Court File and Parties
COURT FILE NO.: CV-22-38 DATE: May 24, 2023
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
11385054 Canada Inc. operating as Concretera Plaintiff / Moving Party – and – The Floor Company Ltd. and Gregory Bell a.k.a. Greg Bell Defendants/Respondents
Counsel: Stephane Bond for the Moving Party Gregory Bell, self-represented
HEARD: April 24, 2023
Hooper j.
Decision on Summary judgment
[1] This is a motion for summary judgement to enforce a settlement agreement.
[2] The respondents do not dispute the agreement was signed. They argue the agreement should be set aside due to duress, misrepresentation, and mistake of fact. In furtherance of this position, the respondents take the position that a full hearing is required to determine the agreement’s validity.
[3] I do not agree. This matter can be dealt with under the fact-finding discretion provided by Rule 20 of the Rules of Civil Procedure R.R.O. 1990, Reg 194 and by Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. On the evidence before me, summary judgment is granted to the plaintiff/moving party.
Preliminary Issue – Representation of The Floor Company
[4] The Floor Company (“TFC”) had been represented by counsel until shortly prior to this hearing including the preparation and filing of the responding material. Unfortunately, TFC states that it can no longer afford legal representation. As a result, Mr. Gregory Bell, operating mind, sole shareholder, and named Respondent, attended at the hearing, and sought leave of the court to represent both himself and his corporation.
[5] The moving party did not oppose this request.
[6] Rule 15.01(2) of the Rules of Civil Procedure requires a corporation to be represented by a lawyer, except with leave of the court. The factors that courts have considered on this type of motion are stated by Boswell J. in De La Rocha v. Markham Endoscopy Diagnostics Inc., 2010 ONSC 5100 at paragraph 2:
(i) Whether the proposed representative has been duly authorized by the corporation to act as its legal representative;
(ii) Whether the proposed representative has a connection to the corporation;
(iii) The structure of the corporation in terms of shareholders, officers, and directors and whether it is a closely held corporation;
(iv) Whether the interests of shareholders, officers, directors, employees, creditors, and other potential stakeholders are adequately protected by the granting of leave;
(v) Whether the proposed representative is reasonably capable of comprehending the issues in the litigation and advocating on behalf of the corporation. The Court should not impose too high a threshold at this stage, given that the courts abound with self-represented litigants of varying skills. The proposed representative should, however, be reasonably capable of comprehending the issues and articulating the case on behalf of the corporation;
(vi) Whether the corporation is financially capable of retaining counsel. Access to justice has been a concern troubling courts at all levels in Canada for some considerable time. It is fundamental to the integrity of the courts and the reputation of the administration of justice that the parties have reasonable access to our courts. If the refusal to grant leave would effectively bar a corporation from access to justice, this factor should be given considerable weight.
[7] As further stated by Justice Boswell in De La Rocha at paragraph 3:
Ultimately, the court must give effect to what order is in the interests of justice and must pay heed to Rule 1.04, which directs the court to construe the rules so as to ensure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
[8] Mr. Bell had the benefit of counsel’s assistance in preparation of the responding material. He understood the issues before the court. He advised, and I accepted, that his corporation can no longer afford legal representation. As a result, leave was granted to allow him to represent TFC in this hearing.
Background Facts
[9] TFC is a construction company in the business of polishing concrete floors. As stated above, its controlling mind and sole shareholder is Gregory Bell. In 2017, TFC hired Oleksii Putiatin (referred to as “Alex” in the evidentiary record and within this decision), to assist on their projects. As of his hiring with TFC, Alex was not incorporated and was therefore added to TFC’s payroll. Alex finally incorporated in May 2019 under 11385054 Canada Inc. operating as Concretera (“Concretera”).
[10] On June 12, 2019, Alex wrote to TFC with a list of jobs he believed remained outstanding that he now wished to be paid for under Concretera. While Alex’s original invoices for those jobs totaled $44,359.52, within this email Alex set out additional amounts he believed needed to be added including tax, CPP and EI premiums. After those additions, the total amount of the invoices totaled $68,147.27 inclusive of HST.
[11] TFC did not agree that amounts for CPP, EI and tax could be added into these invoices. Based on its records, TFC believed it owed Alex/Concretera $45,952.45 as of June 2019.
[12] Notwithstanding TFC knew it owed at least $45,952.45 to Alex/Concretera, discussions of payment stalled. Losing patience, Concretera retained legal representation.
[13] During this same time period, TFC and Concretera continued to work together on construction projects. The largest project was run by McDonald Brothers Construction Inc. (“MBC”). In October, lawyers for Concretera put MBC on notice that they were not being paid by TFC and were considering placing a lien on the MBC project.
[14] On October 16, 2019, Patrick McDonald from MBC wrote to Gregory Bell and asked for confirmation that TFC was up to date on their outstanding payments with Concretera. In that correspondence, MBC advised TFC that TFC’s account had been placed on hold until such time as TFC “demonstrates that it has paid Alex’s firm for the completed work.”
[15] In response, Mr. Bell wrote the following to Mr. McDonald on November 5, 2019:
Hi Patrick, apologize for the delay. I’ve spoken to Alex and we have finalized amounts owing and have a payment plan with him… albeit a slow path.
[16] There was no such agreement or payment plan. A direction was sent by MBC to TFC on November 6, 2019, that now allowed MBC to pay funds directly to Concretera. This meant that TFC’s account was still on hold and MBC was not making any payments to TFC for its own work. Before me, Mr. Bell indicated that this created a lot of pressure. However, notwithstanding this pressure, there is no evidence of what steps Mr. Bell took after November 6, 2019, to deal with Concretera’s outstanding invoices.
[17] On November 13, 2019, Concretera’s counsel gave a one-week deadline for all outstanding payments to be made or a lien would be placed on the MBC job. This deadline placed further pressure on Mr. Bell and TFC to deal with the outstanding invoices. Discussions ensued, and Mr. Bell was sent a settlement agreement that set an amount now owing of $72,953 with interest accumulating at 12% compounded semi-annually. A payment plan, attached to the settlement agreement, set out weekly payments of $2,000 with a final balloon payment on July 31, 2020, of over $6,000 to close out the debt.
[18] When returning the signed agreement, Greg Bell wrote:
Hi Alex, attached is the formal payment agreement we’ve discussed. I’ve used the full $72,953 you’ve requested but ask that we have until end of week to reconcile recent payments and (one) line item we feel was double billed. Brenda is compiling this into an easy-to-read xls file to help us all understand billing and payments made to date – to determine actual amount owing.
[19] There was no response to this email in the record before me. There was also no further correspondence from Mr. Bell challenging the amount owed on the basis of double-counting or a mistake during the reconciliation.
[20] TFC thereafter made payments pursuant to this Settlement Agreement until June 2020 when the payments suddenly ceased without explanation. Now, TFC argues that the amount set out in the executed Settlement Agreement erroneously includes CPP, EI and HST. As a result, TFC argues that this Settlement Agreement was executed by mistake, through the misrepresentation of Concretera that the amounts were accurate, and as a result of duress.
Issues
[21] There are two issues before me:
a. Is this an appropriate case for summary judgment?
b. If it is an appropriate case for summary judgment, should the agreement be upheld?
Analysis
Is this an appropriate case for summary judgment?
[22] The court shall grant summary judgment if the court is satisfied that there is no genuine issue for trial. I must determine if, based on the record before me, I am able to reach a fair and just determination on the merits: Hryniak at para. 49.
[23] Rule 20 provides the motions court with the power to weigh evidence, evaluate credibility of a deponent and draw reasonable inferences. It should be used in cases where findings of fact can be made, and the making of those findings would be the most proportional and less expensive means to achieve a just result.
[24] Responding material to a motion for summary judgment motion must set out specific issues and evidentiary disputes that require a full hearing. As often quoted, each side must put “their best foot forward”: Cuthbert v. TD Canada Trust, 2010 ONSC 830 at para. 12. The respondent is not allowed to rest on bare allegations and denials.
[25] This is a straightforward contract case over a relatively modest amount. Many of the facts are not in dispute. While the respondents raise issues of duress, misrepresentation, and mistake, the respondents do not point to any additional evidence that could only be brought forth at a hearing.
[26] I find that this is the type of case that is perfectly suited for summary judgment. No trial is necessary.
Should the Agreement be upheld?
Duress
[7] Duress involves coercion of the consent or free will of the party entering into a contract. To establish duress, it is not enough to show that a contracting party took advantage of a superior bargaining position; for duress, there must be coercion of the will of the contracting party and the pressure must be exercised in an unfair, excessive or coercive manner: Lei v. Crawford, 2011 ONSC 349.
[27] Mr. Bell’s affidavit sets out the pressure that he was under. I accept that MBC’s involvement in this dispute between TFC and Concretera, as well as MBC’s decision to put TFC’s account on hold pending its resolution, put additional pressure on Mr. Bell. However, pressure does not equal the type of coercion that is necessary to meet the test for duress.
[28] I also note that part of the pressure Mr. Bell was under was of his own making – he had failed to deal with these outstanding invoices for months. At the hearing of this motion, Mr. Bell advised that he was running three different companies at the time and TFC was the smallest. He conceded he had therefore left the accounting of TFC to others and was playing catch up when he was suddenly faced with the one-week deadline imposed by Concretera.
[29] There is, therefore, insufficient evidence to support a finding of duress. That argument fails.
Mistake
[30] Unilateral mistake (where one party is mistaken and the other knows or ought to have known of the mistake) can render a contract void when that mistake relates to the fundamental nature of the offer made.
[31] The preliminary question a court must consider is whether a mistake was truly made or whether this is simply a recalculation of the cost / benefit analysis of the agreement entered into: Gill v. Gill, 2021 ONSC 1313 at paras. 34-36.
[32] There are two arguments raised in relation to mistake. First, TFC argues that there has been a double counting of certain invoices. Second, TFC argues that it was unaware that the amount it agreed to in the settlement agreement included CPP, EI and taxes.
[33] Dealing with double counting, after a thorough review of the documents during this hearing, and the admissions made within Mr. Bell’s own affidavit, there was no mathematical error. No invoice was included twice. There was no mistake.
[34] With respect to the additional charges for CPP, EI and taxes, this was also not a mistake. Concretera outlined its position that these additional charges should be added in June 2019. Alex provided the exact formula he was using to make these additional claims when he emailed TFC’s accounting department. While TFC initially disagreed, Mr. Bell eventually accepted these additional charges when he signed the agreement.
[35] I find that TFC, either through Mr. Bell or its employees, knew that Concretera had included CPP, EI and taxes in its invoices. Mr. Bell accepted those additions when he executed the settlement agreement. He cannot now argue he only agreed to these amounts by mistake.
[36] In addition, TFC made payments under this agreement for over seven months without suggesting amounts were included in error. When they stopped making payments in June 2020, they offered no explanation. They cannot now claim that a fundamental mistake was made that places the entire settlement agreement in jeopardy.
Negligent Misrepresentation
[37] In Doumourais v. Chander, 2019 ONSC 6056, the court outlined the five requirements for a claim for negligent misrepresentation:
a. There must be a duty of care based on a “special relationship” between the representor and representee;
b. The representation in question must be untrue, inaccurate, or misleading;
c. The representor must have acted negligently in making the misrepresentation;
d. The representee must have relied in a reasonable manner, on the misrepresentation; and
e. The reliance must have been detrimental to the representee in the sense that damages resulted.
[38] The representation at issue is the amount set out in the Settlement Agreement.
[39] None of these factors in the above test have been met. There was no special relationship between these two companies that created a duty of care. The representation was not untrue, inaccurate, or misleading – it was Concretera’s calculation of what was owed. It was not made negligently and there was no reasonable basis for TFC to simply rely on this number without verifying its accuracy. The fact that TFC still owes a considerable amount under this agreement, at a high interest rate TFC also agreed to, does not equate to damages.
Conclusion
[40] The motion for summary judgment is granted. The moving party will have judgment in the amount of the Settlement Agreement, less any payments made, plus 12% interest as set out in said agreement. That judgment will go against both TFC and Mr. Bell as guarantor under the agreement.
[41] The cost outline for the moving party is reasonable and appropriate. The respondents have acted unreasonably by failing to honour the agreement they made. Spurious arguments were raised in response to this motion for summary judgment. On the factors set out under Rule 57, I find that an award of substantial indemnity costs is appropriate in the amount of $8,975.00 inclusive of fees, disbursements and HST.
[42] Counsel for the moving party will provide an order with the amount owing as of the date of this decision to the respondent. If the respondent does not agree to the calculation, the parties can each submit their calculations to me. If the respondents fail to respond to the calculation within fourteen days of it being served upon them, the moving party may submit it to me, and I will review the judgment without the respondents’ consent.