Court of Appeal for Ontario

Date: 2017-05-05 Docket: C61688

Judges: Doherty, Benotto and Trotter JJ.A.

Parties

Between

Com Dev Ltd. and Routes Astroengineering Ltd. Plaintiffs (Respondents)

and

Microsat Systems Canada Inc. Defendant/Plaintiff by Counterclaim (Appellant)

Counsel

Douglas D. Langley, for the appellant

Evert Van Woudenberg, for the respondents

Hearing and Appeal

Heard and released orally: April 27, 2017

On appeal from: the judgment of Justice David G. Stinson of the Superior Court of Justice, dated January 12, 2016.

Endorsement

[1] This is a factually complicated contractual dispute. The trial judge heard about 12 days of highly technical evidence. His detailed reasons span 189 paragraphs and are found at 2016 ONSC 289.

[2] Counsel for the appellant presents three arguments. First, he submits that the trial judge should have considered this as a case of mutual repudiation of the contract. He submits that while it was open to the trial judge to conclude that the appellant had repudiated the contract in March 2009, the trial judge erred in failing to consider, much less find, that the respondent had also breached the contract by his conduct after March 2009 and before the repudiation as found by the trial judge in February 2010.

[3] Counsel submits that the trial judge failed to address the question of whether the parties had mutually repudiated the agreement. He suggests that the question was raised on the evidence and had to be determined by the trial judge to properly adjudicate the claim. Counsel categorizes the failure to address this material issue as an error in law. We accept that characterization for the purposes of this endorsement.

[4] In our view, the trial judge did address the respondent's conduct between March 2009 and February 2010. He described the respondent's continuing efforts to fully comply with the agreement and he rejected the argument that the delays in performance of the agreement constituted a breach of any term of the agreement. In our view, those were factual findings which were open to the trial judge and we have not been shown any basis upon which we should interfere with that factual finding. Those findings foreclose the mutual repudiation agreement.

[5] The second argument made by the appellant assumes that only the appellant was in breach, but argues that even on that basis, the trial judge had to take into account, by way of set-off or otherwise, the many deficiencies in the work performed by the respondent.

[6] We agree with counsel for the respondent that the answer to this argument lies in the trial judge's approach to the various payments that were made under the agreements. Under the terms of the contract, payments were due when milestones were achieved or met. If the milestone was met, payment was due. If subsequent milestones were not reached, whether because of deficiencies in prior work or deficiencies in subsequent work, then payments referable to that milestone were not paid.

[7] The trial judge, in our view, properly addressed deficiencies by considering whether the amounts were owed under the particular milestones described in the contract. His approach is fully set out in his reasons and accurately summarized at paras. 186 and 187 of his reasons. His findings are fact-intensive and we see no ground upon which to interfere with any of those findings.

[8] The third argument refers to a payment of $22,369, made in relation to what was referred to as "Milestone 14C", involving a specific battery component. The trial judge dealt with this issue at paras. 118-23. Counsel for the appellant submits that the respondent's failure to deliver the required test results constituted a failure to comply with a prerequisite to payment under Milestone 14C. Counsel notes that in relation to other milestones in which tests results were not delivered, the trial judge found against the respondent's claim. He submits that the same reasoning compels the rejection of the claim for $22,369 in respect of Milestone 14C.

[9] The trial judge dealt separately with the requirements of each of the contractual milestones. In the particular case of milestone 14C, the trial judge found that the required testing had been done and that the battery component had successfully passed the test. All that had not been done was a forwarding of these test results to the respondent. In fact, the trial judge did not make a finding one way or the other as to whether the results had been forwarded. In his view, the evidence was uncertain on that point. The trial judge did conclude, however, that but for the appellant's actions, the report referable to the completed testing would inevitably have been forwarded to the appellant. In our view, it was open to the trial judge to make this finding.

[10] The trial judge's finding in respect of Milestone 14C is distinguished from his findings in respect of some of the other milestones because in those cases (e.g. Milestones 10 and 12) the trial judge made a finding that the respondent had failed to do the necessary work or to have the necessary testing completed. As indicated above, in the case of Milestone 14C, the work was done and the tests were there to be read by the appellant. This distinction explains the different conclusions reached by the trial judge. We do not accept the argument that there is any inconsistency in his finding in relation to Milestone 14C and his finding in relation to the milestones in respect of which testing was not done.

[11] As we would reject the three arguments advanced on appeal, the appeal must be dismissed.

[12] The respondent is entitled to its costs which are fixed at $24,500, inclusive of disbursements and all relevant taxes.

"Doherty J.A."

"M.L. Benotto J.A."

"G.T. Trotter J.A."