COURT FILE NO.: CV-20-636341
DATE: 20210705
ONTARIO SUPERIOR COURT OF JUSTICE
RE:
SYMTECH INNOVATIONS LTD., Plaintiff
-and-
FIT ERGONOMICS INC., D'ARCY JOSEPH SHEEDY, PETER DANIEL SHEEDY, and D'ARCY JR. SHEEDY, Defendants
BEFORE: F.L. Myers J.
COUNSEL: Robyn Blumberg and Robert Sniderman, for the plaintiffs Julia A. Toso, for the defendants
HEARD: July 5, 2021
ENDORSEMENT
The Motion
[1] Symtech was a subcontractor on a construction project on which FIT was the general contractor.
[2] There is a dispute in the evidence whether Symtech finished its work in May or September, 2019. Regardless, just about two years have passed.
[3] Symtech claims FIT owes it $103,650.53 for services rendered under its subcontract. The claim is supported by quotes, purchase orders sent by FIT, and corresponding invoices.
[4] Symtech also seeks a finding that FIT and its principals have committed a breach of trust under ss. 8 and 13 of the Construction Act, RSO 1990, c C.30.
[5] For the reasons that follow, I grant summary judgment on the outstanding debt. The motion for summary judgment for breach of trust is adjourned to a case conference before me to consider whether the plaintiff intends to proceed with the claim and, if so, to schedule production and a hearing as may be necessary.
The Owner
[6] The project owner is holding back about $90,000 under its contract with FIT. FIT is suing the owner for payment in separate proceedings.
[7] Some of FIT’s invoices that the owner has not paid include work performed by Symtech.
[8] The owner’s evidence in this proceeding is that it withheld the amount it believed it was due against the last unpaid invoices received from FIT. That is, the owner looked at the total charged by FIT rather than the substance of the work described in any invoice that it has not paid.
[9] The owner’s representative also confirmed in cross-examination that the owner is not holding back money against FIT attributable to Symtech’s work. In addition, the owner has provided a detailed book of the deficiencies, including photographs, supporting its allegations against FIT. Apart from one missing electrical outlet cover plate (worth perhaps $2) none of Symtech’s work is challenged by the owner.
[10] The dispute between the owner and FIT is a separate piece of litigation. FIT was slower in bringing that claim. Some of the time lost was due to the pandemic and other circumstances beyond FIT’s control. FIT’s claim against the owner is not as far along as this case. But the two cases are not joined.
Payment is Due by FIT to Symtech
[11] FIT’s purchase orders expressly repeat and accept the payment term proposed in Symtech’s change notices of “n30”.
[12] It is FIT’s evidence that despite that agreement, it only paid its subs when it was paid. While it does not claim that Symtech accepted a “pay when paid” clause, it says that Symtech’s acquiescence to its progressive payment model raises a triable issue as to whether any funds are due to Symtech by FIT before it gets paid by the owner.
[13] I disagree. The contractual term is express and clear. Payment under Symtech’s invoices is due 30 days after they are sent. Silence in face of delays is not a basis to amend a written agreement. No estoppel is claimed. No representation or reliance is pleaded or adduced in evidence.
[14] Of course Symtech did not sue FIT as each due date passed. In the real world, business people deal with the realities. You don’t bite the hand that feeds you. Lawyers do not sue their ongoing clients every time an account is not paid on its due date. But, when push comes to shove, the contractual term governs the parties’ legal relationship as they agreed barring an estoppel or amendment or other recognized defence.
[15] FIT’s evidence of its understanding of the progressive payment model (which is just a name they have created to try to say it is not “pay when paid”) is just subjective interpretation evidence that is not admissible.
The Communications Work and Symtech Invoice No. 8
[16] FIT argues that Symtech improperly charged as extras the electrical tie-in work described in Symtech’s invoice No. 8 and its communication work that were both within the scope of work agreed in the subcontract.
[17] For the communication work, the parties agreed that it would be separately quoted and billed as an extra.
[18] Invoice No. 8 began as a request for an extra made by a change notice delivered to Symtech by FIT’s electrical design consultant and agent. Symtech sent FIT a change notice pricing the requested change at $3,128.72. FIT accepted the quote for $3,128.72. by purchase order dated April 17, 2019. The documents are perfectly clear.
[19] There is no genuine issue requiring a trial on either point. There are clear contracts among sophisticated parties. FIT’s witness gives his inadmissible subjective view as to the meaning of the subcontract wording about the pricing of communications work. I find the contract wording clear and unambiguous. It says that communication work will be quoted and billed separately. It was. FIT agreed. Now it is required to pay.
[20] FIT says it protested the categorization of invoice No. 8 as an extra and it felt pressured to accept. However, it did accept with knowledge of its concern. There is no hint of true duress overwhelming the free will of FIT. Perhaps it decided that $3,000 was not worth the fight. Regardless, it raised an issue and settled. There is nothing left for trial.
Interest is due as per Symtech’s Invoices
[21] FIT submits that it should not be liable for interest of 2% per month that is plainly set out on each of Symtech’s invoices. Counsel agrees that some interest would have been expected and due. She has no evidence of any other interest agreement. Interest is not covered in the subcontract documents.
[22] FIT might have protested the first invoice where it saw 2% interest charged and opened a negotiation. Absent doing so, in my view, its ongoing requests for extras on an n30 basis (as set out in FIT’s own purchase orders) carried knowledge that if FIT was late, Symtec would charge interest at 2% per month. Moreover, this strikes me as fair and reasonable in any event. Retail interest rates being set out in invoices is a typical commercial presentation. I would not exercise discretion to alter the interest amounts assuming I can do so.
No Genuine Issue Requiring a Trial for Delay
[23] FIT submits that Symtech was late in completing its work and its delay caused other delays in the project. Attendance by Rogers Communications had to be re-scheduled three times apparently. If I ignore the delays attributable to FIT between the delivery of Symtech’s change orders and FIT’s release of purchase orders accepting each, and ignoring that Symtech requested three days extra time on each change order it sent to FIT that FIT later accepted in a purchase order, there could be an issue of whether Symtech was late.
[24] FIT says Symtech did not finish its work until September. Symtech says it finished its work in May and FIT paid it 90% in May (net of holdback and the two disputed items (communication work and invoice No. 8)). If I had to resolve this issue, I would not make a credibility finding without more detailed submissions on the timing of Symtech’s performance of its work.
[25] But, I do not need to decide if Symtech was late or whether its timing amounted to a breach of the subcontract. That is because FIT has not adduced evidence of having suffered a penny of loss due to Symtech’s delay.
[26] I required the exchange of affidavits of documents prior to scheduling this motion. Cross-examinations and a Rule 39.03 examination have been held. FIT had ample opportunity to put its best foot forward. There is no genuine issue requiring a trial on the question of delay because FIT has not claimed or proven that it suffered any loss or damages despite the evidence being within its sole knowledge.
FIT’s Speculation of Future Deficiency Claims
[27] FIT claims that the owner may prove in its separate litigation that Symtech’s work was deficient. It relies on a hearsay text message from the CEO of the owner in 2019 complaining about the appearance of wiring in places. The text message is not admissible for the truth its content. It can be used to show that the CEO complained about the wiring. But whether his complaint was real or justified is not admissible from a hearsay text.
[28] In any event, the owner’s evidence in this proceeding is that it currently makes no complaints about FIT’s work.
[29] Moreover, Symtech gave a one year guarantee on its work. It re-attended the owner’s site to fix two lights when requested to do so in November, 2019. The guarantee expired in May, 2020. It is now July of 2021. Neither FIT nor the owner has given notice of any complaint to Symtech let alone a timely complaint that Symtech could have fixed during the one year warrantied period.
[30] A bald statement that the owner might claim a deficiency in Symtech’s work after not actually doing so for two years and confirming under oath that it is not doing so, does not raise a genuine issue requiring a trial.
Summary Judgment Issues
[31] Through the documentary case proven, Symtech has met its burden to show that there is no genuine issue requiring a trial. FIT has an evidentiary burden to raise any other issues that it says require a trial. It has not done so.
[32] I agree with Ms. Toso that Symtech’s hearsay evidence is not weighty. But I am not deciding this motion based on resolving conflicts in evidence. I resolve it on the documents and ignore the subjective interpretations discussed above. The failure of the defences based on delay and a hypothetically possible future discovery of deficiencies is not based on the plaintiff’s hearsay evidence. These defences fail because FIT’s evidence does not raise a triable issue.
[33] I also agree with Ms. Toso that summary judgment is not the preferred course in an action under the Simplified Rules. But, each case should get the amount of process it needs. When I was asked to schedule this motion in Civil Practice Court, I was concerned about possible unfairness to the defendant due to a lack of discovery. I ordered the exchange of affidavits of documents to that end. I allowed cross-examinations and Rule 39.03 examinations under summons despite the normal motion process under Rule 76 not contemplating examinations.
[34] There is no point in ordering a summary trial now. This case does not involve credibility findings. Even if the plaintiff put in better evidence of its project manager, the documents on which I find the contractual terms would not be affected.
[35] I can both find the facts based on the record and apply the law to those facts fairly. This is a case in which “light touch case management” at CPC seems to have worked well by creating a customized process that got the parties into court relatively quickly and affordably.
[36] There is no genuine issue requiring a trial on the defence of setoff and the counterclaim advanced by FIT. My determinations above resolve the defence of setoff and the counterclaim on their merits.
[37] Neither is there a basis to stay judgment pending the outcome of FIT’s claim against the owner. The final finding of the rights of the parties under the subcontract does not change if a judge in a different case finds that FIT breached its contract with the owner on the basis of some of Symtech’s work. Symtech will not be a party to that case and its rights under its subcontract will already have been determined. Whether FIT will be able to try to pass along to Symtech any deficiencies that might be claimed and then proven against it in future by the owner will turn on how another judge views this decision in the context of the doctrines of res judicata, cause of action estoppel, issue estoppel, and abuse of process.
[38] As the owner has given evidence in this case, it seems to me that the evidence should be available for FIT in its claim against the owner in any event. I think that the concern here is far more theoretical and speculative than it is real.
[39] This action involves a modest amount. It is important that the court be able to provide access to civil justice through a proportional process in modest cases that exceed the monetary jurisdiction of the Small Claims Court. Notsch-Kupcho v. NY Brand Studio Inc., 2021 ONSC 4271, at para. 19.
Breach of Trust
[40] As far as I can tell, despite repeated demands under s. 39 of the Construction Act, FIT has not provided a full accounting of all money it received from the owner and all money it has paid out on the project. It is not enough to show Symtech the money received regarding its invoices. The question is whether FIT received funds in trust and has paid out trust funds to someone other than a trust beneficiary.
[41] I find that Symtech has not established that there is no genuine issue requiring a trial because its ability to do so has been thwarted by a trustee’s failure to account with transparency as required by law.
[42] If FIT is solvent, then this claim should make no difference. Similarly, the claim against the owners personally for breach of trust is more tactical than real as long as FIT is solvent or, if not, the owners fund it to pay its debts as found.
[43] Technically, that makes my grant of judgment above “partial summary judgment”. However, the issues on the merits of the contractual claim and breach of trust are discrete. The contract claim between Symtech and FIT is not at all concerned with the flow of funds between the owner and FIT. The trust claim, by contrast, starts with an amount being owed to a beneficiary under a contract and then looks at the payments from the owner to fund payment of the debt. The two can be heard separately without any risk of inconsistency or duplication.
[44] However, there should be no reason to carry on with the trust claim unless FIT is insolvent and its owners refuse to fund it to pay its just debts.
[45] I therefore convene a case conference to consider whether it will be necessary to move forward with the trust claim and, if so, to consider a timetable to do so.
Costs
[46] Costs will also be dealt with summarily at the case conference. The parties shall send me their costs outlines and any offers to settle on which they rely prior to the case conference.
F.L. Myers J.
Date: July 5, 2021