HAMILTON COURT FILE NO.: 06-23359
DATE: 2013-08-16
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Canada Forgings Inc.
Plaintiff
– and –
Atomic Energy of Canada Limited and Linamar Holdings Inc.
Defendants
Geoff R. Hall, Brenda Swick and Melissa Arruda, for the Plaintiff
Roger Gillott, Jay Nathwani, for the Defendant/Moving Party
HEARD: February 6, 7, 21 and 22, 2013 and March 4 and 5, 2013
the honourable justice b. h. matheson
JUDGMENT
[1] Atomic Energy of Canada Limited (“AECL”) brought a notice of motion for summary judgment against the plaintiff, Canada Forgings Inc. (“CanForge”) on the grounds that there is no genuine issue requiring a trial.
[2] I heard this motion for summary judgment on February 6, 7, 21, 22 and March 4 and 5, 2013.
[3] The plaintiff’s action against Linamar Holdings Inc. was dismissed with the consent of all parties without costs. I gave an order dated the 18th day of April, 2013 to that effect.
A BRIEF STATEMENT OF MY UNDERSTANDING OF THE FACTS AND THE INTERACTION OF VARIOUS COMPANIES AND PEOPLE
[4] In 2004 Bruce “A” nuclear reactor was going to be refurbished and AECL was planning for that. On September 1, 2004, AECL requested tenders from the three qualified suppliers: Invar, Donlee Precision, a division of General Donlee (“Donlee”) and Precision Nuclear Inc. (“Precision”).
[5] The bidders had to arrange pricing from subcontractors and suppliers.
[6] AECL received bids from the three on October 12, 2004. Precision’s bid was rejected as technically non-compliant. Invar’s bid was $18,495,919.20. This was about $5,000,000.00 lower than the bid from Donlee, whose bid was $24,295,125.00.
[7] A contract was not entered into because of a delay in AECL and Bruce Power signing a prime contract. Patriot was the supplier of the end fittings for Invar. CanForge had also submitted a bid which was less than that of Patriot. I will deal with that issue later.
[8] When AECL was asking for bids, it was stated on the bid documents that the bids were open for 180 days. That is one of the areas that CanForge is resting much of its case. CanForge is stating that because of the conduct of AECL that the bidding did not close after the 180 days.
[9] AECL contacted Patriot and made some business decisions that would appear to be binding on these two parties.
[10] CanForge brought this action for grounds that will be referred to later.
[11] If one looks at Exhibit D, one will see the players.
[12] The issue is that while the parties were in a Contract A situation, no one could alter the terms of the bidding. If a contract were entered into then the contract would be a Contract B, and only the parties to the Contract B would have any further dealings.
THE ACTION
[13] AECL, after service of the statement of claim dated the 15th day of March, 2006, brought a motion to strike part of the plaintiff’s statement of claim. Justice Fedak by order dated September 11, 2008, which was agreed to by all the parties, ordered the following claims struck:
a. Civil conspiracy;
b. Criminal conspiracy contrary to the Criminal Code;
c. Tied selling contrary to the provisions of the Competition Act;
d. The Tort of Intimidation;
e. The Torts of Unlawful Interference with Economic Interests and Intentional Interference with Economic Relations;
f. Inducing Breach of Contract;
g. Action against Ian Salgo dismissed.
[14] The only claim that remained was the defamation claim.
[15] Justice Carpenter-Gunn, by order of August 7, 2012, allowed the plaintiff on consent to amend its Amended “Fresh as Amended” Statement of Claim attached to her order. The amendments made by the plaintiff to its statement of claim were made without prejudice to AECL’s ability to argue on a motion for summary judgment, are statute-barred and disclose no reasonable cause of action.
[16] The issues before this court are the claims by the plaintiff against AECL for the following matters:
a. Is the claim of CanForge barred by the Limitations Act?
b. Breach of Duty of Fairness
c. Defamation
d. Fraudulent Concealment
e. Negligence
IS THIS ACTION ONE THAT SHOULD BE DECIDED ON A MOTION FOR SUMMARY JUDGMENT?
[17] Rule 20.01 (3):
A defendant may, after delivering a statement of defence, move with supporting affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim.
[18] Rule 20.02(1) to 20.04(4):
EVIDENCE ON MOTION
20.02(1) An affidavit for use of a motion for summary judgment may be made on information and belief as provided in subrule 39.01(4), but, on the hearing of the motion, the court may, if appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts.
(2) In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that here is a genuine issue requiring a trial.
FACTUMS REQUIRED
20.03(1) On a motion for summary judgment, each party shall serve on every other party to the motion a factum consisting of a concise argument stating the facts and law relied on by the party.
(2) The moving party’s factum shall be served and filed with proof of service in the court office where the motion is to be heard at least seven days before the hearing.
(3) The responding party’s factum shall be served and filed with proof of service in the court office where the motion is to be heard at least four days before the hearing.
(4) [Repealed O. Reg. 394/09, s.13(4)]
DISPOSITON OF MOTION
General
20.04(1) [Repealed O. Reg. 438/08, s.13(1).]
(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.
Oral evidence (Mini-Trial)
(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.
Only Genuine Issue is Amount
(3) Where the court is satisfied that the only genuine issue is the amount to which the moving party is entitled, the court may order a trial of that issue or grant judgment with a reference to determine the amount.
Only Genuine Issue is Question of Law
(4) Where the court is satisfied that the only genuine issue is a question of law, the court may determine the question and grant judgment accordingly, but where the motion is made to a master, it shall be adjourned to be heard by a judge.
[19] In the Combined Air Mechanical Services Inc. v. Flesch 2011 ONCA 764, [2011] O.J. No 5431 a five member panel of the Ontario Court of Appeal gave judgment on how the new wording of Rule 20 should be applied when a court is dealing with a summary judgment motion.
Page 8, paragraphs 2 to 4:
[2] Of the changes introduced, the amendments to Rule 20, which governs motions for summary judgment, were arguably the most important. Simply put, the vehicle of a motion for summary judgment is intended to provide a means for resolving litigation expeditiously and with comparatively less cost than is associated with a conventional trial. Although such motions have long been available in this province, their utility had been limited in part by a line of jurisprudence from this court that precluded a judge on a summary judgment motion from weighing the evidence, assessing credibility, or drawing inferences of fact. These powers were held to be reserved for the trial judge.
[3] The 2010 amendments to Rule 20 effectively overruled this line of authority by specifically authorizing judges to use these powers on a motion for summary judgment unless the judge is of the view that it is in the interest of justice for such powers to be exercised only at a trial. One of the objectives behind enhancing the powers available to judges on a summary judgment motion was to make this form of summary disposition of an action more accessible to litigants with a view to achieving cost savings and a more efficient resolution of disputes. Indeed, the principle of proportionality is advanced by the expansion of the availability of summary judgment.
[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 wasted costs associated with preparing for, arguing and deciding a motion for summary judgment, only to see the matter sent on for trial.
Page 18, paragraphs 40 to 44:
[40] Speaking generally, and without attempting to be exhaustive, there are three types of cases that are amenable to summary judgment. The first two types of cases also existed under the former Rule 20, while the third class of case was added by the amended rule.
[41] The first type of case is where the parties agree that it is appropriate to determine an action by way of a motion for summary judgment. Rule 20.04(2)(b) permits the parties to jointly move for summary judgment where they 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.” We note, however, that the latter wording – “the court is satisfied” – affirms that the court maintains its discretion to refuse summary judgment where the test for summary judgment is not met, notwithstanding the agreement of the parties.
[42] The second type of case encompasses those claims or defences that are shown to be without merit. The elimination of these cases from the civil justice system is a long-standing purpose well served by the summary judgment rule. As stated by the Supreme Court of Canada in Canada (A.G.) v. Lameman, 2008 SCC 14, 2008 SCC 14, [2008] 1 S.C.R. 372, at para. 10:
The summary judgment rule serves an important purpose in the civil litigation system. It prevents claims or defences that have no chance of success from proceeding to trial. Trying unmeritorious claims imposes a heavy price in terms of time and cost on the parties to the litigation and on the justice system. It is essential to the proper operation of the justice system and beneficial to the parties that claims that have no chance of success be weeded out at an early stage. Conversely, it is essential to justice that claims disclosing real issues that may be successful proceed to trial.
[43] As we shall discuss further below, the amended Rule 20 has given the motion judge additional tools to assess whether a claim or defence has no chance of success at trial.
[44] Moreover, the amended Rule 20 now permits a third type of case to be decided summarily. The rule provides for the summary disposition of cases other than by way of agreement or where there is “no chance of success”. The prior wording of Rule 20, whether there was a “genuine issue for trial”, was replaced by “genuine issue requiring a trial”. This change in language is more than mere semantics. The prior wording served mainly to winnow out plainly unmeritorious litigation. The amended wording, coupled with the enhanced powers under rules 20.04(2.1) and (2.2), now permit the motion judge to dispose of cases on the merits where the trial process is not required in the “interest of justice”.
Pages 20 and 21, paragraphs 49 to 53 and 56:
[49] In contrast, a summary judgment motion is decided primarily on a written record. The deponents swear to affidavits typically drafted by counsel and do not speak in their own words. Although they are cross-examined and transcripts of these examinations are before the court, the motion judge is not present to observe the witnesses during their testimony. Rather, the motion judge is working from transcripts. The record does not take the form of a trial narrative. The parties do not review the entire record with the motion judge. Any fulsome review of the record by the motion judge takes place in chambers.
[50] We find that the passages set out above from Housen, at paras. 14 and 18, such as “total familiarity with the evidence”, “extensive exposure to the evidence”, and “familiarity with the case as a whole”, provide guidance as to when it is appropriate for the motion judge to exercise the powers in rule 20.04(2.1). 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?
[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.
[56] By adopting the full appreciation test, we continue to recognize the established principles regarding the evidentiary obligations on a summary judgment motion. The Supreme Court of Canada addressed this point in Lameman, at para. 11, where the court cited Sharpe J.’s reasons in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 (Gen. Div.), at p. 434, in support of the proposition that “[e]ach side must ‘put its best foot forward’ with respect to the existence or non-existence of material issues to be tried.” This obligation continues to apply under the amended Rule 20.
[20] Justice D.M. Brown in George Weston Limited v. Domtar Inc., Court file 07-CL-7061, and 1318214 Ontario Limited v. Sobeys Capital Incorporated, Court file 10-8668-00CL, wrote at paragraphs 10 and 11 the following:
I do not regard Rule 20 as giving a party an automatic right to bring a Post-Discovery summary judgment motion. The General Principle of Rule 1.04(1) and the principle of Proportionality of Rule 1.04(1.1), when coupled with the reality of scarce judicial resources and the risk that the motion might not end the action, impose on a party wishing to schedule a one day or longer Post-Discovery summary judgment motion an obligation to demonstrate, at a scheduling conference, that the benefits of allowing such a motion to proceed outweigh the risks that the motion might fail, thereby saddling the parties with an unnecessary layer of additional litigation costs. Let me expand on both points.
The fundamental principles guiding a court’s consideration of such competing requests remain the General Principle of Rule 1.04(1) – securing the just, most expeditious and least expensive determination of every civil proceeding on its merits – and the principle of Proportionality in Rule 1.04(1.1) – giving directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding. Those are the benchmarks against which requests to schedule Post-Discovery summary judgment motions or directions for stays of such motions must be measured.
[21] I realized that it was not going to be a short summary judgment. By the time that I realized this we were into our fourth day. I felt that it was best to forge on.
THE ISSUES
[22] My recollection of the arguments and the material filed indicate that there are four main issues raised by the plaintiff. They are:
a. Duty of fairness;
b. Defamation claim;
c. Negligence on the part of AECL. This is included in the amended claim of the plaintiff.
d. Statute of Limitations.
DUTY OF FAIRNESS
POSITION OF CANFORGE
[23] CanForge argues that AECL owed a duty of fairness to it. It arose when AECL issued a tender for bids for the end fitting assemblies. It stated that this arose on September 1, 2004; at that time Donlee, CanForge and Patriot submitted bids.
[24] At that time and during the period of time there was a Contract “A” relationship between the bidders and AECL. It becomes a Contract “B” when, and if, AECL enters into an agreement with one of the bidders.
[25] Paul Emanuelli in his book Government Procurement Third Edition, wrote at page 768 the following:
The primary indicator of a Contract A process is the requirement that bidders submit tenders that will be legally binding, typically for a predetermined amount of time set out in the tender call. However, a tender call may be ambiguous and may not contain express language regarding the intention of the parties, the binding nature of a tender, the irrevocability period or the legal sanctions that may attach to a bidder’s failure to honour its tender.
Since each case is considered on its own facts, no decision to date has provided a complete list of factors, nor have the courts conclusively indicated whether any particular factor is in itself determinative of the overall intention of the parties. However, based on the general concepts articulated in the decisions that have considered this issue, the factors that courts typically look for when determining whether the purchaser intended to create Contract A include:
The use of traditional tendering terms, phrases and concepts, particularly those historically associated with the construction industry bidding process.
Formal procedural rules that must be followed by all prospective suppliers in order to avoid disqualification.
Standards that a tender must meet to be compliant and eligible for acceptance.
A detailed matrix to score rated criteria.
The inclusion of pre-established performance terms and standards incorporated into pro forma agreement that replace or limit negotiations during the bidder selection and contract formalization process.
The requirement that bidders be irrevocably bound to their tenders, often for a predetermined amount of time specified in the tender call.
The requirement that bidders provide bid security, such as a bid bond or letter of credit, to be forfeited if the bidder is selected but fails to honour its tender.
[26] Precision’s bid was rejected for technical reasons, that left Invar and Donlee bids to be considered by AECL.
[27] In the tender document of AECL, which was dated July 6, 2004, gave a validity date of 180 days. This is found at page 92 of Volume 1 of the motion record of AECL. In the form of tender of the three bidders, Donlee, Invar and Precision, the validity date for all three stated 180 days. (This is found at pages 180, 260 and 307 of the volume).
[28] The position of AECL is that there was no acceptance during the 180 days and thus the tender period was over. This, according to AECL, allowed it to deal with Patriot directly and was not bound by any duty of fairness.
[29] CanForge’s position is that because of the actions of AECL the tender process was extended by the actions of AECL. CanForge states that when AECL entered into direct negotiations with Patriot, it should have also dealt with it on the same basis. AECL owed it a duty of fairness.
[30] CanForge relies on a number of documents that it says support its position that the tender process was extended.
[31] CanForge states in its factum that the tendering process was extended to December 12, 2005, when AECL gave the end fitting contract to Invar, and not the April 10, 2005 that AECL says that the tendering process ended.
[32] CanForge relies on a document prepared by AECL dated October 7, 2004 to Invar. It gives Invar tentative dates of January 31, June 1, and December 1, 2006 for delivery. This is found in document ‘Form of Tender’ at page 79, Tab 1-K of the responding motion record of CanForge.
[33] CanForge states that Addendum No. 1 (found in the motion record of AECL Volume 2 at pages 417-420) refers to the original tender document, which is referred to in paragraph 26 of my judgment, mentions a number of changes to the document. CanForge argues that by making these changes the tender process was still in effect and that AECL had a duty of fairness to CanForge.
[34] At Tab 1-J of CanForge’s responding motion record Volume 1 is a document that appears to be a revised quote of Invar. It refers to its quote of October 6, 2004. This was a document referred to in the affidavit of Scott Naar sworn the 22nd day of August 2012.
[35] In the affidavit of Mr. Scott Naar previously referred to at page 133, there is reference to Recommendation and Authorization to Purchase (“RAP”). It is dated the 8th day of December 2005. This gives reasons for choosing Invar and why Donlee and Precision were not chosen. It also indicates the bidding of each of the three. Since Precision was not technically acceptable, Invar was the lowest bid by about $3,000, 000.00. This was the awarding of the contract to Invar, well after the 180 expiry period that was in the original bidding documents.
[36] Bruce Nuclear delayed the refurbishing of its plant for a period of time. No contract was awarded during the 180 day period referred to in the tendering documents.
[37] CanForge has stated that AECL breached its duty of fairness to CanForge by directly entering into contract arrangements with Patriot. AECL should have also entered into negotiations with CanForge.
[38] As I understand the position of CanForge, it is stating that the tendering process was extended and that when AECL was dealing with Patriot and Invar, it should have also, because of the duty of fairness, dealt with them. When AECL did not deal with them in the same manner that it dealt with Patriot and Invar, there was a breach of that duty.
[39] CanForge also relies on the Financial Administration Act R.S.C. 1985. It is found in the reply factum of the AECL Tab B, pages 23-27. It basically states how certain government entities will deal with the letting of contracts. CanForge relies on this to show that, in its opinion, AECL must let contracts by the bid process. However if one looks at s. 41(2) of the said Act, AECL is exempt because it is a Crown Corporation.
[40] However, AECL still has to act fairly to all persons or corporations that it comes into contact with.
[41] AECL has taken the position that once the tender period of 180 days had lapsed that AECL could negotiate with contractors and sub-contractors as it saw fit. If there were to be an extension of the bid time, it would have to be made available to all the parties in the original tendering process. That did not happen.
[42] I am not able to find any document, affidavit, or examinations of people involved with the bid process that there had been an extension of the time.
[43] Mr. Ian Salgo, in his affidavit of August 10, 2012, stated that AECL issued the tender documents on September 1, 2004. In his affidavit, he states that the bid was valid until April 10, 2005. His affidavit is found in Volume 1 of the motion record of AECL at Tab 2, page 10. Invar’s bid was the lowest by about $5,000,000.00. Mr. Salgo stated that the contract with Bruce Power had not been signed in the Fall of 2005. He indicated in the affidavit that he became aware that Patriot had submitted a price to Invar. Negotiations were entered into by AECL and Invar because of a possibility of a shortage of end fittings assembly. AECL wanted to confirm the price and delivery. This also included a contract with another nuclear plant at Lepreau in the Maritimes.
[44] The letter of intent, found at Volume 2 of AECL’s motion record, Tab H, was sent to Patriot Forge Co. on October 25, 2005. There were changes from the original tender document to accommodate the Lepreau facility.
[45] I, therefore, find that the tendering period had long since passed and that AECL could negotiate with suppliers, without the need of a bid process. Having stated that, I find that there is a duty to act in a fair way. There are arguable issues to be dealt with. Those issues, dealing with the duty of fairness are:
If CanForge was the lowest bidder, why was there no reason given for not asking them to bid a second time?
Did AECL not disclose all the information so that CanForge would have understood why it was not allowed to bid?
I will deal with the issue of defamation later, but I find that there might be a degree of ill will between the parties.
[46] I find that there are issues that would require viva voce evidence on this point, and thus I would not grant summary judgment to AECL on that point.
DEFAMATION
[47] The Supreme Court of Canada in the Grant v. Torstar Corp. 2009 SCC 61, [2009] 3 S.C.R. 640 stated at paragraph 28 the following:
[28] A plaintiff in a defamation action is required to prove three things to obtain judgment and an award of damages: (1) that the impugned words were defamatory, in the sense that they would tend to lower the plaintiff’s reputation in the eyes of a reasonable person; (2) that the words in fact referred to the plaintiff; and (3) that the words were published, meaning that they were communicated to at least one person other than the plaintiff. If these elements are established on a balance of probabilities, falsity and damage are presumed, though this rule has been subject to strong criticism: see, e.g., R. A. Smolla, “Balancing Freedom of Expression and Protection of Reputation Under Canada’s Charter of Rights and Freedoms”, in D. Schneiderman, ed., Freedom of Expression and the Charter (1991), 272, at p. 282. (The only exception is that slander requires proof of special damages, unless the impugned words were slanderous per se: R. E. Brown, The Law of Defamation in Canada (2nd ed. (loose-leaf)), vol. 3, at pp. 25-2 and 25-3.) The plaintiff is not required to show that the defendant intended to do harm, or even that the defendant was careless. The tort is thus one of strict liability.
[48] Raymond Brown in his book Brown on Defamation wrote at page 7-1 the following:
The defamatory remark about which a plaintiff complains must have been published, that is, it must have been communicated to some person other than the plaintiff. Generally speaking the defendant is responsible only for the defamatory comments which he, or someone acting on his behalf, or pursuant to his authority, publishes and not for the subsequent repetition by others. However, he may be held responsible for the repetition of defamatory remarks if he intends or authorizes someone to publish it further, or that repetition is the natural and probable result of the first publication, or if the person to whom it is published is under some moral, social or legal duty to repeat it to others. The defendant is generally not responsible for any publication made by the plaintiff unless it is necessary for the plaintiff to do so in order to understand the communication made by the defendant under circumstances where the defendant knows, or should have known, that the plaintiff would have to consult a third person. Every repetition of a defamatory statement is a new publication and it is no defense that someone else originated the information and the person repeated it honestly and in good faith, believing it was true. In order to constitute a publication the defamatory information must be communicated to a third person and if the latter does not hear it, or cannot understand it, or does not understand that it refers to the plaintiff, there is no publication.
[49] Lewis N. Klar, Q.C. wrote in his book Tort Law Fourth Edition the following at page 759:
Defamatory material is not actionable unless the plaintiff can prove that it has been published, i.e., communicated to at least one person who is not the person defamed. In order to be communicated, the person to whom the material was published must have been aware of it and understood it. It has been stated that this person must have understood the material in a defamatory sense and that it referred to the plaintiff, but as argued by Brown, this must be regarded as questionable. As noted previously, whether material is defamatory and refers to the plaintiff does not depend upon the subjective understanding of individual witnesses, but on the understanding of the ordinary, reasonable person.
[50] Thus in brief, a plaintiff must establish the following before he may be successful in establishing a defamation:
a. That the words were defamatory.
b. That the words referred to the plaintiff.
c. That the words were communicated to at least one person other than the plaintiff.
[51] CanForge relies on the affidavit of Don Whaley, of Canada Forge, sworn on the 22nd of August 2012. (This is found in Volume 2 of the responding motion record of Canada Forge at Tab 2). At paragraph 3 Whaley recites a comment that he states that Mr. Salgo of AECL made to him. Salgo is said to have made the following statement to Whaley, “If you knew what was going on at AECL you would know you would never get a job from us because of the quality issues.”
[52] Later Whaley, according to his affidavit, called Janice Montgomery of Invar. There was a comment that she allegedly made that upper management at AECL had indicated to Invar that there were quality issues with CanForge and their end fittings.
[53] CanForge, in its Amended “Fresh as Amended” Statement of Claim, dated March 15, 2006, stated at paragraph 21 the following (at Tab M Volume 3 motion record of AECL):
During the ensuing discussions, Mr. Salgo of AECL advised Invar that,
a. AECL had experienced significant quality problems with forgings supplied to it by CanForge 16 years previous, and that it believed their forgings continued to be defective, or words to that effect (the “Defamatory Statements”); and
b. AECL would not approve any purchase order for the First Project which included forgings manufactured by CanForge.
[54] In the affidavit of Scott Naar sworn August 22, 2013, found in Volume 1 of the responding motion record of the plaintiff at Tab 1, page 16, paragraph 49 states the following:
“Canada Forgings was concerned that AECL had not complied with its own procurement process and may have run a sole source procurement and purchase from Patriot for a number of reasons. Not only had Canada Forgings been the lowest compliant bidder but had not been chosen as the supplier, but also, Mr. Don Waley, Regional Sales Manager of Canada Forgings, (“Mr. Whaley”) told me and I believe that Janice Montgomery at Invar told Mr. Whaley that AECL had told Invar that they had to source the end-fitting forgings from Patriot because of “quality issues” with Canada Forgings when both we and AECL knew this not to be true.”
[55] In the affidavit of Bob Reid sworn April 26, 2012, Mr. Reid stated the following at paragraph 21:
When the events at issue in this action took place, I was the primary contact for AECL at Invar and I was the person at Invar who dealt with AECL’s Supply Coordinator on the Bruce Project, Ian Salgo. At no time did Mr. Salgo say anything to me about the quality of Canada Forgings’ products. I in turn never said anything to anyone at Patriot about the quality of Canada Forgings’ products and to my knowledge, no one at Invar did either. Further, I recall that when this action was first commenced, I was advised by Ms. Montgomery and Ms. Johnston and do verily believe that neither of them had dealings with Mr. Salgo in respect of these projects. I was also advised by Ms. Montgomery and Ms. Johnston while I was still GM at Invar and do verily believe that neither of them had any discussions with Patriot about Canada Forgings. Ms. Montgomery further advised me and I do verily believe that she only heard about the raw material quality issue that both Canada Forgings and Patriot had in the late-1980s after this litigation started.
[56] He specifically denied that he and Mr. Salgo had any conversations as outlined in paragraph 21 of the amended statement of claim referred to above.
[57] Mr. Salgo denies making any comments to Janice Montgomery.
[58] The only indication of someone at AECL making a defamatory remark about the quality of the end fittings would be Janice Montgomery, according to the evidence of Don Whaley.
[59] The question arises, why was Janice Montgomery not called or an explanation as to why she could not be called?
[60] The only indication that there was a defamatory statement made by Mr. Salgo was reference to a statement allegedly made by her.
[61] There was an acknowledgement that some 16 years ago that the plaintiff had some quality problems with the forgings, but that was because of the fault of Atlas Steel.
[62] The plaintiff in its defence to this motion must put its best foot forward, and I find that it did not do so as far as this part of the motion. The court had every right to hear from Ms. Montgomery or a valid explanation as to why she was not called.
[63] I would therefore find that the Defendant will have established that there is no merit in the plaintiff’s claim for defamation.
[64] There will be summary judgment dismissing the claim for defamation as pled by the plaintiff.
LIMITATIONS ACT
[65] It is agreed that this project required two major components. One component was fuel channel end fitting assemblies and end fitting forgings for these assemblies.
[66] There are only three potential suppliers available in this area: Invar, Donlee Precision (Donlee) and Precision Nuclear Inc. (Precision).
[67] For the end fitting forgings, there are only two potential suppliers, Canada Forgings Inc. (CanForge) and Patriot Forge Co. (Patriot).
[68] On September 1, 2004 AECL issued a tender document for end fitting assemblies to Invar, Donlee and Precision. (See Salgo affidavit, paragraph 5.)
[69] On October 12, 2004, all three potential bidders submitted bids to AECL. Precision bid $16,886,618.00, Invar $18,495,919.20, and Donlee $24,295,125.00. ( See affidavit of Ian Salgo paragraph 5)
[70] Precision’s bid was not technically compliant, thus leaving Invar and Donlee in the bid process.
[71] The bid process according to the tender documents was for a period of 180 days which expired on April 10, 2005.
[72] The project was not retendered and AECL awarded the contract to Invar.
[73] The project was delayed for legitimate reasons agreed to by both parties.
[74] On October 25, 2005 AECL contracted directly with Patriot for the supply of end fittings. It was the position of AECL that the contract was a Letter of Intent (LOI). Forgings takes the position that this was a binding agreement containing all of the elements of a purchase order.
[75] This letter of intent had the effect of increasing the amount of the contract substantially. Does this change of the value of the contractual agreement with Patriot, in itself, require a court hearing?
[76] CanForge states that the circumstances surrounding this contract between AECL and Patriot must be dealt with by way of a court hearing rather than a motion for summary judgment.
[77] On December 5, 2005, AECL issued a recommendation and authorization to purchase (RAP). The RAP, according to CanForge, does not follow the actual deal between Invar and AECL. This in itself according to CanForge requires a court hearing.
[78] Don Whaley in December 2005, who was an employee of CanForge, became aware that AECL had given supplier for end fittings forges to Patriot.
[79] He called Ian Salgo on December 9, 2005 and the conversation was most critical of CanForge and its quality issues.
[80] Nancy Cifari, on behalf of Gary Graham of Gowling Lafleur Henderson, then solicitors for CanForge, wrote an e-mail to lawyers at Gowling dated February 5, 2006. (Found at page 1073, Tab 2, Volume 3 of written record of AECL.) In that e-mail he queries whether an arrangement of AECL to source the supply of end fittings from Patriot “Is this actionable”.
[81] The parties have agreed that the limitations period ended on April 27, 2009 – thus if CanForge was aware of a potential action earlier then the claim for duty of fairness would be statute barred.
[82] CanForge states that its knowledge of duty of fairness was not complete and was ongoing. CanForge states that it felt something was wrong but not sure what the wrong was.
[83] The e-mail referenced in paragraph 76 goes on to indicate that the plaintiff requires more information to make a determination as to whether there was a cause of action.
[84] I am not able to make a finding on the material before me as to the Limitation period claim. There is conflicting evidence that requires a trial.
CONCLUSION
[85] This is a case that requires a court hearing with viva voce evidence, as I have indicated credibility is a major issue.
[86] In hindsight I should have dismissed the motion for summary judgment at the onset of the motion, for the following reasons:
The sheer volume of the material.
The contradictions of the witnesses in their affidavits and examinations, which will require a judge’s determination after hearing from the various witnesses.
The magnitude of the action.
[87] Therefore the motion for summary judgment shall be dismissed, except the plaintiff’s action for defamation, which I dismiss.
[88] I may be spoken to about costs either orally or in written form. I leave it to counsel to decide which way they would like to proceed. If counsel are unable to reach an agreement, I will decide.
Matheson, J.
Released: August 16, 2013
HAMILTON COURT FILE NO.: 06-23359
DATE: 2013-08-16
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Canada Forgings Inc.
Plaintiff
and
Atomic Energy of Canada Limited and
Linamar Holdings Inc.
Defendants
JUDGMENT
Matheson, J.
Released: August 16, 2013