Court File and Parties

CITATION: Four Seasons Site Development v. City of Toronto, 2015 ONSC 2293

COURT FILE NO.: CV-12-453641

DATE: 2015-04-10

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: FOUR SEASONS SITE DEVELOPMENT LTD., Plaintiff

AND:

CITY OF TORONTO, Defendant

BEFORE: F.L. Myers J.

COUNSEL: Harvey S. Dorsey, for the Plaintiff Darrel A. Smith, for the Defendant

HEARD: April 8, 2015

ENDORSEMENT

[1] The City of Toronto moves for partial summary judgment dismissing the plaintiff’s claim for payment of $358,744.31 that the plaintiff alleges is due to it under the construction agreement between the parties dated July 7, 2008. The agreement governed the terms by which the plaintiff was engaged by the City to perform construction on Bloor Street in downtown Toronto from 2008 until 2010.

[2] The merits of the parties’ dispute are not before me. The issue on this motion is whether the plaintiff’s claim for additional fees for a particular piece of the plaintiff’s construction work is statute barred by section 4 of the Limitations Act, 2002, S.0. 2002, c. 24, sch. B. The issue turns on the calculation of fees under the agreement for a particular type of work that was performed by the plaintiff. The plaintiff says the contract provides that its fees are to be calculated one way and the City says the contract provides for the fees for this type of work to be calculated a different way. For the reasons that follow, I find that this part of the claim is statute barred and must be dismissed.

The cause of action accrued in 2008

[3] The contractual dispute between the parties arose first in August, 2008, at about the time that the relevant part of the overall construction work began. The plaintiff’s first effort to bill for this work was in September, 2008. So the issue arose and the first meeting on this issue was held before the City had actually declined to pay a monthly invoice at the rate sought by the plaintiff. The parties discussed their differing views at a meeting in late August, 2008. The City agreed to look at the issue with the plaintiff. It agreed to have consultants consider it and the plaintiff expected the City to get back to it to try to resolve the matter within the currency of the agreement.

[4] In the fall of 2008, the City had its architectural consultants consider the issue raised by the plaintiff. It later hired another consultant to look at the issue. The City decided that its position was correct and would stand. As early as October 31, 2008, counsel for the plaintiff put the City on notice that this issue was “a matter of dispute” and that it “will result in a substantial difference in the amount to be paid for this item”.

[5] It should be noted that under the terms of the bidding documents by which the plaintiff tendered for the contract, the City provided approximate quantities of the total work in issue to bidders. The bidders then bid a unit price and were able to approximate, at the outset, the entire contract price related to this piece of the work. The ultimate price to be paid by the City under the agreement turns on how the City measures the work performed. While site conditions could alter the exact amount of the work required, the overall impact of the dispute was readily calculable at the outset (subject to minor site variations). Hence, the plaintiff was able to say as early as October 31, 2008 that the amount in issue would be substantial.

[6] In a letter dated December 9, 2008, the lawyer for the plaintiff advised the City that in light of the City’s refusal to pay the amount sought, the plaintiff “intends to implement the dispute resolution process as provided for in the contract.” By that time therefore, the plaintiff knew that loss had occurred as set out in the October 31, 2008 letter. It knew that the loss was caused by an act – the City’s refusal to recognize the plaintiff’s interpretation of the contract. The plaintiff knew that the act was that of the City. And it knew that having regard to the nature of the loss, a proceeding would be an appropriate means to remedy it as it had already said it was commencing the formal claims process under the construction agreement that is the precursor to legal proceedings. Therefore all four parts of subsection 5(1) of the Limitations Act, 2002 were satisfied and the limitation period likely began to run in late 2008.

The Plaintiff’s Argument

[7] The affidavit of Rohit Bansal sworn February 23, 2015 for the plaintiff is largely unchallenged. Mr. Bansal was cross-examined but there is no responding affidavit. The bulk of the facts asserted by Mr. Bansal are uncontradicted. Mr. Bansal asserts that the City confirmed as late as April, 2009 that it was still unable to make a final decision in respect of the matter in dispute notwithstanding its prior position rejecting the plaintiff’s position. Mr. Bansal says that in light of his history as a contractor for the City on numerous projects, it was clear to him that the City was willing to change its mind and negotiate a higher price for this piece of the work even if its initial approach was to refuse to pay the amount claimed. The City had previously agreed to consider the issue and was keeping track of work done both on its own basis and on the basis claimed by the plaintiff in light of the plaintiff’s position. The plaintiff asks the court to infer that the City was representing that it would not rely upon its limitation period rights if the plaintiff forbore from suing while discussions between the parties continued. At its highest, Mr. Bansal says that it was the plaintiff’s “understanding” that there would be a future negotiation, at some undetermined point in time, during the currency of the contract.

[8] By letter dated January 5, 2010, the plaintiff’s lawyer sent a notice of default to the City on a number of issues including the issue in play in this motion:

As a result of the foregoing, the [plaintiff] hereby gives notice of default of the above-noted contract for failure by the [City] to issue certificates in accordance with the provisions of [the agreement] and without prejudice to any other right or remedy, [the plaintiff] may stop the work or terminate the contract, if the default is not corrected in the seven days immediately following the receipt of this notice.

[9] In that letter, the plaintiff claimed over $3 million against the City for numerous alleged breaches of the agreement between the parties including approximately $226,000 in respect of the matter in issue in this action. The letter was a formal notice of default under the agreement.

[10] By response dated January 12, 2010, in-house counsel to the City gave the City’s formal response within the seven day period demanded. The City responded:

It remains the City’s position that it is paid in full for the [work] in accordance with the contract.

With respect [certain other claims] and the claimed short payment on [the claim in issue] for the reasons we have set out, they are not presently payable. If your client stops work or purports to terminate the contract based on not being paid for these, or based on any other wrongful claim of default, the City will look to your client for payment of any resulting damages.

[11] Mr. Bansal confirmed on cross-examination that he understood the City to have rejected the plaintiff’s position in that letter. At risk of gilding the lily, I note as well Mr. Bansal’s letter to the City dated December 23, 2010 reiterating many of the plaintiff’s disputes ten months later. Mr. Bansal recites the City’s agreement to consider the matter and to keep track of the differences in the fees allegedly owing by the parties. He then concludes:

We never received any response from the Contract Administrator or the Manager or the Director, General Manager or the Executive Director. This request for payment was submitted again in our legal counsel’s letter of January 5, 2010. The City’s solicitor denied the same in the letter from City solicitor on January 12, 2010.

[12] The parties patently joined issue on the contractual dispute by January, 2010 and Mr. Bansal acknowledged this to be so in his letter the following December. The December letter is consistent with Mr. Bansal’s evidence that he was waiting for discussions. They did not happen as the plaintiff hoped so he put the City on formal notice and the City responded. There was a clear allegation of breach of contract. In cross-examination, Mr. Bansal said that the plaintiff “understood” that there were still other events, issues, and communications happening which were not been reflected in the City’s letter and that he still expected the matter to get sorted out at a later date.

[13] I accept Mr. Bansal’s evidence, uncontradicted as it is. The difficulty is an expectation of a future negotiation is not an answer to a limitation period. There is no question that under section 5 of the Limitations Act, 2002, the plaintiff discovered its cause of action, perhaps as early as August 27, 2008 but, in any event, by no later than January 12, 2010. The plaintiff’s response, although not pleaded (as required), is based on promissory estoppel. While there is some basis in the evidence to consider some of the initial discussion from August, 2008, to be precatory and, perhaps, to precede the actual rejection by the City that was necessary to crystallize the cause of action, the plaintiff is unable to point to any actual representation having been made by the City that it would forgo its legal rights in respect of this dispute. There was no discussion of a tolling agreement; certainly nothing qualifying under section 22 of the Limitations Act, 2002. Even if the City’s investigations amounted to some kind of an implicit request that the plaintiff refrain from suing it, the plaintiff itself gave formal notice of default on January 5, 2010 and the City joined issue and gave its own cross-notice on January 12, 2010. Mr. Bansal has no evidence of any representation made by the City inconsistent with the enforcement of the City’s legal rights as asserted in the January 12, 2010 letter. His invocation of unparticularized “other events” on cross-examination in support of yet a further “understanding” by the plaintiff does not, even if true, amount to a representation sufficient to estop the City from advancing its Limitation Act, 2002 defence.

[14] This action was commenced by statement of claim issued May 15, 2012. Even if the conversations in 2008 and 2009 led the plaintiff to believe that there was some basis for negotiation before legal process was required (and making the questionable assumption that this would toll the limitation period), that understanding could not reasonably survive the January, 2010 exchange of default notices. There is no issue requiring a trial as to whether the City made a representation after the exchange of default notices to lead the plaintiff to believe that the limitation period would not be relied upon by the City. The parties had asserted their legal rights and were in a formal dispute by January, 2010 at the very latest. This action was commenced more than two years later and was therefore too late on this issue.

[15] While not all of the plaintiff’s work in this area of the contract had been performed by May 5, 2012, this is not a case where each passing installment amounted to a fresh cause of action. There was one contractual interpretation issue that arose as early as August, 2008, which determines the entire outcome. All the work was required under the one clause and the issue arose in respect of all of the known work on day one. Halter v. Standard Life Assurance Co., 2014 ABCA 50 at paras 13 to 15. In its October 31, 2008 lawyer’s letter, the plaintiff acknowledged that at that early date, it was looking at the foreseeable loss for the entire work.

[16] It is also clear in Ontario that a plaintiff does not have to know the extent or the type of damage for a cause of action to accrue. Once it knows that some damage has occurred subsection 5(1)(a)(i) of the Limitations Act, 2002 is engaged. Hamilton v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156 at para 61.

[17] The plaintiff relies on the decision of Perell J. in Montcap Financial Corporation v. Schyven, 2011 ONSC 4030 in which Perell J. denied summary judgment in a claim for promissory estoppel even though the representation alleged was not “well-articulated or well labeled”. However, in paragraph 19 of the decision, Perell J. found that there was a conflict in the evidence in that the parties were calling each other liars on the key point of whether a representation had been made. In that pre-Hryniak case, Perell J. found that there was a genuine issue requiring a trial in light of the credibility issue on which the case turned. That is not the situation here. As noted above, I accept Mr. Bansal’s evidence in full. In my view however, it does not support a finding that the City represented that it would not enforce its rights under the Limitations Act, 2002. There is no credibility issue that might now engage the enhanced fact-finding powers of the court under Rule 20.02(2.1) or possibly require a trial. I agree with the law cited by Perrell J. concerning the need for proof of a representation to support a finding of estoppel. In his case, there was a credibility issue precluding that finding of fact. There is none here.

[18] The plaintiff’s counsel advises that there could be several more witnesses to the meetings between the parties presented at trial. As I accepted Mr. Bansal’s evidence, there is no need to have witnesses come to say the same things. If counsel is suggesting that others might have different evidence, that might support an express representation, then it was the obligation of the plaintiff to lead that trump card on this motion. Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200 at para. 26.

[19] The plaintiff makes an alternate argument that under article 3.14.03(03) of the parties’ agreement, the dispute resolution process (and hence the ability to sue) did not commence until all work under the contract was completed. This argument runs directly contrary to the express wording of article 3.14.03(01) that makes clear the immediacy and urgency with which allegations of claims are to be made. The interpretation is equally inconsistent with the 30 day and 90 day notice periods contained in section 3.14.03(03) itself. Moreover, reviewing the agreement as a whole, including the requirement that a contractor continue to work after serving a claim, the proposed interpretation of deferred resolution cannot be accepted. The immediate claims resolution process is a quid pro quo for the requirement that the contractor keep working despite an alleged breach of the contract.

[20] The proposed interpretation is also inconsistent with the conduct of the plaintiff who invoked the dispute resolution process in late 2008 as soon as the first monthly payment for this work was not made. Mr. Bansal’s evidence is that he expected the City to resolve the dispute during the currency of the contract. It did. It considered the issue, hired two consultants, spoke to “legal” and rejected the claim all during the contract period. That too is inconsistent with an interpretation that all disputes were to be deferred.

[21] In accordance with the decision of the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, I have confidence that I can make the findings of fact and apply the relevant law in this case. I do not need to resort to additional fact-finding powers under rule 20.04 (2.1) given the acceptance of the plaintiff’s evidence. While granting summary judgment may not change the identity of witnesses at trial, it reduces the claim by resolving one of three principal issues. It thereby reduces the amount of testimony which the witnesses will be required to give at trial. Moreover, by reducing the amount in issue, the court is assisting the parties to focus on a proportional outcome i.e. it should be both easier and more urgent to resolve the case once the parties have a more realistic understanding of the true amount in issue.

[22] The parties were in agreement that costs should go to the successful party on a partial indemnity basis. The quantum of costs claimed by each of the parties was very similar.

[23] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.

[24] In my view, it is fair and reasonable for the plaintiff to pay the defendant costs of $14,000 forthwith.

F.L. Myers J.

Date: April 10, 2015