Court File and Parties

Court File No.: CV-16-128661-00 Date: 2018-10-26 Superior Court of Justice - Ontario

Re: Concord Plumbing & Heating Ltd., Plaintiff And: Canadian Tire Real Estate Limited, Morguard Realty Holdings Inc. and Northern Structures Ltd., Defendants

Before: Justice J. Di Luca

Counsel: Jeremy Sacks, Counsel, for the Plaintiff/Moving Party Jeffrey J. Long, Counsel, for the Defendant/Respondent, Northern Structures Ltd.

Heard: September 13, 2018

Endorsement

[1] This is a partial summary judgment motion within a construction lien action relating to the construction of a Canadian Tire store in Aurora. The Plaintiff, Concord Plumbing and Heating (“Concord”), seeks summary judgment against the Defendant Northern Structures Ltd. (“Northern”), in the amount of $114,959.01 for unpaid invoices relating to the supply of mechanical work.

[2] Concord’s action includes a lien claim against Canadian Tire Real Estate Limited’s [“Canadian Tire”] interest in the property where the store is located. Concord is not seeking to prove or enforce its lien claim at this time. Rather, Concord takes the position that the lien claim is an alternative claim that provides security against the property in the event that Concord cannot collect from Northern. Northern has filed a cross-motion seeking to prove the validity of Concord’s lien, which is opposed by Canadian Tire. Concord does not oppose the cross-motion, though it notes that proof of the lien claim is not a defence to the action as between Concord and Northern. The cross-motion is scheduled for hearing December 20, 2018.

[3] This action forms part of a larger set of litigation between the parties. Northern has commenced lien actions against Canadian Tire in relation to a project in Aurora and in relation to a second project in Innisfil. The lien actions have been set down for trial and a first pre-trial conference has been held in both actions. Canadian Tire is defending the actions alleging a number of deficiencies, some of which relate to Concord’s work on both the Aurora and Innisfil projects.

Brief Summary of the Facts and Positions

[4] By way of factual background, Northern was the general contractor hired by Canadian Tire to build the Aurora store. Northern hired Concord to provide mechanical work for the project at a price of $224,000 plus HST. During the same general time period, Northern also hired Concord to provide mechanical work for another Canadian Tire store located in Innisfil.

[5] Concord claims that the following amounts remain unpaid in relation to the Aurora project; $80,758 for progress invoices, $25,312 for unreleased holdback and $7,830.90 for additional work provided in relation to a building automation system.

[6] According to Northern, Canadian Tire failed or refused to pay Northern substantial amounts for work done on both projects, some of which was work performed by Concord. That said, it is Concord’s position that Northern was actually paid by Canadian Tire in relation to the work done by Concord at the Aurora project, and it has filed a Certificate of Payment in this regard. Concord takes the overall position that its payment is being held back as a result of a larger dispute between Northern and Canadian Tire, mainly in relation to the Innisfil project.

[7] Northern claims a set-off for any amount asserted by Canadian Tire for back charges or deficiencies relating to Concord’s work. In this regard, I note that this construction lien claim remains subject to the provisions of the old Construction Lien Act and not the new Construction Act. As such, the set-off provision found in s. 17(3) of the old Act applies, and there is no insolvency requirement.

[8] Northern has filed a Reply Scott Schedule relating to its lien claim against Canadian Tire, which suggests that there are no deficiencies with respect to Concord’s mechanical work. Notwithstanding the position in the Reply Scott Schedule, Northern argues in this motion that there are deficiencies relating to Concord’s work at the Aurora project. It also argues that there are deficiencies in relation to Concord’s work at the Innisfil project which would provide a basis for set-off if proven.

[9] The claims in relation to the Innisfil project are also the subject of a separate action commenced by Concord in Barrie. In that action, Northern takes the position that the work completed by Concord was deficient.

[10] On the issue of the Scott Schedules, Northern notes that in the main action, Canadian Tire has filed Scott Schedules for both the Aurora and Innisfil projects that list some $260,000 in back charges and deficiencies that relate to Concord’s work. In relation specifically to the Aurora project, Canadian Tire’s Scott Schedule lists $124,897.19 in deficiencies relating to Concord.

[11] More importantly, Northern argues that the position it advances in its Reply Scott Schedules on the main action is premised on the position advanced by Concord. In other words, Northern is simply adopting Concord’s position in relation to the deficiencies alleged by Canadian Tire. Northern has not independently taken the position that Concord performed all of its work without any deficiency. Indeed, Northern’s position is that Concord is responsible for certain deficiencies should they be proven by Canadian Tire.

Leave to Bring Summary Judgment Motion

[12] Under s. 13 of the Procedure Regulations for the Construction Act, leave must be sought in order to bring an interlocutory motion such as a partial summary judgment motion. This new provision essentially mirrors the language of s. 67(2) of the old Construction Lien Act. Regardless of which section is relied on, the test for granting leave appears to be the same.

[13] In terms of the test for leave, I adopt the following discussion by Perell J. in Industrial Refrigerated Systems Inc. v. Quality Meat Packers Ltd., 2015 ONSC 4545 at paras. 72 and following:

[72] Section 67(2) of the Construction Lien Act requires the leave of the court for a motion for summary judgment, and the court shall grant leave if the motion is either “necessary” or will “expedite the resolution of the issues in dispute”. Thus, while motions for summary judgment are available in a construction lien action, the moving party confronts a preliminary hurdle of persuading the court that the motion is necessary or would expedite the resolution of the issues in dispute: Brantford Engineering and Construction Limited v. 1562772 Ontario Inc., [2007] O.J. No. 1636 (S.C.J.).

[73] I shall discuss the caselaw about s. 67(2) momentarily but, speaking practically or pragmatically, unless a motion for leave is brought as a preliminary motion, it is hollow to discuss the leave requirement once the court schedules or approves a timetable for the summary judgment motion. Of course, the court cannot abrogate a statutory leave requirement, but where the moving party does not bring a preliminary motion for leave or the responding party does not move to quash the motion for want of leave having been obtained, the court, having prepared for the motion being argued, should grant leave and hear the motion, which is what I did in the case at bar. After preparing for and hearing the motion on its merits, it would be specious to refuse leave, because refusing leave would just be a pretense for dismissing the motion on its merits. Refusing to grant leave in the circumstances of the case at bar is to close the judicial barn door after the parties’ horses have gone to run their race.

[74] In Michaels Engineering Consultants Canada Inc. v. 961111 Ontario Ltd., (1996), 29 O.R. (3d) 273 (Div. Ct.), the Divisional Court supported the idea that generally speaking, summary judgment motions should be available in construction lien actions. At para. 8, Justice Borins stated:

...there is no reason, in principle, why a motion for summary judgment may not proceed in a construction lien action. As motions for summary judgment, in general, are not inconsistent with the Act, they are sanctioned by s. 67(3). Indeed, because the purpose of Rule 20 of the Rules of Civil Procedure is to dispose of claims, or defences, which do not raise a genuine issue for trial early in a proceeding, a motion for summary judgment advances the intention of the legislature as found in s. 67(1). . However, in Hamilton Landscaping & Paving v. 603893 Ontario Inc. (1988), 30 C.L.R. 127 (Ont. H.C.J.), Gravely J. held that a motion for default judgment under rule 19.05 of the Rules of Civil Procedure could be brought in the context of a construction lien action. And in St. Clair Roofing & Tinsmithing Inc. v. Davidson (1992), 8 O.R. (3d) 578 at p. 583 (Gen. Div.), in following the Hamilton Landscaping case, in obiter dictum, Master Sandler saw no reason why Rule 20 of the Rules of Civil Procedure could not be used "in an appropriate case". In my view, Master Sandler was correct in limiting the use of Rule 20 to "an appropriate case". It will be for the court to make this decision when its consent is requested, under s. 67(2) of the Act, to bring a motion for summary judgment.

[75] The case law tends toward the proposition that the leave requirement is a statutory anomaly and rarely should be refused. In Bradhill Masonry v. BWK Construction Company Limited, 2011 ONSC 6230 at para. 3 Justice Healey noted the anomaly that the Construction Lien Act imposes a leave requirement for a motion for summary judgment; he stated:

3. …To require that a party seek leave to proceed with a motion for summary judgment prior to undertaking such a step appears to contradict the provisions of s. 67(1) of the Act, which stipulates that the procedure in an action shall be as far as possible of a summary character, having regard to the amount and nature of the liens in question. Having regard to the amount in dispute in this proceeding, it seems sensible to grant leave to a party to take a step such as a motion for summary judgment if such step may narrow or dispose of the triable issues.

See also Eramosa Engineering Inc. v. The Town of Penetanguishene, 2017 ONSC 6381 at para. 23 per DiTomaso J. and see also Total Meter Services Ltd. v. Aplus General Contractors Corp., 2015 ONSC 3830 at para. 10 per Quinlan J.

[14] In view of these authorities, I am satisfied that leave to bring this partial summary judgment motion should be granted. Without addressing the merits of the summary judgment motion, I can readily conclude that the motion, if successful, would expedite the resolution of issues in dispute.

[15] I turn next to the merits of the motion.

The Law on Summary Judgment

[16] In Hryniak v. Maudlin, 2014 SCC 7 at para. 49, the Supreme Court of Canada discussed the scope of the summary judgment power in Rule 20.04(2)(a) of the Rules of Civil Procedure:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the 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.

[17] The court further directed judges considering summary judgment motions as follows at para. 66:

On a motion for summary judgment under Rule 20.04 of the Rules of Civil Procedure, 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 issuing 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) of the Rules of Civil Procedure. 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) of the Rules of Civil Procedure. She may, at her discretion, use those powers, provided that their use is not against the interests of justice. Their use will not be against the interests 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.

[18] The modern approach to summary judgment motions requires that parties continue to put their “best foot forward”. As Corbett J. notes in Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 at para. 32:

Summary judgment motions come in all shapes and sizes, and this is recognized in the Supreme Court of Canada’s emphasis on “proportionality” as a controlling principle for summary judgment motions. This principle does not mean that large, complicated cases must go to trial, while small, single issue cases should not. Nor does it mean that the “best foot forward” principle has been displaced; quite the reverse. If anything, this principle is even more important after Hyrniak, because on an unsuccessful motion for summary judgment, the court will now rely on the record before it to decide what further steps will be necessary to bring the matter to a conclusion. To do this properly, the court will need to have the parties’ cases before it.

[19] On a similar note, Dunphy J. in 2313103 Ontario Inc. v. JM Food Services Ltd., 2015 ONSC 4029 at para. 40 explains as follows:

Of particular relevance to this case is “best foot forward” assumption. In bringing a motion for summary judgment the court is entitled to assume that both parties have put before the court all of the evidence they would intend to adduce at trial (even if not in the same form) that relates to the issues for decision on the motion. Ambush and surprise have no legitimate place in modern litigation, but this is particularly so in motions for summary judgment where the entire action or a substantial part of it may be disposed of in favour of one or the other party. Summary judgment is no place for a party to look to keep powder dry for another day and it is rather late in the process to sit down and ensure the issues are thoroughly understood.

[20] The court can also assume that the party responding to a summary judgment motion will present the evidence it intends to rely on at trial in order to prove that its claim or defence has a chance of success. In the vernacular, the responding party must “lead trump or risk losing”, see: 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 21 O.R. (3d) 547 (C.A.) at p. 557, and Juneja v. Samra, 2016 ONSC 5502 at paras. 20-21.

[21] Motions for partial summary judgment present specific challenges that are not present where a full summary judgment motion is brought. These challenges were recently discussed by the Court of Appeal in Butera v. Chown, Cairns LLP, 2017 ONCA 783, wherein Pepall J.A. noted the following at paras. 25-35.

[25] Hryniak does not address partial summary judgment per se except in the context of exercising the enhanced fact-finding powers contained in r. 20.04(2.1) of the Rules of Civil Procedure. In that regard, Karakatsanis J. observed that it may not be in the interests of justice to use the new fact-finding powers to grant summary judgment against a single defendant if the claims against other parties will proceed to trial in any event. Such partial summary judgment runs the risk of duplicative proceedings or inconsistent facts. On the other hand, Karakatsanis J. noted that the ‘resolution of an important claim against a key party could significantly advance access to justice and be the most proportionate, timely and cost effective approach’.

[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 in 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 underlying 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 also always the possibility of an appeal.

[31] Second, a motion for partial summary judgment may by 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 of Civil Procedure be liberally construed to secure the just, most expeditious, and least expensive determination of every civil proceeding on its merits.

[35] Lastly, I would observe the obvious, namely, that a motion for partial summary judgment differs from a motion for summary judgment. If the latter is granted, subject to appeals, it results in the disposal of the entire action. In addition, to the extent the motion judge considers it advisable, if the motion for summary judgment is not granted but is successful in part, partial summary judgment may be ordered in that context.

[22] The caution against partial summary judgment sounded in Butera v. Chown, Cairns LLP, does not mean that partial summary judgment is never appropriate. Indeed, in cases where a discrete legal and factual issue can be readily ascertained and determined so as to avoid the risk of inconsistent findings and duplicative proceedings, partial summary judgment motions remain an appropriate vehicle; see Larizza v. Royal Bank, 2018 ONCA 632, Sirois v. Weston, 2017 ONCA 1002, and Mason v. Perras Mongenais, 2018 ONSC 1477. Even in cases where the issue is not entirely discrete, the courts have granted partial summary judgment where summary judgment was determined to otherwise be a fair, proportionate and just means of resolving the action; see Kueber v. Royal Victoria Regional Health Centre, 2018 ONCA 215, and Mason v. Parras Mongenais at paras. 24-33.

Analysis

[23] Concord claims that there is no need for a trial to determine whether there is any merit to the claimed deficiencies for the Aurora project. According to Concord, there is simply no merit. In this regard, Concord notes that Northern has an obligation to puts its best foot forward on the motion by providing evidence supporting the deficiencies of $124,897 being claimed on the Aurora project. Concord notes that apart from some nominal costs of approximately $5,000, neither Northern nor Canadian Tire have put forward any evidence substantiating their claim for deficiencies. Concord argues that this is because there are no deficiencies remaining, and any other deficiencies were corrected or satisfied long ago. Concord also points to the Reply Scott Schedule filed by Northern in support of its argument that there are no deficiencies.

[24] In response Northern argues that in the main action, Canadian Tire has advanced claims for deficiencies relating to work completed by Concord. While Northern disputes Canadian Tires’ claims in the main action, Canadian Tire will advance the set-off claims and may be successful in whole or in part. At this stage in the proceedings, Canadian Tire has not yet tendered or provided the evidence it will rely on in support of its deficiency claims against Northern and Concord. In this regard, Northern argues that if partial summary judgment is granted in favour of Concord, there is a risk of duplicative proceedings and inconsistent findings if Canadian Tire were to be successful in its deficiency claims in the main action down the road.

[25] Bearing in mind the guidance provided by Pepall J.A. in Butera v. Chown, Cairns LLP, I turn to determining whether this is an appropriate case for partial summary judgment. I note at the outset that it is unfortunate that Concord appears to be caught up in a fracas between Northern and Canadian Tire, which extends beyond the scope of the Concord’s work. That said, it is also clear that the litigation between Northern and Canadian Tire will invariably involve determinations relating to the certain deficiencies alleged by Canadian Tire against Concord. While Northern will likely support Concord in that litigation, there is a clear risk that findings will be made against Concord in terms of deficiencies relating to the Aurora project. As such, there is a clear risk of inconsistent and contradictory findings. In my view, this risk is sufficient to foreclose the suitability of partial summary judgment in this case.

[26] Moreover, the issues involved in this litigation are complex and intertwined. The affidavit evidence provided on this motion suggests that a determination of the validity of the deficiency claims is not straightforward. A determination of that issue will require detailed evidence and credibility findings regarding the scope of the work contracted for, the nature of the alleged deficiencies, the provision of notice and opportunity for rectification and remediation, as well as the nature and scope of extras that were agreed upon.

[27] I am not satisfied that it is fair and just to determine these issues on the record before me. I am also not satisfied that this is an appropriate case for use of expanded summary judgment fact-finding powers. Simply stated, the nature and extent of the deficiencies is a genuine issue requiring a trial. On this issue, I find the facts here roughly parallel the facts in 1473662 Ontario Ltd. v. Avgroup Consulting Services Ltd., 2011 ONSC 2900, wherein DiTomaso J. found that the determination of certain deficiencies was a genuine issue requiring a trial.

[28] Lastly, there is a live lien claim by Concord against Canadian Tire. Determination of the claim will impact a determination of statutory holdbacks and other related issues. It strikes me as potentially unfair to determine the issue of partial summary judgment while leaving the determination of Concord’s lien claim for another day.

[29] In my view, when I consider all of these factors together, I conclude that this is the very type of case that the Court of Appeal has cautioned against in terms of suitability for partial summary judgment.

[30] The motion for partial summary judgment is dismissed.

[31] If the parties are unable to agree upon costs, Northern shall have 15 days from the date of the release of this Endorsement to serve and file costs submissions no more than three pages in length. Concord shall have 15 days thereafter to serve and file responding costs submissions no more than three pages in length. If no submissions are received within 30 days, there shall be no order as to costs.

Justice J. Di Luca Date: October 26, 2018