COURT FILE NO.: CV-07-CV009334-00D1 DATE: 20220411

ONTARIO SUPERIOR COURT OF JUSTICE

IN THE MATTER OF the Construction Lien Act, R.S.O. 1990, c. C.30

BETWEEN:

Southside Construction (London) Limited Plaintiff/Defendant by Counterclaim – and – The Corporation of the City of Windsor Defendant/Plaintiff by Counterclaim – and – Montgomery Sisam Architects Inc., J.P. Thomson Associates Ltd., JMR Electric Ltd., Jemini Construction Ltd., Forest City Forming Ltd., Bravo Cement Contracting Inc., Artisan Masonry Inc., Prestressed Systems Inc., Plaza Ontario Marble & Tile Incorporated, Trend Millwork & Cabinets Inc., D & M Glass & Mirror Ltd., Flynn Canada Ltd. and Williams Food Equipment Company (1998) Limited and Robson Acoustics & Drywall (2002) Inc. Third Parties to the Counterclaim

COUNSEL: James A. LeBer and Eric A.F. Grigg, for the Plaintiff Daniel A. Boan and Laura Delemere, for the Defendant Andrew Lundy, for the Third Parties Montgomery Sisam Architects Inc. and J.P. Thomson Associates Ltd. No one else appearing

HEARD: July 8 and 9, 2021 (by videoconference)

REASONS FOR DECISION

howard j.

Overview

[1] I was designated the case management judge for this matter in November 2015 in anticipation of the retirement of the previous case management judge, Gates J., in December 2015.

[2] In February 2004, the City of Windsor (the “City”), as owner, entered into a construction contract with Southside Construction (London) Limited (“Southside”), as general contractor, for the construction of a 224-bed long-term care facility in Windsor, known as the Huron Lodge Home for Seniors (“Huron Lodge”).

[3] The contract named Montgomery Sisam Architects Inc. and J.P. Thomson Associates Ltd. as the architectural consultants (the “Architects”).

[4] In 2013, the City entered into direct negotiations with a number of unpaid subtrades who worked on the Huron Lodge project and who were third parties in this litigation. The City reached conditional settlements with eight third party subtrades [1] (the “Settling Third Parties”) from August through to October 2013 (the “Eight Settlement Agreements”).

[5] Each of Southside and the Architects now bring motions for mirror relief, seeking, inter alia, an order pursuant to s. 106 of the Courts of Justice Act [2] staying the City’s counterclaim against Southside, the City’s third party claim against the Architects, and the counterclaims, crossclaims, or other claims of the Settling Third Parties that were assigned to the City.

[6] The moving parties submit that the continuation of the City’s claims constitutes an abuse of process by reason of the failure of the City to immediately and fully disclose the Eight Settlement Agreements, which altered the litigation landscape of the proceedings.

[7] The City opposes the motions and disputes that the City’s conduct in this matter constitutes an abuse of process. The City argues that it entered into and disclosed the Eight Settlement Agreements “in a transparent manner.” [3] The City submits that it acted “‘to protect persons on the lower rungs’ of the construction pyramid.” [4]

[8] While I have carefully considered the submissions of all parties, for the reasons that follow, in the circumstances of the instant case, I have concluded that the relief sought by Southside and the Architects is both appropriate and necessary.

[9] In the result, I grant the motions and permanently stay the impugned claims of the City.

Factual Background

[10] I have had occasion to consider the factual background to this matter on two previous occasions. [5] I repeat and rely upon the factual findings described, inter alia, in paras. 12-48 of my December 2016 Decision and in paras. 8-27 of my October 2018 Decision.

[11] The construction contract between the City and Southside provided for a contract price of some $29,478,000 (plus GST and before approved extras). Southside claims that it completed its obligations under the contract, but the City refused to pay the balance owing of $4,677,391.37.

[12] By statement of claim issued June 15, 2007, Southside sued the City for payment of the balance owing. The City counterclaimed for deficiencies and delay. As Southside’s work on the Huron Lodge project was carried out by subcontractors, in each case of deficiency and delay alleged by the City against Southside, Southside issued third party claims on the City’s counterclaim against each respective subtrade that performed the actual work.

[13] Southside also commenced third party proceedings against the Architects on the City’s counterclaim, seeking contribution and indemnity. The Architects defended the third party proceedings and cross-claimed against the subtrades, seeking contribution and indemnity for the claims of the City advanced against the Architects by counterclaim through Southside. [6]

[14] The instant proceeding and several other lien actions arising out of the Huron Lodge project were consolidated pursuant to the order of Patterson J. dated February 17, 2009, which order also provided that all related non-lien actions arising from the project be tried together or consecutively, and that all actions proceed together under case management.

[15] Apart from the subject-matter of the instant proceedings, there were other lien claims that were resolved by conventional agreements between the parties and/or were determined by the court.

[16] For example, Southside contrasts the impugned Eight Settlement Agreements with previous settlement agreements negotiated jointed and directly with Southside and other subtrades [7] in a conventional manner that culminated in a settlement with the subcontractors being paid directly upon the consent and direction of Southside, in February 2012.

[17] On the other hand, the claim for payment by the third party subcontractor Artisan Masonry Inc. (“Artisan”) for work done to construct the exterior brick veneer wall of the Huron Lodge facility proceeded to trial. That trial commenced on January 28, 2013, before Carey J. of this court and proceeded for eight days of hearing. At trial, the City relied on allegations of improper masonry work to resist paying Southside for that portion of Artisan’s masonry work. The positions taken by Southside and Artisan at trial were described by Carey J. in the following terms:

Southside and the subcontractors point to the history of the litigation to assert that The City has never had a real or valid complaint with Artisan's work on this project and has been “grasping at straws” to justify their non-payment of the monies being withheld. They argue that the issue was only raised three years after the building was complete and after the warranty period had passed and The City's agents had approved and signed off on all of the disputed work. [8]

[18] It is fair to say that, in dismissing the City’s allegations of improper work by Artisan, Carey J. was critical of the City’s conduct and its positions taken during the litigation. In his reasons for judgment released April 26, 2013, Carey J. held that:

There was never any list of deficiencies set out by The City nor was Artisan or Robson […] given an opportunity to dispute or fix any alleged deficiencies.

The tie connector issue first was raised in 2010. The history of The City's pleadings in relation to Artisan's alleged deficiencies make it clear that The City has moved through a series of allegations that have all fallen away except this one. It has been argued that The City has been desperately looking for some excuse to justify not paying Artisan. It should have been obvious that if The City really did think that walls were built improperly because of the ties on every second stud, that Artisan bore no responsibility for that. All Artisan did was hook the supplied V ties through the bayonets that had been installed by Robson and then apply the bricks and mortar.

There is no suggestion that the bricks and mortar were improperly or poorly installed. The contracts between Southside and Artisan and Southside and Robson set out that the responsibility for installing the bayonets was with Robson.

After hearing the evidence here I cannot find any reason why Artisan would not have been paid some time ago. There has been a recalcitrance to pay demonstrated by The City here that is difficult to fathom. [9] [Emphasis added.]

[19] In the same vein, Carey J. concluded that:

I agree with counsel for Southside. If this building’s walls were unsafe and in danger of imminent collapse in high winds, it is difficult to believe that The City would allow it to continue to be used to house more than two hundred vulnerable senior citizens of this city.

There have been no remedial steps to fix the construction decisions referred to as “disastrous” by counsel for The City.

The lack of any steps by The City to rectify the supposed problems, the fact that they have not put up protective barricades along with the history of The City’s changing its allegations about brick construction has led me to conclude that The City does not believe this building is unsafe.

The City has failed to demonstrate good faith in its dealings with Artisan on this issue. They have gone looking for a problem to justify their non-payment until they found an opinion to support their position. [10] [Emphasis added.]

[20] In the result, Carey J. found that Artisan’s work was not improperly performed, that the City had not suffered any damages for breach of contract, and that the amounts held back by the City from Southside relating to Artisan’s outstanding contract should be released for payment to Artisan. [11]

[21] Following the successful suit by the subtrade Artisan in April 2013, the City entered into direct negotiations with a number of the unpaid subtrades who worked on the Huron Lodge project. Indeed, it was almost one month to the day following the release of Justice Carey’s decision that the then Mayor of the City, Mr. Eddie Francis, held a press conference on May 27, 2013, in which he invited Southside’s subcontractors to negotiate a resolution of their outstanding claims against the City on the Huron Lodge project over the next 45 days. The City’s efforts to settle the claims of the unpaid subtrades were widely reported by the local news media in Windsor.

[22] In these circumstances, I do not accept the City’s submission that the then Mayor’s very public declaration of the City’s plan to negotiate with the subtrades was some sort of exercise in “transparency.” Although I would not, and do not, rest my decision on this point solely, I tend to agree with the observation made by Southside that, “[i]t was not due to a virtuous desire for transparency. It was a political response to Justice Carey’s stinging criticism of the City’s failure to demonstrate good faith.” [12]

[23] It was against this background that the City reached conditional settlements with the eight Settling Third Parties from August through to October 2013. All of the Eight Settlement Agreements were conditional upon obtaining (a) the approval of Windsor city council, and (b) the appropriate orders to continue from the court.

[24] The evidence of the City, upon the information and advice of Mr. Keith Bannon, the City’s then lawyer (and trial counsel before Carey J. in the Artisan claim) is that the conditional settlements were approved by city council, in camera, on October 21, 2013.

[25] I find it telling that just one week after the Eight Settlement Agreements were approved by the City, in camera, on October 21, 2013, four days of examinations for discovery were conducted by Southside, the Architects, and the City, commencing on October 28 until November 1, 2013, without the City making any disclosure whatsoever of the Eight Settlement Agreements that it had just concluded with the Settling Third Parties the week prior. At no time during those four days of discoveries was there any disclosure by the City that it had settled with the Settling Third Parties, indeed, providing many of them with City indemnities from any claims of Southside and the Architects.

[26] The City argues that, as of the time of the discoveries, the parties were aware – “or should have been aware” [my emphasis] – of the City’s negotiations with the subtrades, given the various communications regarding the then Mayor’s press conference. [13]

[27] The City’s attempt to shift the burden of disclosure to Southside and the Architects – i.e., that they “should have been aware” of the City’s negotiations with the subtrades – is, in my view, a fallacious and specious attempt to deflect attention away from their own failure to act properly. The City, having full knowledge of the change in the litigation landscape (while Southside and the Architects had none at that point), was clearly in a position to immediately disclose the Eight Settlement Agreements with the Settling Third Parties to Southside and the Architects. It refused or neglected to do so. It was not for Southside to attempt to guess about whether the City had actually entered into agreements with any of its subcontractors, much less attempt to speculate about the identity of the eight – nine or ten? – subtrades that had actually entered into secret agreements with the City.

[28] Moreover, the City’s attempt to portray their conduct as entirely transparent [14] and their repeated assertions that they made meaningful settlement overtures to Southside that were all rebuffed [15] are simply belied by the evidence before the court. The record of evidence before me clearly indicates that, as early as June 2017, internal memoranda from the City’s then legal counsel, referencing initial settlement overtures to one of the Settling Third Parties, records that counsel for the City advised counsel for the subtrade that, “we will not be pursuing a 3-party settlement with Southside.” [16]

[29] Further, in the City’s first written communication to each of the Settling Third Parties following the then Mayor’s press conference on May 27, 2013, sent by way of a template letter dated August 2, 2013, Mr. Bannon for the City advised counsel for the Settling Third Parties that the City’s negotiations with the subtrades “are to remain completely confidential” and that the terms of the settlement agreements would not be disclosed to the court, Southside, or the Architects prior to the City seeking court approval. [17]

[30] That obligation to keep all terms of the City’s negotiations with the subtrades and the eventual agreements confidential from Southside and the Architects was subsequently confirmed in the evidence to have been a demand made by the City to all of the Settling Third Parties. [18]

[31] Indeed, the City remained steadfast in its refusal to disclose critical details of the Eight Settlement Agreements. For example, in a letter dated November 18, 2013, from Mr. Bannon to counsel for Southside, Mr. Bannon flat out stated, “no party is under an obligation to provide you with the terms or details of those settlements.” [19]

[32] There is no doubt in my mind that, had the City immediately disclosed its Eight Settlement Agreements with the Settling Third Parties, those four days of discovery, from October 28 until November 1, 2013, would have taken on a significantly different complexion. But that did not happen because the City did not disclose the Eight Settlement Agreements. In my view, the City’s failure to make disclosure inevitably caused, inter alia, the parties opposite, i.e., Southside and the Architects, to incur increased legal costs by reason of having to pursue four days of discoveries while operating under the false impression that – unbeknownst to them – the litigation landscape had been significantly altered.

[33] Following the completion of the discoveries, the City then brought a motion, returnable November 20, 2013, seeking an order to continue the proceedings on behalf of the Settling Third Parties pursuant to rule 11.02(1) of the Rules of Civil Procedure. [20]

[34] The affidavit material in support of the City’s motion disclosed an assignment to the City of the subtrades’ claims for payment of unpaid contract balances alleged to be due from Southside. The City’s affidavit stated that the eight third party subtrades had “provided full and final assignments of their claims to the City.”

[35] However, the liabilities of the subtrades for claims advanced against them by Southside for breach of contract, deficiencies, delay in completion of their work, and for the claims of the Architects for contribution and indemnity were not addressed in the City’s motion material. There was no evidence that the Settling Third Parties had assigned their liabilities. The was only a one-page, standard form “Assignment” agreement, which was a common element of the Eight Settlement Agreements, but that dealt with the assignment of claims only.

[36] The form of the draft order to continue was not provided to counsel before the motion. It was provided to the court at the end of the hearing and was amended by Gates J. to identify that as the action proceeded, the Glaholt LLP law firm (previous counsel for the City) would act as solicitors of record to represent the Settling Third Parties and defend claims being advanced against them. Yet, on page 3 of the draft order, a revised title of proceeding was presented with the names of the Settling Third Parties deleted and the name of the City substituted therefor. The order to continue was signed November 20, 2013 (the “OTC”).

[37] In conjunction with the OTC, Southside brought a cross-motion seeking production of all settlement agreements entered into between the City and the Settling Third Parties. The motion also sought the right to examine a “knowledgeable representative” of each of the Settling Third Parties and the City, pursuant to rule 39.03, with respect to “the timing of the negotiations and the full extent, scope, and nature of the verbal and written agreements arising therefrom.”

[38] Southside’s cross-motion was adjourned by Gates J. to January 23, 2014.

[39] By order dated January 23, 2014, Gates J. ordered, inter alia, (a) that the City produce the agreements pursuant to which the Settling Third Parties assigned their respective claims to the City; and (b) that Southside and the Architects have “the right to examine at their choice one representative of each of the 8 assignors of the claims assigned to the Corporation of the City of Windsor and a representative of the City of Windsor under Rule 39.03.”

[40] On February 6, 2014, Mr. Bannon purported to make disclosure of the Eight Settlement Agreements, pursuant to which the claims of the Settling Third Parties were assigned to the City. Each of the agreements included essentially identical language describing the basis of the City’s offer, which was set out in individual letters sent by Mr. Bannon to the respective lawyers of the eight subtrades.

[41] Four of the eight Settling Third Parties agreed to produce for examination the lawyer who had negotiated their settlement agreement with the City. The remaining four of the Settling Third Parties agreed to produce a witness who was accompanied by the lawyer who negotiated the agreement. The examinations took place in March and April 2014. The evidence of the witnesses confirmed that each of the Eight Settlement Agreements with the City was comprised of more than just the one-page, standard form “Assignment” that had been disclosed, that the Eight Settlement Agreements themselves were not uniform, and that Mr. Bannon, on behalf of the City, had negotiated different terms and conditions with different Subcontractors.

[42] In my December 2016 Decision, I found that that the agreements comprised “more than just the one-page standard form “Assignment” and that the agreements “were not uniform” but included combinations of subtrade commitments to perform further work and to provide extended warranties, and commitments by the City to indemnify for all claims of any sort that might be made against the subtrade arising in the litigation, and an assumption by the City of liabilities of the subtrade. [21]

[43] I also held in my December 2016 Decision that the substantive determination and elimination of the third party claims of Southside and the crossclaims of the Architects against the subtrades was not an issue that was adjudicated upon by Gates J. in making the OTC, and that assigning the liabilities of the subtrades to Windsor would not be possible without consent of Southside or the Architects, which consent was neither sought nor obtained.

[44] In the result, in my December 2016 Decision, I concluded that the claims of Southside and the Architects against the Settling Third Parties remained, and I ordered that, inter alia, the OTC be amended to restore the names of the Settling Third Parties to the title of proceedings and that the City produce for examination Mr. Thomas Graziano, the City’s Project Administrator.

[45] The examination of Mr. Graziano took place on February 7, 2017. The examination was unproductive, to say the least, largely due to the interventions and positions adopted by (former) counsel for the City on the examination. Among other things, counsel for the City refused to permit cross-examination of Mr. Graziano.

[46] In June 2018, Southside and the Architects returned before me to renew their request for an order to compel Mr. Bannon to attend and be examined pursuant to rule 39.03 and the order of Gates J. dated January 23, 2014, and my order dated December 14, 2016.

[47] In my October 2018 Decision, I determined that Mr. Graziano’s failure to fully inform himself resulted in a “procedural abuse” and a “fundamental denial” of any meaningful examination of the City on the full extent and scope of all settlement agreements and whether there had been complete and immediate production of all aspect of all such agreements.

It is an understatement to say that the “examination” of Mr. Graziano on February 7, 2017, was not a productive session or meaningful examination. In my view, that is largely (but not solely) a function of the interventions and positions adopted by counsel for the City on the examination.

At the outset of the examination, Mr. Brunner and counsel for the City got into a dispute about the nature of the examination under rule 39.03, with counsel for the City apparently taking the position that Mr. Brunner was not entitled to cross-examine the witness.

As the examination progressed, it soon became apparent that the witness was not informed on the matters in issue and had not, apparently, taken steps to fully inform himself as to the matters in issue, as I had specifically directed in para. 88 of my December 2016 Reasons. I accept the submissions in para. 22 of the Architect’s factum that the failure of the witness to fully inform himself was demonstrated on 26 separate occasions when Mr. Graziano was unable to answer questions that were central to the issues concerning the nature, extent, and scope of the settlement agreements between the City and the eight subtrades. …

At various instances, counsel for the Architects invited Mr. Graziano to speak with Mr. Bannon (who was sitting at the examination table) in order to inform himself. Counsel for the City rejected all such invitations as, he believed, that would constitute an “indirect examination of Mr. Bannon.”

The examination of Mr. Graziano then devolved into a series of questions that were met by counsel for the City’s statement that the question would be taken “under advisement.” In particular, it appears that all questions that involved information from Mr. Bannon about the settlement agreements in issue were met with replies that the question would be taken under advisement.

On April 7, 2017, following the conclusion of the examination of Mr. Graziano, counsel for the City provided certain answers to the questions that had been taken under advisement. I agree with the characterization that such “answers” were clearly formulated by counsel for the City.

I also agree that, in the circumstances of the instant case, a procedural abuse took place. Considering collectively, the apparent failure of the witness to fully inform himself, contrary to the court’s explicit direction, with the positions taken and the apparent tactics employed by counsel for the City, what transpired was tantamount to a fundamental denial of the right of the Architects and Southside to cross-examine the witness, as had been ordered by the order of Gates J. of January 23, 2014, and my order of December 14, 2016. [22] [Emphasis added.]

[48] In the result, while acknowledging that the relief sought was extraordinary, but having considered, inter alia, what happened with the thwarted examination of Mr. Graziano, I concluded that the extraordinary request to examine Mr. Bannon was appropriate in the exceptional circumstances of the instant case. [23]

[49] The cross-examination of Mr. Bannon took place on December 4, 2019.

[50] In the course of that examination, Mr. Bannon finally conceded that in negotiating the Eight Settlement Agreements, the City had promised to a number of counsel for the Settling Third Parties that their clients would be removed from the actions, and that this had been the City’s very intention on November 20, 2013, when the City appeared before Gates J. seeking the flawed OTC. [24]

[51] Mr. Bannon testified that, “[t]he form of the order that we presented in [sic] that day was important to effect the settlement as it was between the parties,” [25] namely, that the City would take the place of the Settling Third Parties pursuing their claims and accepting the liability of all eight of them, while they would no longer be named parties in the actions. [26]

[52] Under oath, Mr. Bannon acknowledged having had specific discussions with counsel for one of the Settling Third Parties, Trend Millwork & Cabinets Inc., (Mr. John Leslie), in which Mr. Leslie was seeking “something in writing that used the word indemnity.” [27] Mr. Bannon explained that he gave a similar explanation to all of the eight Settling Third Parties, namely, that the City was going to be standing in the shoes of the subtrades for claims and liabilities. Mr. Bannon argued the point with Mr. Leslie, i.e., that the City assuming the liabilities was “effectively the same thing for all practical purposes” as providing an indemnity. [28] Mr. Bannon was unable to articulate how the City assuming “all of the liabilities” was any different from the City providing an indemnity. [29]

[53] In the context of his discussions with another of the Settling Third Parties, Flynn Canada Ltd., Mr. Bannon was asked, “if you had given full indemnification to Flynn, how would it have been different than giving the commitment that each of the trades got, particularly if they asked, that you were standing in the shoes for all purposes good or bad?” Mr. Bannon answered that, “[w]ell, it’s a different term. That’s for starters. I’m not sure if I’m able to answer the question here otherwise.” [30]

[54] Mr. Bannon acknowledged the practical reality of the City assuming all of the liabilities of the Settling Third Parties. Specifically, he was asked that, where the City was assuming all of a subcontractor’s liabilities, “would it not then be the result that the subcontractor, having received their money, would have no longer any financial interest in the goings on with respect to the litigation?” Mr. Bannon replied, “[a]ny financial interest? They would no longer have an interest in their claim[,] and they would no longer have a financial interest in the corresponding counterclaim if it was successful.” [31]

[55] I pause to note that, within the context of Mr. Bannon’s explanation of the nature of the Eight Settlement Agreements with the Settling Third Parties, prior to the City assuming all of the liabilities of the subtrades pursuant to the Eight Settlement Agreements, the City’s allegations against Southside would be met with a combined response from Southside and the individual subtrades whose workmanship was under scrutiny, putting their pending subcontract payment at risk. In this respect, the landscape of the financial and litigation interests of Southside and the subtrades had been aligned in self-defence against the City’s workmanship complaints. But with the advent of the Eight Settlement Agreements, that landscape changed.

[56] Mr. Bannon was also asked a number of questions in furtherance of Southside and the Architects’ claim that the City failed to immediately disclose the terms of the Eight Settlement Agreements to the non-settling parties and the court. Mr. Bannon admitted that he did not provide any further details to Gates J. (or the non-settling parties) about the nature and extent of the agreements that the City had entered into with the Settling Third Parties, other than what is disclosed in Ms. Brudney’s affidavit in support of the OTC. [32] Ms. Brudney’s affidavit affirmed that the Eight Settlement Agreements were approved by City council on October 21, 2013.

[57] Mr. Bannon admitted that, “[t]he form of assignment document given to all eight trades does not cover an assignment of liabilities.” [33] Mr. Bannon further admitted that in dealing with Gates J., “I would not have represented that the assignment document was an assignment of liabilities[.]” [34] Mr. Bannon acknowledged that Gates J. “was under the impression that it was more of a traditional settlement[.]” [35]

[58] Additionally, Mr. Bannon admitted on examination that, when he was before Gates J. to obtain the OTC on November 20, 2013, the City did not make disclosure to the non-settling parties or the court of the eight-year warranty provided by D & M Glass & Mirror Ltd., one of the Settling Third Parties, [36] not the one-year warranty provided by Robson Acoustics & Drywall (2002) Inc., another of the Settling Third Parties, [37] both of which were terms of the respective settlement agreements that the City entered into with those specific subtrades, which were not disclosed to the court or the non-settling parties on November 20, 2013. [38]

Issues

[59] The issues for consideration on these motions are as follows:

a. Are the Eight Settlement Agreements with the Settling Third Parties of a nature that immediate disclosure was required? b. Were sufficient details of the Eight Settlement Agreements immediately disclosed?

Analysis

Legal Principles

[60] The core legal principles governing circumstances like the instant case have been the subject of clear direction from our Court of Appeal, which has reaffirmed the principle that parties to a lawsuit have an obligation to disclose immediately upon their completion any agreement between or amongst parties to the litigation that has the effect of changing the adversarial position of the parties set out in their pleadings.

[61] Where the obligation to disclose is triggered, immediate disclosure to the non-settling parties must include, first, that there is a settlement and, second, the terms of settlement that change the adversarial orientation of the proceeding.

[62] The failure to immediately and completely disclose the terms of a settlement that changes the adversarial orientation of a proceeding is fatal. The case law that has developed in Ontario under s. 106 of the Courts of Justice Act provides that a stay of proceedings is the only appropriate remedy in such circumstances.

[63] In the oft-cited 2010 decision of Aecon Buildings v. Brampton (City), 2010 ONCA 898, the Ontario Court of Appeal considered an agreement between Aecon, as plaintiff, and the City of Brampton, as defendant, that capped the damages for which the city might be liable to Aecon. Neither Aecon nor the city disclosed their agreement to the third and fourth parties until several months after its conclusion. Speaking for the unanimous court, MacFarland J.A. held that partial settlement agreements that “change entirely the landscape of the litigation” must be disclosed immediately, as follows:

We do not endorse the practice whereby such agreements are concluded between or among various parties to the litigation and are not immediately disclosed. While it is open to parties to enter into such agreements, the obligation upon entering such an agreement is to immediately inform all other parties to the litigation as well as to the court. … The reason for this is obvious. Such agreements change entirely the landscape of the litigation. [39] [Emphasis in original.]

[64] MacFarland J.A. held that disclosure must be not only immediate but also voluntary, and that the other parties to the litigation should not be required to make inquiries to seek out such agreements:

In this case, the agreement was not voluntarily produced immediately upon its completion. It was only produced several months after its existence was discovered by the appellant and it was specifically requested.

Other parties to the litigation are not required to make inquiries to seek out such agreements. The obligation is that of the parties who enter such agreements to immediately disclose the fact. [40]

[65] Further, MacFarland held that the immediate disclosure of such agreements is required even in the absence of demonstrable prejudice and that the remedy for the failure to disclose such agreements demands the most serious of remedies, namely a stay of proceedings:

Here, the absence of prejudice does not excuse the late disclosure of this agreement. The obligation of immediate disclosure is clear and unequivocal. It is not optional. Any failure of compliance amounts to abuse of process and must result in consequences of the most serious nature for the defaulting party. Where, as here, the failure amounts to abuse of process, the only remedy to redress the wrong is to stay the Third Party proceedings and of course, by necessary implication, the Fourth Party proceedings commenced at the instance of the Third Party. Only by imposing consequences of the most serious nature on the defaulting party is the court able to enforce and control its own process and ensure that justice is done between and among the parties. To permit the litigation to proceed without disclosure of agreements such as the one in issue renders the process a sham and amounts to a failure of justice. [41] [Emphasis added.]

[66] In 2018, in Handley Estate v. DTE Industries Limited, 2018 ONCA 324, the Court of Appeal reiterated the principles laid down in Aecon. Speaking for the unanimous court, Brown J.A. described the obligation of immediate disclosure in the following terms:

The obligation of immediate disclosure is not limited to pure Mary Carter or Pierringer agreements. The disclosure obligation extends to any agreement between or amongst parties to a lawsuit that has the effect of changing the adversarial position of the parties set out in their pleadings into a co-operative one: Aviaco International Leasing Inc. v. Boeing Canada Inc. (2000), 9 B.L.R. (3d) 99 (Ont. S.C.J.), at para. 23. To maintain the fairness of the litigation process, the court needs to “know the reality of the adversity between the parties” and whether an agreement changes “the dynamics of the litigation” or the “adversarial orientation”: Moore v. Bertuzzi, 2012 ONSC 3248, 110 O.R. (3d) 611 (Ont. S.C.J.), at paras. 75-79.

In Aviaco International Leasing Inc., at para. 23, the court formulated the question to pose to ascertain whether an agreement triggers the immediate disclosure requirement:

Do the terms of the agreement alter the apparent relationships between any parties to the litigation that would otherwise be assumed from the pleadings or expected in the conduct of the litigation? [42]

[67] Summarizing the caselaw on point, Brown J.A. held that:

By contrast, Aecon Buildings squarely addressed the consequences that should flow from a specific kind of abuse of process – a party's failure to disclose immediately an agreement that alters the adversarial posture of the litigation. Several clear messages emanate from Aecon Buildings:

(i) The obligation of immediate disclosure of agreements that “change entirely the landscape of the litigation” is “clear and unequivocal” – they must be produced immediately upon their completion: at paras. 13 and 16; (ii) The absence of prejudice does not excuse the late disclosure of such an agreement: at para. 16; (iii) “Any failure of compliance amounts to abuse of process and must result in consequences of the most serious nature for the defaulting party”: at para. 16; and (iv) The only remedy to redress the wrong of the abuse of process is to stay the claim asserted by the defaulting, non-disclosing party. Why? Because sound policy reasons support such an approach:

Only by imposing consequences of the most serious nature on the defaulting party is the court able to enforce and control its own process and ensure that justice is done between and among the parties. To permit the litigation to proceed without disclosure of agreements such as the one in issue renders the process a sham and amounts to a failure of justice: at para. 16.

Aecon Buildings identified the remedy for a specific kind of abuse of process. As a matter of litigation procedural policy, no unfairness is likely to arise from the application of the Aecon principles. At least one party to a litigation agreement usually is an insurer or other sophisticated litigation participant who should be well aware of the Aecon principles. Where such a sophisticated party fails to comply with its clear disclosure obligation, judicial time should not be spent on inquiring into what, if any, prejudice was caused by a breach of the party's clear obligation (or, as argued by Aviva, whether the undisclosed litigation agreement somehow actually benefited the parties who knew nothing of its existence). [43]

[68] In concluding that the motion judge in Handley Estate “erred by failing to apply Aecon’s remedy of staying the claim of the party that did not immediately disclose a litigation agreement,” Brown J.A. clarified that in such circumstances, the appropriate remedy is not a matter of discretion, and that a stay of proceedings is the only possible remedy capable of curing such a default. [44]

[69] Interestingly, in Handley Estate, Brown J.A. highlighted an available option for those settling litigants who perhaps lack the sophistication that Brown J.A. spoke of in the passage quoted above or who are simply unsure whether the obligation of immediate disclosure applies to their particular circumstances – apply to the court for directions. In this regard, Brown J.A. commented that:

Moreover, if a party to a litigation agreement is unclear whether the agreement has the effect of changing the adversarial position of the contracting parties, thereby attracting the mandatory disclosure obligation, it is always open to the party to move before the court for directions. In that way, the court can enforce and control its own process and ensure that justice is done between and among the parties. [45]

[70] It goes without saying that no such motion for directions was brought by the City in the instant case seeking direction as to whether the Eight Settlement Agreements must be immediately disclosed pursuant to the Aecon – Handley Estate principles.

Are the City’s Eight Settlement Agreements with the Settling Third Parties of a nature that immediate disclosure was required?

[71] The question here, simply put, is whether the City’s Eight Settlement Agreements with the Settling Third Parties entirely changed the litigation landscape.

[72] In its responding factum, the City relies upon the decision of R.S.J. Ricchetti in Caroti v. Vuletic, 2021 ONSC 2778 for the proposition that, inter alia, not every settlement agreement must be disclosed immediately:

Not all settlement agreements need to be disclosed immediately. It is only where the settlement agreement “entirely changes” the adversarial relationship between the litigants (or adversarial landscape), that the settlement agreement must be immediately disclosed. [46]

[73] I should think that neither Southside nor the Architects take issue with that basic proposition. What they do take issue with is the City’s submission that, “the City did not have an immediate disclosure obligation because the [Eight Settlement Agreements] did not alter the relationship among the parties to the litigation.” [47]

[74] I reject that submission of the City.

[75] It is clear to me, and I find, that the Eight Settlement Agreements entirely changed the adversarial relationship between the parties.

[76] In my view, while it took Southside and the Architects some time to discover the complete picture, eventually they discovered that some of the most fundamental terms of the Eight Settlement Agreements, which changed the adversarial nature of the litigation, included: (a) indemnities from the City to the subcontractors for the City’s complaints against Southside based upon the subcontractors’ own work; (b) certain extended warranties exchanged by the subcontractors to the City to address the City’s specific complaints about their work; and (c) an assumption by the City of the liabilities of the subcontractors which were being pursued by the Southside and the Architects against them.

[77] The result of the City’s agreements to pay the very same subcontractors about whose work it was complaining and then to indemnify them from all risks of Southside’s claims against them for the City’s ongoing complaints, was that these subcontractors, the Settling Third Parties, were removed from a position of clear financial and tactical alignment with Southside. Mr. Bannon’s answers on his cross-examination acknowledged the subcontractors’ loss of engagement resulting from their payment, indemnity, and anticipated removal as parties to the litigation. Southside then found itself facing the City on two fronts: the City was simultaneously arguing that Southside should not be paid, while also claiming that Southside should pay the City, standing in the shoes of the Settling Third Parties, for the same work. Thus, it is clear that, as a result of the Eight Settlement Agreements, the adversarial landscape was fundamentally changed.

[78] The practical effect of the changed litigation landscape was well described by Southside in its reply factum, and I can do no better than merely repeat that description here, which I rely upon and adopt as my own reasons:

Rather, Windsor wanted to have its cake and eat it too. Its intention in 2013 and 2014 was to bar Southside from claiming against the Settling Third Parties (by having them removed from the action with Windsor taking their place and assuming their liabilities) while simultaneously maintaining its right to counterclaim against Southside for the same ‘resolved’ deficiencies. As a backstop to Southside continuing its third party claims against those same subcontractors, (where demanded by lawyers for the Settling Third Parties, or as a consequence of the purported assignment of liabilities) Windsor also agreed that it would indemnify those subcontractors against the consequences of Windsor’s continued claims of deficient workmanship against Southside.

The resulting circularity renders Windsor’s claims in these proceedings a sham. Any successful Windsor workmanship claim by Windsor qua owner will yield a corresponding deduction from Windsor’s receivable qua Assignee of the third party claim of the implicated subcontractor. Meanwhile, Windsor qua owner has already quantified a credit value for any dissatisfaction Windsor qua owner had with the subcontractor work, through direct negotiation with the subcontractor over Windsor’s purchase price paid to acquire the assigned receivable interest. Windsor takes with one hand and indemnifies for that which it has taken, with the other. But, it gets to litigate with Southside coming and going.

The litigation landscape changed when Windsor opened a second front against Southside by acquiring the claims of the Settling Third Parties while secretly indemnifying them from any consequences of their continued involvement. The undisclosed circularity from opening that second front would have allowed Windsor to use the court process, not in the pursuit of the resolution of a bona fide dispute on the merits, but to vex Southside. The court cannot control what it does not know. Thus, the failure to reveal the intention, disclosing the details and particularly the indemnities, amount to a failure of justice. [48] [Emphasis in original.]

[79] For these reasons, I find that when the City entered into the Eight Settlement Agreements with the Settling Third Parties, it entirely changed both the adversarial relationship between the litigants and the adversarial landscape. It fundamentally altered the litigation landscape, and thereby triggered the City’s obligation to make immediate disclosure of the agreements. [49]

[80] In my view, the moving parties have met their onus in establishing that the Eight Settlement Agreements were of such nature that immediate disclosure was required.

Were sufficient details of the Eight Settlement Agreements immediately disclosed?

[81] The City argues, in the alternative, that “any disclosure obligation was met by the City’s disclosure to all parties and the court about the [Eight Settlement Agreements], and any relevant terms, when they were concluded on November 20, 2013.” [50]

[82] I find no merit in this argument at all.

[83] Indeed, in my view, comparatively speaking, relatively little was actually disclosed by the City as of November 20, 2013. True, it disclosed that the City had reached conditional settlements with the eight Settling Third Parties and, in each case, a copy of the one-page, standard form Assignment was actually produced. [51] But I have already found in my December 2016 Decision that the Eight Settlement Agreements had multiple elements that varied between the subcontractors. [52] While the one-page, standard from Assignment was the only document disclosed to the court and the non-settling parties on November 20, 2013, it is clear, and I have already found, that the one-page Assignment did not contain all of the relevant terms of the Eight Settlement Agreements. Importantly, they did not include those critical terms that fundamentally altered the litigation landscape.

[84] As I have reviewed above, it was not until the examination of Mr. Bannon in December 2019 that Southside and the Architects eventually discovered that the Eight Settlement Agreements were an attempt by the City to substitute itself in the place of the Settling Third Parties, by assuming the liabilities of the Settling Third Parties and by relieving them of any financial interest to stand behind their work and thus support Southside’s defence of the City’s counterclaim.

[85] It simply cannot be said that disclosure of the critical terms of the Eight Settlement Agreements that came more than six years after City council’s approval of the agreements on October 21, 2013, satisfies an immediate disclosure requirement.

[86] In Aecon, MacFarland J.A. observed that, “[o]ther parties to the litigation are not required to make inquiries to seek out such agreements.” [53]

[87] But that is exactly what Southside and the Architects were forced into undertaking, given the failure of the City to satisfy its obligation to make immediate disclosure. Their quest began with their cross-motion for production of the settlement documents, originally returnable November 20, 2013, coincident with the City’s motion for the OTC. It came to conclusion, six plus years later, on December 4, 2019, with Mr. Bannon’s cross-examination.

[88] As the events here unfolded, the City made some disclosure of the Eight Settlement Agreements in November 2013, with production of only the one document evidencing the agreements, being the one-page, standard form Assignments. As recounted above, some further disclosure was made by Mr. Bannon on February 6, 2014. This “trail of crumbs” pattern of disclosure continued until the cross-examination of Mr. Bannon in December 2019. To their credit, Southside and the Architects relentlessly pursued the City’s “trail of crumbs” to conclusion. But that protracted exercise should never have been necessary. The City’s failure to make immediate disclosure of the Eight Settlement Agreements flies in the face of the admonition of Myers J. in Tallman Truck Centre Limited v. K.S.P. Holdings Inc., 2021 ONSC 984 that, “[m]andatory disclosure is not made by taking steps that give a hint to people skilled in the art.” [54] [Emphasis added.]

[89] Indeed, on the evidence before me, where Southside has described the City’s efforts at disclosing the terms of the Eight Settlement Agreements in the following terms – “involuntary, irregular, incomplete, insincere; anything but what it had to be: immediate” [55] – I am unable to say that characterization is unfair.

[90] I therefore conclude that the moving parties have met their onus in establishing that the Eight Settlement Agreements were not immediately disclosed to the court and the non-settling litigants, as required.

[91] In its responding factum, the City raises various arguments that seek to avoid the application of the Aecon – Handley Estate principles to the instant case, which would result in a stay of proceedings because of the abuse of process arising from the City’s failure to make immediate disclosure of the Eight Settlement Agreements. I find none of the City’s arguments to be persuasive.

[92] For example, the City argues that Southside and the Architects have suffered no prejudice. [56] However, the Ontario authorities have made it abundantly clear that the absence of prejudice does not excuse late disclosure and is irrelevant. [57] In Ontario, the application of the Aecon – Handley Estate principles simply do not depend upon a showing of prejudice by the non-settling defendants.

[93] The City also relies upon, as referenced above, the unreported decision of R.S.J. Ricchetti in Caroti v. Vuletic, 2021 ONSC 2778 in its attempt to avoid the application of the Aecon – Handley Estate principles here. But Caroti v. Vuletic is distinguishable on its facts. The decision turned on the motion judge’s central finding that “[a]s far as the Vuletics are concerned, the adversarial landscape has not changed” because “Kegalj was always and remains adverse to the Vuletics.” [58] Moreover, there was no assignment and no indemnity in that case. [59] Rather, a party that was adverse to the Vuletics was released from the litigation on the basis that he would be a witness instead. [60] Further, the Vuletics appear to have slept on their rights by failing to immediately and diligently pursue the alleged change in the litigation landscape when it came to their attention. [61] As I have found above, that is not the case here, where Southside and the Architects have pursued disclosure of the terms of the Eight Settlement Agreements since November 2013.

[94] Finally, the City relies heavily on the decision of Saunders J.A. of the Nova Scotia Court of Appeal in National Bank Financial Ltd. v. Barthe Estate, 2015 NSCA 47, and its criticism of our Court of Appeal’s decision in Aecon, where Saunders J.A. observed that, “the [Aecon] decision does not contain any analysis of the law that ought to be applied when determining whether a court should exercise its discretion by granting a stay for abuse of process in the context of civil proceedings.” [62]

[95] But the instant case is not one where there is no relevant Ontario appellate authority on point, such that, appellate decisions from other jurisdictions might be of some assistance. Here, our Court of Appeal has provided direct, and repeated, direction. And our Court of Appeal has left no doubt about how the relevant principles are to be applied. Again, the Court of Appeal has specifically held that: “[t]he only remedy to redress the wrong of the abuse of process is to stay the claim asserted by the defaulting, non-disclosing party.” [63]

[96] I conclude that the City’s failure to disclose immediately to the court and the non-settling parties the complete terms of the Eight Settlement Agreements that fundamentally altered the litigation landscape constitutes an abuse of process. I conclude further that the only appropriate sanction to remedy that abuse of process by the City is to stay its claims against Southside and the Architects.

Conclusion

[97] For all of these reasons, the City’s claims against Southside for damages and delay during construction must be permanently stayed pursuant to s. 106 of the Courts of Justice Act by reason of the City’s abuse of process. Similarly, the City’s claims against the Architects should also be stayed. Further, the Settling Third Parties’ claims to payment, acquired by the City through the assignment pursuant to the Eight Settlement Agreements, must also be stayed by reason of the same abuse of process.

[98] The result is that Southside’s lien action and claim to payment of contract funds earned as of project completion, and its third party claims against the Settling Third Parties for any amounts it cannot recover from the City as a result of the Settling Third Parties’ negligence or breach of contract, should proceed to trial, and the City is barred from prosecuting either its counterclaim or the assigned claims. Anything less rewards the City for its abuse of process.

[99] Accordingly, an order shall issue that, on account of the City’s abuse of process:

a. the City’s counterclaim against Southside in court file no. CV-07-CV009334-00D1, b. the City’s third party claim against the Architects in court file no. CV-07-CV009334-00D1, c. the counterclaims or crossclaims or other claims of the Settling Third Parties, which were assigned to the City, in the context of court file no. CV-07-CV009334-00D1, d. the action of the City as against the Architects in court file no. CV-09-12615CM, including any claims that the City derived from the assignment of the crossclaims of the Settling Third Parties as against the Architects in court file no. CV-07-CV009334-00D1,

shall be permanently stayed, pursuant to s. 106 of the Courts of Justice Act.

[100] Southside and the Architects were successful on the motions before me and are presumptively entitled to their costs of the motions.

[101] If counsel are unable to agree on the question of costs, they may file brief written submissions with the court, of no more than five (5) double-spaced pages (exclusive of any costs outline, bill of costs, dockets, offers to settle, or authorities), in accordance with the following schedule:

a. Southside and the Architects shall deliver their submissions within thirty (30) days following the release of these reasons. b. The City shall deliver its submissions within twenty (20) days following service of the submissions of Southside and the Architects, whichever is latest. c. Southside and the Architects shall deliver their reply submissions, if any, of no more than three (3) double-spaced pages, within five (5) days following service of the City’s submissions. d. If any party fails to deliver their submissions in accordance with this schedule, they shall be deemed to have waived their rights with respect to the issue of costs, and the court may proceed to make its determination in the absence of their input or give such directions as the court considers necessary or advisable.

(Electronic Signature) – Signed and released J. Paul R. Howard

Justice

Date: April 11, 2022

COURT FILE NO.: CV-07-CV009334-00D1 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Southside Construction (London) Limited Plaintiff/Defendant by Counterclaim – and – The Corporation of the City of Windsor Defendant/Plaintiff by Counterclaim – and – Montgomery Sisam Architects Inc., J.P. Thomson Associates Ltd., JMR Electric Ltd., Jemini Construction Ltd., Forest City Forming Ltd., Bravo Cement Contracting Inc., Artisan Masonry Inc., Prestressed Systems Inc., Plaza Ontario Marble & Tile Incorporated, Trend Millwork & Cabinets Inc., D & M Glass & Mirror Ltd., Flynn Canada Ltd. and Williams Food Equipment Company (1998) Limited and Robson Acoustics & Drywall (2002) Inc. Third Parties to the Counterclaim REASONS FOR DECISION Howard J.

Released: April 11, 2022

Cited Cases and Legislation:

Legislation:

• Construction Lien Act, R.S.O. 1990, c. C.30
• Courts of Justice Act, R.S.O. 1990, c. C.43
• Rules of Civil Procedure, R.R.O. 1990, Reg. 194

Case Law:

• Aecon Buildings v. Brampton (City), 2010 ONCA 898
• Aviaco International Leasing Inc. v. Boeing Canada Inc.
• Caroti v. Vuletic, 2021 ONSC 2778
• Great Northern Insulation Services Ltd. v. King Road Paving and Landscaping Inc., 2019 ONSC 3671
• Great Northern Insulation Services Ltd. v. King Road Paving and Landscaping Inc., 2021 ONCA 367
• Handley Estate v. DTE Industries Limited, 2018 ONCA 324
• K. Bannon v. Southside Construction (London) Limited, 2019 ONCA 787
• Laudon v. Roberts, 2009 ONCA 383
• Moore v. Bertuzzi, 2012 ONSC 3248
• National Bank Financial Ltd. v. Barthe Estate, 2015 NSCA 47
• Southside Construction v. City of Windsor, 2016 ONSC 7860
• Southside Construction v. City of Windsor, 2018 ONSC 6137
• Southside Construction Ltd. v. City of Windsor, 2013 ONSC 2520
• Tallman Truck Centre Limited v. K.S.P. Holdings Inc., 2021 ONSC 984
• Tremblar Building Supplies Ltd. v. 1839563 Ontario Limited, 2020 ONSC 6302
• Waxman v. Waxman, 2021 ONSC 2180

[1] The eight third party subtrades in issue are: JMR Electric Ltd., Forest City Forming Ltd., Jemini Construction Ltd., Plaza Ontario Marble and Tire Incorporated, Trend Millwork & Cabinets Inc., D&M Glass & Mirror Ltd., Flynn Canada Ltd., and Robson Acoustics & Drywall (2002) Inc.

[2] Courts of Justice Act, R.S.O. 1990, c. C.43.

[3] Factum of the City delivered in response to the Factum of Southside, dated June 23, 2021 (“Factum of the City”), at para. 11. The City delivered a mirror or similar factum in response to the factum of the Architects.

[4] Ibid., citing Great Northern Insulation Services Ltd. v. King Road Paving and Landscaping Inc., 2021 ONCA 367, 156 O.R. (3d) 1, at para. 14.

[5] See Southside Construction v. City of Windsor, 2016 ONSC 7860 (S.C.J.) [unreported] [the “December 2016 Decision”] and Southside Construction v. City of Windsor, 2018 ONSC 6137 (S.C.J.) [unreported] [the “October 2018 Decision”]; leave to appeal to Div. Ct. refused with costs (21 June 2019), Toronto file no. 697/18 [unreported]; appeal to Ontario Court of Appeal by K. Bannon dismissed with costs, 2019 ONCA 787.

[6] There are fourth, fifth, and sixth party claims in the litigation, but they are not germane for present purposes.

[7] Prestressed Systems Inc. and Williams Food Equipment Company (1998) Limited.

[8] Southside Construction Ltd. v. City of Windsor, 2013 ONSC 2520 (S.C.J.) [unreported], at para. 8.

[9] Ibid., at paras. 30-33.

[10] Ibid., at paras. 44-47.

[11] Ibid., at paras. 51-52.

[12] Factum of Southside, delivered in reply, dated June 30, 2021 (“Southside’s Rely Factum”), at para. 10.

[13] Factum of the City, at para. 31.

[14] See, for example, Factum of the City, at para. 70(a).

[15] See, for example, Factum of the City, at paras. 21, 22, 23, 26, 28, 29, and 30.

[16] See Southside’s Reply Factum, at para. 12, and evidentiary references cited therein.

[17] Ibid., at para. 13, fn. 11, and evidentiary references cited therein.

[18] Ibid., at para. 13, fn. 12, and evidentiary references cited therein.

[19] Ibid., at para. 14, and evidentiary references cited therein.

[20] Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[21] December 2016 Decision, at paras. 37, 38, and 45-47.

[22] October 2018 Decision, at paras. 30-38 [citations omitted].

[23] Ibid., at para. 39.

[24] Motion Record of Southside dated January 7, 2021, Tab 2-A, Transcript of the Examination of Keith Bannon taken on December 4, 2019, at p. 65, QQ. 157-160 [page references are to the Motion Record].

[25] Ibid., at p. 64, Q. 154.

[26] Ibid., at pp. 63-6, QQ. 150-155; pp. 65-66, QQ. 157-160; and p. 70, Q. 180.

[27] Ibid., at p. 68, Q. 169.

[28] Ibid., at p. 70, Q. 181.

[29] Ibid., at p. 70, Q. 180.

[30] Ibid., at p. 84, Q. 231.

[31] Ibid., at pp. 70-71, QQ. 180-183.

[32] Ibid., at pp. 32-33, Q. 37.

[33] Ibid., at pp. 66-67, Q. 163.

[34] Ibid., at p. 113, Q. 340.

[35] Ibid.

[36] Ibid., at pp. 86-90, QQ. 238-257.

[37] Ibid., at pp. 101-102, QQ. 291-295

[38] Ibid., at p. 105, QQ. 307-309.

[39] Aecon Buildings v. Brampton (City), 2010 ONCA 898, 328 D.L.R. (4th) 488, 98 C.L.R. (3d) 1 [Aecon], leave to appeal to the S.C.C. refused, 425 N.R. 400 (note), at para. 13, quoting Laudon v. Roberts (2009), 2009 ONCA 383, 308 D.L.R. (4th) 422 (Ont. C.A.), at para. 39 [omitted]. See also Moore v. Bertuzzi, 2012 ONSC 3248, 110 O.R. (3d) 611, 32 C.P.C. (7th) 376 (S.C.J.), at paras. 76 and 93, per Perell J.

[40] Aecon., at paras. 14-15.

[41] Ibid., at para. 16.

[42] Handley Estate v. DTE Industries Limited, 2018 ONCA 324, 421 D.L.R. (4th) 636, 17 C.P.C. (8th) 271 [Handley Estate], at paras. 39-40. See also Tallman Truck Centre Limited v. K.S.P. Holdings Inc., 2021 ONSC 984, 60 C.P.C. (8th) 258 (S.C.J.) [Tallman Truck], at para. 46, per F.L. Myers J.

[43] Ibid., at paras. 45-46. See also the summary of the law in the recent decision of Waxman v. Waxman, 2021 ONSC 2180, 69 C.P.C. (8th) 411 (S.C.J.) [Waxman], at paras. 26-27, per Koehnen J.

[44] Ibid., at para. 48.

[45] Ibid., at para. 47.

[46] Caroti v. Vuletic, 2021 ONSC 2778 (S.C.J.) [unreported], at para. 53, quoted in Factum of the City, at para. 50.

[47] Factum of the City, at para. 59.

[48] Southside’s Reply Factum, at paras. 25-27.

[49] In para. 57(c) of the Factum of the City, relying on Great Northern Insulation Services Ltd. v. King Road Paving and Landscaping Inc., 2019 ONSC 3671, 100 C.L.R. (4th) 169 (Div. Ct.), at para. 25, per Corbett J., the City argues that the Eight Settlement Agreements “related only to amounts that Southside and the Architects had no entitlement to claim for their own use” and, therefore, there was no change in the litigation landscape. That argument relies upon a misreading of the decision in Great Northern. For the reasons set out in paras. 34-38 of Southside’s Reply Factum, which I adopt as my own, the City’s argument must fail. See, in particular, the subsequent decision of the Divisional Court, also authored by Corbett J., in Tremblar Building Supplies Ltd. v. 1839563 Ontario Limited, 2020 ONSC 6302, 454 D.L.R. (4th) 546 (Div. Ct.), at paras. 15-17.

[50] Factum of the City, at para. 59.

[51] See the Affidavit of Tatiana Brudny sworn November 15, 2013, filed by the City in support of its motion for an order to continue returnable November 20, 2013, and, in particular, paras. 7-17 of the affidavit, and Exhibits “B” through to “I”, attaching a copy of the “Assignment of Claim” for each of the eight subtrades.

[52] December 2016 Decision, at paras. 37, 38, and 45-47.

[53] Aecon, at para. 15.

[54] Tallman Truck, at para. 56, fn. 1.

[55] Factum of Southside, delivered in the main, dated May 26, 2021 (“Southside’s Main Factum”), at para. 7.

[56] Factum of the City, at paras. 46 and 61.

[57] See, for example, Aecon, at para. 16; Handley Estate, at para. 45; Tallman Truck, at para. 46; and Waxman, at para. 26.

[58] Caroti v. Vuletic, at para. 103.

[59] Ibid., at para. 33.

[60] Ibid., at paras. 103 and 105.

[61] Ibid., at para. 101.

[62] National Bank Financial Ltd. v. Barthe Estate, 2015 NSCA 47, 359 N.S.R. (2d) 258, at para. 225. I also note that National Bank was decided before Handley Estate.

[63] Handley Estate, at para. 45 (iv).