Endorsement

COURT FILE NO.: CV-18-595430
DATE: 2025-05-01
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 9357-1578 Quebec Inc., Plaintiff
AND: Bondfield Construction Company Limited, Zurich Insurance Company Ltd. and Travelers Guarantee Company of Canada also known as Travelers Insurance Company of Canada, Defendants

BEFORE: Sean F. Dunphy

COUNSEL:
Adam Wainstock, for the Plaintiff
Rebecca Torrance and Denise Bambrough, for the Defendant Zurich Insurance Company Ltd.
Evan Cobb, for Ernst & Young Inc. as Court-appointed Monitor of Bondfield Construction Company Limited

HEARD: 2025-01-13

Introduction

[1] 9357-1578 Quebec Inc. (“9357”) is the plaintiff in three actions in which it seeks payment for project extension costs incurred by Mometal Structures Inc. (“Mometal”), a subcontractor of Bondfield Construction Company Limited (“Bondfield”), on the construction of the TTC Finch West Subway Station (the “Project”). 9357 is the assignee of the project extension claim of Mometal.

[2] 9357 moves for an order requiring the responding parties (or any of them) to produce in this litigation unredacted Minutes of Settlement and documents showing what amounts were paid under the Minutes, by whom, to whom, and for what claims, and how each payment was calculated.

Factual Background

Parties

[3] In 2011, Bondfield entered into a contract with the TTC to construct the Project.

[4] Mometal, a structural and miscellaneous metals trade, was a subcontractor to Bondfield on the Project.

[5] 9357 is the assignee of certain claims of Mometal, including a claim for project extension costs incurred by Mometal on the Project.

[6] Zurich and Travelers are the named sureties in a Labour and Materials Payment Bond issued on June 9, 2011 (the “L&M Bond”) which was posted by Bondfield in connection with the Project.

9357 Actions

[7] On February 22, 2018, Mometal delivered a claim for lien for the amount it claimed was owed on account of services provided to Bondfield on the Project, including project extension claims from delays it alleged it encountered on the Project. The action to perfect the lien was commenced on March 23, 2018. The lien was then bonded off by Bondfield on March 29, 2018 which posted security by way of a Zurich lien bond in the amount of $3,889,731.13 (the amount of the lien claim plus $50,000 as security for costs).

[8] On March 29, 2018, Mometal registered a construction lien in the same amount on title to the Project lands. An action on this registered lien was commenced by statement of claim issued on April 16, 2018. The Zurich lien bond stands as security for both liens.

[9] Bondfield, the only remaining defendant in these lien actions, has defended (and counterclaimed in) both lien actions.

[10] On April 9, 2018, Mometal commenced this action naming Zurich, Travelers, and Bondfield as defendants seeking payment for its claims on the Project under the L&M Bond. Bondfield defended and counterclaims in the L&M Bond action and Mometal defended the counterclaim.

[11] Zurich and Travelers have defended the L&M Bond action.

Mometal Minutes of Settlement

[12] On August 22, 2018, Mometal and 9357 entered into an assignment agreement to assign the project extension claims on the Project to 9357 (the “Assignment”).

[13] In October 2018, Mometal settled the contract claims on the Project as well as claims on other Bondfield projects with Bondfield and Zurich by way of Minutes of Settlement (the “Mometal Minutes”). Pursuant to the Mometal Minutes, Mometal was paid $791,000 for its contract claims on the Project. The settlement excluded the project extension claim which had been assigned to 9357.

Finch West Litigation

[14] There were many legal proceedings commenced by and against Bondfield, the TTC, the design consultants, and subcontractors in relation to the Project (including the 9357 actions).

[15] In April 2019, Bondfield filed for creditor protection under the CCAA.

Finch West Settlement Transaction

[16] On June 28, 2023, Ernst & Young Inc., the court-appointed monitor for Bondfield, brought a motion for approval of a global settlement of the litigation in relation to the Project. 9357 was not involved in the settlement discussions and its claims were not settled.

[17] The motion materials disclosed that there were two settlement agreements, both of which were redacted to conceal the settlement amounts:

(a) Minutes of Settlement between: (i) TTC, (ii) Bondfield; (iii) Zurich; (iv) Travelers; and (v) the design consultants (the “TTC Minutes”); and

(b) Minutes of Settlement between (i) Bondfield, (ii) Zurich; (iii) Travelers; and (v) the balance of the remaining group of subcontractors (other than 9357) (the “Subcontractor Minutes” and, together with the TTC Minutes, the “Minutes”).

Analysis

[18] Rule 30.02(1) of the Rules of Civil Procedure provides that every document relevant to any matter in issue in an action that is or has been in the possession, control or power of a party to the action shall be disclosed whether or not privilege is claimed in respect of the document. Rule 30.02(2) provides that every such document shall be produced for inspection if requested unless privilege is claimed in respect of the document.

[19] Relevance is determined by the pleadings. See Premform Limited v. Heights Rental Construction Inc., 2023 ONSC 955, para 9.

[20] 9357 moves pursuant to rule 30.06 of the Rules of Civil Procedure for production of the unredacted Minutes and documents showing what claims such payments were made on account of.

[21] The global settlement settled all claims between the design consultants, the TTC, Bondfield, and the other remaining subcontractors (and Zurich) in connection with the Project. The actions that were settled included claims for delay and project extension costs.

[22] Under the global settlement, a payment was made by the TTC to Bondfield. The amount of such payment was redacted from the Minutes.

[23] In Bondfield’s Statement of Defence and Counterclaim to Mometal’s action, Bondfield pleads that if the alleged delay costs (described as “Stand-By Costs”) claimed by Mometal are proper under the subcontract, it was an express or implied term of the subcontract with Mometal that Mometal would only be paid for delay costs if and when TTC granted, acknowledged and authorized such costs and if and when Bondfield received funds from TTC. Bondfield pleads that Mometal’s entitlement to delay costs has not yet been released or processed by TTC and paid to Bondfield and that Mometal’s entitlement to such costs, if any, is tied to the release of such costs from TTC to Bondfield. Bondfield pleads that to the extent that Mometal is entitled to any payments, such entitlement is limited to moneys for the delay costs held by TTC which TTC has refused and/or neglected to pay to Bondfield. Zurich adopted Bondfield’s pleadings in this respect in its own pleadings.

[24] 9357 submits that Bondfield’s pleading that Mometal’s entitlement to payment of its delay claim is limited to moneys for delay costs held by TTC makes the amount, if any, that Bondfield received from TTC in relation to Mometal’s delay claim a relevant fact in the 9357 actions. 9357 submits that, therefore, the redacted information in the Minutes is relevant to the issues in the 9357 actions and should be disclosed and produced.

[25] Zurich opposes 9357’s motion to producing the unredacted Minutes and related documents. Zurich submits that 9357 has not shown that the redacted information on the Minutes is relevant. Zurich submits that its pleading does not make the unredacted Minutes relevant where the redacted information is the amount of the global settlement. Zurich submits, citing Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, that the redacted information is, in any event, presumptively protected from disclosure by settlement privilege.

[26] If the redacted Minutes show an amount received by Bondfield in respect of Mometal’s delay claim, that information would be relevant in the 9357 actions. There would need then to be a determination of whether an exception to settlement privilege has been shown. However, if the redacted amount does not show an amount allocated to the Mometal delay claim, then the redaction does not conceal information that is relevant to the 9357 actions because the global settlement amount will not show that any amount was received by Bondfield in respect of Mometal’s delay claim.

[27] I have considered the record before me and the submissions of the parties. I conclude that 9357 has not established on the evidentiary record that the redacted Minutes include redacted information that is relevant to the issues in the 9357 actions. It may be that after examinations for discovery, there will be a sufficient evidentiary basis for a determination to be made that the redacted information is relevant. In the absence of 9357 establishing the relevance of the redacted information, the order it requests would risk premature disclosure of information that is not relevant and that is otherwise presumptively protected from disclosure by settlement privilege.

Disposition

[28] For these reasons, I dismiss 9357’s motion, without prejudice to its right to renew the motion after examinations for discovery, if so advised.

[29] If the parties are unable to resolve costs, they may make written submissions in accordance with a timetable agreed upon by counsel (with reasonable page limits) and approved by me.

Sean F. Dunphy
Date: 2025-05-01