Court File and Parties

Court File No.: CV-15-538996 Date: 2017-04-18 Superior Court of Justice - Ontario

Re: Ciccocioppo Design/Build Inc. And: Leonardo Gruppuso and Anna Gruppuso

Before: Madam Justice J. T. Akbarali

Counsel: Darren J. Smith, for the Plaintiff Vusumzi Msi and Balpreet Lailna, for the Defendants

Heard: March 28, 2017

Endorsement

Overview and the Parties’ Positions

[1] The defendants, Leonardo Gruppuso and Anna Gruppuso, decided to build a house on vacant land. Mr. Gruppuso turned to his friend, Nicola Ciccocioppo, a contractor, for help.

[2] Mr. Ciccocioppo, through an unincorporated business styled as ARC One Renovations, had a role in the design and construction of the home. In this action, claiming through the plaintiff, which is the entity through which he now operates his business, Mr. Ciccocioppo alleges he was not fully paid. He asserts an interest in the home by way of constructive trust on the basis of unjust enrichment.

[3] The Gruppusos deny that Mr. Ciccocioppo was not fully paid. They bring this motion for summary judgment arguing that:

a. the claim for unjust enrichment cannot be made out because, even assuming there is an enrichment and a corresponding deprivation, there are at least two juristic reasons for them – the contract between the parties and the statutory scheme set out in the Construction Lien Act, R.S.O. 1990, c. C.30,

b. the action is statute-barred, and

c. the plaintiff is a stranger to the relationship between the Gruppusos and Mr. Ciccocioppo and ARC One Renovations. Thus it has no standing to advance this claim.

[4] The plaintiff argues that neither the contract nor the Construction Lien Act is a juristic reason for the unjust enrichment. It states that the terms of the contract are either not sufficiently precise or not in evidence before me, and that the Construction Lien Act regime does not account for the “quasi-domestic relationship” between Mr. Ciccocioppo and Mr. Gruppuso.

[5] The plaintiff also argues that the action is governed by the 10 year limitation period in s. 4 of the Real Property Limitations Act, R.S.O. 1990 c. L. 15. It argues that the “quasi-domestic relationship” between Mr. Gruppuso and Mr. Ciccocioppo grounds its claim in equity. Finally, the plaintiff argues, in effect, that it is the successor in interest to ARC One Renovations and thus has standing to advance the claim.

The Construction Project and Discussions Between Mr. Gruppuso and Mr. Ciccocioppo

[6] The Gruppusos purchased the property in question in April 2003. Construction began in October 2004. By late 2005, most of the construction was completed. The Gruppusos moved into the home in January 2006.

[7] Mr. Ciccocioppo was hired around 2003 or early 2004. He and the Gruppusos had an oral contract. They were friends. They did not anticipate anything going wrong.

[8] There is some dispute about the scope of Mr. Ciccocioppo’s role. It is not necessary to resolve the specific terms of the agreement between the parties on this motion. It is enough to understand that Mr. Ciccocioppo was doing work on the project and was to be paid for his time and the costs he incurred, whether for materials or sub-trades.

[9] In October 2005, Mr. Gruppuso made what he describes as a “final payment” to Mr. Ciccocioppo, in the form of a cheque payable to ARC One Renovations. He claims to have asked Mr. Ciccocioppo whether any monies remained owing to him or ARC One Renovations or any sub-trades, and Mr. Ciccocioppo said nothing more was owing. Mr. Ciccocioppo denies having this conversation. He claims that after the Gruppusos moved into the house, he asked Mr. Gruppuso for an additional payment, which is the subject of this dispute. There is some disagreement among the parties as to the extent of Mr. Ciccocioppo’s efforts to collect that payment afterwards. Mr. Ciccocioppo deposes that he finally realized that Mr. Gruppuso had no intention of paying him after their last telephone conversation in October 2014.

[10] In June 2015, Mr. Gruppuso received a letter from Mr. Ciccocioppo claiming a sum of over $76,000 owing, plus the value of Mr. Ciccocioppo’s time. There followed some correspondence between the parties and their counsel, in which demands for payment were made and refused.

[11] Mr. Ciccocioppo issued a Statement of Claim on October 23, 2015, alleging entitlement to a constructive trust and seeking an order for payment of the amount owing, an order for a Certificate of Pending Litigation and an order for partition and sale of the property.

Issues

[12] The Gruppusos raise three issues on this summary judgment motion:

a. Should the court dismiss the plaintiff’s action summarily because there is a juristic reason for any enrichment and corresponding deprivation?

b. Should the court dismiss the plaintiff’s action summarily because it is statute-barred?

c. Should the court dismiss the plaintiff’s action summarily because the plaintiff has no standing to advance the claims?

Is Summary Judgment Appropriate?

[13] Summary judgment is appropriate where there is no genuine issue for trial. This will be the case where the summary judgment process provides me with the evidence required to fairly and justly adjudicate the dispute, by allowing me to make the necessary findings of fact and to apply the law to the facts, and where summary judgment is a timely, affordable and proportionate procedure: see Hryniak v. Mauldin, 2014 SCC 7 at paras 49-50 and 66, [2014] 1 S.C.R. 87.

[14] The plaintiff argues that summary judgment is not appropriate because there is conflicting and complex evidence that requires determinations of credibility. I disagree. While there are conflicts in the evidence, it is not necessary to resolve them to determine this motion. In this case, the facts necessary to determine the issues are readily ascertainable on the basis of the record before me and can be applied to the law. I conclude that summary judgment is a timely, affordable and proportionate procedure in this case.

Is there a juristic reason for the enrichment and corresponding deprivation?

[15] The plaintiff’s claim for a constructive trust is grounded in unjust enrichment. To establish unjust enrichment, a plaintiff must prove (i) an enrichment of the defendant; (ii) a corresponding deprivation of the plaintiff; and (iii) the absence of a juristic reason for the enrichment: Garland v. Consumers’ Gas Co., 2004 SCC 25 at para. 30, [2004] 1 S.C.R. 629.

[16] For purposes of this motion, the Gruppusos accept that the first two elements of the test are made out. They argue that the claim fails on the third prong.

[17] The analysis of whether there exists a juristic reason for the enrichment and deprivation has two parts. First, the plaintiff must show that no juristic reason from an established category exists to deny recovery. Established categories include the existence of a contract, a disposition of law, a donative intent, and other valid common law, equitable or statutory obligations. Only if the plaintiff clears this first hurdle does the court turn to the second part of the analysis, where it asks whether, looking at all of the circumstances of the transaction, there is another reason to deny recovery: Garland at paras. 44-45.

[18] The existence of a contract is a juristic reason to deny recovery for claimed unjust enrichment: Brouilette Building Supplies v. 1662877 Ontario Inc., 2009 ONSC 491 at para. 17, Heerkens v. Lindsay Agricultural Society, 2017 ONSC 240 at para. 54. This recognition that a contract is a juristic reason reflects the principle of autonomy of the parties to the contract, including their legitimate expectation that they may order their affairs by contract: Kerr v. Baranow, 2011 SCC 10 at para. 41, [2011] 1 S.C.R. 269. It also reflects the principle that equity finds a role where an injustice arises without a legal remedy: Kerr at para. 45. A party wronged due to a breach of a contractual obligation has a legal remedy. It can seek to rectify any resulting injustice through an action for breach of contract, consistent with the expectations of the parties to the contract.

[19] Here, the parties agree they entered into an oral contract. There is nothing in the dispute about its terms that affects the determination of whether the contract is a valid juristic reason for the enrichment. Assuming the plaintiff is the proper party to advance its claims, whatever the plaintiff was entitled to from the Gruppusos arose out of the contract with the Gruppusos. It is possible that the Gruppusos did not pay what they owed. But there is no reason why the plaintiff’s claims could not have been advanced in an action for breach of contract. The contract is a juristic reason for the enrichment.

[20] There is a second juristic reason to deny recovery in this case. The Construction Lien Act is a comprehensive statutory scheme that provides for an interest in land in favour of a contractor who has contributed to its betterment.

[21] To allow the plaintiff to claim an interest in land based on unjust enrichment, having failed to preserve its rights under the Construction Lien Act, would both circumvent the orderly system created by the Construction Lien Act and allow the plaintiff to indirectly enforce a claim that is invalid by reason of the passage of time, because it did not meet the timelines required by the Construction Lien Act in this case: Heerkens at paras. 55, 57.

[22] The Construction Lien Act strikes a balance among all those involved in a construction project. Allowing the plaintiff to proceed with its claim would defeat the scheme of the Construction Lien Act: Furmanov v. Juriansz, 2015 ONSC 3744 at paras. 11-12.

[23] The plaintiff argues that the Construction Lien Act scheme does not take into account the close relationship between Mr. Ciccocioppo and Mr. Gruppuso. I reject this argument for two reasons.

[24] First, the evidence establishes that Mr. Ciccocioppo and Mr. Gruppuso were very close during high school. It establishes that they were friends after high school, but I am not satisfied that their relationship remained as close as it was in their teenage years. There is no evidence of their families getting together, of them marking milestones together (apart from being guests at each other’s weddings) or even of regular contact once they became adults. I do not accept Mr. Ciccocioppo’s characterization of their relationship as “quasi-domestic”.

[25] Second, I am mindful of the guidance from Iacobucci J. in Garland at para. 43. He cautioned that unjust enrichment claims require the court to expand the category of juristic reasons as circumstances require and to deny recovery where to allow it would be inequitable. While he recognized that the law must develop in a flexible way to meet changing perceptions of justice, he referred to the need for guidelines to offer some indication of the boundaries of the cause of action. “The goal is to avoid guidelines that are so general and subjective that uniformity becomes unattainable.”

[26] It is a common occurrence for friends to do business with friends, or for family to do business with family. Those relationships, without more, cannot be the basis to take what are, at their heart, commercial dealings, out of the framework of contract or statute, and into equity. To do otherwise would be to do away with the boundaries of unjust enrichment. It would make the parties’ choice to structure their affairs by contract meaningless. It would call into question the legitimacy of statutory schemes where the parties governed by them are friends or family.

[27] I do not foreclose the possibility that in other circumstances the personal relationships between parties to a contract or parties governed by a statutory scheme may be so significant that equity must intervene to prevent an injustice. This is not that case.

Disposition

[28] I dismiss the plaintiff’s action because the contract and the Construction Lien Act scheme are juristic reasons for the defendants’ enrichment and his corresponding deprivation.

[29] Given my conclusions, it is not necessary to address the limitation period issue or the question as to whether the plaintiff is the proper party to advance its claims.

Costs

[30] There is no reason that costs ought not to follow the event. The defendants seek their costs of $25,000 on a partial indemnity scale plus HST and disbursements. The plaintiff, if successful, would have sought costs of $24,486 plus HST and disbursements. I understand these to be costs of the action because they include costs related to the pleadings in addition to costs related to the motion.

[31] The motion was set down for a full day and included several legal issues requiring research. There were five examinations and several affidavits filed. I am satisfied that the costs sought are fair and reasonable in the circumstances.

[32] Accordingly, the defendants are entitled to their costs of $25,000 plus HST of $3,250 and claimed disbursements of $1859.14 for a total of $30,109.14.

[33] I thank counsel for their able assistance.

Madam Justice J. T. Akbarali Date: April 18, 2017