COURT FILE NO.: CV-17-00575768-0000
DATE: 20210913
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Sunnybrook Health Sciences Centre
Plaintiff
– and –
Buttcon Limited et al
Defendants
Rory Barnable and Zac Cooper, for the Plaintiff
Sienna Molu for MMM Group
Kathryn Kirkpatrick for Buttcon Limited
Richard Hepner for State Group Kevin Adams for Clayton Industries and Clayton Sales & Services Ltd.
HEARD: MAY 12, 2021
VELLA J.
REASONS FOR DECISION
[1] This motion for summary judgment was brought by the defendants, as a group, jointly seeking dismissal of the entire action based on an alleged expiry of a limitation period.
PRELIMINARY ISSUE: Admissibility of Plaintiff’s Expert Evidence
[2] At the outset of the motion, the defendants brought a preliminary motion to strike the affidavit of Mohammad Ali Fayazbakhsh, PhD., P. Eng., of the engineering firm Jensen Hughes, and his report attached as an exhibit (the “Jensen Hughes Report”) on two grounds. First, the defendants state that the expert report is beyond the scope of the proposed expert’s area of expertise. Second, the defendants state that the report goes to the ultimate issue and thus usurps my function as a trier of fact.
[3] Originally, the defendants objected to the fact that the Jensen Hughes Report was originally not attached as an exhibit to the author’s, Mr. Fayazbakhsh’s, affidavit and accordingly was originally not properly before the court: Moore v. Getahun, 2015 ONCA 55, 124 O.R. (3d) 321, at para. 86. However, the defendants agreed to abandon that ground of objection in response to Sunnybrook’s offer to make Mr. Fayazbakhsh available for cross-examination and to permit a late reply. The defendants filed a supplementary factum but chose not to cross-examine the expert or to adduce any responding expert evidence.
[4] After reviewing the facta and the affidavit of Mohammad Ali Fayazbakhsh and his attached report, and hearing submissions, I dismissed the motion to strike, reserving the right to release brief written reasons. It is my view that the expert did not go beyond his area of expertise, nor does his report violate the ultimate issue doctrine as it relates to my determination of whether Sunnybrook has raised a genuine issue for trial; namely, when did Sunnybrook gain the requisite actual or constructive knowledge to trigger the commencement of the limitation period, including whether it acted with reasonable diligence.
[5] I was mindful of my gatekeeping role as outlined by the Supreme Court of Canada in White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, at para. 54, under which the court is to consider the expert evidence’s “relevance, necessity, reliability and absence of bias” to meet the minimum admissibility threshold. Furthermore, I considered whether the court would benefit from the proffered expert opinion evidence.
[6] The Jensen Hughes Report essentially consists of a review of the key documents in this matter, some of which are either authored by the defendant engineering firm, MMM Group Limited, or which otherwise contain technical content. The report provides information relevant to determining whether Sunnybrook acted with reasonable diligence in discovering its claim against the defendants in the circumstances presented. The Report also arguably mirrors Sunnybrook’s position at the motion; namely, that it was reasonable to wait to pursue the claim because Sunnybrook was awaiting the advice of its professional advisors who, in turn, provided the knowledge necessary to allow Sunnybrook to realize that it had a claim against one or more of the defendants. It is hardly surprising that an expert has provided an opinion that is consistent with the tendering party’s position. That on its own is insufficient to support a bias allegation.
[7] The Jensen Hughes Report was tendered to show that there is some evidence that Sunnybrook did not sit on its rights but rather exercised reasonable diligence in determining whether it had a cause of action against any or all of the defendants in a timely fashion. All of the documents upon which Mr. Fayazbakhsh bases his opinion are admitted in evidence on this motion.
[8] I admitted the proffered expert evidence of Mr. Fayazbakhsh into evidence on this motion. It is admitted for the limited purpose of determining whether there is a genuine issue for trial with respect to the limitation period defence that is the subject of this motion.
[9] This ruling does not in any way fetter the discretion of the trier of fact should this matter proceed to trial, as the trier of fact will ultimately rule on the admissibility of this expert evidence. My ruling is without prejudice to the right of the defendants to renew their objection at trial.
OVERVIEW
[10] In or around 2010, as part of a larger renovation project to expand the boiler system at the St. John’s Rehabilitation Hospital (part of Sunnybrook Health Sciences Centre), Sunnybrook retained the defendants to select, design, and install a new steam boiler within the existing boiler system. The new steam boiler (the “Clayton Boiler”), manufactured and distributed by the defendants, Clayton Industries and Clayton Sales & Services Ltd. (“Clayton”), had to be compatible with the existing boilers (the “Cleaver Brooks Boilers”) so that the boilers would function together as an integrated boiler system.
[11] MMM Group Limited (“MMM”) was retained by Sunnybrook to provide engineering services in relation to upgrading the central utility plant and notably the boiler system, and to create the new boiler specifications. It approved the selection and installation of the new Clayton Boiler system.
[12] Buttcon Limited (“Buttcon”) was retained as the mechanical and general contractor to carry out the installation of the new Clayton Boiler system.
[13] The State Group Inc. (“State Group”) was retained to provide multi trade services to install the new Clayton Boiler system.
[14] The Clayton Boiler was fully commissioned on January 4, 2012, meaning it was approved to go into operation.
[15] Almost from the beginning, concerns were raised by Sunnybrook’s water treatment service provider, WMC Water Management Consultants Inc. (“WMC”), about the condensate accumulating within the new boiler system that is related to the Clayton Boiler. WMC handled the chemical treatment of the water (known as feedwater) running inside the integrated boiler system.
[16] The defendants collectively submit that Sunnybrook knew or ought to have known it had a claim against them by November 5, 2012 when Sunnybrook’s own water consultants, WMC, raised concerns about the performance of the boiler system relating to the condensate problem caused by the differences between the Clayton Boiler system and the Cleaver Brooks Boilers. In the alternative, Sunnybrook ought to have discovered its claim on or by May 26, 2014 when WMC submitted a further report alerting Sunnybrook to corrosion and pitting (of primarily the piping and hotwell tank) problems emanating from the Clayton Boiler’s steam system, which operated on a different basis than the Cleaver Brooks Boilers’ steam system and would not “work well together.”
[17] Sunnybrook submits that all parties reasonably believed that the condensate and corrosion related concerns had been resolved in 2013 at a low cost to it. It was not until Sunnybrook received a draft report from MMM dated July 24, 2015 (“July 2015 Draft Report”) identifying for the first time that the problem was the unresolvable incompatibility of the Clayton Boiler with the Cleaver Brooks Boilers that it had sufficient facts to give rise to a claim against the defendants. Furthermore, and in any event, it was reasonable for Sunnybrook to wait until it received MMM’s penultimate July 2015 Draft Report, at which time Sunnybrook had the basis to conclude that a civil proceeding was an appropriate means by which to remedy its “injury, loss or damage” within the meaning of s. 5 of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B. It did not sit idle but rather actively pursued answers and solutions to the emerging condensate and later the related corrosion problems identified by WMC starting in November 2012.
[18] Sunnybrook commenced its action against the defendants on May 24, 2017 more than two years after the May 26, 2014 WMC report but less than two years following the July 2015 Draft Report.
TEST FOR SUMMARY JUDGMENT
[19] Under r. 20.04(2), if the court is satisfied that there is no genuine issue requiring a trial with respect to all or part of a claim or defence, the court must grant summary judgment.
[20] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 45, the Supreme Court of Canada confirmed that summary judgment is “a significant alternative model of adjudication.” Rule 20.04(2.1) provides judges with fact-finding powers (i.e., the power to weigh evidence, evaluate credibility, and draw inferences) to resolve claims without the need to have a trial.
[21] The focus at the motion is not on what further evidence could be adduced at trial, but rather, on whether a trial is required. A trial will not be required when the summary judgment process “(1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result”: Hryniak, at para. 49.
[22] The determination of a motion for summary judgment involves a two-step approach: the judge should first determine whether there is a genuine issue requiring a trial based only on the evidence before her, without using the rule’s fact-finding powers. If there is no genuine issue requiring a trial, summary judgment must be granted. Second, if there appears to be a genuine issue requiring a trial, the judge should then determine whether “the need for a trial can be avoided” by using the fact-finding powers to weigh evidence, evaluate credibility, and draw inferences: Hryniak, at paras. 66-68.
[23] On a motion for summary judgment, the moving party must establish a prima facie case that there is no genuine issue requiring a trial. The onus then shifts to the responding party. It is not sufficient for the responding party to simply rely on allegations in their pleadings. The responding party must set out, in affidavit material or other evidence, specific facts showing there is a genuine issue requiring a trial. Both parties must put their “best foot forward” and the court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial: Chernet v. RBC General Insurance Co., 2017 ONCA 337, at para. 12; Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 (Gen. Div.), at para. 24, aff’d [1997] O.J. No. 3754
[24] However, summary judgment is unsuitable when there is insufficient evidence to properly assess reasonable discoverability, particularly in cases with a complex factual matrix and cases that put into issue the standard of care of professional advisors: Victoria Mendes et al. v. Blaisedale Montessori School, 2014 ONSC 3178, at paras. 3-4; aff’d 2014 ONCA 821; 1511419 Ontario Inc. v. KPMG, 2019 ONSC 228, at paras. 47-59, 71-79 and 112-113.
[25] I have reviewed the evidence and considered the submissions of the parties. In my view, the plaintiff has raised a genuine issue for trial with respect to the issue of when it reasonably discovered its claim against the defendants. The need for a trial is not avoided by resort to the fact-finding powers under r. 20.04(2.1) and summary judgment will not lead to a proportionate, more expeditious, and less expensive means to achieve a just result. Accordingly, for the reasons that follow, the motion for summary judgment is dismissed
DOES THE ISSUE OF REASONABLE DISCOVERABILITY RAISE A GENUINE ISSUE FOR TRIAL?
Framework for analysis
[26] After the conclusion of the hearing, the defendants submitted a decision from the Supreme Court of Canada, Grant Thornton LLP v. New Brunswick, 2021 SCC 31, released on July 29, 2021. Sunnybrook did not object.
[27] Grant Thornton provides a helpful framework for analyzing the statutory doctrine of reasonable discoverability. While the Supreme Court was applying its analysis to New Brunswick’s statutory framework set out in its Limitation of Actions Act (“LAA”), the statutory language is substantially similar to sections 4 and 5 of Ontario’s Limitations Act, 2002.
[28] In Grant Thornton, the Court stated, at para 42., that the appropriate approach to determining when a plaintiff had the requisite degree of knowledge required under the LAA to trigger the commencement of the limitation period is as follows:
[A] claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn. This approach, in my view, remains faithful to the common law rule of discoverability set out in Rafuse and accords with s. 5 of the LAA. [Emphasis added]
[29] The Court observed, at para. 43, that the material facts that must be actually or constructively known are set out by the statute itself. At paras. 45-46, the Court explained that a “plausible inference of liability” means one which gives rise to a “permissible fact inference”:
The plausible inference of liability requirement ensures that the degree of knowledge needed to discover a claim is more than mere suspicion or speculation. This accords with the principles underlying the discoverability rule, which recognize that it is unfair to deprive a plaintiff from bringing a claim before it can reasonably be expected to know the claim exists. At the same time, requiring a plausible inference of liability ensures the standard does not rise so high as to require certainty of liability or “perfect knowledge”; see also the concept of “perfect certainty”. Indeed, it is well-established that a plaintiff does not need to know the exact extent or type of harm it has suffered, or the precise cause of its injury, in order for a limitation period to run. [Citations omitted]
Statutory Framework – The [Limitations Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-24-sch-b/latest/so-2002-c-24-sch-b.html)
[30] The parties agree that the basic two-year limitation period set out in s. 4 of the Limitations Act, 2002 applies to Sunnybrook’s claim:
s. 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.
[31] The material facts that must be actually or constructively known to the plaintiff are set out in ss 5(1) of the Limitations Act, 2002:
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).
[32] Section 5(2) of the Limitations Act, 2002 creates a rebuttable presumption that the plaintiff is deemed to have known the facts upon which the claim took place on the date of the act or omission giving rise to the claim. The burden lies on the plaintiff to prove that it did not have constructive or actual knowledge of the matters giving rise to the claim. Put another way, the plaintiff must demonstrate that it could not through the exercise of reasonable diligence have discovered the claim within two years of the wrongdoing occurring: Vu v. Attorney General of Canada, 2020 ONSC 2447, at para. 24, aff’d 2021 ONCA 574.
[33] The threshold to be met by the plaintiff is “relatively low”: Miaskowski (Litigation guardian of) v. Persaud, 2015 ONCA 758, 393 D.L.R. (4th) 237, at para. 28.
Additional relevant principles regarding the application of the statutory test of reasonable discoverability in Ontario
[34] The Court of Appeal in Alexis v. Darnley, 2009 ONCA 847, at para. 12, cautioned that reasonable discoverability is a fact driven analysis, so motions for summary judgment should not be granted on the basis of the expiry of a limitation period under s. 4 of the Limitations Act, 2002 where there are material facts in dispute that ought to be decided after a trial.
[35] Furthermore, the statutory discoverability test under s. 5(1)(b) of the Limitations Act, 2002 is a codification of the common law test of reasonable discoverability reflected in decisions such as M. (K.) v M. (H.), 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6.
[36] In order to postpone the commencement of the applicable limitation period, the plaintiff must demonstrate that it could not have discovered its claim earlier through the exercise of reasonable diligence: Zapfe v. Barnes (2003), 2003 CanLII 52159 (ON CA), 66 O.R. (3d) 397 (Ont. C.A.), at para. 24. In other words, the plaintiff must not sit on its rights: Longo v. MacLaren Art Centre Inc., 2014 ONCA 526, at para. 42.
[37] In addition, under s. 5(1)(iv) of the Limitations Act, 2002, the plaintiff must have known that a proceeding would be the “appropriate means” by which to seek a remedy. This part of the analysis is fact dependent: Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, 142 O.R. (3d) 561, at para. 46.
[38] The Court of Appeal has held that where a plaintiff has appropriately relied upon “the superior knowledge and expertise of the defendant, especially where the defendant undertook efforts to ameliorate the loss,” the commencement of the limitation period may be postponed under s. 5(1)(iv) of the Limitations Act, 2002: Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., 2019 ONCA 47, 144 O.R. (3d) 385, at para. 48; see also DeZwirek v. Swadron, 2019 ONSC 1709, at para. 34). This requirement avoids the commencement of needless litigation.
[39] Similarly, in Presley v. Van Dusen, 2019 ONCA 66, 144 O.R. (3d) 305, the Court of Appeal confirmed that the commencement of a limitation period can be postponed where a plaintiff reasonably places reliance on a defendant service provider’s corrective measures.
ANALYSIS
Affidavit evidence
[40] Numerous documents were submitted as exhibits to various affidavits. The parties agreed that all of the exhibits were admitted as authentic, but they took different views as to the interpretation of various documents and, more particularly, whether and how the documents should have alerted Sunnybrook to the existence of its claim.
[41] Of note, Sunnybrook tendered three affidavits: Michael McRitchie, Director of Plant Operations, Maintenance and Biomedical Engineering at Sunnybrook, its engineering expert; Ali Fayazbakhsh, PhD, P. Eng., the senior mechanical engineer from Jensen Hughes; and Jennifer Priess, a law clerk at Sunnybrook’s law firm.
[42] Mr. McRitchie is the only deponent who had direct involvement in this matter.
[43] In stark contrast, the defendants collectively filed an affidavit and supplementary affidavit from MMM’s lawyer, Morris Chochla.
[44] Neither Mr. McRitchie nor Mr. Fayazbakhsh were cross-examined on their respective affidavits. On the other hand, Mr. Chochla was cross-examined.
[45] In my view, the defendants took a calculated risk that the documents would “speak for themselves” and thus declined to submit affidavits from those with direct knowledge, most notably anyone from MMM. By relying only on a solicitor’s affidavit, the defendants did not put their best foot forward, and the defendants were shielded from cross-examination. In addition, the court did not have the benefit of receiving affidavit evidence from some of the key actors who had direct knowledge of material matters in dispute, including the two engineers, Ms. Lai and Mr. Cionga, (former employees of MMM) who had direct involvement in this matter.
[46] In this light, I am placing more weight on the affidavit of Mr. McRitchie, who was not cross-examined on his affidavit and prefer his evidence where it contradicts that of Mr. Chochla.
Review of the Evidence
[47] The defendants played various roles with respect to the manufacture, specifications, design, and installation of the Clayton Boiler and integrating the Clayton Boiler with the pre-existing Cleaver Brooks Boilers and the overall boiler system at Sunnybrook.
[48] The Clayton Boiler was intended to work in unison with the two existing Cleaver Brooks Boilers within Sunnybrook’s existing boiler plant and system. This was a critical requirement of the project.
[49] The Clayton Boiler system was put into operation on January 4, 2012. At that time, MMM signed off on the commissioning of the Clayton Boiler.
[50] Sunnybrook’s water chemical treatment company, WMC, began observing problems related to the Clayton Boiler steam system identified as relating to a condensate issue. It advised Sunnybrook of its concerns in a report dated November 5, 2012.
[51] In its report, WMC observed that the two boiler systems (Clayton and Cleaver Brooks) would not work well together because of the differences in their respective steam systems. WMC recommended a separate chemical treatment system for the Clayton Boiler (a new timer and chemical pump control system) to fix the condensate problem. The cost of the equipment for this installation would be $1500. WMC states in the report that this proposed fix will be sufficient to deal with the condensate issue. The report further states that,
WMC expects your system will run with no major operational issues as designed. The system will provide good quality steam with any combination of boilers online. WMC recommends a couple of minor changes to the conductivity controller probe location and a secondary chemical feed system for the Clayton boiler to trim existing chemical feed. The only real issue regarding water treatment relates to the efficiency of the chemical treatment program, water and energy use. We expect the Clayton boiler to increase water treatment costs by 40% when in operation.
The report concludes “these changes will allow WMC to control the two systems and help maximize treatment efficiency and steam quality.” WMC approached this concern as a resolvable chemical water treatment issue.
[52] In relation to the projected 40% increase in Sunnybrook’s water treatment costs of the Clayton Boiler, Mr. McRitchie deposed that, from Sunnybrook’s perspective, the boiler plant’s cost for chemical water treatments was so nominal that a 40% increase in this cost was not a concern within the context of the overall operating costs of the boiler plant.
[53] Contrary to the submissions of the defendants, WMC’s November 5, 2012 report makes no mention of corrosion or any suggestion that there is a potential unresolvable incompatibility as between the Clayton Boiler and the Cleaver Brooks Boilers at the root of the then emerging problem. Indeed, WMC’s report states the opposite: with the proposed modification the two boiler systems would work in unison.
[54] Furthermore, contrary to the defendants’ submissions, I do not interpret Mr. McRitchie’s answers in his examination for discovery to the effect that WMC advised Sunnybrook that the two systems would not work well and therefore there was an incompatibility to mean that Sunnybrook understood in 2012 that the two boiler systems were irreconcilably incompatible, in the sense that they could not function together in an integrated boiler system.
[55] Sunnybrook alerted MMM to the condensate problem identified by WMC in the fall of 2012. The remaining defendants were also aware of the condensate issue. MMM did not raise any flags for Sunnybrook regarding the potential unsuitability of the Clayton Boiler that MMM had approved for this project.
[56] In response to WMC’s November 5, 2012 report, MMM issued a mechanical change notice on November 20, 2012 to implement WMC’s recommendations at a cost of $3,738.39.
[57] There is evidence in the record supporting Sunnybrook’s position that it reasonably believed that the problem identified by WMC as a condensate issue had been fixed in 2012, as did the defendants. There is no evidence from the defendants that seriously challenges that view.
[58] In early 2014, staff at Sunnybrook noticed corrosion, for the first time, in the metal piping of the Clayton Boiler system.
[59] On May 26, 2014, WMC submitted a further report to Sunnybrook observing that there had been further corrosion and pitting related to the piping associated with the Clayton boiler system’s hotwell (tank). WMC proposed that further work be done in the form of installing a separate feedwater system to service the Clayton Boiler separately from the Cleaver Brooks Boilers.
[60] Notably in neither of the WMC reports does WMC state that the problem (as was later revealed) was a fundamental and unresolvable incompatibility issue between the Clayton Boiler and the Cleaver Brooks Boilers. Rather, WMC was proposing relatively modest operational solutions to fix the condensate and related corrosion problem so that the two boiler systems could function together in an integrated boiler system.
[61] On or about June 10, 2014, Sunnybrook requested its project engineers, MMM, to review and respond to WMC’s May 26, 2014 report on June 10, 2014. At this time, MMM’s project lead engineer was Bertha Lai.
[62] On June 26, 2014, Ms. Lai provided a proposal to Sunnybrook to resolve these ongoing condensate and corrosion operational issues at a cost of $9,500, which included the recommended installation of a separate feedwater system for the Clayton Boiler, and modifications to the associated condensate return and chemical treatment recommended by WMC. Again, there is no suggestion in MMM’s fee proposal or response that Sunnybrook was facing a potentially much larger issue of a fundamental incompatibility of the two boiler systems. Rather, MMM recommended modifications to address the condensate and emerging corrosion issue as operational issues with the goal of promoting the integration of the Clayton Boiler and Cleaver Brooks Boilers.
[63] By 2015, Ms. Lai had left MMM and MMM designated Eugen Cionga as the boiler project’s lead engineer.
[64] On January 13, 2015, WMC submitted a further report to Sunnybrook reporting that due to the ongoing condensate issue relating to the feedwater (hotwell) tank, the Clayton Boiler system was subject to “intensive corrosive attack.” The report identifies the problem as a “design flaw” within the system. However, WMC did not recommend replacing the Clayton Boiler nor did it advise that the design flaw was an incompatibility issue (nor did WMC have this area of expertise). Rather, WMC recommended further water treatment-related modifications to the boiler system to address the corrosion.
[65] In WMC’s further report dated May 25, 2015, WMC still points to corrosion as the main issue with the Clayton Boiler. This is again related to condensate being pumped back into the main feedwater tank or hotwell at a rate that was below the normal operating level. WMC recommended further modifications to the system but did not suggest that the problem lie in the Clayton Boiler’s incompatibility with the Cleaver Brooks Boilers. The report notably stated that Sunnybrook needed engineering input at this stage.
[66] In its report dated May 5, 2015, MMM provided a further estimate to fix the identified corrosion problem at a cost of $16,500 to Sunnybrook. The proposal included the undertaking by MMM of an analysis of the boiler plant, boiler configuration, feedwater system, and chemical treatment.
[67] As part of its analysis into the cause of the corrosion, MMM hired C.B. Non-Destructive Testing Ltd. (“C.B.”) to conduct non-destructive testing on the boiler system.
[68] In its report dated April 21, 2015, C.B. advised MMM of its findings. As a result of these findings concerning the extent and location of the corrosion inside the boiler system, MMM provided its opinion as to the cause of the corrosion and its recommendations for remediation of the boiler system, which were reflected in its July 2015 Draft Report.
[69] In its July 2015 Draft Report, MMM advised for the first time that the root cause of the increasingly severe corrosion issues being experienced throughout the boiler system, particularly in the tank piping and hotwell tank, was a complete and unresolvable incompatibility in the functioning of the Clayton Boiler with the Cleaver Brooks Boilers, which could not be fixed to operate as an integrated system in the long-term. MMM advised Sunnybrook of the extreme aggressiveness of the corrosion and provided three options to remediate the boiler system.
[70] The first option, being the long-term solution, called for the replacement of the Clayton Boiler with a new Cleaver Brooks boiler. The second option, called a short-term solution, required the complete separation of the two types of boiler systems. The third option, called an emergency solution, required the installation of a new condensate tank to act as a backup in case the existing hotwell tank completely shut down due to the aggressiveness of the corrosion.
[71] As the July 2015 Draft Report did not contain any estimate associated with the three options, Mr. McRitchie asked MMM to provide costs estimates. By email dated August 27, 2015, MMM provided the cost estimates, all of which are considerably more than the earlier cost proposals for system modifications proposed by MMM. MMM recommends that the only “viable long-term solution” is option #1; that is, a complete replacement of the Clayton Boiler with a new Cleaver Brooks boiler at a cost of $1.7 million. Option #2 would cost $1.0 million and option #3 would cost $320,000. This is in stark contrast with MMM’s earlier modification estimates of $9,500 and $16,500.
[72] Upon receipt of this Draft Report and cost estimates, Mr. McRitchie requested a high-level meeting with MMM. The meeting occurred on September 16, 2015 and was attended by Mr. Bovay and Mr. Eppinghoven on behalf of MMM. Mr. Eppinghoven attended as a representative of MMM’s senior management. According to Mr. McRitchie’s unchallenged evidence, Mr. Eppinghoven advised that MMM might offer not to charge for the cost of future engineering work concerning replacement of the Clayton Boiler. He also advised that any additional claims would need to involve MMM’s error and omissions insurer.
[73] The final report from MMM was provided to Sunnybrook in October 2015. It reiterated the findings and recommendations of the July 2015 Draft Report and stated that it was the complete incompatibility of the Clayton Boiler with the Cleaver Brooks Boilers that was causing the condensate problem. This was resulting in what MMM characterized as “severe” and aggressive corrosion that was jeopardizing the entire boiler plant. This could only be resolved by the replacement of the Clayton Boiler with a new Cleaver Brooks boiler. In other words, there was no long-term solution for maintaining the existing Clayton Boiler as part of an integrated boiler system at Sunnybrook’s boiler plant.
[74] Following further discussions, Sunnybrook received three reports from another company, HDR, dated May 20, 2016; January 27, 2017; and March 7, 2017. HDR ultimately submitted a fee proposal to replace the Clayton Boiler at a cost of $1.325 million.
[75] The defendants submit that Sunnybrook had the requisite degree of knowledge permitting it to identify a problem with the Clayton Boiler and associated damage by November 5, 2012.
[76] The defendants submit that Sunnybrook did not need to know the full extent of the problem or the full extent of the damage before its claim crystallized triggering the commencement of the two-year limitation period. I agree with this general proposition.
[77] The defendants point to the fact that WMC advised Sunnybrook of a problem with the Clayton Boiler as early as November 5, 2012 (and by May 26, 2014 at the latest). At that time, WMC also advised that the proposed fix would cost money to resolve and would result in an increase of operational water treatment expenses of 40% per year.
[78] However, the record shows there is evidence consistent with WMC’s identification of a problem as a water treatment problem concerning the condensate, which had a solution that would maintain the Clayton Boiler as part of the integrated boiler system. However, Sunnybrook’s claim is premised on the conclusion that there was an irreconcilable incompatibility of the two boiler systems that could not be fixed by modifications to the overall boiler system. As long as the Clayton Boiler system could be made to work with the Cleaver Brooks Boilers system at a low cost there was no unresolvable incompatibility and, therefore, the Clayton Boiler continued to be considered a suitable boiler that met Sunnybrook’s project requirements. Therefore, the nature of the claim as advanced is different from the nature of the problem that was perceived before the July 2015 Draft Report.
[79] The identification of corrosion does not appear to occur until early 2014 (confirmed in WMC’s May 26, 2014 report). However, it is not until MMM’s July 2015 Draft Report that the corrosion problem is elevated to severe. Furthermore, it appears that the condensate and related corrosion problems were indicators (and visible consequences) of the real problem, which is eventually identified by MMM to be a fundamental incompatibility of the Clayton Boiler with the pre-existing Cleaver Brooks Boilers. This problem calls for no less than a complete replacement of the Clayton Boiler. In other words, the determination of an unresolvable incompatibility with the two boilers was not made until after the relatively minor operational modifications failed to stem the corrosion.
CONCLUSION: Is there a genuine issue for trial?
[80] In my view, there is credible evidence submitted by Sunnybrook that raises a genuine issue for trial concerning at what point in time it had actual or constructive knowledge of the material facts leading it to a plausible inference of liability against the defendants, or any one of them. The reports of WMC, C.B., and MMM, Mr. McRitchie’s affidavit, and to a limited extent the useful documentary review of the chronology of events provided by Mr. Fayazbakhsh, demonstrate support for Sunnybrook’s contention that it could not have reasonably discovered a claim against the defendants, or any of them, until it received MMM’s July 2015 Draft Report.
[81] There is also credible evidence in the record that is consistent with a finding that Sunnybrook, WMC, and MMM were all of the view that the initial condensate problem reported by WMC had been fixed and that the recurrence of the condensate problem, with the added concern of corrosion, did not arise until 2014. At that point, there is again credible evidence capable of supporting the finding that Sunnybrook acted with reasonable diligence upon receipt of the WMC May 26, 2014 report when it authorized its own project engineers, MMM, to conduct a review of the entire boiler system . Sunnybrook awaited the results of that review before determining whether a civil proceeding was an appropriate means by which to remedy its loss or damage.
[82] As well, there is credible evidence in the record showing that MMM itself did not conclude that the growing corrosion problem was the result of the irreconcilable incompatibility of the two types of boilers until after MMM retained C.B. to conduct non-destructive testing in 2015, resulting in the July 2015 Draft Report. This Report in turn was the first time MMM or any party, including WMC, specifically identified that the Clayton Boiler it approved could not work, even with modifications, in an integrated boiler system with the Cleaver Brooks Boilers. This also raises a genuine issue for trial regarding the reasonableness of Sunnybrook waiting for MMM to conduct an analysis of the overall functioning of the two boiler systems to determine the condensate/corrosion problem and it waiting for MMM to advise that options were available to remediate the overall boiler system, under s. 5(1)(b) and s. 5(2) of the Limitations Act, 2002.
[83] This, in turn, also raises a genuine issue for trial regarding the reasonableness of Sunnybrook’s reliance on the professional advice of its engineering firm, MMM, and its reliance on MMM’s proposed costs for fixing the boiler system. The reasonableness of its reliance on MMM’s advice and proposed corrective measures impacts the postponement of the commencement of the limitation period under s. 5(1)(iv) of the Limitations Act, 2002.
[84] Finally, there is credible evidence in the record that supports Sunnybrook’s position that it reasonably relied on WMC and MMM’s identification of what appeared initially to be minor operational issues relating to the condensate accumulation and resulting corrosion, and their belief that this problem could be fixed at a low cost, and for a while appeared to be fixed.
[85] It is noteworthy that the court has not had the benefit of any direct evidence from any of the key players in the 2012 – 2015 timeframe on behalf of any of the defendants by way of affidavit evidence. There is no direct evidence from former and current employees of MMM (other than the examination for discovery of Mr. Cionga) who were directly involved in assessing and making the recommendations to Sunnybrook, and who were privy to the earlier WMC reports surrounding what it characterized as relatively minor operational issues that could be easily resolved in 2012.
[86] In addition, the defendants, have each issued cross claims and at their respective examinations for discovery, have blamed each other for the root cause of the condensate/corrosion problem – manufacture, selection, design, oversight, and installation are all live issues. For example, Clayton maintains that its boiler is compatible with Cleaver Brooks Boilers but that the Clayton Boiler was not properly installed. These are material facts which are in dispute and must be resolved in determining when the limitation period was triggered as against each of the defendants.
[87] Of further note is the evidence that in response to an answer to an undertaking, MMM provided a copy of its responding liability insurance policy, which shows that it is in force for the policy period from February 1, 2015 to February 1, 2016. The inference I am asked to make is that MMM first recognized its duty to provide notice of a claim to its insurer sometime during that policy period. This is a reasonable inference and supports Sunnybrook’s position that it could not have known of this incompatibility issue before it received professional engineering advice from its own project engineer, MMM.
[88] Accordingly, for the purposes of this motion, I do not agree with the defendants that the WMC November 5, 2012 or May 26, 2014 reports provided sufficient information to have necessarily triggered the two-year limitation period under s. 4 of the Limitations Act, 2002. The necessary findings of fact will require an assessment of credibility of the key witnesses, which should be made at a trial.
[89] In the end, there is merit to Sunnybrook’s position, grounded in the evidentiary record before me on this motion, that it did not, and could not have, reasonably discovered its claim against the defendants until a point in time within two years from the issuance of its statement of claim. Accordingly, Sunnybrook has raised a genuine issue for trial with respect to at what point in time it had the necessary information to trigger the commencement of the two-year limitation period under s. 4, having regard to the statutory discoverability test under s. 5 of the Limitations Act, 2002.
RULING
[90] The motion for summary judgment is dismissed.
[91] If the parties cannot agree on costs, then the plaintiff will submit its cost outline and written submissions to me within 30 days from the release of this decision. The defendants will submit their respective cost outlines and written submissions within 20 days from receipt of the plaintiff’s materials. The written submissions will not exceed 3 pages double spaced. The materials are to be delivered to my judicial assistant.
Vella, J.
Released: September 13, 2021
COURT FILE NO.: CV-17-00575768-0000
DATE: 20210913
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Sunnybrook Health Sciences Centre
Plaintiff
– and –
Buttcon Limited et al
Defendants
REASONS FOR JUDGMENT
Vella J.
Released: September 13, 2021