Correct Building Corp. v. Lehman, 2017 ONSC 150

Court File and Parties

COURT FILE NO.: CV-13-5678-00 DATE: 20170623 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CORRECT BUILDING CORPORATION AND CORRECT GROUP INC., Plaintiff v. JEFFREY LEHMAN, JON BABULIC, RICHARD FORWARD, JANET FOSTER, CHARLES MAGWOOD, EDWARD ARCHER, INGRID PETERS, DEBORAH MCKINNON, JENNIFER ROBINSON, METROLINX, ROBERT STEWART, INDICOM APPRAISAL ASSOCIATES LTD., ALEX NUTTALL, JERRY MOORE, MICHAEL PROWSE, and THE CORPORATION OF THE CITY OF BARRIE, Defendants

BEFORE: EMERY J.

COUNSEL: Craig Bryson and Roman Krupnyk, for the Plaintiffs, Correct Building Corporation and Correct Group Inc. Roger J. Horst, for the Defendants, Robert Stewart and Indicom Appraisal Associates Ltd.

HEARD: November 7, 2016 and January 4, 2017

REASONS FOR DECISION

[1]

Reasons for Decision

The historic Allandale Station lands are located on the shores of Kempenfelt Bay, in the heart of the City of Barrie. This location is strategic for development and transportation purposes.

2In 2008, the City of Barrie (the “City”) issued a Request for Expressions of Interest from experienced developers to purchase the Allandale Station lands. The Request invited submissions from developers willing to work with municipal departments in redeveloping these lands to suit the requirements of private and public partners to that redevelopment. A developer, Correct Group Inc. (“CGI”), expressed an interest to purchase The Allandale Station lands, and to participate with the City and the YMCA of Simcoe/Muskoka to develop the waterfront they cover.

3Litigation followed the collapse of the development proposal with CGI as the developer. In this action, CGI claims damages under various causes of action against Indicom Appraisals Associates Inc. and its principal, Robert Stewart, for preparing an appraisal of the Allandale Station lands for the City.

4The defendants Robert Stewart and Indicom Appraisal Associates Ltd. (collectively, “Indicom”) bring this motion for summary judgement to have the plaintiffs’ action dismissed as against them.

5This action is collateral to another action commenced by CGI in Orangeville against the Corporation of the City of Barrie. That action is referred to in these reasons as the Orangeville action. In the Orangeville action, CGI seeks damages for the failure of the City to negotiate with CGI and then to complete the sale of city property to CGI on which the old Allandale Railway Station sits.

6It was never made clear to me throughout this motion for summary judgment why the first action was commenced in Orangeville, and why this action was commenced in Brampton rather than in Barrie, Ontario when the City of Barrie is a party to each of them. Nor could counsel explain why no party has obtained an order that the two actions be consolidated or tried together.

BACKGROUND

[7]

Background

Correct Building Corporation (“CBC”) holds all shares in CGI. According to paragraph 20 of the amended Statement of Claim, both corporations are part of the Correct Group of Companies controlled by Alan Furbacher.

8On or about May 12, 2009, CGI entered a form of agreement with two other parties, the YMCA and the City. This agreement, known as the Preliminary Agreement, related to the intended refurbishment of the old Allandale Railway Station, the construction of a GO Station, and the development of a 9.1 acre parcel of land at 285 Bradford Street for the construction of a hotel, and for commercial and residential uses. The 9.1 acre parcel of land is referred to in its entirety or in part throughout this litigation as the Allandale Station lands.

9The Preliminary Agreement provided, among other things, that the City would sell the entire property to CGI and the YMCA for two million dollars. In the Preliminary Agreement, the parties agreed to finalize an agreement of purchase and sale on terms to be negotiated.

10CGI seeks damages in this action against all defendants, and in particular against Indicom and Mr. Stewart for preparing an appraisal on 4.67 acres of the Allandale Station lands giving an appraisal value of three million dollars. CGI claims that this appraised value was responsible for the City’s refusal to sell the Allandale Station lands to CGI at the price agreed upon in the Preliminary Agreement. CGI frames its claim as against Indicom and Mr. Stewart in civil conspiracy, negligent or fraudulent misrepresentation, negligence, unlawful or intentional interference with economic relations, and inducing the City to breach the Preliminary Agreement.

Indicom’s Evidence

[11]

Indicom’s Evidence

On September 17, 2009, Indicom received a request for quotation from the City to appraise the Allandale Station lands. The request for quotation references the development scheme proposed by the YMCA and CGC. The request for quotation goes on to describe how the appraisal is required to assist the City in negotiations for its potential sale.

12In October, 2009, the City retained Indicom to appraise the Allandale Station lands for the purpose of selling them to third parties for mixed use development.

13On December 2, 2009, Indicom wrote to inform Kathy Gray, Manager of Real Estate Services that it had completed research that would assist in the ultimate appraisal of the 9.1 acre site. In that letter, Mr. Stewart discussed certain values the City could attribute to each component making up the Allandale Station lands. The letter discussed specific values for the components of those lands being 2.25 acres of Public Lands, the one acre for the GO transit lands, and 5.95 acres for mixed commercial/residential development (the “development property”).

14Ms. Gray and Mr. Stewart subsequently met about Mr. Stewart’s letter dated December 2, 2009. At that meeting, Ms. Gray told Mr. Stewart his property values were “far too high”. Ms. Gray informed Mr. Stewart at that time that the City was looking for a lower value for the Allandale Station lands.

15On January 18, 2010, Ms. Gray sent an email to Mr. Stewart that took issue with Indicom’s previous approach to assessing the value of the Allandale Station lands. The methodology and criteria used by Indicom to appraise the development property at this time translated into an appraised value between $8,918,910 and $11,467,000.

16It was also in January, 2010, that the YMCA withdrew from the development contemplated under the Preliminary Agreement. The City and CGI continued negotiations. In the course of those negotiations, CGI made a proposal to assume the obligations that were initially those of the YMCA.

17The City put Indicom’s assignment to appraise the Allandale Station lands on hold in January 2010. Indicom has never prepared a formal appraisal on the 9.1 acre parcel described in the request for quotation.

18On June 22, 2010, William (“Bill”) Moore made a presentation to City council on behalf of the Correct Group that proposed modifications to the proposal for the development property within the Allandale Station lands. Mr. Moore represented himself to be the agent or representative authorized to speak to the City on behalf of the Correct Group of Companies.

19Mr. Moore proposed at council that the original site area for development be reduced from 9 acres to 4.67 acres, and that the commercial portion of the development property be increased from 200,000 square feet up to 335,000 square feet. Mr. Moore advised council that Correct Group was “committed to the project and has been working with City staff to develop a revised plan consistent with the original concept.”

20On June 25, 2010, Mr. Stewart met with Zarah Walpole, solicitor for the City, and others to discuss how he had previously calculated values for the Allandale Station lands. It is his recollection that it was at this meeting he was asked to prepare an appraisal on that portion of the Allandale Station lands which he believes is consistent with the modified concept for the Allandale Station lands proposed by Mr. Moore a few days before.

21On July 7, 2010, Mr. Stewart prepared and signed a letter of engagement on behalf of Indicom which he sent to the City. The City returned a signed copy of that letter on July 9, 2010. In that engagement letter, the following paragraph appears:

9. We have not commissioned or been provided with a property transfer agreement, an environmental audit or any other type of study or survey pertaining to the possible presence of contaminates and hazardous materials either within the boundaries of the property or in close proximity to the property.”

22Indicom produced a Summary and Valuation Report for the Allandale Station lands on August 20, 2010 (the “Indicom appraisal”). In the Indicom appraisal, the Allandale Station lands, consisting of 4.67 acres that did not include the train station building, were appraised at a value of three million dollars.

23At the time he prepared the appraisal, Mr. Stewart knew it was to be used for sale purposes. However, he states that neither he nor Indicom were aware of the Preliminary Agreement, or any pre-determined price that had been discussed with CGI for the Allandale Station lands. Indicom was not involved in the negotiations between the City and CGI, and had no dealings with CGI prior to the completion of the Indicom appraisal in August 2010.

[24] Mr. Stewart further states in his evidence that: a. he prepared the appraisal for use by the City of Barrie and no one else; b. he prepared the appraisal in accordance with the standards of professional practice and properly stated in the appraisal any qualifications or limitations that would apply; and c. the appraisal was specifically subject to some limiting conditions.

[25] Various limiting conditions stated in the appraisal read as follows: a. On page 9, under “Special Assumptions”:

This report has been prepared with a number of contingent and limiting conditions, which are outlined in the Addenda of this report. No environmental factors affecting the Subject property, including soil and or water contaminants, which may or may not affect the lands, have been considered. b. On page 10, under “Extraordinary Assumption”: The valuation of lands as described has been specifically restricted by the City of Barrie as to the height, size and type of improvements to be permitted. It is with his restrictive scope that the appraisal applies and should development be altered in type or density, the values herein may not apply.

[26] The Indicom appraisal also provided an exception to taking environmental issues into account when giving an opinion of market value on page 6:

We did not complete technical investigations such as:

• Inspections or engineering reviews of the structure, roof or mechanical systems
• Technical review of the utility serving
• Investigations into the bearing percolation or other qualities of the soils
• An environmental review
• An archaeological survey On page 47 under “Environmental”, Indicom made this disclaimer for any liability arising from environmental issues:

The appraiser is not qualified to comment on environmental issues that may affect the market value of the property appraised, including but not limited to pollution or contamination of land, buildings, water, groundwater or air. Unless expressly stated, the property is assumed to be free and clear of pollutants and contaminations, including but not limited to moulds or mildews or the conditions that might give rise to either, and in compliance with all regulatory environmental requirements, government or otherwise, and free of any environmental condition, past, present or future, that might affect the market value of the property appraised. If the party relying on this report requires information about environmental issues then that party is cautioned to retain an expert qualified in such issues. We expressly deny any legal liability relating to the effect of environmental issues on the market value of the property appraised.

[27] The appraisal also contained the following statements at pages 78 and 79 under “Assumptions and Limiting Conditions”:

1. This report has been prepared at the request of the City of Barrie for the purpose of providing an estimate of market value for Sale Purposes of 285 Bradford Street, Barrie, Ontario. It is not reasonable for any other person other than those whom this report is addressed to rely upon this appraisal without first obtaining written authorization from the Client and the author of this report. This report has been prepared on the assumption that no other person will rely on it for any other purpose and all liability to all such persons is denied.
2. The object of this appraisal is for an estimated market value of the real estate for Sale Purposes, and for no other use.

28Mr. Stewart deposes that he has never authorized anyone other than the City of Barrie to rely on the appraisal.

29In the course of the negotiations between January and December 2010, The City provided a copy of the Indicom appraisal to Bill Moore as a representative or agent of CGI. The City required Mr. Moore to execute a non-disclosure agreement before it would provide a copy of the Indicom appraisal to him.

30The City also advised Alan Furbacher, the officer and director who controls CGI, that he would be required to sign a non-disclosure agreement in order to obtain a copy of the Indicom appraisal.

31Mr. Furbacher refused to sign the non-disclosure agreement to obtain direct access to the Indicom appraisal.

32After Mr. Moore received a copy of the Indicom appraisal, Mr. Furbacher wrote to the City on August 26, 2010 to protest the appraisal, and to provide his preliminary comments about it. Mr. Furbacher complained that the appraisal had been conducted without “our input or review”. He challenged the methodologies and assumptions Indicom had used when preparing the appraisal. Mr. Furbacher was very careful to state that he had not yet read the appraisal itself.

33On August 27, 2010, Mr. Moore sent a detailed email to Mr. Forward at the City to express his concerns. Chief among those concerns was his complaint that land value for the hotel portion of the appraisal was “grossly overstated”. He advised Mr. Forward that he had made Mr. Furbacher aware that he believed there was a major flaw in the appraisal. Mr. Moore also advised Mr. Forward that he had not given Mr. Furbacher any details, or shared the Indicom appraisal or its contents with him.

34Mr. Stewart participated in a conference call with Mr. Moore and representatives from the City on or about September 10, 2010. He believes Mr. Furbacher also participated in this call. The purpose of this conference call was to discuss the Indicom appraisal.

35Subsequent to the conference call on September 10, 2010, Mr. Stewart received an email from Mr. Moore asking him for another telephone meeting to discuss further information he had received. Mr. Stewart states that he was very cautious about participating in a further telephone call without knowing what was to be discussed. He therefore asked Mr. Moore to put any pertinent information he wished to discuss in writing.

36Mr. Moore subsequently sent additional information in written form to Mr. Stewart. That information did not change or alter Mr. Stewart’s opinion of value stated in the appraisal. Mr. Stewart also advised Mr. Moore that he would need further instructions from his client to proceed further.

37Mr. Stewart then gives the following evidence in his affidavit:

39. I have a specific recollection that I was told by William Moore during a telephone call in this time period – September 2010 – that if I did not change the Appraisal I would face legal proceedings.

38The City did not instruct Mr. Stewart to prepare a further appraisal.

39The negotiations between CGI and the City ended in December 2010 without those parties reaching an agreement on the sale of the Allandale Station lands in whole or in part to CGI.

CGI’s Evidence

[40]

CGI’s Evidence

CGI filed the affidavits of Alan Furbacher, James Strassman, Roman Krupnyk, two affidavits sworn by David Aspden, and the transcript from Robert Stewart’s cross-examination as evidence. These are the sources of the evidence CGI has filed in response to Indicom’s motion for summary judgment.

41The plaintiff CGI did not file an affidavit from William Moore in response to Indicom’s motion for summary judgment. Furthermore, neither CGI or Indicom as the moving party examined Mr. Moore under Rule 39.03 to make a transcript of his evidence available on the pending motion for summary judgment.

The Furbacher Affidavit

[42]

The Furbacher Affidavit

Mr. Furbacher swore the primary affidavit in response to the motion. Mr. Furbacher described himself in that affidavit as the President of CGI, and a director of CBC.

43CGI claims that Indicom and Stewart have caused damage to CGI by providing the City with an appraised value for the Allandale Station lands that is artificially higher than it ought to be. CGI claims that Indicom or Stewart acting alone, or in conjunction with the City has been instrumental in reducing the size of the development property available for purchase from 9.1 acres to 4.7 acres, not including the old Allandale Railway Station.

44CGI also claims that Indicom and Stewart have intentionally, or through professional negligence appraised those 4.67 acres without taking relevant environmental issues into account, or the archaeological sensitivities associated with the site. Had Indicom and Stewart taken those issues and sensitivities into account, they say that the appraised value would have been lower than the three million dollars given in the appraisal.

45Mr. Furbacher set out the position of CGI in his affidavit that, despite the name of the Preliminary Agreement, CGI had a contract with the City to purchase the 9.1 acre site for two million dollars that was binding in nature. Mr. Furbacher advances the argument that the Indicom appraisal was the reason why the City breached the Preliminary Agreement when it failed to sell the Allandale Station lands to CGI for this price. CGI has pleaded several causes of action to support its claim that Indicom was behind, or complicit in the City’s failure to negotiate and to complete this sale to CGI.

[46] Mr. Furbacher’s affidavit provides a myriad of issues in paragraph 6 that he puts forward as questions of fact that require a trial to answer. Mr. Furbacher states that the factual issues are so complex that they cannot be determined summarily, or without turning the hearing for summary judgment into a full-blown trial. Those factual issues are organized under the following subtitles: I. Duty of Care Arising Out of Special Relationship II. Representation Untrue, Inaccurate and Misleading III. Negligent or Fraudulent Misrepresentation IV. Plaintiffs’ Reasonable Reliance V. Plaintiffs’ Detriment and Damages as a Result of Reliance

47Under “Other Grounds in Stewart’s Motion”, Mr. Furbacher’s affidavit sets out CGI’s position in his affidavit on those grounds given in Indicom’s notice of motion for summary judgment. For instance, paragraph 8 sets out the following basis for CGI’s position that the court should find Indicom and Stewart owed a duty of care to the plaintiffs:

8. In response to paragraphs (b), (c) and (d) of Stewart’s grounds for the motion, I admit that while neither Plaintiff did commission the Appraisal, it was nevertheless prepared for them, they relied upon it, to their detriment and Stewart, as a professional appraiser in business of valuing real estate, absolutely owed a duty of care to the Plaintiffs, with respect to the Appraisal, as illustrated above.

48Further on, Mr. Furbacher deposes at paragraphs 11 and 12 as follows:

11. Contrary to paragraph (g) of Stewart’s grounds for the motion, I submit that the Plaintiffs first learned of the contents of the appraisal and first laid eyes on same, in the course of the related Orangeville Action, and in any event, no earlier than March 27, 2012. Prior to the said review the Plaintiffs merely knew and relied upon the value attributed to the Property in the Appraisal. Independent consultation, retained by the Plaintiff, executed the extremely onerous and restricting non-disclosure agreement demanded by the City and Stewart, relayed to the Plaintiffs the appraised value and reported that Stewart has accepted their development proposal as viable, and has come up with similar development cost and return figures. A true copy of the said non-disclosure agreement is attached as Exhibit “S”, hereto.
12. Contrary to paragraph (i) of the Stewart’s grounds for the motion, I confirm that prior to their review of the Appraisal and the investigations conducted in the course of these and related proceedings, the Plaintiff could not have known of Stewart’s wrongful conduct, with respect to same.

49Mr. Furbacher goes on to provide evidence with respect to Mr. Stewart’s prior involvement with the City, his knowledge of the property, his breach of duty of care owed to the plaintiffs, and issues with the appraisal itself in the affidavit. This is evidence that may be relevant to whether Stewart and Indicom owed CGI a duty of care, and if so, what standard of care Stewart and Indicom were expected to meet.

The Lansink Report

[50]

The Lansink Report

At the outset of the motion for summary judgment, CGI brought a motion to file the affidavit of Roman Krupnyk to which the expert report by Lansink Appraisal and Consulting (the “Lansink Report”) was attached as an exhibit. This affidavit was the means by which CGI intended to have the Lansink Report before the court on the motion for summary judgment. CGI brought its motion for leave to file Mr. Krupnyk’s affidavit under Rule 39.02 because CGI had already cross-examined Mr. Stewart on his affidavit.

51Mr. Horst did not object to the filing of Mr. Krupnyk’s affidavit. However, he opposed CGI’s motion to have the Lansink Report accepted by the court as opinion evidence from an expert on the motion. Mr. Horst argued that the Lansink Report was attached as an exhibit to a lawyer’s affidavit when it should have been attached to an affidavit sworn by Mr. Lansink himself, which would allow Mr. Lansink to be cross-examined.

52In Sanzone v. Schechter, 2016 ONCA 566, the Court of Appeal explained the general rule on how a party is to adduce expert evidence on a motion for summary judgment at para. 16:

16 As a general rule, when a party seeks to adduce expert evidence on a summary judgment motion, the evidence of the expert must comply with rule 53.03, unless the opinion evidence is based on the witness' observation of or participation in the events in issue, as explained in Westerhof v. Gee Estate, 2015 ONCA 206, 310 O.A.C. 335, at paras. 60-62. A party can file either an affidavit from the expert containing his or her opinion or an affidavit from the expert with the report attached: Danos v. BMW Group Financial Services Canada, a division of BMW Canada Inc., 2014 ONSC 2060, [2014] O.J. No. 1802, at para. 29, aff'd 2014 ONCA 887.

53On consent, the affidavit of Roman Krupnyk was filed. The evidence given by Mr. Krupnyk in his affidavit is evidence before the court on the motion. However, the Lansink Report is not before the court as no affidavit from Mr. Lansink was filed attaching his report, or containing the substance of that report.

54Mr. Horst also conceded for the purpose of the motion that the Indicom appraisal was deficient, as it did not take into account any environmental issues or archaeological sensitivities that could impact on the appraised value of the Allandale Station lands. He acknowledged that this deficiency might go to the standard of care provided by Mr. Stewart in preparing the Indicom appraisal. By making this concession, Mr. Horst argues that the Lansink Report is not relevant to the issues for the court to determine, as it concerns only the issue of standard of care, if applicable.

55The Lansink Report does not contain any reference to, or analysis of the duty of care owed by an appraiser to third parties. As the Lansink Report only concerns the standard of care for an appraiser to meet and as that issue is conceded for the purpose of the motion, the Lansink report offers little else of substance on the motion for summary judgment.

56For those reasons, I have not taken the Lansink Report into account as evidence on this motion for summary judgment.

Evidence of Diminished Value

[57]

Evidence of Diminished Value

The presence of environmental issues on the Allandale Station lands, as well as the presence of archeological artifacts mentioned in Mr. Furbacher’s own evidence, suggests that the Allandale Station lands may have had a negative fair market value by December, 2010. This new information gave rise to the prospect that it could have cost CGI many millions of dollars to rehabilitate those lands, making them unsuitable for development. At paragraph 6G of his affidavit, Mr. Furbacher states as follows:

6G. The trial judge will need to consider that Stewart admitted that he knew that the Appraisal was done for sale purposes. In fact, he knew that the Plaintiffs have partnered with the City for the Property development, as it was extensively advertised, via newspapers, billboards and on Rogers television. Nevertheless, he attributed the value of $3m to the Property, which, in fact had a negative value, due to presence of environmental and archaeological factors that would prove a bar to any development and would actually require any developer to invest several millions of dollars more, in order to bring the Property within governmental compliance, for any contemplated development. True copies of transcriptions of sound recordings and videos of conversations with various engineers, archaeologists and technical consultants, which confirm the cost and extent of remediation required for Property development, are attached as Exhibit “F”, hereto.

58CGI filed an affidavit sworn by James Strassman, President of Strassman Architects Inc. in response to the motion. Mr. Strassman had been retained by the City of Barrie in 2006 to assist Michael McKnight to prepare an integrated master plan for the 9 acre parcel of land known as the Allandale Station lands. Mr. Strassman deposes in his affidavit about his knowledge, and he confirms what the presence of any contaminants on those lands would mean at paragraphs 10 and 11 of his affidavit as follows:

10. I confirm that at no point in my involvement with the project, was I ever advised of or provided with any reports suggesting any actual or potential contamination of the Property. As a lead architect responsible for the project, had I known of such an issue, I would have insisted upon proper notices being provided to all individuals involved with the Property, as well as upon complete remediation of any developable areas, prior to construction.
11. Furthermore, I confirm that the presence of any contaminants exceeding Ministry of the Environment guidelines would immediately halt any construction, prevent bank financing required for development and effectively invalidate any schedule in place for the CGC portion of the Property.

59Mr. Strassman also addressed the prospect of archeological issues. In paragraphs 13 and 14, he states that he is convinced that the archeological issues of the property have not been adequately addressed by the City. In paragraphs 14 and 15 of his affidavit, Mr. Strassman describes his knowledge of archeological issues with the Allandale Station lands during his involvement with the project. He confirms that had he known of those issues, he would have insisted upon strict compliance with Ministry directives and recommendations by all participants to the property development. He further explains what it would mean to funding and development of the property as follows:

14. I confirm that at no point in my involvement with the project, was I ever advised of or provided with any reports suggesting any actual or potential archaeological issues with the Property. As a lead architect responsible for the project, had I known of such issues, I would have insisted upon strict compliance with ministry directives and recommendations of the experts, by all participants to the Property development.
15. Furthermore, I confirm that the potential of any archaeological presence on the Property would immediately halt any construction, prevent bank financing required for development and effectively invalidate any schedule in place for the CGC portion of the Property.

60Mr. Aspden, in an affidavit sworn on February 29, 2016 in relation to a motion brought by Metrolinx in this action, addresses the potential effect of archeological issues of the property at the time he was mayor for the City of Barrie in paragraphs 19, 20 and 21:

19. Upon my own recollection of the development and review of the recommendations issued by various archaeologists, the Directives of the Ministry of Tourism Culture and Sport (the “Ministry”), as well as comments made by Mr. Henry in the course of his investigations, I am convinced that the archaeological issues of the Property have not been adequately addressed by the City and GO Transit/Metrolinx.
20. Furthermore, I confirm that the potential of any archaeological presence on the Property would prevent any development.
21. I further confirm that at no point in my involvement with the project, was I ever advised of or provided with any reports suggesting any actual or potential archaeological issues with the Property. As a Mayor of a municipality, had I known of such issues, I would have insisted upon strict compliance with ministry directives and recommendations of the experts, by all participants to the Property development, or alternatively, canceled the Project.

61There was no evidence filed by CGI about what it would cost to address environmental concerns, and how it would pay for remedial work if it purchased the development property. There was little except bold statements made in Mr. Furbacher’s affidavit that CGI would act in strict compliance with Ministry directives and the recommendation of experts to accommodate actual or potential archeological issues with the Allandale Station lands.

LITIGATION HISTORY

[62]

Litigation History

The litigation history after the termination of negotiations between CGI and the City to purchase the Allandale Station lands in 2010 is also relevant to the motion.

63CBC and CGI commenced the Orangeville action against the City of Barrie and others on December 15, 2011. Neither Stewart nor Indicom are named as defendants in the Orangeville action.

64There have been significant steps taken in the Orangeville action and in this action to narrow the issues and reduce the number of defendants before this motion was brought.

65In the Orangeville action, CGI made a claim for specific performance of the Preliminary Agreement against the City. CGI also claimed damages in the Orangeville action alleging, among other things, breach of contract, breach of duty, breach of good faith, negligence and negligent or fraudulent representation against various defendants.

66On February 27, 2012, CGI obtained an order on an ex parte basis in the Orangeville action granting leave to obtain a certificate of pending litigation against title to the Allandale Station lands based on the Preliminary Agreement.

67In the Orangeville action, Justice Healey discharged the certificate of litigation that CGI had obtained against the Allandale Station lands. In her reasons released on June 28, 2013, Justice Healey provides a careful review of the facts as found on the evidence before her. At the end of those reasons, Justice Healey considered the position of the plaintiff CGI and the position of the defendants on whether the Preliminary Agreement between CGI, the City and the YMCA is a proper contract or an enforceable contract. In support of the plaintiff’s position, CGI relied upon the affidavit of David Aspden, who was the Mayor of the City of Barrie at the time the Preliminary Agreement was entered. This is the same affidavit as the first affidavit of David Aspden filed in response to this motion.

68Justice Healey concluded that the withdrawal of the YMCA from the Preliminary Agreement made it necessary for the remaining parties to conduct further negotiations. Many of the essential terms were never agreed upon. Justice Healey wrote as follows:

[57] In addition, the terms of many agreements were required to be reached, which necessitated further negotiation beyond those that were undertaken to attempt to reach an agreement of purchase and sale. Without making a decision as to what may have been all of the essential terms in the minds of these parties, it is easy to conclude that the evidence establishes that CGI and the City were never able to reach an agreement on crucial terms for this development. They were never able to agree upon the price once the available land was reduced. The parties having changed, they were never able to agree upon their respective obligations. Finally, the exact acreage comprising the Disputed Lands that were for sale was never defined in any agreement after the decision was made to have the City retain the train station buildings, a decision to which CGI acquiesced. [58] While both parties continued to attempt to negotiate these terms long after the signing of the Preliminary Agreement, to a reasonable, objective observer it would be obvious that no deal had ever been reached on these essential terms.

69Justice Healey also considered whether the agreement was capable of specific performance after YMCA withdrew from the three party proposal. At paragraph 64 and 65, Justice Healey stated as follows:

[64] The YMCA will not be taking any of the steps required of it under the Preliminary Agreement, and as a result of the expired limitation period, will never be required to do so. To order specific performance of this agreement, a court would have to re-write the Preliminary Agreement by leaving out those terms and conditions related entirely to the YMCA, and then reinterpret those terms that involve both CGI/YMCA to read “CGI” only. CGI has not provided any authority for the proposition that a court will order specific performance where one venturer, even one with separate rights and obligations from a co-venturer, withdraws from that agreement. [65] In the situation where the party responsible for the initial Train Station Restoration Agreement and cultural plan has withdrawn, and where the parties’ respective rights and obligations are based on a tripartite arrangement, I conclude that the Preliminary Agreement has no reasonable likelihood of being enforced as binding on the remaining parties. Accordingly, CGI is not entitled to specific performance of the Preliminary Agreement.

70Based on those reasons, the certificate of pending litigation was discharged. I understand that CGI has continued the Orangeville action for damages only.

71In the course of the disclosure and discovery process within the Orangeville action, CGI obtained a copy of the complete Indicom appraisal. CGI also obtained a copy of an earlier appraisal prepared by Andrew Thompson and Associates Limited on January 6, 2006 for CHUM Limited. CHUM Limited had purchased part of the Allandale Station lands for $1,050,000 without an appraisal in 2000. CHUM Limited had later sold the Allandale Station lands back to the City in 2006 for $3,900,000, by paying $1,050,000 in cash and receiving a charitable certificate for the balance to recoup certain improvement costs. The Thompson appraisal disclosed that “Indian artifacts” had been found on part of the Allandale Station lands, and made known the presence of contaminated soil on the site.

72CGI also obtained other documents during the disclosure and discovery process in the Orangeville action that included copies of environmental site assessment reports dated February 18, April 10 and July 27, 2010. Apparently, these reports show that the Allandale Station lands had environmental issues. Furthermore, copies of a geotechnical investigation report prepared for GO transit dated June 17, 2010 show that the Allandale Station lands contained contaminants.

73A copy of a stage one archeological report prepared in 2009 and delivered on June 15, 2010 indicates that the Allandale Station lands contain archeological artifacts.

74CBC and CGI commenced this action on December 16, 2013 based on the information and documents that came to their attention from the disclosure and discovery process in the Orangeville action. CGI named various employees and elected officials of the City of Barrie, Metrolinx (which owns and operates GO transit), as well as Mr. Stewart and Indicom as defendants.

75Several defendants in this action brought a motion for summary judgment to have the claims of CBC dismissed. That motion was heard by Justice Ricchetti on September 29, 2016. On October 3, 2016, Justice Ricchetti released an Endorsement dismissing the claims of CBC in this action against the defendants Jeffrey Lehman, Jon Babulic, Richard Forward, Janet Foster, Edward Archer, Deborah McKinnon, Jennifer Robinson, Alex Nuttall, Jerry Moore, Michael Prowse and Charles Magwood. Those defendants were either council members, officers or employed with the City of Barrie. None of those moving parties were a party to the Preliminary Agreement between CGI, the City and YMCA.

76Justice Ricchetti concluded that he was not persuaded there is a sufficient proximity between CBC and any of the moving parties for a duty of care to arise. Justice Ricchetti further stated that he was satisfied a fair and just determination could be made on whether any of the moving parties owed a duty of care to CBC that did not require a trial. It was his conclusion that, “No such duty of care existed.”

77At the hearing of Indicom’s motion for summary judgment, I was told that CBC was no longer a plaintiff. Counsel informed me that the parties had agreed that the result of the motion before Justice Ricchetti would apply to all defendants. However, I cannot see where an order has been made to terminate the claims advanced by CBC against Indicom and Stewart. For greater certainty, I therefore dismiss the balance of the action as between Correct Building Corporation and the defendants not specifically covered by Justice Ricchetti’s Endorsement, for the same reasons that order was granted.

78Subsequently, CGI agreed to the dismissal of the action in its entirety as against Metrolinx as a defendant, after Metrolinx brought its own motion for summary judgment.

79The preceding motions therefore left CGI as the plaintiff, and the City of Barrie as well as Indicom and Mr. Stewart as the defendants in the action. The amended statement of claim at the time Indicom’s motion for summary judgment was argued contained claims against Indicom sounding in conspiracy, fraudulent or negligent misrepresentation, negligence, inducing breach of contract and wrongful interference with CGI’s economic relations pertaining to the City. These various claims were based on the central allegation that Mr. Stewart and Indicom colluded with the City to interfere with the implementation of the Preliminary Agreement. CGI alleges that this wrongful conduct has prevented CGI from the acquisition and eventual development of the Allandale Station lands, and that it has suffered damages as a result.

ANALYSIS

Summary Judgment

[80]

Analysis

The Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87 declared that, with the amendments to Rule 20 governing summary judgment in Ontario, came a cultural shift where litigants should accept that seeking relief from the court through a motion for summary judgment is a viable alternative to a conventional trial when it is a fair and just process to determine an action.

81It is also important to keep in mind the mandatory nature of Rule 20.04, as amended. The language of Rule 20.04(2) dictates that the court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

82The court in Hryniak explained that the process to enable the motions judge to reach a fair and just determination of the motion on the merits will depend on whether the evidentiary record allows the judge to make the necessary findings of fact, allows the judge to apply the law to those facts, and is a proportionate, more expeditious and less expensive means to achieve a just result.

Evidentiary Requirements

[83]

Evidentiary Requirements

The more things change, the more things stay the same. Before the amendments to Rule 20 that took effect on January 1, 2010, the Court of Appeal had established that the onus to show there is no triable issue, now a genuine issue requiring a trial, was on the moving party. If the moving party satisfied the court on a balance of probabilities that there is no genuine issue for trial, the respondent had the evidentiary burden to provide evidence that shows that there is. In the words of Justice Osborne in 1061590 Ontario Ltd. v. Ontario Jockey Club, a responding party on a motion for summary judgment must “lead trump or risk losing”. This case is often cited for these fundamental principles, as well as for the colourful description of the evidentiary burden carried by a responding party.

84The purpose behind this evidentiary burden is clear: to ensure that the motions judge has a full record that contains the best evidence available to the responding party. It is this obligation imposed on each party to provide a full record that enables the motions judge to assess from the motion materials whether he or she is confident that the factual record provides the evidence required by the court to take a good hard look at whether the claim or defence can be adjudicated justly without requiring a trial.

85This evidentiary burden could be no more important than it is in this case. Indicom and Stewart has the onus of providing evidence to show that there is no genuine issue of fact requiring a trial, and that the substantive law applicable to the facts justifies the dismissal of the action as against them. If they succeed in meeting that threshold, CGI has the evidentiary burden of filing evidence that establishes a genuine issue requiring a trial to defeat the motion.

86Since the amendments to Rule 20, various judges of this court have examined this evidentiary burden. In examining the burden of proof on the moving party and the evidentiary burden on the party responding to the motion, Justice Karakatsanis, as she then was, described the evidentiary burden of a responding party to “put it’s best foot forward” in Hino Motors v. Kell, 2010 ONSC 1329 in the following way:

[9] The new Rule does not change the burden in a summary judgment motion. The moving party bears the evidentiary burden of showing that there is no genuine issue requiring a trial. The moving party must prove this and cannot rely on mere allegations or the pleadings. Pursuant to Rule 20.02(2), a responding party “may not rest solely on the allegations or denial in the party’s pleadings but must set out in affidavit material or other evidence, specific facts showing there is a genuine issue requiring a trial.” In other words, consistent with existing jurisprudence, each side must “put its best foot forward” with respect to the existence or non-existence of material issues to be tried. The court is entitled to assume that the record contains all the evidence which the parties would present if there were a trial.

87In Sweda Farms Ltd. v. Egg Farmers of Ontario, 2013 ONSC 1200 affirmed at 2014 ONCA 878, Justice Corbett spoke of the assumption the court is entitled to make that the parties have placed before the court, in some form, all of the evidence that will be available for trial. In 2 313103 Ontario Inc. v. JM Food Services Ltd. Justice Dunphy built upon this framework:

[40] Of particular relevance to this case is “best foot forward” assumption. In bringing a motion for summary judgment, the court is entitled to assume that both parties have put before the court all of the evidence they would intend to adduce at trial (even if not in the same form) that relates to the issues for decision on the motion. Ambush and surprise have no legitimate place in modern litigation, but this is particularly so in motions for summary judgment where the entire action or a substantial part of it may be disposed of in favour of one or the other party. Summary judgment is no place for a party to look to keep dry powder for another day and it is rather late in the process to sit down and ensure the issues are thoroughly understood.

88A responding party who is a plaintiff opposing the motion must demonstrate on evidence permissible under Rule 20.02 and 20.04 that there is a genuine issue with respect to its claim, and that the claim has a real chance of success: Northern Industrial Services Group Inc. v. Duguay, 2016 ONCA 539 and Sanzone v. Schechter, 2016 ONCA 566. It is not appropriate for a responding party to make a tactical decision not to use the tools available under the Rules of Civil Procedure to obtain evidence, and then to defend the motion for summary judgment on the basis that more evidence will be available at trial: Paramandham v. Holmes, 2015 ONSC 1903.

89Furthermore, it is not the role of the motions judge to second guess the tactical choices made by counsel: ThyssenKrupp Elevator (Canada) Ltd. v. Amos, 2014 ONSC 3910 at paras. 44 and 45.

Further Powers under the 2010 Amendments

[90]

Further Powers under the 2010 Amendments

The amendments made in 2010 to Rule 20 also provide the motions court judge with further fact finding powers to determine whether there is a genuine issue requiring a trial, unless it is in the interest of justice for such powers to be exercised only at a trial. Those powers included the ability to weigh the evidence, evaluate the credibility of a deponent and to draw any reasonable inference from the evidence. These powers were not previously available on a motion for summary judgment.

91The amendments also provide the motions court judge with the discretion to order that oral evidence be presented by one or more parties with a view to determining whether there is a genuine issue requiring a trial. These amendments introduced the means by which the court could resolve factual issues in order to make findings of fact to which principles of law could then be applied to determine an outcome.

92The motion for summary judgment to dismiss the action as against Indicom and Mr. Stewart requires me to examine the claims made by CGI as against them; to consider the evidence given by the affidavits filed in support of, and in response to the motion to determine if there is a genuine issue requiring a trial. There will be no genuine issue if a claim or defence can be adjudicated on the evidentiary record, or if that claim or defence can be resolved on hearing viva voce evidence.

Indicom’s Issue

Limitation Defence

[93]

Indicom’s Issue

Indicom takes the position that CGI brought its action against them out of time. Indicom argues that CGI knew of material facts by August 26, 2010 to form the basis of bringing an action against them for a remedy. Indicom and Stewart state that CGI is barred from making a claim by the passage of time under section 4 of the Limitations Act, 2002 because it did not commence this action until December 16, 2013.

94CGI takes the position that it did not have sufficient facts to discover it had a possible claim against Indicom and Stewart in order to seek a remedy by commencing a proceeding against them. CGI argues that it did not receive access to the Indicom appraisal until it was disclosed in March 2012 during the discovery process in the Orangeville action.

Due Diligence

[95]

Due Diligence

CGI argues that the analysis of whether an action was commenced within the limitation period described by the Limitations Act, 2002 is fact specific. CGI argues that the limitation period begins when the plaintiff discovers or ought to have discovered through reasonable diligence, the material facts to which the cause of action is based. CGI relies upon CargoJet Airways v. Aveiro et al., 2016 ONSC 2356. In determining when a cause of action arises, CGI argues that the time starts running under section 5(1) of the Limitations Act, 2002 only when material facts on which a cause of action is based has been or ought to have been discovered.

96For the purposes of the analysis, s. 5(1) and (2) of the Limitations Act, 2002 read as follows:

5. (1) A claim is discovered on the earlier of, (a) the day on which the person with the claim first knew, (i) that the injury, loss or damage had occurred, (ii) that the injury, loss or damage was caused by or contributed to by an act or omission, (iii) that the act or omission was that of the person against whom the claim is made, and (iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and (b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a). 2002, c. 24, Sched. B, s. 5 (1).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. 2002, c. 24, Sched. B, s. 5 (2).

97The Court of Appeal in Galota v. Festival Hall Developments Ltd., 2016 ONCA 585 addressed the issue of discoverability in the context of information received in the course of litigation. In Galota, the Court of Appeal considered the findings of a motions judge on a motion for summary judgment in an occupiers liability case. The plaintiff did not learn the identity of the landlord until it was disclosed at the examination for discovery of the tenant’s representative some three and a half years later. The court held that the plaintiff was not required to conduct pre-action discovery under the circumstances to learn the identity of the landlord and possible defendant.

98The court in Galota relied on the decision of Justice Van Rensburg in Fennell v. Deol, 2016 ONCA 249. The court in Fennell recognized that, although due diligence is a factor that the court must consider, lack of due diligence is not in and of itself a reason for dismissing a plaintiff’s claim as statute barred. As Justice Van Rensburg explained in Fennell at paragraph 24:

[24] Due diligence is part of the evaluation of s. 5(1)(b). In deciding when a person in the plaintiff’s circumstances and with his abilities ought reasonably to have discovered the elements of the claim, it is relevant to consider what reasonable steps the plaintiff ought to have taken. Again, whether a party acts with due diligence is a relevant consideration, but it is not a separate basis for determining whether a limitation period has expired.

99Although due diligence on the part of a plaintiff to determine the elements of a claim is but one factor in the evaluation of when a limitation period begins, it is an important factor. Where from outward appearances a limitation period has expired, or where discoverability under s. 5 (1) of the Act is raised, the court is put on inquiry to determine whether a party has acted with reasonable diligence to learn the identity and role of a prospective defendant to extend the start and end date of a limitation period.

100CGI relies upon evidence of Alan Furbacher to show that CGI first reviewed the Indicom appraisal in the course of receiving productions in the Orangeville action. Mr. Furbacher deposes that before March 2012, CGI only knew and relied upon the value given to the Allandale Station lands of three million dollars in the Indicom appraisal.

101Mr. Furbacher states that CGI was not aware of any contamination prior to receiving the affidavit of Richard Forward sworn on March 27, 2012. He further alleges that Mr. Stewart failed to disclose, or that he concealed the true nature and extent of the environmental contamination of the property in his appraisal.

102Mr. Furbacher further states that CGI was not aware of the presence of archeological artifacts on the proposed building site prior to receiving Mr. Forward’s affidavit.

103CGI further relies upon Mr. Furbacher’s evidence that he did not review the appraisal in order to raise issues as to its methodology and conclusions, and did not receive the entire report until 2012. He states that prior to his review of the appraisal in the course of the Orangeville action, CGI could not have known of any wrongful conduct by Stewart or Indicom. Accordingly, CGI submits that since Mr. Furbacher did not discover the factual elements that could make up a cause of action against Stewart and Indicom until after March 27, 2012, the time limit for commencing an action did not start to run until at least March 27, 2012.

104Mr. Furbacher makes the further argument that the court cannot determine the applicability of the limitation issue on the affidavits filed. He argues that viva voce evidence and a determination of credibility is required. He therefore argues that the materials filed in support of and in response to the motion for summary judgment raise a genuine issue with respect to the limitation period that requires a trial to decide.

105Knowledge that the plaintiff has suffered damage for which a proceeding may be brought as the appropriate means to seek a remedy is enough to start the limitation period running. As Justice Trimble explains in Barry v. Pye, 2014 ONSC 1937, at paragraph 46:

Further, one does not need full knowledge or appreciation of the nature of the damages before the limitation clock starts running. The exact nature and extent of the injury need not be known for the cause of action to accrue. Once the Plaintiff knows that some damage has occurred and has identified the possible tortfeasor and his acts as the potential cause, the cause of action has accrued. Neither the extent of the damage nor the type of damage need be known. To hold otherwise would inject too much uncertainty into cases where the full scope of the damages may not be ascertained for an extended period of time beyond the general limitation period. [See Peixeiro v. Haberman, [1997] 3 S.C.R. 549, at para. 18].

106The discovery of new facts that would support the possible claim CGI intended to make did not restart the time for the purpose of a limitation period in circumstances where CGI already knew of material facts on which it could base a claim. As Justice Belobaba explained in Beaton v. Scotia iTrade, 2012 ONSC 7063, [2012] O.J. No. 6166, affirmed at 2013 ONCA 554, [2013] O.J. No. 4095 (Ont. C.A.):

[12] The basic principles pertaining to discoverability were summarized by the Court of Appeal in Lawless v. Anderson: Determining whether a person has discovered a claim is a fact-based analysis. The question to be posed is whether the prospective plaintiff knows enough facts on which to base an allegation of negligence against the defendant. If the plaintiff does, then the claim has been “discovered”, and the limitation begins to run…[W]hat a prospective plaintiff must know are the material facts necessary to make a claim, whatever form they come in. [2]

107Even with the knowledge of who and what caused a plaintiff damage, the Court of Appeal has recognized there are circumstances where a party requires time to reach the determination that a legal proceeding would be the “appropriate means” to seek a remedy. Justice Laskin discusses how this element of “appropriateness” may have the effect of tolling the start of a limitation period in 407 ETR Concession Company Limited v. Day, 2016 ONCA 709 at paras. 33 and 34 to give full effect to the language of section 5(1)(a)(iv):

[33] The appropriateness of bringing an action was not an element of the former limitations statute or the common law discoverability rule. This added element can have the effect – as it does in this case – of postponing the start date of the two-year limitation period beyond the date when a plaintiff knows it has incurred a loss because of the defendant’s actions. [34] Also, when an action is “appropriate” depends on the specific factual or statutory setting of each individual case: see Brown v. Baum, 2016 ONCA 325, 397 D.L.R. (4th) 161, at para. 21. Case law applying s. 5(1)(a)(iv) of the Limitations Act, 2002 is of limited assistance because each case will turn on its own facts.

108The evidence is clear that Mr. Furbacher knew that the City had obtained an appraisal from Indicom that less than 9.1 acres of the Allandale Station lands, not including the old railway station itself, had been appraised at three million dollars by August 26, 2010. CGI therefore knew of Indicom’s identity and involvement in the appraisal process. The exact nature of the lands, and the reasons for the increase in appraised fair market value may not have been known by CGI. Whether CGI knew that a legal proceeding would be the appropriate means to seek a remedy depends upon the nature of each cause of action alleged against the defendants.

109It is not enough for Mr. Furbacher to state that only Mr. Moore knew the contents of the Indicom appraisal by August 26, 2010 because only Mr. Moore had signed the non-disclosure agreement. If Mr. Moore was acting as agent for CGI, Mr. Furbacher would have known about the contents of the Indicom appraisal as a matter of agency, including what was included or excluded from the appraisal.

The Plaintiff’s Claims

[110]

The Plaintiff’s Claims

The results of this motion will depend on the evidence filed by each of the parties on those claims made by CGI against Indicom with respect to:

1. Whether there is a genuine issue requiring a trial to determine the expiry of a limitation period; or
2. if there is a genuine issue requiring a trial found on the evidentiary record for one or more causes of action.

Civil Conspiracy

[111]

Civil Conspiracy

The test for civil conspiracy has been set for many years by the Supreme Court of Canada in Cement Lafarge v. B.C. Light Weight Aggregate, [1983] 1 S.C.R. 452. The court sets out that test at paragraph 33 as follows:

33. Although the law concerning the scope of the tort of conspiracy is far from clear, I am of the opinion that whereas the law of tort does not permit an action against an individual defendant who has caused injury to the plaintiff, the law of torts does recognize a claim against them in combination as the tort of conspiracy if: (1) whether the means used by the defendants are lawful or unlawful, the predominant purpose of the defendants' conduct is to cause injury to the plaintiff; or, (2) where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and the defendants should know in the circumstances that injury to the plaintiff is likely to and does result. In situation (2) it is not necessary that the predominant purpose of the defendants' conduct be to cause injury to the plaintiff but, in the prevailing circumstances, it must be a constructive intent derived from the fact that the defendants should have known that injury to the plaintiff would ensue. In both situations, however, there must be actual damage suffered by the plaintiff.

112I conclude on Mr. Stewart’s evidence that there is no genuine issue requiring a trial to find that CGI’s claim for conspiracy does not meet either part of the test. His affidavit gives evidence in a straight forward manner that Indicom was engaged by the City to provide an appraisal on certain terms. When those terms changed, Indicom provided an appraisal on those terms to complete its assignment. There is no evidence that Indicom was acting in combination with the City to produce its appraisal with the predominant purpose, or for that matter any purpose to cause injury to CGI, or that its conduct was unlawful.

113The evidentiary burden to persuade me otherwise therefore shifts to CGI.

114Little evidence has been filed by CGI to show facts that raise a genuine issue requiring a trial based on the test for civil conspiracy set out in Cement Lafarge. In particular, there is no evidence that Indicom or Stewart prepared the appraisal or colluded with the City about the conclusions made in the appraisal with the predominant purpose to cause injury to CGI. Nor is there any evidence that the conduct of Indicom or Stewart was unlawful and that the conduct was directed towards CGI.

115A responding party must put its best foot forward when responding to a motion for summary judgment. The motions judge is entitled to assume that the responding party has provided all evidence on that issue. Even if I go on to employ the enhanced fact finding powers under subrule 20.04 (2.1), I cannot assess credibility on the written record, as difficult as that task might be, without any evidence whatsoever from CGI as a responding party, nor weigh such evidence against the evidence given by Mr. Stewart. Similarly, I cannot draw inferences where there is no evidence given to draw from.

116I also conclude on the evidence that CGI’s claim for the conspiracy alleged is statute barred. The identity of Indicom, Mr. Stewart and the City were known to Mr. Furbacher as of August 26, 2010. The results of the appraisal, if not the appraisal itself, were known to Mr. Furbacher when he first made his displeasure known about the values given. The nature of the alleged conspiracy is based on an agreement between Indicom and the City that CGI has put in issue, not on what Indicom failed to take into account when arriving at the value of the Allandale Station lands. The limitation period for conspiracy therefore started running on August 26, 2010.

No Reliance for Misrepresentation

[117]

No Reliance for Misrepresentation

The motion of the moving defendants also seeks an order dismissing the action as against them in respect of CGI’s claim for negligent misrepresentation. They seek this relief because CGI never relied upon, and was not entitled to rely upon, the Indicom appraisal. In any event, CGI did not take steps pursuant to the Indicom appraisal to its detriment.

118Mr. Furbacher’s affidavit contains paragraph 6 in which he sets out the kind of evidence the trial judge will need to hear as the trier of fact, and the basis on which CGI has advanced the theory of this case. However, there is no evidence provided in paragraph 6 of the affidavit to raise a genuine issue with respect to what facts Mr. Furbacher submits CGI will require a trial to prove, or to support the theory of CGI’s case.

119The difficulty here is that Mr. Furbacher has asked many questions but has given few answers. The responding material to the motion does not contain affidavits or other evidence that satisfies the evidentiary burden a responding party bears under Rule 20.04(2) on a defendants’ motion to dismiss this part of the action.

[120] The Supreme Court of Canada articulated the essential elements for the tort of negligent misrepresentation in Queen v. Cognos, [1993] 1 S.C.R. 87: a. There must be a duty of care based on a “special relationship” between the representor and the respresentee; b. The representation in question must be untrue, inaccurate, or misleading; c. The representor must have acted negligently in making the misrepresentation; d. The representee must have relied, in a reasonable manner, on the negligent misrepresentation; e. The reliance must have been detrimental to the representee in the sense that damages resulted.

121Central to CGI’s claim for negligent misrepresentation in this respect is whether it had a special relationship with Indicom or Mr. Stewart to found a claim in negligent misrepresentation. It is clear from the evidence filed on the motion that Indicom did not act for CGI; nor is there evidence that Mr. Furbacher even knew Mr. Stewart. The special relationship must therefore flow from a general duty or relationship that Indicom owed to CGI outside of any scope of retainer or engagement in a contractual context. In looking at the context of any possible duty or relationship, the court must also consider exclusionary factors as well.

122It is clear that CGI at no time relied upon the Indicom appraisal. In fact, CGI has conceded that it disagreed with the appraisal in August 2010, and took the position immediately thereafter that it was flawed. It did not rely upon the appraisal because it rejected the appraisal.

123It is not in dispute that Indicom is the author of the report. It is not in dispute and that the City is the client for whom the appraisal was prepared. It is also not in dispute that Mr. Furbacher or any other person on behalf of CGI at no time obtained written authorization from the City or from Indicom to rely upon the appraisal or its contents.

124At the motion, Indicom relied upon Nussbaum v. Rajesky, [1988] O.J. No. 2369, affirmed at [1991] O.J. No. 3048 (Ont. C.A.) to argue that “even if the appraiser owed a duty of care to another, in order to succeed, the plaintiff must have acted reasonably in reliance on it”. Indicom argues that in Nussbaum, the courts found that it was not reasonable for the plaintiff to take the position that it relied upon the appraisal because he considered the value stated in it to be “overblown”.

125The same conclusion must be reached on the facts here. There is no evidence that CGI relied on the report. In fact, Staff Report IDC009-10 dated November 29, 2010 from Mr. Forward attached as exhibit “J” to Mr. Aspden’s affidavit reveals that an offer was made by CGI provided in an email from William Moore for CGI on November 12, 2010. This offer was made several weeks after the Indicom appraisal would have been known to CGI, and in the possession of Mr. Moore, if not Mr. Furbacher.

126The email from Mr. Moore dated November 12, 2010 and attached as appendix C to his email provides CGI’s proposal in the form of a “Transaction Outline” that contains the following elements:

• CGI is described as the purchaser
• the Corporation of the City of Barrie is described as the vendors
• the property is described as the Allandale Station lands, made up of 5.12 acres per the McKnight Charron Laurin Site Plan (Preliminary Concept), dated August 9, 2010; and
• the proceeds of sale total $2,300,000, payable $1 million in cash on closing and the balance by installments and subject to various methods of payment and conditions.

127The fact that CGI made this offer to purchase less of the Allandale Station lands for more than the price specified in the Preliminary Agreement is, in my view, inconsistent with CGI’s claim that it relied upon the Indicom appraisal to its detriment. The moving parties have satisfied their onus to show that there is no genuine issue requiring a trial to reach this conclusion, and CGI has provided no evidence to the contrary.

128Having considered all of the evidence, I find as a fact that CGI did not rely upon Indicom’s appraisal. The claim of CGI for negligent misrepresentation is dismissed.

129I also find on the evidence that neither Indicom or Mr. Stewart intended to deceive or make a fraudulent representation to CGI. In fact, the appraisal was never directed to CGI at all. The claim for fraudulent misrepresentation is therefore dismissed on the evidence.

Negligence

[130]

Negligence

A finding that one party owes a duty of care to another is an essential element to prove the tort of negligence: Hill v. Hamilton-Wentworth Regional Police Services Board, 2007 SCC 41, [2007] 3 S.C.R. 129.

131The concepts of “duty of care” and “standard of care” are often confused. As Justice Epstein observed in Rausch v. Pickering (City), 2013 ONCA 740 at para 38, an error that is frequently made is conflating the duty of care with the standard of care. Justice Epstein described those concepts in the following terms:

[39] The existence of a duty of care simply means that the defendant is in a relationship of sufficient proximity with the plaintiff that he or she ought to have the plaintiff in mind as a person foreseeably harmed by his or her wrongful actions. It is not a duty to do anything specific; it is a duty to take reasonable care to avoid causing foreseeable harm: Ryan v. Victoria (City), [1999] 1 S.C.R. 201, at paras. 25-27. [40] If a duty of care is recognized, then the standard of care necessary to discharge the duty and whether it has been breached will be determined at trial.

132A duty of care must therefore be proven as the foundation for any claim in negligence. It is not only necessary to establish a duty of care based on the relationship between the plaintiff and any defendant; it is necessary to show that the defendant is responsible for conduct that fell below the standard of care expected of someone in that position to meet the duty of care.

133Mr. Horst has conceded on behalf of Indicom and Stewart that the Indicom appraisal is deficient for the purpose of the motion. Leaving aside the disclaimer by Mr. Stewart in the appraisal about what it does not contain, he agrees it does not take into account the environmental issues associated with the Allandale Station lands. Furthermore, Mr. Horst concedes the Indicom appraisal does not account for the potential for existence of archeological artifacts found on or close to the site because the Allandale Station lands were built on an ancient indigenous burial site. In respect of these omissions, Mr. Horst concedes that Mr. Stewart fell below the standard of care expected of an appraiser when preparing the appraisal. The issue is to whom Mr. Stewart owed a duty of care in the first place.

134It is clear on the authorities that the question of whether a duty of care exists is a question based on the relationship between the parties, not a question of conduct: Stewart v. Pettie.

135Earlier in this action, Justice Ricchetti reviewed the proper approach to determine whether a duty of care exists. At paragraph 54 and 55 of his decision, Justice Ricchetti relied on Cooper v. Hobart, 2001 SCC 79, [2001] 3 SCR 537 and Paton Estate v. Ontario Lottery and Gaming Corporation (Fallsview Casino Resort and OLG Casino Brantford), 2016 ONCA 458 to consider whether the moving defendants on that motion owed a duty of care to CBC.

136In Cooper v. Hobart the court made the following comment on the relevance of the relationship between the parties as the basis for finding the necessary element of sufficient proximity between them to find a duty of care:

31 On the first branch of the Anns test, reasonable foreseeability of the harm must be supplemented by proximity. The question is what is meant by proximity. Two things may be said. The first is that “proximity” is generally used in the authorities to characterize the type of relationship in which a duty of care may arise. The second is that sufficiently proximate relationships are identified through the use of categories. The categories are not closed and new categories of negligence may be introduced. But generally, proximity is established by reference to these categories. This provides certainty to the law of negligence, while still permitting it to evolve to meet the needs of new circumstances.

137The responding materials filed by CGI are not sufficient to explain the nature and function of William Moore’s legal relationship to CGI when he dealt with the City, or with Indicom in the summer and fall of 2010. In paragraph 6(1) of his affidavit, Mr. Furbacher deposes that the plaintiffs (as they then were) paid considerable funds to “an independent consultant, William Moore (“Bill Moore”), for assessing, challenging and disproving Stewart’s findings …” , among other services.

138In paragraph 243 of the amended statement of claim attached as Exhibit “A” to Mr. Furbacher’s affidavit, Mr. Moore is described as CGI’s independent financial adviser who had agreed to provide a confidential review of the appraisal, and of CGI’s concerns with the appraisal. Particular reference is made to Mr. Moore’s discussions with Mr. Stewart, which occurred after August 20, 2010 when the appraisal was released, in paragraph 246 of the amended claim.

139In paragraph 349, the amended statement of claim alleges that Indicom refused to revise the appraisal even when its deficiencies were brought to its attention by Mr. Moore on behalf of CGI.

140The evidence given by Mr. Stewart that Mr. Moore was the person who made a presentation to the City on June 22, 2010 for a concept based on 4.67 acres of the Allandale Station lands suggests that Mr. Moore proposed changes to the development concept and dimensions of the site plan at that time. This presentation was made before the Indicom appraisal was ever done. If Mr. Moore was acting as the agent or designated representative for CGI to deal with the City, it would be open for Indicom to argue that his acts, words and deeds were those of CGI.

141CGI has denied that Mr. Moore was acting as its agent during 2010.

142When the position taken by CGI about Mr. Moore’s capacity is compared with the evidence given by Mr. Stewart, the nature and function of Mr. Moore’s relationship with CGI and his function becomes a genuine issue for trial. The knowledge of CGI could very well turn on the nature and function of Mr. Moore’s role. The absence of any evidence from Mr. Moore in the evidentiary record is conspicuous; the fact that neither party has obtained an affidavit or taken steps to examine him suggests that his evidence will be pivotal for discoverability purposes under section 5 (1) of the Limitations Act, 2002, and for any determination of whether Indicom owed a duty of care to CGI.

Inducing Breach of Contract

[143]

Inducing Breach of Contract

For there to be a basis for alleging the tort of inducing breach of contract, there must first be a contract that is capable of being breached: Alleslev-Krofchak v. Valcom, 2010 ONCA 557 at paragraphs 92-97.

144On the evidence before the court on the motion to discharge the certificate of pending litigation in the Orangeville action, Justice Healey found many essential terms of an agreement between CGI and the City of Barrie had not been agreed upon. Consequently, Justice Healey concluded at paragraph 58 as follows:

[58] While both parties continued to attempt to negotiate these terms long after the signing of the Preliminary Agreement, to a reasonable, objective observer it would be obvious that no deal had ever been reached on these essential terms.

145I am tempted to find, on the evidentiary record for this motion, that no contract remains between CGI and the City of Barrie because no meeting of the minds had taken place on essential terms after the YMCA withdrew from the Preliminary Agreement. Justice Healey made that determination on an interlocutory basis in the Orangeville action on the record before her in 2013. However, Mr. Bryson has made the submission that not all evidence was before Justice Healy to make a final determination at law. It is also unclear from the record before me what CGI and the City agreed upon, if anything, to replace the role the YMCA was to play under the Preliminary Agreement.

146I therefore conclude that the issue about whether the Preliminary Agreement ever was, or remained an enforceable contract between CGI and the City after the YMCA withdrew its participation in January 2010 is a genuine issue requiring a trial, or further evidence for the purpose of this motion.

Wrongful Interference with Economic Relations

[147]

Wrongful Interference with Economic Relations

The tort of interference with economic relations wrongfully or by unlawful means is similar to, but different from the tort of inducing breach of contract. As the Court of Appeal discussed in Correia v. Canac Kitchens, 2008 ONCA 506, the elements and the objectives of each tort are distinct:

98 In defining the two torts, the Lords emphasized that both are intentional torts that aim to give redress in the context of deliberate commercial wrongdoing: see OBG at paras. 141-143, 145, 191 (Nicholls L.). Where the impugned conduct is merely negligent, then it must be actionable using negligence principles, and if it is not, it cannot be made actionable by recharacterizing it as wrongful commercial interference. 99 The Lords defined the elements of the tort of inducing breach of contract as follows: (1) the defendant had knowledge of the contract between the plaintiff and the third party; (2) the defendant's conduct was intended to cause the third party to breach the contract; (3) the defendant's conduct caused the third party to breach the contract; (4) the plaintiff suffered damage as a result of the breach (see OBG at paras. 39-44 (Hoffman L.)). The Lords confined the tort to cases where the defendant actually knew that its conduct would cause the third party to breach (it is not enough that the defendant ought reasonably to have known that its conduct would cause the third party to breach); the defendant must have intended the breach (it is not enough that a breach was merely a foreseeable consequence of the defendant's conduct); and there must be an actual breach (it is not enough for the conduct to merely hinder full performance of the contract). 100 The elements of the tort of causing loss by unlawful means are: (1) wrongful interference by the defendant with the actions of a third party in which the plaintiff has an economic interest; (2) an intention by the defendant to cause loss to the plaintiff: see OBG at para. 47 (Hoffman L.). Again, the intentionality of the defendant's conduct is critical: it is not enough that the loss was a foreseeable consequence of the defendant's conduct; to be actionable under this tort, the loss must have been the intended result. Furthermore, intentional conduct that causes loss but is not unlawful, is not actionable. That is considered permissible competitive commercial behaviour.

[148] Recognizing the principles set out in Correia and on Alleslev-Krofchak v. Valcom, I find there to be no cogent evidence on the current record that Stewart and Indicom interfered with the economic relations between CGI and the City of Barrie. I say this for the following reasons: a. Mr. Stewart prepared the Indicom appraisal on a limited engagement basis “to assist the City in negotiating the sale of the Allandale Station lands”; b. The Indicom appraisal was released to the City only; and c. There is no reference in the evidence to any intention, or to any reason for Indicom to attribute a value to the lands in a different amount.

149Despite the absence of direct evidence from Mr. Moore or Mr. Furbacher, the possible evidence Mr. Moore may have to offer could give this court the basis to determine when the material facts relating to the alleged wrongful interference CGI now alleges against Stewart and Indicom became known. This evidence will allow the court to decide if there is a factual basis for CGI to make a claim for wrongful interference at all. Mr. Moore’s evidence will also be relevant to the question of the date that time began to run for CGI to determine that commencing an action would be the appropriate means to seek a remedy.

Conclusion

[150]

Conclusion

The motion for summary judgment is therefore granted in part. CGI’s claims for conspiracy and for negligent or fraudulent misrepresentation are dismissed. I am confident on the evidence given by the parties and the applicable principles of law that there is no genuine issue requiring a trial to dismiss those claims on the merits.

151I find on the evidentiary record before me that whether the remaining claims have been commenced in time is a genuine issue that requires a trial, or further evidence to resolve that issue. There is also a genuine issue on the evidentiary record about the legal nature of the Preliminary Agreement as the underlying basis for the surviving claims CGI has made against Indicom. This too requires a trial or further evidence to resolve.

152A mini-trial to determine whether a limitation period has expired with respect to any of those claims, or the nature of the Preliminary Agreement could easily be as lengthy as a conventional trial. However, if the mini-trial is focused on evidence to make the findings of fact necessary to apply the law on those issues, then a mini-trial would be a fair and just process to adjudicate the remaining issues on their merits. Focused this way, the mini-trial would not be contrary to the interests of justice.

153I am therefore ordering a mini-trial under Rule 20.04(2.2) to exercise the powers given by subrule (2.1) to hear viva voce evidence relevant to the remaining claims against the defendants Indicom and Stewart. The mini-trial shall be heard by me as the motions judge requiring the further evidence to decide the balance of the motion.

[154] The factual issues that require further evidence include, but are not limited to:

1. The nature and function of William Moore’s role with CGI in 2010. This issue must be answered to determine his legal relationship with CGI and the extent, if any, the knowledge of Mr. Moore was shared with, or deemed to be the knowledge of CGI.
2. The agreement, if any, made to continue or replace the YMCA’s role in the Preliminary Agreement. This issue must be answered to determine whether there was a viable contract that continued beyond January 2010.

155I order that William Moore, Alan Furbacher, Robert Stewart and any one or more of Kathy Gray, Zarah Walpole or Richard Forward from the City of Barrie attend before the court and give oral evidence at the mini-trial, not to exceed 90 minutes each.

156A hearing date for this mini-trial before may be arranged through the trial coordinator. If required, counsel may arrange for a case conference either by telephone or attending in court to discuss scheduling, witnesses and documents at which time the hearing date may be arranged. Those arrangements may be made through my judicial assistant, Ms. Kim Williams, at 905-456-4835 in Brampton.

157The costs of the motion to date are reserved to the mini-trial.

Emery J