COURT FILE NO.: CV-17-1156-00
DATE: 2022 12 09
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
THE REGIONAL MUNICIPALITY OF PEEL
PLAINTIFF
– and –
AD STEEL DETAILING AND FABRICATION INC. and R-CHAD GENERAL CONTRACTING INC.
DEFENDANTS
Jennifer Bruce, Lawyer for the Plaintiff
David Truman, Lawyer for the Defendant R-Chad General Contracting Inc.
HEARD: November 23, 2022
ENDORSEMENT
Ranjan K. AGARWAL J.
I. Introduction
[1] The defendant R-Chad General Contracting Inc. moves for summary judgment on all of the claim in the plaintiff The Regional Municipality of Peel’s statement of claim or, alternatively, for a determination before trial of a question of law raised by R-Chad’s statement of defence. R-Chad argues that Peel’s claim against it is time-barred by the Limitations Act, 2002, SO 2002, c 24, Sched B.
[2] Peel hired R-Chad to install guardrails on the roofs of two long-term care homes. As the work was being completed, the roofs started leaking. On March 13, 2015, Peel’s engineering consultant concluded that the leaks were caused by tears in the roof membrane. Peel sued R-Chad and R-Chad’s subcontractor, the defendant AD Steel Detailing and Fabrication Inc., for negligence and breach of contract on March 13, 2017. R-Chad argues that Peel discovered its claim against the defendants in January 2015, meaning that Peel’s claim was started after the limitation period had run.
[3] R-Chad’s motion is dismissed. Peel couldn’t have reasonably discovered its claim against the defendants until March 13, 2015, when its consultant opined on the cause of the leaks. Thus, Peel’s claim is not barred by the Limitations Act, 2002.
II. Facts
[4] In 2014, Peel hired R-Chad to install rooftop guardrails at the Malton Village and Tall Pines LTC homes. R-Chad subcontracted installation of the guardrails to AD Steel. The installation began in November 2014. The work was substantially completed on January 7, 2015. It was finally completed on both sites on January 29th.
[5] Tall Pines’s staff discovered a leak affecting the Adult Day Services program area at Tall Pines on January 4, 2015. R-Chad was using the roof above this area as an access point or staging area as that roof had the easiest access from the loading dock. Tall Pines’s staff emailed Bob Ho, a Capital Project Manager employed by Peel, who then involved Margarita Perez, another Capital Project Manager. Peel was unsure whether R-Chad caused the leak as there was no equipment or guarding on the roof in the leak area. Peel thought the leak might be from the roof drain.
[6] On January 5th, Semple Gooder Roofing Corporation checked the roof at Tall Pines. Paul Goodban, Tall Pines’s Facility Services Supervisor, emailed Ho:
They are unable to source the location of the leak – they checked the roof drain and feel that it is installed properly and is functioning properly and there is no obstruction in the drain line. They think that we have a tear in the membrane that allowed water to collect between the roof deck and the roofing material/insulation during the mild temperatures and rain yesterday.
The collection of water has stayed liquid and is still dripping out into the ceiling of the ADS area. Unfortunately, they cannot source where the puddle is as the gravel on top of the roof has frozen up and is mixed with ice/snow and stuck to the roof and they feel the water could be migrating from anywhere on the roof to the drain.
[7] Peel then asked Stephenson Engineering Ltd. to check the roof. Stephenson engaged Nortex Roofing Ltd., the original roof installer, to fix roof penetrations around the drain. Nortex couldn’t do so until January 14th because of weather conditions. Stephen Spano, a Nortex employee, emailed Ho the next day:
Our service crew suspects that there are two possibilities that could not be explored at the time of the site visit due to the cold. The first being that there may be a puncture in the field of the roof (which is unlikely due to the components of the new roof assembly) and/or two that there is a plumbing issue where the system had backed-up.
[8] On January 21st, Peel asked Stephenson to do infrared scanning to find the source of the leaks. Stephenson agreed but said it couldn’t do so until Spring: “At this time we hope we have fixed the leakage but will have to continue to monitor for few more days before concluding anything. If there’s a tear in the membrane we will be able to see it physically once the snow on the roof melts.” Peel continued to insist that Stephenson review the membrane.
[9] On February 11th, there was another leak at Tall Pines—Peel believed it was the damaged membrane and planned to inform Urbis Engineering Ltd., the consultant for the project, and R-Chad. In the interim, Peel determined that any further investigation would have to wait until the snow on the roof melted.
[10] On March 9th, Peel contacted Stephenson about its investigation as the weather was nicer. On March 11th, there were more leaks at Tall Pines. Peel was eager to get “to the root of the problems” and “move ahead with the investigation”.
[11] Stephenson inspected Tall Pines’s roof on March 13th. It discovered a cut in the roof membrane. That day, Peel notified R-Chad’s insurer that its investigation “has been completed” and it “would appear that” R-Chad was liable for the damage to “the roof causing several water losses within the building and needing subsequent roof repairs.”
[12] Malton Village’s staff discovered a leak in the staff lunchroom and change areas on January 3, 2015. R-Chad was either doing work above this area or passed close by whenever they brought material up to the roof. At the time, Malton Village’s staff thought it was a maintenance issue. The problem wasn’t communicated to Perez until March 13th.
[13] On March 18th, Urbis inspected the roofs at Tall Pines and Malton Village. It found cuts in the roof membranes. It concluded that the “cut was most probably caused by an improper handling of materials and tools during construction of Roof Safety Guardrails” by R-Chad.
[14] As early as December 12, 2014, Peel understood that the installation of the guardrails might damage the roof membrane.
[15] Peel started this proceeding by issuing a notice of action on March 13, 2017. The pleadings have closed and the parties have completed examinations for discovery. The action hasn’t been set down for trial.
III. Legal Framework
[16] The court shall grant summary judgment if the court is satisfied that there’s no genuine issue requiring a trial with respect to a claim (Rules of Civil Procedure, r 20.04(2)(a)). There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process: (a) allows the judge to make the necessary findings of fact; (b) allows the judge to apply the law to the facts; and (c) is a proportionate, more expeditious and less expensive means to achieve a just result. See Hryniak v Mauldin, 2014 SCC 7 at para 49.
[17] Section 5 of the Limitations Act, 2002, was enacted to bring greater clarity and certainty to the determination of when a limitation period starts. Unless the Act provides otherwise, a proceeding must be commenced within two years of when “a claim is discovered” (Limitations Act, 2002, s 4). A claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which a “plausible inference of liability” on the defendant’s part can be drawn. See Grant Thornton LLP v New Brunswick, 2021 SCC 31 at paras 42-43; Rooplal v Fodor, 2021 ONCA 357 at para 72.
[18] The material facts that must be actually or constructively known are listed in sections 5(1)(a) to (c) of the Act: when the plaintiff knows, or ought to have known, they have suffered loss, injury, or damage caused by or contributed to by the acts or omissions “of the person against whom the claim is made”, and that it is appropriate to start a proceeding. This list is cumulative, not disjunctive. For instance, knowledge of a loss, without more, can’t trigger the limitation period. See Rooplal, at paras 72-73; Grant Thornton LLP, at paras 42-43.
[19] In assessing the plaintiff’s state of knowledge, both direct and circumstantial evidence can be used. Moreover, a plaintiff will have constructive knowledge when the evidence shows that the plaintiff ought to have discovered the material facts by exercising reasonable diligence. Suspicion may trigger that exercise. See Grant Thornton LLP, at para 44.
[20] A plausible inference is one which gives rise to a “permissible fact inference”. Determining whether a plausible inference of liability can be drawn from the material facts that are known is the same assessment as determining whether a plaintiff had “all of the material facts necessary” to determine that it had prima facie grounds for “inferring liability on the part of the defendant”. See Grant Thornton LLP, at para 45.
[21] The plausible inference of liability requirement ensures that the degree of knowledge needed to discover a claim is more than mere suspicion or speculation. This approach accords with the principles underlying the discoverability rule, which recognize that it is unfair to deprive a plaintiff from bringing a claim before it can reasonably be expected to know the claim exists. At the same time, requiring a plausible inference of liability ensures the standard doesn’t rise so high as to require certainty of liability. A plaintiff need not know the exact extent or type of harm it has suffered, or the precise cause of its injury, for a limitation period to run. See Grant Thornton LLP, at para 46.
[22] Trivial damages don’t trigger a limitation period since a prudent plaintiff wouldn’t bring an action to recover a trivial loss. See Gillham v Lake of Bays (Twp.), 2018 ONCA 667 at para 22.
[23] A plaintiff is required to act with due diligence in determining whether it has a claim. A limitation period will not be tolled while a plaintiff sits idle and takes no steps to investigate the matters referred to in section 5(1)(a). While some action must be taken, the nature and extent of the required action will depend on all the circumstances of the case. See Longo, at para 42. In Soper v Southcott, 1998 CanLII 5359 (Ont CA), the Court of Appeal explained how this analysis works in the context of a medical negligence case:
Limitation periods are not enacted to be ignored. The plaintiff is required to act with due diligence in acquiring facts in order to be fully apprised of the material facts upon which a negligence or malpractice claim can be based. This includes acting with diligence in requesting and receiving a medical opinion, if required, so as not to delay the commencement of the limitation period. In some cases, a medical opinion will be necessary to know whether to institute an action. In other cases, it will be possible to know material facts without a medical opinion, and the medical opinion itself will simply be required as evidence in the litigation. In the latter instances, the time of receipt of the medical opinion is immaterial to the commencement of the running of the limitation period.
[24] R-Chad argues that Grant Thornton LLP changes the law so that expert opinions are never needed on a limitations motion: “The standard cannot be so high as to make it possible for a plaintiff to acquire the requisite knowledge only through discovery or experts” (at para 48). I disagree. Grant Thornton LLP affirms that a plaintiff can’t always wait until it has an opinion on whether the defendant breached the standard of care to start a lawsuit—the limitation period will begin to run when it has the material facts. In my view, the Supreme Court’s statement in Grant Thornton LLP aligns with Soper—it may be possible to know the material facts without an expert’s opinion but that doesn’t preclude circumstances where an opinion may be necessary.
IV. Analysis and Disposition
[25] R-Chad says that Peel is presumed to have discovered the claim on January 29, 2015, when the project was substantially completed, or early January when the roofs started leaking. Peel doesn’t challenge these presumptive dates. But Peel says that it has met the burden of proving that it didn’t have constructive or actual knowledge of the matters giving rise to its claim until March 13, 2015 (when Stephenson inspected Tall Pines’s roof). Put another way, Peel says that it couldn’t have discovered the claim, through the exercise of reasonable diligence, before March 13th.
[26] I agree. Peel knew that it suffered a loss or damage at both Tall Pines and Malton Village by January 5th. It didn’t know that R-Chad caused the loss until Stephenson inspected Tall Pines’s roof on March 13th.
[27] R-Chad argues that Peel didn’t need an investigation. It says that Peel had all of the material facts by January 5th: (a) Peel anticipated that R-Chad’s work might damage the roof membranes; (b) some leaks were on floors directly below the roofs and around roof access points; and (c) since both buildings had leaks, Peel should have ruled out plumbing issues.
[28] Though some of these facts led Peel to suspect that R-Chad’s work caused the leaks, Nortex told Peel that a “puncture in the field of the roof” was “unlikely”. The project managers didn’t know about both leaks until March 13th (though, perhaps, Nortex’s conclusion might have been different if it knew about the leak at Malton Village). Malton Village’s leak appeared trivial, given that the staff treated it as a maintenance issue not a potential claim. Peel didn’t have all of the material facts necessary to determine that it had prima facie grounds for inferring liability on R-Chad’s part.
[29] Peel’s suspicion that the leaks may have been caused by R-Chad’s work on the roof triggered the reasonable due diligence exercise. On January 5th, Semple Gooder suggested there might be a tear in the roof membrane. They couldn’t find the source of the leak because of gravel, ice, and snow on the roof. On January 14th, Nortex suggested two possible causes—a plumbing issue or a puncture in the field of the roof (which it thought was unlikely). Through February and early March, Peel encouraged Stephenson to complete its investigation. Stephenson couldn’t do so until March 13th when the snow melted.
[30] R-Chad argues that Peel should have cleared the snow before March 13th. The law doesn’t require a plaintiff to take every step possible to discover the claim. The plaintiff only has to act reasonably to investigate and determine whether they have a claim (see Longo, at para 43). Peel remained in communication with Stephenson about the investigation, encouraging it to come as soon as the snow melted, which was reasonable in the circumstances.
[31] Until March 13th, Peel only had a mere suspicion or speculation that R-Chad may have caused the leaks. It acted with due diligence to acquire the facts to be apprised of the material facts on which its negligence and breach of contract claims are based. An engineer’s opinion was necessary to know whether to initiate the action. Thus, Peel had those material facts only on March 13, 2015, which started the limitation period. The outcome here might have been different if Peel waited for Urbis’s report or the results of Stephenson’s thermal scans (which were conducted in April 2015 and reported in May 2015) to trigger the limitation period. But it didn’t.
[32] R-Chad’s motion to strike out Peel’s claim is also dismissed. Limitation issues can only be determined under rule 21.01(1)(a) where pleadings are closed and the facts are undisputed. See Clark v Ontario (AG), 2019 ONCA 311 at para 44, var’d on other grounds 2021 SCC 18. That situation is “very narrow”, and such motions are discouraged unless the parties agree there are no material facts in dispute. Here, there’s no such agreement and, as such, the limitations issue should not be decided under Rule 21.
[33] I also question the efficiency of moving under both Rule 20 and Rule 21 at the same time. I can’t think of a scenario when the court would dismiss a Rule 20 motion but grant a Rule 21 motion on limitations. Though it’s possible the court grants the Rule 21 motion and doesn’t consider the Rule 20 motion, that also seems unlikely. If there are no material facts in dispute, there would be no need for the parties to engage in the more robust evidentiary process required under Rule 20. In my view, Rule 21 limitation motions, if they meet the narrow situation discussed in Clark, should be used as post-pleading, pre-discovery motions to efficiently end time-barred actions. If the defendant is moving to end the action on limitation grounds after discovery, Rule 20 should be used.
V. Ancillary Issues
[34] The parties’ materials raise several ancillary issues that I need not decide given my disposition of this motion. That said, as these issues were fully briefed, I comment on them here.
[35] R-Chad pleaded its limitations defence in its statement of defence. Peel didn’t deliver a reply. In Collins v Cortez, 2014 ONCA 685 at para 10, the Court of Appeal held that “if a limitations defence is raised…the material facts relevant to discoverability should be pleaded in reply.” R-Chad argues that since no reply was filed, Peel can’t rely on the discoverability principle. Collins was dealing with a situation where a plaintiff didn’t plead any discoverability facts in its statement of claim and, as such, had to plead them in reply. Peel pleaded its discoverability facts in its statement of claim. Thus, no reply was necessary.
[36] R-Chad also argues that the use of “discovery” in a heading in the statement of claim is an admission by Peel that it discovered the claim in January 2015. In my view, Peel hasn’t admitted that the claim was legally discovered in January 2015—it’s merely pleading that it found or observed the leaks then.
[37] Peel argues that R-Chad’s Rule 20 motion should be dismissed because there’s a genuine issue for trial—it submits that the court should hear “expert evidence as to whether it would have been reasonable given the weather conditions to detect and locate tears in the roof membrane prior to March 13, 2015.” As discussed above, I believe that Peel has met its burden of showing that its claim was not discoverable until March 13, 2015. That said, I would not have dismissed this motion on the basis that Peel requires an expert’s report. First, I don’t believe the issue of weather conditions is a matter of opinion evidence. Indeed, Peel relied on fact witnesses to prove that point. Second, if expert evidence was necessary, Peel should have put it into evidence now. While the onus is on R-Chad to establish the lack of a genuine issue requiring a trial, Peel must put “its best foot forward” with respect to the existence of material issues to be tried. See Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral v Aga, 2021 SCC 22 at para 25. There is no bar on relying on an expert’s report on a summary judgment motion.
[38] Peel also argued that even if its negligence claim were time-barred, the limitation period for its breach of contract claim, which is based on the two-year warranty period in the contract between the parties, didn’t start running until Peel made an indemnity claim. Peel relies on Markel Ins. Co. of Canada v ING Ins. Co. of Canada, 2012 ONCA 218. In that case, the Court of Appeal held, at para 27: “the first party insurer suffers a loss from the moment the second party insurer can be said to have failed to satisfy its legal obligation to satisfy the loss transfer claim.” On that basis, Peel says the limitation period for the breach of contract claim began to run when it claimed indemnity from R-Chad on March 13, 2015. In my view, the principles applicable to insurance contracts aren’t necessarily transferable to warranty claims (see also Maisonneuve v Clark, 2022 ONCA 113 at para 12, which appears to narrow Markel’s application to claims under the Insurance Act, RSO 1990, c I.8). Also, if Peel is correct, then it could have waited until January 2017 (when the warranty period expired) to make its claim. Under Peel’s theory, the limitation period would not begin running until then. If that’s right, I believe that this outcome might unfairly tip the “equitable balance of interests” that discoverability is intended to achieve.
VI. Order
[39] In oral submission, Peel asked for a declaration that it discovered the claim on March 13, 2015. Peel didn’t move for such a declaration. It didn’t agree to submit this dispute to resolution by summary judgment (see Combined Air Mech. Services Inc. v Flesch, 2011 ONCA 764 at para 72, aff’d Hryniak). A party can’t refuse to submit a dispute to resolution but then argue, at the same time, there should be summary judgment only if it wins.
[40] Thus, I endorse an order dismissing R-Chad’s motion for summary judgment and for a determination of a question of law. In accordance with the parties’ agreement, I endorse an order fixing the costs of the motion in the amount of $5000 and order them to be paid by R-Chad to Peel within 30 days.
Agarwal J.
Released: December 9, 2022
COURT FILE NO.: CV-17-1156-00
DATE: 2022 12 09
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
THE REGIONAL MUNICIPALITY OF PEEL
PLAINTIFF
– and –
AD STEEL DETAILING AND FABRICATION INC. and R-CHAD GENERAL CONTRACTING INC.
DEFENDANTS
ENDORSEMENT
Agarwal J.
Released: December 9, 2022