Toscana Ventures Inc. Plaintiff - v. -, 2013 ABQB 289

Court of Queen ’ s Bench of Alberta Citation: Toscana Ventures Inc. v. Sundance Plumbing, Gas & Heating Ltd., 2013 ABQB 289 Date: 20130510 Docket: 1201 04233 Registry: Calgary Between: Toscana Ventures Inc. Plaintiff - and - Sundance Plumbing, Gas & Heating Ltd., Alberta Paving Ltd., Rainbow Engineering Ltd., ZCL Composites Ltd., Wolseley Industrial Products Group Inc., J.K.R. Excavating Ltd. and ABC Ltd. Defendants - and - Focus Industries Inc. Third Party Defendant (Third Party Claim of Wolseley Industrial Products Group Inc.) - and - Gelowitz Holdings Ltd. Third Party Defendant

(Third Party Claim of Wolseley Industrial Products Group Inc.) - and - Sundance Plumbing, Gas & Heating Ltd., Focus Industries Inc., Rainbow Engineering Ltd., Alberta Paving Ltd., J.K.R. Excavating Ltd., Wolseley Industrial Products Group Inc. and Gelowitz Holdings Ltd. Third Party Defendants (Third Party Claim of ZCL Composites Ltd.) - and - Alberta Paving Ltd., MDS Design and Management, 1022764 Alberta Ltd., Eli Consulting Inc. and BRT Consulting Limited Third Party Defendants (Third Party Claim of Rainbow Engineering Ltd.) _______________________________________________________ Memorandum of Decision of J.L.

Mason, Master in Chambers _______________________________________________________ Introduction [ 1 ] Toscana Ventures Inc. was developing a commercial condominium complex in southwest Calgary in 2010. Toscana entered into a Construction Agreement with Alberta Paving to perform a number of services, including site sub-grade, excavation, installation of underground water and sewage tanks, backfill, installation of a fire hydrant and two approaches, and the supply and provision of all gravel, sidewalk and paving work.

In turn, Alberta Paving subcontracted the sidewalk work to Concrete Finishing Deluxxx Ltd. and the excavating work to J.K.R. Excavating Ltd. [ 2 ] In November, 2010, Toscana took issue with the sidewalk and the installation of the fire hydrant, and held back payment of a portion of Alberta Paving's final invoice. Alberta Paving filed two builders' liens against the lands, totalling $114,967.00. [ 3 ] On March 2, 2011, Toscana and Alberta Paving entered into a settlement agreement, which included a term that the parties would subsequently execute a release.

Toscana, Alberta Paving and Concrete Finishing Deluxxx Ltd. executed a mutual release on

August 2, 2011. [ 4 ] Toscana commenced this action on April 2, 2012 in regard to the design, manufacture, installation, engineering and servicing of the underground water and sewage tanks. The claim against Alberta Paving and its excavation subcontractor, J.K.R. Excavating Ltd., relates to the excavation of the holes into which the tanks were placed, the supply and installation of pea gravel around the tanks, and the backfill covering the tanks. [ 5 ] One of Alberta Paving's defences is that the action is captured under the terms of the settlement and release.

It applies to summarily dismiss Toscana's action on this basis. Toscana asserts that the scope of the settlement agreement and release is restricted to the sidewalk and fire hydrant installation. It further states that it was not aware that the problems with the tanks might be attributable to Alberta Paving and its excavation subcontractor until after the release was executed. [ 6 ] For the reasons that follow, Alberta Paving's application for

summary judgment is dismissed. Test for

summary judgment [ 7 ] Rule 7.3 provides that a party may apply to the court for

summary judgment in respect of all or part of a claim on one or more of the following grounds: there is no defence to a claim or part of it; there is no merit to a claim or part of it; or the only issue is the amount to be awarded. [ 8 ] The bar on a motion for

summary judgment is high: Canada (Attorney General) v. Lameman , 2008 SCC 14 , [2008] 1 S.C.R. 372. The applicant must establish that there is no genuine issue requiring trial: see for example, Pioneer Exploration Inc. (Trustee of) v. Euro-Am Pacific Enterprises Ltd. , 2003 ABCA 298 , 339 A.R. 165 at paragraphs 15-19 , Tottrup v. Clearwater (Municipal District No. 99) , 2006 ABCA 380 , 401 A.R. 88 at paragraph 10 . [ 9 ] The Court of Appeal confirmed in Tottrup v. Clearwater (Municipal District No. 99) that applications for

summary judgment or dismissal can take many forms. [ 10 ] The Court explained that in some cases, the application is simply based on the factual merits of the case and the applicant can prove its case on the facts without a trial. In this type of

summary judgment application, the test is as stated in Pioneer Exploration Inc. (Trustee of) v. Euro-Am Pacific Enterprises Ltd . An analogous approach is used where the defendant applies for

summary dismissal. It is in the context of this type of

summary judgment application that the cases sometimes say it must be "plain and obvious" or "clear" or "beyond real doubt" that the action should be disposed of summarily. [ 11 ] The Court further observed at paragraph 11 that there are other types of

summary judgment applications. In some cases the facts are clear and undisputed. The ultimate outcome of the case may depend on the

interpretation of some statute or document, or may depend on some issue of law that arises from undisputed facts. In such cases, the test for

summary judgment is not whether the issue of law is "beyond doubt", but whether the issue of law can fairly be decided on the record before the court. If the legal issue is unsettled, complex or intertwined with the facts, it is sometimes necessary to have a full trial to provide a proper foundation for the decision. In other cases, it is possible to decide the question of law summarily. [ 12 ]

Summary judgment should not be granted if opposing affidavits clash on relevant facts. A Justice or Master in chambers should not assess the quality and weight of the evidence, as this is a function reserved for a trial judge: De Shazo v. Nations Energy Co. , 2005 ABCA 241 , (2005), 48 Alta. L.R. (4th) 25 (C.A.) at paragraph 17 , citing Liu v. Tangirala , 2004 ABCA 171 at paragraph 2 . The settlement agreement

[13] The settlement agreement provides in part that: Alberta Paving agreed to settle "any and all matters and issues" relating to the Construction Agreement and builders' liens in exchangefor payment by Toscana of approximately $80,000.00; A “sidewalk holdback” amount of $15,000 was to be held in trust pending inspection of the sidewalk by a consultant; A deposit provided by Toscana to Walton Development (Sheppard) Inc. and Walton Development and Management LP in the sum of$25,000.00 as a guarantee for the performance of roadway and asphalt work on a road adjacent to the complex, was to be assigned toAlberta Paving, with any deficiencies identified by Walton to be corrected by Alberta Paving if they were within its scope of work underthe Construction Agreement (according to Mr.

Hubbell's cross examination, this deposit related to the fire hydrant installed by AlbertaPaving on these adjacent lands); Alberta Paving would discharge its builders' liens; and Alberta Paving and Toscana would sign mutual releases upon the later of the release of the sidewalk holdback and the release of theguarantee deposit.

The release [14] The release provides in part that: ..in consideration of the payment of $10,000.00 out of the Sidewalk Holdback as defined in the Settlement Agreement… and other goodand valuable consideration, Toscana… Alberta Paving…and Concrete Finishing Deluxxx Ltd… hereby remise, release, and foreverdischarge each other…from any and all matters, causes of action, suits…claims and demands of every nature and kind whatsoever whichthe Parties had, now have or hereafter may have, can or shall have against each other for or by reason of any cause, matter or thingwhatsoever, including but not limited to those matters arising out of or in connection with the concrete sidewalk and any and alldeficiencies thereto at the project… …For clarity purposes, this Release shall be a global release whereby the parties are hereby discharged and released from any duties orobligations to the other whatsoever.

Interpretation of settlement and release [15] The intent of the parties is to be determined from the words in the written contract; their subjective intent is irrelevant:Gainers Inc. v. Pocklington Financial Corporation, 2000 ABCA 151, 255 A.R. 373 at paragraph 20, citing Eli Lily & Co. v.Novopharm, (SCC), [1998] 2 S.C.R. 129. [16] Contracts are not to be interpreted in a vacuum. Contextual evidence of surrounding circumstances, disclosing facts known tothe parties at the time the contract is made, is part of the interpretive process: Nexxtep Resources Ltd. v.

Talisman Energy Inc., 2013ABCA 40 at paragraphs 20-21. It is from the whole of the document, coupled with the surrounding circumstances, that the generalintention of the parties is to be ascertained: Omers Energy Inc. v. Alberta (Energy Resources Conservation Board), 2011 ABCA 251 atparagraph 34. [17] Many Canadian courts have commented on principles of

interpretation in the specific context of release contracts: see forexample, White v. Central Trust Co. (1984), (NB CA), 7 D.L.R. (4th) 236 (N.B.C.A.); Hill v. Nova Scotia (AttorneyGeneral), (SCC), [1997] 1 S.C.R. 69; Re Bank of British Columbia Pension Plan, 2000 BCCA 291; Abundance

Marketing Inc. v. Integrity Marketing Inc., 2002 CarswellOnt 3273 (S.C.J.). [18] In Re Bank of British Columbia Pension Plan, the British Columbia Court of Appeal stated at paragraph 17: 1. No particular form of words is necessary to constitute a valid release. Any words which show an evident intention to renounce aclaim or discharge the obligation are sufficient. 2. The normal rules relating to the construction of a written contract also apply to a release, and so, a release in general terms is to beconstrued according to the particular purpose for which it was made. 3.

The court will construe a release which is general in its terms in the light of the circumstances existing at the time of its executionand with reference to its context and recitals in order to give effect to the intention of the party by whom it was executed. 4. In particular, it will not be construed as applying to facts of which the party making the release had no knowledge at the time ofits execution or to objects which must then have been outside his contemplation. 5.

The construction of any individual release will necessarily depend upon its particular wording and phraseology. [19] In Abundance Marketing Inc. at paragraph 24, the Court referred to White v. Central Trust Co. and stated that "[p]resumably, the more general the release the more important the context or factual matrix of the document becomes." [20] Alberta courts have confirmed that a release operates to cover what the parties had in contemplation at the time. Even widegeneral words of release may be limited by that factor: see for example, Athabasca Realty Co. v. Foster (1982), 1982 ABCA 48, 18 Alta.

L.R. (2d) 385 (C.A.) at 393, citing Directors of London & South Western Ry. v. Blackmore (1869-70), L.R. 4 H.L.610. [21] In Directors of London & South Western Ry. v. Blackmore, Lord Westbury stated at 623: The general words in a release are limited always to that thing or those things which were specifically in the contemplation of the partiesat the time when the release was given. But a dispute that had not emerged, or a question which had not at all arisen, cannot beconsidered as bound and concluded by the anticipatory words of a general release.

There is no difficulty, therefore, in holding that thepresent contention on the part of this Plaintiff, Mr. Blackmore, in respect of matters that subsequently arose, cannot be at all affected bywords in a release given anterior to the arising of the subject of the present dispute. [22] In Tongue v. Vencap Equities Alberta Ltd. (1996), 1996 ABCA 208 , 184 A.R. 368, the Court of Appeal confirmedits earlier statement in Athabasca Realty Co. v.

Foster that in the ordinary course, a release cannot be effective notwithstanding itswording, if it purports to waive a cause of action not known to the releasor. [23] With these principles in mind, I turn to the agreements before me. [24] The recitals to the settlement agreement are general in scope. They suggest that the parties wish to settle any and all mattersand issues between them relating to the Construction Agreement and the builders' liens. However, the specifics of the settlementagreement relate to the sidewalk and fire hydrant.

Further, the settlement agreement requires the parties to execute a release upon thelater of the release of the sidewalk holdback and the roadway and asphalt deposit. [25] The release also contains very general language, including the global release quoted earlier. It incorporates defined terms fromthe settlement agreement. Again, however, the specific portions of the release relate to the payment of a sum of $10,000.00 out of thesidewalk holdback. Further, Alberta Paving's sidewalk sub-contractor Concrete Finishing Deluxxx Ltd. is a party to the release. AlbertaPaving's tank installation sub-contractor, J.K.R.

Excavating Ltd., is not a party to the release.

[ 26 ] Evidence of the factual matrix in which the agreements were executed (as distinct from evidence of the parties' understanding and subjective intentions) may be considered in interpreting these agreements. There are some conflicts in the evidence in this regard. [ 27 ] Mr. Paquette testified under cross examination on his affidavit that he and Mr. Hubbell did in fact discuss the problem with the tanks prior to the settlement agreement.

He stated that the discount on Alberta Paving’s invoices ultimately reflected in the March 2, 2011 settlement agreement was in part to address this, not just the sidewalks and hydrant. [ 28 ] Standing against this evidence is Mr. Hubbell's evidence that the problems he discussed with Mr. Paquette prior to the settlement agreement and release did not extend beyond "surface issues", and that the underground tanks were not on either party's radar at the time. [ 29 ] Further, there is some evidence before the court that while Mr.

Hubbell may have known that there was a leak in one of the tanks after the execution of the settlement agreement but prior to the execution of the release on August 2, 2011, the problem presented as a plumbing issue. Mr. Hubbell stated on cross-examination that he did not learn until the tanks were excavated some weeks after the release was signed, that the problem could have been attributable to the type of pea gravel used in the installation of the tanks by Alberta Paving's subcontractor, Concrete Finishing Deluxxx Ltd. This is consistent with the August 18, 2011 letter from Samac Engineering exhibited to Mr.

Paquette's affidavit. Mr. Hubbell further explained that his reference in his affidavit to his knowledge of the problems with the "installation" of the tanks was a general reference and not intended to reference the excavation and installation of pea gravel by Concrete Finishing Deluxxx Ltd. [ 30 ] Alberta Paving also submits that Toscana had sufficient facts available to it prior to executing the release that should at least have put it on inquiry that it had a cause of action in regard to the underground tanks.

It asserts that Toscana's lack of prudence in this regard cannot obviate the release, citing Tongue v. Vencap Equities Alberta Ltd . [ 31 ] The evidence before the court at this time does not clearly support this outcome. It is possible that a trial judge will accept Mr.

Hubbell's evidence concerning the complexity of identifying the source of the problem with the underground tanks, and that he did not have sufficient information to consider the possibility that the problem could be attributed to Alberta Paving and its subcontractor, until after the release was signed. [ 32 ] Based on a review of the words used, in the context of the agreements as a whole, evidence of the surrounding circumstances and the facts known to the parties at the time of execution, it is at least arguable that the settlement agreement and release do not extend to the installation of the underground tanks by Alberta Paving and its subcontractor.

It is not plain and obvious that the settlement agreement and release bar this action. Conclusion [ 33 ] Alberta Paving's application for

summary judgment is accordingly dismissed. [ 34 ] Costs will follow the event, unless spoken to within 30 days of the date of this memorandum. Heard on the 23 rd day of April, 2013. Dated at the City of Calgary, Alberta this 10 th day of May, 2013.

J.L. Mason M.C.C.Q.B.A. Appearances: Aidan D. Henderson Bishop & McKenzie LLP for the Plaintiff / Respondent Christian Villeneuve River City Law Group for the Defendant / Applicant