Court File and Parties

COURT FILE NO.: 07-CV-332117PD2 DATE: 20180627 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Catherina Perez and Gerardo Perez, Plaintiffs AND: 1405768 Ontario Limited, Shor-Cais Consulting Limited, The City of Toronto, Olde Yorke Village Homeowners Association, also known as Olde York Village Homeowners Association, Inaugural-Source Inc., and State Farm Fire and Casualty Company, Defendants

BEFORE: Pollak J.

COUNSEL: Alan J. Davis and Brandon Handelman, for the Plaintiffs Michael Simaan, Naomi Brown, Maryanne Cummings, Thomas Hanrahan, and Michael Blinick, for the Defendants

HEARD: March 26, 2018

Endorsement

[1] The Plaintiffs, Catherina Perez and Gerardo Perez, claim damages for interference of their use and enjoyment of their home caused by construction on an adjacent property and a failure of a wooden retaining wall.

[2] The Defendants, 1405768 Ontario Limited, Shor-Cais Consulting Limited, The City of Toronto, Olde Yorke Village Homeowners Association, also known as Olde York Village Homeowners Association, Inaugural-Source Inc., and State Farm Fire and Casualty Company, all move for a summary judgment dismissal of the Plaintiffs' claims, or in the alternative, an Order traversing the action to the Small Claims Court.

[3] For the purpose of this motion for summary judgment only, the Defendants admit liability but argue the claim must be dismissed on the ground that the Plaintiffs cannot prove any damages equivalent to an amount that is in excess of the jurisdiction of the Small Claims Court. They submit that if this Court finds that there are any possible damages, they are so small that on such basis alone, this action should be transferred to Small Claims Court.

[4] The Plaintiffs oppose this motion, submitting that they have claims in excess of the monetary jurisdiction of the Small Claims Court, and that it has no jurisdiction to make a declaratory and, or, injunctive Order.

[5] The theory of the Defendants’ case is that the damages claimed are based on the Plaintiffs’ mistaken belief that the retaining wall's movement caused structural damage to their house, which made it unsafe for them to live there. The claim is that the negligence of the Defendants substantially interfered with their enjoyment of their house from May 2005 to November 14, 2005 and for most of November 15, 2005 to May 2009 because of loss of gas and water service and the unstable soil conditions surrounding their property.

[6] The Defendant Inaugural Source developed the 33 townhouses and designed, developed and constructed the “timber lagging” retaining walls that failed.

[7] The Defendant Olde York represents the interests of the 33 townhome owners and owns the failed retaining wall.

[8] The Defendant Shor-Cais Consulting Limited was also involved in the construction of the “timber lagging” retaining walls and was involved in the development of the Bayview Property on behalf of the Defendant 1405768 Ontario Limited (“140”).

[9] The Defendant 1405768 Ontario Limited was the owner, manager and, or, developer of the adjacent property.

[10] The Defendant the City of Toronto had the obligation to properly inspect the townhouse complex and adjacent properties and was involved in the repair and remediation of the Plaintiffs' property.

[11] Crossclaims for contribution and indemnity have been made by the Defendants Inaugural Source, City of Toronto, Shor-Cais, Olde York and 1405768 Ontario Limited. The Olde York crossclaim is against all other Defendants for recovery of monetary damages in the amount of $250,000.00. The Defendants claim that they have settled all these crossclaims, but were not able to provide proof of the settlement at the hearing.

[12] The Action was set down for trial on November 2015, with a pre-trial scheduled for June 21, 2018. A four week trial is scheduled for September 24, 2018.

[13] This motion is brought approximately 10 years after the Action was started, approximately 2½ years after completion of examinations for discovery and approximately 20 months after the action was set down for trial.

[14] While liability is not admitted by the Defendants in the action, this summary judgment motion is brought on grounds that the Plaintiffs have not sustained damages as alleged in the Statement of Claim, so that even if the allegations of negligence could be proven they could not be successful in their claim for damages. In the alternative, the Defendants seek an Order transferring this action to Small Claims Court on the basis that to the extent that damages were sustained, the quantum of said damages is less than $25,000.

[15] The Plaintiffs object to this approach and submit that the facts and circumstances giving rise to the liability on the part of the Defendants are material to the recovery of their damages including, in particular, claims for punitive, aggravated, exemplary and consequential damages. I agree with this submission. The relevant evidence on the conduct of the Defendants is not before this Court on this motion. The Court cannot make any determination on the entitlement to or the quantification of punitive damages.

The Law

[16] In the case of Hryniak v. Mauldin, 2014 SCC 7, [2014] S.C.R. 87, at para. 66, the Supreme Court of Canada outlined the approach to follow on a motion for summary judgment:

On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. 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). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.”

[17] The Ontario Court of Appeal stated in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, at paras. 35 and 37, that the advisability of a staged summary judgment process must be assessed in the context of the litigation as a whole. The Court noted that in a staged summary judgment process there was a risk that a trial judge would develop a fuller appreciation of the relationships and the transactional context than the motion judge, which can result in a trial decision that would be inconsistent with the motion judge’s finding, even though the parties would be bound by that finding. This process, in such context, would risk inconsistent findings and substantive injustice. At paras. 44-45 the court stated:

Evidence by affidavit, prepared by a party’s legal counsel, which may include voluminous exhibits, can obscure the affiant’s authentic voice. This makes the motion judge’s task of assessing credibility and reliability especially difficult in a summary judgment and mini-trial context. Great care must be taken by the motion judge to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all.

Judges are aware that the process of preparing summary judgment motion materials and cross-examinations, with or without a mini-trial, will not necessarily provide savings over an ordinary discovery and trial process, and might not “serve the goals of timeliness, affordability and proportionality” (Hryniak at para. 66). Lawyer time is expensive, whether it is spent in court or in lengthy and nuanced drafting sessions. I note that sometimes, as in this case, it will simply not be possible to salvage something dispositive from an expensive and time-consuming, but eventually abortive, summary judgment process. That is the risk, and is consequently the difficult nettle that motion judges must be prepared to grasp, if the summary judgment process is to operate fairly.

[18] In Butera v. Chown, Cairns LLP, 2017 ONCA 783, the Ontario Court of Appeal considered the appropriateness of motions for summary judgment that will determine some of the issues, but will not dispose of the action as a whole. The Ontario Court of Appeal cautioned parties and judges about the limits and problems associated with partial summary judgment motions.

[19] It was held that the motion judge committed an extricable error in principle in failing to consider whether partial summary judgment was appropriate in the context of the litigation as a whole. In particular, the court was concerned about inconsistent findings on the motion and at trial and the fact that the result of the partial summary judgments did not achieve the intended benefits of proportionality, timelines and affordability. Rather, it was held that motions for partial summary judgment result in delay, greater expenses, and wasted judicial resources.

[20] The Court explained that partial summary judgment motions tend to defeat the stated objectives of proportionality, timeliness and affordability underlying Hryniak.

[21] It was held that a partial summary judgment motion should be considered a “rare procedure” that is reserved for issues that can be easily bifurcated from the main action and that can be dealt with expeditiously and in a cost-effective manner.

[22] The Court reasoned that this approach is entirely consistent with the Supreme Court’s comments in Hryniak as follows:

[26] The pre-Hryniak appellate jurisprudence on partial summary judgment limited its availability. At para. 3 of Corchis v. KPMG Peat Marwick Thorne, [2002] O.J. No. 1437 (C.A.), this court applied Gold Chance International Ltd. v. Daigle & Hancock, [2001] O.J. No. 1032 (S.C.J.) to state that:

[P]artial summary judgment ought only to be granted in the clearest of cases where the issue on which judgment is sought is clearly severable from the balance of the case. If this principle is not followed, there is a very real possibility of a trial result that is inconsistent with the result of the summary judgment motion on essentially the same claim.

[27] Since Hryniak, this court has considered partial summary judgment in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438 and in Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922, 133 O.R. (3d) 561. Baywood was decided in the context of a motion for summary judgment on all claims, but where only partial summary judgment was granted. CIBC involved a motion for partial summary judgment.

[28] In both Baywood and CIBC, the court analyzed the issue from the perspective of whether (i) there was a risk of duplicative or inconsistent findings at trial and whether (ii) granting partial summary judgment was advisable the context of the litigation as a whole. In both cases, the court held that partial summary judgment was inadvisable in the circumstances.

[29] The caution expressed pre-Hryniak in Corchis is equally applicable in the post-Hryniak world. In addition to the danger of duplicative or inconsistent findings considered in Baywood and CIBC, partial summary judgment raises further problems that are anathema to the stated objectives Hryniak.

[30] First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is always the possibility of an appeal.

[31] Second, a motion for partial summary judgment may be very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing partial summary judgment motions.

[32] Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.

[33] Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial therefore increasing the danger of inconsistent findings.

[34] When bringing a motion for partial summary judgment, the moving party should consider these factors in assessing whether the motion is advisable in the context of the litigation as a whole. A motion for partial summary judgment should be considered to be a “rare procedure” that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner. Such an approach is consistent with the objectives described by the Supreme Court in Hryniak and with the direction that the Rules be liberally construed to secure the just, most expeditious, and least expensive determination of every civil proceeding on its merits.” [emphasis added]

[23] The Court raised the issue of the propriety of this motion for summary judgment with the parties in light of the admission of liability for the motion only and the existence of the crossclaims in this Action. The Defendants submitted that the Court should hear and consider the motion for summary judgment as it is the most cost effective and expeditious way to proceed and it is in the interests of justice that this action be decided on a summary basis. They argue that a decision can be made even if the court must use its enhanced fact finding powers. All the evidence on damages is before the court. It is argued that although the evidence filed on the motion is voluminous, the issues surrounding the matter of damages are not complex. Further, proportionality and the interests of justice support resolving the issues in dispute in a summary fashion rather than at a lengthy four week trial with six parties. The Plaintiff’s position is that this motion should be dismissed as there are genuine issues requiring a trial.

[24] As I have already noted, the evidence with respect to the punitive damages claim is not before this Court.

Facts

[25] The City issued a building permit authorizing the construction of the Townhouse development on August 29, 2000. The plans approved with the building permit included the construction of several concrete retaining walls, which were not built. Instead, steel soldier pile and timber lagging wooden retaining walls were built. The “wooden” retaining wall immediately to the east of the Plaintiffs’ property failed on November 15, 2005.

[26] The Plaintiffs submit that these facts, regarding the construction of the “timber” retaining walls instead of the approved concrete walls are evidence of “a blatant disregard of obligations at law” and had the effect of endangering their property and others in immediate proximity of the failed retaining wall and that these facts will support an award for their punitive damages claim. The Plaintiffs rely on a report from Soil Test Services Ltd. dated April 24, 2006, which stated that the “timber lagging retaining wall” that was constructed on the site was originally designed to be a “reinforced concrete retaining wall” and that the “instability was a direct result of water accumulation and pressure and the failure of wedge anchors which were spaced considerably less than the minimal allowable spacing specified by the anchor manufacturer.”

[27] In addition to the failure of the retaining wall, the Plaintiffs’ house was struck by machinery being used in the development of the adjacent property, causing damage to the bricks on the Plaintiffs’ property.

[28] On November 15, 2005, the water main owned by the Association ruptured, resulting in significant movement of the Retaining Wall. Gravel was put on the opposite side of the Retaining Wall by 140 to prevent any further movement. The Defendants argue that the Retaining Wall was then stabilized and was never in any danger of collapse.

[29] The Plaintiffs submit that they had to leave their house because of the loss of gas and water service, damage to the front stairs, driveway and air conditioner, and movement of soil around their home, which became significantly depressed. A fence along the east side of the property, parallel to the retaining wall, was sheared off on both its north and south ends. The Plaintiffs’ also claim there was structural damage to the walls of the townhome as well as significant cracks in the exterior brick work, separation of the floor and wall on the first floor, second and third floors and basement foundation cracks. These damages are denied by the Defendants who rely on the evidence of the Plaintiffs’ expert who admitted there was no structural damage to the house. The Plaintiffs claim that this damage has not been repaired and ask for an Order requiring remediation and repair.

[30] The Defendants rely on a professional structural engineer’s report on the structural stability of the townhouses dated November 18, 2005, which concluded:

The buildings are founded below the lower grade of the retaining wall, therefore the building foundations are retaining the soil behind the west face of the displaced wall as well. Hence the building stability had not been affected and buildings are safe. The retaining wall was independent of the buildings and the soil moved in the direction parallel to the building blocks.

[31] The Defendants emphasize that even though the Plaintiffs got a copy of the report, which also included a caution that the Plaintiffs’ unit should be temporarily accessed from the rear, Ms. Perez, who was pregnant, used her front porch on November 28, 2005. Due to its instability, the front porch moved and she fell. Although Ms. Perez sustained no injuries, the Plaintiffs moved out of their house. The Defendants submit that their “belief” that the house was unsafe was “irrational,” relying on the professional engineering conclusion of Mr. Tichy that the houses were structurally safe and there is no evidence to the contrary.

[32] Notwithstanding the caution in the report regarding the instability of the front stairs, there was no effort made by any of the Defendants to block off the front entrances from use.

[33] The Defendants emphasize that the townhouses were built on steel pipe piles so that the failure of the Retaining Wall and the washing away of the soil around the homes did not affect the houses’ structural stability.

[34] The Defendants also emphasize that this report was accepted by all of the townhouse residents except for the Plaintiffs, who moved out of their house. All other townhouse owners remained in their homes.

[35] On May 18, 2006, the City of Toronto issued a further “Order to Remedy Unsafe Building” to the Olde York to hire an Engineer to do the repairs and to issue a final report confirming that the unsafe condition has been fixed. The Order was to repair immediately:

The retaining wall adjacent to 15 and 16 Old Primrose Lane has yielded to the extent that the structural integrity of the wall has been compromised. The soil behind the retaining wall has shifted and settled resulting in an unstable condition.

On or about November 16, 2005 gravel was placed against the lower side of the retaining wall in an attempt to support and stabilize the wall. This was done as a temporary measure only pending the permanent repair of the wall. To-date the wall has not been permanently repaired and remains unsafe.

This Order was not removed by the City until the completion of the remedial work on June 15, 2009. The Plaintiffs therefore submit that their house remained unsafe to occupy, use and enjoy until June 15, 2009.

[36] The Defendants submit that because the Plaintiffs’ house was at all times structurally sound and habitable, any costs incurred by the Plaintiffs were not caused by the Defendants’ actions, so that this action must be dismissed.

[37] The Plaintiffs, however, claim that although the townhome may have been safe, the lands around the townhome were unsafe at the time. The Plaintiffs rely on a report from Mr. Tichy, the engineer, stating in part:

The services buried in the soil behind the wall were damaged and must be cut off. They cannot be repaired until a permanent wall is installed at the east of Old Primrose Lane. It appears that the water supply, sewer pipes, gas supply piping and cables with wires in the soil were sheared off or pulled out of the connections. There are air conditioning units hanging on refrigerant lines since the soil below them was eroded. The steps to the main access doors lost their footings and should not be used.

The townhouse units along the west end of the complex may have the services restored. Four units at the east end of Old Primrose Lane shall be without services until the new retaining wall is constructed.

[38] They argue that this report states that they would be without gas and water service from November 15, 2005 to the time the wall was fixed. The Plaintiffs claim that they were unable to use and enjoy their property until June of 2009, when the remediation and repair of property around their townhome was finished.

[39] The Plaintiffs also argue that, even though a pile of gravel was put on the east side of the failed retaining wall to stop the retaining wall from total collapse, they were worried that this would not stop further erosion of soil in and around their property or total collapse of the retaining wall.

[40] The Defendants submit that in response to the summary judgment motion, because of the lack of evidence that the house was unsafe, the Plaintiffs have tried to reconstitute their action by arguing that the house was uninhabitable because of an interruption in both water and gas service to their house. The Defendants allege this is a new theory, but it is noted that these claims were pleaded by the Plaintiffs.

[41] In response to these arguments by the Plaintiffs, the Defendants submit that the City's contractor found that the reason for the lack of water was that the water had been shut off from inside the house by the Plaintiffs. There was no interruption of water service as a result of the actions of the Defendants.

[42] The Defendants’ response with respect to the issue of gas access is that the City's contractor who was hired to repair the retaining wall discovered in December of 2007 that the gas line to the Plaintiffs’ house was disconnected from the gas main. The City, as a courtesy, put Plaintiffs' counsel on notice and recommended that the Plaintiffs take steps to have the line reconnected prior to “backfilling to fix the retaining wall.” The Defendants deny that they disconnected the gas line and submit that the disconnection occurred because of the work being done to repair the failed retaining wall. This is evidenced by the Tichy report I have referred to above.

[43] The City responds with evidence that it made inquiries with Enbridge and learned that Enbridge had cut off gas service to the Plaintiffs' house in June of 2006 due to non-payment of arrears. The June 28, 2006 statement was not paid until December 22, 2007.

[44] The Plaintiffs respond that notwithstanding this argument, the line could only be connected at the time of backfilling to ensure the stability of the line again. The line was reconnected by Enbridge on or about November 26, 2008. As well, although the Defendants submit that the crossclaims have been settled, they could not offer the Court any evidence of such.

[45] The Defendants argue that outside of the approximate one week period in mid-November 2005, following the movement of the Retaining Wall, no other townhouse residents encountered any issues with water or gas, including the occupants of homes who were impacted by events in the exact same manner as the Plaintiffs.

[46] Finally, the Defendants emphasize that at her examination for discovery, Ms. Perez did not claim that lack of gas service was one of the reasons for the Plaintiffs’ decision not to stay. Rather, her evidence was that they did not live there because the property was not safe. However, the Plaintiffs have pleaded these facts, with respect to the interruption of gas services.

[47] The Defendants dispute that the Plaintiffs have incurred the following damages as a result of the failure of the retaining wall:

• 88 bi-weekly mortgage payments equal to $57,332.88;
• Property taxes of $16,710.28;
• Payment for water service of $844.00;
• Payment to Toronto Hydro for electricity of $2,911.46;
• Payment to Enbridge for gas service of $5,167.82;
• Payment for water tank rental of $403.73;
• Payments of $33,000 ($1,000 per month for 33 months) to C. Perez’s mother as contribution towards expenses for living at her house from November 2005 to October of 2008;
• Transportation costs between Pickering and Toronto of $2,863.05;
• $17,500 ($2,500 per month from October 2008 to April 2009) for the value of the residential portion of the mixed commercial residential property at 420 Queen Street East owned by the Plaintiffs;
• Lost profit for having to sell a condominium unit owned by C. Perez on November 8, 2006 to assist in covering expenses associated with living elsewhere. It is alleged that the condo would be worth approximately $400,000 instead of the $219,000 for which it was sold;
• General damages for emotional distress and anxiety;
• Diminution of value of the townhouse because of the stigma arising out of the events surrounding the movement of the Retaining Wall; and
• “Non-structural damages” (i.e. cracking) allegedly to the townhouse as a result of the drilling operations while shoring was being carried out by Shor-Cais in May and June of 2005.

[48] The Defendants submit that any expenses incurred were incurred needlessly. Alternatively, if any damages were incurred as a result of the Defendants' actions, their quantum is less than $25,000.

[49] In summary, the Defendants submit that while the construction at the 140 property may have been a nuisance, at no time was their house unsafe or uninhabitable. The movement of the Retaining Wall on November 15, 2005 did not have any structural impact on the townhouses; they were safe because they were built on steel pipe piles and were structurally independent of the Retaining Wall. This is reflected in the Tichy Report prepared three days following the movement of the Retaining Wall. The Plaintiffs’ expert admitted on cross-examination that the Plaintiffs’ house would have been safe and habitable because of the house's deep piled foundations. Further, all the other townhouses remained occupied, including those which were impacted in the exact same manner as the Plaintiffs. It is submitted that the Plaintiffs’ decision not to occupy their house was unreasonable. The Defendants submit that the Plaintiffs costs were incurred voluntarily and not by the actions of the Defendants.

[50] I do not accept these arguments on the basis of the evidence. I cannot conclude on the basis of the evidentiary record before the Court that the Plaintiffs have not been able to prove that they have incurred damages as a result of gas disruption to their house. The gas disruption is substantiated by the report relied on by the Plaintiffs.

[51] Further, perhaps more importantly, as I have already noted, the evidence with respect to the punitive damages claim is not before this Court. I find that the cautions set out by our Court of Appeal with respect to partial summary judgments are applicable and that this is not an appropriate motion for summary judgment. As I have noted above, there is a claim for punitive damages that may succeed at trial because of the failure to build the retaining wall in accordance with the plan submitted to obtain the building permit. The trial is scheduled for September 24, 2018, which is less than 6 months away. As well, in light of the crossclaims (which have not been proven to have been settled at the hearing of this motion), a trial will involve all of the same issues and the same evidence that is before this Court. I find that the issues on this motion are not issues “that can be easily bifurcated from the main action that can be dealt with expeditiously and in a cost effective manner.” I find that all of the concerns set out in the Butera case are applicable and I must therefore dismiss this motion for summary judgment on this basis alone, notwithstanding my conclusion that the Defendants have not met their burden of proving that the Plaintiffs had suffered no damages. As a result of my findings on this motion, it is not necessary for the Court to consider the Defendants’ alternate argument that this action should be transferred to the Small Claims Court.

[52] For these reasons, this motion is dismissed.

[53] There is one further practical issue. The Supreme Court of Canada in Hryniak also held, at para. 78, that:

Where a motion judge dismisses a motion for summary judgment, in the absence of compelling reasons to the contrary, she should also seize herself of the matter as the trial judge.

In my view, this is an appropriate case for me to follow the Supreme Court’s direction. I must, however, qualify this to recognize the practical reality of our court's ability to schedule trials in a timely and expeditious manner. I will not be seized of this trial if the effect of my unavailability would be to delay the hearing of the trial between the parties. If it is possible to do so without adverse delay or consequences to the parties, I seize myself of the trial of this matter as directed by the Supreme Court of Canada.

Costs

[54] If the parties are unable to agree on costs, they may make brief written submissions to me no longer than three pages in length. The Plaintiffs’ submissions are to be delivered by 12:00 p.m. on July 6, 2018, and the Defendants’ submissions are to be delivered by 12:00 p.m. on July 13, 2018. Any reply submissions are to be delivered by 12:00 p.m. on July 18, 2018.

Pollak J. Date: June 27, 2018