Court File and Parties

Court File No.: CV-14-509098 Date: April 21, 2017

Superior Court of Justice - Ontario

Re: Mount Royal Painting Inc. c.o.b. Epoxy Solutions v. Lomax Management Inc., Unifor Canada Inc., Richard Jeffrey, Gianfranco Marinelli and Anna Trevisan;

Before: Master C. Wiebe

Counsel: Paul Hancock for the defendants; Angela Assuras for the plaintiff;

Heard: April 10, 2017 at Toronto, Ontario.

Reasons for Decision

I. Introduction

[1] This is a motion by the defendants originally for summary judgment dismissing this entire action. On April 4, 2017, the defendants amended their motion to limit it to a motion for summary judgment dismissing the action as against the defendants in the event I found that the governing contract was between the plaintiff, Mount Royal Painting Inc. c.o.b. Epoxy Solutions (“Epoxy”), and Unifor Canada Inc. (“Unifor Canada”). Should I find, on the other hand, that the governing contract was between Epoxy and Lomax Management Inc. (“LMI”), the amended motion sought an order dismissing the action only as against Unifor, Gianfranco Marinelli and Anna Trevisan, but not as against LMI and Richard Jeffrey.

[2] At the argument of the motion, Ms. Assuras raised a preliminary objection to the filing by the defendants of a late affidavit with the amended notice of motion. This was the affidavit of Mandy Prosser, Mr. Hancock’s assistant. Ms. Assuras’ objection was that this affidavit deposed as to evidence from the payment certifier, Sweeny & Co. Architects Inc. (“Sweeny”), concerning revisions it made to LMI progress draws. Of particular concern to Ms. Assuras was the revision Sweeny made to progress certificate no. 28 which removed $12,712.50 in relation to Epoxy’s work due allegedly to its deficiencies. She argued that this was inadmissible hearsay. Mr. Hancock responded that this evidence was being tendered solely for the purpose of showing what had happened, not as to the truth of the alleged deficiencies. After a discussion, I dealt with this issue by ruling that there was an issue justifying a trial concerning the removal of the $12,712.50 from the payment certificate. On that basis, the Prosser affidavit was admitted.

[3] There was then a further preliminary discussion concerning the overall motion and its necessity, particularly now that the lien trial is scheduled for October and November, 2017. Mr. Hancock made it clear that his clients intended on paying any lien judgment. In the end, the parties agreed to have the argument on this motion limited to the issue of the parties to the governing contract, with the remaining issues in the motion to be adjourned to a date after the conclusion of the lien trial. I made that order. Therefore, the only issue to be determined here is the following: is there a genuine issue requiring a trial as to the parties to the governing contract?

[4] For the reasons stated herein, I have determined that there is such a genuine issue, and deny the motion for summary judgment on that issue as a result.

II. Background

[5] The following are the key facts on this issue that came out during the motion and that are not disputed.

[6] An Italian company, Unifor SpA (“Unifor”), incorporated a subsidiary, Unifor Canada, to own and refurbish a commercial property at 445 King Street East, Toronto. Unifor provided Unifor Canada with the funds for the project in issue.

[7] The defendants’ assert that Unifor Canada hired LMI to manage the construction of a project on this property, and that through LMI Unifor Canada entered into a contract with Epoxy whereby Epoxy was to supply and install an epoxy floor. Epoxy asserts that its contract was with LMI.

[8] On or about September 9, 2010 a construction management contract was drawn up naming Unifor, not Unifor Canada, as the owner and the one with the construction management contract with LMI. This contract was not signed. Richard Jeffrey, principal of LMI, maintains in his affidavit in this motion that LMI always intended to contract with Unifor Canada, the registered owner of the property. Mr. Jeffrey called this document the governing construction management contract.

[9] LMI solicited quotations. On June 7, 2012 Epoxy rendered a quotation to LMI, not Unifor Canada, for the base scope of “epoxy flooring” and “concrete toppings.” On the same day, Epoxy rendered a quotation for an extra.

[10] On June 25, 2012, LMI sent Epoxy a letter under LMI letterhead, a “Letter of Intent,” stating that Unifor Canada intended to contract with Epoxy. The letter stated that “a Contract will be issued in the near future.” Mr. Jeffrey signed this document. Just above his signature is a statement that LMI was “acting as agent for and on behalf of Unifor Canada Inc.” Mr. Hildrbrand signed this letter on July 17, 2012 confirming that he “concurred” with its contents.

[11] Subsequently, LMI provided Epoxy with a form of contract (dated July 11, 2012) to sign. The document showed that Unifor, not Unifor Canada, was the owner and was the one who would be contracting with Epoxy. Mr. Hildebrand refused to sign this document. He stated in his affidavit that he did not want to contract with an unknown foreign entity. The document was not signed.

[12] Epoxy began working. It consistently invoiced LMI for its work, not Unifor Canada. This was the case with all of the trades on the project. LMI in turn billed Unifor Canada monthly, and in its monthly billings to the owner identified Epoxy as a “trade” as opposed to one of LMI’s own forces. The unsigned construction management contract differentiated between “trades,” namely those with direct contracts with the owner, and LMI’s own forces, namely those for which LMI was responsible.

[13] With its monthly billings to the owner, LMI enclosed statutory declarations sworn by its secretary identifying Unifor, not Unifor Canada, as the party with the contract with LMI. In addition, LMI enclosed WSIB Clearance Certificates identifying LMI as the “contractor” and Unifor, not Unifor Canada, as the “principal.”

[14] When it received funds from Unifor Canada, LMI paid Epoxy on account with cheques marked, “Lomax Management Inc. – Unifor.” $99,004.95 was paid to Epoxy this way.

[15] LMI eventually issued a purchase order to Epoxy on September 18, 2013 for the base contract scope. It was with LMI letterhead. It was signed by Mr. Jeffrey, and referred to the “Letter of Intent.” However, at the bottom were four lettered paragraphs. In the paragraph lettered “A,” LMI is described as the agent for Unifor, not Unifor Canada. In the paragraph lettered “B,” Epoxy is instructed to submit its invoices to “Unifor SPA c/o Lomax Management Inc.” by the 25th of each month. LMI issued purchase orders for extras using the same form with the same lettered paragraphs. In a covering letter for one purchase order for an extra, a letter dated September 18, 2013, LMI instructs Epoxy to apply to LMI for payment, and describes LMI as the “Construction Manager.”

[16] In the motion, the defendants filed the affidavits of Mr. Jeffrey, Anna Trevisan and, as stated earlier, Mandy Prosser. Epoxy filed an affidavit of Mr. Hildebrand. In his affidavit, Mr. Hildebrand stated firmly that Mr. Jeffrey never told him, Mr. Hildebrand, that Epoxy was contracting with an entity other than LMI. He went on to state that, had Mr. Jeffrey done so, Epoxy would not have provided labour and material to the site, as Epoxy was not prepared to contract with a foreign entity.

III. Analysis

[17] Justice DiTomaso in his 2016 decision in Dawson v. Colt Food Services Ltd., 2016 ONSC 7653 provided a useful summary of the present jurisprudence concerning motions for summary judgment in paragraphs 40 to 52. He reiterated that the basic test is whether there is a “genuine issue requiring a trial,” and that the moving party has the onus of meeting this test. To determine that there is no genuine issue requiring a trial, the motions judge, His Honour went on, must consider the evidence on the motion and reach the conclusion that he or she can make the necessary findings of fact and apply the law to the facts, with the process being a proportionate, more expeditious and less expensive means to achieve a just result.

[18] If the motions judge concludes that there is a genuine issue requiring a trial, there is another step. His Honour stated that the Rules of Civil Procedure have provided the motions judge with discretionary powers to determine whether there is a genuine issue in such a case. His Honour stated that these discretionary powers should be used “provided that their use is not against the interest of justice.” He went on to state that, “their [the discretionary powers] will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.” I will apply this approach to the evidence on this motion.

[19] Have the defendants established that there is no genuine issue requiring a trial as to the parties to the governing contract? In my view, they have not. In my view, there is a genuine issue as to which party Epoxy contracted with.

[20] The issue turns on a question of agency. Ms. Assuras presented a quotation from the book by G.H.L Fridman entitled Canadian Agency Law, 2nd Ed. (Lexis Nexis: Markham, 2012). At page 151, Mr. Fridman states that where an agent enters into a contract on behalf of a principal, the agent will be personally liable on the contract unless he or she makes it clear to the contracting party that the agent is contracting only as an agent. Fridman also stated at pages 152 to 154 that an agent will be found to be personally liable if he or she indicates that he or she intends to be personally liable, and if his or her signature on the contract is found to be “descriptive” only, and not “representative,” based on a review of the surrounding circumstances. I applied these principles to the evidence.

[21] The evidence indicates that Epoxy did not sign a single contract document. Therefore, the nature of the contractual relationship which both parties said they had will have to be gleaned from several documents and the evidence of Messrs. Jeffrey and Hildbrand.

[22] The evidence indicates that Epoxy dealt only with LMI. Epoxy quoted to LMI, received the Letter of Intent from LMI on LMI letterhead, received a form of contract from LMI, received purchase orders from LMI under LMI letterhead, was told by LMI in a letter to invoice LMI, invoiced LMI and was paid by LMI. Mr. Hancock argued that LMI made it clear to Epoxy throughout that LMI was acting at all times as an agent. This position is reflected in Mr. Jeffrey’s affidavit, and is corroborated by several key documents. Of note were the Letter of Intent, the small print in the purchase orders and the draft contract that was provided to Epoxy.

[23] However, against this evidence were the firm statements from Mr. Hildebrand in his affidavit that he did not accept the LMI claims of agency. He downplayed the importance of the Letter of Intent, as he stated that it caused him to expect to receive a contract document. He stated, when the contract document was sent to him, he rejected it and did not sign it because he did not want to contract with the foreign entity, Unifor, and would not have provided labour and material in that event. He stated that he told Mr. Jeffrey of this position. He also stated that Mr. Jeffrey never told him that Epoxy was contracting with either Unifor or Unifor Canada. He stated that he did not pay attention to the small print in the purchase orders that referred to LMI’s alleged agency. He went on to state that what was important to him was Mr. Jeffrey’s directive to Epoxy to invoice LMI and LMI’s decision to pay Epoxy. He insisted that Epoxy’s contract was with LMI. This evidence was not tested. I was not made aware of any cross-examination of Mr. Hildebrand.

[24] In the context of this evidence from Mr. Hildebrand, the confusion in the LMI documentation over the identity of its alleged principal acquires significance. In the Letter of Intent concerning Epoxy’s work, the alleged principal was identified indeed as being Unifor Canada. Yet, the same Letter of Intent indicated that a contract document would be issued; and in the eventual contract document that was issued Unifor, not Unifor Canada, was identified as the contracting party. Furthermore, in the purchase orders that were issued to Epoxy after some time LMI identified its principal as being Unifor, not Unifor Canada. Unifor is the very party Mr. Hildebrand stated he did not want to contract with. The same confusion about LMI’s alleged principal appeared in LMI’s Statutory Declarations and WSIB Clearance Certificates. Significantly, it also appeared in the original construction management contract document that LMI alleged governed the entire project. Here Unifor, not Unifor Canada, was identified as the one with the contract with LMI.

[25] This confusion in the LMI documents suggests at minimum that LMI did not consider its agency relationship important enough to have it incorporated properly and consistently into the contract documents, at least in this case. LMI did not make the effort of identifying its alleged principal clearly to Epoxy. Given Mr. Hildebrand’s apparently steadfast refusal to accept LMI’s agency and LMI’s decision to proceed with Epoxy nevertheless and without a formally signed contract document, the court at trial may, therefore, conclude, based on the totality of the evidence and the assessment of the credibility of the witnesses, that LMI’s alleged agency was ignored or set aside in this case.

[26] What the confusion in the LMI documentation over its alleged principal also suggests is that, if an agency relationship is found to exist in this case, it is unclear as to which Unifor party will be found to be the contracting party. Normally, a Letter of Intent is a critical contracting document where there is no formally signed contract, such as in this case; but here the Letter of Intent is contradicted on this issue by the purchase orders and Epoxy’s invoices, both of which are also normally critical contracting document when there is no formally signed contract. It is also contradicted by the construction management contract document.

[27] What this all means for the purpose of this motion is that there is indeed a genuine issue requiring a trial as to the contracting parties in this case. There is simply not enough evidence before me to make a final determination of this issue. Most importantly, I need to observe and assess the credibility of the evidence of Messrs. Hildebrand and Jeffrey on this point.

[28] But this is not the end of the matter. As indicated by Justice DiTomaso in the Dawson case, I now have to determine whether I, sitting as a reference master, should exercise the discretionary powers granted by the Rules to the motions judge to construct a process other than the trial to determine this issue.

[29] Considering the circumstances of this litigation, I have decided not to do so. The issue of the parties to the governing contract will no doubt be a central one in the lien trial I recently scheduled to start before me on October 3, 2017. That trial hearing is scheduled for 11 days. This is only six months away. To now create a separate process to determine this one issue is not the most cost effective use of time by the parties and the court. This would essentially bifurcate the lien trial without good reason. It would not, to use Justice DiTomaso’s words, promote the goals of timeliness, affordability and proportionality. It would be better and more cost effective to have this issue determined in the context of all of the other evidence at the scheduled lien trial hearing.

IV. Conclusion

[30] I, therefore, dismiss the plaintiffs’ motion.

[31] Concerning the costs of this motion, as ordered, counsel delivered revised costs outlines following the argument of the motion. Epoxy’s costs outlines, dated April 19, 2017, shows a partial indemnity amount of $3,204.68. The defendants’ costs outline, dated April 14, 2017, shows an actual amount of $8,845.09, a substantial indemnity amount of $6,695.61, and a partial indemnity amount of $4,550.80.

[32] Normally, costs follow the event. If the parties cannot agree on costs, further written submissions of no more than two pages must be served and filed.

[33] Epoxy’s written submissions must be served and filed by April 28, 2017. The defendants responding written submissions must be served and filed by May 5, 2017. Any reply written submissions on costs must be served and filed by May 9, 2017.

DATE: April 21, 2017

MASTER C. WIEBE