COURT FILE NO.: CV-20-00004085-0000
DATE: 2022 05 27
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: LEBLON DRYWALL INC. v. KING STATION FACILITY and INSITE CONSTRUCTION MANAGEMENT INC.
BEFORE: RSJ RICCHETTI
COUNSEL: J. Frustaglio and B. Han, for the Plaintiff
S. Schwartz and E. Quail, for the Defendants
HEARD: April 27 and May 18, 2022
ENDORSEMENT
THE MOTION
[1] This is a summary judgment motion brought by Insite Construction Management Inc. (Insite) to vacate/discharge Leblon Drywall Inc.’s (Leblon) Claim for Lien registered on September 18, 2020 (Lien) for $907,876.76.
[2] Alternatively, Insite seeks to reduce the amount of security posted to $547,901.85.
THE ISSUES
[3] There are two key issues determinative of this summary judgment motion:
a) What is the contract price? This impacts on the amount allegedly outstanding to Leblon when it ceased working on the Project.
b) When did Leblon cease to work on the Project? This, of course, impacts on the timeliness of the registration of the Claim for Lien.
[4] There is no dispute as to the law applicable to summary judgment motions.
[5] Rule 20.04 (2) permits a court to grant summary judgment where:
(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.
[6] Rule 20.04 (2.1) confers powers on a judge in summary judgment motion:
In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
[7] The approach for summary judgment motions was summarized by Corbett J. in Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at paras. 33 and 34:
As I read Hryniak, the court on a motion for summary judgment should undertake the following analysis:
The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;
On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;
The Supreme Court is clear in rejecting the traditional trial as the measure of when a judge may obtain a “full appreciation” of a case necessary to grant judgment. Obviously greater procedural rigour should bring with it a greater immersion in a case, and consequently a more profound understanding of it. But the test is now whether the court’s appreciation of the case is sufficient to rule on the merits fairly and justly without a trial, rather than the formal trial being the yardstick by which the requirements of fairness and justice are measured.
[8] As stated by Corbett J., the fundamental question is whether the summary judgment process, in the circumstances of a given case, will permit the court to make a fair and just determination of the issues before the court. The question is not whether the procedure on the motion would be as exhaustive as a trial, but rather whether the evidentiary record and the process gives the judge confidence to find the necessary facts and apply the relevant legal principles to decide the issued in a fair and just manner: Hyrniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 50.
[9] The onus is on Insite to establish that, based on the evidence before this court on this motion, that the court can (without or with its enhanced fact-finding powers under the Rules) make a fair and just determination without requiring a trial.
[10] In this case, I am not persuaded the evidence on this motion permits this court to make a fair and just determination without a trial as there are serious credibility issues and conflicting evidence on facts going to the heart of the two issues to be decided.
[11] Some of the submissions of both counsel sought to have this court draw additional facts from the evidence. The problem is that, while the court can draw reasonable and rational inferences, the court should not embark upon speculation particularly where material facts are in dispute or where there are multiple/conflicting reasonable and rational explanations.
FACTS AND ANALYSIS
[12] The principal of Leblon is Mr. DaSilva.
[13] The principle of Insite is Mr. Nicolini.
[14] The parties both point to other dealings between the parties and make allegations, such as threatening conduct or motivation due to other contractual dealings and disputes. However, these are collateral issues and irrelevant to the issues to be decided and do not impact the court’s decision on this motion.
The Contract Price
[15] In September 2018, Leblon entered into a contract (Contract) with Insite to provide labour for the drywall work at a retirement residence (the “Project”) owned by King Station Facility Inc. (“King Station”).
[16] There was no written agreement or other document setting out the Contract price.
[17] Leblon started the drywall work at the Project in October 2018.
[18] What is not in dispute is that Leblon would invoice for the cost of labour performed under the Contract, plus 25% for union costs AND that the profit of 23% would be invoiced upon the “successful completion” of Leblon’s drywall work.
[19] There is a dispute about the Contract price:
a) Leblon states the contract price was $2,524,996.30.
b) Insite states the contract price was $1,305,988.46.
[20] There is no reasoned and clear evidentiary basis for this court to make a fair and just determination as to what the Contract price. Both parties attempt to extrapolate what the Contract price through various calculations, quotes from other parties, to justify their positions.
[21] The calculations put forward by both counsel is nothing more than “fun with mathematics” because the fundamental facts necessary for a proper judicial determination of the Contract price must be based on accepted evidence not on speculative extrapolation of how the Contract price might have been arrived at.
[22] There is another issue. Insite focusses on the initial Contract price (which is also unclear and relies on quotations from another company), but the Site Review Reports show that there were $825,000 worth of extras. Does this impact the Contract price? That is not clear.
[23] And another issue. The 23% profit had not even been invoiced before Insite prevented Leblon from returning to the Project in September 2020.
[24] Insite points to the agreement which confirmed that 95% of the drywall work was done by the end of April 2020. The “95% complete as of the end of April 2020” assists, but the amount invoiced only covers Leblon’s labour costs and does not include the profit, which is deferred under the Contract. The outstanding profit will no doubt add to the amount outstanding to Leblon as of September 2020. And simply using 5% of what was paid is speculation as to the work that was done to complete the Project – after all the Project Site Review shows extras of $825,000.
[25] There are just too many uncertainties to fairly and justly determine the Contract price or the amount outstanding to Leblon.
[26] In Ledcor Construction Ltd. v. Canalfa Liberty Village Homes Inc., [2008], in a motion to reduce security under section 44(5) of the Construction Lien Act, the court held:
A motion to reduce security under section 44(5) of the Construction Lien Act cannot succeed where there are genuine issues of fact that require a trial to determine whether the entire amount claimed or some lesser amount is appropriate. Only where the evidence clearly and unequivocally proves that the lien as registered is excessive or improper should the court reduce or release security at an interlocutory stage. A motion is not a substitute for a lien trial.
(Emphasis added.)
[27] Without establishing a Contract price or even the amount outstanding with any degree of certainty on this record, Insite cannot establish that the amount liened by Leblon was excessive or exaggerated.
[28] I find that, in this case, based on the evidentiary record before me, there is not clear and unequivocal evidence that establishes the amount of the Lien was excessive.
The Last Date Leblon Performed Work on the Project
[29] There is no dispute that the Leblon drywall work on the Project was 95% completed by the end of April 2020.
[30] The date when Leblon last performed work on the Project is a seriously disputed issue between the parties.
[31] Insite submits that Leblon bears the onus of proving on a balance of probabilities that the Leblon Lien was preserved and perfected in time. I agree – at a trial. But this is a summary judgment motion where the onus is on Insite to prove that a trial is not required to demonstrate that the Leblon Lien was registered out of time. This reverses the onus for the motion – but not for the ultimate onus at the trial which remains on Leblon.
[32] Insite relies heavily on the submission that the parties entered into, what Insite calls, a “termination agreement” on May 7, 2020.
[33] I do not accept this submission. The word “termination” is nowhere found in the written signed agreement. The agreement does NOT clearly state that the Contract is terminated or that no further work was to be done by Leblon. The agreement does NOT state that Leblon would not be entitled to “any further payment”. In fact, the agreement expressly excludes “deferred” amounts payable to Leblon – i.e., the profit. While Insite suggests the “quid pro quo” for this agreement was that Insite would not seek to recover the “cost of any deficiencies”, there is no such term and there is no evidence of any deficiencies of Leblon’s work.
[34] All the agreement states are that the amounts due to Leblon, as of May 1, 2020, had been paid except for the Holdbacks and deferred amounts.
[35] I do not find, for the purpose of this motion, that the agreement terminated the Contract. In addition to the above serious shortcomings based on the wording of the agreement, I also rely on the following evidence on this motion:
a) Aside from Mr. Nicolini’s assertion that Leblon “abandoned the contract”, there is no other evidence supporting Leblon intended to or wanted to “abandon” the Contract. And there is considerable evidence to the contrary.
b) The suggestion that Leblon abandoned the Contract, accepted payment of its actual costs for the work done over the 1 ½ year, thereby abandoning its substantial profit, is simply not supportable on the evidence; it makes no sense; and there is no plausible explanation why Leblon would abandon its 23% profit.
c) There is no evidence of any deficiencies in Leblon’s work as of May 2020 or other issue that would suggest a termination was mutually beneficial (as alleged by Insite).
d) There are no other documents supporting an “abandonment”, “termination” or any agreement that Leblon would cease working on the Project.
e) May 2020 was a time which Covid became an issue and the government implemented a financial assistance package for employers/employees. There is evidence before this court that Leblon’s labourers continued to work on the Project for Leblon and were paid in whole or in part by Insite (and in part by Leblon) to take advantage of the government Covid financial assistance. This is a plausible explanation why Leblon did not issue an invoice directly to Insite, but instead allegedly paid cash to Leblon’s labourers while Insite showed some payments directly to some of Leblon’s same labourers for a short time.
f) The fact that Insite may have paid some of Leblon’s labourers directly (in whole or in part) for some time, does not necessarily mean that these labourers didn’t work for Leblon, particularly as there is evidence they believed they continued to work for Leblon, Leblon supervised them, and the labourers reported to the Union they were still working for Leblon on this Project right up until the week ending August 16, 2020 (which would still make the Lien timely).
g) There is evidence that Mr. DaSilva continued to go to the Project site weekly to review the work and continued to make some payments to its labourers. Leblon produced a cheque dated September 2, 2020 for one of the same labourers that worked for Leblon for 1 ½ years and also for a period of time was paid (in whole or in part) by Insite.
h) There is evidence that Leblon’s labourers (as opposed to Leblon) reported their continued work for Leblon on the Project to the Union.
i) There is evidence of Leblon’s timesheets for its labourers from April 30, 2020 to September 2, 2020. While Insite submits these are suspect, I cannot so conclude or ignore these for the purpose of this motion.
j) There is evidence from the Project Site Review Reports that drywall work continued to be performed right through to September or October 2020. This is consistent with Leblon’s evidence and lien. Insite alleges it paid Leblon’s labourers until June 2020. Insite submitted that the drywall work was done. But these Project Site Review reports show that drywall work continued to be done. Insite does not state which labourers or company did this work. Leblon and the labourer’s evidence is consistent with these reports – Leblon’s labourers did the drywall work until September 2020.
k) Up until end of July 2020 Project Site Review Report, only 99% of the drywall work was done. By the August 31, 2020, the reports show that 100% of the drywall work was done. So, drywall work continued. Even when 100% of the drywall work was reported completed, there was still more than $5,000 of drywall work done the next month (September).
l) A Leblon employee was turned away from the Project in early September. Insite alleges this was an attempt to extend Leblon’s lien rights but the evidence from Leblon and the labourers is to the contrary. Of course, the timing of this event may or may not be coincidental – it occurred when the drywall work was virtually complete, and it was time to pay the 23% profit to Leblon.
[36] Having rejected that the evidence on this motion establishes the May 7, 2020 document is a “termination” agreement, this does not form a basis for finding that the Lien was out of time.
[37] Based on the above evidence, this court cannot and does not have sufficient and credible evidence to conclude with confidence that Leblon ceased to perform work on the Contract at the time alleged by Insite (end of April 2020) or at any earlier time before September 2, 2020 that would make the Lien “out of time”.
[38] Let me deal with several Insite’s submissions on this issue:
a) The fact that Leblon did not submit invoices after April 2020 is not determinative, particularly in light of the significant amount of contrary evidence that drywall work and payment continued by the same Leblon labourers who had worked throughout the Project, even though some were paid in part by Insite and in part by Leblon in May and June. I note that the bookkeeper, Ms. Munro, did the invoicing for both Insite and Leblon stated in her cross-examination that she reported predominantly to Insite’s principal, Mr. Nicolini. The issue in law is when Leblon performed its last work, NOT when did Leblon sent its last invoice to Insite.
b) The fact that Leblon didn’t submit Union reports after May 2020 means nothing given that Leblon’s labourers submitted reports directly to the Union throughout the summer of 2020 setting out that they were working on the Project for Leblon.
c) The fact that Insite paid the same Leblon labourers for a part of the summer of 2020 is not evidence that Leblon ceased to work on the Project given the evidence of the labourers that they continued to work for and were supervised by Leblon up to September and the lack of evidence from Insite as to who was performing the drywall work in July and August 2020.
d) The fact that 95% of the drywall work was done by April 2020 does not assist the analysis. The Project records show that drywall work continued right through to October 2020. It is not the amount of drywall work that is important, it is whether there was actual drywall work done by Leblon under the Contract until September 2020. Leblon’s evidence is consistent with the Project Site Review Reports. Insite’s evidence is not.
[39] Based on the above, I cannot and do not find that Insite has established, on clear and convincing evidence, that Leblon’s Lien was registered out of time.
Conclusion
[40] The motion is dismissed.
[41] If the parties cannot agree on costs,
a) Leblon has 2 weeks to deliver written submissions – 5-page max, 12 font, double spaced, PLUS any offers, authorities and a Bill of Costs.
b) Insite shall have 2 weeks thereafter to deliver responding submissions - 5-page max, 12 font, double spaced, PLUS any offers, authorities and a Bill of Costs.
c) There will be no reply submissions, unless requested by the court.
Released: May 27, 2022 RSJ RICCHETTI
COURT FILE NO.: CV-20-00004085-0000
DATE: 2022 05 27
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: LEBLON DRYWALL INC. v. KING STATION FACILITY and INSITE CONSTRUCTION MANAGEMENT INC.
COUNSEL: J. Frustaglio, for the Plaintiff
S. Schwartz and E. Quail, for the Defendants
ENDORSEMENT
RSJ RICCHETTI
Released: May 27, 2022