CITATION: D & J Manufacturing Co. Ltd. v. Thornwood Fine Homes Inc., 2017 ONSC 5994
COURT FILE NO.: CV-14-4656-00
DATE: 2017 10 26
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
D & J MANUFACTURING CO. LTD.
Paul Feldman, for the Plaintiff
Plaintiff
- and -
THORNWOOD FINE HOMES INC. and DAVID GOWANS
Geoffrey Daley and George Limberis, for the Defendants
Defendants
HEARD: September 20th, 2017
REASONS FOR JUDGMENT
LEMAY J
[1] This is a motion for summary judgment brought by the Plaintiff, D&J Manufacturing Company against the Defendants. The Plaintiff is a company that produces and installs custom millwork, such as kitchen cabinets and other cabinetry. The Defendant, Thornwood Fine Homes Inc., is a company that, among other things, renovates larger and luxury homes for resale. The Defendant David Gowans is the President and directing mind of Thornwood.
[2] D & J contracted with Thornwood to provide custom millwork for two homes in Burlington. The parties have a dispute over whether the work was actually performed, whether there were deficiencies in the work, and whether the Defendants owe money to D & J.
[3] D & J seeks summary judgment for the amount of $67,788.90, less an amount of approximately $3,000.00 for alleged deficiencies in the work that D & J is prepared to concede as a matter of efficiency. D & J also claims that the Defendants are subject to the statutory trust provisions of the Construction Lien Act and that the Defendants are liable for breaching those provisions. The Defendants resist this summary judgment motion, and claim that the issues in the case require a trial to resolve.
[4] For the reasons that follow, I find that summary judgment is the appropriate manner in which to resolve this case. However, I am not prepared to grant the full summary judgment that the Plaintiff seeks. Instead, as discussed below, a portion of the Plaintiff’s claim is dismissed, a portion of that claim is allowed, and further steps must be completed by the parties. I retain jurisdiction to address those steps.
[5] In the sections that follow, I will set out the facts and the positions of the parties. I will then address the following issues:
a) Is this an appropriate case for summary judgment?
b) If so, then what were the terms of the parties agreement, what work was completed, and what damages are owing?
c) Were there funds left over from the sale of the houses? If so, is there a trust under the Construction Lien Act?
The Facts
[6] The Plaintiff tendered evidence from Mimi Vo-Quan, who is an estimator for the Plaintiff. This evidence was in the form of an affidavit, and of a cross-examination of Ms. Vo-Quan.
[7] The Defendants relied on an Affidavit and the cross-examination of Mr. Gowans, as well as an Affidavit from the law clerk of Defendants’ counsel. That Affidavit included the productions from the Plaintiff’s Affidavit of Documents, as well as documentation from the sales of the two houses in question.
[8] As will be seen below, there are very few facts in dispute between the parties. Instead, this is a dispute over how the facts should be interpreted.
a) The Properties and Contracts In Question
[9] The parties contracted with respect to two properties. One was at 4507 Lakeshore Drive in Burlington, and the other was at 4338 Lakeshore Drive. There is some documentation that suggests that the second house was at 4348, but there is no disagreement between the parties that the second property is 4338 Lakeshore Drive.
[10] For 4338 Lakeshore, the contract was for seven items, including kitchen cabinetry, vanities and a make-up desk. The total contract was for $47,980.00 plus HST for a total of $54,217.40. The contract sets out the following specific work that is to be performed:
ITEM 1/ Kitchen as per floor plan received. (Veneer stained, Interior to e ¾” standard melamine) ($29,900.00 + HST)
No panels required for appliances. Assuming appliances will be stainless steel. Includes for (2) sliding basket shelves for bottles / spices. Richelieu no. 517166100
1-Tip out tray Richelieu no. 965721150
2-double cutlery trays Richelieu no. 40-150 maple plastic.
1- Recycle – Garbage bin Richelieu no. 4614100
ITEM 2/ 2-full height bookcases approx. 24”D x 60”W x 120”HT. (Veneer, stained) ($6,780.00+HST)
ITEM 3/ 1-Powder room vanity (no top included) Based on high range laminate. ($900.00+HST)
Approx. 24”D x 36”W x 32-34”HT.
ITEM 4 / 1- vanity (no top included) Based on high range laminate $2,000.00+HST)
Approx. 24”D x 48”W x 32-34”HT.
ITEM 5 / 1-Master Ensuite vanity (no top included) Based on high range laminate ($4,050.00+HST)
Approx. 24”D x 9’-0”W x 24-30”HT.
ITEM 6/ 1- Make-Up Desk (no top included) Based on high range laminate ($1,580.00+HST)
Approx. 24”D x 60”W x 24-30”HT.
ITEM 7/ 1-Shared Washroom vanity (no top included) Based on high range laminate ($4,050.00HST)
Approx. 24”D x 60”W x 24-30”HT.
[11] There is a similar form for the house at 4507 Lakeshore. It is for a lower cabinet, upper open shelving unit and some full height shelving units. The price was $15,550 plus HST.
[12] When the submissions of the parties are reviewed, there appears to be a dispute over the amounts owing under the contract. The Plaintiff claims that the total amount is approximately $71,000.00 inclusive of HST. The Defendants dispute that anything is owing at all, but also take issue with the Plaintiff’s calculations. The Defendants argue that the maximum value of the Plaintiff’s total claim is $65,000.00.
[13] However, when all of the materials that were filed with the Court on this motion are reviewed, it is clear that there are only a maximum of four documents that govern the price of the contract. The first two are the quotes set out above. When I do the mathematical calculations, it is apparent that the two quotations produce a total price of $71,788.90. I see no other documentation or other evidence that would support a different price.
[14] It is also clear that the Defendants paid a deposit for this work in the sum of $4,000.00. Specifically, a cheque from the Defendants to the Plaintiff was filed as part of Mr. Gowans’ evidence. As a result, the total remaining under the contract is $67,788.90. In reviewing the transcripts, it is clear that there was still some confusion between the parties over what was to be paid. However, it is also clear that this was confusion, rather than a real dispute. I find that the total value of the contract is $71,788.90 and that $4,000.00 had been paid as an installment.
[15] The other document that may govern the contract between the parties is the irrevocable direction that was provided by Mr. Gowans on behalf of Thornwood Fine Homes. I now turn to that document.
b) The Irrevocable Direction
[16] D & J argues that Mr. Gowans made repeated promises to pay the monies that were owing to D & J. I was provided with e-mails between Mr. Tony Medeiros, the principal of D & J and Mr. Gowans indicating that they met on a number of occasions. These e-mails suggest that payment was an issue as well.
[17] However, the only specific promise about payment that was put into evidence before me was an irrevocable direction regarding funds, along with an accompanying e-mail. Those documents state as follows:
DIRECTION
TO: MILLIGAN GRESKO LIMBERIS
Barristers & Solicitors
FROM: THORNWOOD FINE HOMES INC.
Re: 4338 Lakeshore Rd
THE UNDERSIGNED HEREBY AUTHORIZES AND DIRECTS YOU to pay to D & J Manufacturing (“DJ”), out of the sale of the premises municipally known as 4338 Lakeshore Rd (the “Property”), to pay $65,000.00 to DJ in full satisfaction of all work completed by said DJ to the Property.
THIS shall be your good and sufficient authority for so doing and shall be irrevocable by the undersigned.
Dated this 3rd day of July 2013
To Tony Medeiros from David Gowans
Dated July 3rd, 2013
I said that I would get this to you to give you as much reassurance as I could that you would get paid.
As I stated the house is for sale and it will be marketed as aggressively as I can which would include a price reduction or whatever it takes to get it sold.
There is ample funds left over to cover this amount, however as I said I will try also to make periodic payments to retire some of the balance over time.
I [sic] would help to market the house if at least the main level was completed or at least if the kitchen was finished, the hardware, kick plates and valances are here.
At any rate, I promised this and here it is.
[18] D & J argues that these documents amount to an irrevocable promise to pay at least $65,000.00. The Defendants argue that these documents only amount to a promise to pay if the work was completed. The Defendants argue that, since there were significant deficiencies, the promise contained in these documents is not triggered.
[19] In the course of her cross-examination, Ms. Vo-Quan was questioned about this irrevocable direction. She provided two different answers about what D & J did when they received the July 3rd, 2013 e-mail reproduced above. First, Ms. Vo-Quan stated that they tried to call to discuss a schedule to install the kick plates and valance. Then, she went on to say that D & J never objected to, or agreed, to the proposal set out in this e-mail.
[20] I was not directed to any follow-up communications between the parties about this irrevocable direction.
[21] In assessing this evidence, I note that the Plaintiff’s principal, Mr. Tony Medeiros, did not provide an Affidavit in this case. As a result, I am left to determine the meaning of these documents, and the contractual relationship more generally, without his evidence. I also note, however, that a party seeking (or resisting) summary judgment must put its best foot forward. Therefore, I conclude that Mr. Medeiros’s evidence would not have been helpful to the Plaintiff on this point.
c) The Deficiencies
[22] In his Affidavit, Mr. Gowans sets out a number of deficiencies in the work that was completed. First, he listed the following deficiencies to which he provided a value:
a. Purchase two vanities for the third floor of the Property, at the cost of $1,258.00;
b. Purchase a powder room sink from multi-plumbing fixtures in Oakville at the cost of $760.00;
c. Purchase fireplace shelves at the cost of $200.00;
d. Install powder room pedestal sink, which is a modification from vanity to pedestal at a cost of $400.00;
e. Install third floor vanities at a cost of $400.00; and
f. Install fireplace shelves at a cost of $300.00.
[23] Counsel for the Plaintiff was prepared to concede in argument that these deficiencies were, in fact, deficiencies. Part of the reason for this concession was the fact that the amounts claimed were not large. As a result, any award in favour of the Plaintiff will be reduced to take these deficiencies into account.
[24] This brings me to the items that Mr. Gowans states were not delivered. Mr. Gowans states that items 2 to 7 in the list of deliverables for 4338 Lakeshore Road were not actually delivered to the property or installed. In her cross-examination, Ms. Vo-Quan agreed that these items were never delivered. She stated that the contract required cash on delivery and, when the first invoice was not paid, D & J held the remainder of the materials in the shop and never delivered them.
e) The Sale of the Properties
[25] The two properties were sold by the Defendants. 4507 Lakeshore Road was sold on April 30th, 2013, and 4338 Lakeshore Road was sold on May 31st, 2016.
[26] The Plaintiff argues that these sales created a trust, and that both Thornwood and Mr. Gowans have obligations as trustees to pay the Plaintiff for the full value of the work performed. There are both factual and legal issues to address on this trust below.
Issue #1- Is This an Appropriate Case for Summary Judgment?
[27] Yes.
[28] The power to grant summary judgment flows from Rule 20 of the Rules of Civil Procedure. In Hryniak v. Mauldin (2014 SCC 7 at paragraphs 49-51), Karakatsanis J. outlined the process for deciding whether to grant summary judgment as follows:
49 There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (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.
50 These principles are interconnected and all speak to whether summary judgment will provide [page107] a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.
51 Often, concerns about credibility or clarification of the evidence can be addressed by calling oral evidence on the motion itself. However, there may be cases where, given the nature of the issues and the evidence required, the judge cannot make the necessary findings of fact, or apply the legal principles to reach a just and fair determination.
[29] These powers are designed to ensure that judges can resolve disputes in a proportionate, fair and effective way. As set out by the Court of Appeal in Healing Hands Massage Therapy v. Simon (2016 ONCA 966), there is a two step process that judges must adopt in applying the principles of Hryniak. First, the judge must ask whether the matter can be resolved in a fair and just manner on a summary judgment motion. Second, if there is a genuine issue for trial, then the second step is to consider whether that need for a trial can be avoided by using the powers under Rule 20.
[30] In order to understand my conclusions about this matter, some procedural history is in order. This action was originally started in October of 2014 by the Plaintiffs, and defended by the Defendants in November of 2014. This summary judgment motion was originally brought by the Plaintiff in early 2016, but was then returnable on January 19th, 2017 as a regular motion.
[31] On that day, McSweeney J. determined that the motion would require 1.5 hours to argue, and that it was a long motion. It was scheduled before me on September 20th, 2017, and argument did take more than an hour. In between the adjournment in January of 2017 and the appearance before me on September 20th, 2017, the parties conducted cross-examinations on the various Affidavits.
[32] It is clear from this summary that the litigation time in this case is escalating rapidly. I am of the view that, if this matter were allowed to proceed to trial, the time consumed by the lawyers in litigation would be substantially more than the value of the claim. Therefore, the most proportionate result in this case is summary judgment. Further, if the issues cannot be completely determined on the record before me, then this is the type of case that should be resolved by a directed mini-trial.
[33] I also note that, for the most part, the facts are not in dispute in this case. The contracts were signed, the irrevocable direction was signed, there were some deficiencies, and significant portions of the work was performed by D & J, but never delivered to the house or installed, so that the Defendants never had the benefit of the work that the Plaintiff seeks payment for while the Plaintiff expended some time and effort on this work. All of these are issues that appear to me to be more legal issues than factual issues.
[34] Given that these facts are not in dispute, it is also clear to me that the Defendant owes the Plaintiff for the work performed at 4507 Lakeshore as well as for the first item of work performed at 4338 Lakeshore. The amounts claimed by the Plaintiff for this work are $67,788.90 when the $4000.00 deposit is factored in.
[35] This the type and size of claim that should be resolved by a summary judgment motion and/or a mini trial, rather than requiring the parties to proceed to a full trial.
[36] I now turn to the question of whether I can resolve the remaining issues in this case on the materials filed, or whether a “mini-trial” or some other proceeding is required to resolve them.
Issue #2- What Are the Terms of the Parties Agreement?
a) The Effect of the Irrevocable Direction
[37] The Plaintiff’s position is that the irrevocable direction creates an obligation on the Defendant, Thornwood to pay the monies irrespective of any other issue. Given that Mr. Gowans is the directing mind of Thornwood, the trust provisions under the Construction Lien Act attach responsibility to him for this debt as well.
[38] I am of the view that the “irrevocable direction” has no effect on this case. I reach this conclusion for a number of reasons. First, Ms. Vo-Quan testified that there was no response to either the irrevocable direction or the accompanying e-mail from D & J. As a result, it is not clear that there was any contract formed at all as a result of this document being signed by Mr. Gowans.
[39] Second, when the accompanying e-mail is read, it is clear that the goal of the irrevocable direction was to have D & J finish the work that they had agreed to provide. In particular, Mr. Gowans wanted the kitchen installed so that the house could be sold for a higher value. The irrevocable direction was not just a promise to pay. It was a promise to pay that was tied to making sure that the contract was more fully performed.
[40] This brings me to the Plaintiff’s argument on this point. In essence, counsel argues that the Plaintiff should be able to collect on the irrevocable direction even though they did not perform all of the work under the contract. He focused his argument on the fact that the direction was irrevocable.
[41] I reject this argument for three reasons. First, the direction is a form of contract, or promise to pay. If the Plaintiff as the party that receives this promise to pay does not accept it, then it is difficult to see how it becomes a contract, or a binding promise that the Plaintiff can subsequently enforce.
[42] Second, the Plaintiff’s position on this direction was inconsistent. The direction states that the Plaintiff will be paid the funds owing out of the closing proceeds from 4507 Lakeshore. However, the Plaintiff was also taking the position that it had a “cash on delivery” contract, and would not complete any work until it was paid, regardless of whether 4507 had been sold or not. It cannot be both. Either the parties agreed that the contract would be performed, and the monies paid out or they agreed that it was “cash on delivery”.
[43] Finally, allowing the Plaintiff to collect payment for work that was not delivered would be allowing the Plaintiff to obtain the benefit of the contract without performing its obligations under the contract. Such an outcome would require clear and unequivocal language, which is not present in this case.
[44] In the end, I find that the Plaintiff cannot insist on full payment for the contract on the basis of the irrevocable direction alone.
b) The Failure to Deliver the Remaining Items
[45] The evidence before me establishes that the Plaintiff delivered the entirety of the items to 4507 Lakeshore, as well as the first item (the kitchen) to 4338 Lakeshore. As a result, and subject to my comments on the Defendants’ mitigation claim below, the Plaintiff is entitled to judgment against the Defendant, Thornwood, in the amount of $51,302.00 less the $4,000.00 deposit already paid, for a sum of $47,302.00.
[46] However, if the Plaintiff is going to succeed on the entirety of its claim for damages, then it must prove that it has actually suffered damages.
[47] In argument, I raised this issue with counsel for the Plaintiff. He advised me that the evidence before me established that his clients had manufactured the items. On this basis, the Plaintiffs are claiming the entirety of the remaining amounts.
[48] Presumably, the Plaintiff was planning to earn a profit on the contract. As a result, the Court cannot accept that the Plaintiff has proven its damages for the production of the remaining items for the house at 4338 Lakeshore. There is no evidence before me of how much the materials and labour to complete these items cost.
[49] This could be remedied by providing the Plaintiff with an opportunity to produce such information. However, I decline to do so for two reasons. First, the Plaintiff has an obligation to put its best foot forward on a summary judgment motion, and failed to do so. Indeed, both parties have an obligation to “put its best foot forward”, and the motions judge is entitled to presume that there will not be any additional evidence at trial (see Ludwig v. BDO Canada Ltd 2017 ONCA 292 at paragraph 54).
[50] Second, the Plaintiff’s representative (Ms. Vo-Quan) was specifically asked to produce this information at her cross-examination and refused to do so. The cross examination transcript reads as follows:
MS. MOUNIR: We can put it on the record that in paragraphs 14(f), (g) and (h), we specifically and clearly say they failed to purchase and install the materials, and we ask for specific invoices. Because your client maintains, verbally, today, that the work was, in fact, produced at the shop. I’m asking for evidence based on what she said to me. You can maintain your refusal. That’s on the record, Counsel. We’re not going to argue about it
MR. FELDMAN: That’s her evidence.
MS. MOUNIR: We don’t need to argue about hat.
It’s on the record.
MR. FELDMAN: You have absolutely no evidence to the contrary ---
MS. MOUNIR: It’s for the judge to decide. I specifically – we maintain that none of this work was even done, to begin with. They failed to purchase it, install it, no specific invoices were given.
MR. FELDMAN: What’s the undertaking that you’re asking for?
MS. MOUNIR: Specific invoices with respect to materials that were purchased and installed with respect to this invoice. All the invoices that were provided.
MR. FELDMAN: Sorry?
MS. MOUNIR: So I said this invoice ---
MR. FELDMAN: Specific invoices for materials purchased and installed ….
MS. MOUNIR: With respect to this agreement. Any work that was to be undertaken in this agreement.
So items, 1, 2, 3, ---
MR. FELDMAN: that’s a refusal.
MS. MOUNIR: --- 4, 5, 6, 7. And that’s fine.
MR. FELDMAN: There’s absolutely no basis for that question.
MS. MOUNIR: Okay. That’s your position and you can maintain it.
[51] I am of the view that this was a proper question, the evidence was relevant, and the Plaintiff has failed to produce this evidence. Having failed to produce this evidence, the Plaintiff cannot now claim damages. The remainder of the claim, being $20,486.90, is dismissed.
[52] In addition, I note that the remaining claim is for just more than $20,000.00. If I were to permit the parties to obtain this additional evidence, it is quite possible that they would spend this amount obtaining it. It is not an efficient use of either the parties’ resources or of Court resources.
c) The Set-Off Claims
[53] The Defendants are advancing two claims, as I understand it. First, there is a claim that the value of the property at 4338 Lakeshore was negatively affected by the Plaintiff’s failure to perform the work. Second, the Defendants are claiming a set-off for the value of the work that they performed to fix the deficiencies in the Plaintiff’s work.
[54] On the loss of value claim, I note that there is no evidence on which I can conclude that there has been any loss in the value of the home. No expert report was filed, although I was advised that one would be filed for trial. This is not sufficient. As noted at paragraph 49, above, the Defendants also have an obligation to put their best foot forward in a summary judgment motion. As a result, if they were claiming damages on account of the failure of the Plaintiff to complete the work, they were obligated to submit that evidence. In the absence of any evidence, that claim is dismissed.
[55] On the set-off claim, I note that the Plaintiff has conceded the claim for $3,000.00 for deficiencies where the costs were actually enumerated. The Defendants are entitled to a deduction for this amount from the amount I have calculated as damages above, providing an amount of $43,302.00 as damages owing by the Defendant Thornwood to the Plaintiff.
[56] However, the Defendants claim additional amounts in set-off. Those amounts were not particularized, either in the Defendants’ claim or in the Defendants’ materials on this motion. Further, the Defendants did not tender any evidence to support any additional claims other than an assertion in Mr. Gowans’ affidavit that repairs were necessary.
[57] For the same reasons I have set out above, these claims must also fail.
d) Concluding Comments
[58] At this point, the Defendant Thornwood owes the Plaintiff $44,302.00. The question of whether the Defendant Gowans owes the Plaintiff any monies will be resolved when the trust claim is resolved. I will address that issue below. The remainder of the Plaintiff’s claim is dismissed as against both Defendants.
[59] I have resolved both the Plaintiff’s and Defendants’ claims without affording the opportunity for either party to provide further evidence, even though it is quite possible that such evidence exists. I have set out my reasons for doing so above. However, it is also worth noting the following points:
a) This is a motion for summary judgment. As noted at paragraph 49 above, both parties are expected to put their best foot forward. The party seeking summary judgment is expected to set out all the evidence on which it can advance its claim. The party resisting judgment is also obligated to set out all the evidence on which it can resist the claim. As a result, the Court should expect that it can decide the motion on the record it has.
b) Permitting the parties to relitigate the case, and fill in the holes in their evidence creates three problems. First, it results in significantly more legal costs for both sides. Proportionality is one of the principles that governs the summary judgment regime since Hryniak, and permitting another round of affidavits, expert reports, cross-examinations and arguments on a case of this nature is not proportional. Second, it is not my role to tell the parties how to present their case. The gaps in the evidence I have outlined above should have been obvious to the parties, and I would be usurping the role of counsel were I to have pointed them out before making a final decision. Finally, permitting this matter to consume more court time would not be an efficient or appropriate use of Court resources.
[60] In the circumstances, the evidence before me entitles the Plaintiff to partial summary judgment, and the dismissal of its remaining claim. The Defendants’ claim for set-off for the reduction in the value of the house is dismissed for lack of evidence.
e) Interest
[61] The Plaintiff argues that it is entitled to 2% interest per month on its claim because the invoices rendered by the Plaintiff set that amount of interest out. There is no other evidence to support this claim.
[62] In my view, this claim has three flaws, each of which would be fatal to the claim. First, the original work specification sheets do not set out a rate of interest. As a result, the original documents that are the basis for the contract do not contain any specification of an interest rate on any late payments. Two percent per month is a very high interest rate. I would expect the parties to have turned their minds to this provision before agreeing on it. I do not see any evidence, other than the invoices which I will address below, that they have done so. It is up to the Plaintiff to prove its claim for interest and it has not done so.
[63] Second, the invoices themselves are misleading in at least some of their contents. The invoices, when taken together, clearly state that all of the items were delivered to 4338 Lakeshore. However, the evidence of all parties, including Ms. Vo-Quan, is that nothing beyond the kitchen was delivered to 4338 Lakeshore. I find that these documents were prepared to support D & J’s position in this litigation, and do not reflect what actually happened in at least one material respect. As a result, I cannot rely on these documents to establish that the parties agreed on a rate of interest.
[64] Finally, I do not have evidence from Mr. Medeiros, the principal of D & J about any aspect of these contracts. If interest had been discussed between the parties, I would expect that Mr. Medeiros would have helpful evidence on that point, among others. That evidence was not provided and, as a result, I am of the view that Mr. Medeiros’s evidence would not have assisted D & J on this point.
[65] The parties are, however, entitled to make legal submissions on whether I ought to exercise my discretion under section 130 of the Courts of Justice Act, and fix an interest rate in this case that is either higher or lower than the rate that would normally apply. Those submissions will be made at the same time that the parties address the issue of trust, which I now turn to.
Issue #3- Is There a Trust Claim on Either Property?
[66] The Plaintiff seeks to assert that a trust was created under various sections of the Construction Lien Act when the properties were sold. In reviewing the materials, it is clear that there is a factual question as to whether, after the sale of either property, there were any funds over which a trust was created. The facts on this point are not sufficiently clear from the materials for me to make a decision one way or the other.
[67] As a result, I am directing that this issue be resolved by way of a one-day mini trial before me, at a date to be obtained from the trial coordinator. Given my schedule, it is unlikely this date will be before next April. The parties are to jointly contact the trial coordinator with dates when they are available starting March 15th, 2018 within seven (7) days of the release of this decision.
[68] In addition, in advance of the one day mini-trial, the parties are to complete the following:
a) Within sixty (60) days of today’s date, the Plaintiff is to prepare a further Affidavit setting out all evidence, and attaching all non-privileged documents in its possession that would support its claim for a trust.
b) Within sixty (60) days after receiving the Affidavit in paragraph (a), the Defendants are to prepare an Affidavit setting out all evidence, and attaching all non-privileged documents in their possession that would support their claim that no trust exists.
c) The Plaintiff will have fifteen (15) days to reply to the Affidavit in paragraph (b). Such affidavit is limited to reply only.
d) The Affidavits will be treated as the examinations in chief for each of the parties. Cross-examination will then be permitted for no more than forty (40) minutes.
e) The parties will also provide updated factums that outline the legal basis for their positions on the trust claims in light of the findings in the remainder of this judgment. These are to be completed, served and filed at least fourteen (14) days before the motion.
Conclusion
[69] As I have noted in my discussion on interest, above, the parties are welcome to make submissions on the question of whether I should exercise my discretion to award a level of interest other than the prejudgment interest rate as set out in the Courts of Justice Act. Those submissions are to be based on the record as provided to me.
[70] Given my findings on this matter, the other issue that remains to be determined is the trust claim. In order to resolve that claim, I am directing as follows:
a) Within sixty (60) days of today’s date, the Plaintiff is to prepare a further Affidavit setting out all evidence, and attaching all non-privileged documents in its possession that would support its claim for a trust.
b) Within sixty (60) days after receiving the Affidavit in paragraph (a), the Defendants are to prepare an Affidavit setting out all evidence, and attaching all non-privileged documents in their possession that would support their claim that no trust exists.
c) The Plaintiff will have fifteen (15) days to reply to the Affidavit in paragraph (b). Such affidavit is limited to reply only.
d) The Affidavits will be treated as the examinations in chief for each of the parties. Cross-examination will then be permitted for no more than forty (40) minutes.
e) The parties will also provide updated factums that outline the legal basis for their positions on the trust claims in light of the findings in the remainder of this judgment. These are to be completed, served and filed at least fourteen (14) days before the motion.
[71] In terms of the remainder of the claims, I am ordering as follows:
a) The Plaintiff’s claim in the amount of $43,302.00 is allowed, at least against the Defendant Thornwood. The claim against the Defendant Gowans is based on the trust claim, which I cannot yet resolve.
b) The Plaintiff is entitled to interest at the pre-judgment interest rate. I have invited submissions on this issue, which are to be made at the mini-trial on the trust issue.
[72] In terms of costs, I will resolve costs once the trust claim is resolved.
LEMAY J
Released: October 26, 2017
CITATION: D & J Manufacturing Co. Ltd. v. Thornwood Fine Homes Inc., 2017 ONSC 5994
COURT FILE NO.: CV-14-4656-00
DATE: 2017 10 26
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
D & J MANUFACTURING CO. LTD.
Plaintiff
- and -
THORNWOOD FINE HOMES INC. and DAVID GOWANS
Defendants
REASONS FOR JUDGMENT
LEMAY J
Released: October 26, 2017