Legal Blog

Defenceless

The Ontario Rules of Civil Procedure contain a provision allowing one party to bring a motion for summary judgment against the other party. In essence, the moving party has the onus to demonstrate that, based on the evidence adduced on the motion, there is no genuine issue requiring a trial. The parties submit their evidence by way of affidavit and the motions judge may safely assume that the parties have put forward their best evidence. At the end of the motion, an unsuccessful party cannot cry, “and this is only the beginning, you should see what I have held back for trial!” A party either puts forward sufficient evidence to support its position or it suffers the consequences.

Is there any reason why a party cannot rely on the summary judgment rules in a construction case, whether  to enforce a construction lien or for breach of contract? None whatever. Two 2012 decisions of the Ontario Court of Appeal are instructive: Can-Home Contractors Inc. v. Marel Contractors and Kowal v. Shyiak.

Can-Home

The defendant was a drywall subcontractor. It hired the plaintiff as a subsub to provide and install insulation. The subsub did its work, probably in 2010, and rendered invoices totalling $266,500. The invoices were comprised of $63,600 for attic insulation, $162,900 for spray foam insulation, and $40,000 for other services that the reasons for decision did not particularize.

The sub paid the subsub $55,800 for the work in general, without specifying which of the invoices it was paying; the sub paid nothing else, notwithstanding that it had been paid in full for its work. The sub claimed that it spent $54,350 on deficiencies relating to the attic insulation and that, who knows, it might have to spend more. Accordingly, the sub did not want to pay the subsub anything more at that time – or probably ever, if it got its way.

The subsub brought a motion for partial summary judgment relating to the spray foam insulation, about which the sub had made no complaint. The subsub even agreed that it would apply the sub’s payment of $55,800 to the spray foam insulation work. Accordingly, the claim was $107,100 (i.e. $162,900-$55,800). The subsub acknowledged that, because of the sub’s setoff claims regarding the attic insulation, there could be a genuine issue for trial regarding the remaining money due.

Motion

The motions judge noted that, although the sub had speculated more repairs might be coming, there was no evidence that these repairs would be necessary. The motions judge was not going to allow the sub to retain money based on speculation and granted the subsub a partial judgment for $107,100. The parties could fight over the $103,600 balance at trial.

The motions judge went even further. He looked at the claim on a macro basis. The subsub was due $266,500. After deducting $55,800 that the sub paid and $54,350 for damages for which there was some evidence, the sub owed $156,350. The judge reasoned that the sub did not lead evidence to warrant a setoff greater than its alleged damages of $54,350 and should not be given credit for anything more than what it had put forward. Accordingly, had the subsub requested it, the judge would have granted judgment for $156,350.

The sub got away easy. It was allowed to hold back and  fight about $103,600 at trial when it had only adduced possible damages of $54,350.

Appeal

So who appealed? The sub, of course. Not only was it allowed to hold back  $54,350 of proven (sort of) damages, it wanted to hold back an additional $107,100 – just in case.

The Court of Appeal gave short shrift to the appeal. In reasons for decision comprising all of six paragraphs, it noted that the dispute was factual in nature and that there was evidence on which the motions judge could come to his conclusions.

It dismissed the appeal and awarded the subsub $5,000 in costs.

Kowal

     The limitation cases keep coming – and will keep coming for quite some time. The usual dispute centres on when plaintiffs discovered or ought to have discovered their claims against defendants. Kowal deals with what the plaintiff needs to know in order to “discover” a claim.

     We will set out the salient facts and you can guess when the plaintiffs were held to have the requisite knowledge of their claim.

1. The general built a house for homeowners. The owners contracted with a third party to stucco the house. By the fall of 2006, the house was leaking in four locations.

2. The general and the owners met. The general suggested that the stucco contractor could have caused the leaks. The general performed some caulking and flashing, but did not solve the problem.

3. On August 31, 2007, the general told the owners that it would do nothing further and the owners said, “See you in court.”

4. On November 1, 2007, the owners wrote to the general indicating that the general caused the leak problems and insufficiently supervised the work.

5. The owners retained counsel He wrote to the general on February 21, 2008 advising that the general had until June 1, 2008 to fix the leaks. The general did nothing. The owners retained an expert who reported on August 20, 2008 that the general had been negligent.

6. Tarion, the entity in charge of new home warranties, obtained an expert who, on October 28, 2008, reported that the stucco contractor caused the problems. The owners obtained a report from another expert on October 22, 2009. He blamed the leaks on the general.

7. The owners commenced their action on November 17, 2009. They pleaded that, regardless who was at fault and regardless that they paid the stucco contractor directly, the stucco contractor was under the general’s direction and co-ordination.

8. The general moved for summary judgment claiming that the two-year limitation period had expired.

Question: when did the two-year limitation period start?

Answer

    The Court stated,

 “Certainty of a defendant’s responsibility for the act or omission that caused or contributed to the loss is not a requirement. It is enough to have prima facie grounds to infer that the acts or omissions were caused by the party or parties identified.

By August 31, 2007, and certainly by November 1, 2007, the (owners) were familiar with all the material facts. They knew that they had contracted with both (the general and the stucco contractor). They were aware who had done the work on their home. They knew they had suffered a loss and that the acts or omissions were caused by (one or the other or both of them)… There was ample evidence on which to base a claim against the (general) without the necessity of obtaining any expert opinions… Indeed, cumulatively, the three reports were inconclusive. In any event, an element of the claim is that, as a general contractor, (the general) had a duty to oversee the (stucco contractor’s) work and (the general) is alleged to have breached that duty. No expert report was required in order to advance this claim.

Although the (owners’) circumstances are unfortunate, the Act was not enacted to be ignored.”

The Court dismissed the owners’ action against the general.