2021 ONSC 1807

Court File and Parties

COURT FILE NO.: CV-17-581547 DATE: 20210 310 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Urban Mechanical Contracting Ltd. Plaintiff/Responding Party

AND:

Broccolini Construction (Toronto) Inc., Paul Broccolini, John Broccolini, Joseph Broccolini, Anthony Broccolini and Simon De Groot Defendant/Moving Party (Broccolini Construction (Toronto) Inc.)

BEFORE: Vella J.

COUNSEL: Fernando Souza, for the Plaintiff/Responding Party Timothy Morgan, for the Defendant/Moving Party (Broccolini Construction (Toronto) Inc.)

HEARD: November 10, 2020

Reasons for Decision – Motion to Strike

[1] This is a motion brought by the remaining Defendant, Broccolini Construction (Toronto) Inc. (“Broccolini”), for an order striking various paragraphs of the Fresh as Amended Statement of Claim filed by Urban Mechanical Contracting Ltd. (“Urban”) following the Order of Sossin J., as he then was, dated February 26, 2020 (the “Order”).

[2] The motion is brought under rr. 21.01(1), 21.01(2)(a), 21.01(3)(d), and 25.11(c) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The Notice of Motion also pleads rr. 1.04(1) and (1.1) in support of this motion to strike.

[3] There was no evidence brought on this motion. The three documents submitted were all incorporated by reference into the Fresh as Amended Statement of Claim and are therefore properly before this Court under r. 25.06(7): Montreal Trust Co. of Canada v. Toronto Dominion Bank, 1992 CarswellOnt 1131 (Gen. Div.), at para. 4. In all, the documents before this Court consisted of the Notice of Motion, the underlying pleadings, the Reasons for Judgment of Sossin J. found at Urban Mechanical Contracting LTD v. Broccolini Construction (Toronto) Inc. et al., 2019 ONSC 7385 (the “Reasons”), the Order, and three key documents, namely:

(a) Minutes of Settlement signed by Urban on December 7, 2016, and by Broccolini on December 13, 2016 (the “Minutes”);

(b) A document entitled “Delay Claim Cost Compensation Erin Mills Town Centre Expansion Renovation – Without Prejudice” dated July 7, 2016, from Urban to Broccolini (the “Delay Claim”); and

(c) The subcontract between Broccolini (as contractor) and Urban (as subcontractor) dated September 10, 2013, relating to mechanical work in relation to the Erin Mills Town Centre Mall expansion.

[4] For reasons that follow, the motion to strike is partially granted with respect to the portions of the Fresh as Amended Statement of Claim that reflect an attempt to relitigate the issues before Sossin J. as an abuse of process.

Analysis

Abuse of Process

[5] The main issue is whether the impugned paragraphs are an attempt to relitigate the issue already determined by Sossin J. and therefore constitute an abuse of process.

[6] This necessitates a close review of the Reasons as applied to the impugned paragraphs of the Fresh as Amended Statement of Claim.

[7] The subject paragraphs all generally center around Urban’s claims regarding negligence and unjust enrichment.

[8] The test for abuse of process was set out by the Supreme Court of Canada in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77. The Supreme Court provided that abuse of process is properly engaged to prevent litigation that, if permitted to proceed, would violate principles such as judicial economy, consistency, finality, and the integrity of the administration of justice. The focus of this analysis is on the integrity of the justice system. This doctrine is a more flexible one than issue estoppel and can be invoked to preclude relitigation even where the strict elements of issue estoppel would not be met.

[9] In The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, 145 O.R. (3d) 759, at paras. 61-63, the Court of Appeal wrote:

It is well-recognized that the re-litigation of issues that have been before the courts in a previous proceeding will create an abuse of process. As stated by the Supreme Court of Canada in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 52:

[F]rom the system’s point of view, relitigation carries serious detrimental effects and should be avoided unless the circumstances dictate that relitigation is in fact necessary to enhance the credibility and the effectiveness of the adjudicative process as a whole.

The abuse of process doctrine applies to prevent the attempt to impeach a judicial finding by re-litigation in a different forum: C.U.P.E., at para. 46. It is a flexible doctrine unencumbered by the mutuality of parties requirement that applies to issue estoppel and cause of action estoppel: C.U.P.E., at para. 37….

The need to protect the integrity of the adjudicative functions of courts compels a bar against re-litigation: C.U.P.E., at para. 43. If re-litigation leads to the same result, there will be a waste of judicial resources, and if it leads to a different result, the inconsistency will undermine the credibility of the judicial process: C.U.P.E., at para. 51. The law thus seeks to avoid re-litigation primarily for two reasons: first, to prevent overlap and wasting judicial resources; and second, to avoid the risk of inconsistent findings.

[10] Furthermore, the abuse of process doctrine can also be used to prevent relitigation of issues that not only were actually determined but those that could have been determined: Aba-Alkhail v. University of Ottawa, 2013 ONCA 633, 363 D.L.R. (4th) 470, at para. 12.

Sossin J.’s Reasons

[11] In the Reasons, Sossin J. considered whether certain paragraphs of Urban’s original statement of claim ought to be struck as an abuse of process as being beyond the scope of the Delayed Claim. The Delayed Claim was carved out from the release contained in the Minutes, which settled some of the issues in prior litigation. The prior litigation related to a dispute between Urban and Broccolini, in which Urban claimed various forms of relief arising out of its work, as subcontractor, on a renovation project for which Broccolini was the general contractor.

[12] In striking certain paragraphs from the original statement of claim in the new action, Sossin J. made the following findings in the Reasons that are instructive to this Court under the present abuse of process analysis:

(a) The Minutes form “an integral part of the factual matrix of the pleadings”: at para. 33;

(b) The Delay Claim is defined at para. 9 of the Minutes and states, in part, that in the event this claim remains unresolved, “Urban may commence an action against Broccolini to enforce the Delay Claim as it has been presented and without increase, or changes, in its components” (emphasis in original): at para. 49;

(c) There is no dispute that the Minutes “remain in place and govern the scope of this action”: at para. 45; and

(d) “The original delay claim, therefore, demarcates the remedies which remain open to Urban … to pursue in this action”: at para. 50.

[13] At para. 51 of the Reasons, Sossin J. relies on the “cover note” from Urban to Broccolini, enclosing the Delay Claim, dated July 7, 2016, as setting out the basis for the delay claim as follows:

[P]lease be advised that Urban Mechanical is requesting compensation for, but not limited to, the following impacts from the original base contract(s): time extension; extended head office overhead; extended site office overhead; labour escalation; material escalation; loss of productivity; extended maintenance and other related direct and indirect related costs as outlined in the Claim Report(s) attached for each contract. The claim value is $1,320,553.82.

[14] In the Reasons, Sossin J. observes that the Delay Claim states that: “‘The additional costs is a result of direct and indirect impacts, which delayed construction progress and extended UMC’s contract beyond the original baseline scheduled mechanical finish and substantial completion dates, through no fault of Urban’”: at para. 52. Further, Sossin J. notes that the specific bases for the added delay “‘included but were not limited to’ a series of factual allegations, such as deficiencies in scheduling, the turnover of supervisors, excessive change orders, change directives and work orders, a faulty glass dome, a work stoppage by the scaffolding company, poor snow removal, and the unexpected discovery of shale”: at para. 53.

[15] Sossin J., then strikes out a number of paragraphs in the Reasons on the basis that they “support relief which goes beyond what was sought in the delay claim” including, notably, for the purposes of this motion: “damages for unjust enrichment, unlawful interference with economic relations, inducing breach of contract, and improper interference” (emphasis added): at para. 57.

[16] Urban, according to its factum, submits that the claims struck by Sossin J. were “[b]asically, the claims in relation to breach of trust”. I disagree. When reviewed carefully, the paragraphs struck relate to a broader range of claims including statutory claims under the Business Corporations Act, R.S.O. 1990, c. B.16 (the “OBCA”), equitable claims, and tort claims.

[17] The paragraphs struck by Sossin J. are instructive. In particular, Sossin J. struck paras. 1(b)-(n), articulating the prayers for relief, leaving only the bald claim of $1,745,150.55 in damages, and the claims for pre-judgment and post-judgment interest, costs, and such further and other relief as the Honourable Court may deem just. Of further note, Sossin J. struck the prayer for relief in relation to “conversion” which is a tort. In addition, amongst the other paragraphs struck, Sossin J. struck paras. 13 and 14 (conversion of trust claims), para. 15 (unjust enrichment relating to misuse of trust funds), para. 16 (unjust enrichment on a quantum meruit basis), and para. 20 (interference with economic relations including conversion and inducing breach of contract as against all defendants including Broccolini).

[18] No paragraphs explicitly raising negligence per se were pleaded in the original statement of claim and, hence, were not explicitly addressed by Sossin J.

[19] In the Reasons, Sossin J. carves out an exception to the inducing breach of contract plea to the limited extent that Urban is entitled to maintain that claim but only against the individual directors of Broccolini because doing so will not result in an “‘increase’ or ‘change’ to the ‘components’” of the Delay Claim as proscribed in the Minutes: at para. 59. Sossin J. thereby declines to strike para. 21 of the original statement of claim.

[20] Then, at para. 60 of the Reasons, Sossin J. concludes the abuse of process ruling:

Urban Mechanical is entitled to bring its delay claim, as carved out of the minutes of settlement with Broccolini, with the addition of the individual directors to the delay claim, but claims beyond that were released in the minutes of settlement and would be an abuse of process to allow to proceed in this action.

[21] Urban ultimately decided to abandon its claims as against Broccolini’s individual directors.

[22] In the accompanying Order, Sossin J. struck paras. 1(b)-(n), 11-17, 20, 24-25, and 27-28 of the original statement of claim, with leave to amend. Those paragraphs included, in addition to the paragraph relating to damages for unjust enrichment and inducing breach of contract, claims relating to oppression remedies and other claims under the OBCA, damages for breach of trust, conversion, and misappropriation of trust funds, and various claims for declarations under the Construction Act, R.S.O. 1990, c. C.30.

[23] It is clear that Sossin J. struck paragraphs based on tort as being outside the scope of the limited exception proscribed by the release contained in the Minutes (the “Delayed Claim Exemption”). For example, the tort of inducing breach of contract against Broccolini and the tort of conversion. His Honour also struck paragraphs seeking unjust enrichment valued on the basis of quantum meruit as being beyond the scope of the Delayed Claim Exemption in the Minutes.

[24] The only exception to this finding was with respect to adding a tort claim against the individual directors and this was based on Sossin J.’s view that the Delayed Claim Exemption did not extend to claims against the directors (the “Individual Defendants”). The Reasons make it clear that, with the exception of the claims against the Individual Defendants, the Delay Claim only permits claims based in contract against Broccolini. To expand the claims to concurrent torts, which are permissible at law, would be contrary to the bargain the parties reached in their settlement regarding the limited claim that would survive the terms of the release contained in the Minutes. Namely, an action to enforce the Delayed Claim but without increasing or changing the components of the Delayed Claim as set out by that document.

[25] The Reasons were not appealed by Urban, and the appeal period has now expired.

The Motion to Strike

[26] The claims that Broccolini challenges as an attempt by Urban to relitigate what was decided by Sossin J. relate primarily to the portions of the Fresh as Amended Statement of Claim that sound in tort and the claim relating to unjust enrichment.

[27] I am satisfied that Sossin J. has already ruled that the scope of the Delayed Claim Exemption does not extend to any claims based in tort, which includes negligence, or to claims based in unjust enrichment and quantum meruit.

[28] Most of Urban’s arguments focused on the nature of “delayed claims” in construction cases at large and the fact that the law recognizes concurrent liability in tort and contract. These are arguments that were made before Sossin J. and, in any event, are red herrings in terms of the abuse of process analysis that I have undertaken.

[29] Accordingly, the words “and negligence” in para. 18 of the Fresh as Amended Statement of Claim is struck, without leave to amend, as an abuse of process.

[30] Broccolini’s request that all the subparagraphs of para. 16 be struck is overreaching. These subparagraphs contain allegations that could arguably also apply to particularize the breach of contract claim. Furthermore, those particulars are arguably reflected in the Delay Claim pleaded. I make no finding as to whether any or all of those particulars are in fact precluded by the release contained in the Minutes. That finding is left to the trier of fact. Therefore, the words “and was negligent” in para. 16 are struck, without leave to amend, as an abuse of process.

[31] Paragraph 20 pleads unjust enrichment and seeks damages on a quantum meruit basis. However, Sossin J. already expressly struck substantially the same unjust enrichment and quantum meruit-based damages on the basis that it runs contrary to the restriction contained in the Delayed Claim Exemption. Accordingly, para. 20 is struck in its entirety, without leave to amend, as an abuse of process.

Order and Costs

[32] The following portions and paragraphs of the Fresh as Amended Statement of Claim are hereby struck without leave to amend:

(a) “and was negligent” in para. 16;

(b) “and negligence” in para. 18; and

(c) Paragraph 20 in its entirety.

[33] This order is made without prejudice to Broccolini’s right to raise all defences available to it, including those based on the Minutes and the Delay Claim.

[34] The parties shall attempt to reach an agreement as to costs. However, if that effort fails, then Broccolini will deliver its costs outline and written submissions, no longer than three pages double spaced, to my judicial assistant by March 24, 2021, and Urban will deliver its costs outline and responding written submissions not to exceed three pages double spaced, by no later than March 31, 2021.

Justice S. Vella Date: March 10, 2021

2021 ONSC 1807 COURT FILE NO.: CV-17-581547 DATE: 20210310 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Urban Mechanical Contracting Ltd. Plaintiff/Responding Party AND: Broccolini Construction (Toronto) Inc., Paul Broccolini, John Broccolini, Joseph Broccolini, Anthony Broccolini and Simon De Groot Defendants/Moving Parties

REASONS FOR JUDGMENT Vella J. Released: March 10, 2021