Steel Tree Structures Ltd. v. Gemco Solar Inc., 2019 ONSC 1309

Case Summary

The Fovere Defendants brought a motion for summary judgment to dismiss an action by Steel Tree Structures Ltd. for breach of trust, unjust enrichment, and other claims related to solar panel racking projects. The court dismissed the motion, finding genuine issues requiring a trial, particularly concerning the Fovere Defendants' alleged control over other defendant companies (Gemco and Green Edge) and their failure to produce relevant financial documents. The court also found the claims were not statute-barred and did not constitute an abuse of process. interesting_citations_summary: > The decision applies the summary judgment test from Hryniak v. Mauldin, emphasizing the need for a fair and just determination on the merits and the court's ability to weigh evidence and assess credibility. It clarifies that a breach of trust claim's limitation period commences upon discovery of the supporting circumstances, not concurrently with a breach of contract claim. The court also reiterates the doctrine of abuse of process, confirming that obtaining judgment against one party does not necessarily preclude pursuing claims against others if the litigation is not a relitigation of the same claim between the same parties. final_judgement: The Fovere Defendants' motion for summary judgment was dismissed, and the action against them will proceed to trial. winning_degree_applicant: 5 winning_degree_respondent: 1 judge_bias_applicant: 0 judge_bias_respondent: 0 year: 2019 decision_number: 1309 file_number: "CV-14-501848" source: "https://www.canlii.org/en/on/onsc/doc/2019/2019onsc1309/2019onsc1309.html" keywords: - Summary judgment - Breach of trust - Unjust enrichment - Limitation period - Abuse of process - Construction law - Solar projects - Corporate control areas_of_law: - Civil Procedure - Construction Law - Corporate Law - Equity cited_cases: legislation: - title: "Rules of Civil Procedure, R.R.O. 1990, Reg. 194" url: "https://www.ontario.ca/laws/regulation/900194" - title: "Construction Liens Act, R.S.O. 1990, c.C-30" url: "https://www.ontario.ca/laws/statute/90c30" - title: "Ontario Business Corporations Act, R.S.O. 1990, c. B-16" url: "https://www.ontario.ca/laws/statute/90o16" - title: "Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s.230" url: "https://laws-lois.justice.gc.ca/eng/acts/i-3.3/page-100.html#docCont" - title: "Limitations Act, 2002, S.O. 2002, c. 24, Sched. B" url: "https://www.ontario.ca/laws/statute/02l24" case_law: - title: "Hryniak v. Mauldin, 2014 SCC 7, 1 S.C.R. 87" url: "https://www.canlii.org/en/ca/scc/doc/2014/2014scc7/2014scc7.html" - title: "Papaschase Indian Band No. 136 v. Canada (Attorney General), 2008 SCC 14, 1 S.C.R. 372" url: "https://www.canlii.org/en/ca/scc/doc/2008/2008scc14/2008scc14.html" - title: "Aronowicz v. EMTWO Properties Inc., 2010 ONCA 96, 98 O.R. (3d) 641" url: "https://www.canlii.org/en/on/onca/doc/2010/2010onca96/2010onca96.html" - title: "Singh v. Trump, 2016 ONCA 747, 408 D.L.R. (4th) 235" url: "https://www.canlii.org/en/on/onca/doc/2016/2016onca747/2016onca747.html" - title: "Employment Professionals Canada Inc. v. SDF, 2016 ONSC 4230" url: "https://www.canlii.org/en/on/onsc/doc/2016/2016onsc4230/2016onsc4230.html" - title: "Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63" url: "https://www.canlii.org/en/ca/scc/doc/2003/2003scc63/2003scc63.html" --- # Court File and Parties **COURT FILE NO.:** CV-14-501848 **DATE:** 20190226 **ONTARIO SUPERIOR COURT OF JUSTICE** **BETWEEN:** **STEEL TREE STRUCTURES LTD.** Plaintiff – and – **GEMCO SOLAR INC., GREEN EDGE PRODUCTS INC., JEAN MICHEL AOUN, FOVERE INVESTMENTS INC., PAUL MARSIGLIO, DARRYL ABBOTT, FOVERE GLENBARRA ENERGY FUND IV LIMITED PARTNERSHIP, FOVERE GLENBARRA ENERGY FUND IV LTD., MCCAGUE BORLACK LLP, LORNE HONICKMAN, ROBERT GRIFFIN and STEPHEN BARBIER** Defendants **Counsel:** Karey Anne Dhirani, for the Plaintiff Shane E. Kazushner, for the Defendants Fovere Investments Inc., Fovere Glenbarra Energy Fund IV Limited Partnership, Fovere Glenbarra Energy Fund IV Ltd., Paul Marsiglio and Darryl Abbott **HEARD:** November 16, 2018 **M. D. FAIETA j.** # Reasons for Decision ## Introduction [1] The Defendants Fovere Investments Inc., Fovere Glenbarra Energy Fund IV Limited Partnership, Fovere Glenbarra Energy Fund IV Ltd., Paul Marsiglio and Darryl Abbott (the “Fovere Defendants”) bring this motion for summary judgment for an order dismissing this action against them on the basis that there is no genuine issue requiring a trial. None of the other Defendants appeared on this motion. [2] For the reasons described below, I have dismissed this motion. ## Background [3] The plaintiff, Steel Tree Structures Ltd. (“Steel Tree”) is a manufacturer and installer of, amongst other things, structures for the racking of solar panels. It claims $348,485.54 in respect of racking that it provided for the installation of two solar photovoltaic systems. ### Sunshine Project [4] On April 1, 2011, the Defendant Gemco Solar Inc. entered a contract with Fovere Glenbarra Energy Fund IV Limited Partnership (“Fovere IV LP”) for the design, installation and commissioning of solar photovoltaic systems across the Province of Ontario in order to take advantage of the 0.802 kWh tariff rate set by the Ontario Power Authority under its Feed-In-Tariff program. [5] Under this contract, Gemco built 319 systems for Fovere IV LP. [6] In February, 2011, the Defendant Stuart Micheli, Vice-President, Operations, Gemco, asked Steel Tree for a proposal to supply solar panel racking for “Project Sunshine”. In March, 2011, Gemco entered a contract with Steel Tree for the supply of 252 “Sunshine Racking Systems” at a total cost of $2,306,556.00. [7] Most of the purchase orders were received from Green Edge however some of the purchase orders were received from Gemco Solar Inc. (“Gemco”). Green Edge and Gemco are related companies. [8] Steel Tree claims that the sum of $147,776.02 remains due and owing by Green Edge and Gemco. ### Castlefield Project [9] On January 14, 2013, the Defendant Gemco Solar Inc. entered a contract with Fovere Glenbarra Energy Fund II Limited Partnership (“Fovere II LP”) for the design, installation and commissioning of roof-mounted solar photovoltaic system at 1450 Castlefield Avenue that will provide 250kW output in order to take advantage of the 0.713 kWh tariff rate set by the Ontario Power Authority under its Feed-In-Tariff program (“Castlefield Project”). [10] In May 2013, Gemco issued a purchase order for the supply of solar panel racking equipment for the Castlefield Project at a price of $220, 484.52 [11] The Defendant, Darryl Abbott, states that he is a principal of the Defendants Fovere IV LP and Fovere Glenbarra Energy Fund IV Ltd. Abbott states that the Fovere Defendants did not have any involvement in the Castlefield Project. He states that Gemco acted as the General Contractor for Fovere Glenbarra Energy Fund II Limited Partnership (“Fovere II LP”) rather than for Fovere IV LP, in the design, installation and commission of this roof-mounted solar photovoltaic system. Fovere II LP is not a party to this action. Notwithstanding the organizational distinction between Fovere II LP and Fovere IV LP, Abbott’s affidavit provides a copy of the Gemco-Fovere II LP contract described above and he goes on to state that Fovere II LP paid Gemco all amounts due and owing to it pursuant to their contract as well as cost overruns. Mr. Abbott states that no further amounts are due and owing by Fovere II LP to Gemco. ### 2013 Lawsuit [12] In November 2013, Steel Tree advised the Defendant, Jean Michel Aoun (“Aoun”) and Michieli that it was owed about $335,000.00 for equipment that it had supplied for the two projects. Aoun and Michieli indicated that Green Edge would pay this outstanding amount once it received payment from “Fovere”, which it expected to receive in 4-6 weeks. Steel Tree received no further payments. [13] On July 24, 2013, the plaintiff commenced an action against Green Edge and Gemco (Court File No. CV-13-485485) for breach of contract based on the terms of the invoices. A breach of trust claim was not advanced. The plaintiff sought judgment against: (1) Green Edge in the sum of $138,306.62 plus interest and costs; and (2) Gemco in the sum of $9,649.40 plus interest and costs. [14] Neither Green Edge nor Gemco defended the aforementioned action and, as a result, they were noted in default. On December 23, 2014, default judgment was granted. Gemco was ordered to pay the plaintiff the sum of $12,501.68 and the sum of $270 in costs plus interest. Green Edge was ordered to pay the plaintiff the sum of $200,328.61 and the sum of $940 in costs plus interest. Neither Green Edge nor Gemco are solvent. No payments have been made towards the Judgment. ### Construction Lien – Castlefield Project [15] On October 21, 2013, the plaintiff’s former solicitors registered a construction lien on the plaintiff’s behalf in the amount of $200,709.52 against a property related to the Castlefield Project. On February 25, 2014, Master Albert granted an Order dismissing the lien action as against the owner of the property, 1450 Castlefield Avenue Limited. ### 2014 Lawsuit [16] On April 9, 2014, the plaintiff commenced this second action against Green Edge and Gemco, as well as Aoun in his capacity as the directing mind of both companies, for payment of $200,709.52 in respect of the Castlefield Project. Steel Tree alleges that the Defendants were paid in full by the owner for the Plaintiff’s work and had failed to pay the Plaintiff. The Plaintiff claims the above amount against all defendants based on (a) breach of trust under Part II of the [Construction Liens Act, R.S.O. 1990, c.C-30](https://www.ontario.ca/laws/statute/90c30), as amended (“CLA”) and breach of trust at common law, an accounting of all funds received by the Green Edge and Gemco, as well as an order tracing the distribution of the funds received by them; (b) the amounts owed under contracts between the parties; (c) quantum meruit and unjust enrichment; (d) subsection 245(c) and section 248 of the [Ontario Business Corporations Act, R.S.O. 1990, c. B-16](https://www.ontario.ca/laws/statute/90o16), as amended (“OBCA”). ### CR Electrical [17] On February 2, 2015, counsel for the Plaintiff was provided with a draft amended Statement of Claim by counsel for CR Electrical Contractor that had brought a claim against the Fovere Defendants in respect of installation services that it provided to Gemco for the Sunshine Project. Amongst other things, CR Electrical alleged that: The Plaintiff states that Fovere Investments Inc. and Fovere Glenbarra Energy Fund IV Limited Partnership have been unjustly enriched to its detriment, for which the Plaintiff relies on the doctrine of quantum meruit. In the Fall of 2012 the partnership between Gemco and the Fovere companies was unwound strategically ahead of any bankruptcy, so that any transfer of assets, contracts or trust funds, in this process did not appear as a fraudulent conveyance and an unearned benefit to Fovere Investments Inc. and Fovere Glenbarra Energy Fund IV Limited Partnership. In essence, the Fovere companies will enjoy 20 years of income from installations that have not been paid for. In addition, the Fovere companies had every intention to limit what they paid to Gemco to protect the return on investment (ROI) model that they had in place for the fund and its investors. Through the cross-ownership structure and influence of the Gemco principals, they used Gemco as a vehicle to build these Projects as economically as possible, minimizing the cost to the fund, satisfying their investors at all the expense of the Gemco suppliers and trades, like CR Electrical. [18] These allegations are reflected in an affidavit, sworn January 15, 2015, by Michieli, who is now deceased. His affidavit states that: * He was the former Vice-President of Operations for Gemco; * He was the second cousin to a principal of CR Electrical; * “All indications were of control by Fovere and its principals, through my participation in meetings, facilitation of credit for GEMCO with suppliers and what would appear to be obvious financial influence over Jean Aoun and Gemco. Without the payment stream from Fovere or the Fund, GEMCO would not be able to meet any of its obligations”; * “I would challenge that Fovere and its principals had full knowledge of what the true cost of building these sites were and that the price agreed to between them and the GEMCO principals to complete the Projects was not adequate to cover these true costs. They had full knowledge that various suppliers and subcontractors would not be fully paid, and as I have said before in my Affidavit, that Mr. Aoun shared with me that the principals of Fovere wanted Jean Aoun to bankrupt GEMCO to protect the fund and the Fovere entities from any claim against them for non-payment. The Projects reverted back to Fovere with GEMCO left holding the empty bag”; and [19] Abbott, in response, claims that Michieli’s assertions are lies. ### Amended Statement of Claim [20] On September 21, 2015, the plaintiff subsequently amended the Statement of Claim to add Fovere Investments Inc., Fovere Glenbarra Energy Fund IV Limited Partnership, Fovere Glenbarra Energy Fund IV Ltd., Paul Marsiglio and Darryl Abbott as defendants (the “Fovere Defendants”). Amongst other things, the Plaintiff claims that: (a) The Fovere Defendants were the financiers, partial owners, operators and directing minds of Gemco Solar and Green Edge and that they received the direct benefit of the Plaintiff’s services; (b) All amounts paid to, and all amounts owing to or received by the Defendants for the Castlefield Project and the Sunshine Project constitute trust funds for the benefit of the plaintiff pursuant to the CLA; (c) Aoun, Marsiglio and Abbott (the “Individual Defendants”) caused, acquiesced and assented to conduct that permitted Gemco and Green Edge to divert funds from the Castlefield and Sunshine Projects to other purposes and are thus personally liable to the Plaintiff for $348,465.54 claimed in respect of both Projects; and (d) The Fovere Defendants have been unjustly enriched in that they used Gemco as a vehicle to build the Projecgts as economically as possible, minimizing the cost to the Fund, satisfying their investors at the expense of Gemco’s suppliers, including the Plaintiff. [21] Gemco and Green Edge have defended this action. [22] On August 30, 2016, the plaintiff amended its Amended Statement of Claim to add its former solicitors McCague Borlack LLP, Lorne Honickman, Robert Griffin and Stephen Barbier as defendants (the “McCague Borlack Defendants”). The Plaintiff alleges that the McCague Borlack Defendants improperly registered the construction lien in respect of the Castlefield Project. [23] The Fovere Defendants submit that the action against them be dismissed on the following grounds: (a) The claim against the Fovere Defendants is barred by the [Limitations Act, 2002](https://www.ontario.ca/laws/statute/02l24) as it relates to unpaid invoices that are more than two years old; (b) There has been no breach of contract as the Plaintiff did not have a contract with any of the Fovere Defendants; (c) The Fovere Defendants have not been unjustly enriched by the Plaintiff; (d) It is duplicitous and an abuse of process for the Plaintiff to seek payment of the same invoices for which it has obtained a judgment against Gemco and Green Edge; (e) The Fovere Defendants were never involved in the control or management of Gemco or Green Edge and had no involvement in the operation of those companies; (f) The Fovere Defendants, other than Marsiglio and Abbott, had no involvement in the Castlefield Project whatsoever; and (g) Fovere IV LP paid Gemco all funds due and owing, as well as cost overruns, in relation to the Sunshine Project. [24] On March 28, 2018, on the return of this motion for summary judgment, it became clear that the Plaintiff believed that there were documents in the possession or control of the Fovere Defendants that they had not produced which were relevant to the issues raised by the Plaintiff and the Fovere Defendants. The motion was adjourned to permit the Plaintiff to identify the records sought and for the Defendant to deliver those documents. [25] On the return of this motion, each party delivered a supplementary motion record. ## Analysis [26] [Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194](https://www.ontario.ca/laws/regulation/900194), states that a 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. [27] In [Hryniak v. Mauldin, 2014 SCC 7, 1 S.C.R. 87 at para. 49](https://www.canlii.org/en/ca/scc/doc/2014/2014scc7/2014scc7.html), the Supreme Court of Canada stated that: 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. [28] Rule 20.04(2.1) provides that in determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and 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 trial: 1. Weighing the evidence. 2. Evaluating the credibility of a deponent. 3. Drawing any reasonable inference from the evidence. [29] In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial: see [Rule 20.02(2)](https://www.ontario.ca/laws/regulation/900194). Each side must “put its best foot forward” with respect to the existence or non-existence of material issues to be tried: see [Papaschase Indian Band No. 136 v. Canada (Attorney General), 2008 SCC 14, 1 S.C.R. 372 at para. 11](https://www.canlii.org/en/ca/scc/doc/2008/2008scc14/2008scc14.html). A court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial: see [Aronowicz v. EMTWO Properties Inc., 2010 ONCA 96, 98 O.R. (3d) 641 at paras. 17-19](https://www.canlii.org/en/on/onca/doc/2010/2010onca96/2010onca96.html). [30] On a motion for summary judgment, a judge may grant judgment in favour of a responding party, even in the absence of a cross-motion for such relief, so long as it is within the scope of the motion: see [Singh v. Trump, 2016 ONCA 747, 408 D.L.R. (4th) 235 at paras. 147, 148](https://www.canlii.org/en/on/onca/doc/2016/2016onca747/2016onca747.html). [31] This motion proceeded on the basis of documentary evidence filed by both parties: 1) Affidavits of Darryl Abbott, sworn September 27, 2017 and November 23, 2017; 2) Affidavit of Henry Glavic, sworn November 9, 2017; 3) Transcript from the Cross-Examination of Darryl Abbott, held on January 5, 2018; 4) The Plaintiff’s Supplementary Motion Record, dated March 21, 2018, which consists of a letter sent by Mr. Kazushner to Ms. Dhirani, dated January 25, 2018, responses, including documents, to undertakings and refusals given at Abbott’s cross-examination held January 5, 2018; and 5) An email from Ms. Dhirani, dated September 19, 2018, which attaches a refusals chart from Abbott’s cross-examination along with comments from the Plaintiff and the Fovere Defendants. [32] The Fovere Defendants submit the claim against them should be dismissed as there is no genuine issue requiring a trial against them for the following reasons: * There is no basis for a claim for breach of trust, whether at common law or under the CLA, against the Fovere Defendants; * The claim against the Fovere Defendants is statute barred; and, * The claim against the Fovere Defendants is an abuse of process given that the Plaintiff has obtained judgment against Gemco and Green Edge for the amounts owed in relation to the Castlefield Project. ### Issue #1: Are the Fovere Defendants liable in breach of trust or in unjust enrichment? [33] The basis for the claims in breach of trust and unjust enrichment are described above and centre on the allegation that the Fovere Defendants controlled the operations of the Defendants Gemco and Green Edge. [34] The Fovere Defendants deny that they controlled the operations of Gemco and Green Edge. In support of that position, they rely on Abbott’s affidavit evidence that denies any such control. They also submit that, in any event, Fovere II LP and Fovere IV LLP do not owe any money to Gemco and Green Edge. In support of that position, the Fovere Defendants have provided an auditor’s report which states that as at December 31, 2012, in respect of Fovere IV LP, “all debts with respect to Gemco were extinguished”. It does not state that Gemco and Green Edge were paid in full by Fovere II LP or Fovere IV LP for goods and services provided in respect of the Castlefield and Sunshine projects. [35] The Fovere Defendants have failed to produce many relevant documents including: * Any emails with Gemco relating to either the Sunshine or Castlefield projects; * Any correspondence with Gemco or Green Edge and anyone at the Fovere Defendants relating to invoices, draw requests or request for payment complaining about the lack of payment for the Sunshine Porject from January 1, 2012 onwards; * Any correspondence between Gemco and anyone at Fovere II LP relating to payment or invoices for the Castlefield Project; * Any draw requests or proof of payment with respect to the $1,905,114.46 which was allegedly paid to Gemco for the Castlefield Project; * Any bank statements for Fovere II LP of whatever entity made payment to Gemco for all payments allegedly made for the Castlefield Project; * Any records from their accounting system (Quickbooks) with respect to the Sunshine or Castlefield Projects; * Copies of any cheques paid to Abbott or Marsiglio by Fovere II LP or Fovere IV LP; * Any financial statements for Fovere II LP, Fovere IV LP or Fovere Investments Inc; and * Any documents in their accountants’ files which are within th [36] The Fovere Defendants submit that these documents are no longer available to them. Counsel states that “… the projects were completed 6-7 years ago and the Fovere Defendants have gone through changes to its staff, office location, servers and computers and could not locate invoices or emails regarding payments to Gemco”. This raises the issue of whether the Fovere Defendants have complied with the obligation to maintain records and books of account for seven years from the date that a tax return is filed for that year to which those documents are related: [Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s.230](https://laws-lois.justice.gc.ca/eng/acts/i-3.3/page-100.html#docCont). [37] The inability of the Fovere Defendants to produce emails, invoices, draw requests, evidence of payment and any other documents that were exchanged between them and Gemco during the course of these contracts raises obvious concerns about whether the Fovere Defendants had an arms-length relationship with Gemco and whether the Fovere II LP and Fovere IV LP fully paid Gemco pursuant to their contracts for the delivery of these two solar electricity projects. [38] I agree with the Plaintiff’s position that the breach of trust and unjust enrichment claims against the Fovere Defendants raises genuine issues that require a trial. Such issues cannot be fairly resolved solely on the basis of the documentary evidence that has been adduced without viva voce evidence in order to assess the credibility and reliability of the evidence adduced by the Fovere Defendants. I also expect that the other defendants, particularly Aoun, will have evidence that goes to the issues of control and payment described above. ### Issue #2: Is the claim against the Fovere Defendants statute barred? [39] The determination of when a limitation period commences for an action under section 13 of the Act is governed by sections 4 and 5 of the [Limitations Act, 2002, S.O. 2002, c. 24, Sched. B](https://www.ontario.ca/laws/statute/02l24) (the “Act”). [40] Section 4 of the Act states 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. [41] In turn, section 5 of the Act provides that a claim is discovered when the plaintiff knew or ought to have known of the material facts of the claim, whichever occurs first. [42] Subsections 5(1) and (2) of the Act state: (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). (2) A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. [43] The Fovere Defendants submit that the plaintiff’s claim is for payment of alleged outstanding invoices rendered to Gemco and/or Green Edge dated April 29, 2011 to August 23, 2012 for services and materials supplied before those dates. The Fovere Defendants were not added to this action until September 21, 2015 which is more than two years after the Plaintiff’s alleged services, materials and invoices. The plaintiff’s own evidence is that the prior to February 2013 (and as early as February 2012) it knew that Gemco and/or Green Edge received funds from another sources and/or “Fovere” to pay its trades. However, the plaintiff did not make any effort to add any party until September 21, 2015. Fovere submits there is no reason why the plaintiff could not have discovered its potential or alleged claim against Fovere within the two year limitation period. [44] The plaintiff submits that it did not discover its claims against the Fovere Defendants until February 3, 2015 when its counsel obtained a draft amended Statement of Claim from counsel for CR Electrical Contractors. [45] These claims are denied by the Fovere Defendants who note that CR Electrical’s claim has been dismissed. There is no indication of whether this dismissal resulted from a determination of the claim on its merits, a settlement or otherwise. [46] In any event, an action for breach of trust, whether at common law or under section 13 of the CLA does not run concurrently with a claim for breach of a construction contract but rather when the circumstances that support those causes of action should have been discovered by the Plaintiff: [Employment Professionals Canada Inc. v. SDF, 2016 ONSC 4230, para. 28](https://www.canlii.org/en/on/onsc/doc/2016/2016onsc4230/2016onsc4230.html). [47] In my view, the Defendant has not shown that the Plaintiff ought to have known earlier than February 3, 2015 that its losses were caused or contributed to by the acts or omissions of the Fovere Defendants. Accordingly, I find that the Plaintiff’s claim is not barred by statute. ### Issue #3: Should this action against the Fovere Defendants been dismissed an abuse of process? [48] The Fovere Defendants submit that this action is an abuse of process because the plaintiff has obtained a Judgment against Gemco and Green Edge in respect of the same invoices with respect to which the Steel Tree claims it is owed payment by the Fovere Defendants. [49] No case law was provided by the Fovere Defendants in support of its position that Steel Tree’s action constitutes an abuse of process as against the Fovere Defendants. [50] In [Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, para. 37](https://www.canlii.org/en/ca/scc/doc/2003/2003scc63/2003scc63.html), the Supreme Court of Canada approved the following formulation of the doctrine of abuse of process: The doctrine of abuse of process engages the inherent power of the court to prevent the misuse of its procedure, in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute. It is a flexible doctrine unencumbered by the specific requirements of concepts such as issue estoppel. … One circumstance in which abuse of process has been applied is where the litigation before the court is found to be in essence an attempt to relitigate a claim which the court has already determined. [51] This action does not involve a re-litigation of a claim between these parties. Further, the commencement of this action is not manifestly unfair to the Fovere Defendants nor does it bring the administration of justice into disrepute. Instead, this action raises a triable issue regarding whether some or all of the Fovere Defendants exercised control over Gemco and Green Edge. ## Conclusions [52] I dismiss the Fovere Defendants’ motion for summary judgment given that it would not result in a fair process or a just adjudication other than in respect of the limitation period and abuse of process issues addressed above for which I find in favour of the Plaintiff. [53] As a matter of efficiency, I shall remain seized of this action. I direct that the parties attend a case conference, to be held by telephone, on February 28, 2019 at 8:45 am for 15 minutes, at which time the issue of costs as well as next steps in this action shall be addressed. --- Mr. Justice M. D. Faieta Released: February 26, 2019

citation: "Steel Tree Structures Ltd. v. Gemco Solar Inc., 2019 ONSC 1309" parties: "STEEL TREE STRUCTURES LTD. Plaintiff – and – GEMCO SOLAR INC., GREEN EDGE PRODUCTS INC., JEAN MICHEL AOUN, FOVERE INVESTMENTS INC., PAUL MARSIGLIO, DARRYL ABBOTT, FOVERE GLENBARRA ENERGY FUND IV LIMITED PARTNERSHIP, FOVERE GLENBARRA ENERGY FUND IV LTD., MCCAGUE BORLACK LLP, LORNE HONICKMAN, ROBERT GRIFFIN and STEPHEN BARBIER Defendants" party_moving:

"Fovere Investments Inc."
"Fovere Glenbarra Energy Fund IV Limited Partnership"
"Fovere Glenbarra Energy Fund IV Ltd."
"Paul Marsiglio"
"Darryl Abbott" party_responding: "Steel Tree Structures Ltd." court: "Superior Court of Justice" court_abbreviation: "ONSC" jurisdiction: "Ontario" case_type: "motion" date_judgement: "2019-02-26" date_heard: "2018-11-16" applicant:
"Fovere Investments Inc."
"Fovere Glenbarra Energy Fund IV Limited Partnership"
"Fovere Glenbarra Energy Fund IV Ltd."
"Paul Marsiglio"
"Darryl Abbott" applicant_counsel:
"Shane E. Kazushner" respondent:
"Steel Tree Structures Ltd." respondent_counsel:
"Karey Anne Dhirani" judge:
"M. D. Faieta" summary: > The Fovere Defendants brought a motion for summary judgment to dismiss an action by Steel Tree Structures Ltd. for breach of trust, unjust enrichment, and other claims related to solar panel racking projects. The court dismissed the motion, finding genuine issues requiring a trial, particularly concerning the Fovere Defendants' alleged control over other defendant companies (Gemco and Green Edge) and their failure to produce relevant financial documents. The court also found the claims were not statute-barred and did not constitute an abuse of process. interesting_citations_summary: > The decision applies the summary judgment test from Hryniak v. Mauldin, emphasizing the need for a fair and just determination on the merits and the court's ability to weigh evidence and assess credibility. It clarifies that a breach of trust claim's limitation period commences upon discovery of the supporting circumstances, not concurrently with a breach of contract claim. The court also reiterates the doctrine of abuse of process, confirming that obtaining judgment against one party does not necessarily preclude pursuing claims against others if the litigation is not a relitigation of the same claim between the same parties. final_judgement: The Fovere Defendants' motion for summary judgment was dismissed, and the action against them will proceed to trial. winning_degree_applicant: 5 winning_degree_respondent: 1 judge_bias_applicant: 0 judge_bias_respondent: 0 year: 2019 decision_number: 1309 file_number: "CV-14-501848" source: "https://www.canlii.org/en/on/onsc/doc/2019/2019onsc1309/2019onsc1309.html" keywords:
Summary judgment
Breach of trust
Unjust enrichment
Limitation period
Abuse of process
Construction law
Solar projects
Corporate control areas_of_law:
Civil Procedure
Construction Law
Corporate Law
Equity cited_cases: legislation:
- title: "Rules of Civil Procedure, R.R.O. 1990, Reg. 194" url: "https://www.ontario.ca/laws/regulation/900194"
- title: "Construction Liens Act, R.S.O. 1990, c.C-30" url: "https://www.ontario.ca/laws/statute/90c30"
- title: "Ontario Business Corporations Act, R.S.O. 1990, c. B-16" url: "https://www.ontario.ca/laws/statute/90o16"
- title: "Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s.230" url: "https://laws-lois.justice.gc.ca/eng/acts/i-3.3/page-100.html#docCont"
- title: "Limitations Act, 2002, S.O. 2002, c. 24, Sched. B" url: "https://www.ontario.ca/laws/statute/02l24" case_law:
- title: "Hryniak v. Mauldin, 2014 SCC 7, 1 S.C.R. 87" url: "https://www.canlii.org/en/ca/scc/doc/2014/2014scc7/2014scc7.html"
- title: "Papaschase Indian Band No. 136 v. Canada (Attorney General), 2008 SCC 14, 1 S.C.R. 372" url: "https://www.canlii.org/en/ca/scc/doc/2008/2008scc14/2008scc14.html"
- title: "Aronowicz v. EMTWO Properties Inc., 2010 ONCA 96, 98 O.R. (3d) 641" url: "https://www.canlii.org/en/on/onca/doc/2010/2010onca96/2010onca96.html"
- title: "Singh v. Trump, 2016 ONCA 747, 408 D.L.R. (4th) 235" url: "https://www.canlii.org/en/on/onca/doc/2016/2016onca747/2016onca747.html"
- title: "Employment Professionals Canada Inc. v. SDF, 2016 ONSC 4230" url: "https://www.canlii.org/en/on/onsc/doc/2016/2016onsc4230/2016onsc4230.html"
- title: "Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63" url: "https://www.canlii.org/en/ca/scc/doc/2003/2003scc63/2003scc63.html"

Court File and Parties

COURT FILE NO.: CV-14-501848 DATE: 20190226 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

STEEL TREE STRUCTURES LTD. Plaintiff – and – GEMCO SOLAR INC., GREEN EDGE PRODUCTS INC., JEAN MICHEL AOUN, FOVERE INVESTMENTS INC., PAUL MARSIGLIO, DARRYL ABBOTT, FOVERE GLENBARRA ENERGY FUND IV LIMITED PARTNERSHIP, FOVERE GLENBARRA ENERGY FUND IV LTD., MCCAGUE BORLACK LLP, LORNE HONICKMAN, ROBERT GRIFFIN and STEPHEN BARBIER Defendants

Counsel: Karey Anne Dhirani, for the Plaintiff Shane E. Kazushner, for the Defendants Fovere Investments Inc., Fovere Glenbarra Energy Fund IV Limited Partnership, Fovere Glenbarra Energy Fund IV Ltd., Paul Marsiglio and Darryl Abbott

HEARD: November 16, 2018

M. D. FAIETA j.

Reasons for Decision

Introduction

[1] The Defendants Fovere Investments Inc., Fovere Glenbarra Energy Fund IV Limited Partnership, Fovere Glenbarra Energy Fund IV Ltd., Paul Marsiglio and Darryl Abbott (the “Fovere Defendants”) bring this motion for summary judgment for an order dismissing this action against them on the basis that there is no genuine issue requiring a trial. None of the other Defendants appeared on this motion.

[2] For the reasons described below, I have dismissed this motion.

Background

[3] The plaintiff, Steel Tree Structures Ltd. (“Steel Tree”) is a manufacturer and installer of, amongst other things, structures for the racking of solar panels. It claims $348,485.54 in respect of racking that it provided for the installation of two solar photovoltaic systems.

Sunshine Project

[4] On April 1, 2011, the Defendant Gemco Solar Inc. entered a contract with Fovere Glenbarra Energy Fund IV Limited Partnership (“Fovere IV LP”) for the design, installation and commissioning of solar photovoltaic systems across the Province of Ontario in order to take advantage of the 0.802 kWh tariff rate set by the Ontario Power Authority under its Feed-In-Tariff program.

[5] Under this contract, Gemco built 319 systems for Fovere IV LP.

[6] In February, 2011, the Defendant Stuart Micheli, Vice-President, Operations, Gemco, asked Steel Tree for a proposal to supply solar panel racking for “Project Sunshine”. In March, 2011, Gemco entered a contract with Steel Tree for the supply of 252 “Sunshine Racking Systems” at a total cost of $2,306,556.00.

[7] Most of the purchase orders were received from Green Edge however some of the purchase orders were received from Gemco Solar Inc. (“Gemco”). Green Edge and Gemco are related companies.

[8] Steel Tree claims that the sum of $147,776.02 remains due and owing by Green Edge and Gemco.

Castlefield Project

[9] On January 14, 2013, the Defendant Gemco Solar Inc. entered a contract with Fovere Glenbarra Energy Fund II Limited Partnership (“Fovere II LP”) for the design, installation and commissioning of roof-mounted solar photovoltaic system at 1450 Castlefield Avenue that will provide 250kW output in order to take advantage of the 0.713 kWh tariff rate set by the Ontario Power Authority under its Feed-In-Tariff program (“Castlefield Project”).

[10] In May 2013, Gemco issued a purchase order for the supply of solar panel racking equipment for the Castlefield Project at a price of $220, 484.52

[11] The Defendant, Darryl Abbott, states that he is a principal of the Defendants Fovere IV LP and Fovere Glenbarra Energy Fund IV Ltd. Abbott states that the Fovere Defendants did not have any involvement in the Castlefield Project. He states that Gemco acted as the General Contractor for Fovere Glenbarra Energy Fund II Limited Partnership (“Fovere II LP”) rather than for Fovere IV LP, in the design, installation and commission of this roof-mounted solar photovoltaic system. Fovere II LP is not a party to this action. Notwithstanding the organizational distinction between Fovere II LP and Fovere IV LP, Abbott’s affidavit provides a copy of the Gemco-Fovere II LP contract described above and he goes on to state that Fovere II LP paid Gemco all amounts due and owing to it pursuant to their contract as well as cost overruns. Mr. Abbott states that no further amounts are due and owing by Fovere II LP to Gemco.

2013 Lawsuit

[12] In November 2013, Steel Tree advised the Defendant, Jean Michel Aoun (“Aoun”) and Michieli that it was owed about $335,000.00 for equipment that it had supplied for the two projects. Aoun and Michieli indicated that Green Edge would pay this outstanding amount once it received payment from “Fovere”, which it expected to receive in 4-6 weeks. Steel Tree received no further payments.

[13] On July 24, 2013, the plaintiff commenced an action against Green Edge and Gemco (Court File No. CV-13-485485) for breach of contract based on the terms of the invoices. A breach of trust claim was not advanced. The plaintiff sought judgment against: (1) Green Edge in the sum of $138,306.62 plus interest and costs; and (2) Gemco in the sum of $9,649.40 plus interest and costs.

[14] Neither Green Edge nor Gemco defended the aforementioned action and, as a result, they were noted in default. On December 23, 2014, default judgment was granted. Gemco was ordered to pay the plaintiff the sum of $12,501.68 and the sum of $270 in costs plus interest. Green Edge was ordered to pay the plaintiff the sum of $200,328.61 and the sum of $940 in costs plus interest. Neither Green Edge nor Gemco are solvent. No payments have been made towards the Judgment.

Construction Lien – Castlefield Project

[15] On October 21, 2013, the plaintiff’s former solicitors registered a construction lien on the plaintiff’s behalf in the amount of $200,709.52 against a property related to the Castlefield Project. On February 25, 2014, Master Albert granted an Order dismissing the lien action as against the owner of the property, 1450 Castlefield Avenue Limited.

2014 Lawsuit

[16] On April 9, 2014, the plaintiff commenced this second action against Green Edge and Gemco, as well as Aoun in his capacity as the directing mind of both companies, for payment of $200,709.52 in respect of the Castlefield Project. Steel Tree alleges that the Defendants were paid in full by the owner for the Plaintiff’s work and had failed to pay the Plaintiff. The Plaintiff claims the above amount against all defendants based on

(a) breach of trust under Part II of the Construction Liens Act, R.S.O. 1990, c.C-30, as amended (“CLA”) and breach of trust at common law, an accounting of all funds received by the Green Edge and Gemco, as well as an order tracing the distribution of the funds received by them; (b) the amounts owed under contracts between the parties; (c) quantum meruit and unjust enrichment; (d) subsection 245(c) and section 248 of the Ontario Business Corporations Act, R.S.O. 1990, c. B-16, as amended (“OBCA”).

CR Electrical

[17] On February 2, 2015, counsel for the Plaintiff was provided with a draft amended Statement of Claim by counsel for CR Electrical Contractor that had brought a claim against the Fovere Defendants in respect of installation services that it provided to Gemco for the Sunshine Project. Amongst other things, CR Electrical alleged that:

The Plaintiff states that Fovere Investments Inc. and Fovere Glenbarra Energy Fund IV Limited Partnership have been unjustly enriched to its detriment, for which the Plaintiff relies on the doctrine of quantum meruit. In the Fall of 2012 the partnership between Gemco and the Fovere companies was unwound strategically ahead of any bankruptcy, so that any transfer of assets, contracts or trust funds, in this process did not appear as a fraudulent conveyance and an unearned benefit to Fovere Investments Inc. and Fovere Glenbarra Energy Fund IV Limited Partnership. In essence, the Fovere companies will enjoy 20 years of income from installations that have not been paid for. In addition, the Fovere companies had every intention to limit what they paid to Gemco to protect the return on investment (ROI) model that they had in place for the fund and its investors. Through the cross-ownership structure and influence of the Gemco principals, they used Gemco as a vehicle to build these Projects as economically as possible, minimizing the cost to the fund, satisfying their investors at all the expense of the Gemco suppliers and trades, like CR Electrical.

[18] These allegations are reflected in an affidavit, sworn January 15, 2015, by Michieli, who is now deceased. His affidavit states that:

He was the former Vice-President of Operations for Gemco;
He was the second cousin to a principal of CR Electrical;
“All indications were of control by Fovere and its principals, through my participation in meetings, facilitation of credit for GEMCO with suppliers and what would appear to be obvious financial influence over Jean Aoun and Gemco. Without the payment stream from Fovere or the Fund, GEMCO would not be able to meet any of its obligations”;
“I would challenge that Fovere and its principals had full knowledge of what the true cost of building these sites were and that the price agreed to between them and the GEMCO principals to complete the Projects was not adequate to cover these true costs. They had full knowledge that various suppliers and subcontractors would not be fully paid, and as I have said before in my Affidavit, that Mr. Aoun shared with me that the principals of Fovere wanted Jean Aoun to bankrupt GEMCO to protect the fund and the Fovere entities from any claim against them for non-payment. The Projects reverted back to Fovere with GEMCO left holding the empty bag”; and

[19] Abbott, in response, claims that Michieli’s assertions are lies.

Amended Statement of Claim

[20] On September 21, 2015, the plaintiff subsequently amended the Statement of Claim to add Fovere Investments Inc., Fovere Glenbarra Energy Fund IV Limited Partnership, Fovere Glenbarra Energy Fund IV Ltd., Paul Marsiglio and Darryl Abbott as defendants (the “Fovere Defendants”). Amongst other things, the Plaintiff claims that:

(a) The Fovere Defendants were the financiers, partial owners, operators and directing minds of Gemco Solar and Green Edge and that they received the direct benefit of the Plaintiff’s services; (b) All amounts paid to, and all amounts owing to or received by the Defendants for the Castlefield Project and the Sunshine Project constitute trust funds for the benefit of the plaintiff pursuant to the CLA; (c) Aoun, Marsiglio and Abbott (the “Individual Defendants”) caused, acquiesced and assented to conduct that permitted Gemco and Green Edge to divert funds from the Castlefield and Sunshine Projects to other purposes and are thus personally liable to the Plaintiff for $348,465.54 claimed in respect of both Projects; and (d) The Fovere Defendants have been unjustly enriched in that they used Gemco as a vehicle to build the Projecgts as economically as possible, minimizing the cost to the Fund, satisfying their investors at the expense of Gemco’s suppliers, including the Plaintiff.

[21] Gemco and Green Edge have defended this action.

[22] On August 30, 2016, the plaintiff amended its Amended Statement of Claim to add its former solicitors McCague Borlack LLP, Lorne Honickman, Robert Griffin and Stephen Barbier as defendants (the “McCague Borlack Defendants”). The Plaintiff alleges that the McCague Borlack Defendants improperly registered the construction lien in respect of the Castlefield Project.

[23] The Fovere Defendants submit that the action against them be dismissed on the following grounds:

(a) The claim against the Fovere Defendants is barred by the Limitations Act, 2002 as it relates to unpaid invoices that are more than two years old; (b) There has been no breach of contract as the Plaintiff did not have a contract with any of the Fovere Defendants; (c) The Fovere Defendants have not been unjustly enriched by the Plaintiff; (d) It is duplicitous and an abuse of process for the Plaintiff to seek payment of the same invoices for which it has obtained a judgment against Gemco and Green Edge; (e) The Fovere Defendants were never involved in the control or management of Gemco or Green Edge and had no involvement in the operation of those companies; (f) The Fovere Defendants, other than Marsiglio and Abbott, had no involvement in the Castlefield Project whatsoever; and (g) Fovere IV LP paid Gemco all funds due and owing, as well as cost overruns, in relation to the Sunshine Project.

[24] On March 28, 2018, on the return of this motion for summary judgment, it became clear that the Plaintiff believed that there were documents in the possession or control of the Fovere Defendants that they had not produced which were relevant to the issues raised by the Plaintiff and the Fovere Defendants. The motion was adjourned to permit the Plaintiff to identify the records sought and for the Defendant to deliver those documents.

[25] On the return of this motion, each party delivered a supplementary motion record.

Analysis

[26] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, states that a 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.

[27] In Hryniak v. Mauldin, 2014 SCC 7, 1 S.C.R. 87 at para. 49, the Supreme Court of Canada stated that:

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.

[28] Rule 20.04(2.1) provides that in determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and 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 trial:

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

[29] In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial: see Rule 20.02(2). Each side must “put its best foot forward” with respect to the existence or non-existence of material issues to be tried: see Papaschase Indian Band No. 136 v. Canada (Attorney General), 2008 SCC 14, 1 S.C.R. 372 at para. 11. A court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial: see Aronowicz v. EMTWO Properties Inc., 2010 ONCA 96, 98 O.R. (3d) 641 at paras. 17-19.

[30] On a motion for summary judgment, a judge may grant judgment in favour of a responding party, even in the absence of a cross-motion for such relief, so long as it is within the scope of the motion: see Singh v. Trump, 2016 ONCA 747, 408 D.L.R. (4th) 235 at paras. 147, 148.

[31] This motion proceeded on the basis of documentary evidence filed by both parties:

Affidavits of Darryl Abbott, sworn September 27, 2017 and November 23, 2017;
Affidavit of Henry Glavic, sworn November 9, 2017;
Transcript from the Cross-Examination of Darryl Abbott, held on January 5, 2018;
The Plaintiff’s Supplementary Motion Record, dated March 21, 2018, which consists of a letter sent by Mr. Kazushner to Ms. Dhirani, dated January 25, 2018, responses, including documents, to undertakings and refusals given at Abbott’s cross-examination held January 5, 2018; and
An email from Ms. Dhirani, dated September 19, 2018, which attaches a refusals chart from Abbott’s cross-examination along with comments from the Plaintiff and the Fovere Defendants.

[32] The Fovere Defendants submit the claim against them should be dismissed as there is no genuine issue requiring a trial against them for the following reasons:

There is no basis for a claim for breach of trust, whether at common law or under the CLA, against the Fovere Defendants;
The claim against the Fovere Defendants is statute barred; and,
The claim against the Fovere Defendants is an abuse of process given that the Plaintiff has obtained judgment against Gemco and Green Edge for the amounts owed in relation to the Castlefield Project.

Issue #1: Are the Fovere Defendants liable in breach of trust or in unjust enrichment?

[33] The basis for the claims in breach of trust and unjust enrichment are described above and centre on the allegation that the Fovere Defendants controlled the operations of the Defendants Gemco and Green Edge.

[34] The Fovere Defendants deny that they controlled the operations of Gemco and Green Edge. In support of that position, they rely on Abbott’s affidavit evidence that denies any such control. They also submit that, in any event, Fovere II LP and Fovere IV LLP do not owe any money to Gemco and Green Edge. In support of that position, the Fovere Defendants have provided an auditor’s report which states that as at December 31, 2012, in respect of Fovere IV LP, “all debts with respect to Gemco were extinguished”. It does not state that Gemco and Green Edge were paid in full by Fovere II LP or Fovere IV LP for goods and services provided in respect of the Castlefield and Sunshine projects.

[35] The Fovere Defendants have failed to produce many relevant documents including:

Any emails with Gemco relating to either the Sunshine or Castlefield projects;
Any correspondence with Gemco or Green Edge and anyone at the Fovere Defendants relating to invoices, draw requests or request for payment complaining about the lack of payment for the Sunshine Porject from January 1, 2012 onwards;
Any correspondence between Gemco and anyone at Fovere II LP relating to payment or invoices for the Castlefield Project;
Any draw requests or proof of payment with respect to the $1,905,114.46 which was allegedly paid to Gemco for the Castlefield Project;
Any bank statements for Fovere II LP of whatever entity made payment to Gemco for all payments allegedly made for the Castlefield Project;
Any records from their accounting system (Quickbooks) with respect to the Sunshine or Castlefield Projects;
Copies of any cheques paid to Abbott or Marsiglio by Fovere II LP or Fovere IV LP;
Any financial statements for Fovere II LP, Fovere IV LP or Fovere Investments Inc; and
Any documents in their accountants’ files which are within th

[36] The Fovere Defendants submit that these documents are no longer available to them. Counsel states that “… the projects were completed 6-7 years ago and the Fovere Defendants have gone through changes to its staff, office location, servers and computers and could not locate invoices or emails regarding payments to Gemco”. This raises the issue of whether the Fovere Defendants have complied with the obligation to maintain records and books of account for seven years from the date that a tax return is filed for that year to which those documents are related: Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s.230.

[37] The inability of the Fovere Defendants to produce emails, invoices, draw requests, evidence of payment and any other documents that were exchanged between them and Gemco during the course of these contracts raises obvious concerns about whether the Fovere Defendants had an arms-length relationship with Gemco and whether the Fovere II LP and Fovere IV LP fully paid Gemco pursuant to their contracts for the delivery of these two solar electricity projects.

[38] I agree with the Plaintiff’s position that the breach of trust and unjust enrichment claims against the Fovere Defendants raises genuine issues that require a trial. Such issues cannot be fairly resolved solely on the basis of the documentary evidence that has been adduced without viva voce evidence in order to assess the credibility and reliability of the evidence adduced by the Fovere Defendants. I also expect that the other defendants, particularly Aoun, will have evidence that goes to the issues of control and payment described above.

Issue #2: Is the claim against the Fovere Defendants statute barred?

[39] The determination of when a limitation period commences for an action under section 13 of the Act is governed by sections 4 and 5 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (the “Act”).

[40] Section 4 of the Act states 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.

[41] In turn, section 5 of the Act provides that a claim is discovered when the plaintiff knew or ought to have known of the material facts of the claim, whichever occurs first.

[42] Subsections 5(1) and (2) of the Act state:

(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).

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[43] The Fovere Defendants submit that the plaintiff’s claim is for payment of alleged outstanding invoices rendered to Gemco and/or Green Edge dated April 29, 2011 to August 23, 2012 for services and materials supplied before those dates. The Fovere Defendants were not added to this action until September 21, 2015 which is more than two years after the Plaintiff’s alleged services, materials and invoices. The plaintiff’s own evidence is that the prior to February 2013 (and as early as February 2012) it knew that Gemco and/or Green Edge received funds from another sources and/or “Fovere” to pay its trades. However, the plaintiff did not make any effort to add any party until September 21, 2015. Fovere submits there is no reason why the plaintiff could not have discovered its potential or alleged claim against Fovere within the two year limitation period.

[44] The plaintiff submits that it did not discover its claims against the Fovere Defendants until February 3, 2015 when its counsel obtained a draft amended Statement of Claim from counsel for CR Electrical Contractors.

[45] These claims are denied by the Fovere Defendants who note that CR Electrical’s claim has been dismissed. There is no indication of whether this dismissal resulted from a determination of the claim on its merits, a settlement or otherwise.

[46] In any event, an action for breach of trust, whether at common law or under section 13 of the CLA does not run concurrently with a claim for breach of a construction contract but rather when the circumstances that support those causes of action should have been discovered by the Plaintiff: Employment Professionals Canada Inc. v. SDF, 2016 ONSC 4230, para. 28.

[47] In my view, the Defendant has not shown that the Plaintiff ought to have known earlier than February 3, 2015 that its losses were caused or contributed to by the acts or omissions of the Fovere Defendants. Accordingly, I find that the Plaintiff’s claim is not barred by statute.

Issue #3: Should this action against the Fovere Defendants been dismissed an abuse of process?

[48] The Fovere Defendants submit that this action is an abuse of process because the plaintiff has obtained a Judgment against Gemco and Green Edge in respect of the same invoices with respect to which the Steel Tree claims it is owed payment by the Fovere Defendants.

[49] No case law was provided by the Fovere Defendants in support of its position that Steel Tree’s action constitutes an abuse of process as against the Fovere Defendants.

[50] In Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, para. 37, the Supreme Court of Canada approved the following formulation of the doctrine of abuse of process:

The doctrine of abuse of process engages the inherent power of the court to prevent the misuse of its procedure, in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute. It is a flexible doctrine unencumbered by the specific requirements of concepts such as issue estoppel. …

One circumstance in which abuse of process has been applied is where the litigation before the court is found to be in essence an attempt to relitigate a claim which the court has already determined.

[51] This action does not involve a re-litigation of a claim between these parties. Further, the commencement of this action is not manifestly unfair to the Fovere Defendants nor does it bring the administration of justice into disrepute. Instead, this action raises a triable issue regarding whether some or all of the Fovere Defendants exercised control over Gemco and Green Edge.

Conclusions

[52] I dismiss the Fovere Defendants’ motion for summary judgment given that it would not result in a fair process or a just adjudication other than in respect of the limitation period and abuse of process issues addressed above for which I find in favour of the Plaintiff.

[53] As a matter of efficiency, I shall remain seized of this action. I direct that the parties attend a case conference, to be held by telephone, on February 28, 2019 at 8:45 am for 15 minutes, at which time the issue of costs as well as next steps in this action shall be addressed.

Mr. Justice M. D. Faieta Released: February 26, 2019