Court File and Parties

COURT FILE NO.: 15-66721 DATE: June 17, 2016

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: JACK CARTMAN AND SUZANA STEINER Plaintiffs

AND:

OTTAWA GENERAL CONTRACTORS LTD. carrying on business as OTTAWA GENERAL CONTRACTORS, MOHAMED ABBAS, BARON BYRANT, KHALID ELFARRO and ANDREW JABBOUR Defendants

BEFORE: MASTER NATHALIE CHAMPAGNE

COUNSEL: Brent Craswell, for the Plaintiffs Peter Liston, for the Defendants

HEARD: April 5, 2016

Endorsement

Background

1The plaintiffs bring this motion for an order for partial judgment against the Ottawa General Contractors Ltd. (OGC) pursuant to Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

2The facts of this matter are largely undisputed and they are as follows:

3The plaintiffs are homeowners of a home located at 12 Skipton Road, Ottawa, Ontario.

4Ottawa General Contractors Ltd. carries on a construction contracting business as Ottawa General Contractors. The company’s President and founder is Mohamed Abbas.

5In June 2014, the plaintiffs paid OGC the sum of $5,000.00 to provide them with drawings of a proposed renovation. On November 21, 2014 they entered into a contract with OGC to perform extensive renovations on their home for the sum of $238,790.92, not including GST. The agreement between the parties also provided that “any additional items that are ordered or changed during the job will be paid before OGC will proceed with the change” and that change orders would be subject to a minimum charge of $85.00.

6It is undisputed that at the time the contract was signed the plaintiffs paid OGC $1,000.00 and paid $66,458.35 on January 6, 2015. They paid a further sum of $67,458.35 on April 16, 2015.

7On March 18, 2015 OGC submitted the building and demolition permit applications to the City of Ottawa. Demolition work began between mid-March and mid-April, 2015.

8The evidence of Jack Cartman is that on April 15, 2015 the plaintiffs were presented with additional documents by OGC which were entitled “Project Contemplated Change Estimating Sheets, Change Directive”. It is uncontested that OGC requested that the said documents be signed by the plaintiffs. The plaintiffs reviewed the documents and found that they did not include fixed prices, rather they were authorizations for hourly rate labour fees plus a 10% handling fee for materials, a 15% supervision fee in addition to a 15% overhead fee and a “fee” of 10%. The plaintiffs refused to sign the documents. None of this evidence by the plaintiffs is refuted by the defendants. In fact, in the affidavit of Mohamed Abbas there is no mention of the document.

9On April 21, 2015 the plaintiff Jack Cartman attended at the defendants’ offices looking for the approved plans and building permit from the City of Ottawa. He was advised by the defendants that the permits were not available at that time but that the City of Ottawa had assured the defendants that the permits would be forthcoming. The evidence of Cartman is that at that point he told OGC to stop work immediately if it was being done without permit. Work was stopped accordingly.

10The plaintiffs retained counsel and on May 21st, 2015, their counsel informed the defendants that the plaintiffs wanted to cancel the project and he demanded their money back.

11It is uncontested that on June 2, 2015 the lawyers for the defendants wrote to the plaintiffs’ counsel advising that OGC was prepared and willing to complete its obligations under the contract and expected the plaintiffs to honour their obligations under the contract. In that letter the defendants’ counsel states that if the plaintiffs wish to terminate the contract, the defendants would be “entitled to be paid for all work performed including reasonable overhead and profit, out-of-pocket and reimbursable expenses, lost opportunity, and other damages sustained as a result of the termination of the contract”.

12It is undisputed that the response to that letter by counsel for the plaintiffs was a demand for the immediate return of the plaintiffs’ advance, failing which they would be filing a complaint under the Consumer Protection Act and pursuing other remedies. It is also undisputed that on July 6, 2015 counsel for the defendants wrote to counsel for the plaintiffs enclosing an accounting of the defendants’ losses with respect to the plaintiffs’ termination of the contract which the defendants state was wrongful. The letter from counsel for the defendants simply says the following:

Please find enclosed an accounting of Ottawa General Contractor’s losses in respect of your client’s wrongful termination of the contract.

13It is signed by counsel and it is silent as to whether it is sent with or without prejudice. The accounting which was attached to that letter is reproduced below as it, together with the letter, is the subject matter of this motion:

14Counsel for the plaintiffs responded the same day, July 6, 2015, demanding payment of the $76,228.02 in accordance with the statement which showed a refund to the plaintiffs in the sum of $76,228.02. The defendants’ counsel did not respond to that letter and on January 19, 2016 the plaintiffs sent the defendants two Requests to Admit. One was to admit the authenticity of the document entitled Account Statement for Skipton Rd. 12, prepared by Serhii Melnyk dated June 30, 2015. The second Request to Admit was to admit the payments received by OGC from the plaintiffs well as a request to admit the total cost of the project including profits in the amount of $58,688.68. The defendants admitted the authenticity of the Account Statement. The defendants also admitted receipt of the payments from the plaintiffs, but did not admit that its total costs including profits for 12 Skipton Road were $58,688.68. In fact the response to the Request to Admit specifically states that “the costs presented on the account statement were reflective of costs incurred only to that date and do not include any new costs since then.” It further states that the amount was presented as a settlement offer and not as an admission of monies owed to the plaintiffs at the time it was presented. It claims settlement privilege on the document entitled “Account Statement for Skipton Rd. 12”. The evidence before the court is that this is the first time the defendants took the position that the letter it sent on July 6, 2015 was an offer to settle and was subject to privilege.

15No evidence was presented by OGC as to what, if any, additional work or expenses were incurred after June 30, 2015. The plaintiffs’ evidence is that no work was done after May 21, 2015.

16The position of the plaintiffs is that the account statement admits that the sum of $76,228.02 is due to the plaintiffs and they seek partial judgment for same.

17OGC`s position is that the account statement does not admit that a refund is due to the plaintiffs. Rather, it purports that the account statement is an account generated using internal accounting software, which is why the document says “refund”. OGC’s evidence is that the money was only to be refunded if the plaintiffs accepted a “buyout” of the contract. OGC points to communication between the defendants and their counsel as evidence. The email communication from the defendants’ counsel to the defendants dated June 26, 2015 says the following:

“Hi Kal and Moe,

Please see attached.

Let me know how you wish to proceed. I previously advised that you should prepare an accounting of your losses and how much you are willing to return.”

A response from the defendant to its counsel on May 9, 2015 set out as follows:

“Hi Ruba,

I have attached our account for this project. The expenses are all incurred. The only variable I have is the profit. I put 10% of the total project as profit as we should be entitled to the profits from the contract if they wish to cancel. They are essentially buying out the contract much like I would do if I had a contract with my phone carrier that I want to break or my mortgage company.”

18The plaintiffs take the position that the Account Statement is an admission as the defendants admitted the authenticity of the document in response to a Request to Admit.

19OGC is of the view that the document in question is not an admission as while it admitted its authenticity it did not admit the truth of its content. In the alternative OGC’s position is that if the court finds that the document in question to be an admission, it was an offer to settle and is subject to privilege and therefore not admissible as evidence for the purposes of partial summary judgment.

Disposition

20Having read the materials before me including the motion records, factums and books of authorities submitted by both parties and having considered the oral submissions of counsel, I am prepared to grant the plaintiffs partial summary judgment for the sum of $76,228.02.

Analysis

21The issue for the court to determine is whether the plaintiffs should have summary judgment in the amount of $76,228.02 based on the defendants’ July 6, 2015 letter from counsel which enclosed an account statement showing a refund to the plaintiffs in that amount. The defendants’ position is that the impugned letter and account statement do not amount to an admission. I disagree. The defendants admitted the authenticity of the account statement. The court need not find that the document was admitted for the truth of its contents in order for the court to conclude that it is an admission. The next issue the court must address is whether or not the communication was subject to settlement privilege. The common law principle of settlement privilege is well set out in the case of Sable Offshore Energy v. Ameron International, 2013 SCC 37, [2013] 2 S.C.R. 623. At paragraph 13 of that decision, Justice Abella states that “[s]ettlement negotiations have long been protected by the common law rule that “without prejudice” communication made in the course of such negotiations are inadmissible” but she acknowledges that those words are not required to invoke the privilege. She says “what matters is the intent of the parties to settle the action”. In the case of Canadian Gateway Development Corporation v. National Capital Commission. Master Beaudoin, as he then was, discusses intent and sets out the three conditions under which settlement discussions will be considered privileged and inadmissible. Those conditions are 1) the litigation has to be in existence or contemplated, 2) the communication must be for the purposes of settlement, and 3) there must be some indication either express or implied that the communication was not to be disclosed to the court. The letter sent by the defendants’ counsel contained no offer to settle nor was it sent without prejudice. As I indicated, while the words “without prejudice” are not necessarily determinative of whether or not a communication is subject to settlement privilege, they are a factor to be weighed by the court (see William Allan Real Estate Co. Ltd. v. Robichaud (1987), 17 C.P.C. (2d) 138 (Ont. H.C.) and Gagne v. Smooth Rock Falls Hospital (1991), 6 C.P.C. (3d) 46 (Ont. Gen. Div.)) When a party is represented by counsel, if a communication is not clearly an offer to settle, but is meant to be privileged, there should be some indication by counsel to that effect. That was not the case here until six months after the communication was exchanged and even then, it was only in response to the Request to Admit. While there is evidence that the defendants intended for the plaintiffs to “buy out their contract”, the exchange between the defendants and their lawyer does not indicate any compromise or instruction to offer to settle. In fact, the defendants claim profit on the full amount of the contract. The communication between the plaintiffs’ counsel and the defendants’ counsel on July 6, 2015 does not contain any compromise or offer to settle either, express or implied. On the face of it, it is simply a letter attaching an accounting and the exchange between the parties appears to be no more than a communication setting out each party’s position. Privilege was not asserted by the defendants until 6 months after they had received the letter from the plaintiffs’ counsel which claimed that by the defendants own accounting, a refund was due to the plaintiffs. In the circumstances I am unable to conclude that the communication from the defendants’ counsel to the plaintiffs’ counsel is subject to settlement privilege.

22Having decided that the letter and account statement are admissible as evidence and that neither are subject to settlement privilege, I must now decide whether or not there is sufficient evidence to warrant partial summary judgment in favour of the plaintiffs in this matter. The case of Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 is the leading case on summary judgment and provides, at para. 49, that:

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.

23Further the Court in Hryniak states, at para. 57, that:

On a summary judgment motion, the evidence need not be equivalent to that at trial, but must be such that the judge is confident that she can fairly resolve the dispute.

24I am satisfied that the evidence before me allows me to make findings of fact such that I am confident I can fairly resolve the dispute between the parties. The evidence is that the parties entered into an agreement for renovations at their home on 12 Skipton Road in Ottawa, Ontario. The price of the agreement was $238,790.62. The plaintiffs paid OGC an advance of $134,916.20. It is undisputed that following the commencement of work on the project, on April 15, 2015, OCG presented the plaintiffs with additional documents to sign which purported to change the original agreement. The plaintiffs refused to sign the proposed amendment. Following that event, on April 21, 2015, the plaintiffs instructed the defendants to stop work on the project as they learned that no permit had yet been received from the City of Ottawa. It is undisputed that no work was performed by the defendants after May 21, 2015. The account statement for 12 Skipton Road on June 30, 2015 lists expenses incurred to that date. While the defendants’ response to the Request to Admit states that the costs presented on the account statement were reflective of costs incurred only to June 30, 2015, they have not provided the court or the plaintiffs with evidence of any new costs since then. In addition, the communication dated July 3, 2015 from Moe Abbas to the defendants’ counsel clearly explains that the defendants are retaining 10 percent profit on the full value of the contract which is what they would have realized had the contract been complied with. This is shown in the Account Statement of June 30, 2015 which also shows that the defendants are retaining project management fees and administration fees in the total sum of $11,939.54.

25On the evidence before me, I conclude that the defendants did not incur costs in relation to the purchase of materials or make expenditures other than those listed on the June 30, 2015 Account Statement for Skipton Road 12. I therefore can only conclude that by its own accounting the defendants should refund the plaintiffs’ amount of $76,228.02. In the circumstances I am granting the plaintiffs partial summary judgment in that amount.

26The costs of this motion payable by the defendants to the plaintiffs shall be fixed at $3,000.00 plus HST.

Master Nathalie Champagne