CITATION: Ekum-Sekum Inc. v. Bel-Air Excavating & Grading Ltd., 2017 ONSC 540
COURT FILE NO.: C-411-15
DATE: 2017-01-24
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
EKUM-SEKUM INCORPORATED, carrying on business as BRANTCO CONSTRUCTION
Meaghan Swan, for the Plaintiff
Plaintiff/Defendant by Counterclaim
- and -
BEL-AIR EXCAVATING & GRADING LTD.
Randell Thomson, for the Defendant
Defendant/Plaintiff by Counterclaim
HEARD: September 27, 2016
The Honourable Justice C.D. Braid
REASONS FOR JUDGMENT
I. OVERVIEW
[1] Bel-Air hired Brantco to do paving work. Brantco did the first stages of paving work in June and September. Because of construction delays, the next stage of paving work could not be done until early December.
[2] Brantco told Bel-Air that the paving should not be done in cold weather. Brantco asked Bel-Air to sign a release before completing the next stage of paving. Bel-Air reluctantly signed the release. The asphalt was of poor quality. Brantco relied on the release and refused to correct the asphalt.
[3] Bel-Air states that the release was signed under economic duress and argues that it is voidable at law. Bel-Air refused to pay Brantco for the final stage of paving work, and submits that Brantco should be liable for the cost of correcting the asphalt.
[4] The issues on this motion for summary judgment are:
A. Is this an appropriate case for summary judgment?
B. Was the release an amendment to the original contract?
C. Has Bel-Air proven economic duress?
[5] For the reasons set out below, I find that this is an appropriate case for summary judgment. Bel-Air has not proven economic duress, and the signed release is valid. Brantco is entitled to payment for unpaid paving work.
II. NATURE OF THE MOTION
[6] Brantco moves for summary judgment. The Statement of Claim seeks payment for paving contracts in Kitchener and Cambridge. In its submissions, Brantco has limited the motion for summary judgment to $49,762.93 for unpaid paving work in Kitchener.
[7] Bel-Air argues that the release is not valid, and has counterclaimed for damages to correct the faulty asphalt.
III. FACTS
[8] Brantco is an asphalt paving contractor. Darcy Miskie is a project manager for Brantco.
[9] Bel-Air is a general contractor. Brian Wright is a project manager for Bel-Air.
[10] In December of 2013, Brantco submitted an estimate for roadwork and surface construction for the City of Kitchener. Based on the original plan, paving was to be completed by October 31, 2014. Bel-Air accepted the estimate by submitting Brantco’s name as part of its tender to the City.
[11] Brantco completed the first and second stages of paving in June and September 2014. Bel-Air paid Brantco for this work. By the end of October 2014, Bel-Air was behind schedule and had not yet called Brantco about the next stage of paving work.
[12] The contract between Bel-Air and Brantco required that the paving be done in accordance with the Ontario Provincial Standard Specifications and the City of Kitchener Specifications. These specifications included the following operational constraints:
i. Binder courses shall not be placed unless the air temperature at the surface of the road is a minimum of 2°C and rising; and
ii. The asphalt binder course shall be laid…no later than November 30th, or as directed by the Contract Administrator.
[13] The parties agree that the specifications required Brantco’s next stage of paving to be completed when the air temperature was a minimum of 2°C and rising. Bel-Air does not dispute that low temperatures can affect the quality of the material and the compaction of asphalt paving. Bel-Air agreed that it relied on Brantco’s expertise regarding paving and working within specifications for paving.
[14] On November 12, 2014, Mr. Miskie emailed a Warranty Release Form to Mr. Wright. He stated that the weather forecast did not look great for the rest of the month, so Brantco would need the Release signed.
[15] The Release stated the following:
This form indicates that Brantco Construction will be release [sic] form [sic] any and all warranties associated with asphalt paving when OPSS and Municipal conditions cannot be met;
When the required contract specifications are not met, Brantco Construction cannot be held responsible for repairs and/or damages. Brantco Construction will place asphalt to the best of our abilities, however cannot guarantee compaction, or appearance of asphalts.
[16] Mr. Wright forwarded the Release to Bryan Bishop, the City of Kitchener’s Design and Construction Manager. Mr. Wright asked for Mr. Bishop’s opinion regarding the Release. Mr. Bishop stated that the City would still require the asphalt to meet the requirements in the contract. Mr. Bishop suggested that Mr. Wright should not sign the release. He also stated “[t]here are other pavers/suppliers in the area.”
[17] Mr. Wright refused to sign the Release.
[18] On November 14, 2014, Miskie, Wright and Bishop met to discuss the temperature issue. Mr. Miskie stated that the specifications, which were part of the contract, prohibited the paving work where the air temperature was below 2°C. He recommended that they wait for warmer temperatures in the spring.
[19] Mr. Bishop stated that the City was not willing to wait until the spring as the road needed to be open for public access. Mr. Wright stated that Bel-Air could not postpone the paving work as it would put the project behind schedule and expose Bel-Air to penalty charges under its contract with the City.
[20] Mr. Miskie stated that low temperatures would impact compaction and appearance. Mr. Wright was fairly certain that Brantco would meet compaction requirements, and believed that the appearance did not matter because it was base asphalt rather than topcoat.
[21] Mr. Miskie asked Mr. Wright to sign the Release if Bel-Air wanted Brantco to go ahead with the paving despite not being able to meet the specifications of the contract. At the end of the November 14 meeting, Mr. Wright reasserted his position that he would not sign the Release. The parties disagree about how that meeting concluded:
a) Mr. Miskie states that he never withdrew Brantco’s request to have the Release signed. He recalls telling Mr. Wright that he did not require Bel-Air to sign the Release on that day, as Brantco was not proceeding with paving at that time; but that the signing of the Release was a precondition to the work being completed should Brantco be called to pave at a time when the temperature was too low.
b) On the other hand, Mr. Wright understood that Brantco was no longer insistent that the form be signed. He believed that Brantco would proceed with the paving work without a signed Release.
[22] Sometime between November 26 and 28, Bel-Air contacted Brantco to arrange for the paving to take place on or about December 1. Mr. Miskie states that between November 14 and 28 he had a number of telephone conversations with Mr. Wright regarding temperature and the Release. Mr. Wright disputes this evidence, and states that he did not discuss the Release with Mr. Miskie between November 14 and 28.
[23] On November 28, Mr. Miskie spoke to Mr. Wright and advised him that the Release had to be signed or Brantco was not going to pave. Mr. Wright was unhappy that this was a change from the resolution that he believed was reached at the November 14 meeting.
[24] Mr. Wright has acknowledged that he has little recollection of the words spoken during the conversation on November 28. However, Mr. Wright says that he protested having to sign the release, and that he conveyed his view that Brantco was leaving Bel-Air with no choice. During his examinations on this motion, Mr. Wright admitted that Bel-Air was never going to abide by the terms of the Release. However, he did not convey this information to Brantco before Brantco finished the paving work.
[25] Bel-Air had previously raised concerns about the wording in the Release being too broad. Mr. Miskie tried to address those concerns by amending the wording in the Release. He states that during the telephone conversation with Mr. Wright on November 28, he told Mr. Wright that he had changed the wording on the Release.
[26] The second Release stated the following:
Further to our telephone conversation please sign and return a copy of this form as your authorization to proceed with paving…with the understanding that Brantco Construction cannot meet the required specifications for materials and placements.
Brantco Construction cannot be held responsible for repairs, damages, or the appearance of the asphalt, when specifications are not met.
It is understood that Brantco Construction will perform to the best of our ability given these conditions.
[27] Mr. Wright denies being advised that the wording of the Release had changed. He did not review the updated Release.
[28] Mr. Wright instructed the on-site foreman to sign the Release on behalf of Bel-Air. Mr. Wright stated that, had he known the versions of the release were different, he would not have directed the foreman to sign it. However, he gave evidence that the Releases had the same effect: they both released Brantco from any responsibility for its work.
[29] The paving work was completed on December 2, 2014, with some minor work being done the following day.
[30] The actual temperature on December 2, 2014 reached a high of -1°C. The following independent records support that finding:
a) One of the AMEC asphalt testing reports states that the air temperature was -1°C at the site of the paving.
b) A second AMEC asphalt testing reports states that the air temperature was -3°C at the site of the paving.
c) The Government of Canada report for Kitchener/Waterloo states that the temperature on that day was between -1.1°C (max temp) and -11.6°C (min temp).
[31] Mr. Wright gave evidence that he saw the weather forecast for December 2, which showed a temperature of 3° and rising. Mr. Wright’s evidence was vague on this point: he could not identify where or when he observed this weather report. He has no notes or records that relate to his review of this forecast. Mr. Wright believed that, on November 27, he looked at the weather forecast for December 2; and although he “can’t remember a hundred percent” what the forecast was, he recalled that “it met the 2° and rising” specification.
[32] The asphalt was tested and found to be deficient. On February 27, 2015, Mr. Wright emailed Mr. Miskie to convey the City’s position that the asphalt needed to be replaced.
[33] On March 2, 2015, Mr. Miskie responded by email. He referred to the signed Release and denied any responsibility for fixing the problem. Almost immediately, Mr. Wright replied “[t]hat’s what I thought you would say. That waiver was signed under duress which makes it not worth the paper it is written on.”
[34] The affidavit of Mr. Miskie includes copies of four invoices from Brantco and three payments from Bel-Air to Brantco. The amount owing to Brantco on the invoices for the Kitchener contract is $41,048.18. Mr. Wright has confirmed that this calculation is correct.
IV. ANALYSIS
A. Is This an Appropriate Case for Summary Judgment?
[35] The court shall only grant summary judgment if it is satisfied that there is no genuine issue requiring a trial. Pursuant to rules 20.04(2)(a) and (2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the court shall consider the evidence submitted by the parties and may exercise any of the following powers for the purpose of determining whether there is a genuine issue requiring a trial, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
[36] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada clarified the test to apply on a summary judgment motion. Under this test there is no genuine issue requiring a trial if the evidence permits the court to make a fair and just determination on the merits. This will be the case when a motion for summary judgment (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
[37] What is fair and just depends on the nature of the issues and the nature and strength of the evidence. There is an obligation on each party to “put its best foot forward.” The responding party must present its best case or risk losing: Canada Mortgage and Housing Corp. v. Greenspoon, 2015 ONSC 6882 at para. 28.
[38] Bel-Air argues that there are a number of material facts in dispute in this case, and therefore this is not an appropriate case for summary judgment. I shall address the main categories of factual dispute below:
The parties disagree about whether Mr. Miskie withdrew his request for a signed Release at the November 14 meeting, and whether there were additional conversations regarding the Release between November 14 and November 28. Even though there is conflicting evidence on these point, I find that this is not critical to the defence of economic duress. I shall address this further below when considering whether alternatives were open to Bel-Air.
The parties disagree about what was said during the telephone call on November 28. Mr. Wright does not remember exact words spoken during this conversation, but I am prepared to accept that Mr. Wright protested the signing of the release during that conversation.
The parties disagree about why the wording on the Release was changed. In submissions before me, Bel-Air argues that the changes to the wording were significant: the first Release required Brantco to advise Bel-Air when the temperature did not meet specifications on the day of paving, but the second Release shifted the burden to Bel-Air to confirm that the temperature was within specifications before paving took place.
While it may be interesting to examine the legal nuances of the wording of the two Releases, Mr. Wright was unable to articulate how the change in wording affected Bel-Air’s position. He believed that both documents absolved Brantco of any responsibility for its work. There is no evidence that Mr. Wright was misled by the first Release, or that he believed Brantco had a responsibility to confirm that the temperature was within specifications before paving took place. The factual dispute about the wording change is not critical to the determination of the validity of the Release.
[39] Although the parties disagree on certain factual points, I find that the facts that are relevant to the legal issues can be properly determined on a summary judgment motion. This is an appropriate case for summary judgment.
B. Was The Release an Amendment to the Original Contract?
[40] I find that the Release was an amendment to the terms of the original contract. The specifications regarding temperature requirements for paving were incorporated into the contract. When Bel-Air asked Brantco to pave in cold temperatures outside of specifications, Bel-Air required Brantco to work outside the terms of the contract. The original contract contemplated paving in accordance with specifications, and the Release contemplated paving outside of specifications.
[41] The Release gave Brantco an opportunity to confirm, in writing, its concerns regarding the cold temperatures. Brantco obtained Bel-Air’s acknowledgment that it would take responsibility for faulty work when paving outside specifications. It therefore shifted the responsibility to Bel-Air, who was attempting to force Brantco to pave outside specifications.
[42] Bel-Air submits that it did not receive consideration for this new contract. It argues that paving outside of specifications is not proper consideration because it would not benefit Bel-Air and would cause them to incur damages. I do not accept this submission.
[43] Bel-Air was insistent on the paving work being completed despite concerns about low temperatures. The Release permitted Bel-Air to direct Brantco to proceed with the work that was outside the parameters of the original contract. Therefore, Bel-Air received consideration for entering into the new contract.
C. Has Bel-Air Proven Economic Duress?
[44] To succeed on the ground of economic duress, a party must prove that his or her will was coerced and that the pressure exerted was not legitimate. When determining whether a party’s will was coerced, the Ontario Court of Appeal has stated that four factors should be considered:
i. Did he protest?
ii. Was there an alternative course open to him?
iii. Was he independently advised?
iv. After entering the contract, did he take steps to avoid it?
After considering these four factors, the court must still determine whether the coercion was legitimate: See Gordon v. Roebuck (1992), 1992 CanLII 7443 (ON CA), 9 O.R. (3d) 1 (Ont.C.A.).
i. Did Bel-Air protest when it signed the Release?
[45] Mr. Wright told Mr. Miskie at the November 14 meeting that he did not want to sign the Release. On the day that the Release was signed, Wright told Miskie “you are leaving me with no choice.” The first factor has been met.
ii. Were alternatives open to Bel-Air?
[46] Bel-Air was under pressure because the work was behind schedule. It was trying to avoid financial penalties for further delays. The City had insisted that the paving be completed as soon as possible, and that it could not be delayed until the spring.
[47] Bel-Air acknowledged that there were about four other pavers in the area who Bel-Air had worked with before. Mr. Wright did not inquire about the availability of alternate pavers because he believed no one would be available at that the time of year. A City representative stated that it would only take a few days to replace a sub-contractor if a change was requested. Bel-Air failed to ask other paving contractors and/or seek an extension from the City to hire a different sub-contractor.
[48] Bel-Air could have asked the City for an extension until the weather was warmer. Even if the City denied the extension, Bel-Air could have delayed the paving work and incurred the $1,500/day penalty until specifications were met. This penalty was relatively nominal when compared to the cost of correcting the defective asphalt.
[49] Even if the court accepted that Brantco withdrew the request for a signed release, and then renewed that request on November 28, this does not alter the fact that several alternatives were available. The second factor has not been met.
iii. Was Bel-Air independently advised?
[50] Mr. Wright initially spoke to the City about the Release. The City advised against signing the Release and suggested that Mr. Wright could hire another paving company. Bel-Air ended up signing the release, against the City’s advice, without seeking another paver.
[51] Bel-Air did not seek a delay before signing the Release on November 28 in order to obtain further advice from the City or from a lawyer.
[52] In addition, Bel-Air did not obtain independent advice after signing the release on November 28. Although the release had been signed, the paving work was done four days later. This provided a window of opportunity to seek independent advice.
[53] Since Mr. Wright failed to follow independent advice or seek additional advice on or after November 28, the third factor has not been met.
iv. After signing the Release, did Bel-Air take steps to avoid the Release?
[54] Even though Bel-Air knew that Brantco would rely on the Release, Bel-Air did not raise the issue of duress until well after the work had been completed. Bel-Air always intended for Brantco to bear the risk of working outside of specifications but failed to tell Brantco that this was Bel-Air’s intention.
[55] Both parties knew that working outside of specifications carried a risk of creating defective asphalt. Because of its own pressures to get work done on time and without further financial penalty, Bel-Air failed to take any steps to avoid the work being done outside of specifications. Mr. Wright did not determine the actual temperature on the day that the work was completed, nor did he request that Brantco confirm that that the air temperature met specifications before it proceeded with the paving.
[56] The fourth factor has not been met.
v. Was the pressure for a legitimate purpose?
[57] The contract between the parties incorporated work specifications, including a minimum temperature requirement. Brantco expressed concerns about the temperature requirement in early November. Brantco made it clear that specifications, which are part of the contract, were unlikely to be met based on the construction schedule. In an email to Bel-Air, Mr. Miskie stated that, by sending the Release, he intended to make Bel-Air aware that temperatures for paving may not meet specifications. Brantco asked for a signed Release in order to proceed when minimum temperature requirements could not be met.
[58] Although Bel-Air acknowledges that Brantco is the paving expert, Bel-Air did not heed these concerns and told Brantco that it expected them to proceed with the work. Bel-Air and the City of Kitchener refused to grant extensions for the paving work. The City made it clear that if materials did not meet the specifications, then the owner should not pay.
[59] It is notable that, as between the parties, Bel-Air had more bargaining power. Mr. Miskie has given evidence that he felt as though Brantco was under duress to complete the paving job. In these circumstances, it was appropriate for Brantco to put its concerns in writing and require that Bel-Air take responsibility for effectively forcing them to complete the work outside of specifications.
[60] If Brantco had not obtained a signed Release, it would have been within its right to refuse to do the work on December 2 when the temperature was below 2°C. Bel-Air could not have forced Brantco to do the work outside of specifications. Rather than refusing the work at the last minute, Brantco gave Bel-Air advance notice of its concerns regarding the temperature. Bel-Air chose to direct that the work proceed, despite these risks.
[61] I find that the pressure exerted by Brantco was for a legitimate purpose.
vi. Conclusion regarding economic duress
[62] Having considered the factors, I find that it does not amount to economic duress at law. In addition, the pressure exerted was justified on the facts of this case. Consequently, the agreement is not one that could be set aside as one executed under unjustifiable economic duress.
V. DISPOSITION
[63] In the result, judgment is granted in favour of Brantco for unpaid paving work under the Kitchener contract in the amount of $41,048.18 plus prejudgment interest pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43.
[64] Bel-Air’s counterclaim seeks damages arising from the Kitchener contract. In light of my findings regarding the validity of the Release, the counterclaims related to the Kitchener contract are without merit and are dismissed. For further clarity, this includes the counterclaim for damages to correct the asphalt; and for interest on money held back by the City of Kitchener as security for the repair work to the asphalt.
[65] I have not been asked to address the claim and counterclaim regarding the Cambridge contract. This action shall continue with respect to those claims.
VI. COSTS
[66] In the event that the parties cannot agree as to costs, they are directed to provide written submissions as to costs. The submissions shall be no longer than two typed pages, double-spaced, in addition to any relevant offers or Bill of Costs. Brantco shall provide costs submissions by February 10, 2017; and Bel-Air shall provide any response by February 24, 2017.
Braid, J.
Released: January 24, 2017
CITATION: Ekum-Sekum Inc. v. Bel-Air Excavating & Grading Ltd., 2017 ONSC 540
COURT FILE NO.: C-411-15
DATE: 2017-01-24
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E N:
EKUM-SEKUM INCORPORATED, carrying on business as BRANTCO CONSTRUCTION
Plaintiff/Defendant by Counterclaim
- and –
BEL-AIR EXCAVATING & GRADING LTD.
Defendant/Plaintiff by Counterclaim
REASONS FOR JUDGMENT
CDB
Released: January 24, 2017