NEWMARKET COURT FILE AND PARTIES

NEWMARKET COURT FILE NO.: CV-09-097426-0000T
DATE: 20120214
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: COMMANDER CONSTRUCTION, Plaintiff

AND:

THE SOVEREIGN GENERAL INSURANCE COMPANY AND
CONTRAD CONS. (1999) INC., Defendants

BEFORE: THE HON. MR. JUSTICE G.M. MULLIGAN

COUNSEL:
P. Di Monte, for the Plaintiff
J. Goode, for the Defendant The Sovereign General Insurance Company

HEARD: February 2, 2012

ENDORSEMENT

[ 1 ] This is a motion for summary judgment under Rule 20.01 brought by Commander Construction (“Commander”) against The Sovereign General Insurance Company (“Sovereign”) with respect to obligations that may exist between Sovereign and Commander in connection with labour and material bonds. The defendant Contrad Cons. (1999) Inc. (“Contrad”) was a general contractor on two municipal projects. Commander was one of its subcontractors. Sovereign issued labour and material bonds with respect to these projects. Commander obtained default judgments against Contrad in Small Claims Court and now seeks judgment against Sovereign pursuant to the labour and material bonds.

[ 2 ] Sovereign opposes the motion for partial summary judgment and requests that the plaintiff’s motion be dismissed with costs to the defendant. Sovereign submits that there are issues requiring a trial and partial summary judgment ought not to be granted.

[ 3 ] For reasons to follow I dismiss the plaintiff’s motion for partial summary judgment.

BACKGROUND

[ 4 ] Commander issued two Small Claims Court claims with respect to two separate projects it had with Contrad. The first project was referred to as the “Wilson Project”. The second project was referred to as the “Graffton Project”. Both of these projects were conducted on municipal properties and Contrad was required to obtain bonds. Those bonds were issued by Sovereign. As a result of non-payment by Contrad, Commander issued Small Claims Court claims against Contrad and named Sovereign with respect to both claims in 2002. In view of the Small Claims Court limits at the time Commander limited its claims to $10,000 with respect to each claim. In due course Commander obtained default judgment against Contrad for $10,000 with respect to each claim. There was no adjudication on the merits with respect to the matter and the judgment against Contrad remains unpaid. Commander pleads that there is additional indebtedness owing to it by Sovereign, an amount that it waived against the defendant Contrad in view of the previous limits of the Small Claims Court. Commander alleges that Sovereign owes it $32,207. However by way this partial summary judgment motion it only seeks judgment against Sovereign in this motion for $20,000 plus interest and costs.

[ 5 ] Commander has consolidated both of the Small Claims Court actions to the Superior Court in Newmarket and both parties have agreed that this action shall be governed by the simplified rules as set out in Rule 76 of the Rules of Civil Procedure.

[ 6 ] Before the motion commenced I discussed with counsel whether or not it would be efficient for the parties to adjourn the motion and proceed to a summary trial. It was evident that if the plaintiff succeeded in its motion for summary judgment it would still be left with the remnant of its claim which it could pursue through a summary trial. The responding party brought a cross-motion for a summary judgment dismissing the plaintiff’s motion so if was successful then the parties would have had to move on to a summary trial having spend considerable time and resources on the summary motion. No agreement was reached between the parties and the motion proceeded.

POSITION OF THE PLAINTIFF

[ 7 ] Johnny Esho, principal of the plaintiff Commander, filed a lengthy affidavit with 21 exhibits outlining the history of this matter with respect to the two separate job sites, the Small Claims Court action history and the correspondence and related documents with respect to Sovereign. Its position is that Sovereign owes it the amounts claimed as it issued labour and material bonds on behalf of Contrad with respect to both job sites.

[ 8 ] On behalf of Sovereign an affidavit was filed by Edouard Chasse, a Claims Adjuster for Sovereign. Mr. Chasse’s 57 paragraph responding affidavit contains 20 exhibits. Sovereign asserts that it has defences to both causes of action.

[ 9 ] It is clear that upon reviewing both affidavits there are a significant number of factual issues in dispute. Based on the facts which it refers to, Sovereign submits that a court will have to make a number of factual determinations to determine the merits of the claim. Those issues to be determined may include:

• Whether the labour and material bonds provide any coverage for Commander

• Whether Commander has given notice of its claim pursuant to the limitations period as set out in the bonds

• Whether Commander has properly pleaded its claim against Sovereign in view of the provisions of the Limitations Act

• Whether Commander failed to complete deficiencies brought to its attention on one of the projects entitling Sovereign to use the costs of completing these deficiencies as an offset.

ANALYSIS

[ 10 ] Both parties acknowledge that the court has expanded powers on a motion for summary judgment under the amendments to Rule 20.04. Rule 20.04(2.1) indicates that judges may exercise additional powers on a motion including weighing evidence, evaluating credibility and drawing inferences from evidence “unless it is in the interests of justice for such powers to be exercised only at trial”.

[ 11 ] After the introduction of the amendment to the Rule Karakatsanis J., sitting as a motions judge, reviewed these expanded powers but issued this cautionary note in Cuthbert v. TD Canada Trust, 2010 ONSC 830 at para. 11 :

Nonetheless, although a motions judge may weigh the evidence, evaluate the credibility and draw reasonable inferences from the evidence, it is not the role of the motions judge to make findings of fact for the purpose of deciding the action on the basis of the evidence presented on a motion for summary judgment. This change in the Rule does not substitute a summary trial for summary judgment motion.

[ 12 ] In Healey v. Lakeridge Health Corp., 2010 ONSC 725 Perell J. made reference to the tension between a summary judgment motion or a trial hearing and stated at para. 28:

Since the introduction of the summary judgment rule, the courts have struggled with finding a balance between a day in court by a summary judgment motion or by a trial hearing.

As Perell J. further noted at para. 28, there are cases where “the issues to be resolved cannot be truthfully, fairly and justly resolved without the forensic machinery of a trial”.

[ 13 ] On December 5, 2011 the Ontario Court of Appeal issued its decision, Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764 (“ Combined Air ”). In its decision the Court reviewed five appeals of summary judgment decisions under the amended rule. The Court provided significant guidance as to the approach that motion judges should follow. As the Court said at para. 50:

In deciding if the these powers should be used to weed out a claim as having no chance of success or be used to resolve all or part of action, the motion judge must ask the following question: Can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of a summary judgment, or can this full appreciation only be achieved by way of a trial?

[ 14 ] As the Court went on to state a para. 51:

We think this “full appreciation test” provides a useful benchmark for a deciding whether or not a trial is required in the interest of justice. In cases that call for multiple findings of fact on the basis of conflicting evidence emanating from a number of witnesses and found in a voluminous record, a summary judgment motion cannot serve as an adequate substitute for the trial process. Generally speaking, in those cases, the motion judge simply cannot achieve the full appreciation of the evidence and issues that is required to make dispositive findings. Accordingly, the full appreciation test is not met and the “interests of justice” requires a trial.

[ 15 ] Combined Air, supra reminded members of the bar of their obligations before summary judgment motions are brought. As the Court said at para. 68:

It is important to underscore the obligation that rests on members of the bar in formulating an appropriate litigation strategy. The expenditure of resources, regardless of quantum, in the compilation of a motion record and argument of the motion is not a valid consideration in determining whether summary judgment should be granted. It is not in the interest of justice to deprive litigants of a trial simply because of the costs incurred by the parties in preparing and responding to an ill conceived motion for summary judgment.

[ 16 ] In Combined Air one of the matters under appeal was an action proceeding under the simplified procedure under Rule 76 of the Rules of Civil Procedure. The Court provided additional guidance with respect to such cases. In addition to the “full appreciation test” the court provided an additional test, the efficiency test, for matters proceeding under the simplified procedure rules. As the Court stated at para. 254:

We wish to emphasis the significant additional factor that must also be considered in the context of a simplified procedure action. Given that simplified procedure claims are generally for amounts of $100,000 or less, the Rule is designed to get the parties to trial with a minimum of delay and costs. Thus, one of the key objectives of the simplified procedure rule is to limit the extent of pretrial proceedings and to bring the parties to an early trial conducted pursuant to tailored rules. … It will often be the case that bringing a motion for summary judgment will conflict with the efficiency that can be achieved by simply following the abridged procedures in Rule 76.

[ 17 ] In Combined Air the Court of Appeal acknowledged that summary judgment motions can provide a method for litigants to achieve cost savings and arrive at a more efficient resolution of disputes. However the Court cautioned at para. 4:

However, it is equally clear that the amendments to Rule 20 were never intended to eliminate trials. In fact, the inappropriate use of Rule 20 has the perverse effect of creating delays and wasting costs associated with preparing for, arguing and deciding a motion for summary judgment, only to see the matter sent on for trial.

[ 18 ] However the Court allowed that there may be cases where a summary judgment motion may be appropriate in the Simplified Procedure action. As the court noted at para. 257:

For example, in a document driven case, or in a case where there is limited contested evidence, both the full appreciation test and the efficiency rationale maybe served by granting summary judgment in a simplified procedure action.

CONCLUSION

[ 19 ] I am satisfied that both parties have put their best foot forward in advancing affidavits setting out their positions but the affidavits clearly illustrate contested evidence. Based on the conflicting evidence a judge will be required to make determinations of fact in order to arrive a just result. Because this is proceeding under the simplified rules the defendant has not had an opportunity to cross-examination on the plaintiff’s affidavit. However this opportunity will be available if the matter moves on to a summary trial.

[ 20 ] The competing affidavits indicate a number of issues which needed to be determined: whether the plaintiff has the protection of the labour and material bonds with respect to one or both projects; whether the plaintiff has given notice of its claim to Sovereign under the specific terms of the bond; whether the defendant can rely on the Limitations Act, R.S.O. 1990 c.L.15 as a defence to one or both claims; whether the defendant as surety has any obligation to pay the plaintiff under the terms of the bonds with respect to the two projects; and finally whether the plaintiff’s claims, commenced in Small Claims Court, sufficiently pleads a cause of action against Sovereign.

[ 21 ] Without the benefit of hearing the cross-examination of the witnesses I am satisfied that I am unable to satisfy the “full appreciation test”. In addition I am satisfied that this matter could be more efficiently dealt with by a summary trial given the quantum involved together with the recognition that this is a partial summary judgment motion only.

[ 22 ] As the court noted in Combined Air it is open to the court to exercise case management powers found in Rule 20.05: see Combined Air at para. 264.

[ 23 ] In order that this matter may move forward on a cost efficient basis I order that the trial of this action shall proceed by way of summary trial under Rule 76.12. In order to provide further cost efficiencies the parties may use their affidavits filed on this motion for purposes of a summary trial together with one further affidavit each if there are issues that need to be brought forward for a summary trial that were not fundamental to the issues on the summary judgment motion.

COSTS

[ 24 ] The parties are encouraged to settle the issue of costs if the issues are not resolved then the responding party may make costs submissions not exceeding five pages within twenty of this endorsement, thereafter the moving party will have ten days to respond. Submissions should be sent in care of my judicial secretary care of the Superior Court of Justice, Barrie.

MULLIGAN J.

Date: February 14, 2012