Court File and Parties
COURT FILE NO.: CV-16-565275
DATE: 20180406
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CANADIAN ASPHALT INDUSTRIES INC.
Plaintiff
– and –
D. CRUPI & SONS LIMITED
Defendants
COUNSEL:
Larry Reimer, for the Plaintiff
Emilio Bisceglia and Fernando Souza, for the Defendant
HEARD: March 29, 2018
ENDORSEMENT
DIAMOND J.:
Overview
[1] The plaintiff (presently and through its previous corporate history) and the defendant have enjoyed a lengthy contractual relationship for approximately 20 years. Throughout those years, the plaintiff sold and supplied bitumen (asphalt cement) to the defendant for use in road construction and paving.
[2] At all material times, the parties conducted themselves in accordance with a Supply Agreement dated June 1, 2004 (the “Agreement”). Under that Agreement, the plaintiff agreed to give the defendant a reasonable discount off its quoted price for bitumen, and warranted that it would conform to industry standards with respect to product quality, pricing, delivery and payment terms.
[3] Commencing in or around the fall of 2014, the defendant advised the plaintiff that the defendant had been receiving complaints from certain contractors and Ontario municipalities about premature cracking on certain roadways constructed by the defendant using the plaintiff’s bitumen. Between early October and late December 2014, numerous invoices for bitumen rendered by the plaintiff (totaling $2,749,677.18) remained due and owing by the defendant.
[4] As at January 2017, the defendant’s total outstanding balance increased to $5,166,252.37. The plaintiff commenced this proceeding seeking payment of those outstanding invoices. The defendant has defended this proceeding and counterclaimed for $10,000,000.00 in damages arising from, inter alia, incurring extensive remediation costs for roadway deficiencies.
[5] The plaintiff brings this motion seeking summary judgment. In resisting the plaintiff’s motion, the defendant effectively raised three issues:
Is the plaintiff’s claim for payment of invoices rendered prior to December 2, 2014 statute-barred as being commenced outside the two year period prescribed under the Limitations Act 2002 S.O. 2002 c.24 (“Limitations Act”)?
Did the parties enter into a further agreement in or around late 2014 whereby the defendant could withhold payment for bitumen purchases in order to set off future costs or claims against it arising from the alleged roadway deficiencies?
If the plaintiff is entitled to judgment for any amount, should execution of the plaintiff’s judgment be stayed until the disposition of the defendant’s counterclaim?
[6] At the conclusion of the hearing of the motion, I took my decision under reserve.
Summary Judgment
[7] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that the Court shall grant a summary judgment if the Court is satisfied that “there is no genuine issue requiring a trial with respect to a claim or defence.” As a result of the amendments to Rule 20 introduced in 2010, the powers of the Court to grant summary judgment have been enhanced to include, inter alia, weighing the evidence, evaluating the credibility of a deponent and drawing any reasonable inference from the evidence.
[8] In Hryniak v. Mauldin 2014 SCC 7, the Supreme Court of Canada held that on a motion for summary judgment, the Court must first determine whether there is a genuine issue requiring a trial based only upon the record before the Court, without using the fact-finding powers set out in the 2010 amendments. The Court may only grant summary judgment if there is sufficient evidence to justly and fairly adjudicate the dispute, and if summary judgment would be an affordable, timely and proportionate procedure.
[9] The overarching principle is proportionality. Summary judgment ought to be granted unless the added expense and delay of a trial is necessary for a fair and just adjudication of the case.
[10] As held in Sanzone v. Schechter 2016 ONCA 566, only after the moving party discharges its evidentiary burden of proving that there is no genuine issue requiring a trial for resolution does the burden then shift to the responding party to prove that its claim has a real chance of success. The Court must address the threshold question of whether the moving party discharges its evidentiary obligation to put its best foot forward by adducing evidence on the merits.
[11] Nothing in Hyrniak or the subsequent jurisprudence displaces the onus upon a party responding to a motion for summary judgment to “lead trump or risk losing.” The Court must assume that the parties have put their best foot forward and placed all relevant evidence in the record. If the Court determines that there is a genuine issue requiring a trial, the inquiry does not end there and the analysis proceeds to whether a Court can determine if the need for a trial may be avoided by use of its expanded fact-finding powers.
Issue #1 Is the plaintiff’s claim for payment of invoices rendered prior to December 2, 2014 statute-barred as being commenced outside the two year period prescribed Limitations Act?
[12] The plaintiff’s Notice of Action was issued on December 2, 2016. The defendant takes the position that any invoices which were outstanding on or before December 2, 2014 cannot form part of the plaintiff’s claim as they are statute-barred under the provisions of the Limitations Act.
[13] Pursuant to section 5(1)(a) of the Limitations Act, a claim is discovered on the earlier of the day upon which a person with the claim first knew, or a reasonable person with the abilities and in the circumstances of that person, first ought to have known,
(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 a person against whom the claim was 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.
[14] Section 5(2) of the Limitations Act and the jurisprudence developed thereunder is clear that a person with a claim shall be presumed to have known of the matters referred to above on the day the act or omission upon which the claim is based took place unless the contrary is proved. This is a presumption that can be rebutted by a plaintiff with necessary evidence.
[15] As the Court of Appeal for Ontario held in Miaskowski v. Persaud 2015 ONSC 758 (C.A.), a plaintiff is presumed to have discovered the material facts upon which his/her claim against a defendant is based on the day the accident took place. There is an obligation upon a plaintiff to act with due diligence in determining if he/she has a claim. No limitation period will be tolled while a plaintiff sits idle and takes no steps to investigate any of the matters referred to in section 5(1)(a) of the Limitations Act.
[16] A plaintiff is not required to possess a comprehensive understanding of his/her potential claim in order for the limitation period to commence. As held by the Court of Appeal for Ontario in Lawless v. Anderson 2011 ONSC 102 (C.A.), “the question to be posed is whether the prospective plaintiff knows enough facts on which to base an allegation of negligence against the defendant.”
[17] Discoverability is thus a fact-based analysis. The discovery of a claim does not depend upon a plaintiff’s knowledge that his/her claim is likely to succeed, or awareness of the totality of a defendant’s wrongdoing. Knowledge of the material facts, and not the elements of a cause of action, will inform the Court’s assessment of the commencement of a limitation period.
[18] A plaintiff must show that he/she was both not subjectively aware of the factors set out in section 5(1)(a) of the Limitations Act, and that a reasonable person “with the abilities and in the circumstances of the person with the claim” would also not have been aware of these factors. In other words, the plaintiff bears the onus of leading evidence to displace both the objective and subjective components of the tests set out in section 5(1)(a) of the Limitations Act.
[19] The contents of paragraph 4 of the Agreement are as follows:
“Unless otherwise mutually agreed to in writing, invoiced product shall be paid by Crupi net (30) days from the date of receipt of Canadian Asphalt’s statement.”
[20] The defendant urged upon the Court that despite the use of the word “statement”, what the parties actually agreed upon in paragraph 4 was payment being due and owing within 30 days of the delivery of an invoice by the plaintiff. I do not agree. There is a clear difference between the meaning of the words “statement” and “invoice”. A statement is a summary of outstanding invoices. The parties negotiated the terms of the Agreement themselves, and settled upon the use of the word “statement”. I do not read any other meaning into paragraph 4 other than the clean meaning of the word “statement”.
[21] I have therefore considered when the plaintiff’s statements were delivered to the defendant in order to determine when the limitation period began. On the record before me, there is an email dated November 10, 2014 from the plaintiff to the defendant enclosing the plaintiff’s October 2014 statement. Within that statement are invoices for the month of October totaling $2,479,177.84.
[22] That sum was due and owing 30 days after November 10, 2014, i.e. on or before December 10, 2014. Accordingly, the limitation period began to run on December 10, 2014. This proceeding was commenced within two years of that date.
[23] As such, the answer to Issue #1 is “No”.
Issue #2 Did the parties enter into a further agreement in or around late 2014 whereby the defendant could withhold payment for bitumen purchases in order to set off future costs or claims against it arising from the alleged roadway deficiencies?
[24] The alleged problems with the plaintiff’s bitumen commenced before 2014. The defendant’s position in this proceeding is that once those problems were brought to the plaintiff’s attention, sometime in or around late 2014 the parties entered into a new agreement whereby the defendant was permitted to withhold payment towards future bitumen purchases in order to set off any future costs or claims against the defendant for roadway deficiencies (the “new agreement”).
[25] The evidence surrounding the existence of the new agreement comes from two affiants: Bruce Armstrong (“Armstrong”, the plaintiff’s director of sales) and Cosimo Crupi (“Crupi”, the defendant’s president). I note that neither Armstrong nor Crupi were cross-examined on their respective affidavits.
[26] The extent of Crupi’s evidence on this issue is as follows:
● after the bitumen problems were discovered, Crupi met with Armstrong in the fall of 2014 and told him that the defendant would be withholding payment for future bitumen purchases so that it had an ability to set off any future costs or claims against it. Those possible costs or claims were unknown at that time, but the defendant anticipated that “they could be in the millions of dollars.”
● after the defendant began notifying the plaintiff of the bitumen problems as they developed, the defendant acted on its understanding that it would no longer forward payment for outstanding invoices and created a fund which would set off the losses being incurred by the defendant.
● the defendant believes that as the plaintiff does not have the ability to pay a large damages award to satisfy the defendant’s counterclaim, “that is why the set off understanding was entered into between the parties.”
[27] In response, Armstrong gave evidence that while the parties did discuss complaints received from certain municipalities, the parties disagreed about the cause of those alleged roadway deficiencies. Armstrong stated that despite the underlying factual dispute never resolving, the plaintiff and the defendant continued their business relationship with respect to the supply and demand of different grades of bitumen for different projects.
[28] Armstrong did recall Crupi threatening not to pay invoices, but gave evidence that at no point did the parties ever enter into any new agreement with respect to the withholding of payment of the plaintiff’s invoices or the creation of any fund.
[29] Objectively, why would the plaintiff enter into the new agreement as it continued to supply bitumen to the defendant but left its ability to recover payment of millions of dollars of invoices in the sole discretion of the defendant? While this does not seem like a sound commercial decision, the fact is that, apart from one payment made by the defendant on November 17, 2014, the plaintiff’s statement discloses nothing but invoices rendered to the defendant until late November 2015. Regardless of whether such an agreement makes objective commercial sense, the fact is that no payments were received from the defendant during the above time period.
[30] The purpose of the enhanced powers under Rule 20.04 (2.1 and 2.2) are typically reserved for the Court once it is satisfied that a sufficient evidentiary record has been tendered to establish the existence of a genuine issue required at trial. On the record before me, and in the absence of any cross-examination of Armstrong or Crupi on their respective affidavits, a genuine issue requiring a trial may indeed exist.
[31] Specifically, I find that I am currently not in a position to resolve the issue of whether the parties entered into the new agreement in the absence of using the enhanced powers under Rule 20.04 (2.1 and 2.2). Accordingly, in the circumstances of this case I am ordering a mini-trial of Issue #2. Both Armstrong and Crupi will be present for cross-examination on their respective affidavits. Depending upon how Issue #2 is determined after the mini-trial is concluded, I will thereafter address Issue #3.
[32] Counsel for the parties may contact my assistant Michelle Giordano at michelle.giordano@ontario.ca to arrange a telephone case conference for the purpose of scheduling the mini-trial, and a timetable for any interim steps leading up to the hearing.
[33] The costs of this motion are reserved to me as the judge hearing the mini-trial to be scheduled.
Diamond J.
Released: April 6, 2018