COURT FILE NO.: CV-16-3335
DATE: 2021 04 23
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Tower Restoration Ltd.
Milena Celap, for the Plaintiff/Responding Party
Plaintiff/Responding Party
- and -
Attorney General of Canada
Jacqueline M. Dais-Visca and Mary Shenouda, for the Defendant/Moving Party
Defendant/Moving Party
HEARD: April 21, 2021
REASONS FOR JUDGMENT
MANDHANE J.
[1] The Defendant, the Attorney General of Canada (“AG”) moves for summary judgment dismissing the Plaintiff’s action for $2,000,000 in damages for breach of contract, quantum meruit, and unjust enrichment.
[2] For reasons below, I grant the AG’s motion for summary judgment.
OVERVIEW
[3] After a competitive procurement process, the Government of Canada (“Government”) contracted with the Plaintiff, Tower Restoration Ltd. (“Tower”), to replace the windows at a fully-occupied prison, Millhaven Maximum Security Penitentiary (“Penitentiary”).
[4] To submit a bid, Tower was required to attend at the Penitentiary to be briefed on the site conditions and anticipated work. The Government also made available the standard form general contract (“GC”) that the successful party would be required to sign.
[5] Tower submitted the lowest bid and was awarded the contract.
[6] On May 21, 2010, the parties entered into a GC whereby the Government agreed to pay Tower a lump sum of $3,200,000 to replace all the windows at the Penitentiary by May 21, 2011. Tower was responsible for supplying the necessary labour, materials, tools, and supervision, while the Government was required to facilitate regular access to the Penitentiary.
[7] From the outset, Tower encountered logistical issues in terms of accessing the interior of the Penitentiary which, in turn, led to delays and increased costs. That said, Tower knew or ought to have known that, by submitting a lump sum bid, it would be required to take on obvious and inherent financial risks associated with replacing all the windows within a fully occupied maximum-security penitentiary housing hundreds of federally-sentenced prisoners.
[8] These logistical issues were sometimes sorted out through informal discussions between Tower and Penitentiary management. Other times they were dealt with informally between Tower and the various Government employees tasked with overseeing and administering the contract on behalf of the Crown. During these informal discussions, neither Tower nor the Government engaged the services of a lawyer to negotiate on its behalf nor was any formal documentation generated pursuant to the GC.
[9] These informal discussions did not relate to changes in the scope of work or additional payment under the contract. There is no evidence that any Government employee ever told Tower that they had authority to increase the amount payable under the GC, or that Tower could be paid outside of the formal process required under the GC. Indeed, the GC included standard terms regarding “Changes Orders” that required Tower to abide by strict notice provisions failing which extra payment would not be made. Tower complied with these GC provisions on eight occasions and received at total of $34,809.95 in additional compensation.
[10] Tower substantially completed the work and, on December 10, 2012, the Government authorized payment, with a holdback of $12,000. The Certificate of Final Completion and final invoice is dated January 26, 2013.
[11] On April 3, 2013, Tower provided a detailed claim for additional payment of $1,0003,621.82 (“2013 Claim”). In response to Tower’s inquiry about the determination of its 2013 Claim, the Government employee administering the GC emailed back that “the final amount will be agreed to during the mediation process or other legal discussions.”
[12] On April 23, 2013, the Government paid the hold-back of $12,000 owing on the GC.
[13] On July 18, 2014, the Government sent Tower an email with its final written decision rejecting the substance of its 2013 Claim, but offering it $13,156 in compensation for wage escalation. The Government was clear that if Tower did not agree with the amount, it could exercise its options under the GC.
[14] Tower never triggered the Dispute Resolution provisions in the GC in relation to its 2013 Claim. To do so it would have had to submit its Notice of Dispute within 15 days of Government’s final decision – by August 8, 2014. That day came and passed with no action on Tower’s part.
[15] Despite acknowledging receipt of the Final Decision on August 12, 2021, Tower took no further action until April 27, 2015, when its counsel wrote the Government asking it to “reconsider” its decision. The Government did not reply as it was under no obligation to reconsider final decisions made pursuant to the GC.
[16] On July 25, 2016, Tower brought this action. The AG asks that I dismiss the action because Tower did not comply with the mandatory Dispute Resolution provisions of the GC.
Availability of summary judgment
[17] This is an appropriate case for summary judgment. There are no material facts in dispute and there is no genuine issue for trial: Urban Mechanical, 2018 ONSC 1888 at para. 25, citing Hryniak v. Mauldin, 2014 SCC at paras. 49 and 60.
[18] I reject Tower’s argument that a trial is required so that it can call evidence to support its claim that the Government waived its contractual rights through the conduct of its employees. Based on the admitted facts, specific terms of the GC, and the applicable Supreme Court of Canada jurisprudence, there is no air of reality to this argument: See Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 2 S.C.R. 490.
[19] While Tower says that it has put its best foot forward on this motion, it has not adduced any evidence capable of supporting a finding that the Government waived its contractual rights. Foremost, the terms of the GC are crystal clear that waiver must be express and in writing. There is no evidence that these pre‑conditions were met.
[20] Tower’s testimony that it formed an “impression” based on its dealings with Government staff persons that it would be “dealt with fairly at the conclusion of the work,” regardless of the GC terms, is not supported by the other evidence before the court or the overall context. The conversations that Tower relies on to support its implied waiver argument pre-date the Government’s final decision on the 2013 Claim, did not involve legal counsel, and did not relate to administration of the GC. On the other hand, the record includes written correspondence where the Government reminded Tower that it would need to comply with the strict terms of the GC to obtain additional payment, including specifically in relation to the 2013 Claim.
[21] This case is distinguishable from Collautti Construction Ltd. v. City of Ottawa, 1984 CanLII 1969 (CA) insofar as, here, the Government adhered strictly to the terms of the GC relating to additional payments throughout the contract duration. It never once paid Tower outside of the strict processes contemplated in the GC, which included provisions related to dispute resolution in the event of disagreement.
[22] There is simply no air of reality to Tower’s waiver argument. Tower was a sophisticated commercial enterprise engaged in a multi-million-dollar contract with the Government. It knew that it would have to comply with the strict terms of the GC to receive additional payment totalling over $1,000,000. Most tellingly, Tower employed the process outlined in the GC to make the 2013 Claim in the first instance.
[23] This action is ripe for summary judgment insofar as I am only tasked with interpreting the GC to determine whether it extinguishes Tower’s claim. This is a legal determination based on the text and there is no need for a trial: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53.
TOWER’S CLAIM IS BARRED BY OPERATION OF THE CONTRACT
[24] Tower accepted the Government’s final decision on its 2013 Claim when it failed to provide notice of this dispute as required under the GC: Elite Construction Inc. v. Canada, 2021 ONSC 562; Ross-Clair, 2016 ONCA 205; Technicore Underground Inc. v. Toronto (City), 2012 ONCA 597, at paras. 29, 34, 35; and Urban Mechanical, 2018 ONSC 1888 at para. 111.
[25] The Supreme Court of Canada and other appellate courts have explained that, in construction contracts, the purpose of binding notice provisions is to provide the other party with sufficiently detailed information to allow it to consider its options and take corrective action before the contractor pursues a claim: Corpex (1977) Inc. v. Canada, 1982 CanLII 213 (SCC), [1982] 2 S.C.R. 643 at paras. 31, 60-62; Doyle Construction Co. v. Carling O’Keefe Breweries of Can. Ltd., [1988] B.C.J. 832 (C.A.) at para. 111-112.
[26] These policy rationales are germane to disputes arising from government construction contracts, which involve sophisticated commercial enterprises, a competitive bidding and selection process, use of public funds, contracts of adhesion, and which have precedential value beyond the immediate parties: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., [2016] SCC 37 at para. 37-43.
[27] Having failed to deliver the prescribed Notice of Dispute after receiving the Government’s final decision on its 2013 Claim, Tower is barred by operation of the GC from availing itself of any of the dispute resolution provisions in the GC, up to and including this action.
Order
[28] The Plaintiff/Respondent Party’s action shall be dismissed.
[29] Tower shall pay the costs of the AG in the amount of $60,000, inclusive of all fees, disbursements and HST.
Mandhane J.
Released: April 23, 2021
COURT FILE NO.: CV-16-3335
DATE: 2021 04 23
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Tower Restoration Ltd.
Plaintiff/Responding Party
- and -
Attorney General of Canada
Defendant/Moving Party
REASONS FOR JUDGMENT
Mandhane J.
Released: April 23, 2021