Court File and Parties

Court File No.: CV-21-00658578-0000 Date: 2023-05-24 Superior Court of Justice – Ontario

Re: G GROUP 5220 YONGE LTD., o/a G GROUP, Plaintiff And: STANTEC CONSULTING LTD., GORDON A. JOHNSTON and PAUL J.D. ALPERN, Defendants

Before: Koehnen J.

Counsel: Jeff Rosekat for the moving party defendants Jonathan L. Frustaglio for the responding party plaintiff

Heard: May 11, 2023

Endorsement

Overview

[1] In 2016, the plaintiff, G Group, engaged Stantec Consulting Ltd. to provide certain engineering design services to a condominium development that G Group was building on Yonge Street in North York. G Group and Stantec encountered difficulties with each other which led Stantec to terminate the relationship by letter dated August 8, 2018. On March 10, 2021 G Group commenced this action against Stantec Consulting Ltd. and the two individual defendants arising out of the termination. The defendants bring a motion for summary judgment to dismiss the claim on the grounds that it is barred by the Limitations Act and on the grounds that the plaintiff has raised no issue against the individual defendants that requires a trial to resolve.

[2] I grant the motion for summary judgment in favour of the individual defendants but dismiss the motion for summary judgment against the defendant Stantec. The record discloses no viable claim against the individual defendants, let alone a claim that requires a trial to resolve. The limitations issue is more complex than counting two years from the termination letter as Stantec suggests. The limitations issue does raise issues that require a trial to resolve.

The Test for Summary Judgment

[3] The test for summary judgment is not in dispute. The relevant principles may be summarized as follows:

(a) The court shall grant summary judgment if “the court is satisfied that there is no genuine issue” that requires a trial. (Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 20).

(b) There is no genuine issue that requires a trial if 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 (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.” (Hryniak v. Mauldin, 2014 SCC 7 at para.49).

(c) In determining whether a trial is required, rule 20.04(2.1) allows the court to weigh evidence, evaluate credibility and draw any reasonable inference from the evidence, unless it is “in the interest of justice for such power to be exercised only at a trial”. If these expanded fact-finding powers do not enable the court to decide the matter, it may direct that a mini-trial be conducted if doing so would allow the court to resolve the matter. (Hryniak, at paras. 44-45).

(d) Each party must put its best foot forward; the responding party “must lead trump or risk losing”; and the motion judge is entitled to assume that all evidence that might be adduced by the respondent at trial has been adduced on the motion. (Northern Industrial Services Group Inc. v. Duguay, 2016 ONCA 539, at paras. 16-17; Queen Street Holdings Inc. v. Z-Teca Inc., 2017 ONSC 5890, at paras. 8-10; Tim Ludwig Professional Corp. v. BDO Canada LLP, 2017 ONCA 292, at para. 54; Chernet v. Galaites, 2017 ONCA 337, at para. 12; Auciello v. 3877337 Canada Inc. (c.o.b. HLC Home Loans Canada), 2017 ONSC 2360, at paras. 33 and 39, aff’d 2018 ONCA 377).

The Claim Against the Individual Defendants

[4] The individual defendants are Gordon A. Johnston and Paul J. D. Alpern. Mr. Johnston is the CEO of the Stantec family of companies. Mr. Alpern is the General Counsel of the Stantec family of companies. Both are also the sole directors of the defendant Stantec Consulting Ltd. The Stantec family of companies employs 25,000 people in 300 offices around the world. Its market capitalization is approximately $9 billion.

[5] The plaintiff’s responding materials on the summary judgment motion do not raise any allegations against Johnston or Alpern. The plaintiff’s affidavit merely identifies them as the CEO and General Counsel of Stantec. The plaintiff’s primary affiant and principal is Jack Scivoletto. He admits he had no conversations with either of Johnston or Alpern. The plaintiff’s second affiant, Carl Di Giacomo, did not even know who Johnston and Alpern were. Mr. Di Giacomo described himself as the main contact between the plaintiff and Stantec.

[6] The plaintiff says summary judgment against Johnston and Alpern is not appropriate because neither swore an affidavit on this motion denying their involvement in the matters at issue. Instead, Stantec’s affidavit denying their involvement comes from David Clark and is based on hearsay from Johnston and Alpern to the effect that they had no involvement with the matters at issue in this claim. The plaintiff submits that one of the issues for trial is how high the matters of which the plaintiff complains rose within the Stantec organization.

[7] The plaintiff’s position is insufficient to withstand a motion for summary judgment. It is not up to Johnston and Alpern to defend themselves in a vacuum. In light of the absence of any specific allegations against Johnston and Alpern, once there is (even weak) evidence in the record denying their involvement, it is up to the plaintiff to refute that evidence. It is understandable that the CEO and General Counsel of a corporation the size of Stantec would not want to expose themselves to cross-examination unnecessarily. It would have been easy for the plaintiff to respond to the hearsay statements about Johnston’s and Alpern’s lack of involvement by introducing some sort of evidence to demonstrate that they were involved. Both of the plaintiff’s affiants admit that they had no contact with Johnston or Alpern. The plaintiff has produced no documents to suggest that they were otherwise involved in the matters at issue. That is not surprising. The contract in question had a value of approximately $400,000. If anything, it would be surprising if the CEO and General Counsel of a $9 billion corporation had been involved in a contract of that size.

[8] As noted above, a judge on a motion for summary judgment is entitled to assume that the evidence on the motion will be the same as the evidence at trial. Not only does the evidence before me fail to raise an issue vis-à-vis the personal defendants that requires a trial to resolve, the evidence raises no issue of any sort against the individual defendants.

[9] Nor does the statement of claim raise any sustainable issue against the individual defendants. The claim alleges that the individual defendants:

(a) owed and breached a common law duty of care to G Group to, among other things, ensure that Stantec did not breach the Stantec Professional Services Agreement; (Statement of Claim paras. 37, 38, 40, and 41.)

(b) owed and breached a fiduciary duty to act in the best interest of G Group; (Statement of Claim paras. 42-44.)

(c) made fraudulent or negligent misrepresentations; (Statement of Claim paras. 19, 44, 26-33.)

(d) were using Stantec as their alter ego. (Statement of Claim para.53.)

[10] Those claims do not withstand scrutiny. Officers and directors owe a duty of care to the corporation. They do not, absent some additional circumstances, owe a duty of care to clients of the Corporation. The same can be said of fiduciary duties. While officers and directors would be liable for fraudulent or negligent misrepresentations, there are no particulars of such misrepresentations by the individual defendants in the statement of claim and there is no evidence of such misrepresentations in the record on this motion. Finally, while using a corporation as one’s alter ego can lead a court to pierce the corporate veil and attach personal liability to an officer or director, the court must have specific evidence of such conduct before it can attach liability. There is simply no evidence in the record before me of any conduct by the individual defendants that could even give rise to an issue about their having used Stantec as their alter ego, let alone an issue that requires a trial to resolve.

[11] The plaintiff notes that dismissing the claim against the individual defendants would amount to granting partial summary judgment and relies on the Court of Appeal’s warning about such relief in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 to the effect that:

What happened here illustrates one of the problems that can arise with a staged summary judgment process in an action where credibility is important. Evidence by affidavit, prepared by a party's legal counsel, which may include voluminous exhibits, can obscure the affiant's authentic voice. This makes the motion judge's task of assessing credibility and reliability especially difficult in a summary judgment and mini-trial context. Great care must be taken by the motion judge to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all. (Baywood at para. 44.)

[12] Those concerns do not arise here because there is no evidence to implicate the individual defendants in the events at issue.

[13] Given that I am entitled to assume that the record at trial will be the same as the record before me on summary judgment, there is no basis on which a trial judge could come to a different view on the liability of the individual defendants.

[14] As a result of the foregoing, I dismiss the action against Johnson and Alpern.

The Limitations Issue

[15] The concerns that the court of appeal raised in Baywood do, however, apply to the limitations issue. The determination of the limitations issue requires a deep dive into conflicting evidence which may turn on issues of credibility and may require the court to draw inferences. Although I am mindful that the Rules of Civil Procedure give a judge on a motion for summary judgment the power to make findings of credibility, draw inferences of fact and hear live evidence, it would not be appropriate to exercise those powers here.

[16] As a general rule, summary judgment is most appropriate for matters where there is a specific, pointed, easily extricable issue that will resolve the case. While it is possible that a limitations issue can be sufficiently narrow to warrant summary judgment, that is not the case with the motion before me.

[17] The amount of evidence and detail that will be required to make findings on the limitations issue is such that it would not be efficient, practicable or appropriate to do so on a motion for summary judgment. Those issues, as they arise in this case are classic issues for which a trial is required.

[18] The limitations issue raises two fundamental questions:

(i) What constitutes the agreement? (ii) When ought G Group to have discovered its claim?

What Constitutes the Agreement?

[19] The nature of the agreement in question is an issue here because the parties were involved in an exercise akin to a “battle of the forms.”

[20] Stantec says its standard form agreement applies. It provides for the application of a simple two-year limitation period. This point is important for Stantec because work on the contract spanned the Covid pandemic. During the Covid pandemic, Ontario passed emergency regulations that suspended limitations periods for six months between March 16, 2020 and September 13, 2020. (46 O. Reg. 73/20 and O. Reg 457/20 (which revoked O. Reg 73/20) (collectively, the “Emergency Regulations”)). The Emergency Regulations, however, applied only to statutory limitation periods. They did not apply to contractual limitation periods. A non-consumer contract, like the Stantec standard form agreement, can amend a statutory limitations period. (Limitations Act, s.22(5) and 22(6); Cargojet Airways v. Aveiro, 2016 ONSC 2356 at paras. 49 to 56). The Stantec standard form contract does just that. As a result, the 6 month extension to limitations periods under the Emergency Regulations would not apply to Stantec’s standard form agreement.

[21] The difficulty with Stantec’s argument is that there is no single document that contains the terms of the contract and the signatures of the parties. Instead, Stantec relies on an email dated April 1, 2016, from Carl Di Giacomo of G Group to Kenny Smith of Stantec with the subject line “Stantec: Contract Signatory Page.” Attached to that email, with the file name “Stantec Signatory Page April 1 2016.pdf”, was the execution page of the Stantec agreement, signed by the President of G Group, Jack Scivoletto. Mr. Scivoletto admits that the signature is his and that when he signed, the page had already been counter-signed by Kenny Smith and Barry Dempsey on behalf of Stantec.

[22] Stantec says the email and the signed execution page contained no indication that Mr. Scivoletto’s signature was intended as anything other than an unqualified and unequivocal acceptance of the Stantec standard form agreement. Stantec also says that there is no contemporaneous documentation that indicates anything to the contrary. I disagree.

[23] There is significant evidence in the record before me that raises a genuine issue about what Mr. Scivoletto was agreeing to when he returned the Stantec signature page. Mr. Scivoletto says that he intended it to apply only to indicate agreement to Schedule A of the Stantec standard form contract which contained pricing and a description of Stantec’s scope of work.

[24] There is a series of emails between Mr. Scivoletto and Mr. Smith concerning the negotiation of the agreement. If anything, those emails indicate that Stantec had agreed to the G Group’s form of professional services agreement, not the Stantec standard form contract. G Group’s contract contains no limitations period, as a result of which the Limitations Act and the Emergency Regulations would apply to it.

[25] By way of example, on March 14, 2016 Mr. Smith wrote an email to G Group stating:

Our legal team reviewed the PSA (Professional Services Agreement) and had the following comments. Can you check and implement before you resend and we can sign off?

The balance of the email contained a series of comments on G Group’s form of contract. This suggests that Stantec was negotiating G Group’s form of contract and was prepared to sign it if certain changes were made.

[26] On March 18, 2016 Mr. Di Giacomo wrote back to Mr. Smith objecting to the inclusion of some of Mr. Smith’s requested additions into the G Group contract. Mr. Smith then responded on March 22, 2016 saying:

Thanks Carl just finalizing on our side. Can you change our name to Stantec Consulting Ltd? Will sign and send back today. Also can you sing (sic) and send back the proposal/PSA I sent through?

[27] The first three sentences of that email suggest that Stantec is prepared to sign the G Group contract. Mr. Smith advises that Stantec is just finalizing things, asks the G Group to change the Stantec corporate name and says that Stantec will sign and send back the contract the same day. All of this suggests that Stantec is amenable to signing the G Group contract. The final sentence of the email introduces some ambiguity. In that final sentence, Mr. Smith appears to be asking G Group to sign some form of agreement that Stantec had sent over. There are also other emails from both sides referring to the existence of two agreements and contemplating that both should be signed. Mr. Scivoletto says that the Stantec agreement which was being signed was only schedule A to the Stantec standard form contract which contained pricing and a description of the scope of work.

[28] I note as well that Mr. Smith has filed no affidavit on this motion. His failure to do so is unexplained. Stantec submits that I should draw no adverse inference from this because it was up to the plaintiff to examine Mr. Smith under Rule 39. I disagree.

[29] G Group’s affidavit materials raise a genuine issue about which of the two standard form agreements applies. If anything, the record before me creates a credible case for the proposition that the G Group contract applies. In those circumstances, it was up to Stantec to rebut that evidence with evidence from Mr. Smith. It was not up to G Group to make Stantec’s defence by calling Mr. Smith as a witness under Rule 39.

[30] Stantec also relies on a letter from G Group’s external counsel to Stantec dated March 11, 2019 which refers to the parties having “entered into a Professional Services Agreement in the form of Stantec’s standard Professional Services Agreement effective February 19, 2016…” I do not draw anything conclusive from that letter. Lawyers can make mistakes; especially at the outset of their retainer when the facts are less than clear. In addition, the letter goes on to refer to the fact that this agreement was “amended and restated by a further Professional Services Agreement between G Group and Stantec.” That creates a further issue about the nature of the restatement.

[31] In these circumstances, the issue of which form of agreement applies is simply too fact intensive to resolve efficiently by examining a witness on a motion for summary judgment. This is precisely the type of issue that demands full documentary production, examinations for discovery and evidence from all relevant witnesses about the full factual context of the negotiations and their evolution.

When Ought G Group To Have Discovered Its Claim?

[32] Stantec submits that it terminated the contract by letter dated August 8, 2018. In response to the termination letter, Mr. Scivoletto wrote an email the same day saying:

Let’s be clear.

If you think that your company is walking with my money and all your company has done is neglect/and misleading/time-consuming and tens of thousands in damages YOUR (sic) WRONG! Finish your obligation or pay the millions in damages to a judge!

[33] Stantec submits that this email indicates that Mr. Scivoletto knew as of August 8, 2018 that he had a cause of action against Stantec. That would mean that the ordinary two-year limitation period would have applied as of August 8, 2020. Even applying the six-month extension under the Covid Emergency Regulations would extend the limitation period to February 8, 2021. The claim was commenced approximately one month later on March 10, 2021.

[34] Stantec then relies on the Supreme Court of Canada’s decision in Grant Thornton LLP v. New Brunswick, 2021 SCC 31 where, Moldaver J., speaking for the court, said the following about the commencement of a limitations period:

In my respectful view, neither approach accurately describes the degree of knowledge required under s. 5(2) to discover a claim and trigger the limitation period in s. 5(1)(a). I propose the following approach instead: 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. This approach, in my view, remains faithful to the common law rule of discoverability set out in Rafuse and accords with s. 5 of the LAA.

By way of explanation, the material facts that must be actually or constructively known are generally set out in the limitation statute. Here, they are listed in s. 5(2)(a) to (c). Pursuant to s. 5(2), a claim is discovered when the plaintiff has actual or constructive knowledge that: (a) the injury, loss or damage occurred; (b) the injury loss or damage was caused by or contributed to by an act or omission; and (c) the act or omission was that of the defendant. This list is cumulative, not disjunctive. For instance, knowledge of a loss, without more, is insufficient to trigger the limitation period. (Grant Thornton LLP v. New Brunswick, 2021 SCC 31 at paras. 42-43).

[35] Stantec submits that Mr. Scivoletto’s email indicates that injury, loss or damages occurred, that it was caused by an act or omission and that the act or omission was that of the defendant. Stantec’s counsel submitted in oral argument that “a miss is as good as a mile,” as a result of which the one month miss in the limitation period should bar the claim.

[36] G Group submits that the issue about the commencement of limitation period turns not only on when a party believes it has a claim but when it has a cause of action. In that regard, it relies on section 5 (1) of the Limitations Act which provides:

A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[37] G Group focuses in particular on s. 5(1)(a)(iv) that is to say, that the limitation the period begins to run from the date that a proceeding would be an appropriate means to seek a remedy.

[38] The day on which a party writes an email in anger may not necessarily be day on which a proceeding becomes the appropriate means to seek a remedy. Anger is not a cause of action. Loss occasioned by the act of another usually can found a cause of action. Just when G Group knew or ought to have known there was a loss is something in respect of which there is a genuine issue that requires a trial to resolve in this case.

[39] Stantec’s termination letter assured G Group that it would “endeavor to provide such assistance as G Group may reasonably require” to facilitate the transition of the project to another engineering consultant. G Group says that it relied on Stantec’s promise of assistance, but that Stantec did not assist in facilitating a transition. On the contrary, G Group says Stantec interfered with that process by withholding “documents and/or drawings that were completed, allegedly completed, and/or partially completed by Stantec.”

[40] In addition, G Group says that it had no cause of action until it learned that the cost of completing Stantec’s work with new consultants was greater than the amount that G Group had yet to pay Stantec. That could not be determined until new consultants were hired and had an opportunity to determine what work remained to be done and what the fee for that work would be. G Group did not retain new consultants until late 2018.

[41] A number of different possibilities to calculate the limitations period apply in light of these various permutations.

[42] The first is to calculate the limitations period based on Stantec’s termination letter dated August 8, 2018. That letter, however, was not effective until September 7, 2018. If limitations periods are calculated as of September 7, 2018, they would expire March 7, 2021; only three days before the claim was issued. If the limitations period is calculated from the date of the letter, the limitations period would have expired on February 7, 2021.

[43] G Group notes that it hired replacement consultants on October 8, 2018. It submits that this is the earliest date as of which G Group could have known that the cost of their services would exceed the amount that remained to be paid under the agreement with Stantec. Applying that theory, and the six-month extension under the Emergency Regulations, means that the limitations period would have expired on April 7, 2021, approximately a month after the statement of claim was issued.

[44] G Group submits that the appropriate day to the limitations period is March 29, 2019. That is the deadline imposed by G Group’s lawyers in their letter dated March 11, 2019 for a response to G Group’s complaints. G Group submits that this is the appropriate date to start the limitations period because that letter informs Stantec that it had performed only 35% of the work called for under the contract even though a substantially higher portion of the contract price was paid. That, says G Group, is the time at which it knew that the cost of its new consultants would exceed the balance owing under the Stantec contract. If the limitations period begins to run on March 29, 2019 and the six-month extension under the Emergency Regulations is applied, then the limitations period would expire on September 22, 2021.

[45] As noted above, even if one began calculating the limitations period on the day Stantec sent its termination letter, G Group would have had until February 7, 2021 to commence its claim. It actually did so, a little over one month later on March 10, 2021. It does not strike me as unreasonable to find that G Group would have needed more than a month to determine whether it would actually sustain a loss by reason of Stantec’s termination of the agreement. While it may be that a “miss is as good as a mile,” when the calculation of limitation periods is as nuanced as it potentially is in this case and when the day on which to start counting the limitations period depends on as many detailed findings of fact as it does in this case, the proper determination of the limitations period requires a trial to resolve. I cannot determine that issue on the paper record before me.

[46] Nor is this the sort of issue that can be resolved by using the court’s enhanced fact finding powers on summary judgment motions. This too is the type of issue that demands full documentary production, examinations for discovery and evidence from all relevant witnesses about, among other things, the context of the termination, the status of the contract at the time of termination and a determination of when G Group ought to have known that the cost of the replacement consultants would exceed the unpaid balance under the Stantec agreement. As a result, I dismiss Stantec’s summary judgment motion.

Conclusion and Costs

[47] For the reasons set out above, I grant the summary judgment motion of Johnston and Alpern and dismiss the summary judgement motion of Stantec.

[48] Any party seeking costs as a result of these reasons may make written submissions within 15 days of the release of these reasons. The responding party shall have a further 10 days to deliver its submissions, with a further five days for reply.

Date: May 24, 2023 Koehnen J.