COURT FILE NO.: CV-15-526601 DATE: 20160426 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
WALSH CONSTRUCTION/BONDFIELD PARTNERSHIP Plaintiff – and – CHARTIS INSURANCE COMPANY OF CANADA Defendant
Faren Bogach and Jeff Scorgie, for the Plaintiff James MacLellan and Soizic Reynal de St. Michel, for the Defendant
HEARD: April 20, 2016
R.F. Goldstein J.
[1] Should litigation between a general contractor and the issuer of a performance bond to a subcontractor be referred to a Master where that Master is hearing construction lien matters related to the same project? That is the issue to be decided on this motion.
BACKGROUND
[2] Walsh, the Plaintiff, is the design-builder for the redevelopment of the Women’s College Hospital in Toronto. Walsh retained various subcontractors to perform work. One of those subcontractors was Yuanda Canada Enterprises Ltd. Yuanda was to supply and install a curtain-wall for $3,392,358.00. Yuanda was required to obtain a performance bond as part of the terms of the subcontract. A representative of Yuanda signed the subcontract on March 14 2012; Walsh’s representative signed it on April 16, 2012.
[3] Yunada obtained a performance bond for $3,833,364.54 from Chartis, the Defendant, on April 27, 2012. The bond guaranteed the obligations of Yuanda to Walsh.
[4] Things began to go wrong at the project. Yuanda registered a construction lien for what it alleged was unpaid amounts on the subcontract. On July 12, 2013 Yuanda issued a Statement of Claim against Walsh under the Construction Lien Act. On November 14 2014 Walsh counterclaimed against Yuanda for breaching its contractual obligations and negligently performing work.
[5] Walsh and Yuanda were not the only parties getting involved in litigation over the Women’s College Hospital redevelopment project. Claims and counter-claims between Walsh and its subcontractors have proliferated. There are at least five other actions. All have been referred to Master Albert. Master Albert has issued a series of orders dealing with procedural aspects of these references, but in essence they are to be dealt with together or one after the other as Master Albert, in her discretion, thinks appropriate.
[6] That left the matter of the performance bond issued by Chartis. On April 22 2015 Walsh issued a statement of claim against Chartis. Walsh alleges that Chartis has failed to perform its obligations under the bond. Chartis defended on July 9 2015. Among other things Chartis pleads that Walsh has missed a limitation period.
[7] Walsh now brings a motion to have the proceeding between it and Chartis (which I will refer to as the “Walsh/Chartis proceeding”) referred to Master Albert so that one common trier of fact can hear all litigation associated with the Women’s College Hospital redevelopment project. Ms. Bogach, for Walsh, argues that the Yuanda and Chartis actions involve similar questions of law and fact, both arise out of the same transactions and occurrences, and it is the most efficient way of proceeding as it will avoid a multiplicity of proceedings and inconsistent findings of fact.
[8] It would have made sense for Walsh to third-party Chartis in the Yuanda litigation, but it is abundantly clear that s. 55 of the Construction Lien Act does not permit what is technically a non-construction matter to be joined with a construction matter. Ms. Bogach’s position is that this motion does not seek consolidation or joinder.
[9] Mr. McLellan, for Chartis, argues the Chartis and Yuanda actions raise different questions of law and fact. He concedes that there is overlap in the analysis of Yuanda’s default but his main argument is that Walsh is statute-barred from proceeding by virtue of a limitation issue. He also argues that the balance of convenience does not favour hearing the actions together or sequentially because the summary procedures in the Construction Lien Act would restrict Chartis’s ability to defend the action under the Rules of Civil Procedure. Ultimately, he says, it would be unfair to Chartis.
ANALYSIS
[10] In my respectful view, the Walsh/Chartis proceeding should be referred to Master Albert. I say that for three reasons:
[11] First, the pleadings show that the actions have overlapping legal and factual issues. The pleadings define the issue. The pleadings show that:
- In its Statement of Claim, Yuanda pleaded against Walsh that Walsh asked Yuanda to perform additional work and changed the work to be done. The extra work and the changes to the original scope of work were caused by defaults by Walsh. Yuanda claimed that it performed extra work to a value of about $3.8 million and that Walsh did not pay.
- Walsh, in its Statement of Defense and Counterclaim against Yuanda, pleaded that Yuanda negligently and in breach of its contractual obligations failed to provide proper skilled workers to install the curtain, failed to follow the project specifications, failed to properly manage and supervise its trades, failed to carry out field mock-up testing, and failed to carry out the work on time. Walsh pleaded that the delays were Yuanda’s own fault.
- In its Reply and Statement of Defense to the Counterclaim, Yuanda specifically denied the allegations and pleaded that it carried out all work in a good and workmanlike manner and in accordance with the project specifications.
- In its Statement of Claim against Chartis, Walsh pleaded that Yuanda failed to perform its obligations under the contract between them and that Chartis failed to ensure that Yuanda carried out its obligations under the bond. Walsh’s paragraph setting out Yuanda’s failures is identical to the paragraph setting out Yuanda’s failures in the counterclaim. Walsh pleaded that Chartis failed to honour its obligations under the performance bond, in essence, because it did not remedy Yuanda’s default.
- Chartis pleaded in its defence that Walsh was statute-barred because of a limitation period. In the alternative, Chartis pleaded that Walsh was in default of its obligations under its contract with Yuanda. The material facts setting out Walsh’s alleged defaults is very similar to the material facts pleaded in Yuanda’s pleadings.
[12] To greatly simplify matters, it comes down to this: in order to succeed against Yuanda Walsh needs to show on a balance of probabilities that Yuanda defaulted on its obligations. In order to succeed against Chartis, Walsh also needs to show (the limitation issue aside) that Yuanda defaulted on the same obligations and that Chartis guaranteed those obligations.
[13] Second, I agree with Ms. Bogach that it simply makes sense to have the same trier of fact hear all matters. This will avoid a multiplicity of proceedings, avoid inconsistent results, and greatly simplify the process. Furthermore, it puts the matters before a Construction Lien Master, who is an expert in such things, clearly economizing judicial resources.
[14] In 1014864 Ontario Inc. v. 1721789 Ontario Inc., 2010 ONSC 3306, Master Dash defined the proper approach to consolidating or trying actions together. The court must first determine whether one or more of the “gateway” criteria in Rule 6.01(1)(a) (b), or (c) are satisfied. If so, the court should then consider a non-exhaustive list of factors in determining whether the actions should be tried together. These factors are set out at para. 18 of the Master’s decision:
(a) the extent to which the issues in each action are interwoven; (b) whether the same damages are sought in both actions, in whole or in part; (c) whether damages overlap and whether a global assessment of damages is required; (d) whether there is expected to be a significant overlap of evidence or of witnesses among the various actions; (e) whether the parties the same; (f) whether the lawyers are the same; (g) whether there is a risk of inconsistent findings or judgment if the actions are not joined; (h) whether the issues in one action are relatively straight forward compared to the complexity of the other actions; (i) whether a decision in one action, if kept separate and tried first would likely put an end to the other actions or significantly narrow the issues for the other actions or significantly increase the likelihood of settlement; (j) the litigation status of each action; (k) whether there is a jury notice in one or more but not all of the actions; (l) whether, if the actions are combined, certain interlocutory steps not yet taken in some of the actions, such as examinations for discovery, may be avoided by relying on transcripts from the more advanced action; (m) the timing of the motion and the possibility of delay; (n) whether any of the parties will save costs or alternatively have their costs increased if the actions are tried together; (o) any advantage or prejudice the parties are likely to experience if the actions are kept separate or if they are to be tried together; (p) whether trial together of all of the actions would result in undue procedural complexities that cannot easily be dealt with by the trial judge; (q) whether the motion is brought on consent or over the objection of one or more parties.
[15] Rule 6.01(1)(a) provides that where two or more proceedings are pending in Court, they may be consolidated, heard together, or heard one immediately after the other if they have a question of law or fact in common. Section 138 of the Courts of Justice Act expresses the underlying philosophy that a multiplicity of proceedings should be avoided. In my view, there are common questions of fact (at the least) between the Chartis action and the Yuanda action. This is clear from the pleadings, as I have mentioned. The first of the “gateway criteria” is met.
[16] In applying the factors suggested by Master Dash, and without mentioning them all in detail I think that they favour trying the Walsh/Chartis actions together with the other actions arising out of the Women’s College Hospital project, or sequentially:
- The issues are significantly interwoven, based on the factual allegations in the pleadings;
- There is a risk of inconsistent findings or judgment if the actions are not heard together or one after the other;
- There is no jury notice in the Chartis action;
- There will be significant costs savings to Walsh, and, as far as I can tell, no extra costs incurred by Chartis;
- The trial of all the actions will not result in undue procedural complexities that cannot be readily dealt with by Master Albert.
[17] I am aware that the consent or objection of the parties is one of the factors mentioned by Master Dash. I am also aware that Walsh vehemently objects. Consent or objection is merely one factor to consider, and in this case I do not think it outweighs the other factors. I doubt that Master Dash intended to suggest that one party could exercise a veto.
[18] In 450477 Ontario Ltd. v. Feldman, 2010 ONSC 122 several Construction Lien Act matters were joined with a non-Construction Lien Act matter. All of the proceedings arose out of the same construction project. The Court ordered that the matters be heard together in such a manner as the trial judge thought fit. In my view, that case is on all fours with this one. See also: Unimac-United Management v. Cobra Power Inc., 2015 ONSC 208.
[19] Mr. McLellan relies on Clarke’s Electrical Services Limited v. Gottardo Construction Limited, [2001] O.J. No. 1517 (Sup.Ct.) where Seppi J. dealt with a claim to try actions together. The only real connection was the identity of some of the parties. The actions did not arise out of the same series of events or transactions (although there was some similarity). In my view, that case turned on the interpretation of the word “contract” in s. 1 of the Construction Lien Act. The contracts were not found to be Construction Lien Act contracts. There being no other connection (other than the identity of some of the parties) the actions were not to be heard together. In my view, the case is distinguishable on that basis alone. The other authorities relied on by Mr. McLellan are similarly distinguishable on the facts.
[20] Third, despite the valiant attempts of Mr. McLellan to show otherwise, I simply do not see the prejudice to Chartis. I am aware that Chartis’s main argument is that there is a limitations issue in the Walsh/Chartis proceeding and there will be a summary judgment motion on that point. There is no reason why Master Albert cannot make that decision. Some of the discoverability issues will involve delving into the facts and expertise in construction law will be valuable in that regard.
[21] As well, I see no other prejudice to Chartis. It is true that Master Albert has made several procedural orders and set out a timetable. Chartis will have to appear before Master Albert and it may well be that the timetable will have to be modified. Master Albert is in the best position to determine how to proceed with an additional party involved. Furthermore, Chartis will have all of the other procedural remedies available to it (such as interlocutory appeals) that are not available under the Construction Lien Act. This is because the Rules of Civil Procedure will still apply. All that will simply happen is that the identity of the trier of fact will be the same. Master Albert will determine how best to proceed in a manner that is both economical and preserves Chartis’s rights.
DISPOSITION
[22] The Walsh/Chartis proceeding will be referred to Master Albert pursuant to Rule 54. Master Albert will hear Walsh/Chartis proceeding together with the other Women’s College Hospital actions or after them, as she in her discretion decides. Master Albert will hear all other procedural matters associated with the Walsh/Chartis proceeding and manage it as she thinks fit.
COSTS
[23] Counsel may each make costs submissions of no more than two pages within 30 days of the release of this judgment.
R.F. Goldstein J.
Released: April 26, 2016