Burnco Manufacturing Inc. v. Ellisdon Corporation, 2016 ONSC 5806
CITATION: Burnco Manufacturing Inc. v. Ellisdon Corporation, 2016 ONSC 5806
COURT FILE NO.: CV-12-462856
MOTION HEARD: 20160518
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: BURNCO MANUFACTURING INC., Plaintiff
AND
ELLISDON CORPORATION, Defendant
BEFORE: Master Lou Ann M. Pope
COUNSEL: Counsel for plaintiff: Raymond M. Slattery, Minden Gross LLP Fax: 416-864-9223
Counsel for defendant: Angelo D’Ascanio, Advocates LLP Fax: 519-858-0687
Counsel for E.S. Fox Limited: Sean Clarke, Eccleston LLP Fax: 416-504-2686
REASONS FOR ENDORSEMENT
[1] This is a motion pursuant to Rule 6.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”) for an order that two actions be tried together or one immediately following the other at the discretion of the trial judge. This motion is brought by Burnco Manufacturing Inc. (“Burnco”) who is a plaintiff in this action (“Burnco action”) and a defendant in the second companion action brought by E.S. Fox Limited (“Fox”), action number CV-12-458027 (“Fox action”).
[2] Both EllisDon Corporation (“EllisDon”) and E.S. Fox Limited (“Fox”) oppose the motion.
[3] Both actions arise out of the same construction project known as the Canadian Forces Base Multi-Purpose Hangar and Training Facility at Petawawa, Ontario (“the project”). The project involved the construction of a new hangar facility and related training facilities for the new Chinook helicopters which were being developed for the Canadian Forces.
[4] EllisDon was the general contractor for the Department of National Defence (“DND”). It entered into its agreement with DND in October 2010.
[5] Burnco was EllisDon’s structural steel subcontractor in which Burnco was required to supply and install the structural steel for the project.
[6] Fox was Burnco’s steel erection (sub) subcontractor.
[7] The project was delayed very early on in the process. There were a number of design changes. DND placed a stop-work order on a significant area of the project known as Area B while it was redesigned.
Burnco Action
[8] Burnco claims for additional costs incurred over its contract amount for expediting the work in Area B, for extras and significant changes in the scope of the steel supply. In addition, Burnco claims for changes in the design complexity. Burnco’s total claim is for $7,461,731, which includes the balance owing under its contract.
[9] EllisDon defended the action denying Burnco’s entitlement to the extras and other claims. It pleaded that Burnco breached its contract with EllisDon for, among other things, failure to employ competent employees and/or its subtrades and, failure to properly supervise its employees and/or its subtrades. EllisDon alleged that a cause of the delay was due to Fox having failed to have sufficient labour on site. It alleged further that Burnco caused some five-month delay in the project which forms the basis of its claims to set-off and its counterclaim. EllisDon claimed a set-off of $6 million. It also issued a counterclaim for $6 million which relies on the allegations in the statement of defence.
[10] On examinations for discovery, EllisDon confirmed that the allegations of incompetent Burnco subcontractors and the delays that were caused related solely to Fox.
[11] The Burnco action was set down for trial on December 18, 2015. It is not yet scheduled for trial. Burnco states that the action is ready for trial as it has obtained an expert report. EllisDon states that the action is not ready for trial as Burnco’s answers to undertakings are not satisfactory and an expert needs to be retained for the purpose of preparing a responding expert report. The trial of this action is estimated at four to five weeks.
Fox Action
[12] Fox commenced its action for payment of the balance owing on the contract with Burnco and for payment of numerous extras in the total amount of $2,607,000, with $1,577,133 being the amount claimed for extras. The breach of trust claim brought by Fox against Burnco’s officers and directors was settled; therefore, the remaining claim in that action is based on the contract. One of the issues in the Fox action is whether the extras were approved by Burnco.
[13] In its amended statement of defence, Burnco pled that Fox abandoned the project resulting in Burnco incurring significant costs to complete the Fox work. As such, it claims a right of set-off of these costs against any amounts otherwise owing to Fox. Burnco relies on the contract which provided that Fox was to obtain substantial performance of its work, as defined, by February 10, 2012. As Fox did not obtain substantial performance, it is not entitled to payment. Burnco also pled that much of the amounts claimed represented alleged extras which were not approved as required by the contract and are therefore neither due nor payable.
[14] The Fox action is scheduled for a five-day non-jury trial on October 17, 2016. It was set down for trial on June 16, 2015.
[15] It does not appear to be in dispute that the Fox action is less complex than the Burnco action with fewer substantive issues and it is at a more advanced stage.
Law
[16] The applicable law with respect to motions for an order that two actions be tried together is set out below.
[17] Section 138 of the Courts of Justice Act provides that as far as possible, multiplicity of legal proceedings shall be avoided.
[18] Rule 6.01 of the Rules outlines the court’s discretion to order that proceedings be tried together.
6.01(1) Where two or more proceedings are pending in the court and it appears to the court that,
(a) they have a question of law or fact in common;
(b) the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or
(c) for any other reason an order ought to be made under this rule,
the court may order that,
(d) the proceedings be consolidated, or heard at the same time or one immediately after the other; or
(e) any of the proceedings be,
(i) stayed until after the determination of any other of them, or
(ii) asserted by way of counterclaim in any other of them.
(2) In the order, the court may give such directions as are just to avoid unnecessary costs or delay and, for that purpose, the court may dispense with service of a notice of listing for trial and abridge the time for placing an action on the trial list.
[19] Subrule 6.01(1) provides that if any one of the criteria in subrules (a) through (c) are met, the court may exercise its discretion to order trial together. Once one or more of these criteria have been met, the Rule states that “the court may order” (emphasis) various relief, including trial together be ordered. The court may then consider all relevant factors and section 138 of the Courts of Justice Act which discourages a multiplicity of proceedings.
[20] In the recent decision of Robert A. Cartier Inc. v. Stocking, 2015 ONSC 3242, (“Cartier”), Raikes J. held that to succeed on the motion, the moving party must demonstrate that one or more of the “gateway” criteria found in Rule 6.01(1) (a)-(c) are engaged, If they are not, that is the end of the motion. If all or any of those criteria are met, then the court will consider the factors set out by Master Dash in 1014864 Ontario Ltd. v. 1721789 Ontario Inc., 2010 CarswellOnt 4183. At paragraph 18, Master Dash provided the following non-exhaustive list of considerations on ordering trial together:
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 [are] 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 straightforward 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.
Analysis
[21] There is no dispute that the two actions arise out of the same transaction or occurrence. Therefore, Burnco has demonstrated that one of the gateway criteria has been met under rule 6.01(1)(b).
[22] The issues in both actions arise out of the change in scope, delay impact, and increased design complexity of the project. It is alleged by Fox that Burnco has not paid Fox as the issues between Burnco and EllisDon have not been resolved. It is alleged that due to the owner/contractor/subcontractor nature of the relationships among the parties, where the scope of work changed, it had a trickle-down effect on the subsequent parties, ie. contractor and subcontractor.
[23] EllisDon submits that while the two actions arise from the same construction project, the relief claimed arises out of separate and distinct contractual obligations and relationships where Burnco’s claim arises out of its sub contract with EllisDon and Fox’s claim arises out of its sub contract with Burnco.
[24] It is evident from a review of the pleadings in both actions that interpretations of many terms of the contracts are in issue. By way of example, EllisDon pleads specific provisions of the subcontract in its amended statement of defence and counterclaim at paragraph 16. However, Burnco disputes EllisDon’s allegation in its amended reply and defence to counterclaim, as example, at paragraph 21. In the Fox action, Burnco relies on the provisions of the subcontract which relates to substantial performance of the work to allege that Fox is not entitled to payment as it abandoned the project. In its reply to Burnco’s statement of defence, Fox disputes that allegation.
[25] It is also evident from the pleadings that the primary issue at trial in the Burnco action will be who is responsible for the changes and scope of the project, and whether, in turn, those changes fell within the terms of the subcontract. If not, did the changes result in additional expense to Burnco. I find that the determination of those issues will affect the determination of the issues in the Fox action. I reach that inescapable conclusion based on the allegations in the Fox pleadings which will undoubtedly require evidence regarding the change in work on the project, the delay and the effect of the delay on Burnco and Fox. By way of example, Burnco alleged in its statement of defence that Fox was not entitled to payment as it did not meet substantial performance of its work as defined in the contract (see para. 4). Burnco also alleged that Fox abandoned the project and that most of the amounts claimed by Fox were for extras and other additions to the contract which were not approved. Whereas, in its reply, Fox specifically alleged, at paragraph 6, that delays in completion of the project caused extra work for Fox which was beyond the control of Fox, and due to either changes initiated by the owner, changes due to the activities of EllisDon or to Burnco’s activities.
[26] For the above reasons, I find that if the actions are heard separately numerous witnesses will be called to testify at both trials on the same facts surrounding the changes in the project, the delay and the effect of the delay.
[27] I make another observation based on the pleadings. In EllisDon’s amended statement of defence and counterclaim, it makes numerous direct and indirect references to Fox. I find that these allegations necessarily link Fox to the Burnco action which, in turn, will undoubtedly result in evidence being called at the trial of the Burnco action regarding Fox’s involvement and conduct. The following are examples:
a. At paragraph 19, EllisDon alleged that delays and the losses were caused or contributed to by Burnco “or others” for whom Burnco is responsible for in law.
b. At paragraph 19(a), it is alleged that Burnco failed to coordinate its work with other subcontractors engaged in the project.
c. At paragraph 19(f), it is alleged that Burnco failed to hire, supervise and manage its sub-sub-contractors whose incompetence caused the delays.
d. At paragraph 23(a), it is alleged that Burnco negligently misrepresented that it had the requisite skills and manpower to complete the work competently.
e. At paragraph 23(c), it is alleged that Burnco failed to employ competent employees and/or sub trades.
f. At paragraph 23(d), it is alleged that Burnco failed to properly supervise its employees and/or sub trades.
[28] These allegations form the basis for EllisDon’s claim to a set off of $6 million plus HST against any sums owing to Burnco, as well as its counterclaim. Therefore, the above allegations lead to the inescapable conclusion that EllisDon’s set-off claim and counterclaim are directly referable to the Fox scope of work.
[29] In Cartier, Raikes J. held that the list of factors enumerated by Master Dash have at their core the following principles:
Judicial resources should be used efficiently which benefits not only the litigants but the public; and,
The application of the alternative methods of joinder of action contemplated by rule 6.01(1) must be practicable; that is, they should be invoked when it makes sense to do so because they offer a viable method of proceeding.
[30] He stated further that it does not follow that an order for consolidation, trial together or trial of actions consecutively must benefit all parties or all parties equally.
[31] As is the case herein, Burnco is the common party in both actions whereas EllisDon and Fox are each a party to only one action.
[32] I turn now to the factors to be considered.
Extent To Which the Issues In Each Action Are Interwoven
[33] For the reasons contained in the paragraphs above, I find that although each party has raised a distinct and different issue as they relate to alleged losses, the issues regarding the change in the scope of the project, the delay and the effect of the delay on each party are interwoven.
Same Damages Claimed
[34] The damages claimed by each party are not the same given two different contracts and different scope of work involved in each contract.
Overlap of Damages or Global Assessment
[35] This is not the case in the within actions. The damages sought are specific to each party.
Significant Overlap of Evidence or of Witnesses
[36] I have addressed this factor above. It is expected that there will be a significant overlap of evidence and witnesses.
Whether the Parties are the Same
[37] Burnco is the only common party to both actions.
Whether the Lawyers are the Same
[38] Counsel for Burnco is the same lawyer in both actions.
Risk of Inconsistent Findings
[39] For the reasons above, I find that there is a risk of inconsistent findings if the actions are tried separately on the issues of responsibility for the project changes, delay and effect on the parties.
Issues Complex or Straightforward
[40] The issues in the Fox action are less complex than in the Burnco action. Although there are set-off claims in both actions, EllisDon made a counterclaim in the Burnco action. However, given that the set-off claim and the counterclaim are for the same amount and EllisDon relies on the same facts and allegations for both claims, this will not necessarily lengthen the trial.
[41] There are issues in both actions regarding interpretations of provisions of the contracts; however, the Burnco action will be more complex given the allegations by EllisDon that involve its contract with the owner. I find that this will also necessitate an interpretation of that contract which makes the Burnco action more complex.
Narrow Issues or Increase Likelihood of Settlement
[42] Once the trier determines the central issues in the Burnco action; namely, responsibility for the project changes, whether the changes caused delay and the effect on the parties, in my view, there is a greater likelihood of the Fox action being settled, or at a minimum, shorten the trial.
[43] For that reason, it is my view that the Burnco action ought to be tried first followed immediately after by the Fox trial. If the Fox action were tried first, it would be tantamount to putting the cart before the horse, to use the proverbial expression.
Litigation Status
[44] The Fox action is scheduled for a non-jury trial in one month, on October 17, 2016 for five days. A pre-trial conference has been held.
[45] The Burnco action was set down for trial on December 18, 2015. It is scheduled to be struck from the trial list on January 27, 2017. It appears that the parties filed the trial certification form and are awaiting dates for the pre-trial and trial. Burnco states that it is ready for trial; however, EllisDon states that it must obtain an expert report. EllisDon gave no explanation as to why the expert report has not been obtained to date. It is still within the timeline under rule 53.03 for delivery of expert reports prior to the pre-trial conference.
Jury Notice
[46] No jury notice was delivered in either action.
Avoiding Interlocutory Steps
[47] Trial together of the two actions will not avoid any interlocutory steps given that both actions have been set down for trial and the Fox action is scheduled for trial. There is no evidence that any party intends to bring a motion or of a pending motion.
Costs Savings or Increase
[48] I am not satisfied that there will be increased costs to Fox if the actions are tried together. As stated above, it is my view that if the Fox action is tried first, there will have to be additional witnesses called to testify on the issues of the changes to the subcontract between EllisDon and Burnco, whether the changes caused delay and, if so, the effect on Fox. For those reasons, I am not convinced that the Fox action can be completed in five days as scheduled. Similarly, the same witnesses will be required to testify in the Burnco action on the same issues.
[49] While I recognize that if the actions are tried together with the Burnco action heard first, the Fox witnesses will be required to attend the Burnco trial, in my view, there is a greater chance that the Fox action will settle as the Burnco trial progresses if the evidence favours Fox.
Timing of the Motion and Possibility of Delay
[50] This motion was brought by Burnco. The notice of motion was filed on March 23, 2015 and the motion was returnable on July 7, 2015. It was adjourned on July 7, 2015 pending the hearing of a summary judgment motion in one of the companion actions. Thereafter, it was scheduled for April 5, 2016 and adjourned again to May 18, 2016 because not all the material for the motion was before the court.
[51] As a result of those procedural delays, the hearing of the motion was delayed significantly. However, this motion was brought prior to either action being set down for trial. The Fox action was set down for trial on June 16, 2015 and this action was set down on December 18, 2015. Therefore, it cannot be said that this motion was brought at a late stage.
[52] However, if this motion is granted, it will delay the trial of the Fox action which is scheduled for October 17, 2016.
Advantage or Prejudice
[53] None of the parties argued that this was a relevant factor.
Undue Procedural Complexities
[54] None of the parties argued that this was a relevant factor.
Consent or Objection of the Parties
[55] EllisDon and Fox oppose this motion for reasons set out in their factums and in oral submissions.
Conclusion
[56] Having considered all relevant factors, I find that the factors weigh in favour of the Fox action being tried immediately following the trial in the Burnco action, or at the discretion of the trial judge. It is logical and economical that the same trial judge hear and determine the issues in both actions that arise out of the same transaction and matrix of facts. In addition, it is logical that at trial all common witnesses in both actions be examined and cross-examined once in the presence of the same judge who will determine the outcome of both actions separately, but scheduled at the same time rather than months or years apart.
[57] Therefore, the following orders shall issue:
(a) the Burnco action, being action number CV-12-462856, and the Fox action, being action number CV-12-458027, shall be tried one immediately following the other, with the Burnco action to proceed first;
(b) the common witnesses to the two actions shall give their evidence in the Burnco trial and that evidence shall form part of the evidence in the Fox action, subject to the direction of the trial judge;
(c) counsel for all parties shall attend civil practice court forthwith to address rescheduling the trial in the Fox action, and scheduling the trials in both actions. This may necessitate the parties in the Burnco action filing in advance the trial certification form, if they have not done so already.
Costs
[58] Burnco has been successful on this motion; therefore, it shall be entitled to its costs of this motion.
[59] The parties did not file costs outlines. If the parties cannot agree on costs of this motion, each party shall file a costs outline and short written submissions on costs of no more than two pages double spaced within 14 days of the date of this endorsement.
(original signed) Master Lou Ann M. Pope
Released: September 19, 2016