2016 ONSC 5107

Court File and Parties

Court File No.: CV-15-534257 Date: August 11, 2016

SUPERIOR COURT OF JUSTICE - ONTARIO

Re: Limen Structures Ltd. and 1033803 Ontario Inc. o/a Forma-Con Construction, as a joint venture v Brookfield Multiplex Construction Canada Limited

Before: Master C. Albert

Counsel: B. Bowles and J. Nathwani, for the moving party (defendant) Fax: 416-368-3467 J. Armel and D. Resnick, for the responding party (plaintiff) Fax: 416-204-2826

Heard: May 18, 2016

MASTER C. ALBERT

ENDORSEMENT

1. This proceeding arises from the construction of the downtown Toronto office complex known as the Bay-Adelaide Centre. The forming subcontractor, Limen Structures Ltd. and 1033803 Ontario Inc. o/a Forma-Con Construction, as a joint venture (“Limen JV”), sued the general contractor, Brookfield Multiplex Construction Canada Limited (“Brookfield”), for $20,476,980.96 and registered a construction lien in that amount on June 25, 2015 [1]. Limen JV’s lien claim includes a delay claim of approximately $11.5 million. Brookfield counterclaimed against Limen JV and included in its counterclaim a delay claim against Limen JV for $4.7 million.

2. Brookfield moves under section 67 of the Construction Lien Act, R.S.O. 1990, c.C.30 for leave to bring a motion for partial summary judgment to strike the delay portion of Limen JV’s lien claim on the basis that Limen JV failed to give proper notice of its delay claim and notice of particulars of its delay claim as required by the contract. Limen JV opposes the motion for leave, taking the position that genuine issues, including issues of credibility, require a full trial and a motion for partial summary judgment would delay, rather than expedite, resolution of the dispute. Limen JV’s position is that it gave proper notice or, alternatively, if it did not give proper notice at the beginning of the period of delay it gave notice part way through and is entitled to damages for delay for either a portion or all of the period of delay claimed.

3. For the reasons that follow leave is granted for Brookfield to bring the proposed motion for summary judgment.

The test for leave

4. Subsection 67(2) of the Construction Lien Act provides:

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.

5. The Construction Lien Act creates a procedure for construction lien actions that is different from ordinary civil actions. It requires the court to apply procedures that are summary in character, “as far as possible” [2], taking into account the amount and nature of the liens in question. Clearly a proceeding involving $25 million worth of claims and counterclaims will not be as summary in character as an action within the monetary threshold of rule 76 (simplified procedure). The Construction Lien Act and the reference rule [3] allow the reference master to design a process that meets the needs of the case.

6. In furtherance of the objective of a streamlined process to resolve construction lien claims, the Construction Lien Act prohibits interlocutory motions unless the test prescribed by section 67(2) is met. For leave to be granted the moving party must meet only one of the statutory tests. In this case Brookfield argues that the motion would expedite the resolution of the issues in dispute.

7. Brookfield argues that the proposed motion would resolve or narrow the issue of whether Limen JV gave proper notice of delay and would resolve Limen JV’s entitlement to advance its $11.5 million delay claim and could lead to a global settlement of the case.

8. Limen JV opposes the motion for leave, taking the position that the issues of fact and credibility are too complex to be determined by summary judgment. Limen JV asserts that the quantum of the delay claim is too great to allow an unsuccessful result to stand without an an appeal, resulting in additional delay rather than expediting resolution of the case.

9. The parties agree that with both sides accusing the opposite party of causing delay, evidence at trial will require expert evidence of the critical path of the project and responsibility for deviations from the critical path. Limen JV argues that this evidence will be required at trial whether it is entitled to damages for the entire period of the delay claim (predicated on a finding by the court that it gave proper notice as required by the contract), or for only a portion of the claim period (predicated on a finding that delivery of proper notice was not effected until later). Either way, expert evidence on the issue of delay will be adduced at trial. Limen JV argues that there will not be a significant saving of trial preparation and trial time even if Brookfield is successful on its proposed motion.

10. In response Brookfield argues that resolving the issue of notice prior to trial will narrow the issues for trial and reduce the volume of evidence required for trial.

Analysis of the factors relevant to the issue of leave

A. Would the motion reduce trial preparation and trial time?

11. Brookfield argues that if Limen JV’s delay claim is struck out in whole or in part on a summary judgment motion the evidentiary issues at trial would be narrowed and therefore the trial length and complexity would be reduced, both in terms of trial preparation and the actual conduct of the trial.

12. Limen JV’s position is that even if Limen JV’s delay claim is dismissed summarily, the portion of its claim that remains and Brookfield’s delay claim as against Limen JV would require the same or almost the same amount of production, discovery and trial time as it would if Limen JV’s delay claim is adjudicated in its entirety at trial.

13. A significant issue in Limen JV’s delay claim is whether or not it gave proper notice of its delay claim and the particulars of its delay claim, as required by the contract. Limen JV argues that the proposed motion dealing with that issue will require two weeks of court time due to the volume of evidence. Arguably, the issue would also require two weeks of trial time if not determined before trial either on a summary judgment motion or by trial of an issue.

14. Brookfield estimates two days for the motion hearing. Neither party particularized the basis for their time estimates, but Limen JV’s deponent on the motion listed six potential witnesses who would attest to his credibility. I suspect that the time required for the motion, if leave is granted, is more than two days but less than two weeks.

15. I find that a summary judgment motion on the issue of whether Limen JV’s delay claim fails in whole or in part, if successful, would resolve the issue of notice in advance of trial thereby reducing the issues for trial and confining the issue of quantification of damages to the period for which proper notice was given. Trial preparation and trial time would be reduced on the issues of (i) whether Limen JV gave proper notice, and (ii) quantification of delay damages for the portion of the period for which Limen JV failed to give proper notice.

16. If the motion proceeds and is unsuccessful (i.e. if the court concludes that the issue of notice is a genuine issue requiring a trial) then the preparation for and materials used on the motion could be applied to the trial. The time and expense would not have been wasted.

17. I conclude that the proposed motion would not add significantly to preparation time and expense and will reduce preparation time and expense for trial. The motion could resolve or narrow a significant issue in the litigation, thus expediting resolution of the issues in dispute.

B. Would the summary judgment motion enhance the likelihood of settlement?

18. Brookfield argues that regardless of the outcome of a summary judgment motion it is likely to increase the opportunity to settle the case. Brookfield asserts that an adjudication that Limen JV’s delay claim must fail because Limen JV failed to give proper notice, or an adjudication that Limen JV gave proper notice of its delay claim and that its delay claim may proceed to trial on the issue of quantification of damages, would provide certainty on the notice issue thereby narrowing issues and encouraging the parties to consider settlement.

19. Limen JV’s position is that a determination of the summary judgment motion could further entrench the parties in their respective positions, rather than bring them closer together.

20. There is no evidence before the court either way. Both arguments are speculative. In civil litigation many factors influence settlement. I conclude that whether or not the proposed motion would enhance the likelihood of settlement is a neutral factor on the issue of leave.

C. Does a summary judgment motion meet the Hryniuk objectives?

21. With its decision in Hyrniuk v Mauldin [4] the Supreme Court of Canada encouraged the use of summary judgment motions in cases where a fair and just result could be achieved while meeting the goals of timeliness, affordability and proportionality. Applying summary procedures is consistent with the objectives mandated by section 67 of the Construction Lien Act, which requires the court to adopt procedures in construction lien cases that are summary in character, having regard to the amount and nature of the lien claim in issue.

22. In Hyrniuk the Supreme Court of Canada expanded the availability of summary judgment motions to include cases where the court must embark on a broader exploration of the evidence, allowing the court to make findings on all or part of a case without a trial. The Court stated at paragraph 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.”

23. In Ontario the summary judgment rule has been modernized to expand the procedural options available on a motion for summary judgment. In determining whether there is a genuine issue requiring a trial a judge has the power to hear oral evidence, weigh the evidence, evaluate credibility of a deponent and draw reasonable inferences from the evidence [5]. Pursuant to section 58(4) of the Construction Lien Act, a master conducting a reference under the Construction Lien Act has all the powers of the court. I rely on that section to find that as reference master presiding over the reference in this case [6], I have all of the powers of a judge on a summary judgment motion brought in the reference, including the powers conferred by rules 20.04 (2.1) and (2.2).

24. The issue on a motion for summary judgment is whether there is a genuine issue requiring a trial. Brookfield contends that on the proposed motion for summary judgment the court will be able to determine the issue of whether Limen JV gave proper notice of delay and particulars of delay as required by the contract. Brookfield contends that the issue does not require a full trial.

25. Limen JV’s position is that the evidence on that issue is complex and plentiful, raising credibility issues that require a full trial. Limen JV argues that there is a significant amount of evidence required on the issue of whether proper notice was given, including the evidence of the six witnesses listed by Mr. Brannigan, the deponent for Limen JV, as available to attest to his credibility.

26. In my view the volume of evidence required on the issue of notice and the possibility of calling viva voce evidence on the motion is not a barrier to determining the issue of proper notice by way of summary judgment. It remains open for the court to find that the issue does require a trial, but that finding cannot be made in advance of the motion so as to deny leave to bring the motion. In my view the reasonable possibility of determining that issue before trial (i.e. by finding that there Limen JV gave or did not give proper notice) would likely expedite resolution of the dispute and thereby the test for leave to bring the interlocutory motion is met.

27. It would not be against the interests of justice to proceed in this manner. In the words of the Supreme Court of Canada in Hryniuk [7]”, it is not “against the interests of justice if using the enhanced powers leads to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.”

D. Is the likelihood of success of a summary judgment motion relevant to leave?

28. The likelihood of success on the merits of the motion is not relevant to whether the statutory test for leave is met [8]. On the motion for leave Brookfield provided evidence and argument on the substantive issue that it proposes to advance on the motion. I accept this evidence and argument as supporting a finding that the proposed motion is not frivolous and there is a reasonable case to be made. I have not considered the likelihood of success of the summary judgment motion as a factor relevant to whether the test for leave is met.

E. Is the complexity of the case and quantum of the claim a relevant factor for leave?

29. Limen JV asserts that summary judgment is not appropriate in a complex case involving a multi-million dollar claim and issues of credibility.

30. In this case the very large claim of $11.5 million for delay flows from a distinct issue: did Limen JV give proper notice of delay and proper notice of particulars of delay? Whether the damages that flow from the issue are quantified at a modest amount or a significant amount, the issue for summary judgment would be the same. The quantum of the claim does not increase the complexity of the notice issue that is the subject of the proposed motion.

31. Limen JV argues that if the court finds that proper notice was not given initially but that it was given partway through the contractual relationship, then a portion of the $11.5 million delay claim will survive, requiring full evidence at trial. On that basis, Limen JV argues, expert reports regarding the critical path of the project will nevertheless be required and no trial time and expense will be saved by bringing the motion for summary judgment.

32. I disagree. By crystalizing the period of delay for which proper notice was given, if that can be done by way of summary judgment motion in advance of trial, the parties will be able to focus at trial and confine the evidence to liability and quantification of damages for delay for the period for which Limen JV gave proper notice, whether that period is the full period for which the $11.5 million delay claim is made or only a portion thereof.

33. For these reasons and on the facts of this case, the large quantum in issue is not determinative of whether the notice issue can be determined by way of summary judgment.

34. Limen JV argues that the quantum in issue is of sufficient magnitude that if leave is granted and Brookfield’s motion succeeds, then as a final order on that part of Limen JV’s claim Limen JV would appeal. In that scenario, Limen JV argues, the summary judgment motion would have the opposite effect from that contemplated by section 67 of the Construction Lien Act: it would not expedite resolution of the dispute but rather it would delay resolution while appeals run their course.

35. In my view it is not appropriate to decide the issue of leave on the speculative basis that Limen JV would appeal if unsuccessful [9]. The court presumes that Limen JV would give careful consideration to its likelihood of success on appeal. There is no evidence before me of probative value that Limen JV would inevitably appeal my decision on a summary judgment motion not yet argued, regardless of the reasons given.

36. I find that whether or not Limen JV would appeal an unsuccessful outcome of the summary judgment motion is not a factor that the court should consider in applying the test for leave to bring an interlocutory motion under the Construction Lien Act.

Conclusion

37. In conclusion, I find that the proposed motion for partial summary judgment would likely expedite resolution of issues in dispute in this reference. I hereby grant leave pursuant to section 67 of the Construction Lien Act for Brookfield to bring the motion for summary judgment to determine whether and for what period Limen JV gave proper notice of its delay claim and proper notice of particulars of its delay claim.

38. In preparation for the conference call scheduled for August 16, 2016 at 11:00 a.m. the parties should exchange and file their lists of proposed witnesses on the motion by August 15, 2016.

39. Costs of the motion for leave are adjourned to the hearing of the substantive motion.

Master C. Albert. DATE: August 11, 2016

[1] Security having been posted the lien claim continues as a claim against the security. [2] Construction Lien Act, R.S.O. 1990, c.C.30, subsection 67(1) [3] Rule 55.01 (1) provides: “A referee shall, subject to any directions contained in the order directing a reference, devise and adopt the simplest, least expensive and most expeditious manner of conducting the reference and may, (a) give such directions as are necessary, and (b) dispense with any procedure ordinarily taken that the referee considers to be unnecessary, or adopt a procedure different from that ordinarily taken.” [4] Hyrniuk v Mauldin, 2014 SCC 7 [5] rule 20.04 (2.1) and (2.2) [6] This action is part of the reference directed by Justice Faieta on November 3, 2015 in action CV-15-533438, Star Plaster v Brookfield. [7] Hryniuk, supra at para 66 [8] W.M. Green Roofing Ltd. v 1099606 Ontario Ltd., 2001 CarswellOnt 9711 at para 4 [9] Only Limen JV, the lien claimant, would have a right of appeal because the decision would only be a final decision if in the result Limen JV is unsuccessful. If Brookfield is the unsuccessful party the motion result would be interlocutory and subsection 71(3) of the Construction Lien Act precludes appeals from interlocutory orders.