CITATION: Wood v 1584842 Ontario Ltd., 2016 ONSC 979
COURT FILE NO.: 25123/10
DATE: 2016-02-17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SCOTT WOOD operating as SUPERIOR ELECTRIC CONSTRUCTION
Plaintiff
– and –
1584842 ONTARIO LTD. Operating as FAIRFIELD INN 7 SUITES, SUDBURY and ROBERT HIGGINS carrying on business as ROBERT HIGGINS CONSTRUCTION
Defendants
S. Shoemaker, Counsel for the Plaintiff
A. Palombi, Counsel for the Defendants
HEARD: September 8 and 9, 2015
RASAIAH J.
REASONS FOR DECISION
PREFACE
[1] At the opening of the trial, the Plaintiff, Scott Wood, operating as Superior Electric Construction (“the Plaintiff”), sought to withdraw his claim as against the Defendant 1584842 Ontario Ltd. operating as Fairfield Inn & Suites, Sudbury and the Defendant Robert Higgins.
[2] In addition the parties, on consent sought to amend the title of proceedings, to correct the name of the remaining Defendant from Robert Higgins Construction to Robert Higgins Construction Limited (“the Defendant”).
[3] These orders were granted.
[4] Finally, the parties, on consent, sought to bi-furcate the trial of this matter and, in particular, to have the limitations issue determined first.
OVERVIEW
[5] April 15, 2010, the Plaintiff issued a statement of claim, wherein he sought payment from the Defendant in the amount of $48,690.31 pursuant to contract.
[6] The Defendant in its statement of defence claimed that “the claim is without merit and statute barred and should be dismissed with costs on a substantial indemnity basis”.
[7] The Plaintiff and the Defendant agree that:
(a) They entered into a contract on or about October 1, 2005 for the installation of an electrical system and other related electrical services for a hotel that was being constructed by 1584842 Ontario Ltd., operating as Fairfield Inn & Suites, Sudbury (“Fairfield”) in Sudbury, Ontario, namely the Fairfield Inn & Suites, Sudbury (“Fairfield project”)[^1].
(b) The Defendant was the general contractor for the Fairfield project. The Plaintiff was a subcontractor. The Plaintiff’s primary contact on the Fairfield project was Mr. Robert Higgins (“Mr. Higgins”).
(c) The subcontract price for the work was $500,000.00 plus taxes of 7%, for a total amount payable to the Plaintiff under the contract in the amount of $535,000.00. These amounts were subject to adjustments as may be required in accordance with the agreement, namely approved extras.
[8] While it was agreed that extras were agreed to and completed, it was disputed as to what extras were agreed to, completed and invoiced.
[9] The Plaintiff’s claim for $48,690.31 was broken down as follows:
(a) the sum of $5,897.00, which the Plaintiff claims represented the balance owing under the contract, and
(b) the sum of $42,793.31 which the Plaintiff claims represented unpaid extras completed in accordance with the contract, namely extras 12 through 64.
[10] The last date on which the Plaintiff worked on site at the Fairfield project, and the nature of work completed, post December 31, 2006 was disputed. The Plaintiff stated his last date on site working was May of 2007 and included working on particular rooms, extras and rectifying deficiencies. The Defendant thought it was January/February of 2007 and that the work was restricted to rectifying deficiencies.
[11] The parties agree the applicable limitation period is two years. They disagree about the date on which the limitation period commences.
[12] The Plaintiff issued the within claim after a judgment was rendered against him August 6, 2009 in another legal proceeding brought by Fairfield against the Plaintiff (“Fairfield claim”).
[13] In the Fairfield claim, the Plaintiff claimed that he believed that amounts owed by him to Fairfield had been set-off/”washed” against his invoicing to the Defendant in this case and that there had been an agreement to that effect. Secondly, the Plaintiff claimed that he did not appreciate in his position and circumstances that he should have brought a claim against the Defendant in this case until after receiving the judgment rendered against him August 6, 2009.
The Fairfield Claim Details
[14] On September 22, 2008, a claim was issued by Fairfield against the Plaintiff, court file no. 24557/08. The claim sought payment of $27,591.83, consisting of money Fairfield claimed it loaned to the Plaintiff and fees paid on the Plaintiff’s behalf to the Electrical Association of Ontario during the time the Plaintiff was contracted to work on the Fairfield project.
[15] With respect to the loans, Fairfield claimed that in January of 2007, the Plaintiff was lent money on two occasions at his request so that he could meet his payroll obligations. The first loan was for $12,000.00 and the second was for $9,500.00. Mr. Higgins said that the Plaintiff on both occasions advised that he was expecting to receive funds from another project and that he would repay Fairfield from those funds.
[16] At the time of the second loan, Mr. Hornstein a shareholder of one of the corporate owners of Fairfield, on behalf of Fairfield asked the Plaintiff to provide a cheque back to Fairfield in payment for the full amount of the second loan as a condition for that loan. A cheque was provided. Fairfield was unable to negotiate that cheque.
[17] With respect to fees paid, Fairfield claimed it paid $6,085.83 in fees on behalf of the Plaintiff so that he could do the electrical work he was hired for on the Fairfield project.
[18] Fairfield claimed that they had contacted the Plaintiff on a number of occasions prior to issuing the claim to seek payment. Fairfield was not paid.
[19] Fairfield’s claim was served personally on the Plaintiff October 18, 2008. The Plaintiff delivered and filed his statement of defence November 17, 2008.
[20] In his statement of defence filed as Exhibit 4, the Plaintiff claimed that (a) there was never any agreement regarding payment of electrical association fees; (b) that the alleged loans were not loans and the amounts were advances deducted from his Fairfield project contract at the end of the project, along with the electrical association fees; (c) that he had invoices for extras that had been agreed to and completed by him which were never paid that far exceeded the amount Fairfield was claiming; and (d) that he had three meetings where he tried to resolve the issue of payment.
[21] The trial of this claim was held at the Superior Court of Justice at Sault Ste. Marie on August 4, 2009 before the Honourable Mr. Justice W.L. Whalen (“Justice Whalen”). Justice Whalen delivered his decision and reasons on August 6, 2009. He rendered judgment in favour of Fairfield in the amount of $21,500.00. The Plaintiff did not appeal this decision or any of the findings made therein.
[22] Justice Whalen wrote (at the following paragraphs noted) in his reasons:
At some point after work on the Fairfield project got underway, the Plaintiff found himself short of funds to meet his payroll. He approached Mr. Higgins with his problem and asked for a loan or advance for that purpose. In testifying, Mr. Higgins acknowledged receiving the request and said he discussed it with Mr. Hornstein. Mr. Hornstein was sympathetic, as was Mr. Higgins, so they arranged for money to be advanced by a cheque from Waterfront dated January 2, 2007 for $12,000 and payable to Superior. Superior deposited the cheque to its bank account the next day. The cheque was made out by Waterfront because Fairfield did not have sufficient funds either at the time. However, Fairfield provided Waterfront with a cheque dated the same date and in the same amount to repay the advance to Superior when it was in funds…
A few weeks later, the Plaintiff once more found himself short of cash for the same purpose, so he again approached Mr. Higgins for a loan – this time for $9,500. He told Mr. Higgins that he would be able to repay the loan out of monies he expected to receive soon from another job. Again Mr. Higgins was sympathetic and discussed it with Mr. Hornstein. As a result, Fairfield issued a cheque dated January 25, 2007 for $9,500 payable to Superior. With respect to his loan, however, it was a term that Superior was to provide Fairfield with a cheque for the same amount. Fairfield received Superior’s cheque dated January 26, 2007. Superior deposited Fairfield’s cheque on January 26, 2007. When Fairfield attempted to deposit Superior’s cheque on January 29, 2007 it was returned “non-sufficient funds”.
When Superior did not repay the $21,500 advanced by the two cheques, Fairfield commenced this claim. It seeks judgment for $21,500 plus pre-judgment and post-judgment interest pursuant to the Courts of Justice Act. It also seeks costs if successful. The Plaintiff’s defence was that he had set off the amount in his invoices for work done under the contract with Higgins. Mr. Higgins denied this was so, but submitted it was irrelevant and outside the ambit of this proceeding.
The Plaintiff testified that he thought in presenting the request for financial assistance to Mr. Higgins he was dealing with Fairfield. He was aware that Mr. Higgins was involved in Waterfront with Mr. Hornstein and he thought he also had an interest with Mr. Hornstein in Fairfield. The electrical work was being done for Fairfield’s benefit, and although the contract was with Higgins, the Plaintiff saw no difference. He said that his invoices to Higgins for work under the contract were paid by Fairfield anyway, so he thought it proper to offset the $21,500 in payroll advances from Fairfield against the contract with Higgins.
There is obviously more to this case than the monetary advances in question. Unfortunately, however, Higgins was not made a party to this action and no claim or counterclaim was made by Superior for set-off against the contract with Higgins. In his statement of defence Mr. Wood pleaded (without further detail): 6. Any amounts of monies claimed to be owing to plaintiff were deducted from total contract amount payable to defendant at the end of project.
The defendant was self-represented. He is obviously unversed in the technicalities of the law and court practice, which is undoubtedly why he failed to add Higgins as a party and to make a claim or counterclaim based on the contract with Higgins. I must wonder why he would not seek professional advice with a contract involving so much money, although that was his choice. Still, the legal and procedural deficiencies are fundamental. The plaintiff did nothing wrong and it would not be just to subject it to the ambush of a case and cause of action for which it was not prepared. There is no simple repair to be made that would not delay the plaintiff or burden it with further costs. In the meantime, Mr. Wood is still able to seek redress in respect of the contract with Higgins by way of a separate action if he wishes.
Although the arrangements on both sides for the advancement of funds were very relaxed in that there was no underlying documentation (or even discussion for that matter) to confirm particulars, the identity of the payor and payee were evident. The Plaintiff cannot impose his own assumptions to obvious legal relationships – which assumptions were not correct in any event insofar as Mr. Higgins’ interest in Fairfield was concerned.
Nor can he unilaterally blur or amend contractual rights and obligations. While it may have been convenient for the Plaintiff to offset the loans against the Higgins contract (which is not proven), that cannot be done unilaterally for obvious reasons. For example, the advances in question must appear “on the books” of one corporation (Fairfield) but not on the other’s (Higgins), so that there may be consequences flowing from the Plaintiff’s suggested solution. Such consequences are not his to unilaterally impose.
In making these observations I am not casting aspersions, because I realize that the Plaintiff was acting from of lack of knowledge of the law rather than some improper ulterior motive. Fairfield, Higgins and Waterfront are all separate corporate entities and as such are separate persons in the eyes of the law – even though there may be some overlap of individuals involved in those separate corporate entities.
Quite apart from this, the evidence better supports the plaintiff’s position that the loans were to be repaid to Fairfield rather than set off against the contract with Higgins. The Plaintiff agreed that the second loan was made on condition that he issue Fairfield a cheque for $9,500. He acknowledged that he completed the date and amount of the cheque while someone else wrote Fairfield in as the payee in his presence. He then signed the cheque. The fact and preparation of the cheque is inconsistent with the defendant’s “set-off” theory presented at trial. The defendant also acknowledged representing at the time of his request for financial assistance that he expected to receive funds from another job. The point of such representation would be to assure that the loan would be repaid soon and that the cheque would be recovered. This is inconsistent with a set-off defence.
I am satisfied that Fairfield advanced/loaned $21,500 to Superior and that it has not been repaid.
Position of the Plaintiff
[23] The Plaintiff’s first position is that the limitation period began to run September 22, 2008, namely the date that Fairfield issued its claim against the Plaintiff, on the basis that up until this date the Plaintiff believed that Fairfield’s claim had been paid, and in particular, that the funds Fairfield advanced to the Plaintiff had been offset against invoices issued by the Plaintiff on the Fairfield project. He claimed the parties had agreed to this and it had been done. All amounts owed were to have been treated as “washed”.
[24] In the alternative, the Plaintiff claims that the discoverability date of the Plaintiff’s claim was August 6, 2009, namely the date on which Justice Whalen delivered his decision on the Fairfield claim, on the basis that the Plaintiff, as an unsophisticated self-represented litigant or “legal neophyte” as his counsel described him, in his circumstances, until this judgment was released, did not appreciate his claim and only discovered it then.
[25] Additionally, the Plaintiff submitted that in analyzing the limitations issue, the Defendant had notice of the Plaintiff’s claim for set-off and unpaid extras on November 17, 2008 on receipt of the Plaintiff’s statement of defence filed in the Fairfield action, which notice was (a) within 2 years of the issuance of the Plaintiff’s claim before this court (April 15, 2010) and (b) within 2 years of either of the parties’ evidence regarding the last date that the Plaintiff was on site on the Fairfield project.
[26] If any of these arguments are accepted by the court, the Plaintiff submits, that based on the fact that the Plaintiff issued the within claim by April 15, 2010, he is within the applicable two year limitation period and the claim would not be statute barred.
Position of the Defendant
[27] The Defendant submitted that the limitation period started to run when the last services were rendered under the contract or within a reasonable time thereafter, which the Defendant alleges was by November 2006 or December 31, 2006 at the latest.
[28] In the further alternative, the Defendant says, it published substantial completion on the Fairfield project on January 26, 2007 and, if not December 31, 2006, the limitation period should start to run from this date.
[29] In the further alternative, if neither of these two dates are accepted, the Defendant submits that the court should look to the last date the Plaintiff was working on site, which based on the evidentiary dispute and what the court finds, would be either February of 2007 or May of 2007.
[30] The Defendant submits that if one of these four dates is accepted by the court, the limitation period would have expired the earliest of December of 2008 and the latest of May of 2009 (if May 2007 is accepted as the last day the Plaintiff provided services on the contract). As such, the Plaintiff’s claim is statute barred because April 15, 2010 is 11 months past the limitation period.
[31] The Defendant submits there was never any agreement to set-off/”wash” amounts owed to “stop/interrupt” the limitation period. The Defendant submits that the transactions between Fairfield and the Plaintiff were loans, that they were found to be loans between Fairfield and the Plaintiff in the Fairfield claim heard by Justice Whalen, and these findings are binding on the parties. It was a loan and nothing other than a loan from Fairfield to the Plaintiff. The Defendant states that none of the new evidence at this trial changes that finding.
[32] Lastly, the Defendant submits that the issue of discoverability doesn’t arise. Even if it did, the Defendant argues that the Plaintiff was not unsophisticated; and that he knew or ought to have known as the contractor who rendered the services that he had a claim and that he ought to have pursued it. The Defendant states that the Plaintiff did not meet the discoverability principle’s burden, namely that, a reasonable person in the Plaintiff’s position and circumstances would not have discovered the claim with the exercise of reasonable diligence. The Plaintiff, the Defendant states in fact did not exercise any diligence.
[33] As to notice of the claim, the Defendant says that this notice is not relevant and further, even if it was, the first time that the Defendant became aware that the Plaintiff was claiming that monies were owed on the contract (the $5,897.00) was by the Plaintiff’s statement of claim in this action. The first time it became aware the Plaintiff was making a claim regarding extras 12 through 64 was in 2009 when the parties had a meeting, and thereafter over the course of looking at some documents during examinations for discovery well into 2009 in the Fairfield claim. The details came later after the within claim was issued. Lastly, in terms of prejudice, the Defendant states he would suffer prejudice, on the fact that the parties are now 8 years out from completion of the project and the availability of documents. There is accordingly he says prejudice in terms of the available records and defending this claim if this was factored into the analysis.
ISSUES
[34] When did the limitation period commence?
[35] Based on the answer to the above, is the Plaintiff’s claim statute barred?
THE LAW
[36] Section 4 of the Limitations Act, 2002, S.O. 2002, Chapter 24, Schedule B, (“Limitations Act”) sets out the basic limitation period and applies to contracts. It states:
- Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
[37] Section 5 of the Limitations Act, provides:
Discovery
- (1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
Presumption
(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.
[38] The test under subsection 5(1)(a) of the Limitations Act is a subjective test. It requires a determination of when the claimant had actual knowledge of the material facts constituting the cause of action. The focus is on the Plaintiff’s actual knowledge of the facts enumerated under the provision: Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONSC 151, paragraph 7.
[39] The test under subsection 5(1)(b) of the Limitations Act is an objective test. It requires a determination of when a reasonable person in the claimant's position would have been alerted to the elements of the claim: Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONSC 151, paragraph 7.
[40] Central to the application of the “discoverability rule” is when the Plaintiff acquired or ought to have reasonably acquired knowledge of the facts on which her claim is based. It is a question of fact when the cause of action arose and when the limitation period commenced: Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 954 (ON CA), 38 O.R. (3d) 161 at 172.
[41] In Brown v. Wahl, 2015 ONCA 778, the Court of Appeal refers to Lawless v. Anderson, 2011 ONCA 102:
… The question to be posed is whether the prospective plaintiff knows enough facts on which to base an allegation of negligence against the defendant. If the plaintiff does, then the claim has been “discovered”, and the limitation begins to run: see Soper v. Southcott (1998), 1998 5359 (ON CA), 39 O.R. (3d) 737 (C.A.) and McSween v. Louis (2000), 2000 5744 (ON CA), 132 O.A.C. 304 (C.A.).
[42] The evidentiary burden is on the Plaintiff to rebut the presumption set by section 5(2) of the Limitations Act: Ferrara vv. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONSC 151, paragraph 8.
[43] The activation of the limitation period does not have to wait until the Plaintiff knows the legal significance of the facts of his case but rather when the Plaintiff believes a meritorious claim exists: Ferrara vv. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONSC 151, paragraph 9.
[44] The principle of discoverability is designed to avoid the injustice of precluding an action or claim before a Plaintiff is in a position to commence proceedings, a Plaintiff who through no lack of diligence is unaware of his cause of action prior to the natural expiry of the limitation period (Peixeiro v. Haberman, 1997 325 (SCC), Kamloops (City of) v. Nielsen, 1984 21 (SCC) and Central Trust Co. v. Rafuse, 1986 29 (SCC).
Analysis
Last Date on Site/Completion of Services Rendered under the Contract
[45] The Plaintiff testified that he was last on site doing additional work the week before the May long weekend in 2007. The Plaintiff acknowledged completing deficiency work in January and February of 2007, but indicated that he was also doing other work at this time. In May of 2007 he was on site to work on the installation of a larger breaker for the air conditioner because the one that had been installed had not met code, it was undersized. No further work was completed post May 2007.
[46] The Plaintiff’s witness Steven Ross Barton, an employee of Superior Electric, testified that he was on site in January and February of 2007. He was not able to confirm with certainty whether or not his work at the site related to repairing deficiencies and/or extras work on any given day he worked. He was an apprentice at the time and completed whatever work was assigned to him. He did acknowledge that it would be fair to say that some of his work that he completed from January to May, 2007 related to rectifying deficiencies. He also worked on the air-conditioning job in May of 2007 described by the Plaintiff. He said he was certain that he was last on site the week prior to the May 2007 long weekend because he recalls distinctly that his vehicle broke down as he was trying to return home from Sudbury to Sault Ste. Marie for this long weekend. That May attendance was the last time he worked on the Fairfield project.
[47] Witness for the Defendant, Mr. Higgins, testified that he believed that as of December 31, 2006 the extent of the completion of the work by the Plaintiff was 95% to 98%. He gave evidence that the Plaintiff was on site in January and February of 2007. He believed it was to rectify deficiencies identified by the Electrical Safety Authority. Mr. Higgins however, acknowledged that while he described it as “not much”, there was some uncompleted electrical work to do in some of the rooms (102,103,104 and 106) in February and that the Plaintiff was completing this work. Mr. Higgins could not dispute the Plaintiff being last on site in May of 2007.
[48] I accept the evidence of Mr. Barton that he and the Plaintiff were on site the week prior to the long weekend in May of 2007. His evidence was honest and credible in my view, supported by the Plaintiff’s evidence, and not contradicted by the Defendant’s evidence.
[49] On the completion of services rendered, the Defendant emphasized the date of the last invoice and the type of work completed post December 31, 2006. The Defendant alleged that the last invoice was September 25, 2006.
[50] First I am not satisfied on the evidence, that the September 25, 2006 invoice was the last invoice. There is unexplained discrepancy on the face of the invoice, namely the difference between what the Plaintiff said he was paid, namely $559,000.00 and the amount on the September 25, 2006 invoice filed at the trial showing as “total amount of contract to date [amount includes this invoice]”, at a far less amount, namely $476,488.97. Neither party could explain it. Neither party filed further invoices post this date. Neither party called his respective bookkeeper to explain it. Mr. Higgins, although he could not confirm that the Plaintiff was or was not paid $559,000.00 without asking his bookkeeper, stated that if the math of the Plaintiff’s counsel was correct, he had no difficulty with it.
[51] Next, the Plaintiff’s employees undisputedly were working on site post September 25, 2006. By both parties’ evidence, it was beyond December 31, 2006. On the face of the September 25, 2006 invoice, it noted that it covered “scope of work performed August 25th, 2006 to September 25, 2006.
[52] In respect of the type of work completed by the Plaintiff post December 31, 2006, and the emphasis placed on this by the Defendant, I find that deciding whether or not it was ongoing work, extras work, rectification work or a combination is not necessary. In my view, at the very least, work rectifying deficiencies and/or other work is reasonably characterized as work arising from the contract on my review of the contract, namely Articles 3 and 5.
[53] Based on all of the above, I find that the completion of services rendered on the Fairfield project, occurred the week prior to the long weekend in May of 2007.
December 31, 2006, and January 26, 2007
[54] Based on my findings above and the outlined evidence as to the completion of services rendered on the contract, I do not find any of these two dates as a limitation period commencement date on the evidence. Further, in respect of the January 26, 2007 notice of substantial completion, drawn to my attention by the Defendant, this was notice of substantial completion of the project. However, Mr. Higgins’ evidence was that he never had any arguments with the Plaintiff over invoices sent and that they were always paid and the fact is that the Plaintiff was still working on site until May of 2007. As such, given the ongoing work, and lack of issues regarding payment at this point in time, it is reasonable that the Plaintiff would not be triggered from a limitations period perspective by this notice. As such, I do not find this as a limitation commencement date.
May 2007/Fall 2007
[55] There was no evidence led by either party that there was any dispute, or that there was going to be any dispute as to payment of invoices at May 2007 that could lead me to the conclusion that the Plaintiff had actual knowledge on this date of a claim against the Defendant. In fact, Mr. Higgins stated that there were no arguments with bills and they were all paid. And while the Plaintiff testified that he knew he was owed substantial money on this date, it would be reasonable to expect that this issue may only have arisen within 60 days of his last attendance given the September 25, 2006 invoice filed (which was the only pre-2007 invoice filed). In particular, this invoice showed that it was billed approximately 30 days after September 25, 2006 and it was made due within 30 days on the face of the invoice. This would have placed a potential limitation period commencement date on or about the third week of July of 2007 if the Plaintiff had followed the same pattern of billing. I did not receive any evidence other than the September 25, 2006 invoice, and the Plaintiff did not file any evidence of a last invoice pre-July 2007 or even a May 2007 related invoice. As such, the court does not know if the Plaintiff in fact billed after the last attendance or not.
[56] This time period leads however into the Plaintiff’s understanding and argument that he believed a set-off had been completed as an argument against this time frame as commencing the limitation period. This understanding however by the evidence was challenged in the Fall of 2007. The Plaintiff testified that he had a meeting with Mr. Higgins a few months after the Fairfield project concluded. Mr. Higgins had contacted the Plaintiff about the $21,000.00. He said that he told Mr. Higgins that it had already been taken out of his invoicing. He says he explained to Mr. Higgins that he had extras far exceeding any monies Mr. Higgins thought were owing to him and this occurred in late of 2007, maybe the Fall. The Plaintiff testified that they discussed the money owing and the offset although they did not discuss exact dollar figures. He testified that his impression when he left the meeting was that it was a “wash” and he was never going to hear from Mr. Higgins again except to move on to another project.
[57] At this point, the Plaintiff, in my view is aware of sufficient facts to alert him of his claim. I find he in fact used these facts in his conversation with Mr. Higgins, to address Mr. Higgins’ demand for the $21,500.00 in the hopes to resolve the issue. At this date, the Plaintiff knew what was owed to him (and that it was substantial) and he knew quite clearly that Mr. Higgins was demanding repayment of the $21,500.00.
[58] Against using this date however is the Plaintiff’s argument of set-off/”wash” which I deal with below.
September 22, 2008
[59] This is the date the Fairfield claim was issued.
[60] While the Plaintiff was not served with the claim until October 18, 2008, he did testify that he thought that he had a discussion with Mr. Higgins in September of 2008 after he found out there was a legal proceeding against his company for the $21,500.00.
[61] The Plaintiff acknowledges that the argument for the limitation period commencing on the date, (namely when the Plaintiff was notified of the Fairfield claim) depends on a finding that the parties had in fact made an agreement that the parties had set-off/“washed” what was owed to each other. The idea behind this is that if they had made such an agreement, then there would have been no reason for the Plaintiff to have contemplated that he had to or needed to bring a claim.
[62] The Defendant’s witnesses Mr. Higgins and Mr. Hornstein adamantly deny any discussions or agreement of set-off/”wash” at any time.
[63] Like Justice Whalen, based on the facts and evidence tendered, I find it is difficult to reconcile and/or accept the Plaintiff’s position that there was a set-off/”wash”.
[64] While this court did receive further details that Justice Whalen did not have at the first trial regarding the Plaintiff’s claims, I find that this new evidence does not establish a set-off/”wash” agreement.
[65] The Plaintiff testified that he was paid for work done under the contract and for extras #1-11 in the amount of $559,000.00. He said at trial that the amount of the contract he billed and extras 1 through 11 mathematically totalled up to $587,000.00. Fairfield and Higgins he says were owed approximately $28,000.00 collectively (Fairfield alleged to have loaned the $21,500 and Mr. Higgins paid the Electrical Safety Authority fees of $6,091.83 for a total of $27,591.83). Plaintiff’s counsel submitted that the difference between what the Plaintiff was owed and what the Plaintiff was paid was $28,000.00 ($587,000.00 less $559,000.00). He submits this calculation establishes/supports that the Plaintiff did in fact have a “wash”/set-off agreement with the Defendant.
[66] The difficulty with this argument is this. It completely ignores the fact that the Plaintiff testified at trial, and outlined in his statement of claim that he was owed well over $587,000.00. The statement of claim outlined $629,793.31 for his work on the Fairfield project as at May of 2007. The Plaintiff testified this amount was correct except for some minor accounting errors.
[67] The Plaintiff’s counsel suggested that extras 12 through 64 and unpaid contract work did not matter in this argument and were not relevant to the limitations issue. I disagree.
[68] The reality is that the amount that the Plaintiff allegedly was owed at the time the contract work was completed in May of 2007 by his figures was $70,793.31 (using the $629,793.31 statement of claim figure less the $559,500.00 he says he was paid). The Plaintiff himself testified that he knew it was substantial in May of 2007 and the Fall of 2007.
[69] Accordingly there was a real and significant monetary difference in what was owed by one party to the other in the context of set-off/“wash”.
[70] There was no explanation as to why the Plaintiff would agree to wash $28,000.00 against $70,793.31. Again, the difference is significant. Further, it makes no sense in my view as to why the Defendant would turn down such an offer if this in fact was discussed. And even if exact figures were not discussed, as the Plaintiff testified, he expressed to Mr. Higgins it was substantially more. Again it makes no sense in my view as to why the Defendant would turn down an offer to wash amounts “substantially more” than what was owed to Fairfield.
[71] I further had trouble accepting, the Plaintiff’s testimony on this point, and in particular his explanation of what he considered “wash” to mean. It did not make sense. He said “Wash to him meant if money was owing to one party it would be taken out of invoicing for instance or two parties would agree to mutually abide by the amounts owing.”
[72] At the Fall 2007 meeting with Mr. Higgins, the Plaintiff said he left with the impression that all was a “wash”. I did not hear from the Plaintiff that Mr. Higgins agreed to this in this meeting, only that he was left with an impression. The details were not explained as to how he could have been left with this impression. Mr. Higgins denied any such agreement.
[73] There was no new evidence regarding the meetings with Mr. Higgins and Mr. Hornstein in January of 2007 that established an agreement between the parties for a set-off against invoicing. There was no evidence of any discussion about “wash” at any of these meetings. It was restricted to an allegation that it was going to be taken out of invoicing.
[74] The Plaintiff’s statement of defence in the Fairfield claim, makes no reference to a “wash”, only to arguments in the nature of set-off and that there was more was owed to the Plaintiff than that claimed. This statement of defence was written personally by the Plaintiff, well after the Fall 2007 meeting.
[75] In addition, at this trial, similar to the first trial, the Plaintiff testified that the $9,500.00 cheque he gave back to Mr. Hornstein in January of 2007 in respect of the second advance from Fairfield, was a “guarantee that they would work this out down the road” and it was never to be cashed. Like Justice Whalen did, I have difficulty reconciling this assertion in the context of the Plaintiff asserting that the parties agreed there would be a set-off. It’s not consistent with a set-off agreement.
[76] Even if there was a set-off agreement, which I do not find, this argument, in my view does not apply to the current claim. The Plaintiff by his claim is not suing for the $21,000.00 which he said was set off against what he had billed in his statement of claim even though he testified at trial that he thinks he is owed this. I have to deal with the claim before the court. He is seeking payment for unpaid extras 12-64 and non-payment on the contract price which were not subject to the claimed set-off agreement.
[77] This leads to his final argument, namely that he was unsophisticated and did not discover his claim against the Defendant until August 6, 2009.
August 6, 2009
[78] This is the date Justice Whalen released his decision on the Fairfield claim. In addition to the argument that he thought the parties had set-off what was owed, the Plaintiff argued that until he received this decision he did not know he should have brought a claim against the Defendant.
[79] The Plaintiff says he was told by Mr. Higgins that Mr. Higgins was the owner of Fairfield, Fairfield’s representative and general contractor. He saw no difference between the Defendant and Fairfield. He said this understanding was reinforced on the basis that he was paid by both the Defendant and Fairfield during the Fairfield project. He claimed he did not know that he could bring Mr. Higgins into the action or that he would have to sue him separately. He stated he did not understand the difference between incorporation and sole proprietorship at the time. He stated he was naïve and lacked business savvy and knowledge about litigation against companies.
[80] I am to analyze this assertion against the standard of a reasonable person with the abilities of the Plaintiff and in the circumstances of the Plaintiff, who with the exercise of reasonable diligence could have been alerted or acquired the facts to alert him to the elements of the claim.
[81] This is the Plaintiff’s burden to establish. I find he has not met that burden. I make this finding, based on the following evidence.
[82] The Plaintiff testified that he is college educated. He is a master electrician.
[83] Prior to the Fairfield project, the Plaintiff had done quite a few smaller projects and some bigger projects. Some of these bigger projects for the Plaintiff were $100,000.00 projects.
[84] When he decided to start his business in 2004 he knew he had to do a title search for the business name he wanted to use and was able to do that. He chose not to seek legal advice prior to starting his business.
[85] The Plaintiff was familiar with Mr. Higgins. He had done some work for Mr. Higgins prior to the Fairfield project.
[86] He had been operating his business for approximately one year prior to the Fairfield project.
[87] His contact for the opportunity to quote the Fairfield project was with Mr. Higgins.
[88] His relationship with Mr. Higgins was cordial.
[89] His discussions for quoting the job were with Mr. Higgins.
[90] He knew how to quote and price a $500,000.00 contract and included suggestions for savings.
[91] He submitted a written quote, filed as Exhibit 2, and did so directly to the Defendant Robert Higgins Construction, not Fairfield or Mr. Higgins personally. This is readily apparent on the face of the document and a document that was within his possession.
[92] When the parties finally agreed to contract, and the contract was presented, the Plaintiff knew, and had to tell Mr. Higgins that the parties executed the wrong division stipulated price subcontract, which Mr. Higgins himself did not know or realize.
[93] The value of this contract was substantial, namely $535,000.00 plus extras.
[94] The Plaintiff knew who to invoice. He invoiced the Defendant, not Fairfield. This is clear on the face of the two invoices tendered at trial, invoice 4000-Part 10 and invoice 4000-Extra 19.
[95] Contrary to the allegation that Fairfield paid the Plaintiff’s invoices, the evidence of Mr. Higgins was that the Defendant primarily paid Fairfield project invoices. The Plaintiff acknowledged being paid by the Defendant.
[96] The Plaintiff tendered only 2 documents establishing 2 payments by Fairfield on the Fairfield project at trial. One for June of 2006, paying invoices 4000-Parts 4 and 5 and one for October of 2006 paying invoices 4000-Parts 8 and 9.
[97] The first cheque given to the Plaintiff for $12,000.00 was clearly from Waterfront, not the Defendant or Fairfield. The second cheque for $9,500.00 was clearly from Fairfield, not the Defendant. This information was readily apparent on the face of the cheques themselves. The Plaintiff personally received and cashed these cheques.
[98] The Plaintiff was personally involved in the completion of the electrical work on the Fairfield project up to the last date at the site. He was personally there in January and February and the week before the May long weekend of 2007. He never returned to the site after this date or sent any employees out past this date. He knew the job was finished as at May of 2007.
[99] He knew he was owed a substantial amount of money on the project at May of 2007, which can be placed with certainty at the Fall of 2007 based on the evidence. He knew Mr. Higgins was demanding repayment of the $21,500.00 in the Fall of 2007.
[100] The Plaintiff could have made himself aware of the work performed on this project at the completion date. The Plaintiff owned Superior. As such, he owned and had access to: records for materials used on the project, records for labour used for the project, records for other expenses of the project, records for bank account deposits/payments that were made on invoices, copies of invoices themselves for the project and tax returns (assuming they would have been completed). He employed the people who did the work on the project that he did not do personally, and employed the secretary who prepared the invoices which he instructed to prepare.
[101] Having and owning all of these records the Plaintiff was in a position to ascertain his position. The Plaintiff in fact said he did this a few months after completing the project, maybe the Fall of 2007 for the meeting he had with Mr. Higgins. He also clearly had such records in 2009 when he decided to issue invoices for extras 12 through 64 and thereafter to provide information to his counsel for the within claim on what he billed for and what he was paid. Everything was “then and there” available to him, had he taken the time to look it over and or make inquiries.
[102] The Plaintiff referred to the case of Ferrara vv. Lorenzetti, Wolfe Barristers and Solicitors, 2012 OCA 851 (). This case is distinguishable by its facts, in that the plaintiff in this case was an unsophisticated sixty year old with very little formal education. This plaintiff in that case had a long standing twenty year relationship with his counsel and followed his counsel’s insufficient advice. This case in my view is very different factually.
[103] The Plaintiff was sued in September 2008 by Fairfield. He chose not to seek legal advice notwithstanding a substantial sum was being sought from him and his view that a substantial amount was still owed to him.
[104] The Plaintiff stated he knew how to use a phone to call a lawyer if he had to. Although he said he had no money for a lawyer, he tendered no evidence of even trying to call a lawyer and/or making an inquiry as to how much a consultation/opinion would cost or that he looked into other options such as the Lawyer Referral Service.
[105] Throughout the Fairfield claim, Mr. Higgins maintained that no agreements were made and no monies were owed. The Plaintiff said they may have met three times in this regard with no resolution. He still did not obtain advice. He said he thought it was cut and dry and that all he had to do was to show up with his paperwork and that the claim would be null and void and thrown out. This statement of the Plaintiff is inconsistent with him having given notice of intention to bring the claim he has now before the court or that he had intentions of pursuing one. By this statement, it seems he wasn’t looking to recover against Fairfield for the alleged substantial unpaid extras.
[106] The Plaintiff personally wrote his statement of defence in the Fairfield claim.
[107] The Plaintiff may have had a lack of knowledge of the law, but that was not because he was misled on the law or by any other person. There was no evidence to support this. I do not accept that Mr. Higgins told the Plaintiff that he was the owner of Fairfield. I agree with the comments of Justice Whalen, and his findings that the Plaintiff made assumptions. I also agree with Justice Whalen’s comments, namely that the Plaintiff cannot “unilaterally blur or amend contractual rights and obligations” and certainly not when he has documents that clearly indicate that his contract is with the Defendant, such as the quote and the invoices. It, in my view, was not reasonable for him to do so in this case.
[108] The Plaintiff suggested that Justice Whalen made a finding in the Fairfield claim that the Plaintiff was unsophisticated. I disagree. Justice Whalen does not describe the Plaintiff as unsophisticated generally or unsophisticated in business, just unversed in the law. Justice Whalen also queried as to why the Plaintiff did not get legal advice and that this was a choice exercised by the Plaintiff.
[109] The Plaintiff did not tender any evidence that he looked into consulting another colleague in the electrical/construction field. This was not the Plaintiff’s first job in this field by his evidence. He worked with and for others in this field.
[110] I do not accept as credible the Plaintiff’s evidence that he was so naïve that he was not aware that he could bring an action for payment if he was not paid for work he completed.
[111] While it may be fair to say that the Plaintiff lacked knowledge of the technicalities of the law and court practice, and had not been running Superior for very long, I am not satisfied, based on the evidence including his education, knowledge and work experience that the Plaintiff was an unsophisticated, inexperienced contractor.
[112] I was left with the impression based on the Plaintiff and Mr. Higgins’ evidence that the Plaintiff had other issues on his plate at the material times of the project and thereafter. The Plaintiff gave evidence that he chose to idle his business after the Fairfield project in favour of a new job. The Plaintiff gave evidence about how the Fairfield project went longer than expected. The Plaintiff also said he was sick for a year and a half and the illness debilitated him. That being said, he did not state or assert that this illness played a part in his ability to discover or address his claim. His arguments centered around a believed set-off/”wash” agreement, and his lack of business savvy and lack of legal understanding of corporate structures and actions for non-payment of rendered invoices.
[113] The Plaintiff did not establish either that he was taken advantage of. The evidence suggested otherwise. The Plaintiff had worked with Mr. Higgins before on other projects. Mr. Higgins was upfront about the budget for the Fairfield project when he offered the Plaintiff a chance to bid on the project. The Plaintiff wanted to bid on the project. It was the Plaintiff who suggested ways to reduce the scope of work to get it into the proposed budget, not Mr. Higgins. The Defendant paid ESA fees on behalf of the Plaintiff to permit him to continue on the project (although this was disputed as to whether or not it was agreed to). Mr. Higgins arranged to have money loaned to the Plaintiff twice on short notice when the Plaintiff was in need. The Defendant worked with others that the Plaintiff sent to the Fairfield project when the Plaintiff, in Mr. Higgin’s words “went AWOL” or was sick. The Plaintiff agreed that his relationship with Mr. Higgins was cordial. The Plaintiff did not contradict the evidence of Mr. Higgins that there was never a fight over any of the bills the Plaintiff sent to the Defendant or money until after May of 2007. Mr. Higgins said they paid every bill sent.
[114] There is a lack of evidence of any exercise of due diligence or explanation as to why the Plaintiff could not have discovered his claim with the exercise of due diligence in these circumstances with the information he had.
[115] A reasonable person with the Plaintiff’s background and in the above circumstances, including being sought after for $21,000.00, I find, with exercise of due diligence, and with the substantial information available would have been or could have been alerted to the claim during the following time frame: a reasonable time following May 2007 and the Fall of 2007.
Undertaking Issue
[116] On the issue of what was paid to the Plaintiff and establishing that figure, the Plaintiff at trial alleged an incomplete undertaking from the Defendant to confirm what was paid to the Plaintiff. In particular, the Plaintiff argued that an adverse inference should be drawn against the Defendant. The Plaintiff submitted that the case 1309489 Ontario Inc. v. BMO Bank of Montreal, 107 R.R. (3d) 384 (ONSC) applied. I disagree. First this case did not decide the issue of limitation before it. Second, in the said case, the Plaintiff had no control over the information it had sought from BMO and therefore, the amounts were in fact unknown to the Plaintiff. BMO had allowed deposits to an account that was not the Plaintiff’s account and then allowed them to be removed by another defendant. The Plaintiff could not discover the amounts until it received the records that the Defendant was asked to provide and was refusing to provide. In the case at bar, the Plaintiff had all of his records, and acknowledged that he had all of his own records to create invoices in 2009 and thereafter to provide to his counsel to develop his statement of claim in this action.
[117] Further, at trial, Mr. Higgins, although he could not confirm the amount paid as being $559,000.00, indicated that it could be correct and if the Plaintiff’s counsel had done the math correctly, then he had no difficulty with the amount. As such, the amount paid was not really contradicted. Additionally, the secretary who prepared the invoices and received payments was not called nor was the Defendant’s bookkeeper called as a witness to shed any light on the issue of the invoices and billings. The Plaintiff chose not to subpoena the Defendant’s bookkeeper. The Plaintiff did not pursue a motion to compel undertakings.
[118] Finally, the Plaintiff testified that he was aware of Justice Whalen’s August 6, 2009 reasons. Justice Whalen in paragraph 11 of his reasons points out that the Plaintiff had not proven the deductions off of his invoicing that he claimed. The relevance of this and my point in raising this, is that this issue was flagged by Justice Whalen more than once in his judgment.
[119] Based on the foregoing, in my view it would not be appropriate or necessary to draw an adverse interest against the Defendant in this case.
The Issue of Notice
[120] On the issue of notice, it was up to the Plaintiff to bring his claim. I do not find this allegation of notice as affecting the limitation period.
[121] First, the Plaintiff gave notice of a defence of set-off against in the Fairfield claim. He did not bring a claim in the Fairfield claim.
[122] The Plaintiff’s statement of defence did not contain any particulars or details regarding the alleged unpaid extras. The statement of defence itself did not specify or claim that money was owed under the contract. It referred only to un-particularized unpaid extras.
[123] While the Defendant undoubtedly acknowledged that he had notice through this document that the Plaintiff was disputing the accounting on the project, and was making a claim for unpaid extras, Mr. Higgins said that he had notice of what was written in the document. At this point in time, the Defendant was of the view that it had paid all extras that he was invoiced for, which was not disputed at trial (extras 1 through 11).
[124] The Defendant in fact, had not been invoiced for extras 12 through 64. The Plaintiff did not prepare the invoices until well into 2009 during the course of the Fairfield claim litigation. The Defendant only became aware of a claim for unpaid contract price by the Plaintiff’s statement of claim in this action, which was issued April 15, 2010.
[125] As such, in my view, this would not trigger notice to the Defendant as the Plaintiff wishes to apply it, namely to extras 12 through 64 and unpaid contract price, which is what is being sought in this case.
Conclusion
[126] By exercise of reasonable diligence, the Plaintiff could have discovered his claim for unpaid contract price and/or unpaid extras 12-64 as early as a reasonable time period following May 2007, or at the very latest the Fall of 2007, the date on which Mr. Higgins, on behalf of Fairfield, came looking for repayment of the $21,000.00 at which time the Plaintiff says he reviewed his records and met with Mr. Higgins.
[127] The Plaintiff did not establish that there was an agreement to, or an actual set-off or “wash” or further, that it would have been applicable to unpaid extras 12-64 and the claimed unpaid contract price he is seeking in this claim.
[128] The claims for extras 12-64 and unpaid contract price were discoverable within the above time frame and as such, I find that the claim, being over 2 years outside of that time frame is statute barred.
Rasaiah J.
Released: February 17, 2016
CITATION: Wood v 1584842 Ontario Ltd., 2016 ONSC 979
COURT FILE NO.: 25123/10
DATE: 2016-02-17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SCOTT WOOD operating as SUPERIOR ELECTRIC CONSTRUCTION
- and -
1584842 ONTARIO LTD. Operating as FAIRFIELD INN & SUITES, SUDBURY and ROBERT HIGGINS carrying on business as ROBERT HIGGINS CONSTRUCTION
reasons FOR DECISION
Rasaiah J.
Released: February 17, 2016
[^1]: I proceeded on the basis of the parties and counsels’ submissions and agreement as to who the proper parties to their contract and claim are.