Court of Appeal for Ontario

Date: 2014-07-09 Docket: C58351

Laskin, MacFarland and Lauwers JJ.A.

Between

Talon International Inc., LB 325 Bay Street Inc., and Norton Rose Fulbright Canada LLP (formerly Norton Rose Canada LLP)

Appellants

and

Far East Aluminium Work Canada Corp.

Respondent

Counsel: Michael Tamblyn and Ryan Hauk, for the appellants Glenn Grenier, for the respondent

Heard and released orally: June 24, 2014

On appeal from the judgment of Justice Edward P. Belobaba of the Superior Court of Justice, dated February 7, 2014.

Endorsement

[1] While the record before the application judge was voluminous, the issues were straightforward. His task was to determine whether or not the respondent had complied with paragraph 6 of the Settlement Agreement between the parties dated December, 2012. Paragraph 6 reads:

Prior to the release of the Statutory Holdback, Far East shall provide Talon with all the “close-out” documentation required pursuant to the Subcontract including, without limitation, a complete set of “as-built” drawings, warranty documentation, assignment of manufacturers’ warranties and engineering certificates.

[2] At paragraph 28 of its factum, the appellant raised three items of complaint: as-built drawings, the engineering certificate and spare parts. In this court the third item was not pursued.

[3] The application judge found that none of these items was contractually required but he also found as a fact that each of the items had nonetheless been delivered. There was clearly evidence available before the application judge to make those factual determinations.

[4] In paragraph 1 of his reasons, the application judge noted:

Given the extensive record that has been filed, including the affidavits and exhibits, the cross-examination transcripts and the detailed factums and reply factums, I am able to interpret the Settlement Agreement and the parties’ respective contractual rights thereunder and resolve any factual disputes without having to send this matter in whole or in part to trial;

[5] The appellant argues that this case should not have been decided summarily and should have been sent to trial. We would refer to paragraph 50 of the Supreme Court of Canada’s decision in Hryniak v. Maudlin, 2014 SCC 7 which reads:

It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as the trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.

[6] The application judge had that confidence in this case and we agree with him.

[7] In relation to the as-built drawings, paragraph 5.1 under the heading “Exclusions” reads: “Preparation of a final survey and/or as built drawings”.

[8] However, Appendix B, described as supplementary conditions of contract amends the subcontract and provides at 3.5 under the heading “Shop Drawings”:

3.5.4 Subcontractor shall continuously keep up-to-date a set of as-built drawings as the job progresses and provide final as-built drawings and operation & maintenance manuals and warranties ten (10) calendar days prior to the Subcontract work reaching Substantially Completion.

[9] Appendix “B” provides in its opening preamble:

The Stipulated Price Subcontract Agreement Canadian Construction Document CCAI-2001 is hereby amended and superceded as follows: [Emphasis added]

[10] The evidence, which the trial judge accepted, was that the as-built drawings so far as they were available (there was ongoing continuing work) had been provided to Talon. That finding was supported by the evidence of Mitchell and the transmittal notice from Far East to Brookfield dated May 7, 2013.

[11] As to the Engineering Certificate, the appellants’ argument in relation to that item is based on the architectural specifications at 1.4.13 which reads:

Design curtain wall system in connections to substrate where the bottom of the curtain wall system extends to a point below 1070 mm above finished floor level and separates a floor level from an adjacent interconnected space to withstand the required guard and handrail loads in accordance with the OBC and applicable local regulations. When requested by Consultant, provide a letter signed and sealed by a Professional Engineer certifying that the curtain wall in connection to substrate conforms to the OBC requirements.

[12] The appellant relies in particular on last sentence of that provision. This provision is found under the title “Design Criteria”. In our view, the provision relates to design only and the letter provided by the respondent’s engineer BVDA meets the requirement of this section.

[13] The currency issue was not pursued in this court.

[14] As to the motion for fresh evidence, we would dismiss the application. The evidence sought to be introduced is, in our opinion, irrelevant to the holdback issue and meets none of the tests for the admission of fresh evidence save perhaps for the fact that the incident occurred after the application was heard and decided.

[15] We would dismiss the appeal.

[16] The money at issue in this appeal is a statutory holdback amount. There is no question that the money is owed. The work has been done and paid for, except the amount required to be withheld.

[17] The notice of substantial performance in relation to this project was published in November 2012 and the building has been occupied for some time, yet the respondent has not been fully paid.

[18] The appellant has persistently and continuously as the application judge described them put forward a litany of excuses why this money should not be paid, none of which has any merit at all on the findings of the application judge, now upheld by the judgment of this court. Bearing in mind that this litigation relates solely to the statutory holdback and has nothing to do with deficiencies, which may be the subject of other proceedings, in our view, it is only fair and just that an order be made for immediate payment out of court of the amounts paid into court and compliance with rule 72.03(2)(c) is hereby waived under rule 2.03. The accountant of the Superior Court is to immediately pay out of court the funds standing to the credit of this action in the amount of $3,184,280.13 to McMillan LLP, in trust.

[19] Costs of the appeal to the respondent are fixed in the sum of $48,000.00 inclusive of disbursements and applicable taxes.

[20] At the conclusion of argument counsel advised the court there are additional holdback-related monies standing in court to the credit of this application which were paid into court as a “hedge” against any fluctuation in currency rates.

[21] By correspondence received June 27, 2014 counsel have agreed that this additional sum in the amount of CDN $96,713.82 is on consent, to be paid out of court immediately to the order of Norton Rose Fulbright in trust and compliance with Rule 72.03(2)(c)(ii) in respect of this payment is dispensed with.

[22] Further on the consent of counsel an order shall issue requiring the Accountant of the Superior Court to immediately convert the balance of any and all monies paid into court or held by the Accountant to the credit of this application from Canadian dollars to United States dollars and to continue to hold those funds together with any interest accrued thereon in United States dollars pending further Order of the court or the consent of the parties.

“John Laskin J.A.”

“J. MacFarland J.A.”

“P. Lauwers J.A.”