1838120 Ontario Inc. v. Township of East Zorra-Tavistock, 2021 ONSC 3341

COURT FILE NO.: 122/17

DATE: 2021-06-03

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

1838120 ONTARIO INC. c.o.b. as GREENFIELD CONTRACTING

Plaintiff

– and –

TOWNSHIP OF EAST ZORRA-TAVISTOCK and K. SMART ASSOCIATES LIMITED

Defendants

Alexandra Ferrier, Counsel for the Plaintiff

Michael Polvere, Counsel for the Defendant Township of East Zorra-Tavistock

HEARD: April 1, 2021 by videoconference

HEENEY J.:

[1] This is a motion, brought by the defendant Township of East Zorra-Tavistock (“the defendant”), for summary judgment dismissing the plaintiff’s action. The action against the defendant K. Smart Associates Limited was dismissed on consent on March 26, 2018.

[2] The defendant submits that there is no genuine issue requiring a trial and that the plaintiff’s claims should be dismissed for the following reasons.

1. The monies allegedly owing are for “extras” that were never approved in writing by the defendant.

2. The plaintiff’s claims should have been raised in an earlier action which was commenced by a sub-trade, Fiorino Concrete Ltd., and it is an abuse of process to “relitigate” the issues in the current proceeding.

3. The plaintiff’s claim is for work done and materials supplied in July and August of 2015. The statement of claim was not issued until October 25, 2017. Accordingly, the defendant argues that these claims are barred by the two-year limitation period provided for in the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B [Limitations Act].

4. The plaintiff cannot demand final payment on the contract because it failed to comply with the contractual terms regarding the issuance of a Certificate of Substantial Performance. In particular, it failed to provide a statutory declaration that all sub-trades were paid.

[3] Before discussing those issues, I will briefly review the facts.

The facts:

[4] The parties entered into a written contract on January 22, 2015 for the reconstruction of certain roads, sewers, and sidewalks in Tavistock, Ontario. The defendant retained K. Smart Associates Limited (“K. Smart”) as its consulting engineer. K. Smart was responsible for overseeing the project and for issuing Progress Payment Certificates on a monthly basis, which authorized the defendant to make progress payments to the plaintiff as the plaintiff completed work on the contract.

[5] The bulk of the work on the contract took place during the summer of 2015. There is some dispute as to when the project was completed, but the plaintiff is able to point to an inspection record showing that some work was done on September 28, 2015. The plaintiff is unable to provide evidence that it did any work on this project beyond that date.

[6] K. Smart issued Progress Payment Certificates, which consisted of the following certificates:

• #1, for work done through July 31, 2015, recommended for payment on August 6, 2015;

• #2, for work done through August 31, 2015, recommended for payment on September 17, 2015;

• #3, for work done through September 30, 2015, recommended for payment on October 7, 2015;

and

• #4, for work done through October 31, 2015, recommended for payment on November 15, 2015.

[7] K. Smart issued a revised certificate #4, which was also for work completed through October 31, 2015, recommended for payment on December 22, 2015. It increased the total value of the work done to date from $421,815.00 to $440,700.60 and the amount payable to the plaintiff from $42,281.78 to $61,488.43. This was the last progress payment certificate issued. The plaintiff concedes that the defendant paid all progress payment certificates.

[8] On this motion, the plaintiff filed an affidavit, sworn January 12, 2021, from Domenico Vozza (“Mr. Vozza”), the plaintiff’s principal and sole director. In it, Mr. Vozza states that, when he received the revised certificate #4, he discovered for the first time that the defendant might not intend to pay the plaintiff for the extra work that it (allegedly) did on the project at the defendant’s request. The nature of this extra work will be discussed in detail below.

[9] In the meantime, one of the subtrades the plaintiff hired to work on the project, Fiorino Concrete Ltd. (“Fiorino”), had not been paid for its work, so it filed a Claim for Lien on November 4, 2015 for the amount (allegedly) owed of $86,777.34. Fiorino issued a statement of claim on December 18, 2015, which named both the plaintiff and defendant in these proceedings as defendants in that proceeding. I will continue to refer to the plaintiff and the defendant in these proceedings as “the plaintiff” and “the defendant,” even as I discuss the Fiorino lawsuit, though they were both named as defendants therein.

[10] The plaintiff defended Fiorino’s claim by way of a statement of defence dated February 18, 2016. It neither advanced the issue of being owed monies by the defendant for “extras” nor did it commence a cross-claim against the defendant.

[11] In a letter dated January 27, 2016 from counsel for the plaintiff to K. Smart, the plaintiff conceded that it was not in a position to pay Fiorino and proposed that the they be paid directly from the hold-back funds held by the defendant.

[12] On February 26, 2016, the defendant received a Requirement to Pay from the Canada Revenue Agency regarding unpaid taxes owing by the plaintiff in the amount of $57,521.

[13] In a letter dated April 25, 2016, counsel for the defendant advised both Fiorino and the plaintiff that the defendant could not agree to pay Fiorino directly from its holdback funds but that it would instead bring a motion to pay the holdback funds into court.

[14] On May 5, 2016, counsel for the plaintiff wrote to counsel for the defendant, advising that changes had been made to the terms of the contract due to site conditions, in particular that the original contract called for the re-use of native fill, but that, due to poor soil quality, the plaintiff was directed to purchase fill instead. The plaintiff requested that the final payment certificate be amended to reflect the additional charges related to these changes. On the record before me, this appears to be the first time the plaintiff explicitly advanced the claim for these “extras.”

[15] The defendant brought its motion to pay the holdback funds into court and an order was obtained from Howard J. on August 19, 2016. It provided that the Claim for Lien would be immediately vacated upon payment into court of the sum of $93,438.05. Howard J. also ordered that the defendant pay into court the balance of the maintenance fund held back by it, $11,017.51, by November 1, 2016, whereupon the action against the defendant would be automatically dismissed.

[16] The defendant made both payments as ordered, which exhausted all holdback funds it held on this project. The Fiorino action was automatically dismissed against the defendant.

[17] On October 25, 2017, the plaintiff commenced the present action, claiming payment of the sum of $134,502.71 and a declaration that the work performed is substantially complete. The plaintiff’s claim relates to “extra” work the plaintiff did on the project, primarily relating to changes made to the scope of the work. The most substantial change was that the contract called for the use of native backfill. The plaintiff’s statement of claim alleges that the native soil was of poor-quality clay and was not suitable for use as backfill, which required the plaintiff to remove the native soil and supply granular backfill.

[18] The particulars of the plaintiff’s claim are set out in detail in para. 15 of its statement of claim. I have summarized them in the following table. They are organized in the same order as found in the statement of claim:

	Invoice Date	Additional Work Allegedly Performed	Amount Claimed
1	Aug. 21, 2015	Hauled clay out	$57,243.75
2	None	Supplied Granular "B" fill	$15,410.00
3	Oct. 26, 2015	Labour premium due to change in design	$8,874.91
4	Oct. 26, 2015	Excavator premium due to change in design	$14,841.00
5	Oct. 26, 2015	Loader premium due to change in design	$3,091.87
6	Oct. 26, 2015	Cleared stone for use in trenches	$4,990.50
7	Aug. 5, 2015	Replacement of broken 8-inch sewer	$2,576.00
8	Aug. 16, 2015	Re-doing sanitary service	$1,900.00
9	Oct. 26, 2015	Additional paving stone required	$1,354.20
10	Oct. 26, 2015	Additional removal of driveway paving stone	$847.60
11	Oct. 26, 2015	Additional sod required	$1,303.68
12	Oct. 26, 2015	Additional removal of boulevard	$1,117.44
13	Oct. 26, 2015	Additional milling of road required	$4,978.00
14	None	Water for sod	$500.00
		Total	$119,028.95

[19] Adding HST of $15,473.76 brings the total amount claimed to $134,502.71, which is the amount the plaintiff claims in its statement of claim.

[20] I note that, despite the presence of detailed particulars of the amounts allegedly invoiced and claimed, as set out in the statement of claim, many of the amounts have since changed. In para. 27 of Mr. Vozza’s affidavit, he expanded on each item invoiced and claimed, and the following changes emerge.

• Item #1: The amount the plaintiff is claiming for trucking expenses incurred in hauling clay increased from $57,243.75 to $58,746.05 plus HST. More significantly, the plaintiff is now claiming the additional sum of $17,638.12 plus HST for trucking supplied by his subcontractors for removing native soil. Mr. Vozza attached an invoice as an Exhibit I to his affidavit, which purports to be dated August 21, 2015, and which invoices a total amount of $75,533.77 plus HST for these combined trucking charges. I note that the defendant denies having received this or any of the other invoices that the plaintiff is relying upon, and that denial was not challenged during the cross-examination of Will Jaques, Corporate Manager for the defendant, nor was it otherwise contradicted.

• Item #3: The amount the plaintiff is claiming for the labour premium related to the removal of native soil and replacement with granular backfill increased from $8,874.91 to $34,073.56 plus HST. Again, Mr. Vozza supports that with an invoice attached as Exhibit J in that amount, purportedly dated October 26, 2015.

• Item #4: The amount the plaintiff is claiming for the excavator premium related to the operation of the excavator to remove native soil and load it onto trucks for hauling away increased from $14,841 to $54,845.80 plus HST. Again, this is supported by an invoice attached as Exhibit K in that amount, purportedly dated October 26, 2015.

• Item #5: The amount the plaintiff is claiming for the loader premium related to delays, extra work caused by having to haul clay, and extra hours for a backhoe, roller, dozer, pickup, and other jobsite equipment is increased from $3,091.87 to $49,760.50 plus HST. This is supported by an invoice attached as Exhibit L in that amount, purportedly dated October 26, 2015. However, this invoice is at odds with yet another invoice, supplied by Ms. Ferrier, counsel for the plaintiff, in a letter dated September 11, 2019, which purported to provide particulars of the amounts being claimed. Her letter is Exhibit A to the affidavit of Mr. Jaques, sworn February 10, 2021, found in the defendant’s reply motion record. Exhibit C to the same affidavit is a copy of an invoice for extra hours for a backhoe, roller, dozer, pickup, and other equipment in the amount of $64,170.00 plus HST. This invoice also purports to be dated October 26, 2015.

[21] The net effect of these changes is that the plaintiff increases the amount claimed by $144,571.60 plus HST (using the highest invoice for Item #5), which more than doubles the amount claimed in the statement of claim.

[22] While all of this is interesting, not to say disturbing, little else needs to be said about it at the present time. For purposes of this motion, the amounts being claimed are not the issue. While the amounts claimed are denied, and would be vigorously challenged by the defendant if this matter ever reaches trial, the focus of the present motion is on issues other than what work was done and what was it worth. However, these changes, made long after the fact, leave me with the impression that Mr. Vozza is making these numbers up as he goes along. His only explanation for the many discrepancies between what the plaintiff initially claimed and what the plaintiff is currently claiming is that he initially calculated the amounts owing using lower rates, but that, when he reviewed the OPSS rates included in the contract, he discovered that they were higher than the rates he had previously used. I reject this explanation. The minor adjustments in the rates charged would not begin to explain the vast disparity between the amounts now claimed, as set out in Mr. Vozza’s affidavit and the exhibits attached thereto, and the amounts particularized in the plaintiff’s statement of claim.

[23] At the very least, when invoices are now produced, supposedly created and dated during the months of August and October 2015, which are vastly at odds with claims made for the identical items as particularized in the statement of claim dated October 25, 2017, the inference is inescapable that these invoices have been manufactured years after the work was done and have been backdated.

[24] The fact that nine of these invoices are dated October 26, 2015, suspiciously amounting to two years less one day prior to the date the statement of claim was issued, supports the same inference.

Approach to be taken on a Rule 20 motion:

[25] The approach to be taken by the court on a motion for summary judgment is very helpfully outlined by Arrell J. in Newman Bros. Ltd. v. Universal Resource Recovery Inc., 2018 ONSC 4019, 90 C.L.R. (4th) 88 [Newman Bros. Ltd.], a decision that I will have occasion to refer to later in these reasons. He said the following at paras. 21-22:

Under Rule 20 of the Rules of Civil Procedure, where this Court is satisfied that there are no genuine issues requiring a trial, the motion must be granted. There will be no genuine issue requiring a trial when the Court is able to reach a fair and just determination of the merits of the motion. This will be the case when the process allows the Court to make necessary findings of fact and apply the law to those facts, and the motion is a proportionate, more expeditious and less expensive means to achieve a just result (see Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 (S.C.C.) at paras. 47, 49 and 66).

The Court should first determine if there is a genuine issue requiring a trial based on the evidence before it, prior to using the new fact-finding powers under Rule 20. If there appears to be a genuine issue requiring a trial after that review, the Court may then determine if the need for a trial can be avoided with the use of the powers in Rule 20.04 (2.1) and (2.2). The Court has the discretion to use those powers, provided their use is not against the interest of justice (see Hryniak at para. 66; see also Rogers Cable TV Ltd. v. 373041 Ontario Ltd., 1994 CanLII 7367 (ON SC), [1994] O.J. No. 2196 (Ont. Gen. Div.); and see eg. Dawson v. Rexcraft Storage & Warehouse Inc., 1998 CanLII 4831 (ON CA), [1998] O.J. No. 3240 (Ont. C.A.) at paras. 13-31; Rahimi v. Hatami, 2015 ONSC 4266, [2015] O.J. No. 3479 (Ont. S.C.J.) at paras. 5-6).

[26] Before discussing the issues advanced by the defendant, I note that two of the claims outlined in the table at para. 18, above, can be quickly addressed. As I already mentioned, the letter from Ms. Ferrier, counsel for the plaintiff, dated September 11, 2019, provided particulars about the many claims the plaintiff is asserting. As to item #2 in the table above, which is a claim for $15,410.00 for Granular “B” fill supplied by the plaintiff, Ms. Ferrier states, at para. 6 of her letter, that “We agree that this amount has been paid.”

[27] Similarly, with respect to item #14, water for sod, Ms. Ferrier states at para. 40 of her letter that “Greenfield Contracting agrees that the water for sod has been paid.”

[28] Given these admissions through counsel, which have not been withdrawn or contradicted, I find as a fact that these two items have been paid. Accordingly, those claims are dismissed.

[29] I will now address the issues the defendant advances, as outlined above, at para. 2, which, according to the defendant, calls for the balance of the plaintiff’s claims to also be dismissed.

Issue #1: The monies allegedly owing are for “extras” that were never approved in writing by the defendant

[30] The largest remaining items in the table above, items 1, 3, 4, 5 and 6, are extras relating to the cost of removing native soil and bringing in granular backfill, including downtime incurred on other equipment. Items 7 through 13 don’t appear to be related to that same issue but are instead based on the allegation that the quantities of materials supplied and work done exceeded the specifications in the contract.

[31] With respect to the issue of the plaintiff’s authority to remove native soil, replace it with granular backfill, and then bill the defendant for those extra costs, the plaintiff relies on the job inspection sheet of Ryan Pinder, the inspector from K. Smart who was on site, dated July 2, 2015, which states: “Contractor backfilled majority of san [sanitary] service using recycled “B” and “A” from road as well as new “B” for remainder. Native material was unsuitable.” A further note from Mr. Pinder dated July 9, 2015 states: “CVD arrived on site to inspect material conditions, stated that existing material was not satisfactory (refer to CVD report from 7/9/15).”

[32] The defendant produced the report from Chung & Vander Doelen Engineering Ltd. (“CVD”), dated July 9, 2015, pursuant to an undertaking given during the cross-examination of Mr. Jaques. The report can be found at Tab 2 of the Transcript and Undertakings/Refusals Brief. It states the following:

As requested a rep of CVD was present to inspect the condition of the existing subgrade material.

The material was observed to be over the optimum moisture content, which will cause the contractor to be unable to achieve the required compaction specified.

CVD recommended that the contractor wait to allow the material to reach reasonable moisture content or import a suitable material to replace existing material.

[33] At para. 23 of Mr. Vozza’s affidavit, he states, “On site, the consulting engineer and inspector determined that the native material was not suitable to be used as backfill.” This is not, in fact, accurate. As just noted, the report stated that the material’s moisture content was not optimal. It did not instruct or direct the plaintiff to replace the native soil with imported material; it simply provided that as one option. The other option was to wait for the existing material to dry out sufficiently.

[34] The defendant takes the position that the plaintiff never discussed, and the defendant never approved, trucking away the native soil and replacing it with granular fill. Given that CVD provided two options for dealing with the issue, it is clear that the parties needed to decide which option to choose. It is also clear that the plaintiff should have sought the defendant’s input and agreement as to which option to choose. That decision-making process would undoubtedly have included a consideration of the relative costs involved with both options. Given that, in the statement of claim, the plaintiff claimed that the extra costs involved in replacing the native soil were over $120,000 including HST, and is now claiming that the actual costs were more than double that amount, cost was and is a significant factor. It is noteworthy that the total value of the entire project, as reflected in the revised, final Progress Payment Certificate #4, was only $440,700.60. The “extras” the plaintiff claims amount to between 25% and 50% of the entire contract price.

[35] Previous changes to the contract were made in writing. Exhibit D to Mr. Vozza’s affidavit is a document entitled “Contract Change Order No. 1.” It is in writing, appears to have been prepared by the defendant or its agents, and is signed by a representative of the plaintiff. It contains detailed specifications of the revised work to be done, beside which specific prices have been added by the plaintiff on an item by item basis, reflecting the cost of that revised and additional work. Proceeding in this way is entirely to be expected in a contact of this nature, so that both parties know, in advance, precisely what extra work will be performed and what it will cost.

[36] While I agree with the defendant that it is entirely reasonable to expect the parties to agree on both the scope and cost of any proposed extras in advance and in writing, counsel for the defendant did not direct me to any provision in the written contract that requires this. There are significant gaps in the material on this motion. What purports to be the contract between the parties is attached as Exhibit A to Mr. Vozza’s affidavit, but that appears to be a draft tender document as opposed to a concluded and fully executed contract. A section entitled “Part G, General Conditions of Contract” is blank. The notation reads “Refer to Ontario Provincial Standards (Not Bound Herein).”

[37] On the material filed on this motion, I cannot know whether there is some term to be found in those provincial standards that is relevant to this issue. Absent such evidence, there is no basis upon which to give effect to the defendant’s argument. As such, and subject to my rulings on the other issues, resolution of this specific issue would require a trial.

Issue #2: This action constitutes an abuse of process

[38] The defendant argues that the action should be dismissed because the plaintiff had an opportunity to advance these issues in the Fiorino action and did not do so. It argues that it is an abuse of process to “re-litigate the issues that were decided as between the parties” in the earlier action.

[39] It can constitute an abuse of process to attempt to relitigate issues that have already been decided. In Canam Enterprises v. Coles (2000), 2000 CanLII 8514 (ON CA), 51 O.R. (3d) 481 (C.A.), Goudge J.A. said the following at paras. 55-59:

The doctrine of abuse of process engages the inherent power of the Court to prevent the misuse of its procedure, in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute. It is a flexible doctrine unencumbered by the specific requirements of concepts such as issue estoppel. See House of Spring Gardens Ltd. v. Waite and Others, [1990] 3 W.L.R. 347 (C.A.) at 358.

One circumstance in which abuse of process has been applied is where the litigation before the Court is found to be in essence an attempt to re-litigate a claim which the Court has already determined. See Solomon v. Smith, supra. It is on that basis that Nordheimer J. found that this third party claim ought to be terminated as an abuse of process.

I would disagree. As I have attempted to indicate, the issue in the third party claim is different from the issue already determined by Day J. The duty of care owed by the Realtors to Canam was simply not before Day J. This is not the re-litigation of an issue already decided by the Court. Hence, in my view, Nordheimer J. built his conclusion of an abuse of process on an erroneous foundation.

This issue can be addressed by looking not just at the claim but also at the party bringing it. Here it cannot be said that the third party claim is an attempt by Coles to re-litigate a claim which he has previously raised but lost. Coles has not raised this issue before in any legal proceeding. Nor could Coles have forced Canam to raise this issue and sue the Realtors in the action in contrast against National Trust before Day J. Coles has not had his day in Court on this issue.

Equally this issue can be examined from the perspective of the party required to defend the claim. Here, it cannot be said that the third party claim forces the Realtors to re-litigate a claim which it has already successfully resisted. The Realtors have not previously been required to defend this nor any other claim by either Canam or Coles.

[40] Although Goudge J.A. made these comments in a dissenting opinion, the Supreme Court of Canada allowed an appeal of the majority decision, which was reported at 2002 SCC 63, [2002] 3 S.C.R. 307. Chief Justice McLaughlin, speaking for the court in a short endorsement, agreed with the reasons of Goudge J.A.

[41] Applied to the case at bar, I do not agree with the defendant that the present action is an attempt to relitigate issues that were decided in the Fiorino action. The issues are different. The issue in the Fiorino action related to the work done on Fiorino’s subcontract for the installation of concrete aprons, sidewalks, curbs, and gutters and the monies owing for that work. The issue in the present action relates to work allegedly done by the plaintiff on the main contract, primarily for extras involving backfilling the sewer trenches, and the monies allegedly owing for that work. The plaintiff’s present claims were neither advanced, addressed, nor lost in the Fiorino action nor is the defendant presently being called on to relitigate claims that it had previously successfully resisted.

[42] While it may have made sense to have advanced all issues in one proceeding, for reasons of judicial economy if for no other reason, I am not persuaded that it is an abuse of process not to have done so. Indeed, advancing these issues in the Fiorino action would have served to complicate and protract those proceedings, so any savings in judicial resources may well have been illusory.

[43] Accordingly, I am not persuaded that the plaintiff’s claims should be dismissed on this ground.

Issue #3: The plaintiff’s claims are statute-barred

[44] Sections 4 and 5 of the Limitations Act provide as follows:

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

5 (1) 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, and

(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).

[45] The key issue I must determine is when the two-year limitation period begins to run, which is the date when the claim is “discovered,” as defined in s. 5(1).

[46] In Hugh Munro Construction Ltd. v. Moschuk, 2011 ONSC 3271 [Hugh Munro], Shaw J. dealt with a construction case involving a series of projects done on the defendant’s cottage from July 2000 to March 2007. The invoice was not issued until June 22, 2009, after the death of the principal of the plaintiff corporation. The plaintiff’s statement of claim was not issued until November 24, 2009.

[47] In addressing the issue about when the limitation period began to run, Shaw J. said the following at paras. 29-30;

I accept the plaintiff’s submission that the principle of discoverability applies, pursuant to s. 5(1) of the Limitations Act. However, in my view, this does not assist the plaintiff’s position on this motion. In G.J. White Construction Ltd. v. Palermo (1999), 2 C.P.C. (5th) 110 (Ont. S.C.J.), Nordheimer J. dealt with the issue of when the limitation period would begin to run in relation to a claim for services performed. In that case, the defendant contracted with the plaintiff to build a cottage and a tennis court on the defendant’s island property. Commencing at para. 19, Nordheimer J, stated:

19. When did the plaintiff know, or ought to have known, the material facts giving rise to the cause of action in the case?

20. In my view it is neither the time that the work was done nor is it the time when the invoice was delivered. To select the latter date would allow the plaintiff to effectively toll the limitation period for as long as it wished by simply withholding delivery of an invoice — not an unrealistic event as is evidenced by the very fact that the invoice for the July and August 1989 work in this case was not sent out until December 30, 1994.

21. I also do not believe that the appropriate date is the time when the work was done. If this is the date when the cause of action arose, and taken to its extreme, the plaintiff would have been in a position to demand payment from the defendants as each piece of work was done or, taken even more literally, when each nail was hammered in or each screw turned. This would obviously lead to an absurd result. Further at the point in time when the work was done, the plaintiff would have no reason to know or expect that the defendants were not going to pay him such than an action would have to be instituted. Rather it would have reasonably been expected that payment would be forthcoming once an invoice was delivered for the work.

22. I have therefore concluded that the cause of action in this particular case arose from the time after two events took place — the expiration of a reasonable period of time for the plaintiff to deliver an invoice to the defendants, and the expiration of a reasonable time for the defendants to pay that invoice. This conclusion accords with the practice that had developed between the plaintiff and the defendants regarding payments for this project. In each case after a reasonable period of time from the completion of a segment of the work, the plaintiff delivered an invoice and in each case after a reasonable period of time from receiving the invoice the defendant would make payment. What then is a reasonable period for these two events?

Nordheimer J. looked at the parties’ past practices and concluded that the invoice for the work completed in June 1989 should have been delivered during the first part of July 1989 and payment should have been made by the end of July 1989. Accordingly, the limitation period began to run at the end of July 1989.

[48] It is noteworthy that Shaw J. relied on G.J. White to determine the commencement date of the limitation period even though that case was decided on the Limitations Act as it was prior to the extensive amendments made in 2002 and, in particular, the statutory codification of the discoverability principle.

[49] An appeal of the Hugh Munro decision was dismissed by the Court of Appeal for Ontario. In a short endorsement, reported at 2012 ONCA 109, the court said the following at para. 1:

The contractor launched its action in November 2009, more than two years after the last work was done and more than two years after a reasonably-timed invoice would have been sent and payment made or refused. In the circumstances of this case, the motion judge was entitled to conclude that the action was barred by the passage of the two-year limitation period. The appeal is accordingly dismissed.

[50] The Court of Appeal explicitly expressed its approval of G.J. White in Collins Barrow Toronto LLP v. Augusta Industries Inc., 2017 ONCA 883. That case involved a claim for monies owed on invoices rendered for auditing services. The Court of Appeal said the following at paras. 5-6:

The other two invoices in dispute are dated April 9, 2014 and April 11, 2014. The application judge pointed out that the engagement letters expressly provided that invoices only became delinquent once 45 days had expired from their delivery. The application judge concluded that the limitation period for these two invoices did not commence until 45 days after they were delivered. We agree with her conclusion in that regard. It is consistent with the express wording of the engagement letters and also with existing case law that provides that the limitation period on an invoice does not begin to run until a reasonable period of time has expired for payment of the invoice: see, for example, G.J. White Construction Ltd. v. Palermo, [1999] O.J. No. 5563 (Ont. S.C.J.) .

In our view, this conclusion is not inconsistent with the recent decision in Pellerin Savitz s.e.n.c.r.l. c. Guindon, 2017 SCC 29 (S.C.C.) , in which Gascon J. makes it very clear that the conclusion on the commencement of a limitations period is highly fact-specific and that a judge's conclusion in that regard is entitled to "great deference" (para. 11). In addition, we note that Pellerin was concerned with the interpretation of the Civil Code of Quebec.

[51] G.J. White has been applied in numerous other cases under the Limitations Act, including the following: Environmental Building Solutions v. 2420124 Ontario Limited, 2018 ONSC 3112, 92 C.L.R. (4th) 153; Licata Disability Management Paralegal Professional Corp. v. Triluc Enterprises Ltd., 2014 ONSC 7470 (Div. Ct.); Bougadis Chang LLP v. 1231238 Ontario Inc., [2012] O.J. No. 3982 (S.C.J.) [Bougadis], leave to appeal refused 2012 ONSC 6409, 300 O.A.C. 363 (Div. Ct.); and Delmar Construction Inc. v. Toronto (City), 2008 CanLII 19223 (Ont. S.C.) [Delmar].

[52] I conclude, therefore, that G.J. White is good law in Ontario. Although it was decided under the pre-2002 Limitations Act, it was almost prescient in that, in addressing when it would be reasonable for a contractor to expect payment, it served to identify the date when it would be apparent that commencement of a proceeding would be appropriate if payment was not forthcoming. To some extent, this anticipated s. 5(1)(a)(iv) of the current Act and is useful in interpreting and applying that section in a contract case. The words used in s. 5 make sense in the context of a tort action but, to borrow the comments of Sharpe J.A. in Federation Insurance Co. of Canada v. Markel Insurance Co. of Canada, 2012 ONCA 218, 109 O.R. (3d) 652 [Federation], at para. 22, there is “a certain element of artificiality” in using the word “discovered” in the context of a claim for monies owed under a construction contract. In tort claims, it is often a real issue as to when the potential plaintiff discovers that he or she has a claim. In a construction case, though, the contractor knows, at the moment the work is done, that he has a claim against the customer because he is not doing the work for free. However, he could not reasonably expect to be paid for that work until he renders a proper invoice. Once he does so, if the invoice is not paid within a reasonable time, the customer is in default, and from that point forward it would be appropriate for the contractor to commence a proceeding if it remains unpaid.

[53] In saying that it would be “appropriate” for a proceeding to be commenced, what is meant is that it would be “legally appropriate”, as discussed below, rather than appropriate in the ordinary sense of being the sensible thing to do. When an invoice goes unpaid, the sensible thing to do is to commence a dialogue with the defaulting customer in an effort to encourage payment. This is particularly the case when dealing with a repeat customer. The parties might consider a compromise on the amount owed or an extension to the terms of payment. Generally speaking, commencing a lawsuit would be the last resort after other efforts have failed to secure payment. None of those steps, though, would delay the commencement of the limitation period. Once the reasonably delivered invoice goes into default on the reasonable due date, the contractor knows, or should know, that the legally appropriate means to collect that debt, if it remains unpaid, is to commence a proceeding. That does not mean that he would be expected to commence a proceeding right away. It does mean that he would be expected to commence a proceeding within two years from that date.

[54] Thus, in my view, G.J. White provides a workable approach for addressing the issue of discoverability in construction cases such as the case at bar. It stands for the following proposition: the limitation period on an invoice, issued for having supplied goods and services in accordance with a contract, does not commence at the time the goods and services are supplied or at the time the invoice was issued and submitted to the payors. Instead, it commences after a “reasonable” period of time has passed for the invoice to be issued and a “reasonable” period of time has passed for the invoice to be paid. What is “reasonable” is context- and circumstance-dependent and follows the parties’ contract and the parties’ past practices with respect to when invoices were issued and submitted and when payments were made.

[55] The plaintiff relies on Newman Bros. Limited to argue that the court should not look at individual invoices and determine a separate limitation period for each, based on when that invoice should reasonably been issued and when it should reasonably have been paid, because to do so would be unduly onerous on the parties. At para. 26 of that decision, Arrell J. said the following:

The defendants submit that the limitation period begins to run under this particular contract 16 days after the delivery of each invoice, and therefore separate actions would have to be commenced at different times whenever there was a delay in the payment of a particular invoice. I reject such an argument as not commercially reasonable, unduly onerous on the parties, and a potential waste of judicial resources.

[56] The motion judge went on to dismiss the motion for summary judgment brought by the defendant. He did not refer to or consider the approach followed in G.J. White that calculates the limitation period from the date a reasonably timed invoice should have been paid. Instead, he found merit in the plaintiff’s argument that the limitation period did not begin to run until 2 ½ years after the contract was substantially performed, when further funds were paid following promises of payment by the defendant. In arriving at that conclusion, he relied upon the decision of the Ontario Court of Appeal in 407 ETR Concession Company Limited v. Day, 2016 ONCA 709, 133 O.R. (3d) 762.

[57] With great respect, I disagree that a ruling that separate limitation periods apply to each invoice would require separate actions to be commenced at different times, resulting in a potential waste of judicial resources. It must be remembered that we are merely discussing when the limitation period begins to run, not when an action must actually be commenced to enforce payment. If a contractor submits an invoice and it is not paid, and then issues another invoice and yet another, neither of which is paid, it would be readily apparent to the contractor, well before two years had elapsed from the date of the first invoice, that the customer was not prepared to pay and that a lawsuit would have to be commenced. The contractor would then commence one lawsuit for all of the unpaid invoices. There would be no waste of judicial resources. Having multiple limitation periods merely puts the onus on the contractor to keep track of when his invoices have been issued (assuming that they were issued within a reasonable time), so that he can ensure that an action is commenced within two years after the date that the earliest one should reasonably have been paid.

[58] The only situation that could generate multiple proceedings would be where a contractor does work and issues an invoice, which remains unpaid for two years from its reasonable due date, yet continues to do work for the customer beyond the two-year mark. In those rare cases, the contractor would need to commence a proceeding within two years to preserve his right to collect on the first invoice, and then commence a further proceeding in the future if his invoices for future work also go unpaid.

[59] As to Arrell J.’s reliance on 407 ETR, that was, in my view, a highly fact-specific case, where the Court of Appeal for Ontario was considering when the limitation period commenced with respect to tolls owed for the use of Highway 407. There is a statutory collection system provided for by the Highway 407 Act, whereby the renewal of the license plates of delinquent drivers could be suspended for unpaid tolls. In interpreting the meaning of s. 5(1)(a)(iv) of the Limitations Act as to when a proceeding would be an “appropriate” means to recover their loss, the Court of Appeal held that it was not appropriate to sue until the license denial process had run its course and the vehicle permit expired.

[60] In so doing, however, Laskin J.A., speaking for the court at para. 47, made it clear that the word “appropriate” means “legally appropriate”:

Holding that the two-year period begins after the licence plate denial process fails to prompt payment does not raise the concern Sharpe J.A. referred to in Federation Insurance Co. of Canada v. Markel Insurance Co. of Canada, 2012 ONCA 218, 109 O.R. (3d) 652 (Ont. C.A.), at para. 34. There, he said that “appropriate” must mean “legally appropriate”. By using that phrase he signified that a plaintiff could not claim it was appropriate to delay the start of the limitation period for tactical reasons, or in circumstances that would later require the court to decide when settlement discussions had become fruitless. In this case, however, 407 ETR seeks to delay the start of the limitation period for a legally appropriate reason: waiting until a statutorily authorized process has been completed.

[61] The Federation case to which Laskin J.A. was referring involved the determination of when the limitation period commenced for a “loss transfer claim,” which is a claim made by one insurer against another for indemnification for statutory accident benefits. The Court of Appeal in that case was faced with two competing interpretations of the word “appropriate” by two different arbitrators. One had ruled that the limitation period begins to run the day after the insurer seeking indemnification makes a demand for loss transfer. The other had ruled that the limitation period only runs from the date the second insurer definitively refuses to indemnify.

[62] Sharpe J.A., speaking for the court, agreed with the former approach and held that the limitation period begins to run the day after the demand is made. The commencement of the limitation period is not delayed while the other party considers whether or not to honour the demand and then finally makes an unequivocal denial. He said the following at para. 34:

This brings me to the question of when it would be “appropriate” to bring a proceeding within the meaning of s. 5(1)(a)(iv) of the Limitations Act. Here as well, I fully accept that parties should be discouraged from rushing to litigation or arbitration and encouraged to discuss and negotiate claims. In my view, when s. 5(1)(a)(iv) states that a claim is “discovered” only when “having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it”, the word “appropriate” must mean legally appropriate. To give “appropriate” an evaluative gloss, allowing a party to delay the commencement of proceedings for some tactical or other reason beyond two years from the date the claim is fully ripened and requiring the court to assess to tone and tenor of communications in search of a clear denial would, in my opinion, inject an unacceptable element of uncertainty into the law of limitation of actions.

[63] It seems to me that giving consideration to things such promises of payment followed by partial payments injects precisely the unacceptable element of uncertainty into the law of limitation of actions that Sharpe J.A. cautioned against. Accordingly, to the limited extent that Newman Bros. Ltd. is relevant to the case at bar, I am not inclined to follow it.

[64] Applying G.J. White to the case at bar, it is necessary to examine the pattern of dealings between the parties in determining what was a reasonable period of time for the delivery of an invoice and what was a reasonable period of time for the payment of that invoice. Here the evidence is uncontested that the plaintiff was to be paid by way of progress payments, on a monthly basis, as the work was done. Progress Payment Certificate #1 was intended to pay the plaintiff for work done through July 31, 2015 and was recommended for payment on August 6, 2015. Progress Payment Certificate #2 was intended to pay the plaintiff for work completed through August 31, 2015 and was recommended for payment on September 17, 2015. Progress Payment Certificate #3 was intended to pay the plaintiff for work done through September 30, 2015 and was recommended for payment on October 7, 2015. Progress Payment Certificate #4 was intended to pay the plaintiff for work done through October 31, 2015 and was recommended for payment on November 15, 2015.

[65] The payment system that was in use between the parties serves to answer both questions posed by G.J. White. Since each Progress Payment Certificate was supposed to pay the plaintiff for work done up to the end of that particular month, it follows that the plaintiff’s invoices for work done during that particular month should have been submitted prior to the end of the month so that they could be included. This represents the “reasonable” period for the submission of invoices. The Progress Payment Certificates also prescribe a specific date for payment within each certificate, which represents the “reasonable” date for payment. In my view, the limitation period would commence the day after the date recommended for payment with respect to each certificate.

[66] The evidence is clear that the defendant paid the amounts certified for payment within days of the date recommended for payment. With respect to #1, the recommended payment date was August 6, 2015. The uncontradicted evidence of Mr. Jaques is that the payment cheque was cut on August 14, 2015. With respect to #2, the recommended payment date was September 17, 2015. The evidence of Mr. Jaques is that the payment cheque was cut on September 18, 2015. He was not cross-examined about the payment dates for #3 or #4.

[67] The evidence is uncontested that the “extras” which are now being claimed were performed during the months of July and August 2015. Indeed, it appears that the vast majority of the plaintiff’s claims relate to work done in July 2015 — namely, removing native soil and replacing it with granular material. The plaintiff would have reasonably been expected to invoice the defendant for extra work done during July 2015 by the end of that month and would reasonably have been expected to be paid for that work on August 6, 2015. The limitation period for those claims would, therefore, commence on August 7, 2015.

[68] Similarly, the plaintiff would reasonably have been expected to invoice the defendant for the “extras” that were performed in August 2015 by the end of that month and would reasonably have expected to be paid for that work on September 17, 2015. The limitation period for those claims would, therefore, have commenced on September 18, 2015.

[69] Although the evidence is undisputed that the work in question was performed in July and August 2015, the plaintiff would still be out of time even if some of the work had been performed in September 2015. As already noted, there is no evidence that the plaintiff performed any further work after September 28, 2015. Work done up to that date should reasonably have been invoiced for inclusion in Progress Payment Certificate #3 for work done through September 30, 2015. Payment on this certificate would reasonably have been expected on October 7, 2015. The limitation period would, therefore, have commenced the next day, October 8, 2015.

[70] The plaintiff’s statement of claim was not issued until October 25, 2017. I find that this is more than two years after the date that the plaintiff’s claims were “discovered,” within the meaning of that term in s. 5(1) of the Limitations Act.

[71] The same result obtains when one considers the invoices. The plaintiff claims amounts owed on invoices dated August 5, 16 and 21, 2015. Even if one ignores the fact that much of the work represented in these invoices was done in July, and should have been invoiced by the end of that month, those invoices should at the very least have been included in the Progress Payment Certificate #2 for work done through August 31, 2015 and should have been paid on September 17, 2015. Since they were not, in fact, paid and since, given the extremely detailed nature of the certificates, a reasonable person with the abilities and in the circumstances of Mr. Vozza would have known that they had not been paid, the limitation period for those invoices commenced on September 18, 2015, more than two years before the plaintiff’s statement of claim was issued.

[72] The rest of the invoices are all dated October 26, 2015, which I have already noted is suspicious for being two years less one day prior to the issuance of the statement of claim. The law is well-established that a plaintiff cannot “toll” the limitation period by delaying the issuance of an invoice: see G.J. White at para. 20; Delmar at para. 12; Bougadis at para. 27; and 1238235 Ontario Limited (Distinct Management Group) v. Toronto Common Element Condominium Corp. No. 1702, 2017 CanLII 51564 (Ont. S.C.) at para. 24. Here, taking the invoices at face value, and ignoring the probability that these invoices were created after the fact and backdated, the fact remains that the work to which these invoices relate was done in July and August 2015. Accordingly, they should have been invoiced by the end of August 2015 at the latest, so as to have been included in the Progress Payment Certificate for that month and be paid by September 17, 2015. Therefore, I find that the limitation period for those invoices commenced on September 18, 2015, more than two years before the plaintiff’s statement of claim was issued.

[73] I conclude that there is no genuine issue requiring a trial on the limitations issue. I am satisfied that I am able to reach a fair and just determination of the merits of the motion for summary judgment on the material that has been filed and the submissions that have been made on this motion. I find that the plaintiff’s claims are barred by virtue of s. 4 of the Limitations Act. Accordingly, the plaintiff’s claims are dismissed.

Issue #4: The plaintiff cannot demand payment on the contract because it failed to provide the necessary statutory declaration for the issuance of a Certificate of Substantial Performance

[74] Sections SP13 and SP14 of the contract between the parties provide as follows:

SP13 PAYMENT CERTIFICATE

Further to Section GC8.02 'Payments' of the General Conditions, the following shall apply.

Upon acceptance of the work as "substantially performed" as defined under the Construction Lien Act 1983 and as determined by the Contract Administrator, a certificate of "Substantial Performance" shall be issued to the Contractor. After the expiration of forty-five days (45) from the date of "Substantial Performance" and provided the provisions of the Contract and the conditions stipulated under the Construction Lien Act have been fully complied with, payment will be made at the rate of ninety-seven and one half (97.5) per cent of the amount due under the Contract with 2.5 per cent being retained by the Corporation for the maintenance guarantee period of 12 months.

The certified cheque (tender deposit) will be released after the execution of the Contract Agreement.

SP14 CERTIFICATE OF SUBSTANTIAL PERFORMANCE

The Contract Administrator will issue a Certificate of Substantial Performance on submission by the Contractor of the following documents:

a. Written undertaking by the Contractor to complete expeditiously any outstanding work and to fulfill obligations under the contract.

b. Statutory declaration in a form satisfactory to the Contract Administrator that all liability incurred by the Contractor and the Sub-contractors in carrying out the contract has been discharged and that all liens in respect to the contract and subcontracts have expired or have been satisfied, discharged, or provided for by payment into court.

c. Satisfactory Clearance Certificate from the Work Place Safety Insurance Board.

d. Extension of bonding, in a form satisfactory to the Contract Administrator, to cover the maintenance guarantee period of 12 months from the date of the 'Substantial Performance' certificate.

The Contract Administrator shall fill out in the Certificate of Substantial Performance the date in which the contract was satisfactorily performed.

On the expiration of the 12 months maintenance period from the date of substantial completion, as set out in the Certificate of Substantial Completion, and after all known imperfect work has been rectified in accordance with the Contract and to the satisfaction of the Contract Administrator and the Contract Administrator is satisfied to the best of his knowledge that the Contractor has discharged all his obligations under the Contract, the Contract Administrator will issue the Final Certificate and the Final Payment Certificate approving the release to the Contractor of the remaining holdback (or certified cheque), if any, less any deductions as provided for in the Contract.

[75] It is undisputed that the plaintiff has never provided the statutory declaration it was required to provide pursuant to SP14(b). The defendant states that the plaintiff is unable to provide a statutory declaration verifying that all sub-trades were paid because, in fact, they have not been not paid. At para. 38 of his affidavit, Mr. Jaques states that the defendant has been advised that other sub-trades, including Walmsley Brothers Ltd., Wilhelm Concrete, and Lafarge Canada were all seeking payment from the plaintiff. Exhibit D to his affidavit is an e-mail from Walmsley Brothers Ltd., dated June 16, 2016, stating that the plaintiff owed them $10,000 plus HST for their work on this project. The plaintiff did not challenge Mr. Jaques on this evidence during his cross-examination.

[76] The plaintiff relies on a letter from its counsel, Ms. Ferrier, dated May 30, 2016, to counsel for the defendant, which states that the plaintiff’s bonding company has paid all subtrades. This letter predates the e-mail from Walmsley Brothers dated June 16, 2016, so there is clearly a conflict, assuming, without deciding, that either piece of correspondence is admissible evidence. What is not in conflict, though, is that the plaintiff has, to this day, failed to provide the required statutory declaration and, as a result, no Certificate of Substantial Performance has ever been issued.

[77] The requirement for a statutory declaration that all subtrades have been paid is not a mere formality. Under s. 8(1) of the Construction Lien Act, R.S.O. 1990, c. C.30, as it read at the time this contract was entered into and carried out (before the amendments to what is now the Construction Act became effective on June 29, 2018), all amounts owing to a contractor on account of the contract price of an improvement constitute a trust fund for the benefit of the subcontractors and other persons who have supplied services or materials to the improvement who are owed amounts by the contractor. The owner requires the statutory declaration in order to ensure that the monies the contractor is demanding are not subject to a trust in favour of an unpaid subtrade.

[78] The contract is clear that the Contract Administrator is only obligated to issue a Certificate of Substantial Performance after the plaintiff has provided the statutory declaration required by SP14(b) and complied with the other requirements of that section. The defendant is only obligated to pay, and the plaintiff is only entitled to receive, the final payment on the contract once 45 days have expired from the date certified to be the date of substantial performance.

[79] I am in a position to make these findings based on the documentary record before me. There is no genuine issue for trial on this issue. I conclude that, since the plaintiff has no contractual right to demand payment as of the date hereof, its claims must be dismissed.

Conclusion

[80] Accordingly, based upon my rulings with regard to both issues #3 and #4 above, the defendant’s motion for summary judgment is granted and the plaintiff’s action is dismissed.

Costs

[81] I encourage the parties to resolve the issue of costs themselves. If they are unable to do so, I will accept the defendant’s brief written submissions on costs within 15 days of the release of these reasons, the plaintiff’s brief written submissions within 10 days thereafter, and the defendant’s brief written reply submissions within 5 days thereafter. Failing that, the parties will be deemed to have resolved the issue of costs between themselves.

T. A Heeney J.

Released: June 3, 2021

ADDENDUM TO REASONS FOR JUDGMENT

[82] I have discovered a typographical error in my Reasons for Judgment released June 3, 2021, which requires correction.

[83] At para. 79, I wrote “I conclude that, since the defendant has no contractual right to demand payment as of the date hereof, its claims must be dismissed.” As is obvious from the context, I intended to say “I conclude that, since the plaintiff has no contractual right to demand payment as of the date hereof, its claims must be dismissed.”

[84] My Reasons for Judgment are amended accordingly.

Mr. Justice T. A. Heeney

Date: June 30, 2021