Court File and Parties

Court File No.: CV-20-644568 Date: 2020-07-24 Superior Court of Justice - Ontario

Re: T-City Construction Inc., Applicant And: Mirunalini Arivuchelvan, Respondent

Before: Pinto J.

Counsel: Paul Portman, for the Applicant Obaidul Hoque, for the Respondent

Heard: July 21, 2020

Reasons for Decision

[1] On July 21, 2020, I heard part of an application brought by the applicant, a construction company, pertaining to its urgent request for the return of tools and equipment left at the respondent's property. At the end of the hearing, conducted via Zoom, I dismissed the application in its entirety, subject to certain procedural rulings, with written Reasons for Decision to follow. These are those Reasons.

Facts

[2] The underlying dispute involves a construction project at two municipal addresses on Grace Street in Toronto. The construction contract was signed on March 10, 2020. On or around March 15, the applicant claimed that, due to COVID-19, the project could not be completed based on the original schedule. A conflict ensued over completion of the contract, and whether the applicant had properly accounted for expenditure of the respondent's funds. The parties' relationship broke down, the construction work stopped, and tools and equipment allegedly belonging to the applicant were left on the property. The applicant tried, without success, to have the respondent return the tools and equipment as it wished to use the material on other construction sites.

[3] The applicant brought an urgent application under Rule 14.05(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, seeking relief for return of its tools and equipment, a declaration that the construction contract was void, and damages.

[4] Meanwhile, the respondent separately began an action in Toronto, CV-20-644022, issued on July 15, 2020. The plaintiffs in the action are Mirunalini Arivuchelvan, the applicant in this proceeding, and her husband Arivuchelvan Durairaj. The plaintiffs allege in their Rule 76 Action that the applicant and its principals, Wilson DaSilva and Domenic Taddeo, have breached the terms of the construction contract. They seek damages including for alleged "incompletion of the Foundation work".

[5] On July 8, 2020, counsel for the applicant wrote to the court requesting an urgent hearing with respect to the entire application. However, after the parties participated in a case conference, I directed that that only two aspects of the application would proceed immediately to a hearing: (a) the question of the return of tools and equipment to the applicant; and (b) the question of whether the proceeding was properly commenced as an application. The parties provided responding and supplementary motion materials that fully canvassed these two aspects of the application.

Applicant's request for return of tools and equipment

[6] The tools and equipment consist of:

(a) 250 units or sheets of 4 x 8 Form plywood ("Forms"). The applicant deposed that the sheets are reusable up to 20 times so that 20 homes could be built; (b) 1,248 units of 2 x 4 x 12 wall straps or wood straps, plus various small off-cuts located in a bin and on the wall; and (c) A ladder.

[7] The applicant estimated that the value of the items is approximately $20,000, based on Forms worth $16,027.72, an additional 50 sheets worth $3,400, plus the other items. The applicant claimed that it had repeatedly tried to gain access to the property to retrieve the items but was blocked by the respondent. The applicant deposed that, on or around July 9, the respondent engaged in self-help and damaged or destroyed many of the Forms. The applicant nevertheless maintained that if the Forms were professionally removed from the construction site, they could be reused for the applicant's other projects. The applicant claimed that it was in dire financial straits and unable to earn an income without its items.

[8] The respondent countered that that the construction project was agreed upon at a time when the challenges with COVID-19 were already well known. On or around March 15, the applicant proposed a fixed price contract worth $172,325.00 with a certain schedule for work and payments. The respondent claimed that work did not actually begin on site until April 1, and that over April and May there were significant challenges associated with the applicant's work. By May 25, the respondent had already paid the applicant $57,980.10 while disputes continued over various aspects of the work. The respondent alleged that by June 3, the foundation for one of the two houses on the property was substantially incomplete, and that the foundation work for the other house had not even begun.

[9] The respondent disputes that the applicant is the legal owner of the tools and equipment in question given that it had already paid the applicant significant sums to purchase material for the foundation work. The respondent deposed that, on July 9, 2020, it had engaged new contractors to remove the Forms that were still attached to the completed part of the foundation so that they could be used for the rest of the foundation work. The respondent denied the allegations of damaging or destroying the Forms.

Legal Test under Rule 44

[10] Although the applicant relied on various legal principles to justify the return of the items, I find that the appropriate test is grounded in Rule 44 and described in 1316223 Ontario v. Giancoulas, 2018 ONSC 5603:

[71] The moving party has the evidentiary burden to satisfy the statutory requirements. First among those requirements is to provide a description of the property sufficient to make it readily identifiable, and the value of the property in question.

[72] The moving party must also establish it has substantial grounds to claim the ownership of the personal property, and that the property was unlawfully taken from the plaintiffs' possession or has been unlawfully detained by the defendant. The moving party must provide a high degree of assurance that it will succeed at trial to meet this test. The high degree of assurance required by the caselaw is a standard of proof that is "clearly a weighty standard to meet." See Higher Ground LLC v. Langstaff, 2010 ONSC 4108.

[73] The moving party must also satisfy the court that the balance of convenience favours its position: In Higher Ground LLC v. Langstaff.

[74] I heard submissions that the outcome of the motions before me could well determine the outcome of the action. That is not the intent of Rule 44. This is not a motion for summary judgment by another name.

[75] The intent under Rule 44 is to determine whether personal property that is the subject matter of the action should be returned to the plaintiff pending trial. It is also for this reason that Rule 44.03 provides that the court may order the plaintiff to post security in exchange for recovering possession of personal property on an interim basis.

[11] Here, I find that the applicant has met the first part of the test by sufficiently identifying the Forms, straps and ladder, and quantifying their value at approximately $20,000. It is also not disputed that the respondent has detained the items in question. However, for the reasons that follow, I find that the applicant has not established substantial grounds to claim ownership of the property. I do not have a high degree of assurance that the applicant will succeed on this point at trial. As well, the balance of convenience does not favour the applicant.

[12] With respect to the rightful owner of the items, leaving aside the respondent's argument that it paid for those items as part of the contract, I find that the applicant's evidence is contradictory, leaving me in doubt as to the provenance of the tools and equipment.

[13] The applicant's principal Wilson DaSilva deposed that Forms worth $16,027.02 were purchased via credit card on March 26, 2020. Yet, in a supplementary affidavit, DaSilva also deposed that: (a) the Forms and other equipment were capital expenditures and assets of the applicant purchased before any particular project; (b) the Forms and equipment were purchased substantially for another project and the funds for this were received from an unrelated third party; (c) he purchased the Forms based on pulling a $16,000 bank draft from his credit line; and (d) the Forms were purchased in February and used for one project immediately prior to the respondent's project.

[14] The respondent's above statements are contradictory. The Forms in question could not have been purchased in February and purchased again in March. While there may perhaps be a way to reconcile how a $16,000 bank draft in February parlayed into a credit card purchase in March, the evidence falls considerably short of the substantial grounds and high degree of assurance required to establish legal ownership.

[15] Even if I were to grant the applicant the benefit of the doubt with respect to legal ownership, I would still dismiss this part of the application on the question of balance of convenience.

[16] Again, I find the applicant's evidence contradictory. On the one hand, the applicant deposes that "as of July 9, 2020 many of these Forms are now damaged, cracked or destroyed, or have otherwise been made unusable as they were improperly stacked and have become warped" as a result of the respondent's self-help. Yet, on the other hand, the applicant maintains that the Forms should be returned to its possession. In my view, it makes little sense to order the return of what is described as many damaged, cracked or destroyed Forms to the applicant.

[17] I find the balance of convenience strongly favours the respondent. The respondent maintains that, having used the Forms for one part of the foundation work on site, it has retained a new contractor to use the Forms for the rest of the property. If, at trial, the ownership of the tools and equipment is found to reside in the applicant, the respondent will have to pay damages, yet it would have presumably mitigated its damages by having another contractor use the items in question.

[18] I therefore find that the applicant has not met its onus under the Rule 44 test, and dismiss that part of the application having to do with the return of the tools and equipment.

Dismissal of Application without prejudice to file a defence and counterclaim in the Action

[19] The applicant maintained that the proceeding was properly brought as an application under Rule 14.05 because: injunctive relief was being sought under Rule 14.05(3)(g); the application involved interpreting rights and remedies pursuant to a written contract per Rule 14.05(3)(d); and, since the applicant's ownership in the tools and equipment was clear, there were no disputes of material fact, so Rule 14.05(3)(h) applied.

[20] Even after my oral ruling concerning the tools and equipment, the applicant still maintained that the remainder of the matter could proceed as an application, and that the existence of a dispute over material facts does not always preclude the bringing of an application.

[21] I will confine myself to the facts of this case and state that, I disagree that this matter can proceed as an application. I do so for several reasons.

[22] With respect to Rule 14.05(3) g), having dismissed the applicant's request for the return of property, the injunctive basis of this application has disappeared.

[23] With respect to Rule 14.05(3) (d), the resolution of the remainder of this matter does not involve the interpretation of a construction contract, so much as it does an evaluation of the parties' conduct under the contract. Rule 14.05(3)(d) does not permit determination of a question by way of an application in circumstances where an "understanding of the broader factual matrix" is necessary: Jackson v. Solar Income Fund Inc., 2016 ONCA 908, at paras. 6 and 7.

[24] I also find that it is highly likely that there will be many material facts in dispute, not the least of which concern whether and to what extent the evolving COVID-19 situation prevented the applicant from fulfilling its obligations under the construction contract.

[25] Finally, there is the practical aspect of the respondent having commenced a Rule 76 action over the same subject matter in dispute. I do not see the applicant being significantly prejudiced by having the ability to continue this dispute as an action. If one or the other party feels that there is no triable issue, it may move for summary judgment.

[26] Accordingly, I find that this matter is not suitable to proceed as an application. However, the applicant should have the opportunity to defend its interests in the action.

[27] I order as follows:

(1) The within application is dismissed in its entirety without prejudice to the applicant to file a defence and counterclaim, if necessary, in the action, CV-20-644022. (2) The file contents of the within application including these Reasons shall be transferred and placed into the court file, CV-20-644022. (3) Costs for the dismissal of the application are awarded to the respondent. If the parties cannot agree on costs, the parties shall provide written submissions by July 31, 2020. Such written submissions shall not exceed five double-spaced pages, exclusive of Costs Outlines, Bills of Costs, Offers to Settle and authorities, and shall be forwarded to me via my judicial assistant. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs for the application as between themselves. (4) Service of the statement of claim in the action on the applicant, Wilson DaSilva and Domenic Taddeo, is admitted by counsel for the applicant effective July 21, 2020. (5) The parties shall adhere to the following deadlines in the action: (a) The defendants shall file their defence and counterclaim, if any, to the action by August 7, 2020; (b) The plaintiffs shall file their reply, if any, and defence to the counterclaim, if any, by August 21, 2020; and (c) The parties shall file their affidavits of documents by Tuesday, September 1, 2020. (6) The parties shall attend a Chambers Appointment before me on Tuesday, September 8 to be arranged by the Motions Coordinator.

Pinto J. Date: July 24, 2020