CITATION: Great Lakes Copper Inc. v. 1623242 Ontario Inc., 2016 ONSC 1221
COURT FILE NO.: 216/11 and 501/12
DATE: 2016-02-18
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GREAT LAKES COPPER INC.
Milton Davis, for the plaintiff and for the defendant, 3072453 Nova Scotia Company
Plaintiff
- and -
1623242 ONTARIO INC. and 3072453 NOVA SCOTIA COMPANY
Gregory Govedaris, for the defendant, 1623242 Ontario Inc.
Defendants
HEARD: February 17, 2016, at Brampton, Ontario
Price J.
Endorsement
NATURE OF PROCEEDING
[1] Counsel attended on February 17, 2016, for the resumption of a conference begun on January 22, 2015, and continued on January 28, 2016.
[2] The conference was adjourned from January 28 to February 17, 2016, to give 1628242 Ontario Inc. (“162”) the opportunity to redeem its title to the property at 865 Gartshore Street, Fergus, Ontario, (“the property”), which is the subject of these two construction lien actions (court file no. 216/11 and 501/12, collectively “the constructive lien actions”), and to discontinue its related fraud action (court file no. 571/12) and its counterclaim in the mortgage foreclosure action by 3072453 Nova Scotia Company (“307”) in relation to the property (court file no. 640-13), failing which the court was to set a date for the four actions.
[3] Counsel for 162 confirmed on February 17 that his client had redeemed its title to the property on February 12, 2016, and had discontinued its fraud action. This leaves the two construction lien actions by Great Lakes Copper Inc. (“GLC”) remaining to be tried. 162 applies, pursuant to s. 67(2) of the Construction Lien Act, for leave to move for summary judgment dismissing the construction lien actions against it.[^1] GLC indicates that if 162 is granted leave to make such a motion, GLC will seek leave to make a cross-motion for summary judgment against 162.
ISSUES
[4] The issue that now needs to be determined is what procedure will secure the just, most expeditious and least expensive determination of these actions on their merits.
POSITION OF THE PARTIES
[5] In response to a question from the court, 162’s counsel indicated that a determination of certain issues of law would likely dispose of, or substantially shorten, a trial of the construction lien actions. He stated that a determination of the following issues could be argued in four hours and could avoid the need for a trial that would likely require three to four days:
a) whether GLC can succeed in its construction lien claims in the absence of a contract with 162; and
b) whether GLC’s remediation of the environmental contamination of the property pursuant to a request, and later an order, by the Ministry of the Environment (“MOE”), entitles GLC to recover the cost from 162 either pursuant to s. 14 of the Construction Lien Act or at common law, based on unjust enrichment and quantum meruit.
[6] GLC does not oppose the trial of an issue, but is less optimistic regarding the time that such a hearing would entail, and the likelihood that it would dispose of the action or substantially shorten the trial.
ANALYSIS AND LAW
[7] Section 67 (1) of the CLA provides:
67(1) Summary procedure – The procedure in an action shall be as far as possible of a summary character, having regard to the amount and nature of the lien in question. [Emphasis added]
[8] While the amounts involved in the present actions are substantial ($290,191.93 in the first action and $347,920.16 in the second), and the nature of the liens are complicated by the fact that they arise from the remediation of environmental contamination, the CLA was nevertheless designed to ensure that such actions can be determined in a summary manner. Justice McDermid, in Global Design & Building Inc. v. 1289193 Ontario Inc., in 2000, correctly characterized the legislative intent when he stated, in reference to section 67 (2):
The Legislature has chosen to initiate a special regime for construction liens in order to provide a simplified, inexpensive, expeditious, and ‘summary’ way of resolving such disputes. The treatment of construction lien actions is intentionally different from other actions for identifiable and sound reasons.[^2] [Emphasis added]
[9] Section 67(2) of the CLA requires a party to obtain the consent of the court for any interlocutory proceedings not provided for in the CLA. It provides:
67(2) Interlocutory steps, other than those provided for in this Act, shall not be taken without the consent of the court obtained upon proof that the steps are necessary or would expedite the resolution of the issues in dispute.
[10] Master Glustein, in Slate Falls Nation v. Canada (Attorney General), in 2007, gave a helpful review of the jurisprudence that applied to bifurcating the trial of issues in an action prior to the Supreme Court of Canada’s 2014 decision in Hryniak v. Mauldin. He stated:
[55] The power to split a trial is a part of the inherent jurisdiction of a judge of this Court (see Elcano Acceptance Ltd. v. Richmond, Richmond, Stambler & Mills, (1986), 55 O.R. (3d) 56 (C.A.) (“Elcano”), at para. 10 – as cited at 1986 2591 (ON CA), 1986 CarswellOnt 618). A Master has no inherent jurisdiction and as such jurisdiction must be conferred by statute.
[56] A case management master has the jurisdiction to bifurcate a trial and make ancillary orders pursuant to Rule 77.11(1)(e) (see Unwin v. Crothers(2005), 2005 23337 (ON SC), 76 O.R. (3d) 453 (S.C.J.) (“Unwin”) at paras. 54, 58, and 61)
[57] However, as Morden J.A. (as he then was) held in Elcano, “it is a basic right of a litigant to have all issues in dispute resolved in one trial” and as such the power to bifurcate a trial is “a narrowly circumscribed power” since “as far as possible, multiplicity of legal proceedings shall be avoided” (Elcano, at para. 11; see also s. 138 of the Courts of Justice Act, R.S.O. 1990, c. C. 43.).
[58] In Elcano, Morden J.A. followed the “judicial admonition” of Meredith C.J. in Walker v. Independent Order of Foresters (1905), 5 O.W.R. 421 at 422 that “Experience has shewn that seldom, if ever, is any advantage gained by trying some of the issues before the trial of the others is entered upon”. Consequently, Morden J.A. held that “the power should be exercised, in the interests of justice, only in the clearest cases” and that “a Court should be slow to exercise the power if one of the parties, particularly, as in this case, the defendant …objects to its exercise” (Elcano, at para. 11).
[59] In Unwin, Spies J. commented on the high onus to establish bifurcation (Unwin, at paras. 78):
The moving party has the onus of demonstrating that there is a clear benefit to be gained, in terms of time and expense, from severing an issue from the trial. This burden is particularly high when the opposing party objects to the bifurcation. …
The onus is on the party requesting bifurcation to establish that the case is one in which the court’s discretion to bifurcate should be exercised. The evidence filed by a moving party in support of its motion for a bifurcation order must be extraordinary and the circumstances of the case must show that the preponderance of factors justify the court in departing from the general rule that all issues relating to litigation should be determined at the trial.[emphasis added]
[60] The court considers the following factors on a severance motion (Ahmed v. Azzizzada, 2006 CarswellOnt 7972 (S.C.J.) at para. 15 and Bourne v. Saunby, [1993] O.J. No. 2606 (Gen. Div.) at para. 30):
(i) are the issues to be tried simple;
(ii) are the issues of liability clearly separate from the issues of damages;
(iii) is the factual structure upon which the action is based so extraordinary and exceptional that there is good reason to depart from normal practice requiring that liability and damages be tried together;
(iv) does the issue of causation touch equally upon the issues of liability and damages;
(v) will the trial judge be better able to deal with the issues of the injuries of the plaintiff and his financial losses by reason of having first assessed the credibility of the plaintiff during the trial of the issue of damages;
(vi) can a better appreciation of the nature and extent of injuries and consequential damage to the plaintiff be more easily reached by trying the issues together;
(vii) are the issues of liability and damages so inextricably bound together that they ought not to be severed;
(viii) if the issues of liability and damages are severed, are facilities in place which will permit these two separate issues to be tried expeditiously before one court or before two separate courts, as the case may be;
(ix) is there a clear advantage to all parties to have liability tried first;
(x) will there be a substantial saving of costs;
(xi) is it certain that the splitting of the case will save time, or will it lead to unnecessary delay;
(xii) has there been an agreement by the parties to the action on the quantum of damages;
(xiii) if a split is ordered, will the result of the trial on liability cause other plaintiffs in companion actions, based on the same facts, to withdraw or settle; and
(xiv) is it likely that the trial on liability will put an end to the action.
[61] Himel J., in General Refractories Co. of Canada v. Venturedyne Ltd., [2001] O.J. No. 746 (S.C.J.) (“General Refractories”) reviewed the above case law and set out a concise summary of the factors relevant to a severance motion (General Refractories, at para. 16):
Whether the issues for the first trial are relatively straightforward;
The extent to which the issues proposed for the first trial are interwoven with those remaining for the second;
Whether a decision at the first trial is likely to put an end to the action altogether, significantly narrow the issues for the second trial or significantly increase the likelihood of a settlement;
The extent to which the parties have already devoted resources to all of the issues;
The timing of the motion and the possibility of delay;
Any advantage or prejudice the parties are likely to experience; and
Whether the motion is brought on consent or over the objection of one or more of the parties.
[62] Bifurcation is limited to cases in which there is a narrow and discrete issue which could be tried expeditiously, and which, if determined against the plaintiff, would put an end to the action without a lengthy and complicated trial, would reduce costs and delay to the parties and would conserve scarce judicial resources. (see Unwin, at para. 83, and SNC-Lavalin Engineers & Constructors Inc. v. Citadel General Assurance Co. (2003), 2003 64289 (ON SC), 63 O.R. (3d) 226 (Mast.) (“SNC-Lavalin”) at para. 18).
[63] The saving of time and costs for the litigants, as well as the State, are secondary to the overriding concern that no party should be prejudiced as a result of a bifurcation order (SNC-Lavalin, at para. 18; Woodglen & Co. v. Owens, [1995] O.J. No. 1360 (Gen. Div.) at paras. 11, 21-22 (“Woodglen”)).
[64] The court should be reluctant to have a separate trial of an issue if, in the disposition of that issue, all or most of the evidence will be called that would have been called to dispose of all of the issues. Further, credibility issues involve a very real concern and severance of issues should not occur where credibility issues have to be tried by the judge (Woodglen, at para. 22).
[65] Separate trials should occur only when the issue to be tried is not interwoven with other issues in the actions (Woodglen, at para. 21).[^3]
[11] The amendment of the summary judgment rule (Rule 20.04) on January 1, 2010,[^4] expanded the powers of a judge hearing such a motion. Following the amendment, the Supreme Court of Canada redefined the test to be applied, and recommended that judges dismissing such motions exercise a trial management function.
[12] Rules 20.05(1) and (2) now provide, in part:
20.05 (1) Where summary judgment is refused or is granted only in part, the court may make an order specifying what material facts are not in dispute and defining the issues to be tried, and order that the action proceed to trial expeditiously.
(2) If an action is ordered to proceed to trial under subrule (1), the court may give such directions or impose such terms as are just . . . .
[13] The Supreme Court in Hryniak called attention, in the following terms, to the trial management orders that a judge hearing a summary judgment motion may employ in the exercise of his/her trial management function:
Rules 20.05(2)(a) through (p) outline a number of specific trial management orders that may be appropriate. The court may: set a schedule; provide a restricted discovery plan; set a trial date; require payment into court of the claim; or order security for costs. The court may order that: the parties deliver a concise summary of their opening statement; the parties deliver a written summary of the anticipated evidence of a witness; any oral examination of a witness at trial will be subject to a time limit or; the evidence of a witness be given in whole or in part by affidavit.[^5]
[14] The Supreme Court in Hryniak recognized that concerns about credibility or clarification of evidence can often be addressed by calling oral evidence at the hearing of the motion, using the powers which Rule 20.04(2.1) gives to the court. It also recognized that there may be cases where, given the nature of the issues and the evidence required, the judge cannot make the necessary findings of fact, or apply the legal principles, to reach a just and fair determination. The Court concluded:
There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.[^6]
[15] Justice Corbett, in Sweda Farms v. Egg Farmers of Ontario, in 2014, noted that the court’s balancing of fairness and proportionality in formulating an appropriate procedure for determining an action must proceed on a case-by-case basis, based on the record before it. He stated, in the context of a summary judgment motion:
Summary judgment motions come in all shapes and sizes, and this is recognized in the Supreme Court of Canada’s emphasis on “proportionality” as a controlling principle for summary judgment motions. This principle does not mean that large, complicated cases must go to trial, while small, single-issue cases should not. Nor does it mean that the “best foot forward” principle has been displaced; quite the reverse. If anything, this principle is even more important after Hryniak, because on an unsuccessful motion for summary judgment, the court will now rely on the record before it to decide what further steps will be necessary to bring the matter to a conclusion. To do this properly, the court will need to have the parties’ cases before it.[^7] [Emphasis added]
[16] The material before the court on February 17, 2016, did not permit a full consideration of the factors relevant when deciding whether a summary judgment motion, or a trial of an issue of law, would offer a fair and economical means of resolving the actions. Myers J., when faced with a similar situation in Matbar S. Enterprises Inc. v. Hourglass Workout Inc., in 2014, found that “before deciding whether there must be a trial of an issue …, there needed to be a more clearly defined issue supported by admissible facts.”[^8] Justice Myers adjourned the application to give counsel an opportunity to consult with their clients and then to meet to try to agree upon a process and schedule. In doing so, he stated, “Perhaps the clients will determine that their scarce funds are better spent on settlement….”
[17] In the present case, counsel acknowledge that mediation of the dispute by a knowledgeable construction lien expert may be worthwhile. If they conclude that this is not feasible, they should have the opportunity to articulate the legal issues whose trial, if given priority, would likely result in the disposition of the actions or substantially shorten the trial, and whether the facts necessary for the determination of such issues can be agreed upon. This process may enable them to assess the relative merits of a summary judgment motion or trial of an issue, and whether, if viva voce testimony is needed, whether it can best be obtained by cross-examinations on affidavits or at trial.
[18] In focusing on what facts need to be established for the particular legal issues that need to be determined, and the form of evidence that can best be employed to establish those facts, the exchange of draft issues of law and agreed statements of fact is consistent with the methodology that the Supreme Court in Hryniak recommended. Justice Penny aptly described the regime that the Hryniak decision introduced when he observed, in T. Flims S.A. v. Cinemavault Releasing International Inc., in 2015, “In today’s world, the test for whether an application should be converted into a trial (or trial of an issue) is congruent with the direction of the Supreme Court of Canada in Hryniak v. Mauldin 2014 SCC 7, that is, in order to dispose of the case justly and fairly, is the forensic machinery of a trial required?”[^9]
CONCLUSION AND ORDER
[19] For the foregoing reasons, it is ordered that:
a) 1628242 Ontario Inc. shall, by March 30, 2016, produce to Great Lakes Copper Inc. a draft of the issues of law that could be determined in these actions, and of an agreed statement of facts upon which a trial of those issues could be based.
b) Great Lakes Copper Inc. shall, by April 18, 2016, produce its response to 1628242 Ontario Inc.’s draft of the issues and proposed agreed statement of facts.
c) The parties shall return for a resumption of the conference before me on April 26, 2016, at 9 a.m.
Price J.
Released: February 18, 2016
CITATION: Great Lakes Copper Inc. v. 1623242 Ontario Inc., 2016 ONSC 1221
COURT FILE NO.: 216/11 and 501/12
DATE: 2016-02-18
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GREAT LAKES COPPER INC.
Plaintiff
- and -
1623242 ONTARIO INC. and 3072453 NOVA SCOTIA COMPANY
Defendants
ENDORSEMENT
Price J.
Released: February 18, 2016
[^1]: Construction Lien Act, R.S.O. 1990, c. C.30
[^2]: Global Design & Building Inc. v. 1289193 Ontario Inc.(2000), 2 C.L.R. (3d) 271 (S.C.J. )
[^3]: Slate Falls Nation v. Canada (Attorney General) 2007 ON SC 1928
[^4]: Rules of Civil Procedure, R.R.O. 1990, Reg. 194
[^5]: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, paras. 76 and 77
[^6]: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, para. 49
[^7]: Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, para. 32
[^8]: Matbar S. Enterprises Inc. v. Hourglass Workout Inc., 2014 ONSC 4657, para. 6
[^9]: T. Flims S.A. v. Cinemavault Releasing International Inc. 2015 ONSC 6608, para. 6