Zeppa v. Woodbridge Heating & Air Conditioning Ltd., 2017 ONSC 5847

CITATION: Zeppa v. Woodbridge Heating & Air Conditioning Ltd., 2017 ONSC 5847

COURT FILE NO.: CV-12-446810

DATE: 20171002

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

FRANCA ZEPPA and CHRISTOPHER ZEPPA Plaintiffs

• and -

WOODBRIDGE HEATING & AIR CONDITIONING LTD. Defendant

COUNSEL: Fernando Souza and Emilio Bisceglia, for the Plaintiffs Brian G. Sunohara, for the Defendant

HEARD: September 15, 2017

P.J. MONAHAN J.

REASONS FOR JUDGMENT

[1] Christopher and Franca Zeppa (“the Plaintiffs”) retained Woodbridge Heating & Air Conditioning Ltd. (“Woodbridge”) to install the heating, ventilation and air conditioning (HVAC) system in their new home in Woodbridge, Ontario. The work was completed around late 2006.

[2] The system did not work as promised. On February 21, 2012, the Plaintiffs commenced an action for damages against Woodbridge, pleading negligence, breach of contract and misrepresentation. Woodbridge brings this motion seeking to have the action dismissed on grounds that it was not commenced within the applicable limitation period.

[3] For the reasons that follow, I would grant the motion and dismiss the action on the basis that it was commenced outside of the period specified in the Ontario Limitations Act, 2002 (“the Limitations Act”).[^1]

Facts

[4] The factual account below draws from two sources: (i) the examination of Christopher Zeppa (“Christopher”) dated August 1, 2015 (the “Examination”); and (ii) the affidavit of Christopher sworn January 27, 2017 and filed in response to this motion by Woodbridge (the “Affidavit”). There are certain differences in the respective accounts set out in the two documents; to the extent that these differences are material and/or relevant, they are noted below.

[5] Christopher is a land developer who has been involved in constructing houses and subdivisions since approximately 2000. The Plaintiffs decided to build a new house on their property at 105 Riverside Road in Woodbridge, Ontario. Christopher met with a representative of the defendant Woodbridge in 2004 or 2005 and retained Woodbridge to install the HVAC system in the Plaintiffs’ new home. The work involved installing two boilers, three fireplaces, radiant floor heating in all tiled areas, a pool heater for an indoor swimming pool, a gas line for a barbecue, and a chimney for a wood oven pizza maker. The work started in late 2005 or early 2006 and was completed in fall 2006 or early winter of 2006-07, at a total cost of approximately $50,000 - $60,000.

[6] Almost immediately after the work was completed, the Plaintiffs began to experience significant and recurring problems with virtually all aspects of the HVAC system. In the course of his Examination, Christopher detailed the following major issues and concerns which arose during the first year of operation of the new system:

(a) There was frequently no heat and/or no hot water in the house;

(b) The air conditioning did not function properly. On hot days in the summer, the second floor was 10-12 degrees Celsius warmer than the main floor;

(c) The pool heater never functioned properly, which caused unacceptable air temperatures in the indoor pool area. As of the date of the Examination, Christopher reported that he had never used the pool; and

(d) The heated floors did not work properly. If the floors were turned on they would become so hot that it was impossible to walk on them. The Plaintiffs would turn the heated floors on for an hour, and then turn them off so that their children or guests could use the area.

[7] These major concerns were brought to the attention of Woodbridge following the installation of the HVAC system over the winter of 2006-07, and frequently thereafter. Woodbridge would attempt to remedy the problems, which would result in the system functioning for a few days or weeks, following which the problems would recur.

[8] In early 2007, Woodbridge suggested that the solution was to enter into a maintenance program. In May 2007, the Plaintiffs entered into a two-year maintenance agreement with Woodbridge at a cost of approximately $2300 per year.

[9] The maintenance program proved unsuccessful. Christopher reported during the Examination that, even after the maintenance program was undertaken, the Plaintiffs continued to experience essentially the same problems with the HVAC system. Moreover, in late 2008, Christopher reported hearing big bangs coming from the heating system. At first he thought nothing of it, but a neighbour reported seeing blue flames coming out of the venting from the heating system. Upon investigation, Christopher noticed what appeared to be black carbon around the exhaust on the boilers. When he reported this problem to Woodbridge representatives, they indicated that this black substance was likely paint flaking off and that it was not possible to have flames coming out of the exhaust.

[10] The maintenance program was not renewed upon its expiry in May 2009. Over the summer of 2009, Woodbridge made a number of additional service calls. During this period, Woodbridge representatives began to suggest that perhaps maintenance would not be sufficient to remedy the problems and that some parts of the system would likely need to be replaced. Christopher reports that during this period he began to openly question this advice:

I called Peter [the Woodbridge representative] and I said, “Look, you know what, this is getting crazy. You know, there’s mould everywhere…the floor is warping, everything is going crazy. Like what is going on here? And I’m not going to – I’m not going to sit down and take this. Like this is crazy.”

And I said, “…I don’t believe it. You’re full of it. You’ve been lying to me from day one…about maintenance. You’ve been lying. You’ve been lying.” And then I just started making some inquiries.

Why would I pay for new modifications when what you were paid to do from the beginning never worked from day one, and all along you’ve been telling me its maintenance, so which one is it? Was or maintenance, or was it not done properly and I have to do new modifications? Why would I have to do new modifications if it was done properly? And then it wasn’t a maintenance issue, so which one is it? At that point I started questioning.[^2]

[11] The last occasion on which Woodbridge serviced the HVAC system was sometime during the fall of 2009.[^3] During this same period, Christopher began reaching out to a number of different HVAC service providers to see if they could remedy the problems with the system.

[12] Christopher indicated in his Examination that, at this point, he “knew what I had to do was probably based on Peter’s information, revamp the whole system.” However he was not then prepared to make the significant investment required in order to revamp or replace the system, “so I tried to just get it going to summer so we could rip the system out and not be without heat in the wintertime.” No major replacement or repairs were undertaken in the fall of 2009, as “at this point they [the other HVAC service providers] were just trying to get either hot water or heat or, or whatever I needed at that time to – just make it to the summer.” While performing this work, these other HVAC service providers advised Christopher that the system was “junk”, that it had been installed improperly, that “the pumps are no good, the sensors are no good, the boilers are no good, the piping is no good…” (See Examination, Qs. 322-326.)

[13] It appears that the system functioned until the fall of 2010 when it failed yet again. Christopher had a further meeting with Woodbridge representatives,[^4] and then decided to reach out to the U.S. manufacturer of the HVAC system, Quietside Corporation (“Quietside”). He called and then emailed Quietside, indicating that he had been told that the Quietside boilers were “terrible boilers” and inquiring as to whether there were other qualified installers in Ontario who could be hired to remedy the problems.

[14] On November 1, 2010, Quietside replied by way of a letter in which they indicated that they had received calls over the years from the ‘service company’ that had installed this particular system.[^5] Quietside reported that, based on the information provided by Christopher and the ‘service company’, as well as photographs provided by Christopher, the system had been installed incorrectly. In Quietside’s opinion, this incorrect installation was responsible for the ongoing problems being experienced by the Plaintiffs.

[15] At around this time, Christopher retained Kern Air Systems (“Kern”), a professional engineering firm, to undertake an assessment of the system. Kern prepared a report dated December 17, 2010 (the “Kern Report”), which included various recommendations to address the problems. These recommendations were accepted and implemented in late 2010 or early 2011. Christopher also retained Pinchin Environmental (“Pinchin”) to prepare two reports, one dated November 12, 2010 dealing with mould problems in the house (the “Pinchin Mould Report”), the second dated November 24, 2010 dealing with the HVAC system (the “Pinchin HVAC Report”). The Pinchin reports, as well as a subsequent letter provided by Pinchin in February 2012, found significant negative impacts on the house resulting from the improperly functioning HVAC system, including extensive mould, cupped hardwood flooring, movement of stairs, shifting columns, and cracks in walls and crown mouldings.

[16] Christopher obtained a number of independent estimates of the cost required to remediate the problems identified. These reports indicated that the total remediation cost would be approximately $291,000. On February 21, 2012, the Plaintiffs commenced this action against Woodbridge, in which they sought general damages of $100,000 for negligence, breach of contract, misrepresentation and unjust enrichment, and $291,312.20 in special damages.

[17] On December 12, 2016, Woodbridge brought this motion seeking an order dismissing the action on the basis that it is barred pursuant to s. 4 of the Limitations Act.

Summary Judgment

[18] As the Supreme Court of Canada concluded in Hryniak v. Mauldin (“Hryniak”), recent changes to Rule 20 of the Rules of Civil Procedure (“the Rules”) were intended to effect a culture shift in the approach to summary judgment in Ontario.[^6] Prior to Hryniak, there was a tendency to assume that summary judgment was an exception to the expected or ideal method of adjudication, namely, a full trial. But as Karakatsanis J. noted in Hryniak, an adjudicative process is illusory unless it is accessible. Few Canadians can afford the time and cost associated with bringing a civil proceeding to trial. Thus, a continued expectation that civil disputes will normally be resolved through a trial will mean that the civil justice system will be rendered ever more remote and inaccessible to ordinary Canadians.

[19] The fundamental teaching of Hryniak is that access to justice is a judicial imperative which must shape and inform how courts interpret all manner of procedural rules. In the context of summary judgment, this means that summary procedures must be interpreted broadly, so as to reduce the cost and time involved in civil litigation. Nor should it be assumed that an expansive approach to summary judgment will compromise the integrity of the fact finding process. To the contrary, parties on a summary judgment motion can file documentary and affidavit evidence, are provided an opportunity for cross-examination, and are expected to ‘put their best foot forward’. A motions judge will commonly be well equipped to make the findings of fact and law necessary to resolve the relevant issues in an entirely fair, just and appropriate manner, thereby sparing the parties as well as the justice system the time and expense that would have been required by a full trial.

[20] This motion illustrates the point precisely. Woodbridge argues that the Plaintiffs’ action was commenced outside of the applicable limitation period. The resolution of this issue requires a determination of the date when the Plaintiffs’ claim was discovered or discoverable. In my view, this issue can be fairly determined on the basis of the evidentiary record before the Court, particularly the Examination and the Affidavit. If the Defendant is correct in its assertion, the action is statute-barred and need proceed no further. Accordingly, requiring that the matter proceed to trial before making this determination would be both unnecessary and wasteful. Here, summary judgment is an effective and just method of adjudication.

Ontario’s Limitations Regime

[21] Ontario’s limitations regime was significantly reformed in 2002. One of the primary purposes underlying the new Limitations Act was to simplify and clarify the law of limitations in Ontario.

[22] Simplicity and clarity are essential to a properly functioning limitations scheme. Limitations statutes promote finality and certainty in legal affairs by ensuring that defendants are not exposed to indefinite liability for past acts. They also promote the reliability of evidence by foreclosing litigation over ‘stale’ claims, and promote diligence by requiring potential plaintiffs to pursue claims with reasonable dispatch.[^7]

[23] But the realization of these laudable goals would be frustrated if the limitations statute itself were drafted or applied in an ambiguous or nebulous manner. Such ambiguity would provoke litigation over the terms of the limitations regime itself, which would lengthen and complicate proceedings rather than simplify them. Moreover, it would be inconsistent with the access to justice imperative which informed the Supreme Court’s analysis in Hryniak.

[24] For this reason, the Legislature has set forth a straightforward limitations regime founded on the principle of discoverability. The limitations period runs from the date that a claim is discovered or discoverable, which involves knowledge of the following four basic elements:

(a) That an injury, loss or damage has occurred;

(b) That the injury loss or damage was caused by or contributed to by an act or omission;

(c) That the act or omission was that of the person against whom the claim is made; and

(d) That, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.[^8]

[25] The Limitations Act further specifies that it is not necessary for a claimant to have actual knowledge of these four elements for the limitation period to commence running. If a person with the abilities and in the circumstances of the claimant ought to have known of these matters the limitation period will commence, regardless of whether the claimant has actual knowledge of the elements of the claim.

[26] In general terms, Ontario courts have interpreted and applied the Limitations Act in a manner that furthers the legislative objectives of clarity and simplicity. Amongst the key interpretive principles that have been developed are the following:

(a) A person has discovered a claim when the person knows, or ought to know, enough facts on which to advance the claim;[^9]

(b) It is not necessary that the claimant have a comprehensive or complete understanding of how the harm or loss occurred, or even be certain that the defendant was the cause of the harm. It is sufficient if the claimant knows that loss or damage has occurred and knows enough to have prima facie grounds to infer that the acts or omissions were caused by the party or parties identified;[^10]

(c) The question of “how it happened” and whether the defendant is legally responsible will be revealed through the legal proceeding and need not be known in advance for limitations purposes;[^11] and

(d) A claimant must exercise due diligence in acquiring material facts upon which to base a claim. Limitation periods are not enacted to be ignored, and a “meritorious claim [will] sleep undisturbed alongside the meritless”.[^12]

[27] At the same time, the limitations regime should have sufficient flexibility so as to avoid prematurely provoking litigation purely to avoid a potential limitations issue, since this could undermine business and personal relationships and produce unnecessary litigation. Thus, the limitations period will not run against a plaintiff who is relying on the superior knowledge and expertise of a defendant, in circumstances where the latter is engaged in good faith efforts to right a wrong, since at that point a legal proceeding is not an “appropriate means” to remedy the wrong.[^13]

Analysis

[28] The Plaintiffs commenced the present action on February 21, 2012. This means that in order to overcome the limitations defence raised by Woodbridge, the Plaintiffs’ claim must not have been discovered or discoverable prior to February 21, 2010.

[29] It would appear that the Plaintiffs discovered their claim well prior to February of 2010. As noted above, the Plaintiffs began experiencing significant problems with the HVAC system almost immediately after it was installed in late 2006 or early 2007. Christopher reported that they were regularly without heat or hot water, the air conditioning system did not function properly, and they were unable to use the indoor pool. It was clear that these problems were caused by acts or omissions of Woodbridge, since they were responsible for the installation of the HVAC system.

[30] The Plaintiffs brought these concerns to the attention of Woodbridge in early 2007. Woodbridge advised that the problems were due to lack of maintenance and, on this basis, the parties entered into a two-year maintenance contract in May of 2007. During this period, the Plaintiffs could reasonably maintain that they were relying on the superior knowledge and expertise of Woodbridge, and on the fact that Woodbridge was engaged in good faith efforts to remedy the concerns with the HVAC system. Based on the reasoning in Presidential MSH Corp. v. Marr, Foster & Co. LLP (“Presidential MSH Corp.”), it is possible that litigation was not then an “appropriate means” to address the concerns.^14

[31] But two years of regular maintenance did not resolve the problems and the maintenance contract was not renewed upon its termination in May 2009. Sometime in the summer of 2009 Christopher told the senior Woodbridge representative that he no longer believed that the problems were due to maintenance and that Woodbridge had been “lying to me from day one…about maintenance”. Indeed, by the fall of 2009 the Plaintiffs were consulting with other HVAC service providers as to how to address the ongoing problems with the HVAC system which, by then, had been known to the Plaintiffs for close to three years. In short, it seems clear that by the fall of 2009 the Plaintiffs were no longer relying on good faith efforts of Woodbridge to remedy the concerns, which clearly distinguishes the present circumstances from those in Presidential MSH Corp.

[32] In response to the Woodbridge motion for summary judgment, the Plaintiffs filed a further report from Pinchin dated June 21, 2017 (the “Pinchin 2017 Report”). The Pinchin 2017 Report noted that the installation of HVAC equipment is performed by licensed professional tradespersons. Therefore, it is not reasonable to expect an ordinary homeowner without specialized training or knowledge to know that the Quietside boilers had been installed improperly. Pinchin further advised that it is reasonable to conclude that an ordinary person would not become aware of the improper HVAC installation unless he or she received official notice from a licensed professional or the manufacturer. Thus, in Pinchin’s opinion, it is entirely possible that Christopher only became aware of the improper installation of the boiler units and the HVAC system upon receipt of the letter from Quietside on November 1, 2010.

[33] The simple answer to the Pinchin 2017 Report is that it was not necessary for Christopher to have knowledge of the fact that the Quietside boilers were installed improperly in order for the limitation period to commence running. What was needed was knowledge, actual or imputed, that he had a “claim” against Woodbridge.

[34] The fact that Christopher had such knowledge well before November 2010 is confirmed by the other expert reports commissioned by the Plaintiffs. For example, the Pinchin Mould Report from November 2010 indicates that Christopher had reported that the house “has experienced mechanical problems since occupancy”; Christopher further advised Pinchin that “[d]ue to humid conditions over long periods of time, [the] house has shifted throughout”, resulting in cupped floors throughout the house, and separation of crown mouldings, kitchen millwork and columns. The Pinchin Mould Report from November 2010 states that “[t]he Client [Christopher] indicated that he had been experiencing heating failures over the last 5 years.” The Kern Report prepared in December 2010 indicates that “the boilers have not operated reliably since the start-up of the system [in 2006-07]”.

[35] It is crystal clear from these reports, as well as Christopher’s Examination, that the Plaintiffs knew long before February 2010 that the HVAC system was not functioning properly. Woodbridge was clearly responsible since they had installed the system. Moreover, by late 2009, Christopher was no longer looking to Woodbridge to remedy the situation; by this time there was no question but that a legal proceeding was an ‘appropriate means’ to remedy the loss or damage. These are the elements sufficient to cause the limitation period to commence running. Although it is entirely possible, as stated by the Pinchin 2017 Report, that the Plaintiffs did not know why the system was not functioning properly until they received the November 1, 2010 letter from Quietside, such knowledge is not required for limitations purposes. As Belobaba J. noted in Beaton, the question of “how it happened’ need not be known in advance for a limitation period to run.

[36] In any event, even if it were assumed that knowledge of the improper installation of the Quietside boilers was a necessary element of discovery of the claim, such knowledge was discoverable by the Plaintiffs prior to February 2010. Christopher had been advised by other HVAC service providers with whom he had consulted in late 2009 that the boilers had been installed improperly. It would have been a straightforward matter for Christopher to have contacted the manufacturer at that time, at which point he would have been advised of the improper installation by Quietside.

[37] The Plaintiffs further argued that Woodbridge had been told by Quietside that the HVAC system had been installed improperly and had chosen to conceal such information.[^15] Even assuming this to be the case, it would not postpone the running of the limitations period. All that is required is that the Plaintiffs have discovered their claim and, as noted above, it is not necessary that they know why or how the claim arose. Thus even if Woodbridge had withheld information about the underlying cause of the claim, such withholding would not postpone the commencement of the limitation period.

[38] The facts here bear some considerable resemblance to those considered by R.D. Gordon R.S.J. in Steinberg v. Toews Engineering Inc., (“Steinberg”).[^16] In Steinberg, the defendant Toews had installed HVAC systems in a number of homes being constructed by the plaintiff Steinberg. The plaintiff and his family members had moved into their homes by the end of 2009 and noticed almost immediately that the HVAC systems were not operating properly. The plaintiff brought his concerns to the attention of the defendant, who provided assurances that the problems did not arise from improper installation. The plaintiff commissioned an expert report but did not commence proceedings against the defendant until June of 2013. Gordon R.S.J. found the plaintiff to be honourable and well-intentioned, and that he may well have suffered a wrong. However he had failed to pursue his claim within the applicable limitation period and therefore the claim was dismissed.

[39] So too, here. The record before me indicates that there were serious and sustained problems with the HVAC system from the time it was installed. The Plaintiffs were well aware of these problems from the time they occupied the house. It is evident that the Plaintiffs have a claim against Woodbridge. The difficulty is that they failed to commence proceedings seeking redress for that claim within two years of having discovered it. Therefore the Plaintiffs’ action against Woodbridge is dismissed.

[40] With respect to costs, I have reviewed the costs outlines filed by the parties and considered the factors enumerated under Rule 57, including the result achieved and the time spent. I have also considered the principle set forth by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario, that the overall objective in fixing costs is to fix an amount that is fair and reasonable for an unsuccessful party to pay in the particular circumstances.[^17] Taking these various factors into account, in my view an appropriate award of costs on a partial indemnity basis, for both the motion and the defence of the action, is $16,000 all-inclusive, payable by the Plaintiffs to Woodbridge within 30 days.

P. J. Monahan J.

Released: October 2, 2017

[^1]: Limitations Act, 2002, S.O. 2002, c. 24, Schedule B [Limitations Act].

[^2]: Examination at Questions 293, 310 and 318.

[^3]: In his Affidavit, Christopher states that he had a further meeting with the Woodbridge representatives in the fall of 2010, although there is no reference to service or other work being performed by Woodbridge at that time. In contrast, Christopher seemed to suggest during his Examination (at Q. 353) that his last meeting with Woodbridge representatives occurred in the fall of 2009. Despite this difference in the two accounts, I am prepared to assume for purposes of this motion that a meeting between Christopher and Woodbridge did occur in the fall of 2010.

[^4]: See note 3, above.

[^5]: Although Quietside did not identify the ‘service company’ with whom they had spoken, I am prepared to assume that the company in question is Woodbridge.

[^6]: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87; Rules of Civil Procedure R.R.O. 1990, Reg. 194.

[^7]: Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44, 410 D.L.R. (4th) 747, at paras. 19-23; Dilollo, Re, 2013 ONCA 550, 368 D.L.R. (4th) 1, at para. 61. See generally Graeme Mew, The Law of Limitations, 3rd ed., (Toronto: LexisNexis, 2016).

[^8]: Limitations Act, supra note 1 at ss. 5(1)(a)(i) to (iv).

[^9]: Lawless v. Anderson, 2011 ONCA 102, [2011] O.J. No. 519, at paras. 22-24.

[^10]: Kowal v. Shyiak, 2012 ONCA 512, [2012] O.J. No. 3420, at para. 18.

[^11]: Beaton v. Scotia iTrade and Scotia Capital, 2012 ONSC 7063, [2012] O.J. No. 6166, at para. 13.

[^12]: Sutton v. Balinsky, 2015 ONSC 3081, [2015] O.J. No. 3935, at para. 113.

[^13]: Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325, 135 O.R. (3d) 321 (“Presidential MSH Corp”).

[^15]: See the November 1, 2010 letter from Quietside, reporting that they had received calls over the years from the service company that had installed the system (presumably Woodbridge).

[^16]: Steinberg v. Toews Engineering Inc., 2017 ONSC 4002, 281 A.C.W.S. (3d) 859.

[^17]: Boucher v. Public Accountants Council for the Province of Ontario, (2004) 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291, (C.A.).