GUELPH COURT FILE NO.: 846/06
DATE: 20120712
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Wellington Standard Condominium Corporation No. 124
Robert Dowhan, for the plaintiff
Plaintiff
- and -
Fergus Mill Inc., Murray Koebel, Altus Group Limited, Bank of Montreal, Ian Milroy, The Corporation of the Township of Centre Wellington, Robert Foster, Anatoly Morgulis, Construction Control Inc., Israel Katzenberg, RN Design Group Inc., Emcad Consulting Engineers (1995) Inc. and Ridley Windows & Doors Inc.
I. Marks, for the defendants, Altus Group Limited, Bank of Montreal and Ian Milroy
J. Bennett, for the defendants, The Corporation of the Township of Centre Wellington and Robert Foster
C. Simcoe, for the defendant Anatoly Morgulis
Defendants
HEARD: February 27 and May 9, 2012
REASONS FOR JUDGMENT
Daley J.
[1] The defendants Altus Group Limited, Bank of Montréal and Ian Milroy (the "Moving Defendants") move pursuant to Rule 20 of the Rules of Civil Procedure for an order dismissing claims made by the plaintiff and one of the cross-claims against them with the exception of claims relating to the remaining work pursuant to undertakings provided by the defendant Altus Group Limited (“Altus”) to the Plaintiff; and an order directing a trial of an issue to determine any damages payable by Altus as required to complete the remaining work under the undertakings given.
[2] The plaintiff seeks damages in the order of $3 million from the defendants based on various causes of action including breach of warranty, negligence, conspiracy and oppression related to the construction of a condominium project known as the Fergus Mill Condominium (the “Condominium"), in the town of Fergus, Ontario.
[3] The Condominium was constructed by the defendant Fergus Mill Inc. ("Fergus Mill") and Fergus Mill, as declarant, registered the Condominium as Wellington Standard Condominium Corporation No. 124 (the "Corporation") on March 2, 2005.
[4] The Condominium was a renovation of an existing building and as such it was not subject to the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O. 31.
[5] Fergus Mill encountered significant financial difficulties during the construction which involved costs exceeding budgeted amounts and as a result Fergus Mill went into default on its construction loan facility with the defendant, Bank of Montréal (“BMO”).
[6] In December, 2003, BMO appointed Altus' predecessor as a receiver manager of Fergus Mill under the terms of a Charge held by BMO. Altus continued as the appointed receiver manager with a mandate to complete the construction, register the Condominium and complete sales of units in the Condominium.
[7] Altus was appointed as the agent of the chargor Fergus Mill and not as the agent of BMO, accordingly to terms of the loan agreement.
[8] The defendant in Ian Milroy’s (“Milroy”) business Milroy & Associates was retained by Altus, in its capacity as receiver manager, to complete the construction of the Condominium.
[9] The Condominium is located in the township governed by the defendant The Corporation of the Township of Centre Wellington ("Township").
[10] The other defendants named in the action were consultants and contractors retained by Fergus Mill, at various times, to carry out work in respect of the construction of the Condominium.
[11] These defendants filed no materials in opposition to the motion brought by the Moving Defendants for summary judgment dismissing the plaintiff's action and defendants' cross-claims. However, on the return of the motion, counsel for the defendants, other than the defendant Anatoly Morgulis ("Morgulis"), filed with the court a consent providing that if the Moving Defendants were not successful in their summary judgment motion as against the plaintiff, then their motion to dismiss the cross-claims of the mentioned defendants would be withdrawn without costs.
[12] The consent further provided that in the event the Moving Defendants were successful in their summary judgment motion as against the plaintiff, then the cross-claims of the mentioned defendants would be restricted to the trial of the issues with respect to the undertakings given by Altus, with the balance of their cross-claims to be dismissed without costs. The consent provided also that the cross-claims of any defendants not appearing on the return of the motion, and who were not signatories to the consent, would be dismissed.
[13] The defendants RN Design Group Inc. and Ridley Windows and Doors Inc. did not appear upon the return of the motion by counsel or agent, nor were they signatories to the consent mentioned.
[14] The Moving Defendants relied upon affidavit evidence from Kenneth Marshall (“Marshall”), a senior director of Altus, Greg Fedoryn (“Fedoryn”), account manager for BMO, and from Milroy. In response, the plaintiff relied upon the affidavits of Margaret Johnson (“Johnson”) and Christina Parkes (“Parkes”). Transcripts of the cross-examination of Kenneth Marshall and Margaret Johnson were also offered in evidence on the motion.
[15] Before the registration of the Condominium a number of the unit purchasers of the proposed Condominium delivered to Altus a report prepared by Brown and Beattie Ltd. dated January 25, 2005, which report identified specific construction deficiencies in the common elements of the Condominium. A subsequent report was also provided by the proposed purchasers relating to additional alleged deficiencies dated February 1, 2005.
[16] Altus received and delivered a report dated February 1, 2005 from Milroy which commented on the alleged deficiencies contained in the two reports delivered by the proposed purchasers of the Condominium units.
[17] It is the position of the Moving Defendants that Altus provided two undertakings in respect of the completion and repair of deficiencies identified in the Milroy report. The first undertaking was dated February 15, 2005 and in that undertaking Altus, as the receiver undertook to complete and repair the deficiencies identified in that report in the manner and time frames as set forth in the report subject to additional terms and conditions.
[18] It is further the position of the Moving Defendants that Altus provided a second undertaking by a letter dated February 15, 2005 where Altus' solicitor advised the Township of the terms of the first undertaking and also gave a receiver's undertaking to the Township to rectify deficiencies, referred to in this undertaking, which related requirements of the Ontario Building Code as identified by the Township’s building department.
[19] It is the position of the Moving Defendants, on the evidentiary record, that the two undertakings were complied with "to the extent that Altus was permitted access by the Corporation to do so." It is the position of the Moving Defendants that remaining work consists of repairs to ice and snow guards and shingles to a small roof over a turbine room.
[20] The plaintiff asserts that there are numerous alleged deficiencies in the Condominium not covered by the undertakings given by Altus. The deponent Johnson sets out numerous alleged deficiencies in her affidavit.
[21] In addition to the alleged deficiencies, the plaintiff also asserts an oppression claim against the Moving Defendants under the Condominium Act, 1998 S.O. c. 19 and further alleges conspiracy among the Moving Defendants.
[22] As to the cross-claim of the defendant Morgulis, who was retained by Fergus Mill as the architect of record for the Condominium, this defendant seeks contribution and indemnity from the Moving Defendants and it is the position of the Moving Defendants that if the plaintiff's action is dismissed as against them, the cross-claim should also be dismissed.
Analysis:
[23] The Moving Defendants submit that they have no liability to the plaintiff and that as far as these defendants are concerned there is no genuine issue requiring a trial except with respect to the remaining work to be completed pursuant to the undertakings provided by Altus. It was also submitted on behalf of the Moving Defendants that, if necessary, there should be two separate trials of the plaintiff's claims, one in respect of the scope of the remaining work under the undertakings given by Altus and the value of the damages relating to that and secondly, a trial in respect of the liability of the defendants other than the Moving Defendants.
[24] This approach is entirely inappropriate and would result in significant unwarranted expense, excessive use of the administration of justice and would also give rise to the prospect of conflicting findings of fact.
[25] The Moving Defendants seek to have four aspects of the plaintiff's action dismissed by way of summary judgment motion:
(1) breach of warranty;
(2) first-year budget deficiency;
(3) oppression claim; and
(4) conspiracy.
[26] They also move to have the Morgulis’ cross-claim dismissed essentially on the basis that it would be contrary to that defendant's duties, as owed to the Moving Defendants, that he be indemnified for his own professional negligence.
[27] Rule 20.04 (2) and (2.1) provide as follows:
DISPOSITION OF MOTION
General
20.04
(2) The court shall grant summary judgment if,
(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or
(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.
Powers
(2.1) In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
[28] In its decision in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764 the Court of Appeal considered the test for summary judgment and introduced a new approach and threshold to be met prior to any substantial analysis of the merits or utilization of the powers available under Rule 20 (2.1).
[29] The threshold "full appreciation" test was set out in Combined Air, supra, as follows at para. 50:
... In deciding if 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 an 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 summary judgment, or can this full appreciation only be achieved by way of a trial?
[30] In considering the "full appreciation" test, the Court of Appeal set out in general terms three types of cases amenable to summary judgment as follows:
(1) "...where the parties agree that it is appropriate to determine an action by way of a motion for summary judgment;"
(2) cases encompassing: "claims or defences that are shown to be without merit;" and
(3) cases "...where the trial process is not required in the "interest of justice": Combined Air, supra; see also: Stewart v. State Mutual Automobile Insurance, 2012 ONSC 2615.
[31] It was urged on behalf of the Moving Defendants that this motion is in the second category of cases.
[32] While the Court of Appeal made it clear that the use of the summary judgment process is to be considered on a case-by-case basis, the Court clearly expressed what it meant by the term "full appreciation" in paras. 51 to 54 which read as follows:
[51] We think this “full appreciation test” provides a useful benchmark for 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 “interest of justice” requires a trial.
[52] In contrast, in document-driven cases with limited testimonial evidence, a motion judge would be able to achieve the full appreciation of the evidence and issues that is required to make dispositive findings. Similarly, the full appreciation test may be met in cases with limited contentious factual issues. The full appreciation test may also be met in cases where the record can be supplemented to the requisite degree at the motion judge’s direction by hearing oral evidence on discrete issues.
[53] We wish to emphasize the very important distinction between “full appreciation” in the sense we intend here, and achieving familiarity with the total body of evidence in the motion record. Simply being knowledgeable about the entire content of the motion record is not the same as fully appreciating the evidence and issues in a way that permits a fair and just adjudication of the dispute. The full appreciation test requires motion judges to do more than simply assess if they are capable of reading and interpreting all of the evidence that has been put before them. [Emphasis in original]
[54] The point we are making is that a motion judge is required to assess whether the attributes of the trial process are necessary to enable him or her to fully appreciate the evidence and the issues posed by the case. In making this determination, the motion judge is to consider, for example, whether he or she can accurately weigh and draw inferences from the evidence without the benefit of the trial narrative, without the ability to hear the witnesses speak in their own words, and without the assistance of counsel as the judge examines the record in chambers.
[33] The plaintiff's claims against the Moving Defendants are multifaceted in that they relate to the liability of the receiver manager, Altus, the lender and the individual retained to remediate the deficiencies in the Condominium.
[34] While the plaintiff's pleading is in many respects sparse in terms of its particularity, the plaintiff has filed responding affidavit evidence in respect of each aspect of its claim in regard to which the Moving Defendants seek to have summary judgment, which just minimally answers the evidence put forward on behalf of the Moving Defendants.
[35] Although counsel for the Moving Defendants urged that consideration of the deficiencies remaining which would be covered by the Altus undertakings, was not necessary, it is clear that these parties have no agreement whatsoever on the nature of the deficiencies being asserted against the defendants nor the cost of remediating the deficiencies and whether they come within the Altus undertakings or not.
[36] In my view, while several of the causes of action asserted by the plaintiff in the statement claim may not ultimately succeed at trial, given the multiple findings of fact required on a conflicting and voluminous evidentiary record, I cannot achieve a full appreciation of the evidence and issues related to the plaintiff’s claims so as to make dispositive findings such that the issues at stake can appropriately be resolved on a motion for summary judgment. As such I conclude that the interest of justice requires a trial.
[37] In reaching this conclusion I am also mindful of the fact that a trial with respect to deficiencies Altus may be liable for pursuant to its undertakings appears inevitable. This outcome was essentially acknowledged by counsel for the Moving Defendants in the notice a motion in that the motion was framed on the basis that Altus wished to have the cost of the remaining work under the two undertakings determined and an order directing a reference or a trial of an issue to determine the amount required to complete the remaining work.
[38] As to the Moving Defendants motion for summary judgment seeking to have the cross-claim of the defendant Morgulis dismissed, in response to the motion, defendant Morgulis filed an affidavit sworn May 17, 2010.
[39] In his statement of defence and cross-claim, he denies any negligence, as architect, and advances a cross-claim against all other defendants jointly and severally seeking contribution and indemnity pursuant to sections 2 and 3 of the Negligence Act, R.S.O. 1990, c. N. 1 and under "the common law and equity for any amounts which the Architect may be found to be responsible to the plaintiff."
[40] Morgulis was not cross-examined on his affidavit filed in opposition to the Moving Defendants' motion and no evidence was filed contradicting statements made in his affidavit.
[41] Although the pleading filed by this defendant is sparse as to particulars in respect of his cross-claim, he has offered affidavit evidence setting forth the nature of his retainer and the circumstances under which he returned to Ontario to review the status of the Condominium project when requested.
[42] This defendant, in his affidavit, contradicts the evidence offered by Marshall and Milroy in their affidavits in several respects.
[43] Given the contradictory and untested affidavit material from Morgulis, in my view the Moving Defendants motion to dismiss the cross-claim must fail. The defendant asserts in his affidavit that he "certainly expected the Receiver to take responsibility for me if there was a problem because I did not have a Certificate of Practice or otherwise." While this may be a vague statement that he believed he had an agreement with Altus as receiver to indemnify him with respect to any claims arising, there is no contrary evidence offered on this motion on behalf of the Moving Defendants.
[44] Notably, in his affidavit sworn April 22, 2010, Milroy states at paragraph 59, in referring to Morgulis as the architect of record and why a new architect was not engaged: "To get a new architect who was unfamiliar with the Condominium to conduct the final review would have been nonsensical."
[45] As to the cross-claims of the defendants RN Design Group Inc. and Ridley Windows and Doors Inc. as against the Moving Defendants, as these defendants did not file any materials in response to the summary judgment motion seeking the dismissal of their cross-claims, and made no submissions on the motion, their cross-claims as against the Moving Defendants are dismissed.
[46] Given the dismissal of the summary judgment motion as against the plaintiff and in respect of the defendants other than the two defendants mentioned in the paragraph immediately above, and in accordance with the parties' consent filed, the Moving Defendants’ motion in respect of the other defendants shall be treated as having been withdrawn on a without cost basis.
[47] In the result, the plaintiff's action shall proceed to trial.
[48] This action was instituted by the plaintiff in 2006. The Moving Defendants' summary judgment motion was prepared in November of 2009 but was not returnable until February, 2012.
[49] This action has had an extraordinary history of delay. As provided for in a Rule 20.05 (2), terms may be imposed where an action is ordered to proceed to trial upon the dismissal of a summary judgment motion.
[50] Although submissions from counsel were not sought as to terms that might be imposed if this matter was directed to proceed to trial, subject to receiving written submissions from counsel within 20 days, and if necessary, attendance of counsel in court at Brampton on scheduling matters, I propose the following timetable:
(1) Affidavits of documents and copies of all productions to be exchanged by August 31, 2012;
(2) All oral examinations are to be complete by December 31, 2012;
(3) Any motions with respect to undertakings and refusals from examinations for discovery are to be completed by February 28, 2013;
(4) The action is to be listed for trial no later than April 1, 2013;
(5) If there are other timing or scheduling issues relating to this matter, I will remain seized as the case supervision judge as appointed by the Regional Senior Justice and maybe spoken to and counsel may appear before me at Brampton upon an appointment arranged with the Brampton trial co-ordinator; and
(6) Pre-trial conferences shall be scheduled before me.
[51] In the event counsel do not file submissions on the proposed timetable, it will come into force upon the expiry of the 20 days as provided.
[52] As to costs, counsel shall file with the Brampton trial office, submissions of no longer than two pages plus a costs outline within 30 days.
Daley J.
Released: July 12, 2012
GUELPH COURT FILE NO.: 846/06
DATE: 20120712
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Wellington Standard Condominium Corporation No. 124
Plaintiff
- and –
Fergus Mill Inc., Murray Koebel, Altus Group Limited, Bank of Montreal, Ian Milroy, The Corporation of the Township of Centre Wellington, Robert Foster, Anatoly Morgulis, Construction Control Inc., Israel Katzenberg, RN Design Group Inc., Emcad Consulting Engineers (1995) Inc. and Ridley Windows & Doors Inc.
Defendant
REASONS FOR JUDGMENT
Daley J.
Released: July 12, 2012