Court File and Parties

COURT FILE NO.: CV-15-121458 DATE: 2018-09-26 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: N.K.P. Painting Inc., Plaintiff – and – Jasper Construction Corp. and Jasper Construction Ltd., Defendants

COUNSEL: F. Scott Turton, for the Plaintiff Christos Papadopoulos, for the Defendants

HEARD: August 21, 2018

Reasons for Decision

CHARNEY J.:

Introduction

[1] This motion is brought by the defendant, Jasper Construction Corp., for summary judgment dismissing the plaintiff’s claim against it for breach of contract.

[2] To understand the issue raised on this motion, it is essential to highlight at the outset that there are two defendants to this action: Jasper Construction Corp. and Jasper Construction Ltd. For ease of reference I will refer to them as Jasper Corp. and Jasper Ltd.

[3] The motion for summary judgment is brought only by Jasper Corp. If the motion for summary judgment were granted, the case would still proceed to trial against the remaining defendant, Jasper Ltd.

[4] For the reasons that follow, the motion is dismissed. I am not satisfied that determining Jasper Corp.’s involvement in this action in a summary judgment process advances the goals of securing the most efficient, affordable and proportionate outcome for all, and I find that the issue can be more fairly determined in the context of the trial that will proceed in any event between the plaintiff and Jasper Ltd.

Facts

[5] The plaintiff, N.K.P. Painting Inc. (NKP) and the defendant, Jasper Ltd. entered into a subcontract agreement in February 2012, pursuant to which NKP agreed to provide Jasper Ltd. services and materials as a painting and wall covering subcontractor for the renovation of the King Edward Hotel in Toronto, Ontario (the project). The subcontract is between NKP and Jasper Ltd.; Jasper Corp. is not a party to the subcontract.

[6] Jasper Corp. states that Jasper Ltd. – not Jasper Corp. - was the general contractor for the project and NKP provided all of its construction services and materials in relation to the project to Jasper Ltd., and not to Jasper Corp. At no time did NKP contract or enter into any agreement with Jasper Corp. in relation to the project or for the provision of any construction services or materials.

[7] Moreover, the prime contract between the owner of the project and the general contractor was entered into by Jasper Ltd. and the owner of the project. Jasper Corp. was not a party to the prime contract and never received any monies from the owner of the project.

[8] Jasper Corp. states that, pursuant to the terms of the subcontractor agreement, Jasper Ltd. paid NKP more than $400,000 for the construction services and material provided by NKP to the project.

[9] Jasper Corp. states that it never made any payments to NKP in relation to the project, since NKP was a subtrade of Jasper Ltd., and not Jasper Corp.

[10] Giancario Appugliesi is the director and president of both Jasper Corp. and Jasper Ltd.

[11] In January 2015, NKP commenced an action against both Jasper Corp. and Jasper Ltd., claiming $276,603.66 for outstanding amounts it alleges are owing to NKP in relation to work done at the project. NKP alleges that the outstanding amount relates to an oral agreement to increase the contract price by $82,000 for touch-up work that was done and for other additional work (extras) performed. NKP alleges that it has been paid $354,619.73 and is still owed $276,603.00.

[12] The Statement of Claim acknowledges that the subcontract was between NKP and Jasper Ltd., but takes the position that Jasper Corp. is liable to the plaintiff on any of the following bases:

(a) It was an undisclosed principal for whom Jasper Ltd. was an agent. (b) Jasper Ltd. is the alter ego of Jasper Corp. and they are a common enterprise who do not have, or should not be treated as having, a separate legal existence. (c) The contract was assigned by Jasper Ltd. to Jasper Corp. (d) Jasper Corp. became a party to the contract by novation.

[13] Jasper Corp. and Jasper Ltd. are represented by the same counsel and have filed a single Statement of Defence. In the Statement of Defence, Jasper Corp. takes the position that it is not a party to the contract with NKP, and is inappropriately named as a defendant. Jasper Ltd. takes the position, inter alia, that the alleged extras were within the scope of the original agreement and are not extras for which NKP is entitled to additional payments, and that NKP has been paid in full for its work on the project.

Evidence on the motion for summary judgment

[14] Jasper Corp. relies on a number of undisputed facts in support of its motion for summary judgment:

(a) Jasper Ltd., not Jasper Corp., was the party to both the prime contract with the owner of the project and the subcontract with NKP. (b) NKP provided all construction services and material in relation to the project to Jasper Ltd., not Jasper Corp. (c) Jasper Ltd., not Jasper Corp., made all payments to NKP in relation to the construction services and materials provided to NKP at the project.

[15] NKP relies on various documents in support of its position on this motion:

(a) Four emails sent to NKP from Jasper Corp. while the work was being performed in 2013. These emails are from Mojeed Fadairo, the Project Coordinator, and Hussein Dannan, the Project Manager, and set out invoicing issues, deficiencies and other work that must be completed by NKP. All four emails indicate that they are from Jasper Corp. (b) A transmittal page addressed to NKP regarding the project, also from Hussein Dannan, Project Manager, Jasper Corp. (c) Two contract change documents setting out changes to the February 2012 subcontract with NKP. Both changes are accepted by Hussein Dannan, Project Manager, on behalf of Jasper Corp.

[16] NKP also relies on other documents, but the documents listed above, which emanate directly from Jasper Corp., are in my view, the most compelling. Given my conclusion on the summary judgment issue I am expressing no opinion on the weight to be given to any of the other documents relied on.

[17] NKP alleges that Jasper Corp. is an active company carrying on business, but Jasper Ltd. is not. This allegation is based primarily on the website of Jasper Group, which refers to Jasper Corp. and other related companies, but makes no reference to Jasper Ltd. NKP is concerned that Jasper Corp.’s motion for summary judgment is an attempt to remove Jasper Corp. from the litigation in order to leave NKP with a claim against an inactive company with insufficient assets to pay any damages awarded.

[18] Mr. Appugliesi, the President of both Jasper Corp. and Jasper Ltd. swore an affidavit in which he states that the use of the name Jasper Corp. rather than Jasper Ltd. in the documents relied on by NKP were “inadvertent clerical errors”. Neither Mr. Fadairo nor Mr. Dannan, the authors of the documents in question, swore affidavits with respect to these alleged errors.

Motions for Summary Judgment

[19] Rule 20.04(2)(a) of the Rules of Civil Procedure provides: “The court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.”

[20] Rule 20.04(2.1) sets out the court’s powers on a motion for summary judgment:

In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

[21] These powers were extensively reviewed by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, where it laid out a two-part roadmap for summary judgment motions at para. 66:

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.

[22] Even with these extended powers, a motion for summary judgment is appropriate only if the material provided on the motion “gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute” (Hryniak, at para. 50).

[23] In Hryniak, the Supreme Court held (at para. 49) that there will be no genuine issue for trial when the summary judgment process “(1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.”

[24] To defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party may not rest on mere allegations or denials of the party’s pleadings, but must set out—in affidavit material or other evidence—specific facts establishing a genuine issue requiring a trial.

[25] The motion judge is entitled to assume that the record contains all of the evidence that would be introduced by both parties at trial. A summary judgment motion cannot be defeated by vague references as to what may be adduced if the matter is allowed to proceed to trial.

[26] Pursuant to Rule 20.02(1), affidavits may be made on information and belief, but the court may, if appropriate, draw an adverse inference from a party’s failure to provide evidence of any person having personal knowledge of contested facts.

[27] Where summary judgment is refused or is granted only in part, Rule 20.05 provides that “the court may make an order specifying what material facts are not in dispute and defining the issues to be tried and order that the action proceed to trial expeditiously” and give directions or impose such terms as are just.

[28] It is now well settled that “both parties on a summary judgment motion have an obligation to put their best foot forward” (see Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753 at para. 9). Given the onus placed on the moving party to provide supporting affidavit or other evidence under Rule 20.01, “it is not just the responding party who has an obligation to ‘lead trump or risk losing’” (see Ipex Inc. v. Lubrizol Advanced Materials Canada, 2015 ONSC 6580 at para. 28).

[29] See also: Crawford v. Toronto (City), 2018 ONSC 1729 at para. 38:

Thus, if the moving party meets the evidentiary burden of producing evidence on which the court could conclude that there is no genuine issue of material fact requiring a trial, the responding party must either refute or counter the moving party’s evidence or risk a summary judgment.

[30] A plaintiff or defendant bringing a motion for summary judgment does not thereby reverse the onus of proof. See for example, Sanzone v. Schechter, 2016 ONCA 566 at paras. 30-32, confirming the initial evidentiary obligation borne by the moving party (in that case the defendant) on a summary judgment motion.

[31] While Rule 20.04 provides the court hearing a summary judgment motion with “enhanced forensic tools” to deal with conflicting evidence on factual matters, the court should employ these tools and decide a motion for summary judgment only if it can do so fairly: Eastwood Square Kitchener Inc. v. Value Village Stores, Inc., 2017 ONSC 832 at paras. 3-6 (and cases cited therein).

Partial Summary Judgment

[32] The motion for summary judgment brought in this case will not dispose of all of the issues raised in the Statement of Claim. If successful, it will determine only the liability of one of two defendants, and a trial will still be necessary with respect to all other issues. In this respect, the motion is for partial summary judgment. On the other hand, the motion, if successful, will finally determine the liability of Jasper Corp.

[33] In Mason v. Perras Mongenais, 2018 ONSC 1477, Myers J. stated, at paras. 6-7:

A single lawsuit often includes numerous claims against a number of different defendants. A trial judgment usually disposes of all of the claims among all of the parties.

…[T]he summary judgment being sought is only a partial resolution of the litigation as a whole and is referred to therefore as “partial summary judgment.” It should be noted though, that from the moving party’s point of view, the case will be over. There is nothing partial about the judgment that it seeks dismissing the claim against itself.

[34] In Butera v. Chown, Cairns LLP, 2017 ONCA 783, the Ontario Court of Appeal indicated that while partial summary judgment remains available in appropriate cases, specific consideration must be given to whether a partial summary judgment will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole. In some cases partial summary judgment will not result in any efficiencies, and will only delay the trial and increase the time and expense. These concerns are particularly apparent when a motion for summary judgment deals with only some but not all issues between the same parties. If the facts and evidence relating to the issues are intertwined or closely related, there is little benefit, and potential detriment, to proceeding with a motion for summary judgment.

[35] In Mason, Myers J. stated the concern as follows (at para. 14):

While judges are required to be careful to understand the risks of duplicative proceedings and inconsistent findings that might undermine the justness and proportionality of granting summary judgment to less than all of the defendants, nevertheless, the Supreme Court recognized that resolving an important claim against a key party could also significantly advance the goals of securing the most efficient, affordable and proportionate outcome for all. The Supreme Court advised caution before granting partial summary judgment but it did not preclude partial summary judgment in appropriate cases.

[36] And, after reviewing the Court of Appeal’s decisions in cases such as Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 and Butera and its progeny (see paras. 17-33), Myers J. summarized the law as follows, at para. 23:

Discrete issues, like limitation periods, which do not overlap with the merits that are left for trial, occupy the most efficient end of the spectrum. Cases like Baywood, where the same parties will go to trial with the same witnesses testifying to the very same facts as are in issue on a motion for summary judgment represent the other end of the spectrum. In the middle, are cases like this one and Hryniak where the litigation against a party can be brought to an end by partial summary judgment. Although not all parties will go to trial, the issues to be resolved summarily are not perfectly discrete and have some relation to the issues that remain for trial. The question then is whether the risks of duplication and inconsistent findings outweigh the benefits of summary resolution and preclude summary resolution from being proportionate where the case is brought to an end against some but not all of the parties. To resolve this issue, the judge must exercise his or her judgment to determine the comparative balancing discussed in Hryniak.

[37] The case at hand falls into the middle category identified by Myers J.

[38] I also adopt the analysis of Sanfilippo J. in York Regional Standard Condominium Corporation No. 1206 v. 520 Steeles Developments Inc., 2018 ONSC 3766, at paras. 93-94:

Recent cases where partial summary judgment is upheld all have a common element: the partial summary judgment resolved a discrete issue that could be separated from the other claims or parties in the surviving case…

The jurisprudence highlights that a motion judge hearing a summary judgment motion must balance the competing objectives set out in Hryniak: namely, the court must weigh the efficiencies achieved by some summary resolution against the risk of duplicative or inconsistent findings in the surviving elements of the case. The motion judge must be certain that the net result of the partial summary judgment process is an overall increase in efficiency in adjudicating the case…

[39] See also: Crawford v. Toronto (City), 2018 ONSC 1729 at para. 42 and “Sanokr-Moskva” LLC v. Tradeoil Management Inc., 2018 ONSC 2967, at paras. 12-17.

Analysis

[40] While the question of Jasper Corp.’s liability may be a distinct legal issue, it is not a distinct factual issue. In my view the facts relating to the liability of Jasper Corp. are inextricably intertwined with the facts underpinning the action as a whole.

[41] Moreover, while Jasper Corp. and Jasper Ltd. are ostensibly different parties and distinct legal entities, they are represented by the same counsel in the action, have filed a single Statement of Defence, and Giancario Appugliesi is the Director and President of both companies. Mojeed Fadairo, the Project Coordinator, and Hussein Dannan, the Project Manager, also appear to have been employed by both Jasper Corp. and Jasper Ltd. In other words, partial summary judgment will not result in fewer witnesses or fewer lawyers should the trial between the plaintiff and Jasper Ltd. proceed; the same parties will go to trial with the same witnesses testifying on many of the same facts as are in issue on the motion for summary judgment.

[42] In my view, this is an appropriate case in which to follow the Court of Appeal’s caveat in Butera. The risk of duplicative proceedings and inconsistent findings that might undermine the efficiencies of a summary judgment motion militate against granting partial summary judgment in this case.

[43] In addition, the evidence presented by NKP on this motion has satisfied me that the liability of Jasper Corp. with regard to NKP’s claim raises a genuine issue that is more appropriately dealt with in the context of the trial between NKP and Jasper Ltd. than in isolation on a partial summary judgment motion.

Conclusion

[44] Accordingly, Jasper Corp.’s motion for summary judgment is dismissed.

[45] The plaintiff is presumptively entitled to costs for this motion. If the parties cannot agree on costs, the plaintiff may file costs submissions within 20 days of the release of this decision, limited to 3 pages plus costs outline and any offers to settle. The defendant Jasper Corp. may file reply submissions on the same terms within 15 days thereafter.

Justice R.E. Charney Released: September 26, 2018