Editor’s Note: Corrigendum released on June 28, 2013. Corrigendum has been add on the Original judgment with text of corrigendum appended.
COURT FILE NO.: C-1023-10
COURT FILE NO.: C-11603-09
COURT FILE NO.: C-11226-08
DATE: 20130628
ONTARIO
SUPERIOR COURT OF JUSTICE
CORRIGENDUM
Corrected decision: In the decision released January 30, 2013, the Court File No. C-1126-08 was stated incorrectly. It shall read Court File No. C-11226-08.
The Honourable Mr. Justice E.J. Koke
Released: June 28, 2013
COURT FILE NO.: C-1023-10
COURT FILE NO.: C-11603-09
COURT FILE NO.: C-1126-08
DATE: 20130130
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN
COURT FILE NO.: C-1023-10
Sandro Steel Fabrication Ltd.
Plaintiff/Respondent
– and –
Edward Chiesa and Edward Engineering
Defendant
Sean Lawler, for the Plaintiff/Responding Party
Peter J. Mitchell, for the Defendant, Moving Party
COURT FILE NO.: C-11603-09
BETWEEN
Tribury Construction (1995) Inc.
Plaintiff
– and –
Sandro Steel Fabrication Ltd., Halsall Associates Limited , Edward Engineering, Edward Chiesa, Castellan James & Partners Architects Inc. and Laurentian University of Sudbury
Defendants
Gerard E. McAndrew, for the Plaintiff/Applicant
Sean Lawlor, for the Defendant Sandro Steel Fabrication Ltd.
Peter J. Mitchell, for the Defendants, Edward Engineering and Edward Chiesa
AND BETWEEN
Sandro Steel Fabrication Ltd.
Plaintiff by Counterclaim
– and –
Tribury Construction (1995) Inc.
Defendant by Counterclaim
Sean Lawlor, for the Plaintiff by Counterclaim
Gerard E. McAndrew, for the Defendant by Counterclaim
AND BETWEEN
Sandro Steel Fabrication Ltd.
Plaintiff by Crossclaim
– and –
Halsall Associates Limited , Edward Engineering, Edward Chiesa, Castellan James & Partners Architects Inc. and Laurentian University of Sudbury
Defendants by Crossclaim
Sean Lawlor, for the Plaintiff by Crossclaim
Peter J. Mitchell, for the Defendant, Edward Engineering and Edward Chiesa
COURT FILE NO.: C-11226-08
BETWEEN
Sandro Steel Fabrication Ltd.
Plaintiff
– and –
Tribury Construction (1995) Inc. and Laurentian University of Sudbury
Defendants
Sean Lawlor, for the Plaintiff, Responding Party
Gerard E. McAndrew, for Defendant/Moving Party, Tribury Construction (1995) Inc.
HEARD: November 28, 2012
JUDGMENT ON MOTION
Koke J.:
[1] In June 2007, construction of the Faculty of Education Building at Laurentian University ground to a halt because of the “failure” of certain steel connections. This gave rise to three law suits, together with related crossclaims and counterclaims. The subject matter of the three law suits overlaps and they largely involve the same parties. The motions before the court are brought in the context of these law suits.
[2] Tribury Construction (1995) Inc. (“Tribury”) was retained by Laurentian University as the General Contractor on this construction project. Sandro Steel Fabrication Ltd. (“Sandro”) was retained by Tribury as the steel fabricator and installer. Edward Engineering and its principal Edward Chiesa (collectively “Edward”) was retained by Sandro as a structural consultant to review and “seal” the steel connection details.
[3] Edward brings a motion for summary judgment and for an order dismissing Sandro’s claims against it on the basis that the limitation period governing the actions has expired.
[4] Tribury requests an order striking Sandro’s counterclaim as being brought outside of the limitation period, or alternatively, for failing to disclose a reasonable cause of action.
[5] Tribury also seeks an order in the Construction Lien action for a declaration pursuant to section 37 of the Construction Lien Act, RSO 1990, c. C.30 that Sandro’s lien has expired since the action was not been set down for trial within the two year period required by the Act, and for an order dismissing Sandro’s action pursuant to section 46 of the Act.
BACKGROUND
[6] The work on the Laurentian University construction project began in 2006. On or about June 26, 2007, the structural steel connections failed.
[7] The failure of the steel led to the alleged losses that form the bases of the litigation among the parties. They are described in Sandro’s factum as follows:
(1) Remedial work undertaken by Tribury that is alleged to ultimately amount to $339,048. This will be described below as the "Tribury Remediation Costs". Tribury claims this from Sandro and the other parties;
(2) Remedial work undertaken by Sandro Steel in the amount of $323,000. This will be described below as the "Sandro Remediation Costs". Sandro Steel claims this from Edward Engineering; and
(3) Sandro Steel’s outstanding account to Tribury at the time the claim was discovered, in the sum of 176,730.59. This will be described below as the "Sandro Fees". Tribury did not pay the Sandro fees in order to offset the damages it sustained from the failure of the steel connections, i.e. the Tribury remediation costs.
Chronology of Claims following Date of Failure of Steel Connections
Notice to Edward by Sandro’s Insurer
[8] On November 29, 2007, the adjuster for Sandro’s insurer wrote to Edward. This letter stated that it was to serve as formal notice that Sandro and its insurer looked to Edward for recovery of those damages occasioned as a result of Sandro’s losses on the construction project. It further advised Edward that it was the insurer’s position that the damages occurred as a result of errors found on drawings approved by Edward.
[9] Enclosed with the insurer’s letter were copies of Sandro’s accounts which purported to cover the necessary upgrade repairs and expenses, as well as copies of accounts submitted by Tribury to Sandro covering Tribury’s costs to date.
Sandro commences the 2008 Lien Action (the"2008 lien action")
[10] On October 28, 2008, Sandro commenced an action against Tribury and Laurentian University pursuant to the Construction Lien Act for recovery of its fees, in the sum of $176,730.59 (the “2008 lien action”).
[11] Tribury defended this claim and counterclaimed on December 16, 2008, for the Tribury remediation costs. The defendants to the counterclaim included Sandro, Edward, Halsall Associates (“Halsall”) (which was another engineering firm), and Castellan James and Partners (“Castellan”) which was the project architect.
[12] The counterclaim was defended by the defendants thereto. Sandro’s defence to this counterclaim included a crossclaim against the other defendants to the counterclaim for contribution and indemnity in respect of the Tribury remediation costs.
Tribury commences the 2009 Action (the "2009 action”)
[13] After Tribury commenced its counterclaim and the parties filed their defences and crossclaims in the lien action, the parties agreed that the subject matter of the counterclaim was not properly within the scope of a lien action. Because of this procedural issue, Tribury agreed to abandon its counterclaim in the 2008 lien action and instead assert those same claims in a new action.
[14] This new action was commenced by Tribury on April 17, 2009. In this action, Tribury is the plaintiff. This action is substantially the same as Tribury’s counterclaim in the 2008 lien action.
[15] In November, 2010, the parties agreed to a dismissal of the counterclaim in the lien action. However, there has not been a dismissal of the main lien action commenced by Sandro.
Discussions and Correspondence by Parties re Mediation
[16] On March 26, 2009, which was after the procedural issue in the lien action had arisen but before the 2009 action was commenced, counsel for Sandro wrote to all counsel to suggest mediation. The following day, on March 27, 2009, counsel for Sandro spoke to counsel for Edward by telephone concerning mediation. In that conversation the subject of the Sandro remediation costs was discussed.
[17] On April 24, 2009, counsel for all the parties participated in a conference call. All parties, with the exception of Halsall (counsel for Halsall did not object but required instructions) agreed to participate in a mediation.
[18] On April 30, 2009, counsel for Tribury wrote a letter to all other counsel confirming the attendance of all parties at the conference call of April 24, 2009 and confirming that all parties with the exception of Halsall had instructions to proceed to mediation. The letter suggested the names of mediators, proposed a May 19, 2009 deadline for the delivery of damages briefs by Tribury and Sandro and confirmed the parties’ tentative consent to a cost sharing for the mediator’s fees.
[19] On July 13, 2009, counsel for Sandro delivered Sandro’s damages brief to Edward. The brief quantified the Sandro remediation costs.
[20] In March, 2010 the parties chose Bill Neville to be the mediator. On August 6, 2010, a mediation date of November 12, 2010, was scheduled.
[21] On November 10, 2010, counsel for Edward advised the other parties that Edward was not prepared to mediate the Sandro remediation costs at the mediation because it was of the view that the parties had only agreed to mediate the Tribury remediation costs, not the Sandro remediation costs. The mediation was cancelled.
Sandro’s Counterclaim and Crossclaim in the 2009 Action
[22] On December 6, 2010, after the mediation was cancelled, Sandro Steel:
(1) Served a statement of defence and crossclaim (dated November 26, 2009) in the 2009 action on Edward and the other parties, in which it claimed:
i. "Full indemnity of Tribury’s damages if found against Sandro" i.e. contribution and indemnity;
ii. Damages in the amount of $400,000 (i.e.: the Sandro Remediation Costs).
(2) Served a statement of defence and counterclaim in the 2009 action (dated December 3, 2009) on Tribury for the Sandro Fees.
[23] Although Sandro’s pleadings were mailed out for service on December 6, 2010, they were not filed with the court office until May 11, 2012.
Sandro commences the 2010 Action (the “2010 action”)
[24] On December 3, 2010, Sandro issued a statement of claim against Edward in which it claimed the Sandro remediation costs from Edward totalling $500,000.
MOTION BY TRIBURY IN THE CONSTRUCTION LIEN ACTION (FOR A DECLARATION THAT SANDRO’S LIEN HAS EXPIRED AND FOR AN ORDER DISMISSING SANDRO’S LIEN ACTION)
[25] Tribury relies on the following provisions of the Construction Lien Act in support of its motion:
Section 37(1) A perfected lien expires immediately after the second anniversary of the commencement of the action that perfected the lien, unless one of the following occurs on or before that anniversary:
- an order is made for the trial of an action in which the lien may be enforced;
and
- an action in which the lien may be enforced is set down for trial.
Section 46(1) Where a perfected lien that attaches to the premises has expired under section 37, the court, upon the motion of any person, shall declare that the lien has expired and shall make an order dismissing the action to enforce that lien and vacating the registration of a claim for a lien and the certificate of action in respect of that action.
[26] Sandro commenced its lien action on October 28, 2008, for payment from Tribury of the outstanding accounts (the “Sandro fees”). This is more than two years ago and Tribury brings this motion for a declaration that the lien has expired and for an order dismissing Sandro’s lien action.
[27] In Teepee Excavation & Grading Ltd. v. Niran Construction Ltd.[^1], a decision of the Ontario Court of Appeal, the court ruled that where a lien has expired because the action has not been set down within two years, the court has the discretion to allow the lien action to continue as an “ordinary” breach of contract action.
[28] It is my view that in the circumstances of this case I should exercise my discretion to allow the contract claim, i.e. the claim for Sandro’s fees to continue, for the following reasons:
(1) First, Sandro pleads that it entered into an agreement with Tribury and that it is owed the sum of $176,730.59 in relation to the materials and services it supplied under that agreement. In other words, it has pleaded a breach of contract.
(2) Second, Sandro has satisfied me that it has a reasonable explanation for the delay; it has not simply sat on its rights. Sandro’s fees are also the subject of a claim for set-off against Tribury’s remediation costs, and the parties had previously agreed to deal with Tribury’s remediation costs through mediation.
(3) Third, there is no evidence that Tribury has been prejudiced by the delay.
(4) Fourth, a dismissal of this action would not end the litigation between the parties. There remains a dispute between the parties concerning Sandro’s responsibility for the Tribury remediation costs, which is the subject of another action. It would be unfair to Sandro if Tribury could proceed with its claim for its remediation costs but Sandro was unable to pursue its claim against Tribury for its outstanding fees.
[29] I note that Sandro has previously agreed to release its lien and that a bond was posted by Tribury as security. An order is to issue declaring that the lien has expired and for the return of the lien bond in the amount of $220,913.23. The request for an order dismissing Sandro’s contract claim in the lien action is denied.
MOTIONS BY TRIBURY AND EDWARD FOR AN ORDER DISMISSING SANDRO’S CLAIMS IN THE 2009 AND 2010 ACTIONS (ON THE BASIS THAT THE APPLICABLE LIMITATION PERIOD HAS EXPIRED)
Did Section 11 of the Limitations Act[^2] Suspend the Running of the Limitation Period?
Position of Sandro
[30] Tribury and Edward argue that the failure of the steel was “discovered” on June 27, 2007, and Sandro therefore had until June 27, 2009, to commence a claim against them. They base their position on the operation of the basic two year limitation period set out in section 4 of the Limitations Act. Sandro did not commence its counterclaim and crossclaim in the 2009 action and its claim in the 2010 action until after June 27, 2009, and therefore Tribury and Edward submit that the limitation period governing these claims has expired.
[31] Sandro argues that on April 24, 2009, the parties agreed to have an independent third party assist them in resolving their dispute, and that this agreement was in place until November 10, 2010, when the parties decided to cancel the mediation. Sandro argues that the limitations clock was “paused” during the approximately eighteen and a half month duration of the agreement to mediate.
[32] Sandro bases its position on section 11 of the Limitations Act,
[33] Section 11 of the Limitations Act reads as follows:
S. 11(1) If a person with a claim and a person against whom a claim is made have agreed to have an independent third party resolve the claim or assist them in resolving it, the limitation periods established by sections 4 and 15 do not run from the date the agreement is made until,
(a) the date the claim is resolved;
(b) the date the attempted resolution process is terminated; or
(c) the date a party terminates or withdraws from the agreement.
Position of Tribury and Edward
[34] Edward submits that in the circumstances of this case the suspension provisions contained in Section 11(1) do not apply because the agreement to mediate did not specify that the limitation period would be suspended pending the conclusion of the mediation. Edward and Tribury also argue that if the parties did enter into an agreement to mediate, they did not agree therein to mediate the Sandro remediation costs.
1) Does the agreement to mediate have to specify that the limitation period will be suspended?
[35] In support of its position, Edward relies on the dicta of Justice Shaw in Penn-Co. Construction Canada (2003) Ltd. v. Constance Lake First Nation (“Penn-Co”)[^3] wherein Justice Shaw held that an agreement to suspend or extend a limitation period in the circumstances of that case required an express agreement between the parties. Edward submits that the agreement to mediate in this case did not contain an express provision that the applicable limitation period be suspended or extended.
[36] In my view, the Penn-Co decision can be distinguished from this case. The Penn-Co. decision did not involve a consideration of section 11 of the Limitations Act., nor did it involve a consideration of an agreement to mediate. Also, in Penn-Co the defendant argued that the limitation period had been waived, not that it had been suspended.
[37] In Penn-Co, the defendant issued an improper defence and counterclaim for damages against the plaintiff after the limitation period for filing such a defence and counterclaim had already expired. At the request of the defendant, and notwithstanding the expiration of the limitation period, the plaintiff agreed that the defendant could issue and serve a replacement defence and counterclaim, which it proceeded to. There was no express agreement to waive or suspend the operation of the limitation period. In response to the plaintiff’s motion to dismiss the counterclaim on the grounds that it was issued more than two years after the expiry of the limitation period, the defendant argued that the limitation period was extended by the operation of section 22(3) of the Act which provides:
S. 22(3) A limitation period under this Act, other than one established by section 15, may be suspended or extended by an agreement made on or after October 19, 2006.
[38] Justice Shaw granted the motion to dismiss the counterclaim, finding that the application of section 22(3) required an express agreement to suspend or extend the limitation period; the defendant could not rely on an implied agreement.
[39] Section 22(3) of the Limitations Act refers to an agreement which parties may enter into whereby a limitation period “may be suspended or extended”. On the other hand, section 11 does not refer to an agreement to extend or suspend a limitation period; it refers to an agreement whereby parties “agree to have an independent third party resolve the claim or assist them in resolving it…” Therefore, in circumstances where a party can demonstrate that the parties have agreed to have a mediator assist them in resolving the claim, it is my view that it follows as a matter of course that the limitation period is suspended or extended; there is no requirement in the section that the agreement include a specific provision extending or suspending the limitation period.
[40] Edward also relies on Suncor Energy Products Inc. v. Howe-Baker Engineers Ltd (2010) (“Suncor)”[^4].
[41] In my view, the facts in Suncor can also be distinguished from the facts in this case. In Suncor the parties had entered into a contract whereby the defendant Howe-Baker was to provide engineering services to Suncor. This primary contract provided that the provisions of the Arbitration Act, R.S.A. 2000, c. A-43 applied to any future disputes between the parties arising out of the contract. A dispute arose between the parties and litigation ensued. Howe-Baker pleaded a limitation defence. Suncor argued that the original contract between the parties should be considered to be the agreement contemplated in section 11 of the Limitations Act. Justice Hawco of the Alberta Queens Bench disagreed, stating at paragraphs 34 and 35 of the case:
With respect, I cannot accept this reasoning and no authority has been cited supporting it. In my respectful view, Section 11 of the Ontario act speaks to agreements which have been made after a claim has arisen and the parties, in an attempt to resolve it, have referred it to a third party for resolution. It is in the nature of a stand-still agreement. The agreement to which Section 11 refers is not the original contract reached between the parties, which has a dispute resolution process as part of the overall agreement. It is that agreement reached when a claim has arisen to have the matter referred to a specific third party with a view to resolving that particular claim. [Emphasis added.]
To negate the effect of a Limitations of Actions Act by agreement would require much more specific language in the contract itself.
[42] Justice Hawco held that the agreement contemplated in section 11 is an agreement wherein the parties agree to refer a dispute to a third party, and it should therefore be an agreement which is entered into after a dispute has arisen. He found that the suspension provisions of section 11 are not triggered in circumstances where the parties rely on an agreement which predates the dispute and in which they agree generally that disputes will be referred to third parties for resolution.
[43] I note that there is nothing in Justice Hawco’s decision to suggest that the agreement must specifically address limitation period issues.
[44] In conclusion, Edward has not convinced me that the agreement referred to in section 11 of the Limitations Act requires specific language suspending or extending applicable limitation periods for its efficacy. In my view, what is required is an agreement which is entered into after a dispute has arisen whereby the parties agree to have a third party assist in resolving the dispute, nothing more. In the case before the court, the parties entered into an agreement to mediate in response to a dispute which had arisen among them. They have therefore met the requisite test.
2) Did the Parties agree to mediate the Sandro remediation costs?
[45] Edward and Tribury argue that the totality of the evidence does not disclose an express agreement between the parties to mediate the issue of the Sandro remediation costs and that there is no objective evidence establishing any basis upon which an agreement to mediate those damages can be implied. They point out that the claim for the Sandro remediation costs was not the subject of any pleadings at the time the parties agreed to mediate, and that there is nothing in the confirming letter of April 30, 2009 to suggest that these damages were to be the subject of the mediation. Accordingly, there is no basis upon which to conclude that section 11 has any application to the claim for the Sandro remediation costs.
[46] In submitting that the parties did not agree to mediate the Sandro remediation costs at the scheduled mediation, Edward relies on a conversation its counsel had with counsel for Sandro on March 27, 2009. The recollection of their respective counsel differs as to the content of the conversation.
[47] It is the recollection of counsel for Edward that Sandro’s counsel informed him that he was unsure as to whether Sandro intended to seek recovery of the Sandro remediation costs, but he undertook to seek an answer from his client and advise accordingly. Edward submits that it did not receive confirmation thereafter from Sandro that it intended to recover these costs. It argues therefore that there was no agreement that the Sandro remediation costs would be mediated.
[48] It is the recollection of counsel for Sandro that one of the matters which was discussed during this conversation was the fact that Sandro’s claim was not only for the balance due to it under its contract with Tribury, but also for its remediation costs.
[49] There is no evidence before me that counsel for Edward followed up his conversation with Sandro’s counsel to confirm whether Sandro intended to recover these costs. Neither is there any evidence that Edward insisted on an answer to this outstanding issue when the parties agreed to proceed to mediation during the April 24, 2009, telephone conference.
[50] Even if I accept that the recollection of counsel for Edward is an accurate account of his conversation with counsel for Sandro, I find that when the parties agreed to proceed to mediation on April 24, 2009 (almost one month following the conversation between counsel), they agreed to do so on the understanding that both the Sandro remediation costs and the Tribury remediation costs would be mediated. I make this finding for the reasons which follow.
[51] First, by letter dated November 29, 2007, Edward had been placed on formal notice by Sandro’s insurer that it was holding Edward responsible for the Sandro remediation costs, as well as the Tribury remediation costs which had been passed along to Sandro. Included in this letter were accounts covering necessary upgrade repairs and expenses submitted by Sandro, as well as copies of accounts submitted by Tribury to Sandro Steel.
[52] Clearly, at the time the parties agreed to proceed to mediation, Edward was aware that it was facing a potential claim from Sandro for its remediation costs.
[53] Second, in the confirming letter of April 30, 2009, counsel for Tribury reports that: “A target date was set with respect to the exchange of damage briefs and engineering reports that being May 19, 2009. Tribury and Sandro Steel will prepare damages briefs.”
[54] In my view, the only reasonable meaning which can be given to the term “damage briefs” in the April 30, 2009, letter, in so far as it applied to Sandro, is that it referred to a brief substantiating Sandro’s remediation costs. Although Sandro also had a claim against Tribury for its fees (the Sandro fees), this is not the type of claim which required the involvement of a mediator; nor would it have been of any concern to the other parties since it was not related to the failure of the steel connectors. Tribury had claimed an offset against these fees in the lien action but there is no evidence before the court that the quantum of the claim was in issue. The insistence that both Tribury and Sandro submit damage briefs is evidence that both the Tribury and Sandro remediation costs were to be the subject of the mediation.
[55] In fact, it would appear that Tribury and the other parties to the mediation demonstrated a marked interest in acquiring the Sandro damage brief after they agreed to proceed to mediation. By letter dated June 9, 2009, addressed to all parties, counsel for Edward reminded the parties that damage documentation was going to be produced by both Tribury and Sandro Steel, and that this damage documentation was to be produced by May 19, 2009. Thereafter, by letter dated July 2, 2009, counsel for Sandro wrote counsel for the defendant Castellan and advised that his client would soon provide him with the necessary information to provide a complete damages brief, which would be sent to all concerned. On July 7, 2009, counsel for Sandro wrote counsel for Edward and advised that in his opinion his client’s damages were fair, and to correct him if he was wrong. On July 13, 2009, Sandro’s counsel delivered Sandro’s damages brief (containing the Sandro remediation costs) to the other parties.
[56] I note that for a period of 16 months thereafter, none of the parties to the mediation raised any objections to the fact that Sandro’s damages brief contained its remediation costs. On November 10, 2010 (two days before the scheduled mediation), Edward raised an objection to mediating these damages for the first time and thereafter took the position that this claim was barred by the operation of the Limitations Act.
[57] Third, the claims by Tribury and Sandro for their remediation costs were claims which were directly related to each other. They involved the same construction project. They required a finding of negligence based on the same set of circumstances, and therefore against the same defendant or defendants. In my view, it would have been commercially unreasonable and contrary to the interests of any of the parties if they had agreed to litigate or mediate the Tribury remediation costs, separate and apart from the Sandro remediation costs.
[58] Forth, the correspondence between the parties which preceded the agreement to mediate indicated that the decision to mediate was motivated by a desire to “lessen the legal accounts that are going to be flowing to our clients” and a concern that “once we get waist deep in litigation that the discoveries will probably take approximately two or more weeks”[^5] It would have been inconsistent with this stated objective if the parties agreed to mediate only Tribury remediation costs, and not the Sandro costs.
[59] Edward and Tribury also argue that since the Sandro remediation costs were not the subject of any pleadings at the time the parties agreed to mediate, the parties could not have agreed to mediate these costs. According to them, the mediation was to be defined by the pleadings as they existed on the date the parties agreed to mediate.
[60] In my view, the fact that Sandro had not yet commenced its own action for its remediation costs cannot be relied on by Edward and Tribury to argue that its claim for these costs was not to be included in the mediation. As I have already noted, Edward had been placed on formal notice of Sandro’s claim against it by Sandro’s insurer and so it was aware that these costs were in issue. Furthermore, the limitation period for commencing this claim had not yet expired.
[61] I note as well that the 2009 action was issued only seven days prior to the date the parties held the teleconference which resulted in the agreement to mediate. Clearly, Sandro had had very little time or opportunity to complete and serve its pleadings. Also, any delay by Sandro in commencing its counterclaim and crossclaim for its remediation costs can be explained by the fact that on April 1, 2009, counsel for Tribury had written the other parties and suggested that after the 2009 action had been commenced the action could be placed in abeyance until mediation had occurred. In the circumstances, it was to be anticipated that Sandro would only file its pleadings in the 2009 action in the event the mediation failed.
[62] Edward also argues that there is nothing in the confirming letter of April 30, 2009, to suggest that the Sandro remediation costs were to be the subject of the mediation.
[63] The absence of any specific reference to the Sandro remediation costs in the confirming letter does not assist Edward. The letter does not refer to the Tribury remediation costs either; in fact it fails to specify any particular costs or damages which were to be the subject of the mediation and leaves this issue open. The confirming letter required only that Tribury and Sandro submit damages briefs.
[64] Edward submits as well that the agreement to mediate was contingent upon the participation of all parties (save Laurentian) and that Halsall did not have instructions to proceed to mediation at that time, and in fact, did not formally notify the other parties that it had instructions to proceed to mediation until many months later, after the expiry of the limitation period applicable to the Sandro remediation costs.
[65] The fact that Halsall’s counsel was the only counsel which had not confirmed his client’s instruction was noted in the April 30, 2010, confirming letter. However, there is nothing in the letter which suggests that Halsall’s participation was a pre-condition to the mediation. In my view, both the content of letter and the subsequent conduct of the parties reveal that the parties considered confirmation by Halsall as a mere formality. The agreement was specific with respect to many of the terms which were to govern the mediation, and these terms were agreed to by all parties, including Halsall. For example, counsel for Tribury states in the letter that “[a]s to the University, all parties have agreed that they will not be required to participate …” (emphasis added).
[66] The confirming letter also indicated that all counsel agreed to confirm their instructions to proceed to mediation within ten days. There is no indication that any of the parties provided formal notice of their intention to proceed to mediation within the ten day period. However, all of the parties, including Halsall, clearly embarked on the road to mediation after their April 24, 2009, telephone conference, thereby signifying their agreement to proceed to mediation. They exchanged damages briefs, selected a mediator, agreed on costs and eventually selected a mediation date.
Application of Section 11 of the Limitations Act: Summary and Conclusion
[67] The correspondence between the parties confirms their mutual intention to mediate the issues which arose following the failure of the steel connectors and I find that all parties decided to mediate these issues on the understanding that all outstanding damages issues would be mediated. Although the confirming letter did not specify which issues were to comprise the subject of the mediation, the agreement was open ended and not restricted in scope. There was a stated requirement in the letter confirming the mediation that both Sandro and Tribury submit damages briefs and there is no evidence that the parties intended that only some of the issues resulting from the failure of the steel connectors were to be mediated.
[68] In conclusion, I find that the parties agreed to have a third party assist them in resolving their dispute and that section 11 applied to suspend the running of the limitation clock in relation to all damages issues which had arisen between them.
[69] In Hodaie v. RBC Dominion Securities[^6], Justice M.R. Dambrot stated that the purpose of section 11 was to “encourage efforts to settle by providing that there is no limitation period penalty for plaintiffs who agree to enter into third party resolution processes”. I agree. In my view, if the purpose of the section is to encourage settlement it should be interpreted broadly. In circumstances where there is ambiguity in what the parties agreed to mediate or when one of the parties to the litigation does not immediately consent to participate in the mediation process, the limitation period should still be suspended. Otherwise, plaintiffs will be reluctant to engage in a mediation process for fear that they will be ‘caught out’ in the event they did not set out a comprehensive mediation agreement.
[70] The evidence before the court is that the failure of the steel was “discovered” on June 27, 2009. Accordingly, but for section 11 of the Act and the parties' agreement to mediate, June 27, 2009, marked the deadline for Sandro to commence a crossclaim against Edward in respect of the Sandro remediation costs and to commence a counterclaim against Tribury for the Sandro Fees.
[71] On April 24, 2009, the parties "agreed to have an independent third party…assist them in resolving” the disputes related to the failure of the steel. I find that the effect of section 11 of the Act was to “pause” the running of the limitations clock with respect to the Sandro remediation costs during the approximately eighteen and a half month duration of the agreement to mediate.
DISPOSITION OF MOTIONS DISMISSING SANDRO’S CLAIMS IN THE 2009 AND 2010 ACTIONS
Motion by Edward for Summary Judgment in the 2010 Action
[72] Section 4 of the Limitations Act requires that an ‘action” is to be commenced not later than the second anniversary of the day it was discovered. Assuming the damage was discovered on June 27, 2007, Sandro had until June 27, 2009, to file its claim against Edward (barring any consideration of section 11 of the Act).
[73] On April 24, 2009, the parties entered into what I find was a verbal agreement to mediate. On that date Sandro Steel had 64 days remaining until the two year mark of June 27, 2009, was reached. It was at that point that the clock was “paused”. The limitations clock was “unpaused” approximately eighteen and a half months later on November 10, 2010 (i.e.: when the mediation was cancelled). Sandro had 64 days thereafter (until January 13, 2011), to commence proceedings for the Sandro fees and the Sandro remediation costs.
[74] Rule 14.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that a proceeding is commenced by the “issuing” of an originating process. The 2010 action was issued on December 3, 2010, prior to the expiry of the new limitation period of January 13, 2011. This action was therefore commenced within the required limitation period, as extended by the operation of section 11 of the Limitations Act.
[75] The motion by Edward for summary judgment in the 2010 action is therefore denied.
Motion by Tribury for an order striking the Counterclaim of Sandro in the 2009 Action
[76] The provisions of section 11 apply equally to both actions and counterclaims. Sandro therefore had until January 13, 2011 (64 days after November 10, 2010), to commence its counterclaim for the Sandro fees.
[77] On December 6, 2010, Sandro mailed the counterclaim to Tribury, which was within the two year time period for commencing its action. However, it did not file its counterclaim until May 11, 2012, which was outside the requisite time period.
[78] Rule 14.01(2) of the Rules of Civil Procedure provides that:
a counterclaim which is only against persons who are already parties to the main action, and a crossclaim, shall be commenced by the delivery of the pleading containing the counterclaim or crossclaim, and the pleading need not be issued. [Emphasis added].
[79] The term “delivery” is defined in Rule 1.03 as follows:
1.03(1) “deliver” means serve and file with proof of service, and delivery has a corresponding meaning. [Emphasis added.]
[80] Notwithstanding the fact that Sandro served its counterclaim on time, it did not file its claim, together with proof of service until May 11, 2012. Therefore, the claim was not delivered until that day.
[81] Sandro argues that there is no statute or rule which specifies that a crossclaim and a counterclaim only “toll” a limitation period once the crossclaim has been filed. Accordingly, there is no basis for an interpretation that makes the filing of a crossclaim or counterclaim a necessary pre-condition and therefore service of the counterclaim on December 6, 2010, was sufficient to meet the requirements of section 4 of the Limitations Act.
[82] Section 4 of the Limitations Act provides that a proceeding shall not be commenced... after the second anniversary of the day on which the claim was discovered. Rule 14.01 requires that a counterclaim is “commenced” when it is delivered (emphasis added). In my view the clear wording of the Limitations Act and the Rules of Civil Procedure determine this issue. Accordingly, I find that the Sandro counterclaim in the 2009 action was commenced on May 11, 2012, which is after January 13, 2011, and it was therefore commenced after the expiration of the applicable limitation period.
[83] Tribury is therefore to have summary judgment against Sandro in the 2009 action dismissing Sandro’s counterclaim therein.
Motion by Edward for an order striking the Crossclaim for the Sandro remediation costs in the 2009 Action
[84] Sandro mailed its crossclaim dated November 26, 2010, to Edward on December 6, 2010. Significantly, the crossclaim was for both contribution and indemnity (of the Tribury remediation costs) and for recovery of the Sandro remediation costs in the sum of $400,000.
[85] Rule 14.01(2) provides that both a counterclaim and a crossclaim shall be commenced “by the delivery of pleadings…and the pleading need not be issued” (emphasis added). As I have noted, Rule 1.03 defines “deliver” to mean “serve and file with proof of service”.
[86] The Limitations Act contains a separate provision with respect to the discoverability date of crossclaims for contribution and indemnity. I will therefore deal with Edward’s motion to dismiss Sandro’s crossclaim for the Sandro remediation costs separately from its motion to dismiss Sandro’s crossclaim for contribution and indemnity of the Tribury remediation costs.
The Motion to dismiss the Crossclaim for the Sandro Remediation Costs
[87] With respect to Edward’s motion to dismiss Sandro’s crossclaim for its remediation costs, the same analysis can be applied to this motion as I applied to the motion by Tribury to dismiss Sandro’s counterclaim. After allowing for the section 11 suspension of the limitation period, Sandro had until January 13, 2011, to commence this claim. It did not deliver its crossclaim until May 11, 2012, however and since a crossclaim is commenced by delivery thereof the crossclaim for recovery of the Sandro remediation costs was delivered after the expiration of the limitation period.
[88] Edward is therefore to have summary judgment against Sandro in the 2009 action, dismissing Sandro’s crossclaim for recovery of the Sandro remediation costs.
The Motion to dismiss the Crossclaim for Contribution and Indemnity
[89] With respect to Sandro’s crossclaim for contribution and indemnity, Section 18 of the Limitations Act provides that a defendant who is sued can make a crossclaim against a concurrent tortfeaser for contribution and indemnity, as long as the claim is brought “within two years of service of the plaintiff’s claim” (emphasis added). The section states:
- CONTRIBUTION AND INDEMNITY – (1) For the purposes of subsection 5(2) and section 15, in the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought shall be deemed to be the day the act or omission on which that alleged wrongdoer’s claim is based took place.
(2) APPLICATION – Subsection (1) applies whether the right to contribution and indemnity arises in respect of a tort or otherwise.
[90] Tribury issued its claim on April 17, 2009. If I assume that Tribury’s claim was served on the day it was issued, section 18 deems April 17, 2009, to be the day the act or omission on which Sandro’s claim for contribution and indemnity took place. Sandro would therefore have until April 17, 2011, to commence its crossclaim for contribution and indemnity (absent any consideration of section 11 of the Limitations Act).
[91] On April 24, 2009, one week after Sandro was served with Tribury’s 2009 action, the parties agreed to mediate, thereby triggering section 11 of the Limitations Act.
[92] The effect of the agreement to mediate on Sandro Steel’s crossclaim for contribution and indemnity was to extend the limitation period to two years, less a week (i.e. 723 days) from November 10, 2010 (the day the mediation was cancelled). In other words, it extended the limitation period to November 3, 2012.
[93] Sandro filed (or “delivered”) its crossclaim for contribution and indemnity on May 11, 2012. Rule 14.01(2) provides that a crossclaim is commenced when it is delivered. Therefore, the two year limitation period had not expired on the date the crossclaim for contribution and indemnity of the Tribury was commenced.
[94] Edward’s motion to dismiss Sandro’s crossclaim for contribution and indemnity is therefore dismissed.
MOTION BY TRIBURY FOR SUMMARY JUDGMENT DISMISSING SANDRO’S COUNTERCLAIM IN THE 2009 ACTION (ON THE BASIS OF THE ADMISSIONS CONTAINED IN SANDRO’S PLEADINGS)
[95] I have dismissed Sandro’s counterclaim against Tribury in the 2009 action on the basis that the limitation period had expired. Accordingly, it is not necessary for me to decide this issue.
SUMMARY OF DECISIONS
The 2008 Lien Action
[96] I have denied Tribury’s claim for an order dismissing the lien action. The action is to continue as an action in contract. However, an order is to issue declaring that the lien has expired and for the return of the lien bond in the amount of $220,913.23.
The 2009 Action
[97] I have granted Edward’s claim for a dismissal of Sandro’s crossclaim for its remediation costs. Those portions of the crossclaim which pertain to the remediation costs are to be struck therefore.
[98] I have denied Edward’s claim for a dismissal of Sandro’s crossclaim for contribution and indemnity.
[99] I have granted Tribury’s motion for a dismissal of Sandro’s counterclaim against it in this action.
The 2010 Action
[100] I have denied Edward’s motion for a dismissal of this action.
TRIAL MANAGEMENT ISSUES
[101] Three actions, involving (largely) the same subject matter and parties remain before the court. Some of the claims in these actions overlap. The parties have requested that I not make any findings or orders with respect to the organization and management of the various claims and actions, and that upon receipt of my decision they will take steps to do so themselves. Accordingly, I will leave the responsibility for doing so to them.
[102] My finding of fact that the parties agreed to mediate the Sandro remediation costs was made in the context of a Rule 20 motion for summary judgment. This finding was based on a consideration of the correspondence which was exchanged by the parties and the other documents which were filed in support of the motions. It is my belief that the contents of these documents permitted me to develop an appreciation of the evidence which was sufficient for me to render summary judgment in these matters. In the circumstances the parties are to proceed to trial on the basis that this fact is not in dispute.
COSTS
[103] If the parties cannot agree on costs they can file written submissions in relation thereto, together with costs outline, within 20 days of the release of this decision. Submissions, exclusive of the costs outline, are to be no longer than three pages in length. Replies to the submissions are to be filed within 30 days.
Mr. Justice E.J. Koke
Released: January 30, 2013
COURT FILE NO.: C-1023-10
COURT FILE NO.: C-11603-09
COURT FILE NO.: C-1126-08
DATE: 20130130
ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: C-1023-10
BETWEEN
Sandro Steel Fabrication Ltd.
Plaintiff/Respondent
– and –
Edward Chiesa and Edward Engineering
Defendant
COURT FILE NO.: C-11603-09
BETWEEN
Tribury Construction (1995) Inc.
Plaintiff
– and –
Sandro Steel Fabrication Ltd., Halsall Associates Limited , Edward Engineering, Edward Chiesa, Castellan James & Partners Architects Inc. and Laurentian University of Sudbury
Defendants
COURT FILE NO.: C-1126-08
BETWEEN
Sandro Steel Fabrication Ltd.
Plaintiff
– and –
Tribury Construction (1995) Inc. and
Laurentian University of Sudbury
Defendants
judgment on motion
Koke J.
Released: January 30, 2013
[^1]: Teepee Excavation & Grading Ltd. v. Niran Construction Ltd. (2000) 49 O.R. (3rd) 612 (C.A.). [^2]: Limitations Act, 2002, S.O. 2002 Ch. 24 as amended [^3]: Penn-Co Construction Canada (2003) Ltd. v. Constance Lake First Nation (2011), 2011 ONSC 5875, 11 C.L.R. (4th) 253 (Sup. Ct.), affirmed 2012 ONCA 430, 292 O.A.C. 370 (CA.) [^4]: Suncor Energy Products Inc. v. Howe-Baker Engineers Ltd.(2010), 2010 ABQB 310, 492 A.R. 288 [^5]: Letter from J. Longstreet (counsel for Sandro) dated March 26, 2009 to counsel for other parties proposing mediation. [^6]: Hodaie v. RBC Dominion Securities, 2011 ONSC 6881, [2011] ONSC 6881, 108 O.R. (3d) 140 (S.C.J.)