COURT FILE NO.: CV-11-430661
DATE: 20180313
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CLEARWAY CONSTRUCTION INC.
Plaintiff
– and –
THE CITY OF TORONTO
Defendant
Marco Drudi, for the Plaintiff
Robert J. Baldwin and Kitto Lau, for the Defendant
HEARD: January 15, 2018
REASONS FOR DECISION
SANFILIPPO J.
A. Overview
[1] Clearway Construction Inc. (“Clearway”) brings this action for additional payments to which it asserts entitlement arising from a project undertaken for the City of Toronto (the “City”) involving the construction of storm and combined sewers. The City denies any liability to Clearway and seeks summary judgment dismissing this action on three grounds:
a) The claims advanced in this action were not brought against the City in accordance with the construction contract between the parties;
b) The claims advanced in this action were discharged by a release granted by Clearway to the City;
c) This action is limitation barred as having been initiated beyond the two year limitation period provided for by the Limitations Act, 2002, S.O. 2002, c. 24.
[2] The record in this summary motion did not include several sources of material evidence. The construction contract was not tendered in evidence. Certain material provisions of the construction contract were to be read in isolation from the remainder of the contract. The City provided affidavit evidence of a City manager based entirely on his review of materials generated by others but with no direct evidence of the matters in issue. The City tendered no evidence of the City representatives who had direct involvement in the project, including the contract administrator. The respondent, Clearway, tendered the affidavit evidence of Anthony Di Battista, a principal of Clearway, who was not involved in the day-to-day activities of the project and had no dealings with the City on several of the pertinent matters in issue. No evidence was presented from the Clearway representatives who had direct involvement in the project.
[3] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that if a court is satisfied that there is no genuine issue requiring a trial with respect to a claim, the court shall grant summary judgment. In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court held, at para. 66, that there is no genuine issue for trial in the following circumstances:
There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a).
[4] The burden on a party seeking summary judgment is to “move with supporting affidavit material or other evidence to support its motion”: Cuthbert v. TD Canada Trust, 2010 ONSC 830, 88 C.P.C. (6th) 359, at para. 12. A foundational element of a summary judgment motion is that each side must “put their best foot forward” with respect to the existence or non-existence of material issues to be tried: Hryniak, at paras. 57, 66; Cuthbert, at para. 12; Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372, at para. 11, citing Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 (Ont. Gen. Div.), at p. 434; Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 27, aff’d 2014 ONCA 878, leave to appeal dismissed, [2015] S.C.C.A. No. 97.
[5] The burden of persuading the court, through evidence, that there is no genuine issue requiring a trial rests with the moving party. This burden shifts to the responding party only after the moving party has discharged its evidentiary burden of establishing that there is no genuine issue requiring trial: Sanzone v. Schechter, 2016 ONCA 566, 402 D.L.R. (4th) 135, at para. 30; Connerty v. Coles, 2012 ONSC 5218, at para. 9.
[6] On a summary judgment motion, a motion judge may grant judgment in favour of the responding party, even in the absence of a cross-motion for such relief: Meridian Credit Union Limited v. Baig, 2016 ONCA 150, 394 D.L.R. (4th) 601, at para. 17, citing King Lofts Toronto I Ltd. v. Emmons, 2014 ONCA 215, 40 R.P.R. (5th), at paras. 14-15, and Kassburg v. Sun Life Assurance Co. of Canada, 2014 ONCA 922, 124 O.R. (3d) 171, at paras. 50-52. However, there must be an evidentiary record on which such judgment can be granted for either moving party or respondent.
[7] This summary judgment motion does not provide the evidence required to fairly and justly adjudicate the genuine issues that were identified regarding each of the three grounds for summary dismissal presented by the City. The City’s motion is thereby dismissed.
B. Background
Clearway’s Alleged Reliance on the Geotechnical Report
[8] On or about January 5, 2009, Clearway entered into a contract with the City, bearing contract number 08TE-24WP, referred to as the “Rosemount Heights Project”, involving the construction of sewers in Toronto, requiring installation under Bayview Avenue (the “Contract”). The court was not provided with the Contract but only extracts of discrete provisions that pertained to certain of the issues raised.
[9] The pleadings were not filed as part of the record on this summary judgment motion, but obtained on request by the court. Clearway pleads, at para. 9 of its statement of claim, that “[a]s part of the tender documents, the City provided a Geotechnical Report dated August 18, 2008, prepared by Shaheen & Peaker” (the “Geotechnical Report”). The Geotechnical Report is not part of the record on this summary judgment motion. The section in the Contract that makes reference to the Geotechnical Report is not in evidence.
[10] No evidence was tendered from those at the City and Clearway concerning the factual matrix within which the Contract was concluded or administered even though these issues are material and such evidence is available.
[11] The Geotechnical Report is said to have provided that the subsurface soil condition in the area of the proposed sewer installation was of a nature that was not problematic for jack and bore with casing operations. The City pleads that this involved creating a tunnel running from a drive shaft to a reception shaft, by utilizing a rotating cutting head.
[12] Clearway pleads that the subsurface soil conditions encountered during its jack and bore operations were substantially different from those in the Geotechnical Report on which Clearway is said to have relied. The City contends that the Geotechnical Report contained cautions and limitations, including the specific indication that no boreholes were located on the area where the sewers were to be constructed, such that Clearway’s reliance on it was misplaced. There was no evidence on which to consider these submissions.
[13] Clearway’s claim is for the additional costs it alleges it sustained in completing its work because the subsurface soil conditions were different than those represented by the City to Clearway through the tender documents and, in particular, the Geotechnical Report.
Notification to the City of an Issue
[14] Clearway contracted the jacking and boring operations to its subcontractor, Earth Boring Company Limited (“Earth Boring”).
[15] The City’s evidence on this motion was provided by Mahesh Ramdeo, a manager with the City’s Engineering and Construction Services Division, through affidavits sworn on April 7, 2016 (“Ramdeo Affidavit #1”) and July 8, 2016 (“Ramdeo Affidavit #2”). Mr. Ramdeo’s role with the City involves oversight of contracts between the City and its independent contractors. Mr. Ramdeo explained that his evidence is based solely on his review of the City’s file in relation to the Rosemount Heights Project as he had no involvement in issues pertaining to this project until almost 5 years after the project was completed and some 3 years after this action was initiated.
[16] The City’s meaningful evidence in relation to this project would be available from Mr. Terry Kawar, the City’s former project manager, Mr. Maurizio Barbon, the City’s former supervisor and from its contract administrator, R.V. Anderson Associates Limited, namely through Mr. Ken Collicott who had significant involvement in this project. None of this evidence was presented on this motion. Mr. Kawar and Mr. Barbon are no longer employed by the City, but are expected to give evidence at trial, as are the R.V. Anderson representatives.
[17] The evidentiary foundation for the City’s motion is a document prepared by Clearway on May 17, 2010 and titled “Request for Additional Compensation Regarding Different Subsurface Conditions” (the “2010 Additional Compensation Report”). This document was delivered by Clearway to the City on or about its stated date and set out the basis for Clearway’s claim for $1,079,726.64 in additional compensation. The 2010 Additional Compensation Report states that Earth Boring identified unexpected voids, rocks, concrete and debris in the subsurface construction area on May 22, 2009. This subsurface soil condition is stated to have been different than the “Clayey Silt” or “Clayey Silt to Silty Clay Till” said to have been identified by the City’s Geotechnical Report, thereby presenting complications for ongoing work subsurface.
[18] Mr. Ramdeo produced minutes of a site meeting conducted on June 19, 2009 (“Meeting Minutes of June 19, 2009”), involving representatives of the City, Clearway, Earth Boring and Mr. Collicott as the City’s contract administrator. These minutes record the following:
K. Collicott advised that GC 3.17 in the General Conditions of Contract, outline the procedure to deal with changed geotechnical or subsurface conditions. He requested that Clearway submit an action plan to address these changed conditions and once approved, this action plan would be handled as “extra work”. He also noted that it was essential for Clearway to minimize the extra costs and delays to address these changed conditions.
[19] None of the available witnesses to the notification by Clearway to the City of differing subsurface soil conditions provided evidence. Subsurface soil conditions were known on June 19, 2009 but, to foreshadow the impact of the insufficiency of evidence to determine the limitation defence, there is a lack of clarity concerning what the parties had by that point in time discovered and what damages were thought at that point to result from any such discovery.
The Change Orders
[20] The City produced a portion of General Condition 3.17 of the Contract, excerpting sub-section GC 3.17(.01) from page 21 of 46, without producing a complete version of the provision:
3.17 (.01) The Contractor of the Contract Administrator shall promptly notify the other party in writing if the geotechnical or subsurface conditions in the Working Area appear to differ materially from those indicated in the Contract Documents. The Contract Administrator will promptly investigate the apparent changed geotechnical or subsurface conditions and make a finding. Subject to the provisions of GC 2.01, if the finding is that the conditions differ materially and this would cause an increase or decrease in the Contract Price or Contract Time, then the Contract Administrator, with the Owner’s approval, shall provide the Contractor with a Change Directive in accordance with the provisions of GC 3.11.02, Extra Work. If the finding is that the conditions are not materially different or that no change in the Contract Price or the Contract Time is justified, the Contract Administrator shall promptly report the reasons for this finding to the Contractor and Owner in writing.
[21] General Condition 3.11.02 stipulates that the contractor, Clearway, shall proceed with the Extra Work approved by GC 3.17 upon receipt of a Change Directive:
3.11.02 (.01) The Owner, or Contract Administrator where so authorized, may instruct the Contractor to perform Extra Work without invalidating the Contract. The Contractor shall not be required to proceed with the Extra Work until in receipt of a Change Directive. Upon receipt of such Change Directive the Contractor shall proceed with the Extra Work.
[22] General Condition 3.11.03 contains a similar provision addressing “Additional Work”, stating that the Contractor does not proceed with any such Additional Work until receipt of a Change Order:
3.11.03 (.01) The Owner, or Contract Administrator where so authorized, may request the Contractor to perform Additional Work without invalidating the Contract. If the Contractor agrees to perform Additional Work, the Contractor shall proceed with such Additional Work upon receipt of a Change Order.
[23] The City issued to Clearway three Change Orders pursuant to GC 3.11, as follows:
a) Change Order No. 1 dated December 7, 2009, in the amount of $68,299.51, which was issued with reference to Change Directives number 1, 2, 4, 6 and 14;
b) Change Order No. 2 dated December 7, 2009, in the amount of $79,768.05, which was issued with reference to Change Directives number 7, 8, 9, 10 and 11;
c) Change Order No. 3 dated December 21, 2009, in the amount of $98,085.41, which was issued with reference to Change Directives number 3, 12 and 13.
[24] Of the 14 Change Directives that formed the basis of the 3 Change Orders, only 6 were made part of the motion record. Those six Change Directives were issued on July 24, 2009 (Change Directive 3), August 27, 2009 (Change Directives 10, 11 and 12) and December 7, 2009 (Change Directives 2 and 14).
[25] The cross-examination of Mr. Ramdeo established that the work outlined in Change Order No. 1 was performed before the date of that Change Order: December 7, 2009. Similarly, the work outlined in Change Order No. 2 was performed in July 2009, before the Change Directives of August 27, 2009 and months before the issuance of Change Order No. 2 on December 7, 2009. Mr. Ramdeo admitted that the work outlined in the Change Orders was completed before the Change Orders were issued and, in the case of the Change Directives that form part of this record, the work was completed before the Change Directives were issued. The City paid for this work.
The Release and Waiver
[26] Clearway’s evidence in this motion was provided by Anthony Di Battista, the principal of Clearway, through an affidavit sworn on May 17, 2016 (the “Di Battista Affidavit”). Mr. Di Battista did not have any direct involvement in the Rosemount Heights Project, no day-to-day role at all. Rather, Domenic Di Tata was the project manager and Marco Di Battista was the project superintendent. Clearway did not tender any evidence from Mr. Marco Di Battista or Mr. Di Tata. Mr. Di Battista sought to testify to information provided to him by Mr. Marco Di Battista and Mr. Di Tata but cannot properly do so: “[a]lthough the rules permit a party to include evidence based on information and belief in an affidavit in support of a motion, the inclusion of hearsay evidence on a key point is not proper. Direct evidence should be filed”: Beach v. Toronto Real Estate Board, 2010 ONSC 30001, 97 C.P.C. (6th) 127, at para. 5. While Rule 20.02(1) permits use of evidence on a motion based on information and belief, its use in determining a case has been termed “troublesome”: Longo v. MacLaren Art Centre, 2014 ONCA 526 at para. 46.
[27] On March 10, 2010, Mr. Di Battista executed a Statutory Declaration declaring that substantial performance of the Contract was achieved on December 23, 2009.
[28] On March 23, 2010, Mr. Di Battista executed a Release and Waiver of Contractor further to General Condition 8.02.03.05.04 of the Contract (the “March 2010 Release”). General Condition 8.02.03.05.04 of the Contract was not presented in evidence in this motion. Clearway provided the March 2010 Release to the City in consideration of the release by the City to Clearway of the statutory holdback under the Construction Lien Act, R.S.O. 1990, c. C.30.
[29] In the March 2010 Release, Clearway released and discharged the City from any issues relating to or in consequence of the Contract save and except for “work not yet performed and/or claims of the Contractor properly submitted in accordance with General Conditions 3.14.03” of the Contract.
[30] On the same day that the March 2010 Release was executed, March 23, 2010, Mr. Di Battista delivered to R.V. Anderson a letter whereby he specifically reserved on behalf of Clearway the right to make an additional claim for costs associated with the unanticipated soil conditions.
The May 2010 Additional Compensation Report
[31] On May 17, 2010, Clearway delivered to the City the May 2010 Additional Compensation Report, in which Clearway seeks $1,079,726.64 in additional compensation, consisting of $1,023,825.75 in Shaft Rental, $52,762.75 in Earth Boring HDD Standby Time and $3,138.14 in Mark-up.
[32] By undated letter, Mr. Barbon rejected the claim for additional payments as advanced by Clearway through the May 2010 Additional Compensation Report. This letter is said to have been delivered in the time period between May 17, 2010 and June 30, 2011, being the date on which Mr. Di Battista forwarded a letter to Mr. Barbon to challenge the rejection of the May 2010 Additional Compensation Report.
[33] On July 13, 2011, Clearway initiated the within action for damages to which it claims entitlement arising from its performance of its obligations under the Contract.
C. Analysis
Grounds for Summary Judgment
[34] The City contends that this action ought to be summarily dismissed on any one of three grounds:
Clearway has breached the Contract requirement that a written detailed claim must be submitted within 30 days after completion of the work in regard to which the claim is advanced. The City submits that the claim advanced herein was submitted on May 17, 2010 in regard to additional costs pertaining to work completed in November 2009 and is thereby out of time;
Clearway executed a release in favour of the City in March 2010, which the City submits caused to be released the claims pleaded herein;
The claims advanced in the within action are barred by operation of the Limitations Act, 2002.
Issue 1: Was Strict Reliance on the Notice Provision Waived by Conduct?
[35] The Contract contains General Condition 3.14.03 that sets out the protocol by which Clearway may make a claim for additional payment against the City (the “Notice Provision”), as follows:
GC 3.14.03 Claims Procedure
.01 The Contractor shall give oral notice to the Contract Administrator of any situation which may lead to a claim for additional payment immediately upon becoming aware of the situation and shall provide written notice to the Contract Administrator of such situation or of any express intent to claim such payment, within seven Days of the commencement of any part of the work which may be affected by the situation or will form part of the claim.
.02 Not used.
.03 The Contractor shall submit detailed claims as soon as reasonably possible and in any event no later than 30 Days after completion of the work affected by the situation. The detailed claim shall:
a) Identify the item or items in respect of which the claim arises;
b) State the grounds, contractual or otherwise, upon which the claim is made; and
c) Include the Records maintained by the Contractor supporting such claim.
In exceptional cases the 30 Days may be increased to a maximum of 90 Days with approval in writing from the Contract administrator.
.04 Within 30 Days of the receipt of the Contractor’s detailed claim, the Contract Administrator may request the Contractor to submit any further and other particulars as the Contract Administrator considers necessary to assess the claim. The Contractor shall submit the requested information within 30 Days of receipt of such request.
.05 Within 90 Days of receipt of the detailed claim, the Owner, or if authorized by the Owner, the Contract Administrator, shall advise the Contractor, in writing, of the Owner’s opinion with regard to the validity of the claim.
[36] This is not the first time the court has considered this Notice Provision. This Notice Provision was considered in Technicore Underground Inc. v. Toronto (City), 2011 ONSC 7205, 94 M.P.L.R. (4th) 115, in which B.A. Allen J. granted summary judgment dismissing a counterclaim brought by Clearway against the City on the basis of non-compliance with the Notice Provision. The Notice Provision was determined to be a condition precedent to advancing a claim against the City, and thereby a bar to the contractor’s rights through non-compliance: see also Corpex (1977) Inc. v. Canada, 1982 CanLII 213 (SCC), [1982] 2 S.C.R. 643 (S.C.C.); Bemar Construction (Ontario) Inc. v. The Corporation of the City of Mississauga, [2004] O.T.C. 51, 30 C.L.R. (3d) 169 (Ont. S.C.J.), at para. 194, aff’d 2007 ONCA 685, 63 C.L.R. (3d) 161. In reaching this decision, the court distinguished cases relied upon by Clearway (W.A. Stephenson Construction (Western) Ltd. v. Metro Canada Ltd. (1987), 27 C.L.R. 113 (B.C.S.C.); Foundations Co. of Canada Ltd. v. United Grain Growers Ltd. (1995), 25 C.L.R. (2d) 1 (B.C.S.C.), aff”d (1997) 1997 CanLII 4064 (BC CA), 34 B.C.L.R. (3d) 92, 33 C.L.R. (2d) 159 (B.C.C.A.)) that allowed for a claim against a municipality notwithstanding breach of a notice provision where the municipality otherwise had actual or constructive knowledge of the additional claims advanced by the contractor, as stated at para. 49:
In the former case, despite the fact the contractor did not furnish formal written notice of its claims pursuant to the contractual terms, the court found that the owner had actual or constructive knowledge of the claims through various communications and minutes of meetings. The contractor’s claims were therefore found to be covered by the contract. In the case before me, Clearway did not provide affidavit evidence of actual or constructive knowledge by the City of the particular claims contained in the Additional Claims. The affidavit of Anthony Di Battista, Secretary-Treasurer of Clearway, does not attest to facts establishing this.
[37] The determination in Technicore was affirmed on appeal, 2012 ONCA 597, 296 O.A.C. 218, at para. 29, in which the Court of Appeal held that the Notice Provision sets out a mandatory procedure for the filing of claims under the Contract. There was no necessity for the City to establish prejudice arising from breach of the Notice Provision as the purpose of the Notice Provision is to allow the municipality the opportunity to decide whether to have the additional work performed by the same contractor or by another, and also allows for an opportunity to monitor the work.
[38] The Court of Appeal rejected Clearway’s argument that the City was disallowed from reliance on the strict application of the Notice Provision because the City had, through conduct, varied the terms of the Contract, which was based on the authority of Colautti Construction Ltd. v. Ottawa (City of) (1984), 1984 CanLII 1969 (ON CA), 46 O.R. (2d) 236, 5 O.A.C. 74 (C.A.), which held at para. 30:
In these circumstances the parties, by their conduct, have varied the terms of the contract which require extra costs to be authorized in writing. As a result, the City cannot rely on its strict provisions to escape liability to pay for the additional costs authorized by it and incurred as a result of its errors.
[39] This finding in Colautti was held to be distinguishable in Technicore as there was no evidence of a pattern of conduct by which the parties had varied the terms of the contract (paras. 66-67):
Colautti Construction is a very different case from the present one. In Colautti Construction, the plaintiff contractor entered into a contract with the defendant city for the construction of a sanitary sewer. The contract stipulated that written authorization was required for additional charges. Nonetheless, at various different times over the course of the project, the contractor billed the city for significant extra charges and the city paid them, despite the absence of written authorization. This court held that the parties had varied the terms of the contract by their conduct and the city could not rely on the strict provisions of the contract to escape liability for further additional costs.
In the present case, there is no pattern of conduct by the parties over the course of the Contract demonstrating that they did not intend to be bound by the Notice Provision. Far from ignoring the relevant provisions in the Contract, the parties acted in compliance with its terms. … There is no pattern of conduct by the parties that had the effect of varying the terms of the Contract.
[40] There is no question that the manner by which Clearway advanced its claim for additional expenses through the May 2010 Additional Compensation Report is non-compliant with the Notice Provision. But there is a question concerning the knowledge of the City of the subsurface issue that had been identified and the steps taken in relation to it, and there is also a question whether the pattern of conduct between Clearway and the City had the effect of varying the terms of the Contract. These are the distinguishing elements identified by the motions judge and by the appeal court in Technicore, respectively, that would disentitle the City from strict reliance on the Notice Provision. None of the witnesses to these issues provided evidence on this motion.
[41] The documentary evidence tendered in this summary motion establishes the following:
▪ On June 19, 2009, Mr. Kawar and Mr. Collicott were aware that General Condition 3.17 was activated by reason of Clearway’s discovery of changed geotechnical or subsurface conditions. The City directed Clearway to submit an action plan to address these changed conditions and, once approved, the action plan would be handled as “extra work”: Meeting Minutes of June 19, 2009.
▪ Fourteen Change Directives were issued by the City in relation to the discovery of changed geotechnical or subsurface conditions. Only six of the fourteen Change Directives were produced in evidence in this motion. The six Change Directives were issued as early as July 24, 2009 and as late as December 7, 2009.
▪ The three Change Orders issued further to the fourteen Change Directives were issued on December 7, 2009 and December 21, 2009.
[42] It is thereby established in cross-examination of Mr. Ramdeo that the work that was conducted by Clearway, including through Earth Boring, arising from the discovery of changed geotechnical or subsurface conditions, was conducted months before the issuance by the City of the Change Orders and, to the extent discernible on the current evidentiary record, before the issuance of the Change Directives.
[43] This pattern of conduct by the City in addressing with Clearway the discovery of changed geotechnical or subsurface conditions is said by Clearway to be in variation with the terms of the Contract. In particular, General Condition 3.11.02 provides that the Contractor is to proceed with any Extra Work identified on the basis of General Condition 3.17 (.01) “upon receipt of a Change Directive”. General Condition 3.11.03 provides that the Contractor is to proceed with any Additional Work authorized by the City “upon receipt of a Change Order”. The City nonetheless issued Change Directives and Change Orders after the completion of work by Clearway, and paid Clearway for such work notwithstanding the lack of strict compliance with the Contract.
[44] There is sufficient evidence to identify that the City’s handling of the additional cost items presented by Clearway deviated from the strict terms of the Contract. As a result, there is a genuine issue for trial regarding whether the City is disentitled from strict compliance with the Notice Provision on the basis of a pattern of conduct of deviation from strict adherence with the Contract, on the authority of Collauti. The determination of this genuine issue could cause the decision in Technicore to be distinguishable should a pattern of conduct of deviation from strict compliance with contract terms, absent in Technicore but present in Collauti, be established.
Issue 2: Does the Release Bar this Claim?
[45] The City submits that this action is barred by reason of the March 2010 Release, which releases and discharges all claims capable of being advanced by Clearway against the City arising out of the Contract except “claims [by Clearway] for work not yet performed [by Clearway]” and “claims [by Clearway] … properly submitted in accordance with [the Notice Provision] … in writing”, in operative part, as follows:
[T]he said Contractor … hereby waives, releases and forever discharges the City of Toronto, its successors and assigns, from any and all claims, actions, liabilities and demands whatsoever, for damages, losses, compensation or otherwise, howsoever arising, relating to or in consequence of the said Contract which may have been or may hereafter be sustained by the Contractor, save and except claims related to the work not yet performed and/or claims of the Contractor properly submitted in accordance with General Conditions 3.14.03 of the Contract in writing. [Emphasis added.]
[46] The City and Clearway both rely on Biancaniello v. DMCT LLP, 2017 ONCA 386, 138 O.R. (3d) 210, which summarizes the interpretative principles to be applied when assessing “what was in the contemplation of the parties” in entering into a release:
One looks first to the language of a release to find its meaning: at para. 8.
Parties may use language that releases every claim that arises, including unknown claims. However, courts will require clear language to infer that a party intended to release claims of which it was unaware: at paras. 9-10.
General language in a release will be limited to the thing or things that were specially in the contemplation of the parties when the release was given: at para. 13.
When a release is given as part of the settlement of a claim, the parties want to wipe the slate clean between them: at para. 23.
One can look at the circumstances surrounding the giving of the release to determine what was specially in the contemplation of the parties: at para. 28.
[47] The interpretative task in relation to the March 2010 Release is to assess what is being exempted or “carved out” of the general nature of the release. Of the two exemptions, the most pertinent is whether the claim arising from the May 2010 Additional Compensation Report is in relation to “work not yet performed” by Clearway.
[48] Mr. Di Battista testified that the expenses claimed in the present action represents work that was “not yet performed” at the time of execution of the March 2010 Release and is thereby not discharged by that document. Mr. Ramdeo testified that the work outlined in the May 2010 Additional Compensation Report “is not for restoration or any other work performed in 2010” (Ramdeo Affidavit #2, para. 6) but gives this testimony based solely on his reading of the May 2010 Additional Compensation Report.
[49] In assessing the “circumstances surrounding the giving of the release” and the “things that were specially in the contemplation of the parties”, Clearway points to two evidentiary points in support of its contention that the claim brought against the City is sheltered by the exception in the March 2010 Release for “work not yet performed”. First, by email dated October 8, 2009, Mr. Di Tata of Clearway notified the City contract administrator that Clearway would be claiming, as of November 1, 2009, its costs for winter handling, which would be documented as the work progressed and would form part of a further formal claim submission. Second, by letter dated March 23, 2010, and said to have been delivered at the same time as execution of the March 2010 Release, Mr. Di Battista notified the City contract administrator as follows:
Further to Mr. Domenic Tata’s email dated October 8, 2009 and subsequent rejection of our claim in other correspondence from the Project Stakeholders, we have again performed a detailed review of all pertinent information related to delay caused by the unanticipated soil condition, more specifically the void condition encountered between MH14A and MH13A on June 12, 2009, and have determined that it had a direct impact on the critical path of the project. Further to this, we have incurred additional costs not accounted for at the time of tendering, and we have retained an independent third party that is currently reviewing the relevant information and preparing a claim for these additional costs. Due to the complexity of the claim, it has taken a significant amount of time to prepare and we will forward it as soon as it is completed. Please contact the undersigned should you have any further question or concerns related to the above claim (the “March 2010 Notice”).
[50] Clearway submitted that the March 2010 Notice was, itself, an exemption from the March 2010 Release of the claim that was later formalized and presented through the May 2010 Additional Compensation Report. Mr. Di Battista testified that the claims outlined in this document represent work that would have been completed earlier in time but for the adverse subsurface soil condition that was identified.
[51] There is a genuine issue concerning whether the claim represented by the May 2010 Additional Compensation Report constitutes “work not yet performed” by Clearway at the time of execution of that Release and thereby exempted from the Release. There is a genuine issue concerning whether the March 2010 Notice was reasonably intended and expected by the parties to be an exemption from the March 2010 Release, particularly as these two documents are said to have been delivered contemporaneously. There is insufficient evidence on this motion to conduct the analysis specified in Biancaniello. As such, these genuine issues are not capable of being determined justly and fairly on this summary motion and must be determined at trial.
Issue 3: Are the Claims Advanced in the within Action Limitation Barred?
The 2 Year Limitation
[52] Section 5 of the Limitations Act, 2002 provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the date on which the claim was discovered:
5(1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
[53] The Limitations Act contains both a subjective and an objective assessment of when a claim is discovered. The objective assessment is to determine when a reasonable person with the abilities and in the circumstances of the plaintiff first ought to have known of all the matters necessary to activate the limitation period, while the subjective assessment is to determine when the plaintiff was actually aware of the elements necessary to activate the limitation period: Longo v. McLaren Art Centre Inc., 2014 ONCA 526, 323 O.A.C. 246, at para. 41; Van Allen v. Vos, 2014 ONCA 552, 121 O.R. (3d) 72, at paras. 33-34.
The Onus
[54] When a limitation period defence is raised, the onus rests with the plaintiff to establish that its claim is not statute-barred in that it acted on its claims as a reasonable person would have in the same or similar circumstances using reasonable diligence in discovering the facts upon which the claim is based: Soper v. Southcott (1998), 1998 CanLII 5359 (ON CA), 39 O.R. (3d) 737, 111 O.A.C. 339 (C.A.), at para. 13; Bolton Oak Inc. v. McColl-Frontenac Inc., 2011 ONSC 6567, at paras. 12-14. The onus on the plaintiff requires that the plaintiff displace the presumption contained in section 5(2) of the Limitations Act: “A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.”
[55] However, a defendant moving for summary dismissal based on a limitation defence has the burden of establishing that there is no issue requiring trial about its limitation defence: Crombie Property Holdings Ltd. v. McColl-Frontenac Inc., 2017 ONCA 16, 406 D.L.R. (4th) 252, at para. 33. Hence, in order for the City to establish an entitlement to summary dismissal of this action based on its limitation defence, the City has the burden of establishing that there is no genuine issue requiring trial regarding its limitation defence.
[56] The Statement of Claim in this action was issued on July 13, 2011. The City submits that a claim that was discovered before July 13, 2009 is limitation barred. The City’s limitation defence is thereby predicated on establishing two essential elements: first, that Clearway discovered, or reasonably ought to have discovered, damage caused by the City’s faulty tender documents, including the Geotechnical Report, prior to July 13, 2009; and second, that having regard to the nature of the damages so discovered, Clearway knew or ought to have known prior to July 13, 2009 that a proceeding would be an “appropriate means” to seek a remedy.
Discovery of Damages
[57] The requirement of discoverability of damage, as contained in section 5(1)(a)(i), is satisfied upon discovery that “some damage” has been sustained, even though the full extent of the damage may not have yet been realized: Hamilton (City) v. Metcalfe & Mansfied Capital Corp., 2012 ONCA 156, 347 D.L.R. (4th) 657, at para. 61, citing Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549 (S.C.C.), at para. 18; Four Seasons Site Development Ltd. v. Toronto (City), 2015 ONSC 2293, 46 C.L.R. (4th) 331.
[58] The City relies on two sources of evidence regarding discovery by Clearway of “some damage”: the documents read by Mr. Ramdeo and annexed to his affidavits, and Mr. Di Battista’s evidence.
[59] Mr. Di Battista’s evidence does not establish that a claim in damages against the City was discovered by Clearway prior to July 13, 2009. Mr. Di Battista did not have any day-to-day role in this project. Mr. Di Battista testified to discussions conducted with Mr. Di Tata and Mr. Marco Di Battista “in the early stages of the project” and testified as well to these colleagues communicating to him that they had consulted with the City representatives and their contract administrator and were assured that all additional expenses would be reconciled at the conclusion of the project. The hearsay nature of this evidence is apparent, rendering this testimony on a material issue unreliable and inadmissible. Mr. Di Battista did provide direct testimony that he knew by July 23, 2009 that Earth Boring was going to make a claim for additional costs against Clearway arising from the subsurface soil condition but this date does not support the City’s limitation defence.
[60] Mr. Ramdeo’s testimony concerning inferences and opinions drawn from his retrospective review of the documents extracted from the City’s files and annexed to his affidavit is not admissible. The Supreme Court stated in White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, [2015] 2 S.C.R. 182, at para. 14, that witnesses are to testify of what they perceived and not what they inferred from those perceptions:
Witnesses are to testify as to the facts which they perceived, not as to the inferences — that is, the opinions — that they drew from them. As one great evidence scholar put it long ago, it is “for the jury to form opinions, and draw inferences and conclusions, and not for the witness”: J. B. Thayer, A Preliminary Treatise on Evidence at the Common Law (1898; reprinted 1969), at p. 524; see also C. Tapper, Cross and Tapper on Evidence (12th ed. 2010), at p. 530. While various rationales have been offered for this exclusionary rule, the most convincing is probably that these ready-formed inferences are not helpful to the trier of fact and might even be misleading: see, e.g., Graat v. The Queen, 1982 CanLII 33 (SCC), [1982] 2 S.C.R. 819, at p. 836; Halsbury’s Laws of Canada: Evidence (2014 Reissue), at para. HEV-137 “General rule against opinion evidence”.
[61] The City is left then to attempt to establish the date on which Clearway first discovered its claim by reference solely to the documents annexed to the Ramdeo affidavits. This analysis allows for the following submissions by the City:
▪ The adverse subsurface soil conditions are said to have been encountered on May 22, 2009: 2010 Additional Compensation Report, pp. 20-21 of Motion Record.
▪ In a site meeting of June 19, 2009, Mr. Collicott asked Clearway to submit an action plan to address the changed subsurface soil conditions and “once approved”, the action plan would be treated as “extra work” under the Contract: Meeting Minutes of June 19, 2009, Exhibit B to Di Battista Affidavit, pp. 7-12 of Responding Motion Record.
▪ Emails exchanged between absent witnesses Messrs. Weightman and Collicott of R.V. Anderson, Mr. Kawar of the City, Messrs. Di Tata and Marco Di Battista of Clearway and others evidence that technical issues pertaining to the identification of adverse subsurface soil conditions took place from June 22 to June 23, 2009: 2010 Additional Compensation Report, Appendix A, pp. 34-36 of Motion Record.
▪ Site meetings conducted on June 30, 2009, July 3, 2009, July 7, 2009 and July 17, 2009 establish continued collaboration amongst all absent witnesses in the handling of the discovery of the changed subsurface soil conditions: Meeting Minutes, 2010 Additional Compensation Report, Appendix C, pp. 38-53 of Motion Record.
▪ On July 3 and 8, 2009, Coffey Geotechnics began drilling additional boreholes to further investigate the adverse subsurface soil conditions and reported to Clearway on the results of these further investigations on July 20 and 23, 2009: Letter from Earth Boring to Clearway dated July 20, 2009, 2010 Additional Compensation Report, Appendix C, pp. 55-66.
▪ On July 23, 2009, Mr. Collicott delivered an email to Messrs. Marco Di Battista and Di Tata, as well as to Mr. Kawar and Mr. Weightman, requesting further data for consideration of the additional costs associated with the subsurface condition, inviting further detail and collaborative discussions: Email dated July 23, 2009, Additional Compensation Report, Appendix C, p. 64.
[62] The City submits that the date of discovery by Clearway of a claim against the City is May 22, 2009, being the date of discovery of adverse subsurface soil conditions. This is not established. The discovery of the subsurface conditions, in and of itself, does not necessarily constitute discovery of a claim in damages. The date of discovery of the claim in damages depends on evidentiary elements not present in the current record, including the findings that emerged from ongoing investigations by Earth Boring and Coffey Geotechnics, the resultant additional costs that these represented, the claims by Earth Boring in relation to them and the impact of the contractual terms on such claims.
[63] There is a genuine issue concerning the date of discovery by Clearway of a claim in damages against the City. The evidentiary record in this motion is insufficient to establish that Clearway discovered, or ought reasonably to have discovered, a claim in damages against the City prior to July 13, 2009, requiring that this issue be determined at trial.
Discovery That a Proceeding Would be an “Appropriate Means” to Seek a Remedy
[64] Having determined that the City cannot discharge its burden, on this evidentiary record, of establishing that Clearway discovered, or ought reasonably to have discovered, a claim in damages against the City prior to July 13, 2009, it is not necessary to determine whether Clearway discovered, prior to July 13, 2009, that a proceeding would be an “appropriate means” to seek a remedy, as is required to satisfy section 5(1)(a)(iv) of the Limitations Act. Nonetheless, this will be considered for completeness of analysis and in the event that my determination in relation to the discovery of damages by Clearway is set aside.
[65] In Markel Insurance Co. of Canada v. ING Insurance Co. of Canada; Federation Insurance Co. of Canada v. Kingsway General Insurance Co., 2012 ONCA 218, 109 O.R. (3d) 652, at para. 34, the Ontario Court of Appeal explained that the requirement in section 5(1)(a)(iv) of the Limitations Act, namely that a legal action would be an appropriate means to remedy a damage that has been identified, means that a legal proceeding must be “legally appropriate”:
In my view, when s. 5(1)(a)(iv) states that a claim is “discovered” only when “having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to remedy it”, the word “appropriate” must mean legally appropriate. To give “appropriate” an evaluative gloss, allowing a party to delay the commencement of proceedings for some tactical or other reason beyond two years from the date the claim is fully ripened and requiring the court to assess [the] tone and tenor of communications in search of a clear denial would, in my opinion, inject an unacceptable element of uncertainty into the law of limitation of actions. [Emphasis in original.]
[66] In 407 ETR Concession Co. v. Day, 2016 ONCA 709, 133 O.R. (3d) 762, Laskin J.A. stated at para. 34 that “when an action is ‘appropriate’ depends on the specific factual or statutory setting of each individual case”. Appropriateness must be assessed on the facts of each case such that case law applying section 5(1)(a)(iv) of the Limitations Act will be of limited assistance: Brown v. Baum, 2016 ONCA 325, 397 D.L.R. (4th) 161, at para. 41.
[67] A proceeding is not legally appropriate until other mechanisms for resolving a case have been exhausted: U-Pak Disposals (1989) Ltd. v. Durham (Regional Municipality), 2014 ONSC 1103, at paras. 22-25; Kadiri v. Southlake Regional Health Centre, 2015 ONSC 621, at paras. 52-57. By way of example, in Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325, 135 O.R. (3d) 321, an action against the professional tax adviser was not determined to be appropriate until the Canada Revenue Agency responded to a notice of objection by confirming its initial assessment, and not at the time of the receipt by the taxpayer of the notice of assessment.
[68] Although the discovery of the adverse subsurface condition took place prior to July 13, 2009 (being two years prior to the issuance of the statement of claim), the process of investigation of the consequences of this discovery, submission of projected costs by Earth Boring to Clearway and, in turn, from Clearway to the City, and consideration by the City of the additional costs, initiated at or about July 13, 2009 and continued to May, 2010. The rejection of the claim now pleaded by Clearway against the City did not occur until an undated letter delivered by the City to Clearway, estimated in the time period between May 17, 2010 to June 30, 2011. The overly-subjective “evaluative gloss” cautioned against in Markel and reiterated in Presidential MSH Corp. prevents Clearway from waiting until the City rejects Clearway’s claims outright to initiate its claim. However, the process engaged between Clearway and the City to address the claim must be fully presented in evidence in order to determine when the claim advanced by Clearway against the City “fully ripened”, to use the terminology of Markel.
[69] There is a genuine issue regarding whether Clearway discovered, or reasonably ought to have discovered, that a legal action would be an “appropriate means” to seek a remedy prior to July 13, 2009, as is necessary for the City to establish its limitation defence. This genuine issue is not capable of being determined on the evidentiary record presented on this motion. As such, the City has not established an entitlement to summary dismissal based on its limitation defence.
D. Disposition
[70] On a motion by a defendant for dismissal under Rule 20, the defendant bears the evidentiary burden of establishing that there is no genuine issue requiring a trial. It is only after the moving party defendant has discharged this evidentiary burden that the burden then shifts to the responding party plaintiff to prove that its claim has a real chance of success: Hryniak, at para. 5; Connerty, at para. 9; New Solutions Extrusion Corporation v. Gauthier, 2010 ONSC 1037, at para. 12; Sanzone, at para. 30.
[71] In terms of the nature of evidence required to make such determinations, the Supreme Court stated in Hryniak, at para. 57, as follows: “On a summary judgment motion, the evidence need not be equivalent to that at trial, but must be such that the judge is confident that she can fairly resolve the dispute”. The Supreme Court noted in Hryniak, at para. 51, that “there may be cases where, given the nature of the issue 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.”
[72] I have determined that the evidentiary record in this motion is insufficient to support summary judgment. I am not satisfied that this summary judgment motion can achieve a fair and just adjudication and is thereby dismissed.
E. Costs
[73] The parties reached an agreement on costs, whereby the City would receive the sum of $20,000 in costs of the motion and the action in the event that summary judgment motion was granted, and that Clearway would receive the sum of $10,000 in costs in the event that the summary judgment motion were dismissed.
[74] Clearway is awarded costs payable by the City fixed in the amount of $10,000, all-inclusive.
Sanfilippo J.
Released: March 13, 2018
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CLEARWAY CONSTRUCTION INC.
Plaintiff
– and –
THE CITY OF TORONTO
Defendant
REASONS FOR JUDGMENT
Sanfilippo J.
Released: March 13, 2018