COURT FILE NO.: CV-17-580793
DATE: July 2, 2021
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Quad Pro Construction Inc. v. Canadian Leaseback (GP) Inc., Maple Leaf Property Management Inc., 690723 Ontario Inc. o/a Maple Leaf Property Management;
BEFORE: MASTER C. WIEBE
COUNSEL: Adam Wainstock for Quad Pro Construction Inc. ("QPC");
Bryce Dillon for Canadian Leaseback (GP) Inc. ("CLI"), Maple Leaf Property Management Inc. ("MLPMI"), 690723 Ontario Inc. o/a Maple Leaf Property Management ("MLPM"), together "the Defendants";
HEARD: July 2, 2021.
ENDORSEMENT
[1] QPC wants to bring a motion for partial summary judgment leading to an interim report ordering that the Defendants pay QPC what it calls the "undisputed monies" that form a part of its claim for lien. The Defendants are the landlords of certain commercial space located at 4900 Yonge Street, Toronto. QPC was retained by the Defendants to refurbish three floors leased by the federal government. QPC registered two claims for lien that now total $3,118,204 concerning the work it did. It purported to perfect these two claims for lien with two lien actions.
[2] QPC obtained a judgment of reference. I became seized of the reference when I conducted the first trial management conference on September 20, 2020. I have conducted five such trial management conferences. Initially, there two other claims for lien. Now there are only the two QPC claims. At the third trial management conference on December 2, 2020 I adopted a litigation and discovery plan the parties had agreed to, a plan which required that a mediation take place by June 4, 2021. At the fourth trial management conference on February 21, 2021 I scheduled a date for this motion, August 26, 2021, with the schedule for the motion to be set later should the mediation fail.
[3] On June 11, 2021 Mr. Wainstock emailed me seeking a teleconference to create a schedule for the motion. I convened a teleconference on June 29, 2021. The parties had not submitted written submissions concerning the Construction Act, R.S.O. 1990, c.C.30 ("CA") section 67(2) test concerning the motion, namely the test to be met for interlocutory proceedings not expressly authorized by the CA. I also learned that the Defendants had unilaterally cancelled the required mediation as it concluded that it was pointless without a commitment from the federal government to fund any settlement. I scheduled another teleconference on July 2, 2021 and required that written submissions be made both as the section 67(2) test and sanctions against the Defendants for unilaterally cancelling the required mediation.
[4] In its written submissions, QPC asked that the issue of the sanctions against the Defendants due to the cancelled mediation be deferred to the argument on the partial summary judgment motion, should I grant leave to hear that motion.
[5] Concerning the leave issue, CA section 67(2) requires that the court "consent" to interlocutory steps not provided for in the CA, and that this consent be given only if the court is satisfied that the steps "are necessary or would expedite the resolution of the issues in dispute."
[6] QPC's position is that between $945,650 and $1,256,400 of its claims for lien represent unpaid portions of draws that were certified for payment by the project payment certifier. Indeed, Mr. Dillon conceded that the federal government, which financed the project, has paid the Defendants this money. As indicated in the Scott Schedules created by the parties, the Defendants raise only two defences on their own account to the non-payment of monies, namely set-offs for deficiency correction costs totaling $139,235.35 and for warranty work totaling $285,000. It is undisputed that these set-offs are covered by portions of the certified draws other than the monies being pursued by QPC in this motion. In short, the Defendants themselves make no set-off claim against the monies in question.
[7] The issue is the third element of the Defendants defence, namely an alleged "set-off" for a "claim" being made by the tenant, the federal government, against the Defendants for the delay of the project. I was advised by Mr. Dillon that the federal government sent notice of this potential claim some 18 months ago, that the federal government has not to date submitted a claim (not even a summary quantification of a claim), and that the latest word the Defendants have received from the federal government is that it may not even commence litigation about this "claim" but instead "may" set-off its claim against future rent it has to pay at some unspecified point in the future. To date, the government has paid all rent in full. Mr. Dillon advised that the Defendants estimate this potential claim as being in the range of $2.7 million as it would be based on the rental space affected. It is undisputed that the Defendants have no particulars of this government delay claim and have no delay claim of their own against QPC.
[8] When I asked Mr. Dillon as to what reason the Defendants give for not paying QPC the apparently undisputed certified monies they have in their possession, he referred me to Supplementary Condition 19 in the contract between Maple Leaf Property Management and QPC dated July 9, 2017. This is the general contract. SC 19 states the following: "in the event of a dispute between the Owner and the Contractor (the "Dispute"), which Dispute is affected by a concurrent dispute between the Owner and PWGSC (the "Concurrent Dispute"), the Contractor acknowledges and agrees that it will delay resolution of the Dispute pending a final and binding outcome of the Concurrent Dispute in accordance with the PWGSC Lease."
[9] I heard submissions on this point and ruled that leave is granted. It became clear to me, particularly after the trial management conference, that the Defendants' reliance on SC 19 had the potential of bringing the entire proceeding to a halt pending the "final and binding outcome" of the "Concurrent Dispute" between the Defendants and the government, should there be such as "Concurrent Dispute." The government's potential claim is apparently large enough to cover almost the entire QPC claim. The suspension could also be significant, as it could potentially last until there is a "final and binding outcome" of the concurrent dispute. I determined that it was therefore "necessary" for the purposes of CA section 67(2) that this issue be clarified now, as it potentially jeopardizes the continuation of this entire action.
[10] There was considerable argument about the second branch of the section 67(2) test, namely whether the motion would "expedite the resolution of the issues in dispute." On refection, it now appears that this branch carries the lesser weight of the two for the purposes of this motion. But it is none the less important.
[11] I also find that the proposed motion could expedite the resolution of a significant part of the QPC claim for lien. The alleged undisputed monies represent as much as 40% of the QPC claim for lien. The Defendants raise no set-off against these monies on their own account. They only raise the nebulous set-off claim from the federal government which has not been asserted now for over 18 months, and the SC 19 point. The determination of this issue would reduce the trial by potentially eliminating the need to prove entitlement to these funds. Furthermore, and most importantly, should I grant the motion, my ruling will not, in my view, interrupt the continuation of the action as it relates to the real issues in dispute, namely the deficiencies, warranty items and the delay. This applies even if there is an appeal. I will make no determination on those issues in this motion.
[12] I do not find that the concerns raised by the Court of Appeal in Butera v. Chown, Cairns LLP, 2017 ONCA 783 at para 38 apply to this case. The issue here is discrete, will not take much time or resources to determine, and again will not delay this action, even if the partial summary judgment motion leads to an appeal.
[13] I also agree with Justice Richetti in his decision in 4 Star Drywall (99) Ltd. v. Nanak Homes Inc. 2009 CanLII 17972 at paragraphs 9 and 10 where he stated that section 67(2) should not be used to allow only interlocutory steps that resolve all of the issues in a case. The test is meant to avoid unnecessary motions or motions that do not advance the resolution of any of the issues in dispute. This point was reiterated by Master Short in his decision in Advanced Construction Techniques v. OHL 2013 ONSC 7505 at paragraph 63. I find that the motion proposed by QPC will potentially resolve a significant issue in this case.
[14] I, therefore, grant leave to QPC to bring its proposed motion for summary judgment.
[15] Concerning the issue of sanctions against the Defendants on account of the cancelled mediation, I grant the QPC request to defer that issue to the argument of this motion.
DATE: July 2, 2021 __________________________
MASTER C. WIEBE