Court File and Parties

Court File No.: CV-15-0522 Date: 2019-02-19 Ontario Superior Court of Justice

B E T W E E N:

AGC FLAT GLASS NORTH AMERICA LTD., Plaintiff

- and -

MAN-SHIELD (NWO) CONSTURCTION INC., 2353267 ONTARIO INC. and AURORA CONDOMINIUMS LP, Defendants

Before: Mr. Justice F. Bruce Fitzpatrick

Counsel: A. Russell, for the Plaintiff R. Johansen, for the Defendant, MAN-SHIELD (NWO) CONSTRUCTION INC.

Heard: July 31, October 15, October 19, October 23, November 16, December 19, 2018 and January 28, 2019, at Thunder Bay, Ontario

Judgment On Motion For Summary Judgment

[1] The plaintiff, AGC Flat Glass North America Ltd (“AGC”), moves for summary judgment on its lien claim. The construction project at issue was a waterfront condominium development in the City of Thunder Bay. AGC is in the glass trade. AGC’s lien claim arose from two construction contracts and claims for extras it had with the defendant, Man-Shield (NWO) Construction Inc. (“MS”). The defendants, 2353267 Ontario Inc. and Aurora Condominiums LP, did not take part in this motion.

Background

[2] I heard this motion as I am case managing all disputes involving the waterfront condominium project at issue. I have written a number of decisions in the past involving MS and its various subcontractors. I am now very familiar with the circumstances and background of these condominium projects.

[3] AGC’s work involved the installation of glass balconies, windows, and doors, glass shower enclosures, mirrors, and the like for the residential condominiums at issue. The project involved the construction of two condominium towers: the Aurora tower and the Allure tower. AGC only seeks payment for its work on the Aurora tower.

[4] The parties have broken down their dispute into seven separate items. This is not unusual in construction cases where items can be discreetly identified. The court appreciates and thanks counsel for how they have organized the material on this motion. Counsel for MS prepared a Scott Schedule of these items to which AGC has responded by preparing its own Scott Schedule. The motion was argued item by item.

[5] There was no issue between the parties about the legal test for summary judgment on this motion. It is well known as a result of the Supreme Court of Canada’s ruling in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. In that decision, the Supreme Court indicated that trial courts should undertake a more liberal approach to summary judgment motions and, where possible, encourage the resolution of matters by methods other than trial.

Issue No. 1 - Guardrails

[6] On the second day of the hearing, following submissions on this discrete issue, I gave oral reasons disposing of the first item: guardrails. For the sake of completeness, I repeat my oral reasons on that issue here.

[7] The parties agree on the contract price for this particular item. The parties agree that there is a balance outstanding of $40,863.65 on this particular sub-contract. What the parties do not agree about is whether or not there is some ongoing problem with the glass guardrails installed pursuant to this sub-contract.

[8] MS describes this problem as “walking glass.” In general terms, this means that high winds has caused the glass balcony panels to shift to one side of the guards or the other such that a gap is opened. It is alleged that the gap exceeds that allowed by the Ontario Building Code, O. Reg. 332/12. This problem has been identified by the City of Thunder Bay in the course of doing building inspections.

[9] MS is currently on site at Aurora attempting to repair this alleged deficiency. It has not provided any evidence of any quotes or expenditures for work it has done to date to remedy this particular “walking glass” situation. However, counsel argues this is a genuine issue for trial that should be sufficient to deny AGC judgment now on this discrete issue.

[10] Counsel for AGC submits the evidence is insufficient on this motion to definitely determine if this “walking glass” issue is even occurring. AGC also argues it installed the guardrails according to the manufacturer’s specifications and performed this contract in a good and workmanlike manner. It argues MS has no claim against AGC for this item in any event as MS has breached its contract and therefore voided any warranty that AGC may have given in respect of its work. Interestingly, on December 4, 2017, AGC, independent of MS, provided current building management of the Aurora condominium with a quote to repair this issue. The quote was for $7,700 plus HST.

[11] In my view, based on the evidence and the admissions of the parties, there is no genuine issue for trial that MS owes AGC $40,863.65 for the guardrail contract. AGC is entitled to a judgment for this amount. That is not the end of the matter however.

[12] I recognize that, practically speaking, argument on this motion has just begun. The fact that AGC is entitled to a judgment for this amount does not completely resolve this first discrete issue. I say this for three reasons.

[13] First, I have to hear the balance of the submissions from the parties on the other points. Proportionately, the guardrail claim makes up about 17% of the total claimed on this motion.

[14] Second, judgment for the guardrails is really only a partial summary judgment, and I would have to hear from the parties about whether or not the provisions of r. 20.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 would apply to stay execution of this partial judgment.

[15] Third, and most significantly in my view, is the fact that I find there is a genuine issue for trial as to whether or not MS is entitled to set off any amount against the amount I have granted for the work it may or may not have done to repair this “walking glass” issue. I make this finding because the alleged need to repair arises from the report of the City of Thunder Bay, an independent third party. I do not find the response of AGC to the effect “we don’t believe it is happening” to be sufficient at this stage, and on the evidence provided, to discount the fact this is a live, potentially triable issue. I also wonder why an owner would bother to seek a quote to repair a non-issue.

[16] What is significant to me is that MS’s material on this motion is silent on the issue of what they think it will cost to repair this item or what they have spent to date to repair this alleged deficiency.

[17] It is clear from the evidence, and in particular from Mr. Belluz’s affidavit of October 2, 2017, at paragraph 16, that the City of Thunder Bay put MS on notice of this “walking glass” issue as of August 2017. This motion for summary judgment was originally brought about the same time in August 2017, and the guardrail issue was clearly identified as one of the outstanding claims. In fact, Mr. Belluz attempted to have AGC return to do the work in April 2018.

[18] A party is required to put its best foot forward on a motion for summary judgment. I would have expected some evidence from MS about the cost to repair “walking glass” at the Aurora condominium project a year after it was put on notice by the City of Thunder Bay about the problem. The best evidence I have on this motion is the estimate from AGC for $7,700 plus HST. This is about 20% of what was owed for the guardrail contract but only about 7% of the value of the $117,500.00 plus HST costs of the total price for the sub-contract for the guardrails.

[19] In my view, my finding that there is a genuine issue for trial about any right for MS to set off against the amount awarded for the guardrail contract engages the provisions of r. 20.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In particular, it seems to me, at least at this point, that a mini-trial as contemplated by r. 20.04(2.2) may be the most just, proportionate, and efficient way to deal with this issue going forward.

[20] Following receipt of this ruling, the parties agreed to conduct a mini-trial. The details of which were left to a subsequent case management meeting.

[21] Since the completion of the submissions on the other issues set out below, there have been a number of teleconference attendances discussing the details of the upcoming mini-trial. These occurred on October 23, 2018, November 16, 2018, December 19, 2018, and January 28, 2019. MS’s submission that I should await the conclusion of the mini-trial before releasing the balance of these reasons for decision was also discussed. AGC asked for a ruling as soon as possible. In my view, it is preferable to release these reasons now.

Issue No. 2 - Windows and Door Subcontract

[22] MS and AGC entered into a construction contract for the installation of windows and doors for the Aurora project on February 24, 2014. AGC performed its obligations under the contract. MS and AGC agree that there is no genuine issue for trial as to the fact that MS owes AGC $84,201.80 for this item. However, MS resists an order for partial summary judgment on this amount now on the basis that it has a counterclaim (for caulking and guardrail repairs) that will be prejudiced if judgment is granted.

[23] I do not accept this argument from MS. The full amount of the claim is bonded off. An order will go for payment out of the bond for this amount. I will deal with the reasons why I am not prepared to accept any further delay in the final section of this judgment under the heading “Outstanding MS claims.”

Issue No. 3 - Glass Shower Enclosure Extra

[24] The parties agree that this was an extra to the windows and doors construction contract. At the hearing of this motion, MS initially admitted that it owes at least $22,000 to AGC for this item and perhaps more. Therefore, I find there is no genuine issue for trial as to MS’s liability to pay AGC for this particular item. I appreciate MS resists payment of any amount now for this item for a number of reasons.

[25] At the hearing, MA acknowledged that it did not have the opportunity to fully turn its attention to the quantum owed. Counsel for MS suggested that, if the parties were given more time to deal with the issue, an agreement on quantum could be reached. Counsel for AGC agreed.

[26] Following the hearing, representatives of the parties were able to agree on the quantum owing for this extra. They agree that the quantum of the outstanding amount MS owes to AGC is $53,839.42. AGC still claims interest for this amount. MS relies on its argument that, while this amount is owing, it should not be paid now because of charge backs on other amounts owing and the claims made by the owner against MS.

[27] I find this amount should be paid now. AGC will have partial summary judgment against MS for $53,839.42 in respect of this extra. Interest on the amount is fixed at the prejudgment interest rate calculated 30 days following issuance of the claim.

Issues No. 4 and No. 6 - Mirrors and Hollow Glazing Extra

[28] The parties agreed to combine these issues and have them dealt with together. The parties admit that there is no genuine issue for trial with respect to these items and that judgment can be granted on the basis of the material filed. MS takes the position that the items were not extras to any contract and were to be included in the windows and doors sub-contract. Accordingly, MS argues that AGC is not entitled to judgment for the amounts claimed for these two items. AGC claims that these items are extras to that contract. MS admits that, if the items were extras, there is no dispute as to the quantum claimed by AGC, namely $15,356.18 inclusive of HST for the mirrors and $4,127.89 inclusive of HST for the Hollowing Glazing.

[29] I find that these items were extras to the windows and doors contract for the following reasons.

[30] In reviewing the text of the windows and doors contract, there is absolutely no mention of “mirrors” or “hollow glazing.” Hollow glazing is a type of specialty glass window that is placed in emergency doors. The work in the contract is described as follows:

[T]o supply labour, materials and necessary equipment to install all aluminum windows and doors for the Aurora Condominium. As per plans and specifications and quotation dated Feb 13, 2014.

[31] The February 13, 2014 quote was provided in the evidence. There is no mention in the tender of “mirrors” or “hollow glazing.”

[32] There is a reference to mirrors and hollow glazing in the specifications given by the owner’s architect to MS. There is no positive evidence that those specifications were appended to the contract or provided to AGC. In fact, in a reply affidavit responding to the MS’s position regarding caulking, a deponent for AGC states that the specifications were specifically not given to AGC.

[33] MS placed an email dated August 13, 2015, in evidence on this motion. It was written by Peter Belluz, the deponent for MS on this motion and many others that have come before me when dealing with MS. The “re line” for the email was “AGC extras - Mirrors, Shower Doors.” In the email, Mr. Belluz asked for the invoicing for the mirrors and shower doors. If the mirrors were in fact part of the fixed price contract for windows and doors, there would be no need for Mr. Belluz to obtain a separate invoice for these items.

[34] MS also placed an email from another representative, Anthony Yozipovic, dated February 20, 2015, in evidence. It states, “the tile is complete on L1-all shower doors can be field verified. Cabinets are in on L1 and L2- all mirrors can be field verified. Please order this material asap.”

[35] In my view, this email constitutes a written request by MS to AGC for installation of the mirrors. This is satisfactory evidence of a change order or request for an extra to the contract.

[36] There was no specific evidence from MS disputing the hollow glazing. I prefer AGC’s evidence. AGC provided evidence of an email exchange between Adam Cassidy for AGC and Anthony Yozipovic on October 16, 2015. Mr. Cassidy asserts the hollow glazing was an extra. Mr. Yozipovic replies “Ok thanks.” In my view, this evidences acceptance of this item as an extra.

[37] Accordingly, AGC will have partial summary judgment in the amount of $19,484.07 inclusive of HST, composed of $15,356.18 for the mirrors and $4,127.89 for the hollow glazing.

Issue No. 5 - Caulking Extra

[38] The parties agree that this work was a legitimate extra to the contracts. There is a significant dispute about the quantum. MS also asserts that it is subject to a significant back charge from the owner as the result of caulking work that was completed by a completion contractor, Pomerleau.

[39] There is no dispute that AGC did caulking work. It quoted MS $33,400 to do caulking work on the Allure tower. While this tower was not the subject of this motion, MS acknowledges that it accepted this quote as it applied to the Aurora condominium project.

[40] Ultimately, because of site condition problems, AGC did not finish the caulking work but invoiced MS $32,431.00 for the work it did do. MS paid $5,085.00 in respect of this work.

[41] When MS was removed from the project, the completion contractor, Pomerleau, contracted with AGC to complete the caulking work. AGC quoted $83,940 to do the work. Pomerleau accepted the quote. AGC completed the caulking.

[42] In this matter, MS points to this significantly increased quote to Pomerleau as relevant to the resolution of the amount that AGC claims. In effect, MS is arguing that AGC is trying to recover twice for the same work, having invoiced both MS and Pomerleau. AGC counters this by suggesting that the majority of the quantum outlined in the Pomerleau invoice related to extra cost for extra time spent cleaning out joints as a result of the stucco trade’s sloppy work.

[43] In my view, the evidence on this discrete aspect of this motion does raise an issue about possible double recovery for similar work. I find that this is a triable issue. While I am sure MS will resist the owner claim in full for Pomerleau charge back, it is unclear how that issue will be resolved. AGC evidence on this motion is clear that site deficiencies, in particular the lack of certification of tie backs, prevented it from completing the caulking extra, at least while MS was in control of the site. Pomerleau arranged to have the tie backs certified and this, according to the evidence from AGC, allowed AGC to complete the work. Apparently, the AGC quote to Pomerleau included work that was not included in the MS quote, specifically for caulking on the head flashing of the masonry window lintels. The value of this “extra to the extra” comparatively speaking was not quantified in the AGC evidence. However, this is going to require extra evidence to resolve.

[44] Accordingly, I order that a mini-trial with respect to the caulking issue be arranged. I will deal with the details of this at the conclusion of this judgment.

Issue No. 7 - Outstanding MS Claims

[45] The nature of the MS claims fall into two broad categories. First, there are specific deficiencies which allegedly have been identified by the Tarion Warranty Corporation. Second, there are less specific “flow through” claims asserted by the owner against MS.

[46] I have dealt with this “flow through” argument from MS in respect of its subtrades in other cases and in particular in my recent decision The Floor Show v. Man-Shield (NWO) Construction et al., 2018 ONSC 6077. At paras. 63 and 75-81, I dealt with a similar back charge argument. I did not accept it in the Floor Show case. I do not accept it in this case.

[47] In contrast to the evidence in the Floor Show case, in this matter, MS’s evidence is only that the owner has back charged MS $141,979.00 for caulking and miscellaneous interior glazing. The significant differences in all these numbers gives me some considerable pause. It is an argument about possible double recovery. However, this argument is not backed by anything other than bald allegations by MS. It is also an argument that can be made in the arbitration between the owners and MS. I have specifically ordered that there be a mini-trial with respect to caulking. It seems to me caulking and the walking glass issue are the only areas where AGC has exposure to MS claims. The generic “delay” claim being actively pursued by the owner against MS was not pressed against AGC on this motion.

[48] With respect to the Tarion claims, the evidence provided is only that of the owner and MS about certain elements of work that might relate to AGC. Counsel for MS candidly admits that the quantum of the possible repair work was not quantified by MS at the time of the motion. However, it may be quantified in the coming months.

[49] In my view, this is insufficient to prevent me from granting partial summary judgment now for certain aspects of the AGC claim. MS simply has not put its best foot forward in respect of these “other issues.” It has been over three years since MS was removed from the site. Clearly the dispute between the owner and MS is ongoing. However, this is not a sufficient reason from my perspective to delay partial summary judgment.

[50] Accordingly, to summarize, an order shall issue on the following terms:

1. There shall be a mini-trial on the issue of the “walking glass.” For the purposes of the trial, I find that MS owes AGC $40,863.65. The only issue for the mini-trial regarding walking glass is as follows: Is MS entitled to set off any amounts against the $40,863.65, and if so, how much?
2. The mini-trial for the “walking glass” shall be placed on the running list at Thunder Bay for trial commencing April 1, 2019, subject to the endorsement of Fitzpatrick J. dated November 16, 2018, and any further procedural orders of Fitzpatrick J.
3. MS shall pay AGC the sum of $84,201.80, inclusive of HST, in respect of the Windows and Doors Sub Contract;
4. MS shall pay AGC the sum of $53,839.42, inclusive of HST, in respect of the Glass Shower Enclosure Extra;
5. MS shall pay AGC the sum of $19,484.07, inclusive of HST, in respect of the Mirrors and Hollow Glazing Extra; and
6. There shall be a mini-trial on the issue of the Caulking Extra. The parties shall arrange a further teleconference before Fitzpatrick J. to set the date for trial and work out any necessary procedural issues. If possible, this mini trial should be conducted at the same time as the “walking glass” mini trial to avoid extra expense to the parties.

Costs

[51] Subject to any offers to settle, in my view, AGC has been successful on those issues for which judgment has been granted by these reasons. AGC has only been partially successful on the issues of the walking glass and caulking as mini-trials are required to finally resolve those issues. However, this summary judgment process has significantly narrowed the scope of those two discrete issues. In all, as offers to settle may be relevant to the disposition of costs, as there are two other issues still to be adjudicated, and as the offers may have been made on a global basis, any submissions on costs will await the completion of the mini-trials.

The Bond

[52] It is my understanding that MS bonded off the AGC lien claim, which is the basis for the statement of claim for which AGC sought summary judgment. Accordingly, there should be bond proceeds available to satisfy those amounts which have now been awarded to AGC. To the extent that is necessary to prepare a formal order to achieve this, I invite counsel to attempt to prepare such an order for my signature. In the event consensus cannot be reached, I may be spoken to concerning settling the order.

“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick Released: February 19, 2019