ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-11-424153
DATE: 20121214
BETWEEN:
EHRLICH ELECTRIC COMPANY Plaintiff – and – BCC INTERIORS INC., EDWARD BURNS, TERRY KLINGENBERG and MICHAEL SCOTT PROKOSCH Defendants
Paul Starkman, for the Plaintiff
Hannah Arthurs, for the Defendants
HEARD: December 3, 2012
t. mcewen j.
reasons for decision
[ 1 ] This motion is brought by the Defendants BCC Interiors Inc., Edward Burns, Terry Klingenberg and Michael Scott Prokosch (“the Defendants”) for an order dismissing this action with costs.
[ 2 ] The Defendants bring this motion pursuant to r. 21.01(1)(a) of the Rules of Civil Procedure on the basis that the within action is statute-barred pursuant to the provisions of the Limitations Act , 2002, S.O. 2002, c. 24 Sched. B.
background facts
[ 3 ] This action involves a claim for labour, materials and equipment that the Plaintiff, Ehrlich Electric Company (“the Plaintiff”) claims to have provided to the Defendant, BCC Interiors Inc. (“BCC”). The remaining Defendants, Edward Burns, Terry Klingenberg and Michael Scott Prokosch (collectively “the Individual Defendants”) were each directors and officers of BCC. The Statement of Claim in this action was issued on April 11, 2011. Essentially, the Plaintiff claims that BCC has received monies and has been paid in full by the owner of the project, and that pursuant to the provisions of the Construction Lien Act , R.S.O. 1990, c.C.30 , as amended, the monies it has received constitute trust funds. The Plaintiff further pleads that BCC committed a breach of trust by appropriating and converting the funds. Additionally, it is alleged that the Individual Defendants assented and acquiesced to the appropriation and conversion of the trust funds.
[ 4 ] It is important to note that the Plaintiff commenced an earlier action against BCC with respect to the same project claiming breach of contract for the exact same amount as sought in this action (“the first action”). The first action was commenced on September 25, 2008 and pleads that the Plaintiff’s last day on site on the project was September 6, 2007.
[ 5 ] Given the Plaintiff’s admission that its last day on site was September 6, 2007 and the fact that the Plaintiff commenced the first action on September 5, 2008, the Defendants submit that the Statement of Claim in this action, which was issued on April 11, 2011 is clearly statute-barred since it was issued outside of the two-year limitation period.
[ 6 ] The parties agree that for the purposes of this motion I can have regard to the pleadings in both the first action and the within action. Based on the existing case law, I agree.
the law
[ 7 ] The test to be applied on a motion brought pursuant to r. 21.01(1)(a) is that a pleading should be struck where it is “plain and obvious” that it cannot succeed, even if the facts alleged in the Statement of Claim were proven: Hunt v. Carey Canada Inc., 1990 90 (SCC) , [1990] 2 S.C.R. 959; MacDonald et al. v. Ontario Hydro et. al., 1994 7294 (ON SC) , [1994] O.J. No. 1670; aff’d 1995 10628 (ON SC) , [1995] O.J. No. 3048 (Div. Ct.).
[ 8 ] In Nash v. The Queen in Right of Ontario , 1995 2934 (ON CA) , [1995] O.J. No. 4043 at para. 11 (Ont. C.A.), the Court of Appeal set out the following principles with respect to striking pleadings:
(a) The test for determining whether a pleading should be struck was set out in Hunt as the “plain and obvious” test;
(b) On such motions, court must accept all facts alleged in the statement of claim as proven unless they are patently ridiculous or incapable of proof and the statement of claim must be read generously with allowance for inadequacies due to drafting deficiencies, and
(c) The Court should not dispose of matters of law that are not fully settled in the jurisprudence.
defendants’ position
[ 9 ] The Defendants submit that at the time the Statement of Claim was issued in the first action (September 5, 2008) for breach of contract, it was plain and obvious that the Plaintiff had a claim for breach of trust. Accordingly, the Statement of Claim in this action was issued outside the two-year limitation period. In this regard, the Defendants further submit that the cause of action pursuant to the provisions of the Construction Lien Act starts to run when unpaid amounts exist and that in this matter the outstanding amounts obviously existed by 2008, at the latest, when the first action was commenced. Thus, the within action was commenced outside the two-year limitation period.
[ 10 ] The Defendants rely upon decisions of this Court in Cast-Con Group Inc. v. Alterra (Spencer Creek) Ltd., [2008] O.J. No. 842 (S.C.) ; add’l reasons [2008] O.J. No. 3274 and Aldine Construction Ltd. v. Brucegate Holdings Inc., 2010 ONSC 3032 ; [2010] O.J. No. 2214 . Both cases dealt with motions brought by plaintiffs to amend Statements of Claim to add new defendants in Construction Lien Act matters. In both cases the motions were dismissed. It was found that the plaintiffs, could have with due diligence, added the defendants within the limitation period.
[ 11 ] The Defendants also rely upon the decision of Wein J. in Charlton v. Beamish, 2004 35934 (ON SC) , [2004] O.J. No. 4540, in which an action was commenced against a chiropractor for injury arising as a result of a chiropractic manipulation. The plaintiff’s Statement of Claim was struck, on a limitation period issue, pursuant to r. 21.01(1)(a). Wein J., at para. 29, held that while it is not generally appropriate to determine the legal issue of the impact of a limitation period in a case where the assessment is affected by the discoverability rule, there are cases where there is no factual component, or where the result is plain and obvious. Wein J., at paras. 48-49, held that based on the pleadings in the case before her, on the undisputed facts set out in the Statement of Claim, the action was statute-barred.
[ 12 ] The Defendants submit that the within action is analogous to the Charlton case given the nature of the pleadings set out in the first action commenced by the Plaintiff.
plaintiff’s position
[ 13 ] The Plaintiff submits that it is not plain and obvious that the Plaintiff’s claim is statute-barred. It relies upon the decision of the Court of Appeal in Boutin v. Co-operators Life Insurance Co. (1999), 1999 2071 (ON CA) , 42 O.R. (3d) 612 (C.A.) in which the Court held, on the facts of that case, that the matter of a limitation period should not be dealt with by way of a r. 21.01(1)(a) motion but rather the issue of the limitation period should be left for trial. The Plaintiff also relies upon a number of other cases in which courts have held that, generally speaking, courts do not want to address factual components in r. 21.01(1)(a) motions: Angevine v. Ontario (2008), 2008 64372 (ON SC) , 94 O.R. (3d) 391 (S.C.); Blenkhorn Sayers Structural Steel Corp. v. Webb, [2005] O.J. No. 4611 (S.C.) .
[ 14 ] The Plaintiff also points out that the case law relied upon by the Defendants, Cast-Con and Aldine were motions to add defendants pursuant to R. 5 of the Rules of Civil Procedure . Accordingly, the onus was on the plaintiff and a different test was employed by the courts in those cases.
[ 15 ] In this action, the Plaintiff submits that the Defendants’ position concerning the limitation period is undermined by virtue of the fact that in its Statement of Defence in the first action BCC expressly denies that any amounts are owing to the Plaintiff and specifically pleads the following:
BCC Interiors denies that any additional costs were agreed and/or verified by the parties as alleged in the Statement of Claim and puts Ehrlich Electric to the strict proof thereof.
Further, there has been no certification of substantial performance and, therefore, no holdback monies are currently owing to Ehrlich Electric. Any and all monies which may be payable to Ehrlich Electric are subject to the holdback provisions pursuant to the Ontario Construction Lien Act .
BCC Interiors denies that it is indebted to Ehrlich Electric for any amount whatsoever and puts Ehrlich Electric to the strict proof thereof.
[ 16 ] Based on the pleadings, the Plaintiff submits that there are a number of missing facts that are necessary to determine when the limitation period begins to run. Some of the facts relied upon by the Plaintiff are as follows:
• The amount of the holdback;
• The date of Certification of Substantial Performance;
• When the holdback is payable; and
• When the Defendant, BCC Interiors Inc. received the holdback.
analysis
[ 17 ] In my view, although the argument of the Defendants is persuasive, the motion ought to be dismissed. The Defendants face a high burden of proof on this motion. While ultimately it may become clear, based on evidence, that the within action is statute-barred, I cannot conclude that it is plain and obvious that this is the case based solely on the pleadings in the first action and a generous reading of the Statement of Claim in this action.
[ 18 ] The defence raised by BCC in the first action, particularly in paragraph 9, is that no monies are currently owed to the Plaintiff. It is therefore possible, in the factual matrix of this case, that there is a legitimate dispute as to when the limitation period does begin to run. The other missing facts raised by the Plaintiff may also affect the limitation period.
[ 19 ] I am also mindful of the fact that, while the Cast-Con and Aldine cases are helpful, they are entirely distinguishable by virtue of the fact that the motions were brought pursuant to R. 5, the legal test is different, and evidence was adduced.
[ 20 ] Lastly, with respect to the Charlton case, I agree that it is persuasive but that it is distinguishable by virtue of the fact that it is a personal injury case and the nature of the pleadings in that case were different from those which I have to consider.
[ 21 ] In all of the circumstances, therefore, I dismiss the motion.
[ 22 ] With respect to the issue of costs, I received costs outlines and submissions from counsel. The amount sought by the Plaintiff in the amount of $3,506.01 is reasonable and I award that amount to the Plaintiff to be paid within 60 days.
T. McEwen J.
Released: December 14, 2012
COURT FILE NO.: CV-11-424153
DATE: 20121214
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
EHRLICH ELECTRIC COMPANY Plaintiff – and – BCC INTERIORS INC., EDWARD BURNS, TERRY KLINGENBERG and MICHAEL SCOTT PROKOSCH Defendants
REASONS FOR DECISION
T. McEwen J.
Released: December 14, 2012