Court File and Parties

Court File No.: 54126/12 Date: July 6, 2018 Superior Court of Justice – Ontario

Between:

NEWMAN BROS. LIMITED, Plaintiff Joseph M. Gottli, for the Plaintiff

And:

UNIVERSAL RESOURCE RECOVERY INC., BRAMPTON BRICK LIMITED, WILFRED GOLDLUST, JEFFREY KERBEL, KENNETH MONDOR, MARILIA MACIAS, GERALD PATT, VICTOR PETERS and TREVOR SANDLER, Defendants Anne M. Kennedy and Marc D. Whiteley, for the Defendants

Heard: May 15, 2018

Judgment

Before: The Honourable Mr. Justice H. S. Arrell

Introduction

[1] The defendants bring this summary judgment motion seeking a dismissal of the plaintiff’s claim due to the expiry of the 2-year limitation period under the Limitations Act, 2002, S.O. 2002, c. 24.

[2] The plaintiff states that the limitation period to bring this action has not expired. In the alternative the plaintiff argues that at the very least, there are triable issues regarding the limitation period and the matter should therefore not be dismissed summarily by way of this motion.

Facts

[3] In August 2007, following consultations in 2006, Newman Brothers entered into a contract with URR according to which Newman Brothers agreed to provide construction services (the “Services”) to URR in the conversion of a building into a waste recycling and composting facility.

[4] Newman Brothers’ accounting system generated monthly invoices under the contract running from December 2007 until January 2009. URR says that it received invoices from Newman Brothers between December 2007 and December 2008, all of which it paid in full.

[5] Newman Brothers disputes this and alleges that URR received all of its invoices rendered under the Main Contract, but not all of which were paid, and some remain owing, leaving an alleged balance due and owed to it by URR of more than $2.5 million.

[6] URR made payment on the invoices it received from Newman Brothers until August 13, 2009. After that date URR says it made no other payments to Newman Brothers under the Contract and proceeded on the basis that it had paid everything it owed Newman Brothers for the Services. That is disputed by the plaintiff which alleges the last payment was made May 11, 2011 and therefore the claim was issued well within the limitation period.

[7] Newman Brothers did not commence this action claiming to be owed money under the Contract until December 27, 2012 which URR alleges was 16 or more months after the expiration of the limitation period, given that it says the last payment under the contract was in August 2009.

[8] The Project did not go as planned. It took significantly longer to complete than had initially been forecast. There is evidence the construction also cost almost twice as much as first contemplated to near $15.5 million, up from $8.5 million. The reasons for, and financial consequences, of this are in dispute in this proceeding.

[9] In essence the plaintiff has said of the arrangement with URR “…essentially it was set up, do the work, we’ll tell you what to do and do it and send the bills.” That is not really disputed by URR.

[10] URR puts great weight on the theory that there was a main contract and a subsequent service contract and that it has paid everything owing under the main contract with the last payment on August 13, 2009 and the missed limitation period is relating solely to that main contract.

[11] The plaintiff argues it brought this action in December 2012 for funds owing under a standard form construction contract. It alleges these funds are owed for the value of construction and management services, and for work to retrofit a Welland industrial building into a working recycling and composting facility.

[12] The contract was certified substantially performed on November 24, 2008. Subsequent to that, the plaintiff alleges it was directed to perform additional work under the contract which it did. The defendants continued to make payments up until May 2011 which the plaintiff argues was under the main contract and does not agree that there was any type of separate agreement for maintenance.

[13] The plaintiffs allege Mr. Patt, the project manager for the defendant, directed all work. He also directed additional work as “extras” to the contract and he insisted on separate invoices without cumulative totals. To do so, the plaintiff referenced such extra work as “URR Maintenance” with separate job matters for tracking purposes only.

[14] The plaintiff states there was no separate arrangement for maintenance. All invoices submitted, according to the plaintiff, was for work done, or work done as additional services under the main contract for the construction project.

[15] The last payment received from the defendants to the plaintiff was received on May 31, 2011. It is alleged there was then, and still is, additional money owing under the contract.

[16] The plaintiff continued to work for the defendants after receipt of that last payment and it made repeated requests for payment of the accumulating amounts owing.

[17] There are numerous examples in the record before me of promises by the defendants to pay on outstanding invoices, and indeed some payments occurred subsequent to some of these assurances of payment.

[18] For example, on May 11, 2011 the defendants, through Mr. Patt, emailed the plaintiff that “a request for payment was submitted.” It is agreed that a payment was then received on May 31, 2011. That payment received by the plaintiff could not be matched to any specific invoice so it was applied to the oldest one.

[19] The plaintiff, on November 25, 2011, sent an email to the defendants confirming the May 31, 2011 payment, and listing the outstanding balances owing. The record would indicate that nothing was ever mentioned by the defendant of any objections to the invoices submitted for the work done. Likewise, it is confirmed by Mr. Patt that no one from the defendants ever told the plaintiff after the May 31, 2011 payment, that no further payments would ever be made.

[20] As of May 25, 2012 the plaintiff again requested payment. No response was forthcoming and this action was commenced on December 27, 2012.

The Law

[21] Under Rule 20 of the Rules of Civil Procedure, where this Court is satisfied that there are no genuine issues requiring a trial, the motion must be granted. There will be no genuine issue requiring a trial when the Court is able to reach a fair and just determination of the merits of the motion. This will be the case when the process allows the Court to make necessary findings of fact and apply the law to those facts, and the motion is a proportionate, more expeditious and less expensive means to achieve a just result (see Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at paras. 47, 49 and 66).

[22] The Court should first determine if there is a genuine issue requiring a trial based on the evidence before it, prior to using the new fact-finding powers under Rule 20. If there appears to be a genuine issue requiring a trial after that review, the Court may then determine if the need for a trial can be avoided with the use of the powers in Rule 20.04 (2.1) and (2.2). The Court has the discretion to use those powers, provided their use is not against the interest of justice (see Hryniak at para. 66; see also Rogers Cable TV Ltd. v. 373041 Ontario Ltd., 1994 ONSC 7367, [1994] O.J. No. 2196; and see eg. Dawson v. Rexcraft, 1998 ONCA 4831, [1998] O.J. No. 3240 (C.A) at paras. 13-31; Rahimi v. Hatami, 2015 ONSC 4266, [2015] O.J. No. 3479 at paras. 5-6).

[23] The Limitations Act, 2002, S.O. 2002, c. 24. Sch B (the “Act”) at s. 4 says that “Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.” Sub-section 5(1) of the Act provides that:

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).

[24] 407 ETR Concession Company Limited v. Day, 2016 ONCA 709 at para. 33 speaks to the appropriateness of when a plaintiff should sue for a debt owing:

The appropriateness of bringing an action was not an element of the former limitations statute or the common law discoverability rule. This added element can have the effect – as it does in this case – of postponing the start date of the two-year limitation period beyond the date when a plaintiff knows it has incurred a loss because of the defendant’s actions.

[34] Also, when an action is “appropriate” depends on the specific factual or statutory setting of each individual case (see Brown v. Baum, 2016 ONCA 325, 397 D.L.R. (4th) 161 at para. 21). Case law applying s. 5(1)(a)(iv) of the Limitations Act, 2002 is of limited assistance because each case will turn on its own facts.

[25] See also the Court’s comments in 407 ETR at paras. 39 and 48:

[39] A civil action becomes appropriate when 407 ETR has reason to believe it will not otherwise be paid – in other words, when the usually effective license plate denial process has run its course. Thus the date when a vehicle permit expires for failure to pay a toll debt is the date a civil action is an appropriate means to recover a debt. This date starts the two-year limitation period.

[48] A third consideration is what I take to be an important purpose of s. 5(1)(a)(iv). The overall purposes of limitation statutes are well-established and well-known: certainty, finality and the unfairness of subjecting defendants to the threat of a lawsuit beyond a reasonable period of time. But it seems to me one reason why the legislature added “appropriate means” as an element of discoverability was to enable courts to function more efficiently by deterring needless litigation. As my colleague Juriansz, J.A. noted in his dissenting reasons in Hare v. Hare (2006), 2006 ONCA 41650, 83 O.R. (3d) 766 (C.A.), at para. 87, courts take a dim view of unnecessary litigation.

Analysis

[26] The defendants submit that the limitation period begins to run under this particular contract 16 days after the delivery of each invoice, and therefore separate actions would have to be commenced at different times whenever there was a delay in the payment of a particular invoice. I reject such an argument as not commercially reasonable, unduly onerous on the parties, and a potential waste of judicial resources.

[27] As was stated in 407 ETR at para. 39:

A civil action becomes appropriate when 407 ETR has reason to believe it will not otherwise be paid – in other words, when the usually effective license plate denial process has run its course. Thus the date when a vehicle permit expires for failure to pay a toll debt is the date a civil action is an appropriate means to recover a debt. This date starts the two-year limitation period.

[28] I accept the position of the plaintiff that it trusted the defendants, it did not want to jeopardize a long standing business relationship and it believed, from the promises made, that payment would be forthcoming and in fact some were. That in my view was a reasonable basis, and reasonable consideration to forebear on issuing the claim to see if further payments would be forth coming.

[29] I conclude that I have not been persuaded by the defendants, based on the record before me, that the legally appropriate time to sue was two years after the August 2009 payment. Indeed, I find the argument of the plaintiff has merit. It was promised further funds, there were no objections to the invoices submitted or the work done, and it received further funds in May 2011 after receiving such promises of payment.

[30] I conclude, in the alternative, that I am unable to make the necessary findings of fact on this record necessary to dispose of this matter on a summary basis. Evidence would need to be called on the whole issue of the invoices, payments, and more importantly verbal discussions of various individuals surrounding this whole project and everyone’s expectations and intentions. This is especially so regarding the defendant’s theory of separate and distinct contracts involving this project. Credibility of the key players in this legal saga is of central importance and cannot be determined except by the trier of fact hearing all of the evidence and especially cross examination. A full trial is required and use of the procedures set out in R. 20.04(2.1) and (2.2) would not be appropriate or sufficient in this particular case.

[31] Based on this record one would have difficulty thinking that the defendants thought the May 31, 2011 payment was all they potentially owed, or that, the plaintiff thought that that payment had satisfied the debt (see s. 13(1) of the Limitations Act, 2002; see also Buik Estate v. Canasia Power Corp., 2014 ONCA 2959 at paras. 13-15).

[32] I conclude that the defendants have not persuaded me that they will necessarily be successful on their limitation defence, such that I should dismiss this case summarily at this stage.

[33] In the alternative I accept that there are serious credibility issues on the evidence regarding what the payments were for and what various people involved were promising each other as this project went forward. This is a case that requires a trial on the merits where all of the evidence and cross examination is available to the trier of fact so that a reasoned and fair decision to all the parties can be made. This is in my view a case that has “genuine issues for trial”.

[34] I am also mindful of the instructions in Bhasin v. Hrynew, [2014] 3 S.C.R. 484 at paras. 60-73 in which the Court states “…the organizing principle is simply that parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily....”. This case requires a trial, at the very least, to determine that fundamental principal.

Conclusion

[35] This motion is dismissed.

[36] If the parties are unable to agree on costs they may make brief written submissions of no more than 4 pages double spaced. The plaintiff shall file its submissions by July 27, 2018 and the defendant may respond no later than August 17, 2018. The plaintiff may reply by August 31, 2018.

ARRELL, J. Released: July 6, 2018