COURT FILE NO.: CV-17-578348 DATE: 20190617 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
ERNEST LUWISH, BY HIS POWER OF ATTORNEY, NAOMI LIPNER, 2345759 ONTARIO LIMITED, AL CARBONE and KIT KAR BAR & GRILL, RESTAURANTS & CLUBS INC. Plaintiffs – and – GRAYWOOD GROUP, GRAYWOOD DEVELOPMENTS, BEAVERHALL HOMES LIMITED, 8 MERCER STREET RESIDENCES INC., TORONTO STANDARD CONDOMINIUM CORPORATION 2460 and THE DOMINION OF CANADA GENERAL INSURANCE COMPANY Defendants
COUNSEL: Dena Oberman, for the Plaintiffs Nicola Brankley, for the Defendants Graywood Group, Graywood Developments, Beaverhall Homes Limited, 8 Mercer Street Residences Inc. No one appearing for the Defendant, The Dominion of Canada General Insurance Company
HEARD: May 22, 2019
M. D. FAIETA j.
REASONS FOR DECISION
INTRODUCTION
[1] The plaintiff Al Carbone is the President of Kit Kat Bar & Grill Restaurants & Clubs Inc. which operates the Kit Kat Italian Bar & Grill (“Kit Kat”) on premises that it leased for the last 40 years from Ernest Luwish until 2012 and subsequently from 2345759 Ontario Limited.
[2] The plaintiffs claim that cracks appeared in the walls and of the Kit Kat premises as a result of the construction of a high-rise condominium on an adjacent property. The construction was completed on June 9, 2015. Kit Kat’s claim to its insurer, Dominion of Canada General Insurance Company, for the repair of the walls and glass roof was denied in 2014.
[3] This action was commenced on July 5, 2017. The action against the defendant Toronto Standard Condominium Corporation No. 2460 (“TSSC”) was dismissed in May, 2019.
[4] The remaining defendants other than Dominion (“the Graywood defendants”) constructed the high-rise building and bring this motion for summary judgment to dismiss this action as against them on the basis that this action was brought after the applicable two year limitation period under the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, had expired.
BACKGROUND
[5] In about 2012, the Graywood defendants began the construction of a high-rise residential building immediately south of Kit Kat on lands owned by 8 Mercer Street Residences Inc. Graywood Group and Graywood Developments were the developers. Beaverhall Homes Limited was the general contractor. The two properties are separated by a laneway owned by the City of Toronto. To stabilize the exterior wall of the residential building, many tieback rods were installed in the exterior wall and extended on an angle beneath the Kit Kat property. Al Carbone testified that none of the plaintiffs gave the defendants permission to place tiebacks under the Kit Kat property. Excavation and installation of the foundation walls were completed in 2012.
[6] Mr. Carbone states that in late 2013 or early 2014 he noticed that the glass canopy roof over the Kit Kat restaurant had started to crack and that water leaked into the restaurant.
[7] Barry Stern and Steven Gutfreund are principals of the Graywood defendants and were regular customers of Kit Kat at the time of the construction. Mr. Carbone testified that he pointed out the crack in the glass roof to Messrs. Stern and Gutfreund from time to time. He also noted that he had difficulty opening the back door to his restaurant after the tiebacks were installed. He states that the Graywood defendants sent someone who tried to remedy the problem by kicking the door open however Mr. Carbone stopped him from doing so.
[8] On March 11, 2014, a piece of rock fell from the 14th floor of the newly constructed residential building and damages the glass atrium at the back of the Kit Kat premises. Mr. Carbone called Beaverhall and it sent their employees to clean and patch hole in the atrium.
[9] On March 11, 2014, Mr. Carbone also reported to his insurer, Travelers, who now carries on business as Dominion, that the construction of high-rise residential building had caused the following damage to the Kit Kat premises:
- there was cracked glass panels in the skylight;
- there were numerous water leaks in the roof and at the interface between the original structure and the first addition;
- there was a step crack at the south end of the west wall of the second addition;
- there were vertical cracks in the wall and linear cracks in the floor at the interface between the original structure and the first addition;
- there was settlement and cracking of the concrete surface of the laneway along the south end of the building; and
- a rock had fallen through the glass roof.
[10] Mr. Carbone acknowledges that, at the time he reported this claim to his insurer, he felt that: (1) the damage to Kit Kat was significant, not trivial; (2) the reported damage would not resolve itself and required repair. Rather than pursue the Graywood defendants directly, Mr. Carbone wanted Travelers to pay his claim and then the insurer could pursue the Graywood defendants if it chose to do so.
[11] Travelers retained an engineer to assess the cause of the damage reported by the plaintiff.
[12] On June 27, 2014, Jeremy Bishop of Giffin, Koerth provided the following preliminary findings to the insurer:
Giffin Koerth attended at 297 King Street West, in Toronto, Ontario on June 23, 2014. The purpose of the attendance was to assess the purported shifting and settlement of the building. … Per you request, this report is a preliminary summary of our findings, provided to facilitate the assessment of coverage. … The building was a three storey commercial building used as a restaurant, comprised the original structure and two rear additions. … The first addition was approximately 13.5 feet long and abutted the south end of the original structure. The second addition was approximately 45 ft. long and abutted the sought end of the first addition. The second addition had only one storey; the roof above included a skylight running the length of it. Toward the north end of the second addition, there was a tree growing from within the building, which extended up through an opening in the skylight.
To the south of the building, a new high rise building with a reported six-storey deep basement, was under construction. … The reported edge of the excavation was 16 ft. away from the south end of the second addition. Between the two buildings was a concrete paved laneway. …
The cracked glass panels of the skylight and the leaks from the roof of the second addition were likely the result of the movement of the skylight framing, caused by the swaying of the tree that extended through it. The tree was in close contact with the encircling framing.
The step cracks in the west wall of the second addition, at the south end of the building, were likely related to settlement. Within the reported crack, there appeared to be a buildup of dust particles, likely collected in the crack from air passing through. Given the build up of dust, the crack has likely been in existence for many years and predated the construction of the high rise.
The vertical cracks in the wall and linear cracks in the floor, at the joint between the original structure and the first addition, as well as the water leaks in the location were likely related to differential settlement between the two structures. The cracks are 75 ft. away from the edge of the excavation for the high rise. For the cracks to have been associated with the construction of the high rise, numerous other cracks would have been anticipated. Furthermore, it would have been expected that the cracks would have increased in size with proximity to the high rise.
The settlement and cracking of the concrete driving surface of the laneway, along with the back of the building, were likely age related. The degree of settlement varied along the laneway and extended well beyond the extent of the property upon which the high rise was located.
The rock appeared to be a piece of concrete. It is feasible that, despite the protection netting set up around the high rise, a piece of scrap concrete could fall from the high rise and impact the skylight. It is unlikely that the resultant damage would have extended beyond the broken pane of glass. It is our understanding that the builders of the high rise have agreed to compensate the insured for the damage. …
[13] Mr. Bishop’s preliminary findings were forwarded by Travelers to Mr. Carbone on or about July 9, 2014. Travelers denied Mr. Carbone’s claim.
[14] Mr. Carbone disagreed with Mr. Bishop’s conclusions, then and now.
[15] When asked why he did not hire an engineer after he received the Giffin Koerth opinion, Mr. Carbone stated:
I was waiting for the insurance company t come and visit and I didn’t find out until later that they were denying the report because of the Giffin report or Jeremy Bishop’s report and I waited. I didn’t … At the time Graywood were regular customers at the restaurant and I don’t want to rock the boat, upset the cart at the same time until, you know, until this starts getting worse and worse and worse. I thought we would reach a mutual understanding.
[16] On June 9, 2015 the following events occurred: (1) the project was registered as a condominium corporation; (2) a certificate of completion and possession was issued; (3) ownership of the condominium was transferred from 8 Mercer Street Residences Inc. to the defendant TSCC, after which no further construction was completed.
[17] Beaverhall Homes agreed to fix the broken glass panels that had been broken by the falling concrete. On December 18, 2015, Mr. Carbone was provided with a quote from State Window Corporation that had been obtained by Beaverhall Homes. The quote covered the replacement of a few glass panels at a cost of $3,407 plus tax.
[18] On May 25, 2016, Mr. Carbone obtained a quote of $110,000 plus tax to replace the glass panels over an area of 8’6” wide by 45’ long.
[19] Mr. Carbone states that the cracks in the skylight glass panels and the walls grew larger over time. Water continued to come into his restaurant.
[20] On September 16, 2016, Ms. Oberman sent a demand letter on behalf of Kit Kat to Beaverhall Homes and Graywood Homes attaching the $110,000 quote that Mr. Carbone had obtained and asking that they notify their insurer of this damages claim.
[21] In December, 2016, Mr. Carbone filed another claim with his insurer, now called Dominion, for repair of the cracks in the glass roof, foundation and walls.
[22] On June 23, 2017, a meeting was held at Kit Kat with representatives of the defendants Graywood and 8 Mercer Street as well as Mr Carbone’s insurance broker.
[23] On June 28, 2017, Ms. Oberman was provided with the “Discussion and Conclusions” portion of the final report dated June 30, 2014 that had been delivered by Giffin Koerth to the insurer. That portion of the report largely repeated the last five paragraphs of the preliminary report quoted above.
[24] On July 5, 2017, this action was commenced.
[25] On August 22, 2017, a complete copy of the Giffin Koerth report, dated June 30, 2014, was provided to Ms. Oberman. The report concludes that the construction of the high-rise building did not cause damage to the plaintiff’s premises other than the damage caused by the falling piece of concrete to the glass roof.
[26] On December 12, 2017, the plaintiffs retained Pario Engineering & Environmental Sciences to conduct its own assessment of the cause of the cracking observed in the structure of the Kit Kat premises.
[27] On June 20, 2018, the plaintiffs obtained a report from Pario which concluded as follows:
In discussing the timelines with the proprietor, Mr. Carbone, we understand that there was no cracking in the building observed, prior to the construction. Given that the cracks appeared recently, and that the building was constructed decades ago, we can conclude that something must have changed, in order for these cracks to occur. Given the consistency of the timeline with the construction activities, in conjunction with the vibration calculations, and the potential for settlement in the soil, it is our opinion that the cracking is related to these construction activities.
The cracks likely arose out of a combination of factors, including vibration, along with some measure of settlement of the soil, from the soil anchor installation and use. Once cracks have formed, the propogation of those cracks is more easily accomplished by either of these mechanisms.
[28] The plaintiffs have obtained a revised estimate that shows that the cost of repairing the glass roof is $132,500 plus tax. Mr. Carbone states that the restaurant will have to be closed about 4 to 6 weeks to make these repairs.
[29] Mr. Carbone states that it was not until receipt of the Pario report that he fully understood that the damage to the premises had been caused or contributed to by the construction of the high rise building. He states that while the thought that the construction of the high rise building had caused damage to the premises, there was no evidentiary basis for him to believe so until he received the Pario report.
ISSUES
[30] This motion raises the following issues:
- Is this an appropriate case for summary judgment?
- Is the plaintiffs’ claim barred by the Limitations Act, 2002?
ISSUE #1: IS THIS AN APPROPRIATE CASE FOR SUMMARY JUDGMENT?
[31] 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.
[32] The following principles govern a motion for summary judgment:
- 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: Hryniak v. Mauldin, 2014 SCC 7 at para. 49. The question is whether the added expense and delay of fact finding at trial is necessary to a fair process and just adjudication: Hryniak, para. 33. In other words, is a judge confident that he or she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute: Hryniak, para. 50.
- Summary judgment remains the exception, not the rule: Mason v. Perras Mongenais, 2018 ONCA 978, para. 44;
- A judge is entitled to assume that the record contains all the evidence that the parties will present if there is a trial. A party must put its best foot forward: Hashemi-Sabet Estate v. Oak Ridges Pharmasave Inc., 2018 ONCA 839, para. 33.
- If there appears to be genuine issue requiring a trial based only on the evidence before the court, a judge shall consider the evidence submitted by the parties and the judge may weigh the evidence, evaluate the credibility of a deponent and draw any reasonable inference from the evidence unless it is in the interests of justice for such powers to be exercised only at trial: Rule 20.04(2.1); Hryniak, para. 66. Where factual disputes exist on the written motion record, a judge typically will resort to such presumptively available powers when evaluating whether a genuine issue requiring a trial exists: Crescent Hotels and Resorts Canada Co. v. 2465855 Ontario Inc., 2019 ONCA 268, para. 9; 2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670, para. 41.
- For purposes of exercising the powers described in Rule 20.04(2.1) a judge may order that oral evidence be presented: Rule 20.04(2.2). This power should be employed when it allows the judge to reach a fair and just adjudication on the merits and it is the proportionate course of action: Hryniak, para. 65. A judge need not exercise these expanded fact finding powers where the motion is clearly unmeritorious or where such powers are tactically sought in order to add time and expense: Hryniak, para. 68.
- “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”: Butera v. Chown, Cairns LLP, 2017 ONCA 783, para. 34; Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369, para. 14. An issue is not readily bifurcated if the motion judge's findings will either constrain the trial judge or lead to the risk of inconsistent findings on the same issues at trial: Vandenberg v. Wilken, 2019 ONCA 262, para. 13.
[33] This motion proceeded on the basis of: (1) the affidavit of Mr. Carbone and the transcript from his cross-examination; (2) Jim Rawling, the Controller of Beaverhall Homes Limited; (3) transcript from the Rule 39.03 examination of Jeremy Bishop in relation to the Giffin Koerth report; (4) transcript from the Rule 39.03 examination of Mark Milner in relation to the Pario report.
[34] I find that this is an appropriate case for a motion for partial summary judgment. The issue of whether this action in tort against the Graywood defendants was commenced after the expiry of the limitation period is easily bifurcated from the issues raised by the plaintiffs’ claim against Dominion which involves a determination of causation and whether coverage is provided under the policies of insurance. Further, Dominion does not plead a limitations defence. Further, in these circumstances, this motion is an expeditious and cost effective means of determining the plaintiffs’ claim against the Graywood defendants.
ISSUE #2: WAS THE ACTION AGAINST THE GRAYWOOD DEFENDANTS COMMENCED AFTER THE EXPIRY OF THE LIMITATION PERIOD?
[35] Section 4 of the Limitations Act, 2002 provides that, unless otherwise provided, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. Under s. 1 of the Act, a “claim” means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission.
[36] Section 5 of the Act governs when a claim is discovered.
[37] Subsection 5(1) of the Act provides a subjective test and an objective test for when a claim is discovered. It states that 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, (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).
[38] Under s. 5(1) of the Act a claim is discovered on the date the claimant knew, or ought to have known, the material facts giving rise to the claim, and that a proceeding would be an “appropriate” means to seek to remedy the claim: Velgakis v. Servinis, 2017 ONCA 541, para. 5.
[39] Subsection 5(2) of the Act provides that 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.
Presumed Date of Subjective Discovery of the Claim
[40] It is unclear when the act or omission on which the claim is based took place. It is clear that it occurred sometime between 2012 and June 9, 2015. Given that Mr. Carbone reported to his insurer on March 11, 2014 that the Kit Kat property had been damaged by the Graywood defendants’ construction activities, I find that the plaintiffs are presumed to have discovered their claim no later than March 11, 2014.
Subjective Test – Actual Knowledge
[41] In order to satisfy s. 5(1)(a)(ii) and (iii), a plaintiff need not have knowledge that an action or omission causing injury is wrongful or come to a legal conclusion regarding the defendants’ liability. The plaintiff must only have sufficient evidence on which to base an allegation of negligence: Buys (appeal by Dale) v. Frank, 2017 ONCA 32, paras. 6-7.
[42] Mr. Carbone was not required to know with certainty that the defendants were responsible for their losses in order to trigger the running of the limitation period. All that was required was for the plaintiffs to have prima facie grounds to believe that the defendants were responsible for their losses: Gillham, para. 21.
[43] Mr. Carbone states in his affidavit that he speaks for all plaintiffs. It is disingenuous for Mr. Carbone to state in his affidavit that it was “not until receipt of the Pario report that [he] fully understood [his] belief that the damages to [Kit Kat] had actually been caused or contributed to by the construction of the 8 Mercer Street Project” given that on cross-examination he stated that: (1) he has always disagreed with the Giffin Koerth opinion that the damages to Kit Kat were not caused by the construction of the high rise building; (2) he did not obtain his own engineering report to respond to the Giffin Koerth opinion because he did not want to “rock the boat” with Messrs Stern and Gutfreund who were regular clients; (3) he commenced this action about five months prior to retaining Pario and about 11 months prior to the receipt of the Pario report.
[44] The plaintiffs also submit that they did not know that their claim was more than a de minimis claim, given that the Graywood defendants had only offered to make modest repairs to the glass roof in the amount of $3,407.00, and given that their belief in the cause of the damage was not confirmed until their receipt of the Pario report in June, 2018.
[45] Neither position has any merit. Mr. Carbone’s evidence is that he believed that he had a “significant” claim since the time that he filed a claim with his insurer in March, 2014. Further, he has continued to believe that the Graywood defendants are responsible for the damage to the Kit Kat premises based on his own observations of the various impacts from the construction of the building such as cracks in the walls and glass roof. Mr. Carbone did not wait for the Pario report, nor was it required, to have prima facie grounds to commence this action as this action was commenced about five months prior to Pario being retained and about eleven months prior to Pario delivering its report. In any event, even if I were to accept the plaintiffs’ position, given that the Pario report was delivered about six months after Pario was retained, it is my view that the plaintiffs could have obtained an engineer’s opinion by December 31, 2014 at the very latest.
[46] The appropriateness requirement under s. 5(1)(a)(iv) of the Act serves to deter needless litigation and can have the effect “… of postponing the start date of the two-year limitation period beyond the date when a plaintiff knows it has incurred a loss because of the defendant's actions.": Presidential MSH Corp. v. Marr, Foster & Co. LLP, 2017 ONCA 325, 135 O.R. (3d) 321, para. 17. In Presley v. Van Dusen, 2019 ONCA 66, the Ontario Court of Appeal stated that, at paras. 22, 25 that “ongoing communications, investigations or negotiations do not postpone the commencement of the limitation period … where it is known that legal proceedings are appropriate and the issue is whether or not the claim can be settled” unless the claim arose out of a person’s alleged wrongdoing and could be resolved by the exercise of that person’s superior knowledge and expertise. These exceptional circumstances applies in the context of a negligence action against a professional such as a physician or dentist as well as to non-professional defendants with superior knowledge and expertise, such as those persons licensed to install septic systems.
[47] While as a practical matter it was appropriate for Mr. Carbone to attempt to persuade the Graywood defendants after March 11, 2014 to make the repairs that he believed were required, and thereby avoid needless litigation, I find that the purpose of these settlement discussions were simply to resolve a known claim and thus their discussions do not postpone the commencement of the limitation period.
[48] I find that the plaintiffs knew the material facts giving rise to the claim, and that a proceeding would be an “appropriate” means to seek to remedy the claim, by March 11, 2014.
Modified Objective Test
[49] Under s. 5(1)(b) of the Act a claim is discovered on the “day on which a reasonable person with the abilities and circumstances of the person with the claim first ought to have known of the matters referred to in clause (a)”.
[50] The proper approach in applying s. 5(1)(b) of the Act was explained by the Ontario Court of Appeal in Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369. At para. 32, Paciocco, J.A. stated:
… s. 5(1)(b) is about knowing what one ought to know. In context, the reasonable person component of s. 5(1)(b) serves to ensure that the plaintiff acted with reasonable levels of prudence and attention in attending to the risk of injury, loss or damage. Because the objective component of the test is modified, the degree of prudence and attention that can reasonably be expected will vary among persons with claims, according to their abilities and circumstances - things such as level of intelligence, education, experience, resources, health, power imbalances, dependence, and situational pressures or distractions that might bear on the ability to appreciate what is happening. It is imperative to remember, however, notwithstanding that the term "abilities" may be wide when viewed in isolation, s. 5(1)(b) requires that once material characteristics are attributed to the reasonable person, that hypothetical person will remain reasonable. If the hypothetical person is imbued with unreasonable imprudence or inattention the objective component of the test is defeated, and only one result can obtain.
[51] The plaintiffs are business owners. There is no suggestion that they were disadvantaged in any of the ways described above. I find that the plaintiffs ought to have known the material facts giving rise to the claim, and that a proceeding would be an “appropriate” means to seek to remedy the claim, by March 11, 2014.
CONCLUSIONS
[52] I find that the plaintiffs discovered their claim against the Graywood defendants by December 31, 2014 at the latest. The Statement of Claim was issued after the two year limitation period expired. I hereby grant the Graywood defendants’ motion for summary judgment.
[53] The parties have agreed the plaintiffs shall pay costs of $10,500.00, inclusive of taxes and disbursements, to the Graywood defendants.
Mr. Justice M. D. Faieta