Court File and Parties

COURT FILE NO.: CV-20-67 DATE: 2022-03-15

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: J.T.J. Contracting (Emo) Ltd. and 444616 Ontario Inc. o/a Lunam Drillers Ltd.

HEARD: March 10, 2022 via Zoom BEFORE: F.B. Fitzpatrick J.

COUNSEL: M. Caza, for the Plaintiff R.C. Pierce, for the Defendant

Endorsement On Motions for Summary Judgment

[1] Both parties move for summary judgment. For reasons that follow I order;

1. partial summary judgment to the defendant dismissing a portion of the plaintiff’s claim;
2. dismissal of the balance of the defendant’s motion for summary judgment;
3. dismissal of the plaintiff’s motion for summary judgment.

Undisputed Facts

[2] The defendant 444616 Ontario Inc. o/a Lunam Drillers Ltd. (Lunam) owns a rock quarry (the Quarry) near Kenora Ontario. The plaintiff J.T.J. Contracting (Emo) Ltd. (JTJ) operates a rock crushing business. On January 1, 2019, the President of Lunam, Lawrence Lunam entered into a written agreement (the Lease) with Derek Floyd and Padraig Egan. The verbatim terms of the Lease were as follows:

“January 1, 2019

LAND LEASE AGREEMENT BETWEEN:

LAWRENCE LUNAM and DEREK FLOYD PADRAIG EGAN

Location of Quarry: 10205 Ritchie Road Kenora, Ontario P9N4L2

Location of Lease: Area surveyed and staked for the purpose of drilling, blasting, and crushing A minimum of 25,000 cu.mtrs. of bedrock Any additional quantities to be negotiated

Condition 1 Length of Lease: Jan. 1,2019 to June 30, 2019

Condition 2 Deposit of $10,000 made and monthly payments of the same ($10,000) each month For six consecutive months. Options upon expiration of lease are:

1. Renewal of lease for an additional 6 months or Purchase of land for 1.3 million Canadian dollars. Any lease payments paid will off set the purchase price This does not include any royalty fees paid

Condition 3 Consulting fees of $1500.00 per month to be paid to Lawrence Lunam at the time of lease Payment

Condition 4 Royalty fees of $2.00 per tonne is to be paid to Lawrence Lunam upon receipt of payment of sales

Condition 5 Proof of Liability insurance must be shown naming the Lessor as added insured

Condition 6 Lessee to conform with all city by laws and regulations pertaining to operations

Condition 7 All operation costs will be absorbed by Lessee including refurbishing costs of Leased area

Condition 8 This lease is governed by Canadian Laws

Signed Lawrence Lunam and Derek Floyd and Padraig Egan”

[3] Although it was not specifically addressed in any of the evidence, the parties’ submissions proceeded (and I took it as a fact) as if Mr. Floyd and Mr. Egan were principles of a corporation Xcav8rox Inc. (“X8”). There was no evidence as to the status of the corporation or in which jurisdiction it was incorporated.

[4] JTJ was not a party to the Lease.

[5] On February 8, 2019, JTJ provided a quote to X8 to crush and stockpile approximately 25,000 cubic meters of material at the Quarry site. The material was to be initially blasted by X8. JTJ conducted crushing and stockpiling activities at the Quarry from February 15, 2019, to March 4, 2019.

[6] On March 19, 2019, DST Consulting Engineers Inc. surveyed the quantity of crushed material stockpiled at the Quarry by JTJ and found there to be a total of 10,827.3 cubic meters of crushed materials (the Material) at the Quarry made up of the following product:

(a) Granular A: 3,520.3 cubic meters; (b) Granular B Type II: 2,768.7 cubic meters; and (c) 2-1/2" to 5/8" ballast stone: 4,538.3 cubic meters.

[7] On March 19, 2019, JTJ sent an invoice to X8 for the rock it had crushed and stockpiled at the Quarry. The invoice was for $127,026.37. In late March 2019, JTJ moved its crushing equipment from the Quarry and did not return.

[8] In the summer of 2019, X8 sold a portion of the Material to third parties. Neither Floyd, Egan nor X8 made all the payments contemplated under the Lease. In the summer of 2019, there was additional blasted rock available to be crushed and stockpiled at the Quarry.

[9] After the summer of 2019 Mr. Floyd and X8 were not physically present in the Kenora district. The parties believe Mr. Floyd now resides in Ireland.

[10] There was no contact between JTJ and Lunam over the winter of 2019/2020. On July 17, 2020, JTJ provided a quote to Lunam to crush and stockpile B type II, Gran A, 1 ½ clear stone from an existing ballast stockpile and byproduct. Lunam did not accept this quote. Lunam retained another crushing contractor Gilbertson, to finish crushing and clean-up of the Quarry. On September 25, 2020 Gilbertson invoiced Lunam $188,495.30 for crushing services.

[11] Lunam has sold crush materials out of the Quarry in 2021.

The Test on a Motion for Summary Judgment

[12] Rule 20 of the Rules of Civil Procedure governs motions for summary judgment. The leading case of the Supreme Court of Canada dealing with Rule 20 is Hryniak v Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. A great deal of jurisprudence has followed on that decision. The test under Rule 20 is well known. Under Rule 20.04(2)(a), the court “shall” grant summary judgment if there is no genuine issue requiring a trial. Where there might be a genuine issue requiring a trial, the Rules empower a judge to weigh evidence, receive oral evidence, and evaluate credibility. The starting point is the evidence before the court. Each party is assumed to have put its best foot forward. If a summary judgment motion can result in a fair and just process, it is to be preferred. A trial should be ordered only where the reasons for it are compelling.

[13] A fair and just process is achieved when:

(a) the court can make the necessary factual findings; (b) the court can apply the law to those facts; and (c) the result is proportionate, more expeditious, and less expensive than a trial.

[14] Neither party framed their facta referencing the provisions of Rule 20. Neither party provided the court with any jurisprudence expressly dealing with the test under Rule 20 that may be applicable to the matters at issue. Counsel did not organize their written arguments in a manner that directly addressed the issue of whether the evidence indicates there were no genuine issues for trial in respect of both the claim or the counterclaim. The oral submissions did not focus on the test under Rule 20 as it applied to the matter at hand.

Positions of the Parties

[15] JTJ moves for a summary judgment declaration of an interest in the nature of a profit a prendre in respect of the Material. JTJ seeks restitution in the sum of $99,348.16 on the basis of either unjust enrichment or on the basis of quantum meruit against Lunam. JTJ asserts in its oral argument that it obtained a partial assignment from X8 of some of the rights in the Lease. This assignment of rights vested JTJ with a title interest in the Material. JTJ submits Lunam had no right to sell the Material. Lunam has been unjustly enriched by JTJ’s efforts in the amount of $99,348.16.

[16] Lunam submits that the Lease was incapable of being assigned by X8. In the alternative, if there is no genuine issue for trial concerning the validity of the assignment, then JTJ was assigned the entirety of the rights and obligations under the Lease. The obligations under the Lease remain unfulfilled. Lease payments were not made. Accordingly, there would be no genuine issue for trial in respect of the unpaid amounts under the Lease and those amounts would be due and owing by JTJ to Lunam. Lunam submits it has not been unjustly enriched by the actions of JTJ.

[17] Lunam acknowledges JTJ has a claim, but not against Lunam. It has a claim against X8. On this basis Lunam submits JTJ’s claim in its entirety should be summarily dismissed.

Analysis

[18] In my view, the Lease is the starting point for the dispute between these parties. On its face, it is made between persons and not corporate entities as alleged in the pleadings and the written material filed on this motion. Mr. Lunam, Mr. Floyd and Mr. Egan are not parties to this litigation. The parties in this action have just by passed this “inconvenience” by treating the Lease as being between Lunam and X8. I am reluctantly prepared to accept this proposition for the purpose of adjudicating this motion.

[19] In the normal course, the purpose of memorializing agreements in writing is to avoid disputes in future about terms. In this case the terms of the Lease are material. On a plain reading of what appears to be an agreement drawn by non-legally trained persons, it is a commercial lease of land for a fixed term which gives rights to the tenant to take, process and sell aggregate from the Quarry. There is no express term in the Lease dealing with the right of either party to assign its rights and obligations under the Lease. This is significant because JTJ’s claim to a declaration of a profit a prendre is premised on it being possessed of some greater bundle of rights over the Material beyond that of being simply entitled to be paid for creating it by crushing and stockpiling it. JTJ is not party to the Lease. It can only assert rights to the Material by virtue of an alleged oral assignment agreement from X8. The evidence of this alleged assignment on the motion was unpersuasive for a number of reasons.

[20] Lunam disputes that there was any assignment of rights under the Lease to JTJ. JTJ’s evidence of the assignment comes from one line in the affidavit of the JTJ affiant, Mr. Judson. It says “the Sub-Contract assigned all of Xcav8’s rights and obligations under the Agreement to JTJ” (emphasis added). This assertion of the entirety of the rights and obligations of the Lease being assigned is maintained in JTJ’s factum. However, in oral submissions, JTJ’s counsel stated that only one aspect of the Lease was assigned, that of the right to sell Material after it had been blasted and crushed. This is a substantial shift in position. It does not accord with the evidence filed. It was an unpersuasive argument.

[21] It is also unpersuasive in the face of the March 19, 2019, invoice from JTJ to X8.

[22] In my view, the March 19, 2019, invoice is irrefutable evidence that the relationship between JTJ and X8 was one of fee for service. It is evidence to the contrary of an assignment of a right to property, the Material, in the nature of a profit a prendre.

[23] The invoice is evidence that JTJ was providing services to X8. JTJ had been allowed to go onto the premises of the Quarry to crush and stockpile further to the rights X8 had under the Lease. Lunam did not expressly permit or request JTJ to come to the Quarry. I agree with Lunam’s argument that the Lease was silent on the issue of entitlement to the Material at the end of the Lease or in the event the other terms of the Lease were breached. On the evidence before me, X8 did not fufill its obligation to pay all the monthly fees or the royalty payments owing under the Lease.

[24] I am also persuaded by the authorities provided by Lunam that in the circumstances of a commercial lease for property, assignment of rights must be expressly stated. A right to assign is not provided in the Lease. As I understand JTJ’s submission, JTJ owned the Material before and after they crushed it by virtue of the oral assignment. In that context, the March 19, 2019, invoice makes zero commercial sense. JTJ argues that the invoice was evidence that X8 was buying back material it had just assigned to JTJ. This argument makes no mention of any consideration for this alleged transaction being received by X8. Taken to its conclusion, this argument means X8 gave the material to JTJ for free and then paid to buy it back at a time where it was paying Lunam for the right to blast and crush material. This is an untenable commercial result. I find on the evidence on this motion, there was no assignment of any rights under the Lease by X8 to JTJ.

[25] I therefore agree with Lunam’s submission that there is no genuine issue for trial in respect of JTJ’s claim that it obtained an assignment of some or all of the provisions of the Lease. It has no air of reality. It cannot be improved by further evidence at trial. JTJ is required to put its best foot forward on a motion for summary judgment. I take it that the one line of evidence in its affidavit material is the highest and best evidence of the oral assignment of all of the terms of the Lease. This impact of this evidence is lessened by the oral submissions of a substantially different position of the extent of the assignment on the hearing before me. This change in position did not make JTJ’s submissions any more persuasive.

[26] I have the necessary evidence to make a finding that there is no genuine issue for trial in respect of JTJ’s claim for a declaration that it enjoyed rights in the nature of a profit a prendre in respect of the Quarry. Granting partial summary judgment dismissing this aspect of the plaintiff’s claim is proportionate, more expeditious, and less expensive than a trial.

[27] My finding in this respect is not the end of the matter.

[28] JTJ asserts a claim for an equitable remedy for the work it did crushing the rock. There is no dispute on the evidence on this motion that JTJ did work turning blasted rock in to commercially saleable items. There is no dispute Lunam sold some of the Material and was paid for it by third parties. Lunam’s affidavit material indicates some granular A and B rocks as well as ballast remains at the Quarry. JTJ submits a “best guess” that all of the Material has been sold. Also Mr. Lunam’s affidavit asserts there was a verbal offer of a “gentlemen’s agreement” to pay JTJ for its mobilization and demobilization costs. This is a recognition of an equitable claim and raises a genuine issue for trial.

[29] On the evidence on this motion, I see an enrichment to Lunam by being able to sell the Material when it had not paid for it to be processed. I see a corresponding deprivation to JTJ for not being paid for their work. There is a genuine issue for trial as to a juristic reason for this enrichment. It appears to me to be unjust on its face. However, it will take a trial with more focused evidence to determine the quantum of JTJ’s claim. On this basis I am not prepared to grant the request of Lunam for a summary judgment dismissing the balance of JTJ’s claim.

[30] Having found that JTJ was not assigned the benefit of the Lease, the scope of the counterclaim by Lunam is significantly narrowed. It is not eliminated. There was some evidence this motion to suggest that JTJ was responsible for damage to a gate and a power washing house at the Quarry. This will take a trial to resolve. The “mess” left at the Quarry was apparently nicely cleaned up by Gilbertson who also managed to crush and stockpile 14,656.95 cubic metres of Granular A and 6,552.56 cubic metres of Granular B. This is approximately 4 times the amount of Granular A and twice the amount of Granular B that was crushed by JTJ. There was no suggestion this material was not of commercial grade. Some of this material was sold by Lunam. It seems to me the quantum of the counterclaim seeking to recover full costs paid to Gilbertson by Lunam is tenuous based on the evidence at this motion.

[31] On this basis, I find there is a genuine issue for trial in respect of liability and quantum of the Lunam counterclaim. Accordingly, I dismiss Lunam’s motion for summary judgment in that respect.

Next Steps

[32] I decline to exercise my discretion to make an order under Rule 20.05. This matter was commenced under the Simplified Rules. I was not made aware of the status of the action at this point. For example, I don’t know if affidavits of documents or witness lists have been exchanged. Also, counsel should have the opportunity to consider the most appropriate procedure going forward as it seems to me the quantum at stake now between these parties is reduced given my findings on these motions. If counsel mutually agree to schedule a case conference before me once they have considered their options following review of this endorsement, they may do so by contacting the trial coordinator at Kenora. In that case I would expect they would come to the conference with reasonable proposals on how to most expeditiously try this case under the Simplified Rules. Otherwise, the parties are free to proceed to trial in the normal course with this endorsement to form part of any trial record filed.

Costs

[33] Although I have awarded partial summary judgment dismissing an aspect of the plaintiff’s claim, it seems to me that success was divided on these motions. The plaintiff still has an equitable claim for payment of some monies from the defendant. The defendant still has a counterclaim for some monies based on the actions of the plaintiff. Accordingly, I see this as a case where no costs should be awarded to either party in respect of these motions.

The Hon. Mr. Justice F.B. Fitzpatrick DATE: March 15, 2022