Municipality of Peel and Struct-Con Construction Ltd. 2019 ONSC 908
COURT FILE NO.: CV-17-0369
DATE: 2019 02 05
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
IML ROOFING & SHEET METAL SYSTEMS INC.
Emilio Bisceglia and Hana Tariq, for the Plaintiff
Plaintiff
- and -
THE REGIONAL MUNICIPALITY OF PEEL and STRUCT-CON CONSTRUCTION LTD.
Ian Latimer, for the Defendant Struct-Con Construction Ltd.
Defendants
HEARD: December 18, 2018
REASONS FOR DECISION
Emery J.
[1] Litigation is by its very nature a clash of competing interests. The quest for information by one party from another personifies that dynamic.
[2] IML Roofing & Sheet Metal Systems Inc. (“IML”) is the plaintiff in a construction lien action. IML has brought this motion to compel the defendant, Struct-Con Construction Ltd. (“Struct-Con”), to serve an affidavit of documents and to attend at examinations for discovery before it delivers responding materials to Struct-Con’s motion for summary judgment to dismiss the action. In the alternative, IML asks the court for an order requiring Struct-Con to respond to IML’s request to inspect dated August 10, 2018. This motion is brought with particular urgency as Struct-Con’s motion for summary judgment is scheduled to be heard on April 24, 2019.
[3] IML alleges that Struct-Con has refused to produce relevant documents in the litigation. In contrast, IML states that it has produced voluminous documents that are within its possession, power and control, and has served an affidavit of documents.
[4] A large component of IML’s action is composed of a delay claim for damages. IML seeks disclosure and production of documents from Struct-Con to properly respond to Struct-Con’s motion for summary judgment. Specifically, IML seeks disclosure and production of relevant documents Struct-Con has in its possession, power, and control relating to the delay claim and Struct-Con’s defence to that claim.
[5] Struct-Con takes the position that it has no legal obligation to disclose and produce the documents that IML seeks in reference to its motion for summary judgment. Struct-Con also relies upon the endorsement made by Justice Snowie at a settlement conference in the lien action on November 21, 2017. Justice Snowie made an order at the settlement meeting that the parties would not exchange affidavits of documents, or conduct discoveries unless Struct-Con’s motion for summary judgment did not dispose of the entire action.
Context for the Motion
[6] IML is a roofing contractor. On May 14, 2015, IML entered a one page agreement with Struct-Con as the general contractor to supply and install a roof for a project at 3515 Wolfdale Road in Mississauga.
[7] The Regional Municipality of Peel (“Peel Region”) is the owner of the property on Wolfdale Road. Peel Region was initially named as a defendant but has since been let out of this action.
[8] IML provided labour and material to the property under its contract between May 7, 2015 and December 16, 2016.
[9] IML provided written notice of its delay claim to Struct-Con in the amount of $799,183.73 on December 3, 2016.
[10] Despite repeated requests, IML alleges it did not receive payment in full for its work pursuant to the agreement with Struct-Con, including its claim for delay. IML alleges that Struct-Con has not paid it $1,095,389.75 under this agreement. Consequently, IML registered a claim for lien against title to 3515 Wolfdale Road on January 13, 2017.
[11] IML perfected its lien and commenced this action on January 26, 2017.
[12] Struct-Con defended the action, and has made a counter-claim against IML.
[13] IML also commenced an action in Toronto on June 27, 2017 pursuant to the Labour and Material Payment Bond that Struct-Con had posted for the project (the “Bond Action”). IML has made contractual and restitutionary claims against Struct-Con and the Guarantee Company of North America as the bonding company in the Bond action.
[14] Struct-Con made certain payments to IML that has reduced the amount IML considers owing to $815,286.98.
[15] Struct-Con takes the position that because of payments it has made, the amount owing to IML, excluding the delay claim, is now $16,102.12. This is the sum of $13,397.26 for a maintenance hold-back, and a set-off claim for $2,704.86. The maintenance hold-back is not payable until sometime after July 5, 2019.
[16] On August 9, 2017, Mr. Bisceglia wrote a letter to Struct-Con on behalf of IML to seek information under section 39 of the Construction Lien Act then in effect. On August 11, 2017, Mr. Jonathan Speigel wrote a letter on behalf of Struct-Con to Mr. Bisceglia to provide information that he considered IML was entitled to receive under the statute.
[17] On September 22, 2017, Struct-Con cross-examined Steven Luke, an officer and director of IML, on the lien claim. IML was required to produce documentation relative to its lien and delay claim as a result of that cross-examination.
[18] The parties attended before Justice Snowie at a settlement meeting in this action on November 21, 2017. Mr. Bisceglia requested an order at the settlement meeting for the production of documents and for examinations for discovery. Struct-Con’s lawyer opposed this request. Struct-Con’s lawyer also advised Justice Snowie at the time that Struct-Con proposed to bring a motion for summary judgment (the “SJM”) to dismiss the action.
[19] After hearing submissions, Justice Snowie fixed August 27, 2018, for the court to hear the SJM and adjourned the settlement meeting to September 11, 2018. Justice Snowie endorsed the record that IML or Struct-Con could bring a motion for production and discoveries if the SJM did not dispose of the entire action, and if the parties could not agree on the scope and form of the production and scheduling of the examinations for discovery.
[20] Struct-Con served IML with the motion record for the SJM on June 21, 2018. In that motion, Struct-Con seeks an order for the dismissal of IML’s delay claim, and for an order for the return or reduction of the security posted by Struct-Con. Struct-Con also sought summary judgment on the counter-claim. The SJM was initially returnable in court on August 27, 2018.
[21] IML has brought a motion to obtain production and discovery in the Bond Action. The motion was initially returnable on June 18, 2018, and is opposed by Struct-Con. That motion is now scheduled to be heard in Toronto on May 10, 2019.
[22] On August 2, 2018, Mr. Bisceglia and Mr. Latimer agreed on behalf of their respective clients to adjourn the SJM on terms. Those terms included a timetable that required of IML to deliver its responding materials by August 31, 2018. The SJM was adjourned on that basis to be heard on April 24, 2019.
[23] Mr. Bisceglia did not deliver IML’s responding materials to the SJM by August 31, 2018 pursuant to the terms of adjournment.
[24] After Mr. Latimer had written to Mr. Bisceglia to inquire about receiving responding materials, Mr. Bisceglia served Mr. Latimer with a four volume motion record on September 7, 2018, returnable at a further settlement meeting scheduled for 2:00 pm on September 11, 2018. The motion did not proceed at the time because IML did not confirm the motion on that date. These reasons relate to that motion as it was heard by me on December 18, 2018.
[25] IML takes the position that it has produced substantially all documents it is required to produce pursuant to its obligations for disclosure. It also maintains it has answered all undertakings and refusals given at various examinations.
[26] IML obtained documents from the Region of Peel pursuant to a Freedom of Information Request. In the course of reviewing the information provided by Peel Region, IML discovered that Struct-Con had made its own delay claim against Peel Region dated May 11, 2015.
[27] IML states that the majority of documents it has obtained from Peel Region consists of minutes of meetings between Peel Region, Struct-Con and consultants, and change orders issued by Peel Region on the project. IML also states that there are several pages missing from the documents produced by Peel Region because Peel Region has refused to produce them, stating those pages are non-responsive to IML’s request.
[28] Specifically, IML states that Peel Region has not produced any of the construction schedules, when the meeting minutes indicate that several scheduling updates were issued.
[29] Struct-Con takes the position that it has produced all documents required of it under s. 39 of the Construction Lien Act, and has fulfilled its obligation under the law in this action.
[30] IML has made demands upon Struct-Con to provide an affidavit of documents, and to provide dates on which a representative will be produced and be examined on both the lien action and the Bond Action. IML has also requested specific documents from Struct-Con in letters dated August 7, August 10 and October 15, 2018.
[31] In response, Struct-Con has responded to IML’s requests in the following manner:
(a) On September 11, 2018, Struct-Con stated that some of the documents being sought by IML are already in IML’s position pursuant to IML Freedom of Information Request to the Region of Peel. Other documents do not exist and Struct-Con has no documents to produce for inspection;
(b) On October 19, 2018, Struct-Con stated that it would provide its position relative to the request for documentation after IML delivers its responding materials in relation to the SJM. Struct-Con is prepared to produce documentation relevant to the SJM at examinations, and any disagreement can be resolved on a refusals motion;
(c) On October 23, 2018, Struct-Con produced the Ministry of Labour documentation. These documents show that the Ministry of Labour issued several stop work orders on the project for safety infractions, thereby halting work on the project; and
(d) On December 6, 2018, Struct-Con produced an unredacted copy of payment certificate No. 25, which document was produced by Peel Region in redacted form pursuant to IML’s request for information under the Municipal Freedom of Information and Protection of Privacy Act.
[32] At the time this motion was heard, IML had still not served any responding material to the Struct-Con motion for summary judgment.
Issues and Law
(a) Should IML be granted leave to bring this motion?
[33] IML requires leave to bring this motion because the order made by Justice Snowie at the settlement meeting on November 21, 2017 permitted either party to bring the motion for directions or for production and discoveries only if the SJM did not dispose of the entire action. That fact alone requires the court to approach granting leave to IML with a critical eye because IML is seeking relief that is contrary to a previous order of this court.
[34] There is also the fact that Mr. Bisceglia agreed on behalf of IML to deliver responding material by August 31, 2018 as a term of the agreement to adjourn the SJM. Struct-Con argues that IML should not be granted leave to bring this motion because it has not delivered any responding materials to the SJM at all, and has caused significant delay to having the motion heard.
[35] Struct-Con submits that leave should not be granted because IML has not met the test for leave under Limen Structures Ltd. v. Brookfield Multiplex Construction Ltd., 2016 Carswell Ont. 23934. In particular, the motion for which leave is requested will not resolve a significant issue or expedite the resolution of those issues in dispute. Struct-Con states that this motion has only delayed the resolution of the issues and made the litigation more expensive.
[36] Prior to the enactment of the Construction Act, R.S.O. 1990, ch. C. 30, motions for interlocutory relief required the consent of the court under s. 67(2) of the Construction Lien Act. Although section 67 was repealed prior to the enactment of the Construction Act that now governs construction litigation in Ontario, it remains in effect by the continuing life it is given under section 87.3 of the new Act because the dates of the contract and procurement of labour and materials in this case arose prior to July 1, 2018.
[37] Section 50(2) provides that, except to the extent that they are inconsistent with the Construction Act, the procedures prescribed for the purpose of actions under the Courts of Justice Act and the Rules of Civil Procedure now apply to actions under Part 8 of the Construction Act. This would include motions for disclosure and production, and also motions for summary judgment in a lien action.
[38] I reach this conclusion when reading section 50 of the Construction Act and the guiding principles in Hryniak v. Mauldin, 2014 SCC 7 together. In Hryniak, the Supreme Court was clear at paragraphs 2 and 28 to 34 that the time has come for the courts to accept greater use of the summary judgment procedure in cases where it would be a fair process that would deliver timely and affordable justice to the parties, and would be proportionate to the circumstances between them.
[39] I am therefore of the view that there is sufficient reason given by IML in the evidence before the court to exercise my discretion to make any order under section 67(2) that is necessary for, or will expedite the conduct of the SJM. IML is therefore granted leave to bring this motion.
(b) Should Justice Snowie’s order be varied?
[40] Justice Snowie’s order did not contemplate that IML would take the position it does not have full disclosure from Struct-Con of material facts and documents that it requires to put its best foot forward when responding to the SJM.
[41] Justice Snowie’s endorsement at the settlement meeting on November 21, 2017 was not necessarily an endorsement that a court makes at a settlement meeting. The endorsement did not consider whether the lien was valid, nor did it narrow the areas in dispute between the parties. Rather, the endorsement gave directions of a general nature.
[42] Contrary to the submissions of Struct-Con, it is not necessary to resort to the authority of and grounds for applying Rule 59.06(2) of the Rules of Civil Procedure. This court has the authority under section 61(5) of the Construction Lien Act, repealed but still applicable by virtue of the transition provisions in section 87.3, to make any order that was necessary for, or would expedite the conduct of the trial. If the facts require the court to make an order of that nature, this court has the power to grant an order to meet those objectives.
[43] For these reasons, the order made by Justice Snowie at the settlement meeting may be varied if and where required on the merits.
(c) Should Struct-Con be ordered to deliver an affidavit of documents?
[44] It is clear from s. 50(2) of the Construction Act that the Rules of Civil Procedure apply to a construction lien action, including the right of any party to bring a motion for summary judgement under Rule 20. This is consistent with section 50(3) of the Construction Act, which provides that the procedure in a lien action shall be as far as possible of a summary character.
[45] Once the legislature removed the prohibition against interlocutory steps from the statutory regime governing construction litigation, the law regarding the right of one party to seek an affidavit of documents from another in the face of a motion for summary judgment became the same as in an ordinary action governed by the Rules of Civil Procedure. The rights and obligations of litigants in an ordinary action under similar circumstances are therefore relevant.
[46] Prior to 2010, Rule 30.03 contained an obligation on the part of each party to an action to serve an affidavit of documents on the other within 10 days after the close of pleadings. This requirement was removed from Rule 30.03 with the amendments to the Rules of Civil Procedure that came into effect on January 1, 2010.
[47] The discovery process after 2010 has been governed by the discovery plan regime set out in Rule 29.1. Rule 29.1.03 provides that where a party to an action intends to obtain evidence under specified rules that include discovery of documents under Rule 30, the parties to an action shall agree to a discovery plan in accordance with this rule. Recently, the Rules have been amended further to give power to the court to impose a discovery plan, although this remedy has been granted ad hoc as and when required. IML has not asked the court to exercise this power on the motion.
[48] The court in Fehr v. Sun Life Assurance Co. of Canada, 2014 ONSC 2183 held there is no legal basis for the court to order a moving party for summary judgment to serve an affidavit of documents before the motion for summary judgment is heard.
[49] The decision in Fehr was really a motion for directions in the context of a class-action proceeding. Justice Perell recognized that the requirement for the automatic delivery of an affidavit of documents within ten days after the close of pleadings is no longer the case under the amendments to the Rules of Civil Procedure that took effect on January 1, 2010. Now, the parties and the court decide when an affidavit of documents is to be served by one or both parties. Cases such as Bank of Montréal v. Negin (1996), 1996 CanLII 1548 (ON CA), 95 O.A.C. 230, 31 O.R. (3d) 321 (Ont. C.A.), decided under the former rule, must also be read as distinguishable because of the rule change.
[50] I read Fehr as saying that there is no entitlement under the Rules of Civil Procedure for one party to seek an affidavit of documents from another in the face of a pending motion for summary judgment and in the absence of a discovery plan.
[51] There is no evidence before me that there was any discussion between counsel to serve an affidavit of documents at any time. It would be difficult to conclude otherwise having regard to the directions made by Justice Snowie on November 21, 2017. In my view, IML is not entitled to now ask this court for an order requiring the plaintiffs to serve an affidavit of documents prior to delivering its responding materials to the SJM.
[52] The benefit of timely and affordable justice relies upon the exercise of information gathering rights that are proportionate to the issues on the motion and the case itself. To default back to the traditional means of disclosure that are de riguer for the conventional trial process would be contrary to the policy direction mandated by the Supreme Court in Hryniak.
[53] The ability of IML to put its best foot forward is not compromised by the requirement to respond to the SJM without first receiving the plaintiffs’ affidavit of documents. IML could not require an affidavit of documents if this were an ordinary action because it would have no right to demand one without a discovery plan in place. The same must therefore hold true for this construction lien action.
[54] For IML to now ask for an affidavit of documents from Struct-Con is to tip out the broth in search of a bay leaf. IML has made the delay claim the key issue for disclosure and production. An order for Struct-Con to provide an affidavit of service would necessitate the listing of every document relevant to the pleadings between the parties, much of which has nothing to do with a delay claim. It is for this reason that the discovery plan was introduced to allow for the identification of issues and for the focused disclosure of documents and discovery at an early stage of an action.
[55] The request IML has made for an affidavit of documents from Struct-Con is therefore disproportionate to the matters at issue between the parties.
[56] In Fehr, Justice Perell offered the observation that a responding party has a right to cross-examine affiants and to summons witnesses who could be in a position to produce relevant documents. I would add that responding parties to a motion have full recourse to all means available under the Rules of Civil Procedure to seek relevant documents that would enable them to put their best foot forward on the motion for summary judgment. Such means would include not only rights to conduct examinations under Rule 39, but also the right to require those persons to bring with them documents that were listed in a Notice of Examination under Rule 34.10, and the various uses a party might put to a request to inspect documents under Rule 30.04.
[57] IML has the means to seek documents and to examine witnesses available on a motion under the Rules. Seeking an affidavit of documents, even if otherwise permitted, would be supplemental to those other means for obtaining evidence and, in my view, inconsistent with the modern approach to summary judgment motions.
[58] The motion seeking an affidavit of documents from Struct-Con is dismissed. It is further ordered that IML serve its responding materials to the SJM by February 28, 2019. Struct-Con shall then have until March 22, 2019 to serve reply materials, if any. Either party may then seek further production during the cross-examinations that will inevitably follow. All examinations are to be completed by April 30, 2019, and all undertakings answered with supporting documents by May 31, 2019.
[59] I am not making an order under Rule 30.04 to compel Struct-Con to answer IML’s request to inspect because the motion was argued on other grounds. In any event, the same result can be achieved upon skillful questioning at examinations in anticipation of the SJM. IML’s motion in respect of the request to inspect is dismissed as well.
[60] This court expects counsel for the parties to discuss the costs of this motion with a view to resolving any claim for costs. If either party requires the assistance of the court to award costs, that party shall file written submissions by February 15, 2019. The responding party may file written submissions by February 25, 2019. No submissions in reply shall be permitted, without leave. All written submissions shall be no more than three pages, not including any Offer to Settle or Bill of Costs. Those written submission may be filed by emailing them to my judicial assistant, Ms. Melanie Powers at Melanie.Powers@ontario.ca in Brampton.
Emery J.
Released: February 5, 2019
Municipality of Peel and Struct-Con Construction Ltd. 2019 ONSC 908
COURT FILE NO.: CV-17-0369
DATE: 2019 02 05
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
IML ROOFING & SHEET METAL SYSTEMS INC.,
Plaintiff
– and –
THE REGIONAL MUNICIPALITY OF PEEL and STRUCT-CON CONSTRUCTION LTD.,
Defendants
REASONS FOR DECISION
Emery J.
Released: February 5, 2019