleaded that Enbridge Inc. owed the appellants a duty of care and was negligent for failing to provide proper supervision and training to its subsidiary, contractors, and subcontractors, causing the fire and explosion.

[6] In March 2018, the action was set down for a ten-week trial to commence in February 2020. In August 2019 – roughly seven years after the action was commenced and less than six months before the trial was to begin – the respondent, Enbridge Inc., as well as Enbridge Solutions Inc. brought a motion for partial summary judgment seeking the dismissal of the action against them. Enbridge Inc. argued that it exercised no control over its subsidiary Enbridge Gas Inc. and owed no duty of care to the plaintiffs.

Decision Below

[7] In September 2019, the motion judge vacated the February 2020 trial date. In April 2020, after hearing the summary judgment motion in writing, the motion judge dismissed the action as against Enbridge Inc. and Enbridge Solutions Inc.

[8] The motion judge’s reasons were sparse. The motion judge noted that Enbridge Solutions Inc. was dissolved two weeks after the explosion, and she stayed the action against it on that basis. The appellants do not appeal this aspect of the judgment.

[9] The motion judge also dismissed the action against Enbridge Inc. She did so on the basis that Enbridge Inc. had no control over the operations of Enbridge Gas Inc., including “control over supervision, training, quality control, field work, hiring of contractors, installation of meters, repair of meters, meter work and other issues in the lawsuit”. She noted that Enbridge Inc. “is a separate corporate entity” and that “the information provided as part of the examinations for discovery and undertakings should have satisfied … the plaintiffs that [Enbridge Inc.] was not a proper party.” The motion judge held there was no basis to lift the corporate veil between Enbridge Inc. and the other corporate entities. She granted summary judgment, dismissing the action against Enbridge Inc. and Enbridge Solutions Inc. In a separate endorsement, the motion judge ordered $175,000 in costs against the appellants.

Issues on Appeal

[10] The appellants appeal the judgment and costs order, except for the dismissal of the action against Enbridge Solutions Inc., on the basis that the motion judged erred in the following ways:

1. by hearing the motion for summary judgment “on the eve of trial”;
2. in not finding a genuine issue requiring trial with respect to the duty of care that Enbridge Inc. allegedly owed the appellants; and
3. in awarding costs on a substantial indemnity basis.

Analysis

(1) The Late Application for Partial Summary Judgment

[11] In March 2018, at a pre-trial conference, Firestone J. set February 20, 2020 as the commencement date for the ten-week trial and established a timetable for the exchange of expert reports.

[12] At that conference, Enbridge Inc. did not advise the court or the appellants that it intended to seek partial summary judgment. It did not do so until August 2019, nearly a year and a half later, and six months before the scheduled start of trial. The appellants objected to the motion being brought so close to the trial date.

[13] Nevertheless, the trial dates were vacated over the appellants’ objections, and the motion for partial summary judgment was scheduled for January 10, 2020. When the motion judge sitting on January 10 was unable to hear the matter, the summary judgment motion was adjourned to March 13, 2020, almost a month after the trial had been scheduled to begin. The summary judgment motion was ultimately heard in writing.

[14] The motion should not have been permitted to proceed. I draw attention to the “Consolidated Practice Direction for Civil Actions, Applications, Motions and Procedural Matters in the Toronto Region”, (July 1, 2015), s. 69, in force at the time, which provided that “[o]nce trial dates are set, there will be no adjournments of the trial except in extenuating and exceptional circumstances.” There were no extenuating or exceptional circumstances present here. When the motion was brought, Enbridge Inc. was in the same circumstance and possessed the same knowledge as at the time of the March 2018 pre-trial conference before Firestone J. The purpose of the Practice Direction, in this respect, is precisely to avoid this sort of last-minute manoeuvring to the prejudice of other parties. In the result, the motion for partial summary judgment added unnecessary delay, expense, and the squandering of available court time: Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at paras. 30-31, 34; Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369, 146 O.R. (3d) 135, at paras. 14, 23.

[15] Although this would be a sufficient basis to allow the appeal, restore the action, and list it for trial, I also agree that the motion judge erred in finding there was no genuine issue requiring a trial.

(2) Genuine Issue for Trial

[16] The motion judge’s decision to grant summary judgment in favour of Enbridge Inc. was based on four findings: (1) Enbridge Gas Inc. was the entity that owned, operated, and maintained the natural gas services to the appellants’ building; (2) Enbridge Inc. played no operational role in either the provision of natural gas to the appellants or the maintenance of the equipment serving the appellants; (3) Enbridge Inc. had no supervisory role over the operations of Enbridge Gas Inc.; and (4) there were no facts providing a basis to lift the corporate veil to impose liability on Enbridge Inc. for the obligations of its subsidiary, Enbridge Gas Inc.

[17] The appellants argue that the motion judge misapprehended the basis on which they alleged Enbridge Inc. was liable for the damage caused by the individual technicians. They did not argue that the corporate veil should be lifted, so as to make Enbridge Inc. liable for the negligence of its subsidiary, Enbridge Gas Inc., and its subsidiary’s contractors. Their argument, instead, was that Enbridge Inc. breached a direct duty it owed to the appellants, by, inter alia, failing “to ensure that all staff and contractors complied with all applicable gas fitting legislation, statutes, regulations, by-laws and other applicable industry accepted standards”.

[18] The appellants’ theory of liability, which it advanced on the motion, was that Enbridge Inc. had publicly stated, through policies of corporate social responsibility and other statements, that it would supervise the operations of the companies within its corporate empire – and their contractors – for compliance with the policies that Enbridge Inc. adopted. The appellants argue that these public statements established a duty of care to the appellants. The motion judge did not address the allegation that Enbridge Inc. had an obligation to ensure that its contractors complied with applicable law.

[19] The appellants rely on recent case law from the U.K. Supreme Court and the Court of Appeal of England and Wales. Both courts have held that a parent corporation can be liable to third parties for its actions or omissions in controlling or otherwise influencing the actions of a subsidiary, based on ordinary principles of tort law: Vedanta Resources PLC v. Lungowe, [2019] UKSC 20, [2019] 2 W.L.R. 1051; AAA v. Unilever PLC, [2018] EWCA Civ. 1532.

[20] The motion judge briefly analyzed whether there was sufficient evidence to raise a triable issue as to whether Enbridge Inc.’s degree of control over Enbridge Gas Inc. could create a duty of care. It consists largely of three statements: (1) that Enbridge Inc. is a separate corporate entity; (2) that Enbridge Inc. “did not have any day to day operational control of either the engineering or operations of [Enbridge Gas Inc.]”; and (3) that Enbridge Inc. “had no control over the operation of [Enbridge Gas Inc.] including control over supervision, training, quality control, field work, hiring of contractors, installation of meters, repair of meters, meter work and other issues in the lawsuit.”

[21] The conclusory nature of the analysis makes it difficult to accept that the motion judge directed her mind to the issue raised: whether there was sufficient evidence to raise a triable issue that Enbridge Inc. sufficiently intervened in the management of Enbridge Gas to have incurred a common law duty of care to the appellants. The evidence adduced by the appellants on the motion included Enbridge Inc.’s following public statements and policies:

1. Enbridge Inc. “owns and operates Canada’s largest natural gas distribution company and provides distribution services in Ontario…”;
2. Gas distribution is one of Enbridge Inc.’s five business segments, and that the core of Enbridge Inc.’s natural gas distribution business is Enbridge Gas Inc.;
3. Enbridge Inc. “proactively addresses safety and environmental issues by ensuring appropriate mechanisms are in place to monitor the safety and environmental aspects of its operations”;
4. Enbridge Inc. “provides treasury and other management services” to Enbridge Gas Distribution Inc. (as Enbridge Gas Inc. then was);
5. Enbridge Inc. adopted a Revised Statement of Business Conduct “applicable to the Enbridge Group of Companies, their Directors, Officers, Employees, Consultants and Contractors”;
6. Enbridge Inc. pledged in its Revised Statement on Business Conduct to conduct “its business in accordance with the letter and spirt of all applicable laws of the countries in which it operates”; “establish and maintain safe working conditions”; and require all employees and contractors “to be aware of and comply with Enbridge’s applicable health, safety and environmental policies.”
7. In its 2015 Annual Information Form, Enbridge Inc. made commitments to Corporate Social Responsibility, which it defined as “conducting business in an ethical and responsible manner, protecting the environment and the safety of people”.

[22] Enbridge Inc. argues that, unlike in Vedanta, there is no evidence that it exercised any control or assumed any duty with respect to supervising its subsidiaries. Enbridge Inc. explains that these policies, which the appellants argue are evidence of it having assumed a duty of care, are merely general, aspirational policies that each subsidiary was required to draw on in enacting its own, more detailed policies.

[23] In my view, whether the policies are evidence of Enbridge Inc.’s control over Enbridge Gas Inc., and whether the policies can generate legal obligations to the appellants, is a novel question of proximity. The motion judge did not engage with it. The appellants adduced sufficient evidence on the motion to raise a triable issue as to whether Enbridge Inc. had undertaken an obligation to the customers of its subsidiaries to set standards for its subsidiaries and enforce them. The action against Enbridge Inc. should proceed to trial.

Disposition

[24] The appeal is allowed, the order of partial summary judgment and the award of costs are set aside, and the matter is to be set down for trial on an expedited basis. The appellants are awarded costs of the appeal in the agreed sum of $25,000, inclusive of HST and disbursements.

Released: May 31, 2021 “P. L.” “B.W. Miller J.A.” “I agree. P. Lauwers J.A.” “I agree. I.V.B. Nordheimer J.A.”