Court File and Parties

COURT FILE NO.: CV-14-513037 DATE: 20180919 SUPERIOR COURT OF JUSTICE - ONTARIO

B E T W E E N:

G. COOPER EQUIPMENT RENTALS LIMITED, Plaintiff

- and -

2208011 ONTARIO LIMITED o/a TRIFIELD CONSTRUCTION, TRIFIELD CONSTRUCTION MANAGEMENT CORP. o/a TRIFIELD CONSTRUCTION, SANDY GOODMAN, AARON GOODMAN, and SARI GOODMAN, Defendants

BEFORE: Copeland J.

HEARD: June 6, 2018

COUNSEL: Ms. Whitney Abrams, for the plaintiff/moving party Ms. Vanessa A. Ibe, for the defendants/responding parties

Endorsement

[1] The plaintiff/moving party brings a summary judgment motion seeking judgment against the defendants in the amount of $50,707.18, and a declaration that the defendants are in breach of the trust provisions of the Construction Act, R.S.O. 1990, c. C-30.

[2] The action relates to unpaid invoices in respect of construction equipment that was supplied by the plaintiff to the defendants. There is no dispute that the equipment was requested and provided, or over the quantum of the invoices, or the fact that the invoices were not paid. In essence, the defendants’ position is that there is no liability on the basis that 2208011 Ontario Limited (“220”) signed the contract, but is not a “contractor” under the Construction Act, and although Trifield Construction Management Corp. (“Trifield”) is a “contractor” under the Construction Act, it is argued that Trifield was not a party to the contract. I note that the defendants have filed no evidence to suggest that Trifield did not use the equipment supplied under the contract.

[3] The central legal issues on the motion are: (i) the liability of the corporate defendant Trifield in contract; (ii) the liability of Trifield in unjust enrichment, if it is found not to be a party to the contract; and, (iii) the liability of the corporate defendants and individual directors under the breach of trust provisions of the Construction Act.

[4] In light of the very limited scope of the affidavit filed in response by the defendants on the motion, the primary areas where I must make findings of fact are: (i) who was a party to the contract (the credit application)? and (ii) was 220 a “contractor” or a “subcontractor” under the Construction Act?

Applicable law

[5] In considering whether there is a genuine issue requiring a trial, I must consider if the summary judgment process, in particular, the record on the motion: (1) allows me to make the necessary findings of fact, including any necessary findings of credibility; (2) allows me to apply the law to the facts; and, (3) if summary judgment is a proportionate, more expeditious and less expensive means to achieve a just result. If I find that there are genuine issues requiring a trial, and the record on the motion as it stands is insufficient to allow me to determine the genuine issues requiring a trial, I must consider if I can decide the issues using the fact-finding resources available under the summary judgment rule: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87.

[6] The parties to a motion for summary judgment must put their best foot forward. The motions judge should assume that the record on the motion contains, in some form, all of the evidence which would be available for a trial. Self-serving affidavits containing bald allegations or denials without providing supporting evidence or detail are not sufficient to create a genuine issue for trial. Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200 at paras. 26-27, 33, affirmed, 2014 ONCA 878; Columbos v. Columbos, 2014 ONSC 1342 at para. 10; Rozin c. Ilitchev, 2003 ONCA 21313, 66 O.R. (3d) 410 at para. 8.

[7] This summary judgment motion arises in the context of a simplified procedure action. As a result, cross-examination is not available on the affidavits filed on the motion.

[8] Counsel for the defendants argues that the summary judgment motion should not be granted due to the unavailability of cross-examination, particularly because discoveries have not yet been conducted.

[9] I have considered whether the absence of cross-examination in this motion leads to unfairness or has the result that I am unable to make the necessary findings of fact and credibility: Singh v. Concept Plastics Limited, 2016 ONCA 815.

[10] Concept Plastics does not hold that summary judgment will never be available on a simplified procedure action due to the unavailability of cross-examination on the affidavits filed on the motion. Rather, in Concept Plastics the Court of Appeal signaled the need for caution in considering summary judgment motions in simplified procedure actions, due to the unavailability of cross-examination. Where a motions judge is considering a summary judgment motion in a simplified procedure matter, the judge should consider if there is unfairness as a result of the unavailability of cross-examination. If the motions judge grants the motion, the judge should explain why and how the potential unfairness due to the unavailability of cross-examination is addressed by the materials filed on the motion: see Concept Plastics at paragraphs 24-25.

[11] In the circumstances of this motion, I find that I am able to make the necessary findings of fact, and that unfairness does not result from the absence of cross-examination. The reasons that I come to this conclusion are twofold. First, the affidavit filed on behalf of the defendants is so bare and conclusory, and also contrary to the documentary record, that I find that I can fairly make factual findings in the absence of cross-examination. Second, given the amount of the claim ($50,000.00), it is in the interests of proportionality, and expeditious resolution of judicial proceedings to decide this action by way of summary judgment.

Findings of Fact and Analysis

Contract claim

[12] The defendants do not dispute that 220 entered into the contract with the plaintiff, or the dollar value of the equipment supplied. The contract provided that invoices were to be paid within 30 days of the date of the invoice. The record is clear that the invoices were not paid. Thus, there is no question that 220 is liable to the plaintiff for breach of contract.

[13] The defendants argue that Trifield is not liable, as they argue that it was not a party to the contract. I do not accept this argument.

[14] The contract was signed by Aaron Goodman. The corporate profile report for 220 shows that Aaron Goodman is one of the directors of 220 (along with Sandy Goodman). In addition to his position as a director of 220, in his own affidavit, Aaron Goodman states that he is the “operations and construction manager” of Trifield.

[15] The contract states the name of the party with whom the plaintiff contracted as follows (the italics indicate portions filled in by hand on the pre-printed contract form):

“Legal name in full: 2208011 Ontario Limited

Trade Name: Same as above, or O/A TRIFIELD CONST .”

[16] Aaron Goodman states in his affidavit (paras. 4-5) that he signed the contract on behalf of 220. As I have noted, the contract also has filled in by hand (as is the rest of the contract) next to “trade name” the words “ O/A TRIFIELD CONST .” Mr. Goodman denies that he wrote this on the contract, and states that 220 has never operated as “Trifield Const.” Thus, he asserts that Trifield was not a party to the contract.

[17] I do not accept Mr. Goodman’s evidence that “ O/A TRIFIELD CONST .” was not written on the contract when he signed it, and that it must have been added later (by some unknown person).

[18] The plaintiff’s evidence is much more consistent with the documentary record. At Exhibits B and C to the affidavit of Catherine McGee, filed on behalf of the plaintiff, are all of documentation related to the equipment supplied, and the invoices sent by the plaintiff to the defendants under the contract, from July 30, 2013 to February 6, 2014. With the exception of one document (dated July 30, 2013), each document which was sent to the defendants, including every invoice sent to the defendants, is addressed: “2208011 Ont Ltd, O/A as Trifield Construction, 10 Cardico Drive, Gormley, ON, L0H 1G0”. Thus, for a period of seven months, invoices and other documents under the contract were sent to the defendants addressed to: “2208011 Ont Ltd, O/A as Trifield Construction”. During this time, the defendants never once said to the plaintiff, “no, wait, we are two separate corporations”, until the plaintiff tried to collect on the invoices. The defendants have filed no evidence whatsoever to rebut this documentary record.

[19] The corporate profile report for 220, filed as part of the plaintiff’s record, shows that Sandy and Aaron Goodman are directors of 220. The registered address of 220 is 10 Cardico Drive in Gormley, Ontario. There is no corporate profile report for Trifield in the record. But the defendants do not dispute that Sari Goodman is a director of Trifield (and indeed, admit this fact in para. 5 of the Statement of Defence). The Master Business Licence for Trifield, appended as an exhibit to the affidavit of Aaron Goodman, shows that Trifield operates from the same address as 220, 10 Cardico Drive, in Gormley, Ontario. As noted above, Aaron Goodman, in addition to being a director of 220, holds the position of “operations and construction manager” of Trifield.

[20] The record filed by the plaintiff shows that equipment was delivered to various job sites at the request of 220, and where it is clear that Trifield was working on projects. Nothing in the defendants’ record on the motion denies that Trifield used the equipment supplied by the plaintiff.

[21] Thus, the contract and invoices list both corporations, both names are on all but one of the documents related to the equipment supplied, including all of the invoices sent to the defendants, and the equipment was delivered to, and used by Trifield at job-sites it was working on.

[22] I appreciate that the documents referred to in paragraph 18 above, and the delivery of equipment at various times referred to in paragraph 20 above, took place after the contract was entered into. However, they are circumstantial evidence of the objective meaning of the contract. Considering the wording of the contract and the surrounding circumstances, objectively viewed, the contract binds both 220 and Trifield.

[23] In the circumstances, I find that both 220 and Trifield were parties to the contract with the plaintiff. I acknowledge that the record does not support that Aaron Goodman is an officer or director of Trifield. But I am satisfied that the record taken as a whole shows that he was acting as agent for Trifield, and on behalf of both 220 and Trifield in entering into the contract. Further, even if Trifield were found not to be a party to the contract, I find that 220 and Trifield were clearly acting in concert, such that Trifield should not be entitled to escape liability under the contract.

[24] Thus, I find that both 220 and Trifield are liable under the contract. The evidence is undisputed that equipment rentals in amount of $50,707.18 were advanced under the contract and used by Trifield. The evidence is undisputed that this amount was not paid. On this basis, I find that both 220 and Trifield are liable for breach of contract in that amount.

Unjust enrichment

[25] In light of my finding that Trifield was a party to the contract, it is not necessary for me to consider 220’s arguments based on unjust enrichment.

Constructive Trust

[26] The plaintiff alleges that the three individual defendants are personally liable under the breach of trust provisions of the Construction Act (ss. 8 and 13).

[27] In order to prove a breach of trust under the Construction Act, the plaintiff must show that the defendant is a contractor or subcontractor; that the plaintiff supplied materials to projects on which the defendant is a contractor or subcontractor; that the defendant has received or is owed monies on account of the contract price for the projects; and, that the defendant owes the plaintiff money for the materials supplied. Once the plaintiff establishes these facts, the onus shifts to the defendant to prove all payments of the trust funds were made to proper beneficiaries of the trust: Monro Ltd. v. Faga Group Construction Ltd., 2016 ONSC 4968 at para. 7.

[28] Much of what the plaintiff needs to prove for the construction lien trust claim is not in dispute, as the defendants have filed no evidence to dispute the plaintiff’s claims on most aspects of the construction lien trust claim.

[29] On the record before me, I am satisfied that the plaintiff delivered equipment to various job sites for use on the projects on which Trifield was the contractor. I am satisfied that that Trifield received payment for the projects. The record shows that Trifield received payment of approximately $1.6 million on the job site at 345 Carlaw Avenue, one of the sites where equipment was delivered under the contract with the plaintiff. And I am satisfied that 220 and Trifield owe money to the plaintiff for the equipment that the plaintiff supplied, in the amount of $50,707.18 (not addressing interest at this stage).

[30] The only issue in dispute is that Trifield argues that 220 was not a contractor. I note that the defendants are silent on the issue of whether 220 is a “subcontractor” under the Act; although s. 8 clearly applies to both “contractors” and “subcontractors”. The defendants’ argument on this issue is based on the bald assertion that 220 is not a “contractor” in the affidavit of Aaron Goodman.

[31] In the absence of further documentation from Mr. Goodman about the nature of the work done on the projects, and evidence of the contracts with the owners or agents of the owners of the projects, which would show who the contractors or subcontractors were, I am not prepared to accept Mr. Goodman’s bare assertion that 220 was not a contractor.

[32] However, under s. 8 of the Construction Act, the plaintiff has the burden to prove that 220 was a contractor or subcontractor.

[33] “Subcontractor” is defined in s. 1 of the Construction Act as:

“a person not contracting with or employed directly by the owner or an agent of the owner but who supplies services or materials to the improvement under an agreement with the contractor or under the contractor with another subcontractor and includes a joint venture entered into for the purposes of an improvement or improvements.”

[34] I am satisfied that the evidence in the record is sufficient for me to draw the inference that 220 was a subcontractor. 220 entered into the contract for rental of equipment (jointly with Trifield, as I have found above). 220 had equipment delivered to project sites over a period of months. In the circumstances, there is every reason to believe that 220 had a subcontracting relationship with Trifield. If 220 now seeks to dispute that (apparently as part of a scheme to avoid liability under the contract), more evidence is required to rebut what the plaintiff was clearly led to believe by Aaron Goodman.

[35] Further, even had I not found 220 was a subcontractor, I find that 220 was acting in concert with Trifield, and as a result shares Trifield’s liability under the trust provisions of the Construction Act.

[36] The defendants’ overall position on the motion amounts to the following. That 220 signed the contract, but it was not a contractor. Trifield was the contractor, but it did not sign the contract. Therefore, neither party is liable under the Construction Act – 220 because it is not a contractor, and Trifield because it did not sign the contract. With respect, in circumstances such as this case, where it is clear to me on the record that 220 and Trifield were operating in concert, the court will not countenance this type of argument to avoid liability.

[37] As outlined above in relation to the signing of the contract, I am satisfied that 220 jointly engaged in the conduct in relation to the plaintiff with Trifield, and thus they are jointly liable under the trust provisions of the Construction Act.

[38] On this basis, I am satisfied that the funds paid to Trifield were impressed with a trust under the Construction Act for the benefit of the plaintiff, and that both 220 and Trifield are responsible for the trust.

[39] In light of these findings, the onus shifts to the defendants (at this stage I speak only of the corporate defendants) to prove that all payments of trust funds were made to proper beneficiaries of the trust.

[40] The defendants have provided no evidence whatsoever to account for the monies received by Trifield (acting jointly with 220). As such, I find that they have not discharged the onus to prove that all payments of trust funds were made to the proper beneficiaries of the trust.

[41] Section 13 of the Construction Act provides that any director, officer or other person who has effective control of the corporation “who assents to, or acquiesces in, conduct that he or she knows or reasonably ought to know amounts to a breach of trust by the corporation is liable for the breach of trust”.

[42] Sandy and Aaron Goodman are both directors of 220. The record is clear that Aaron Goodman was aware of the contract, since he signed it. And I am satisfied that he was aware of the delivery of the equipment, and the fact that the invoices were not paid, even thought Trifield was paid for its work. On this basis I am satisfied that Aaron Goodman assented or acquiesced in the non-payment of the plaintiff for equipment supplied by the plaintiff, knowing that the defendants had received funds for the projects which were impressed with a trust in favour of the plaintiff. Thus, I find that Aaron Goodman is jointly and severally liable along with the corporate defendants for the breach of trust.

[43] With respect to Sandy Goodman and Sari Goodman, I am not satisfied that the plaintiff has proven that they assented to or acquiesced in the conduct at issue. In fact, there is no evidence of their roles in the events at issue, other than that Sari Goodman is a director of Trifield, and that Sandy Goodman is a director of 220.

[44] Section 13 of the Construction Liens Act requires that a director (or other person to whom s. 13 applies) assent to or acquiesce in conduct that he or she knows or reasonably ought to know amounts to breach of trust. The fact of being a director, standing alone, does not prove this level of knowledge: Dietrich Steel Ltd. v. Shar-Dee Towers (1987) Ltd., 1999 ONCA 2757, 42 O.R. (3d) 749. In this case, there is no evidence about the knowledge of Sari or Sandy Goodman, other than the fact of them being directors or Trifield and 220, respectively. Thus, I am not satisfied that Sandy Goodman or Sari Goodman either assented to or acquiesced in the conduct at issue.

Conclusion

[45] I grant judgment in favour of the plaintiff as against the defendants 2208011 Ontario Limited o/a Trifield Construction, Trifield Construction Management Corp. o/a Trifield Construction, and Aaron Goodman in the amount of $50,707.18. I award pre-judgment interest from March 8, 2014 at the rate of 1.3 percent per annum, pursuant to s. 128 of the Courts of Justice Act, R.S.O. 1990, c. C-43. Post-judgment interest applies to the order from today’s date at the rate of 3 percent per annum, pursuant to s. 129 of the Courts of Justice Act.

[46] In addition, I make a declaration that the defendant Aaron Goodman is breach of the trust provisions of the Construction Act.

[47] As against Sandy Goodman and Sari Goodman, the action is dismissed.

Costs

[48] The plaintiff seeks costs of the motion and the action on a substantial indemnity basis. The defendants argue that if costs are granted to 220, they should only be granted on a partial indemnity basis.

[49] Pursuant to the Courts of Justice Act, s. 131(1), the court has a broad discretion when determining the issue of costs. Rule 57.01(1) of the Rules of Civil Procedure sets out a non-exhaustive list of factors to be considered by the court when determining the issue of costs. These factors include: the principle of indemnity and the results obtained; the reasonable expectations of the paying party; the amount claimed in the proceeding and proportionality; the complexity of the proceeding; the importance of the issues; the experience of the lawyer for the party entitled to costs; any offers to settle; and, the conduct of a party that tended to lengthen the duration of the proceeding.

[50] The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Counsel for Ontario, 2004 ONCA 14579. I have considered these factors, as well as the principle of proportionality (R. 1.01(1.1)), keeping in mind that the court should seek to balance the indemnity principle with the fundamental objective of access to justice.

[51] The plaintiff argues that costs should be payable on a substantial indemnity basis because the case has been dragged on an unjust amount of time by the defendants. The plaintiff did not provide detail of the alleged delay caused by the defendants. In response, counsel for the defendants argued that although there were a few motions to compel various steps in the proceedings brought by the plaintiff (where the plaintiff prevailed), costs were awarded against the defendants on each motion, and the defendants have paid those costs orders.

[52] On the record before me, although I am satisfied that the plaintiff should have its costs on a partial indemnity basis because it prevailed on the motion, I am not persuaded that there is a basis to order substantial indemnity costs.

[53] I have reviewed the plaintiff’s costs outline. On a partial indemnity basis, the total amount sought is approximately $9,000.00 in fees (including HST), and $1,400.00 in disbursements (including HST). This is not a particularly complex matter, nor is it about an extremely large sum of money. However, I find that the costs sought by the plaintiff are reasonable and proportionate for the amount at issue. I note that counsel for the plaintiff, reasonably, largely used more junior counsel to prepare and argue the motion, which limited the amount of fees.

[54] In all the circumstances, I find that an appropriate and proportionate award of costs is that the defendants, with the exception of Sandy and Sari Goodman, shall pay the plaintiff costs of the action and the motion in the amount of $10,400.00, inclusive of disbursements and HST. As I have made no order against Sandy or Sari Goodman, I make no order of costs against them.

Justice J. Copeland

Released: September 19, 2018