Court File and Parties

COURT FILE NO.: CV-21-665617 DATE: 2023 09 20

SUPERIOR COURT OF JUSTICE - ONTARIO

IN THE MATTER OF the Construction Act, RSO 1990, c C.30, as amended

RE: PRAXY CLADDING CORP., Plaintiff - and - STONE LAMINA INC. and GCAT GROUP INC. carrying on business as STONE LAMINA, Defendants

BEFORE: Associate Justice Todd Robinson

COUNSEL: S. Sam, for the plaintiff (moving party) J. Frustaglio, for the defendants

HEARD: June 19, 2023 (by videoconference)

REASONS FOR DECISION (Leave to Amend Statement of Claim)

[1] The plaintiff, Praxy Cladding Corp. (“Praxy”), moves for an order granting leave to amend its statement of claim in this lien action. The defendants, Stone Lamina Inc. and GCAT Group Inc. (together, “Stone Lamina”), do not oppose most of the proposed amendments. They only challenge three of them, namely those seeking to plead reliance on Praxy’s accepted quote as a contract document. The defendants’ position is that Praxy is seeking to withdraw an admission that the purchase order issued by Stone Lamina is the contract.

[2] I am not convinced by Stone Lamina’s arguments that there was a legally binding admission about the contract documents in the statement of claim. Whether or not an admission was made during discoveries is not strictly material on this pleadings motion. Different rules apply to admissions made during an examination. Regardless, I am also not convinced that a binding admission was made during Praxy’s examination. Even if there was an admission in the statement of claim, though, Praxy has met the requirements for withdrawal of an admission. I am accordingly granting the motion.

Analysis

[3] In lien actions, interlocutory steps not contemplated by the Construction Act and its regulations require leave of the court on proof that the steps are necessary or would expedite the resolution of the issues in dispute: O Reg 302/18, s. 13. In addition, the rules of court apply in lien actions except where inconsistent with the act and the procedures prescribed by regulation: Construction Act, s. 50(2).

[4] There is no prescribed process for amending a pleading in the Construction Act and its regulations. Praxy moves under rule 26.01 of the Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”), which provides that leave to amend shall be granted unless the responding party would suffer non-compensable prejudice. That is a step in a lien action requiring leave of the court. Stone Lamina takes the position that the proposed amendments constitute withdrawal of an admission, so leave is also required under rule 51.05. That rule provides that an admission in a pleading may only be withdrawn on consent or with leave of the court.

[5] I am satisfied that leave should be granted for this motion to be brought. Stone Lamina’s position is that Praxy has made a binding admission on what comprises the contract documents, namely that the purchase order is the contract and that Praxy’s quotation is not a contract document. Whether or not Praxy is able to rely on the quotation will impact remaining steps and the ultimate trial. It is both necessary and will expedite resolution of issues in dispute to have this disputed issue addressed now.

[6] An admission in a pleading to which rule 51.05 applies must be an unambiguous and deliberate concession made by a party, generally being admissions of facts that assist the opposing side in proving its claim or defence. Admissions do not arise solely from the result of the words chosen in the claim: Yang v. The County of Simcoe, 2011 ONSC 6405 at para. 46; Hobson v. Turner, 2021 ONSC 4407 at para. 19.

[7] Stone Lamina argues that paragraph 4 of the statement of claim admits that only the purchase order comprised the contact. It states as follows:

On or about February 1, 2019, Praxy and Stone Lamina executed a Purchase Order for the installation of Stone Lamina panels, aluminum rails and clips, Rockwool insulation and Blueskin membrane and the supply and installation of galvanized angles and brackets (the “PO”) in respect of the Project.

[8] The opposed amendments seek to add two paragraphs describing Praxy’s quote and a third paragraph stating that the terms of the quote are expressly and/or implied incorporated into the purchase order and the quote formed a contract document.

[9] I reject Stone Lamina’s argument that paragraph 4 constitutes an admission that the purchase order alone constitutes the parties’ contract. That is not what it says. It says that the parties executed a purchase order. That purchase order is evidently a key contract document. Stone Lamina correctly points out that the purchase order is referenced throughout the statement of claim. However, nothing in the pleading states that the purchase order is the only contract document.

[10] Stone Lamina points to the examination for discovery of John Duff on behalf of Praxy. During the examination, Mr. Duff was shown the purchase order and was asked expressly if Praxy agreed that the purchase order formed the contract. Mr. Duff agreed. That answer, though, must be contextualized. Immediately after the question was asked and answered, Praxy’s counsel interjected as follows:

MS. SAM: That’s a legal question, Counsel.

MR. FRUSTAGLIO: I'm just asking. He answered it so --

MS. SAM: Well, my client can’t answer as to everything that forms the legal documents, the legal position.

[11] I have not been provided with the part of the transcript that immediately follows the above exchange, but it appears that Stone Lamina opted not to examine further on the issue.

[12] The basis for Praxy’s objection was incorrect. Witnesses on an examination for discovery may be questioned about the party’s position on questions of law: Ontario v. Rothmans Inc., 2011 ONSC 2504 at para. 129. There was accordingly nothing improper about asking Mr. Duff to confirm whether Praxy agreed that the purchase order formed the contract.

[13] Nevertheless, Praxy has put forward a further extract from later in the examination in which Praxy’s counsel asked Stone Lamina’s counsel to put the quotation to Mr. Duff. That exchange is also relevant to this motion. It went as follows:

MS. SAM: Can you also take my client to tab 79 which we say forms part of the contract?

MR. FRUSTAGLIO: That’s not true. That’s not pled anywhere so I don't care about tab 79 and you trying to coach your client. That’s not --

MS. SAM: I’m not trying to coach my client. It’s in our Scott schedule, Jonathan.

MR. FRUSTAGLIO: Show me where it’s pled in your statement of claim. It’s not pled anywhere.

MS. SAM: It’s in our Scott schedule.

MR. FRUSTAGLIO: The purchase order forms the contract and he agreed to that so I’ll move on.

MS. SAM: It’s detailed in our Scott schedule.

MR. FRUSTAGLIO: Counsel, it’s not in your pleading, okay?

MS. SAM: It’s in our Scott schedule, Counsel.

MR. FRUSTAGLIO: It’s not in your statement of claim. It’s not in your defence to counterclaim. At the end of the day if you now want to try to change your theory during an examination we’ll deal with it in due course. In any event --

MS. SAM: Okay.

[14] In the above exchange, Praxy’s counsel offered Praxy’s legal position on what constitutes the contract. Stone Lamina’s counsel staunchly refused to accept it, evidently taking the same position then as has been taken on this motion: a binding admission had been made.

[15] Rule 31.08 of the Rules provides that, unless there is an objection, a lawyer may answer a question on behalf of the person being examined and that answer shall be deemed to be the answer of the person being examined unless, before the conclusion of the examination, the person repudiates, contradicts or qualifies the answer. Stone Lamina’s lawyer evidently objected to Praxy’s lawyer providing clarification. Nevertheless, there were two occasions during the examination in which Praxy’s legal position on what constituted the contract was raised. Stone Lamina was entitled to probe that legal position, but did not do so.

[16] Examinations for discovery serve several purposes. These include enabling the examining party to know the case to be met; obtaining admissions that may permit dispensing with formal proof of a fact in the proceeding; obtaining admissions that will undermine the opponent’s case; facilitating settlement, pre-trial procedure, and trials; eliminating or narrowing issues; and avoiding surprise at trial: Ontario v. Rothmans Inc., supra at para. 120.

[17] Even if Mr. Duff’s agreement that the purchase order formed the contract constituted a discovery admission (and I am not convinced that it does in all the circumstances), it does not assist Stone Lamina in opposing the pleading amendment sought. Admissions made during an examination for discovery are not admissions to which rule 51.05 applies: Hobson v. Turner, 2021 ONSC 4407 at para. 32. Different rules apply to the effect and use of admissions made during an examination.

[18] In my view, particularly since Praxy’s legal position was not explored further during the discovery, Mr. Duff’s alleged admission is not properly relied upon in deciding whether or not the statement of claim admits that the purchase order is the only contract document. On this motion, I am dealing with whether the pleading contained a deliberate and unambiguous concession that the purchase order was the sole contract document. I am not convinced that it does. This is not a situation where Praxy pleaded something such as, “The purchase order constitutes the contract between the parties.” That would be unambiguous language.

[19] I agree with Praxy that whether the purchase order constituted the contract is a legal question, not a factual one. Subrule 25.6(2) of the Rules does permit a party to raise a point of law in a pleading, provided that conclusions of law may be pleaded only if the material facts supporting them are pleaded. I do not read paragraph 4 of the statement of claim as speaking to anything more than material facts, namely the fact that the purchase order was signed and the scope of work contemplated by it. Based on the record before me, paragraph 4 of the statement of claim is a factually accurate statement, not a legal conclusion.

[20] Even if I am wrong in the foregoing and paragraph 4 of the statement of claim does constitute an admission, I would grant leave to withdraw the admission. I have previously discussed the circumstances under which an admission may be withdrawn. Three criteria must be established: (i) there is a triable issue on the proposed amendment to the facts previously admitted, meaning that the change in position is meritorious, rather than a tactical move that hinders, delays or frustrates the course of justice; (ii) there is a reasonable explanation for a change in position, such as the original admission being inadvertent or resulting from wrong instructions; and (iii) withdrawal of the admission will not result in any non-compensable prejudice: PBW High Voltage Ltd. v. Metrolinx, 2021 ONSC 6715 at para. 27.

[21] Praxy’s first affidavit does not address any of the requirements for withdrawal. They are addressed in Praxy’s reply affidavit prepared and served after Stone Lamina’s responding motion record was served. I question whether the contents of that affidavit are proper reply, but Stone Lamina did not oppose it being admitted nor did Stone Lamina raise any concerns with me considering the contents of the affidavit in deciding this motion.

[22] With respect to first criteria, I am satisfied that there is a triable issue on whether the quote constitutes a contract document. The purchase order expressly references the quote in each of the priced items for installation material, labour, and equipment. The quote itself was signed by Stone Lamina’s deponent on this motion, Alborz Razavi, on the same date as the purchase order. The quote includes a term, which was not struck out, that the quotation, upon acceptance, “is or becomes part of the legal contract documents.” In my view, whether or not the terms of the quote were incorporated into the purchase order or if the quote forms part of the contract documents are triable issues more appropriately addressed at trial.

[23] With respect to the second criteria, John Duff’s reply affidavit states that, through lawyer inadvertence, the quote was not specifically pleaded in the statement of claim. He further sets out that, when he agreed on discovery that the purchase order formed the contract, he did not appreciate that it was a legal question. He notes that the quotation was never put to him during his examination and that he was never asked about whether it was a contract document. I accept that, given the express contractual language in the accepted quotation, failing to plead the impugned paragraphs of the amended pleading was inadvertent, not intentional.

[24] With respect to the third criteria, I am not convinced that Stone Lamina will suffer any non-compensable prejudice from a withdrawal. Stone Lamina argues that its litigation strategy must now change, which constitutes non-compensable prejudice. I do not agree that Praxy being permitted to rely on the quotation amounts to a “fundamentally different claim with respect to the issue of what constitutes the agreement between the parties.” No cogent argument has been made for how permitting Praxy to argue that the quote is a contract document will fundamentally change Stone Lamina’s approach to this litigation.

[25] I also reject Stone Lamina’s position that this motion amounts to “ambush after the fact.” Having seen the purchase order and the quotation, both of which were produced in the litigation, the proposed amendment should not have taken Stone Lamina by surprise. Stone Lamina’s own representative signed back the quotation on the same day that the purchase order was issued. The purchase order number is written on the quotation. The quotation was produced in Praxy’s affidavit of documents. The purchase order specifically refers to the quote. Stone Lamina ought to have known that the quote would play a role in this litigation.

[26] This is also not a situation where the position was raised for the first time after discoveries. As discussed above, Stone Lamina was given express notice during Mr. Duff’s examination of Praxy’s position that the quote was being relied upon as a contract document. Stone Lamina opted not to examine on it.

[27] Stone Lamina also argues further prejudice from unjust delays in this matter proceeding to trial. It points specifically to the need for further examinations. In my view, though, if further examinations are required, it is only because of Stone Lamina’s position. During the examination of Praxy’s representative, Stone Lamina could readily have examined Praxy on its position on the quote, putting on the record that the examination was without prejudice to Stone Lamina’s position that a binding admission had been made. During the examination of Stone Lamina’s representative, Stone Lamina opted to refuse all questions about the quote. Stone Lamina could have answered Praxy’s questions about the quote under subrule 34.12(2) of the Rules. When granting leave for discoveries at the first hearing for trial directions in this lien reference, I strongly encouraged the parties to use subrule 34.12(2) for questions objected to on a ground other than privilege. That is expressly set out in Trial Directions #1.

[28] I am also not convinced by Stone Lamina’s argument that permitting a withdrawal will be affording Praxy an opportunity to change its own litigation strategy. Based on what is before me, Praxy’s position on what constitutes the contract documents has never changed. It will only now been more clearly pleaded.

Disposition

[29] For these reasons, Praxy’s motion is granted and Praxy is granted leave to amend its statement of claim in the form attached as Schedule “A” to its amended notice of motion. Order accordingly.

Costs

[30] Costs outlines have been exchanged. Given the result, I am inclined to award Praxy its costs of this motion. However, at least one offer to settle was made so I could not hear costs submissions at the time of the hearing.

[31] The parties should be settling costs of the motion themselves, including Stone Lamina’s claim for costs thrown away. However, if they cannot agree, then costs submissions shall be made orally by thirty (30) minute hearing booked on any of my construction lien motions lists. Each party shall be entitled to ten (10) minutes of submissions, with Praxy entitled to five (5) minutes of reply. Any case law or offers to settle relied upon by either side shall be exchanged, submitted to my Assistant Trial Coordinator (ATC), and uploaded to CaseLines at least five (5) days prior to the hearing. The hearing shall be booked within thirty (30) days of this decision being released, failing which the parties shall be deemed to have agreed on costs.

ASSOCIATE JUSTICE TODD ROBINSON DATE: September 20, 2023