Court File and Parties

COURT FILE NO.: CV-18-609123 DATE: January 11, 2022

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Symtech Innovations Ltd. v. Bird Construction Company Limited, Bird Construction Group, Bird Construction Group, a Limited Partnership, by its General Partner, Bird Construction GP Limited and Travelers Insurance Company of Canada;

BEFORE: ASSOCIATE JUSTICE C. WIEBE

COUNSEL: Battista Frino for Symtech Innovations Ltd. (“Symtech”); Michael Wilson for Geo. A. Kelson Company Limited (“Kelson”); James A. LeBer for Bird Construction Company Limited, Bird Construction Group, Bird Construction Group, a Limited Partnership, by its General Partner, Bird Construction GP Limited and Travelers Insurance Company of Canada (together “the Defendants”);

HEARD: January 6, 2022.

REASONS FOR DECISION

[1] This is a motion by Symtech in this action and in action numbered CV-18-604627, and by Kelson in its action, CV-18-604392, against the same Defendants for an order requiring that the Defendants provide answers to outstanding undertakings, under advisements and refusals given by the representative of Defendants, Jamie Brenneman, at his discovery on January 27, May 6 and 7, 2020.

[2] The Symtech and Kelson claims are lien actions for claims for lien the two registered in relation their work under a contract between Bird Construction Group, a Limited Partnership, by its General Partner, Bird Construction GP Limited (“Bird”) and the University of Toronto dated June 8, 2015 whereby Bird was to construct the CEIE Building at the University of Toronto (“the Project”). Symtech was the electrical subcontractor to Bird concerning the Project. Its subcontract was dated November 9, 2015. Kelson was the mechanical subcontractor to Bird on the Project. Its subcontract was dated January 29, 2016.

[3] A significant issue in these cases is the impact of the bankruptcy of the caisson installer, Blackrock. It is undisputed that the caisson installation was critical foundation work that preceded the work of Kelson and Symtech. Blackrock was scheduled to be finished by early November, 2015. In the end, the caisson work was finished in June, 2016. Bird has admitted that Symtech and Kelson were delayed in the commencement of their work by 223 days due to the Blackrock failure.

[4] Symtech served a “without prejudice” delay claim document in February, 2017. On March 1, 2017 Symtech served a notice of default. On April 3, 2017 Bird gave Symtech a change order for delay costs of $425,000. On August 15 and September 1, 2017 Bird gave Kelson two change orders for delay costs totaling $464,525. In June, 2018 Kelson delivered a delay claim document.

[5] On July 23, 2018 Kelson registered a claim for lien in the amount of $4,837,576.21 and subsequently started its lien action. On August 2, 2018 Symtech registered a claim for lien in the amount of $6,361,551.71 and subsequently started its lien actions. The bulk of these claims concern delay. The Defendants defended these actions and raised substantial counterclaims alleging delay by Symtech and Kelson.

[6] Bird had a “Subguard” insurance policy which insured against damages caused to Bird by subcontractor failure such as the Blackrock failure. Bird made a claim on that policy which claim included the claims of Symtech and Kelson. The insurer assessed the Bird claim, including the delay claims of Symtech and Kelson. It approved 34% of the Symtech claim and 28% of the Kelson claim. The insurer made a payout to Bird in December, 2019 and April, 2020.

[7] The contested discovery questions fall into three categories. I will deal with them accordingly.

a) Subguard file and delays

[8] The following are the questions concerning these issues.

a.1) P. 34, q. 151: To the extent there is any documentation or communication with Blackrock, produce it.

[9] This is a refusal. The explanation given was that with Bird having admitted the Blackrock delay and the amount of the Blackrock delay, this question is irrelevant.

[10] I disagree. There is no dispute that the Blackrock failure directly (and perhaps indirectly) impacted the schedules of Symtech and Kelson. The nature and extent of this impact is in dispute. This question must be answered.

[11] However, I find the question overbroad. There are probably many documents in the Blackrock file that have nothing to do with delay.

[12] Counsel agreed that I could “read down” a question I find to be overbroad. Therefore, I rule that Bird must only produce those documents in this category that concern the delay that resulted from the Blackrock failure.

a.2) P. 36, q. 152: To produce all documents in relation to Blackrock.

[13] This is another refusal. The ground for the refusal is the same as in a.1 above.

[14] My comments concerning a.1 above apply here, and I make the same order here. The question is relevant but overbroad. I rule that Bird must only produce those documents in this category that concern the delay that resulted from the Blackrock failure.

a.3) Pgs. 37 and 166, q. 155 and 656: To provide all communications to/any correspondence with Zurich in relation to any claims made by Bird during the currency of this project and provide by undertaking.

[15] This is another refusal. Again, the dispute is that the requested documentation is not relevant for the reasons stated in a.1 and a.2 above.

[16] Again, I disagree. There is no dispute that Bird made one claim on its Subguard policy and that that claim concerned the Blackrock failure and the delays that resulted from it. This failure impacted Symtech and Kelson. Bird has made limited disclosure of this insurance claim and the negotiation it had with its insurer that led to the insurer’s payout.

[17] I order that this question be complied with.

a.4) P. 162, q. 640: To produce any documentation that was created to assess the delays caused by the bankruptcy of the forming contractor, Blackrock, and advise what construction schedule is being referred to in paragraph 9 of Bird’s pleading.

[18] This is in fact an undertaking. Bird has provided limited disclosure concerning this undertaking. The initial argument was that the undertaking, when placed into the context of the preceding questions, should be interpreted as requiring the production of only Bird’s assessment of the Blackrock delay. I do not agree. The undertaking is clear as to its scope. It extends to any document in the power, possession or control of Bird that was created to assess the Blackrock delay, whether that document was created by Bird, the insurer or someone else. This would include notes and drafts of documents.

[19] Bird also argued that the request is “disproportionate.” I disagree. The request is not disproportionate. This engages Rule 29.2.03. I was not advised as to the number of documents the insurer and Bird reviewed for their assessments and the number of documents that contain assessments of the Blackrock delay. I assume that they were not an inordinately huge number. No doubt many of the documents reviewed are already in the productions that have been made. There is no doubt that these documents are readily available to Bird, and that their production will not unduly interfere with the orderly progress of this case. Given the size and complexity of the Symtech and Kelson delay claims, I do not see this request as being disproportionate.

[20] This undertaking must be complied with to the full extent of the undertaking.

a.5) P. 165, q. 655: To produce the Bird claim to Subguard, subject to privilege.

[21] This is a refusal. The grounds for the refusal are the same as in a.1, a.2 and a.3, namely alleged irrelevance of the requested document.

[22] Again, I disagree. The Bird claim on the Subguard policy no doubt contains its assessment of the Blackrock delay in general and as it applies to Symtech and Kelson. This question must be answered.

b) Other trades’ delay

[23] There was only one question in dispute under this topic.

b.1) P. 53, q. 204: To produce any change order issued for acceleration to any trade.

[24] This is a refusal. The ground for the refusal is irrelevance. I disagree. What Bird may have paid other trades for acceleration will show in part how it assessed the delays that beset the project. This would include not only the Blackrock delay, but other delays perhaps stemming from its own lack of coordination, from other trade problems and perhaps even from the performance of Symtech and Kelson, which would pertain to the Bird counterclaim. This request is relevant.

[25] I note that Bird has in fact produced a change order log concerning changes Bird submitted to the owner. I do not find this disclosure responsive to the request. The request is for change orders issued by Bird to its other trades for acceleration. This would include acceleration resulting from problems under Bird’s responsibility and under the owner’s responsibility. The change order log for changes submitted to the owner would not contain these trade change orders.

[26] This question must be answered.

c) Bird’s review and position on the Symtech and Kelson claims.

[27] By the time of the motion argument there were only two questions in dispute.

c.1) P. 104, q. 416: To the extent that there are any notes or discussions about this [Bird’s internal evaluation of the Symtech claim], to review the records and provide by undertaking.

[28] This is a refusal. The grounds for the refusal are that these internal notes and discussions are privileged documents both as litigation privilege and as settlement privilege.

[29] In his affidavit in opposition to this motion, Mr. Brenneman swore that he became the Bird project manager on this project in November, 2016. He stated that he learned that Symtech had hired an expert, Noel Leggatt, who attended at the site in 2016. He stated that Mr. Leggatt prepared a delay claim document that was delivered to Bird in February, 2017. This document was entitled, “Without Prejudice for good faith negotiation.” Then on March 1, 2017 Symtech delivered a Notice of Default.

[30] Mr. Brenneman swore that on March 8, 2017 Bird Toronto District manager, Bill Zister, emailed, stating that “Symtech appears to be engaged in a legal dispute which is the prerogative of Symtech however Bird will not jeopardize the project schedule while that legal battle plays itself out.” On April 3, 2017 Bird issued Change Order Number 43 to Symtech in the amount of $425,000 “to resolve all issues as it relates to Symtech’s delay costs up to April 30, 2017.” Mr. Brenneman swore that, given the involvement of Mr. Leggatt and the Default Notice, any internal discussion at Bird about the Symtech claim was done in contemplation of litigation with Symtech. Bird gave no other change order to Symtech on account of its delay claim. This all took place well over year before Symtech registered its claim for lien.

[31] To establish litigation privilege the one asserting the privilege must show in the evidence that the documents were prepared for the “dominant purpose” of existing or anticipated litigation; see Blank v. Canada (Minister of Justice), [2006] 2 S.C.R. 319, 2006 SCC 39, at paragraphs 59-60. The evidence indicates that anticipated litigation was indeed the dominant purpose of the Bird internal discussion about the Symtech claim, particularly given the involvement of Mr. Leggatt and the service of the Default Notice.

[32] This purpose apparently involved initially a discussion of the settlement of the Symtech claim document submitted in February, 2017 “Without Prejudice for good faith negotiation” leading to Change Order Number 43. That internal discussions about settlement would also be covered by the privilege that attaches to any discussion of settling claims. This was raised by Mr. LeBer in oral argument. I accept that argument as well.

[33] Ms. Frino made the argument that there is now a disagreement between Symtech and Bird about the settlement that led to Change Order 43, thereby making it necessary to examine the internal Bird discussions about the settlement. She pointed to paragraph 13 of the Symtech Amended Reply and Defence to Counterclaim arguing that Symtech views the settlement as an interim settlement of its claim while Bird views it as a final settlement. I do not accept that argument. Bird’s pleading does not assert that this payment was a final resolution of the claim. Furthermore, Change Order 43 itself does not purport to be a final resolution. It says that the payment was to resolve issues concerning Symtech’s delay costs “up to April 30, 2017.”

[34] Therefore, this question does not have to be answered; but that is subject to a proviso. I agree with Mr. Wilson that Bird cannot claim privilege to these documents as a group. Instead, it must itemize these privileged documents, which are otherwise relevant, as they would for inclusion in Schedule B of the Bird Affidavit of Documents. This itemization must, in my view, include a description of the type of each document, the subject matter of each document, the creator of each document, and the sender and receiver of each document, and the claimed privilege in each case and the basis for that claim. Should this itemization process create an issue about improper assertion of privilege, Symtech is not precluded from moving further in that regard.

c.2) P. 190-191, q. 745: To review Bird’s records and produce any and all documents (including notes) created for the purposes of reviewing this claim which Kelson submitted to Bird under its subcontract with Bird.

[35] This is another refusal. The ground given for the refusal is that these documents are litigation privileged.

[36] I note that on August 15 and September 1, 2017 Bird gave Kelson two change orders for delay costs totaling $464,525. It did not give Kelson another change order for delay costs. In his affidavit, Mr. Brenneman stated that Bird was sued by Kelson on another project in December, 2017 for delay related damages using a template for the claim in that case that was similar to the template Kelson used for its delay claim in this case. He said that Bird then received the Kelson delay claim in this case on June 28, 2018. I note that Kelson registered its claim for lien on July 23, 2018 less than a month later. Mr. Brenneman stated in his affidavit that, given the history with the other project and the common use of the template for the Kelson claim, the review of the Kelson claim at Bird was done in contemplation of litigation.

[37] I find that Bird has established the grounds for the claimed litigation privilege. Its review of the Kelson claim took place months after Bird had issued its delay costs change orders. There was no purpose to Bird’s review other than in anticipation of litigation, particularly given the recent history Bird had with Kelson on the other project.

[38] Therefore, this question also does not have to be answered; but, again, subject to the same proviso I imposed in c.1 above. These documents must be itemized in the same way.

d) Costs

[39] Concerning the costs of the motion, Mr. Wilson filed a Kelson costs outline that showed a figure of $5,788.76 in partial indemnity costs. Ms. Frino filed a Symtech costs outline that showed a figure of $8,542.80 in partial indemnity costs. Mr. LeBer filed a Bird costs outline that showed a figure of $16,392 in partial indemnity costs.

[40] If the parties cannot agree as to an appropriate costs award, Kelson and Symtech must serve and file and upload to Caselines written submissions on costs of no more than one page on or before January 17, 2022. Bird must serve and file and upload to Caselines responding written submissions on costs of no more than two pages on or before January 21, 2022. Any reply written submissions on costs of no more than one page must be served, filed and uploaded to Caselines on or before January 25, 2022. I will then issue my costs award.

DATE: January 11, 2022

ASSOCIATE JUSTICE C. WIEBE