CITATION: Total Meter Services Inc. v. Aplus General Contractors Corp., 2015 ONSC 3830

BARRIE COURT FILE NO.: CV-13-0699-00

DATE: 20150615

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

TOTAL METER SERVICES INC.

Plaintiff

– and –

APLUS GENERAL CONTRACTORS CORP.

Defendant

W.R. MacDougall, for the Plaintiff

L. Wise, for the Defendant

HEARD: April 16, 2015

REASONS FOR DECISION

QUINLAN J.:

Overview

[1] The plaintiff, Total Meter Services Inc., seeks the following: partial summary judgment against the defendant, Aplus General Contractors Corp., for the sum of $374,982.90[^1]; leave to bring this motion pursuant to s. 67(2) of the Construction Lien Act (CLA)[^2]; and trial of an issue with respect to certain of its claims against the defendant.

[2] The plaintiff argues that it has met the test for leave to bring this motion for the following reasons: full or partial summary judgment on the plaintiff’s claims will narrow and expedite the issues in dispute in this action; the defences raise no genuine issue for trial; and the issues lend themselves to determination by summary judgment.

[3] The defendant argues that the plaintiff’s motion is premature, as the case cannot be justly and fairly decided on its merits on the present evidence before the court.

Uncontested Facts

[4] The plaintiff is a highly specialized firm which supplies meter, fuel dispensing equipment and related services. It is one of a very small number of firms that are approved to provide such services to Metrolinx (commonly known as GO Transit), and has worked on numerous Metrolinx projects. The plaintiff never contracts directly with Metrolinx; but instead enters into subcontracts with general contractors to whom Metrolinx has awarded the entire project.

[5] The plaintiff was a subcontractor to the defendant with respect to the construction of an improvement at a fueling facility (the Project) owned by Metrolinx in Barrie, Ontario. The plaintiff performed its work at the Project from February 3, 2012 to April 3, 2013. The Project achieved substantial completion on April 3, 2013.

[6] The subcontract price, including approved change orders, totalled $2,516,012.24. The defendant claims that it is not required to pay the outstanding subcontract balance because of outstanding documentation from the plaintiff, its delay claim against the plaintiff, and various back-charges.

Issues

[7] The issues to be decided on this motion are whether there exists a genuine issue requiring a trial in relation to:

(a) the defendant’s right to withhold $265,798.76 on the strength of its allegation that some documentation has not been provided by the plaintiff;

(b) the defendant’s delay claim of $77,501.62 and its entitlement to withhold an equivalent sum from the plaintiff due to this unliquidated claim; and

(c) the defendant’s back-charge claim in relation to the non-supply of a transfer-switch.

Law on a Summary Judgment Motion

[8] In Hryniak v. Mauldin[^3], the Supreme Court of Canada provided trial courts with the following principles, which guide the approach to be taken on a summary judgment motion:

(a) A trial is not required if a summary judgment motion can achieve a fair and just adjudication, if it provides a process that allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial.

(b) The assessment may also involve a comparison of the evidence that will be available at trial and on the motion, as well as the opportunity to fairly evaluate it. Even if the evidence available on the motion is limited, there may be no reason to think better evidence would be available at trial.

(c) The “interest of justice” inquiry goes further, and also considers the consequences of the motion in the context of the litigation as a whole. For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice. On the other hand, the resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost effective approach.

(d) If the summary judgment process provides the judge with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, there will be no genuine issue requiring a trial. If there appears to be a genuine issue requiring a trial, the court should then determine if the need for a trial can be avoided by using the new fact-finding powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

[9] The court still must consider established principles regarding the evidentiary obligations of parties on a summary judgment motion. The motion judge is entitled to assume that there is a complete evidentiary record and that the parties have put their best foot forward. A responding party cannot solely rely on bald allegations or unfounded assertions that there is a genuine issue requiring trial.[^4]

[10] “Summary judgment” is by definition, a step that is “of a summary character”, and is entirely in keeping with s. 67(1) of the CLA.[^5]

Outstanding Documentation ($265,798.76)

[11] This claim relates to “as-built” and warranty documentation that the defendant says the plaintiff did not provide.

Positions of the Parties

[12] The defendant claims that the plaintiff has not provided the required documentation for its work, and therefore it does not need to pay the plaintiff until it receives such documentation. The documentation is required because of the possibility of latent defects.[^6] The defendant has offered to release approximately $260,000 to the plaintiff once the defendant receives the “as-built” and warranty documentation, leaving the balance to be disputed in the lien action.

[13] The plaintiff argues that:

(a) it delivered all “as-built” documentation to the defendant prior to completion of its work on the project;

(b) it should not matter if any warranty certificates are outstanding (and the defendant has failed to specify what exactly is missing), since the warranty period has expired;

(c) the defendant is making a bald allegation that the documents are missing, without evidence in support; and

(d) the defendant is not entitled to withhold such an arbitrary and extraordinary sum on the basis of allegedly missing documentation.

Evidence

[14] The defendant’s president deposed that the plaintiff has not provided the required documentation. In his affidavit sworn December 23, 2014, the plaintiff’s president deposed that the defendant’s assertion was true: the plaintiff refused to deliver the documentation because the defendant continued to withhold the agreed-to unpaid subcontract amount for no apparent reason. The plaintiff’s president deposed that he was not aware of any requirement in the sub-contract that such documentation needed to be supplied. Even if it was a requirement, the plaintiff has been at all times ready, willing and able to deliver the “as-built” and warranty documentation to the defendant in exchange for payment of the outstanding subcontract balance.

[15] In the plaintiff’s president’s reply affidavit sworn February 20, 2015, he again deposed that the plaintiff did not deliver warranty documentation to the defendant due to the defendant’s decision to arbitrarily withhold undisputed contract funds. However, contrary to his earlier affidavit, he deposed that he did not believe that there was any outstanding “as-built” documentation; his brother hand-delivered sixteen binders of technical manuals, drawings and other documents to the defendant following the completion of the work. In the reply affidavit, the plaintiff’s president raised a concern for the first time that the defendant had not given any details about what documentation the defendant believed was still outstanding.

[16] The plaintiff’s president was cross-examined on his affidavits on April 1, 2015. His evidence at the cross-examination, again contrary to his affidavits, was that although he did not know the date of submission, the plaintiff had submitted its warranty documentation to the defendant.

[17] The Purchase Order between the plaintiff and the defendant states that it was “issued in accordance to Prime Contract & [the defendant’s] General Conditions”. The Purchase Order General Conditions dated February 3, 2012 provide that final monies owing would be subject to the submission of close-out documentation. The Purchase Order General Conditions provide that they were to be signed by the subcontractor (the plaintiff) prior to commencement of work to ensure all parties were aware of the contract’s conditions. The close-out documentation is listed as including warranties, maintenance manuals and other specified submissions.

[18] The plaintiff’s president’s evidence on cross-examination was that he assumed that the Purchase Order was one in the same as the General Conditions and that he had quoted on “thousands and thousands” of projects.

Findings

[19] Due to the contradictions in its evidence, I do not accept the plaintiff’s argument that it does not know what documentation the defendant is seeking. The plaintiff’s president acknowledged in his first affidavit that the plaintiff had not delivered the documentation because the defendant had withheld monies, and deposed that the plaintiff would do so in exchange for payment of the outstanding subcontract balance. Yet in his second affidavit he denied that documentation was outstanding.

[20] I do not accept the plaintiff’s president’s evidence that he assumed that the Purchase Order was the same as the General Conditions. He was experienced in providing quotes on projects. I find that the documentary evidence shows that close-out documentation was required.

[21] The plaintiff argues that the amount held back is arbitrary and extraordinary.

[22] Neither the Purchase Order nor the General Conditions speak to the amount that can be held back for missing documentation. The measure of damages for a product which is inherently defective is the cost of replacement plus any other damages which arise because of the defective product.[^7] Here, the value of the contract was $2.3 million and I find that withholding approximately 10% is not unreasonable.

Conclusion on Claim for Outstanding Documentation

[23] There is a conflict in the plaintiff’s evidence as to whether the plaintiff submitted the “as-built” and warranty documentation to the defendant. The defendant is entitled to hold back funds until it received this documentation. The amount held back is not unreasonable. Considering the conflicting evidence, I find there is a genuine issue requiring a trial in relation to this claim.

[24] The parties have acknowledged that a trial is required with respect to certain additional work and back-charges. It will not serve the goals of timeliness, affordability and proportionality to use the fact-finding powers available to the court to decide this claim for partial summary judgment. Ordering a “mini-trial” in relation to the holdback for missing documentation is not the proportionate course of action. Nor is it a fair course of action, considering the difficult task of assessing credibility in this case with voluminous exhibits, and contradictory and inconsistent affidavits, which can obscure the affiant’s authentic voice, as discussed in Baywood Homes Partnership v. Haditaghi.[^8]

[25] Therefore, the plaintiff’s motion for summary judgment for monies held back due to outstanding documentation is dismissed.

The Defendant’s Delay Claim ($77,501.62)

[26] The defendant asserts that it has a “delay claim” against the plaintiff, which entitles the defendant to withhold an equivalent amount from the plaintiff.

Positions of the Parties

[27] The plaintiff’s position is that:

(a) it was not responsible for any delays which would impact the “critical path” of the Project, or cause any damages to the defendant; and

(b) the alleged “delay claim” was only raised long after the plaintiff had completed its work on the project and commenced this action.

[28] The defendant’s position is that:

(a) the “delay claim” was not raised in its defence through inadvertence;

(b) it did not wish to retain a delay claim expert because of the cost and the hope of settlement; and

(c) because the delay claim is being advanced in a related action, should this court determine this claim on a summary judgment motion, there would be prejudice to the defendant, the bonding company and the two indemnifiers in the related action.

The Law

[29] In order to recover damages for a delay claim, the following must be established:

(a) the cause of the delay must be isolated and defined;

(b) the delay must be analyzed to determine whether it is excusable or the responsibility of the contractor;

(c) if the delay is the contractor’s responsibility, the contractor must bear the cost. If it is excusable, the extent of the delay must be determined;

(d) the contractor must prove that actual or constructive notice of the delay was given if required by the contract;

(e) it must be established whether the delay affected items on the critical path or whether it merely reduced or eliminated the float;

(f) the contract must be reviewed to assess whether it provides that the contractor is entitled to a remedy of extension of time only or time and compensation; and

(g) the quantum of compensation must be determined.[^9]

[30] The defendant did not dispute that these principles apply equally to claims brought by a contractor against its subtrade.

Evidence

[31] As an exhibit to his affidavit, the defendant’s president provided a document from its project manager outlining the “impact/delay costs” for which the defendant claims that the plaintiff is responsible. The document includes the cost for site facilities for dates other than those set out in his affidavit. His costs for communications, administration, legal assistance and staffing appear to be only estimates. The defendant’s president acknowledged that he is still in the process of collecting information to support these costs. The defendant has allocated 50% of these costs to the plaintiff.

Findings

[32] I find that the defendant has provided no credible evidence on this motion to substantiate its bald allegation that the plaintiff was responsible for Project delays. There is no expert report or any scheduling analysis to support the cause and duration of any project delays. Neither the document prepared by the project manager nor the affidavit evidence submitted is sufficient to establish a delay claim.

[33] I am aware that the defendant did not wish to retain a delay claim expert because of the cost and the hope of settlement. However, two years have passed since substantial completion of the contract. The Statement of Claim was issued in June 2013. It is not reasonable for the defendant to wait until trial to retain a delay claim expert, especially in the face of a summary judgment motion where the defendant is required to put its best foot forward. As there is no evidence that the defendant has even begun to marshall a case on its delay claim, I am not satisfied that it has put its best foot forward.

[34] I find that there is no credible evidence that the plaintiff caused any delay, or any damages. Further, there is no evidence that determining this claim on a summary judgment motion would cause prejudice to the defendant or others.

Conclusion on Delay Claim

[35] I find that there is no genuine issue requiring a trial in relation to the defendant’s delay claim. I am able to make the necessary findings of fact and apply the law to those facts. Compared with going to trial, this is a proportionate, more expeditious and less expensive means to achieving a just result. Accordingly, the plaintiff’s motion for summary judgment in the amount of $77,501.62 plus interest is granted.

Transfer-Switch ($31,682.52)

[36] This remaining issue concerns a 600-volt automatic transfer-switch and whether the provision of the transfer-switch was within the scope of the plaintiff’s contract.

Positions of the Parties

[37] The plaintiff’s position is that the transfer-switch was never an item on which the plaintiff bid or priced. The plaintiff did not agree to take on the responsibility for the transfer-switch as part of the subcontract.

[38] The defendant’s position is that the plaintiff was contractually responsible for the transfer-switch.

Evidence

[39] The plaintiff subcontracted with Wallwin Electrical Ltd. (Wallwin) to install electrical distribution items supplied by the plaintiff, but which the plaintiff did not have the expertise to install. Wallwin’s quote to the plaintiff dated October 5, 2011 specifically excludes the supply of the transfer-switch, noting that same was to be supplied by the plaintiff.

[40] The defendant and Wallwin also entered into a subcontract, to which the plaintiff was not privy.

[41] A meeting was held on January 16, 2012, before the subcontracts were awarded by the defendant to the plaintiff or Wallwin. That meeting was between the plaintiff’s president, the defendant’s president, and Wallwin. Email evidence supports only that a meeting was held. Neither party produced notes from the meeting or correspondence confirming discussions and/or agreements reached at that meeting. The defendant’s evidence is that the purpose of meeting was to ensure that there was no overlap of work, and no electrical work for the fuelling system that was not covered in the two subcontracts. The defendant’s evidence is that the plaintiff stated at that meeting that all electrical work that Wallwin had excluded was covered by the plaintiff.

[42] The plaintiff’s evidence is that the plaintiff never advised Wallwin that the transfer-switch was included in the plaintiff’s scope. Nor did the plaintiff promise or assure the defendant that the plaintiff was responsible for all of the electrical work not covered by Wallwin’s subcontract with the plaintiff.

[43] As a result of the meeting, the defendant issued its Purchase Order to Wallwin for the electrical work that it was to provide. The Purchase Order does not reference a transfer-switch.

[44] The plaintiff provided a bid to the defendant dated January 23, 2012. There is no mention of the transfer-switch in the bid. On February 3, 2012, the defendant issued its Purchase Order to the plaintiff for the distribution of all electrical items dealing with the fuelling system.

[45] Although not in his affidavits, the plaintiff’s president testified at his cross-examination that the plaintiff was primarily responsible for low voltage work and that the high voltage work was subcontracted to Wallwin.

Findings

[46] There is no mention of the transfer-switch in the detailed bid that the plaintiff provided to the defendant. On the other hand, at the time of its bid dated January 23, 2012, the plaintiff had the quote from Wallwin, which specifically excluded the transfer-switch and noted that it was to be supplied by the plaintiff. The timing of the events appears to support the defendant’s position.

[47] The evidence as to what transpired at the meeting with Wallwin is conflicting.

Conclusion on Transfer-Switch

[48] I find that there is a genuine issue requiring a trial in relation to the transfer-switch. I am not satisfied that I can determine this issue on the record before me. Considering that there needs to be a trial of an issue with respect to the claims for outstanding documentation, additional work and back-charges, I find that it is not appropriate for the court to exercise its fact-finding powers. For the reasons set out earlier in relation to the claim for outstanding documentation, the fact-finding powers will not serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

Conclusion

[49] Accordingly, I make the following order:

(i) the plaintiff is granted leave to bring this motion pursuant to s. 67(2) of the Construction Lien Act;

(ii) summary judgment against the defendant is granted in the amount of $77,501.62 plus interest;

(iii) the balance of the plaintiff’s motion for summary judgment is dismissed;

(iv) a trial of an issue with respect to the remaining issues in this action, including the issues in relation to additional claims of the plaintiff and back-charges of the defendant is hereby directed, which order shall constitute an order setting this action down for trial within the meaning of s. 37(2) of the Construction Lien Act, without prejudice to the discovery rights or the rights of the parties to bring discovery motions.

Costs

[50] If the parties are unable to agree on costs and/or interest, I will receive written submissions from the plaintiff by June 25, 2015, followed by responding submissions from the defendant by July 2, 2015. The plaintiff will have until July 8, 2015 to reply. Costs Submissions shall be no more than three pages in length, exclusive of any Costs Outline or Offers to Settle. If no submissions are received by July 8, 2015, the issue of costs will be deemed to have been settled as between the parties.

QUINLAN J.

Released: June 15, 2015

[^1]: The Notice of Motion sought summary judgment in the amount of $412,188.75. In its Factum, the plaintiff advised that it was not seeking relief on the motion for additional work on the Project totalling $21,296.64, and, in an effort to streamline submissions during the course of argument, the plaintiff abandoned its claim for summary judgment with respect to miscellaneous back-charges of the defendant, seeking that there be a trial of an issue with respect to those claims.

[^2]: R.S.O. 1990, c. C. 30

[^3]: 2014 SCC 7, [2014] S.C.J. No. 7 at paras. 4, 49, 58, 60, and 66.

[^4]: 790668 Ontario Inc. v. D’Andrea, 2014 ONSC 3312, [2014] O.J. No. 2837 at paras. 72 and 117; Rogers Cable TV Ltd. v. 374041 Ontario Ltd., 1994 CanLII 7367 (ON SC), 1994 CarswellOnt 166 at paras. 6-7.

[^5]: Kieswetter Demolition (1992) Inc. v. Traugott Building Contractors Inc. et al, 2014 ONSC 1397 at para. 4.

[^6]: The term “latent defects” was used by the defendant’s counsel in submissions. In the affidavit material of the defendant, there is a reference to the need to set aside sufficient monies to cover all possible defects that may arise.

[^7]: Chabot v. Ford Motor Co. of Canada (1982), 1982 CanLII 2051 (ON SC), 19 B.L.R. 147 (Ont. H.C.).

[^8]: 2014 ONCA 450 at para. 44.

[^9]: Lawhill Limited v. Ontario (Realty Corporation), [2007] O.J. No. 4825 at para. 554 citing Bemar Construction (Ontario) Inc. v. Mississauga (2004), 30 C.L.R. (3d) 169.