Court File and Parties
COURT FILE NO.: CV-12-111980
DATE: 20211216
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Prasher Steel Inc, Plaintiff
AND:
Pre-Eng Contracting Ltd., Defendant
BEFORE: Justice C. Boswell
COUNSEL: Angela Assuras for the Plaintiff
Emilio Bisceglia and Daniel Campoli for the Defendant
Brendan Bowles for LawPro
HEARD: December 14, 2021 by Zoom video-conference
ENDORSEMENT
[1] This endorsement follows a case conference conducted in relation to a procedural issue which has arisen following a nineteen-day construction lien trial. Specifically, the determination of the contours of the Defendant’s right of surrebuttal to the Plaintiff’s reply submissions.
[2] An overview of the pleadings and a brief account of events occurring at the end of the trial will put the live issue into context.
The Pleadings
[3] The Plaintiff seeks payment of roughly $255,000 it says it is owed for steel work it did in connection with the construction of an elementary school in Aurora.
[4] The Defendant was the general contractor hired by the York Region District School Board to construct the Rick Hanson Public School in Aurora in 2011.
[5] The Plaintiff entered into two sub-contracts with the Defendant. One related to structural steel work. The other related to miscellaneous metals work, such as stairs, railings, bollards, gates and so on.
[6] The Plaintiff registered a Claim for Lien on October 3, 2012 in the amount of $255,954.70. The legal statements set out in the registered document included the following:
Time within which services or materials were supplied: from 2011/08/02 to 2012/08/21. Short description of services or materials that have been supplied: Supply and install structural steel and related materials. Contract price or subcontract price: $500,832.48. Amount claimed as owing in respect of services or materials that have been supplied: $255,954.70.
[7] The Plaintiff commenced its claim on November 14, 2012.
[8] The Defendant delivered a defence and counterclaim on or about December 4, 2012. Amongst other defences raised, the Defendant alleged that the Plaintiff failed to preserve and perfect its lien in time.
[9] At the time the Plaintiff’s Claim for Lien was registered, it was governed by the provisions of the Construction Lien Act, R.S.O. 1990, c. C.30 (the “CLA”). Section 31 of that Act provided that a contractor’s Claim for Lien expired if it was not registered within 45 days of the last day of supply of materials or services to the project.
[10] Central to the defence is the assertion that there were two separate contracts. The contract for structural steel was completed more than 45 days prior to the registration of the Plaintiff’s Lien. The Plaintiff purported to lien for both contracts combined, which the Defendant submits is improper.
The Trial
[11] The trial proceeded over 19 days, though far from consecutive. Counsel made their final submissions on October 7 and 8, 2021.
[12] I asked that the parties make their submissions orally and not in writing.
[13] By convention, the Plaintiff’s final submissions were made first. Their counsel commenced her submissions at about 1:00 p.m. on October 7, 2021. She finished them the following morning at about 10:30 a.m. She made extensive submissions on the evidence adduced during the trial and the conclusions she urged the court to draw on the basis of the evidence. She did not make submissions on the law or provide the court with any caselaw.
[14] Defence counsel began his submissions at about 10:45 a.m. on October 8, 2021. At the outset, he provided the court with a 56-page document constituting his written closing submissions, even though, as I indicated, the court had not sought written submissions. Counsel proceeded to make oral submissions over the course of about two-and-a-half hours, which more or less tracked his written submissions. That said, he focused his oral submissions on the evidence and the conclusions he urged the court to draw on that evidence. His written submissions, however, contained fulsome submissions on a number of legal issues and included hyperlinks to a number of cases.
[15] At about 2:20 p.m. on October 8, 2021, I asked the Plaintiff’s counsel if she intended to make reply submissions and if she was prepared to proceed with them at that time. She indicated that she did intend to do so and was prepared to proceed, save for one legal issue raised by the Defendant’s counsel during his submissions. Specifically, the application of s. 63 of the CLA to the facts of this case.
[16] Section 63 gives the court the discretion to grant a personal judgment in favour of a plaintiff, even if the plaintiff fails to prove the lien, where the evidence supports the making of that judgment. Defence counsel argued that it does not assist the Plaintiff in the circumstances of this case, for reason I will come to momentarily.
[17] At the outset of counsel’s reply submissions, she indicated that she had forwarded two things for the court’s review. The first was a statement of law on the issue regarding whether a single lien may be filed where there are two separate contracts. The second was a selection of trial transcripts. In response, defence counsel asked for a short break to review the written material just provided.
[18] Following the break, defence counsel made brief submissions to the court about the materials filed by the Plaintiff’s counsel. Though he did not articulate it in these exact words, his submissions amounted to a concern that the Plaintiff was splitting her case, or at least her submissions and that what she had filed by way of a statement of law was not proper reply. He argued that there was an unfairness to the Defendant in the way the submissions were unfolding and indicated that he wished to have an opportunity to reply to the caselaw the Plaintiff’s counsel provided. He said the “two contracts” issue was well known to the Plaintiff and its counsel should have referred to that caselaw in her initial submissions.
[19] Given that the Plaintiff’s counsel required time to consider the s. 63 issue and to make submissions on it, I determined that we would proceed as follows. First, the Plaintiff would make her reply submissions in writing, including whatever submissions she wished to make on the s. 63 issue. Second, the Defendant would have an opportunity to respond to the Plaintiff’s reply submissions – including the statement of law she provided – by way of surrebuttal. I set a timetable for the delivery of those further submissions. I sought to limit them to ten pages in length but acceded to a request by the Plaintiff’s counsel that they be expanded to fifteen pages.
[20] At the time I established the process for completing final submissions I had not yet had an opportunity to review the Plaintiff’s statement of law, which had triggered defence counsel’s concerns.
The Reply
[21] The Plaintiff’s written reply submissions were received November 2, 2021. They are fifteen pages in length and cover a number of topics, including:
A response to the Defendant’s submissions regarding the application of s. 63 of the CLA.
A response to the Defendant’s position on the interpretation of the legal statements set out in the Claim for Lien.
A response to the Defendant’s “two separate contracts” argument.
Submissions on the Defendant’s failure to execute the subcontracts.
A response to the Defendant’s assertion that the Plaintiff failed to deliver material to the site.
A response to the Defendant’s assertion that the Plaintiff refused to correct its deficiencies.
A response to the defence suggestion that the Plaintiff had difficulty executing its work and a shortage of manpower.
A response to defence submissions about the Change Orders Brief.
A response to some of the Defendant’s submissions about back charges.
A submission about the reasonableness of the credit given by the Plaintiff for work removed from his scope of work on the miscellaneous metals contract.
A submission on the Plaintiff’s labour charges on a large extra.
A response to the suggestion that the Plaintiff issued invoices for extra only because it wanted to sue.
A submission on the credibility of the Defendant’s witnesses.
[22] In my view, the Plaintiff’s submissions are, for the most part, proper reply to the closing submissions of defence counsel. That said, the submissions about the credibility of defence witnesses is clearly not proper reply. It covers some of the same ground covered in the Plaintiff’s initial submissions, which was the proper place to talk about credibility.
[23] The submissions about the Defendant’s failure to execute the contract and about the reasonableness of the labour charged on a major extra were issues that ought to have been covered in the Plaintiff’s initial submissions. They are arguably not proper reply. That said, these were relatively brief submissions and create no prejudice.
The Surrebuttal
[24] The Defendant’s surrebuttal submissions came in two iterations. The first was filed on November 23, 2021. It was ten pages in length. It began with the following statement:
The purpose of the Plaintiff’s written submissions was to address the law that Pre-Eng raised in its closing submission. However, the Plaintiff’s written submissions go beyond this scope and are improper.
[25] The surrebuttal goes on to cover the following ground:
It supplements the Defendant’s submission on the (in)applicability of s. 63 of the CLA. In particular, it advances the position that any claim for a personal judgment on the miscellaneous metals contract is statute-barred by the Limitations Act 2002, S.O. 2002, c. 24, Sched. B. The Defendant advances the position that the Plaintiff’s claim is to enforce the Claim for Lien and that the Claim for Lien expressly relates to the structural steel contract. The Defendant asserts that the Plaintiff was put on notice of its “two separate contracts” position in its statement of defence and counterclaim and, in the result, had two years from the date of that pleading to amend its claim to preserve its right to a personal judgment on the miscellaneous metals contract. It failed to do so and is now out of time.
It advanced a further argument about the proper interpretation of the legal statements in the Claim for Lien.
It advanced further arguments about whether the structural steel lien was preserved in time.
It replied to the Plaintiff’s reply on the “two separate contracts” issue, the refusal to deliver materials issue, the refusal to correct deficiencies issue, the manpower issue, the Change Order Brief and the back charges.
[26] The Plaintiff’s counsel raised a concern that the surrebuttal went beyond what was proper. In response, the Defendant submitted a revised surrebuttal on December 13, 2021.
[27] The Defendant’s counsel removed a reference to a passage from a discovery transcript that he had included in his original surrebuttal that was not otherwise in evidence in the trial. The content of the surrebuttal is otherwise by and large the same.
The Case Conference
[28] Counsel requested a case conference to address the propriety of the content of the surrebuttal. That conference was conducted on December 14, 2021.
[29] In addition to the parties’ counsel, counsel appointed by LawPro to act for Ms. Assuras was in attendance. I was advised that Ms. Assuras reported a potential claim to LawPro as a result of the Defendant’s assertion that the Plaintiff’s claim ought to have been amended to preserve its right to claim a personal judgment on the miscellaneous metals contract. The Defendant’s assertion amounts to a suggestion that Ms. Assuras was negligent not to do so.
[30] Counsel to the Plaintiff as well as LawPro counsel took the position that in raising a limitations issue, the surrebuttal went well beyond what was contemplated and indeed, raised an entirely new issue. They seek an opportunity to put in a brief reply to that issue.
[31] Counsel to the Defendant demurred. He argued that the process for submissions must be such as to ensure fairness in the litigation process. Given the way that the closing submissions rolled out, there was a negotiation of sorts at the end of his oral submissions that resulted in a process whereby the Plaintiff would be given time to make written reply submissions and he would be given a chance to offer a surrebuttal. The negotiated process was reached with trial fairness principles in mind. To upend it now would be a disservice to those principles.
Discussion
[32] I remarked to counsel during the case conference that closing submissions had become something of a “gong show”. All of the participants, including me, shoulder some of the responsibility for the current state of affairs.
[33] In my view, the Plaintiff was aware of the “two contracts” issue and should have been in a position to address it, with supporting caselaw, in counsel’s initial submissions.
[34] Having said that, the statement of law provided by the Plaintiff’s counsel to the court and to defence counsel at the outset of reply submissions was, in my view, proper reply. It was brief and focused and did not justify the right of surrebuttal given to the Defendant.
[35] At the time I granted the right of surrebuttal, which was not opposed, I had not had a chance to review the Plaintiff’s statement of law on the two contracts issue. I should have taken the time to do so. Had I done so, I would not have granted a right of surrebuttal.
[36] The written reply submissions subsequently filed by the Plaintiff stretched the boundaries of proper reply. The surrebuttal filed went beyond what I had reasonably anticipated.
[37] More significantly, however, the surrebuttal dropped the proverbial “nuclear bomb” on the Plaintiff. The Defendant, for the first time in my view, clearly articulated that it was advancing an argument that any claim for judgment relating to the miscellaneous metals contract was statue-barred by the Limitations Act, 2002.
[38] The Defendant has always taken the position that the Plaintiff’s lien was not registered in a timely way. That much has always been clear. The Defendant did not plead, however, that there was any basis to deny the Defendant a personal judgment under s. 63 of the CLA. The closest it came to doing so is found at para. 4 of the statement of defence and counterclaim, which provides as follows:
- Pre-Eng and the Plaintiff entered into a Contract with respect to structural steel and miscellaneous steel work at Bayview Northeast Elementary School. There were two contracts between the parties, but they have been amalgamated by the Plaintiff in its Claim. Therefore, both contracts will be referred to as the “Contract”.
[39] The Defendant certainly did not plead a limitations defence under the Limitations Act, 2002.
[40] To be fair, having relistened to the Defendant’s closing submissions, the limitations issue was raised, though not in a way that was, at the time, clear to me or to the Plaintiff’s counsel.
[41] What defence counsel said about it was that the court’s discretion to grant a judgment under s. 63 was limited. He referenced a portion of his written submissions on the point. In those written submissions, he said as follows:
Section 63 of the Construction Lien Act grants the Court the discretion to award any lien claimant a personal judgment whether the claimant proves the lien or not.
Section 63 is predicated on the requirement that a lien is both preserved and perfected, irrespective of whether the lien right was preserved or perfected in a timely fashion. In particular, the Court in Tilar Roofing Ltd. v. John Boddy Developments Ltd., found that if the claimant does not have lien rights to enforce then it would not be entitled to a judgment in person under section 63 of the Construction Lien Act.
Tilar Roofing Ltd. v. John Boddy Developments Ltd. (1986) 20 C.L.R. 161, para 6
- Prasher registered one claim for lien and it was the Structural Steel Contract. Therefore, any monies claimed to be owing under the Miscellaneous Metals Subcontract cannot be claimed in this litigation. Prasher’s lien rights under that Miscellaneous Metals Subcontract have expired. Prasher did not preserve or perfect its lien rights under that contract. The subject matter of this claim does (sic) give rise to a lien.
28.Therefore, it is Pre-Eng’s position that the discretion granted under section 63 of the Construction Lien Act cannot be exercised in this circumstance.
[42] He went on to say that the lien related to the structural steels contract. Any monies owing under the miscellaneous metals contract could not be claimed in this litigation. Any rights the Plaintiff had over the miscellaneous metals contract expired.
[43] At all times, the Defendant’s arguments were framed around the time limits set out in the CLA. No mention was made of the general two-year limitation period under the Limitations Act, 2002.
[44] When the surrebuttal was filed, however, the Defendant submitted as follows:
It is trite law to state that an action is framed by the pleadings (Kalkinis v Allstate). When this claim was issued on November 14, 2012, the Defendant immediately took the position that there were two contracts; namely, a (1) a contract for structural steel and (2) a contract for miscellaneous metals. Therefore, as early as December 5, 2012, being the day that the Statement of Defence and Counterclaim was served, the Plaintiff was placed on notice that there was an issue with its lien and its pleading.
It was at that time that the Plaintiff ought to have addressed this issue in its Reply and Defence to the Counterclaim, which it did not, and it had two years from that date to address the pleadings so that it did not find itself barred from raising the argument that is now being made at trial.
In essence, the Plaintiff cannot claim that it did not know of the Defendant’s position nor can it state that it was only through the evidence at trial that it was made aware of the fact that the Plaintiff’s claim may be barred by operation of the Construction Act, through the discretion of the Court, or the Limitations Act, 2002.
[45] The surrebuttal is the first time the Limitations Act, 2002 was mentioned. It is the first time, in my view, that the Defendant clearly articulated a reliance on a defence under that Act.
[46] It is certainly the first time that defence counsel suggested that the Plaintiff, or its counsel, was negligent for not having amended its pleadings to hedge against a limitations defence.
[47] The Plaintiff’s counsel now wishes to have an opportunity to respond to the limitations issue. The Defendant objects to her doing so. Its counsel submitted, at the case conference, that the court’s determination of whether to allow further submissions had to be made on the basis of trial fairness considerations. I agree.
[48] Defence counsel suggested that it would be unfair to the Defendant should the Plaintiff now be given an opportunity to file further submissions when the process for written submissions was already hammered out at the end of the trial. I strongly disagree.
[49] In fairness, one cannot raise a non-pleaded limitations defence for the first time in a surrebuttal and at the same time accuse opposing counsel of professional negligence, again for the first time, and reasonably expect that the opposing party and counsel will be given no audience to be heard on the point.
[50] In the result, I grant the Plaintiff a right of reply to the surrebuttal. To be clear, the reply is limited to the limitations argument and to a hard cap of ten pages. It is to be served and filed by December 31, 2021.
[51] I will address the costs associated with this case conference as part of the overall costs of the proceedings.
C. Boswell J.
Date: December 16, 2021