COURT FILE NO.: CV-22-689245
DATE: December 7, 2022
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: E-Tech Electrical Services Inc. v. Churchill Three LP, Churchill Three Develco Inc., Diamante Development Corporation and Ledcor Construction a.k.a. LCG Residential Builders Ltd.;
BEFORE: ASSOCIATE JUSTICE C. WIEBE
COUNSEL: Jonathan Frustaglio for E-Tech Electrical Services Inc. (“E-Tech”);
Robert Harason for Churchill Three LP, Churchill Three Develco Inc. and Diamante Development Corporation (together “the Owners”);
Kyle MacLean for Ledcor Construction a.k.a. LCG Residential Builders Ltd. (“Ledcor”);
HEARD: December 5, 2022.
COSTS DECISION
[1] E-Tech brought this motion for an order requiring that the Owners and Ledcor provide the “documents” and information required by the old Construction Act, R.S.O., c. C.30 (“CA”) section 39. E-Tech served its motion record motion on October 25, 2022. On November 1, 2022 the Owners delivered a written section 39 response that satisfied E-Tech. On November 25, 2022 Ledcor delivered a written section 39 response that satisfied E-Tech.
[2] E-Tech now seeks costs of this motion. It filed a costs outline that shows $8,399.17 in partial indemnity costs, $10,782.68 in substantial indemnity costs and $13,166.19 in actual costs. E-Tech wants the substantial indemnity amount of $10,782.68 paid by both sets of defendants, with the Owners contributing 75% ($8,087.01) and Ledcor 25% ($2,695.67).
[3] The Owners served a costs outline that shows $13,442.43 in partial indemnity costs and $20,038.81 in substantial indemnity costs. The Owners want me to deny E-Tech costs and to award them either one of those costs totals. Ledcor seeks no costs. It wants me to award no costs to E-Tech as against Ledcor or costs as against Ledcor of between $1,200 and $1,500.
[4] Having read the filed material and considered the oral submissions of counsel, I have decided that a reasonable award of costs is as follows: the Owners must pay E-Tech $8,000 and Ledcor must pay E-Tech $1,000. These costs must be paid in 30 days.
[5] The main reason for my decision is that the Owners and Ledcor, in my view, caused this unnecessary motion to be brought and then, when the two of them finally did respond properly to the section 39 demand, made no reasonable effort to resolve the motion. The following are particulars of these reasons:
• This motion was made necessary by the clear breach by the Owners and Ledcor of their obligations under CA section 39 to respond to the E-Tech section 39 demand properly within 21 days. The defendants concede that by September 20, 2022 they were served with the E-Tech letter demand dated September 16, 2022. The service could have been earlier by email, but the evidence of that earlier service was not in the motion material. That means that the defendants had until as late as October 11, 2022 to respond properly to the E-Tech demand. In that time period the following were the responses from the Owners. On September 20, 2022 Mr. Harason emailed Mr. Moubarak, counsel for E-Tech, advising wrongly that E-Tech “was not entitled to make or receive an answer to a s. 39 notice.” Later that day on September 20, 2022 Mr. Harason, without resiling from his client’s position, stated that his client in any event had 21 days to respond. He did not state that his client had changed its mind and would answer. Ledcor made no response.
• The Owners’ motion material contains an affidavit of Paolo Palamara, the president of Churchill Three Develco Inc., wherein it is stated that the Owners could not complete a timely section 39 response because of the deficiencies and incomplete work of E-Tech, which necessitated time to evaluate. This was a self-serving statement that lacked credibility. Had there been such difficulty, the Owners should have advised E-Tech of that difficulty during the 21 day notice period and asked for more time. That would have shown that the Owners respected their statutory obligations. That did not happen. I find that the Owners did not respond because they decided wrongly they did not have to.
• Then on October 13, 2022, after the notice period and in response to a motion threat from Mr. Moubarak, the Owners changed their mind. Mr. Harason emailed stating that his clients would respond to the section 39 demand. On October 17, 2022 there was another email from Mr. Harason purporting to be a proper section 39 response. It was not. In particular, what was missing was a proper description of the state of accounts between Churchill Three Develco Inc. and E-Tech as required by the old section 39. There was no information as to the value of the work done and the holdbacks kept in accordance with the CA; see Urbancorp Building Groups Corp. v. Guelph (City), 2009 CarswellOnt 8127 (SCJ) at paragraph 9. There was still no response from Ledcor.
• On October 25, 2022 E-Tech served its motion material. Two days later, E-Tech’s lawyers emailed advising that the motion date was December 5, 2022. Finally, there was a response from Ledcor. On November 7, 2022 it retained a lawyer. As for the Owners, Mr. Harason, having just responded to the E-Tech section 39 demand consistently on behalf of all the Owners, suddenly sent varying emails as to his inability to accept service. This forced E-Tech to serve the Owners directly thereby causing E-Tech further unnecessary inconvenience and expense.
• On November 1, 2022 the Owners finally gave a fulsome section 39 response that E-Tech found satisfactory. On November 25, 2022 Ledcor finally gave a fulsome section 39 response that E-Tech found satisfactory. Neither of these parties, however, made any attempt to resolve the motion by offering to pay E-Tech its costs of the motion.
[6] Mr. Harason rightfully pointed out that the E-Tech motion wrongly sought the disclosure of documents. I note that this request for relief was withdrawn while the motion was pending, but it was there when the motion was brought. Mr. Harason also pointed out rightfully that Mr. Moubarak used unnecessary personal insinuations and aspersions against Mr. Harason in correspondence, thereby inflaming the situation. This is a factor in my decision.
[7] Mr. Harason also argued that the motion was unnecessary as the demanded information was within the knowledge of E-Tech; see Coastal Steel Construction Ltd. v. Man-Shield (NOW) Construction Inc., 2015 ONSC 3923 at paragraphs 14 and 15. I disagree that there is evidence in this motion that E-Tech was at the outset of the motion in possession of the demanded information. What section 39 requires is the disclosure of the Owners’ position on the stated issues such as the value of the work done and the holdback, a position that will bind them.
[8] As to the quantum of the costs sought, there was no issue. This makes sense as the Owners costs outline exceeds the numbers in the E-Tech costs outline. The costs requested by E-Tech are well within what the Owners could reasonably have expected to pay in the event of a loss.
[9] Mr. MacLean argued that E-Tech should be denied costs as against Ledcor. He argued that Mr. Moubarak promised not to pursue costs if Ledcor gave a proper response. I am not satisfied that Mr. Moubarak gave such a promise. He just promised to “get instructions” on the point. After all, by the time Mr. MacLean got involved in November, 2022 Ledcor had been instrumental in causing this motion and the motion costs were obviously a real issue.
[10] Mr. MacLean also argued that by email dated November 24, 2022 Mr. Moubarak made the issue of costs dependent on the disclosure of documentation by Ledcor. Again, document disclosure is not what is required by section 39. Then when Ledcor did provide its section 39 response on November 25, 2022, a response that E-Tech found satisfactory, Mr. Moubarak emailed further stating that he found the information “suspicious” and threatened to sue Ledcor, with whom E-Tech had no contract. This again was unnecessary and inflammatory. Ledcor had no choice but to file responding motion material as a result. This was inappropriate conduct on the part of E-Tech and will detract from its costs entitlement from Ledcor.
[11] As a result, I find that a reasonable costs order in the circumstances is the following: the Owners must pay E-Tech $8,000 in costs in 30 days from today; Ledcor must pay E-Tech $1,000 in costs in 30 days from today. The Owners are denied costs.
DATE: December 7, 2022 _____________________________
ASSOCIATE JUSTICE C. WIEBE