2018 ONSC 4064, 2018 ONSC 4064

CITATION : 1526806 Ontario Inc. v. Ellisdon Corporation, 2018 ONSC 4064 COURT FILE NO.: CV-14-1640-00 DATE: 2018 06 27 SUPERIOR COURT OF JUSTICE – ONTARIO 1526806 Ontario Inc. and 1198934 Ontario Inc., carrying on business as Basic Structure Engineering Glazing Contractors Plaintiffs - and - Elllisdon Corporation Defendant BEFORE: Bloom, J. COUNSEL: Anne Kennedy and Marc Whiteley, Counsel for the Moving Party, the Defendant, Ellisdon Corporation George Limberis, Counsel for the Responding Parties, the Plaintiffs E N D O R S E M E N T I. INTRODUCTION [ 1 ] The Defendant, the Moving Party, moves for partial

summary judgment. Specifically, the Moving Party seeks an order dismissing all claims by the Plaintiff, 1198934 Ontario Inc. (hereinafter “119”), and the claims by 1526806 Ontario Inc. for negligent and fraudulent misrepresentation, for punitive damages, and for aggravated damages. II. PROCEDURAL HISTORY AND EVIDENCE

[ 2 ] The Defendant was awarded a contract by the University of Toronto in approximately 2003 to construct the Communications, Culture and Information Technology (“CCIT”) building at its Erindale campus in Mississauga. [ 3 ] The Defendant contracted with Basic to have the glass installation done. The Defendant contends that its contractual relationship was only with the Plaintiff, 152. The Plaintiffs dispute that allegation. It is undisputed that both Plaintiffs were operated by Edward Ulrich. [ 4 ] By a memorandum dated September 30, 2003 from John Mitchell of the Defendant to Mr.

Ulrich, Basic was advised that “[t]here will be extensive additional costs incurred with temporary enclosures, additional heating and premium-time working, unless prompt and productive effort is made [by Basic] to bring the Project back on track.” [ 5 ] By a letter dated November 12, 2003 the architects advised Mr. Mitchell, “One more time, we want to express serious concerns about the progress of work and performance of Basic[’s]…works in this project.” [ 6 ] By a memorandum dated December 1, 2003 Mr. Mitchell advised Mr.

Ulrich of Basic of two back charges, amounts to be charged to Basic for work done to remedy defects or omissions in the work which was to be done on the project by Basic. [ 7 ] By a letter dated February 24, 2005 the University of Toronto advised the Defendant of deficiencies and omissions in the work on the project, and warned the Defendant that it must take steps to correct the default in 5 working days or the University would correct them at the Defendant’s expense.

These deficiencies and omissions are alleged by the Defendant to be in the work subcontracted by the Defendant to Basic. [ 8 ] The Defendant subcontracted at least some of this remedial work to TAGG with the intention of back charging Basic. The Defendant so advised Mr.

Ulrich, as reflected in a memorandum of June 22, 2005. [ 9 ] In a Notice of Action issued October 24, 2007 and Statement of Claim dated November 22, 2007 the Plaintiffs alleged that the Defendant had breached its contract with the Plaintiffs and in so doing executed a fraudulent scheme against the Plaintiffs with respect to back charges made against them on the project. [ 10 ] The Plaintiffs alleged additionally that Bruno Antidormi, Toronto Vice President of the Defendant, promised that the Defendant would make up for lost revenues as a result of improper back charges, by giving the Plaintiffs work on other projects; and that this compensation never materialized.

Those allegations provided the basis for claims of fraudulent and negligent misrepresentation. [ 11 ] The Plaintiffs also sought aggravated and punitive damages. [ 12 ] The Moving Party relies on this motion on print-outs from its computer system to establish the payments for the work in question, including back charges. The Responding Parties in oral argument conceded the admissibility of this evidence, but put in issue its weight. [ 13 ] The Plaintiffs do not, however, dispute every back charge. [ 14 ] On his examination for discovery on behalf of the Plaintiffs, Mr.

Ulrich conceded that he had no evidence to support the Plaintiffs’ allegation that the back charges were a fraudulent scheme by the Defendant. It should be noted that the Defendant agrees that the breach of contract claim in the action for sums which were the subject of back charges should go forward, but attacks on this motion the claim for punitive damages, which is based on the allegation in the action of a fraudulent scheme in respect of back charges. [ 15 ] There was correspondence in 2006 in which Mr. Ulrich contested with Mr.

Antidormi the validity of the back charges, requesting specific information in relation to them. III. GOVERNING LEGAL PRINCIPLES A. The Principles Applicable to Partial

Summary Judgement [ 16 ] Rules 20.02, 20.04 and 20.05 read as follows: EVIDENCE ON MOTION 20 .02

(1) An affidavit for use on a motion for

summary judgment may be made on information and belief as provided in subrule 39.01 (4), but, on the hearing of the motion, the court may, if appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts. O. Reg. 438/08, s. 12.

(2) In response to affidavit material or other evidence supporting a motion for

summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial. O. Reg. 438/08, s. 12. DISPOSITION OF MOTION General 20 .04

(1) Revoked : O. Reg. 438/08, s. 13 (1).

(2) The court shall grant

summary judgment if, (

a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(

b) the parties agree to have all or part of the claim determined by a

summary judgment and the court is satisfied that it is appropriate to grant

summary judgment. O. Reg. 284/01, s. 6; O. Reg. 438/08, s. 13 (2). Powers

(2.1) In determining under clause (2) (

a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial: 1. Weighing the evidence. 2. Evaluating the credibility of a deponent. 3. Drawing any reasonable inference from the evidence. O. Reg. 438/08, s. 13 (3). Oral Evidence (Mini-Trial)

(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation. O. Reg. 438/08, s. 13 (3). Only Genuine Issue Is Amount

(3) Where the court is satisfied that the only genuine issue is the amount to which the moving party is entitled, the court may order a trial of that issue or grant judgment with a reference to determine the amount. R.R.O. 1990, Reg. 194, r. 20.04 (3) ; O. Reg. 438/08, s. 13 (4). Only Genuine Issue Is Question Of Law

(4) Where the court is satisfied that the only genuine issue is a question of law, the court may determine the question and grant judgment accordingly, but where the motion is made to a master, it shall be adjourned to be heard by a judge. R.R.O. 1990, Reg. 194, r. 20.04 (4) ; O. Reg. 438/08, s. 13 (4). Only Claim Is For An Accounting

(5) Where the plaintiff is the moving party and claims an accounting and the defendant fails to satisfy the court that there is a preliminary issue to be tried, the court may grant judgment on the claim with a reference to take the accounts. R.R.O. 1990, Reg. 194, r. 20.04 (5) . WHERE TRIAL IS NECESSARY Powers of Court 20 .05

(1) Where

summary judgment is refused or is granted only in part, the court may make an order specifying what material facts are not in dispute and defining the issues to be tried, and order that the action proceed to trial expeditiously. O. Reg. 438/08, s. 14. Directions and Terms

(2) If an action is ordered to proceed to trial under subrule (1), the court may give such directions or impose such terms as are just, including an order, (

a) that each party deliver, within a specified time, an affidavit of documents in accordance with the court’s directions; (

b) that any motions be brought within a specified time; (

c) that a statement setting out what material facts are not in dispute be filed within a specified time; (

d) that examinations for discovery be conducted in accordance with a discovery plan established by the court, which may set a

schedule for examinations and impose such limits on the right of discovery as are just, including a limit on the scope of discovery to matters not covered by the affidavits or any other evidence filed on the motion and any cross-examinations on them; (

e) that a discovery plan agreed to by the parties under Rule 29.1 (discovery plan) be amended; (

f) that the affidavits or any other evidence filed on the motion and any cross-examinations on them may be used at trial in the same manner as an examination for discovery; (

g) that any examination of a person under Rule 36 (taking evidence before trial) be subject to a time limit; (

h) that a party deliver, within a specified time, a written

summary of the anticipated evidence of a witness; (

i) that any oral examination of a witness at trial be subject to a time limit; (

j) that the evidence of a witness be given in whole or in part by affidavit; (

k) that any experts engaged by or on behalf of the parties in relation to the action meet on a without prejudice basis in order to identify the issues on which the experts agree and the issues on which they do not agree, to attempt to clarify and resolve any issues that are the

subject of disagreement and to prepare a joint statement setting out the areas of agreement and any areas of disagreement and the reasonsfor it if, in the opinion of the court, the cost or time savings or other benefits that may be achieved from the meeting are proportionate tothe amounts at stake or the importance of the issues involved in the case and, (

i) there is a reasonable prospect for agreement on some or all of the issues, or (ii) the rationale for opposing expert opinions is unknown and clarification on areas of disagreement would assist the parties or thecourt; (

l) that each of the parties deliver a concise

summary of his or her opening statement; (

m) that the parties appear before the court by a specified date, at which appearance the court may make any order that may be madeunder this subrule; (

n) that the action be set down for trial on a particular date or on a particular trial list, subject to the direction of the regional seniorjudge; (

o) for payment into court of all or part of the claim; and (

p) for security for costs. O. Reg. 438/08, s. 14. Specified Facts

(3) At the trial, any facts specified under subrule (1) or clause (2) (

c) shall be deemed to be established unless the trial judge ordersotherwise to prevent injustice. O. Reg. 438/08, s. 14. Order re Affidavit Evidence

(4) In deciding whether to make an order under clause (2) (j), the fact that an adverse party may reasonably require the attendance of thedeponent at trial for cross-examination is a relevant consideration. O. Reg. 438/08, s. 14. Order re Experts, Costs

(5) If an order is made under clause (2) (k), each party shall bear his or her own costs. O. Reg. 438/08, s. 14. Failure to Comply with Order

(6) Where a party fails to comply with an order under clause (2) (

o) for payment into court or under clause (2) (

p) for security for costs,the court on motion of the opposite party may dismiss the action, strike out the statement of defence or make such other order as is just. O. Reg. 438/08, s. 14.

(7) Where on a motion under subrule (6) the statement of defence is struck out, the defendant shall be deemed to be noted in default. O. Reg. 438/08, s. 14. [17] Rule 39.01(4) reads as follows:

(4) An affidavit for use on a motion may contain statements of the deponent’s information and belief, if the source of the informationand the fact of the belief are specified in the affidavit. R.R.O. 1990, Reg. 194, r. 39.01 (4). [18] In Hryniak v. Mauldin, 2014 SCC 7 , [2014] 1 SCR 87 Justice Karakatsanis for the Court set out principles to beapplied on a

summary judgement motion at paras. 49, 50, 57 to 59, and 66: [49] There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on amotion for

summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2)allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a justresult. [50] These principles are interconnected and all speak to whether

summary judgment will provide a fair and just adjudication. When asummary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not beproportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be theproportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as atrial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as toresolve the dispute. …. [57] On a

summary judgment motion, the evidence need not be equivalent to that at trial, but must be such that the judge is confidentthat she can fairly resolve the dispute. A documentary record, particularly when supplemented by the new fact-finding tools, includingordering oral testimony, is often sufficient to resolve material issues fairly and justly. The powers provided in Rules 20.04(2.1) and (2.2)can provide an equally valid, if less extensive, manner of fact finding. [58] This inquiry into the interest of justice is, by its nature, comparative. Proportionality is assessed in relation to the full trial. It mayrequire the motion judge to assess the relative efficiencies of proceeding by way of

summary judgment, as opposed to trial. This wouldinvolve a comparison of, among other things, the cost and speed of both procedures. (Although

summary judgment may be expensiveand time consuming, as in this case, a trial may be even more expensive and slower.) It may also involve a comparison of the evidence

that will be available at trial and on the motion as well as the opportunity to fairly evaluate it. (Even if the evidence available on themotion is limited, there may be no reason to think better evidence would be available at trial.) [59] In practice, whether it is against the “interest of justice” to use the new fact-finding powers will often coincide with whether thereis a “genuine issue requiring a trial”. It is logical that, when the use of the new powers would enable a judge to fairly and justlyadjudicate a claim, it will generally not be against the interest of justice to do so.

What is fair and just turns on the nature of the issues,the nature and strength of the evidence and what is the proportional procedure. …. [66] On a motion for

summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trialbased only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if thesummary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordableand proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine ifthe need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2).

She may, at her discretion, use thosepowers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead toa fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole. [19] In a leading textbook on civil procedure, Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 2d ed(Markham, Ontario: LexisNexis Canada Inc., 2014) at para. 6.209 the learned authors set out the following additional principlesgoverning a

summary judgement motion: The court is entitled to assume that the parties have respectively advanced their best case and that the record contains all the evidencethat the parties respectively will present at trial. The onus is on the moving party to show that there is no genuine issue requiring a trial,but the responding party must present its best case or risk losing. [20] In Butera v. Chown, Cairns LLP, 2017 ONCA 783 at paras. 26 to 34 Justice Pepall for the Ontario Court of Appeal discussedthe principles governing the granting of partial

summary judgement: 26 The pre-Hryniak appellate jurisprudence on partial

summary judgment limited its availability. At para. 3 of Corchis v. KPMG PeatMarwick Thorne, (ON CA), [2002] O.J. No. 1437 (C.A.), this court applied Gold Chance International Ltd.v. Daigle & Hancock, [2001] O.J. No. 1032 (S.C.J.) to state that: [P]artial

summary judgment ought only to be granted in the clearest of cases where the issue on which judgment is sought is clearlyseverable from the balance of the case. If this principle is not followed, there is a very real possibility of a trial result that is inconsistentwith the result of the

summary judgment motion on essentially the same claim. …. 28 In both Baywood and CIBC, the court analyzed the issue from the perspective of whether (

i) there was a risk of duplicative orinconsistent findings at trial and whether (ii) granting partial

summary judgment was advisable in the context of the litigation as a whole.In both cases, the court held that partial

summary judgment was inadvisable in the circumstances. 29 The caution expressed pre-Hryniak in Corchis is equally applicable in the post-Hryniak world. In addition to the danger ofduplicative or inconsistent findings considered in Baywood and CIBC, partial

summary judgment raises further problems that areanathema to the stated objectives underlying Hryniak. 30 First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of amotion for partial

summary judgment. A delay tactic, dressed as a request for partial

summary judgment, may be used, albeit improperly,to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will onlyresolve one element of the action. At worst, the result is only increased fees and delay. There is also always the possibility of an appeal. 31 Second, a motion for partial

summary judgment may by very expensive…. 32 Third, judges, who already face a significant responsibility addressing the increase in

summary judgment motions that have flowedsince Hryniak, are required to spend time hearing partial

summary judgment motions and writing comprehensive reasons on an issue thatdoes not dispose of the action. 33 Fourth, the record available at the hearing of a partial

summary judgment motion will likely not be as expansive as the record at trialtherefore increasing the danger of inconsistent findings. 34 When bringing a motion for partial

summary judgment, the moving party should consider these factors in assessing whether themotion is advisable in the context of the litigation as a whole. A motion for partial

summary judgment should be considered to be a rareprocedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt withexpeditiously and in a cost effective manner. [21] In Mason v. Perras Mongenais, 2018 ONSC 1477 Justice F.L. Myers at paras. 13, 16 to 19, and 32 to 33 elaborated on thoseprinciples: [13] At para. 60, the Supreme Court of Canada recognized the risks of allowing

summary judgment against one defendant while theclaim continued against others: The “interest of justice” inquiry goes further, and also considers the consequences of the motion in the context of the litigation as awhole. For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of

justice to use the new fact-finding powers to grant

summary judgment against a single defendant. Such partial

summary judgment mayrun the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest ofjustice. On the other hand, the resolution of an important claim against a key party could significantly advance access to justice, andbe the most proportionate, timely and cost effective approach. [Emphasis added.] …. [16] There will be cases where a

summary process would resolve so little of value and/or create too much risk of costly duplication orinconsistent verdicts to be viewed as either just or proportionate. But to implement a change in the legal culture – a “culture shift” –judges have to be able to say that in appropriate cases, viewed in the context of the litigation as a whole, partial

summary resolutionachieves the goals of fairness and promoting access to justice as was the case in Hryniak itself. Assessing Claims for Partial

Summary Judgement in the Context of the Litigation as a Whole [17] Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 is the leading case that discusses the parameters forassessing claims for partial

summary judgment in the context of the litigation as a whole. It drew its approach from Hryniak and thediscussion of the contextual approach in para. 60 recited above. In Baywood, the motions judge held that a trial was required todetermine the validity of two promissory notes asserted by the defendant in a counterclaim.

However, the judge held that he coulddetermine summarily the question of the validity of a release that was part of the same set of deal documents as the promissory notes.The judge held that the release provided a defence to the plaintiff’s claim while resolution of the counterclaim on the promissory notesrequired a trial. [18] The Court of Appeal overruled, reasoning that it was an error for the judge to isolate and make findings on the release when it wasintertwined with all the deal documents including the promissory notes: [37] In the complex situation in this case, it is therefore entirely possible that the trial judge who hears the trial of the issue on thevalidity of the promissory notes will develop a fuller appreciation of the relationships and the transactional context than the motionsjudge.

That could force a trial decision on the promissory notes that would be implicitly inconsistent with the motions judge’s findingthat the Third Release is fully valid and effective, even though the parties would be bound by that finding.

The process, in this context,risks inconsistent findings and substantive injustice. [38] In light of the factual connection between the promissory notes and Third Release, and Ralph’s testimony, it was an error inprinciple for the motions judge to refer the enforceability of the promissory notes to trial while summarily determining the enforceabilityof the Third Release. [19] It readily follows that where a trial is required involving the same parties, the same witnesses providing the same evidence aboutthe same facts in issue as are relied upon for

summary judgment, the risk of duplication and inconsistent outcomes is particularly acute.In such cases, the benefits of

summary judgment as a cost saving or tool for efficiency are lost since a trial is required on all the samefacts among all the same parties anyway. …. [32] Discrete issues, like limitation periods, which do not overlap with the merits that are left for trial, occupy the most efficient end ofthe spectrum. Cases like Baywood, where the same parties will go to trial with the same witnesses testifying to the very same facts as arein issue on a motion for

summary judgment represent the other end of the spectrum. In the middle, are cases like this one and Hryniakwhere the litigation against a party can be brought to an end by partial

summary judgment. … [33] The Supreme Court of Canada did not impose a bright line rule to default to a trial if there is no wholly discrete or bifurcated issue.Approaching trials as the default process is not a culture shift at all. It perpetuates the practical roadblocks on access to justice that theSupreme Court of Canada identified as being the greatest challenge to the rule of law in Canada. The shift required is an understandingthat judges will be deciding cases summarily as much as possible to avoid the expense and delays of the trial process that put civil justicebeyond the reach of most Canadians.

The shift is that, instead of defaulting to trials, judges will exercise judgment, where possible, tofind proportionate processes to allow a fair and just resolution on the facts of each case that avoids the cost and delays of the trialprocess. If the risk of duplication and inconsistent verdicts is high, then Baywood and Hryniak dictate that a trial is required. But that isthe last option not the best one.

This requires buy-in to the notion that judges will exercise discretion to determine in each case theamount of process required on the facts and law to give them confidence that the case can be resolved fairly, justly, and proportionately.That is the “culture shift.” [22] Justice Firestone in Griva v. Griva, 2016 ONSC 1820 at paras. 15 and 16 reiterated the need to avoid both duplication ofevidence and inconsistent factual findings: [15] In this case the requested motion for partial

summary judgment will not resolve the damages issues in their entirety. The plaintiff’sother damages claims will still be proceeding to trial. Those additional damage claims are based on the same factual matrix andevidentiary record as the general damages claim for which the plaintiff now seeks partial

summary judgment. [16] In this case to allow some of the damages claims to be determined by way of

summary judgment and others to proceed to trialwould risk inconsistent factual findings and a duplication of evidence from not only the plaintiff but also from the many other expertswho will give evidence both on this

summary judgment motion and at trial regarding the injuries sustained and the effect of thoseinjuries. A complete evidentiary record is necessary in order to properly assess the plaintiff’s claim for general non-pecuniary damages. B. Exceptions to the Principle of Privity of Contract [23] The Responding Parties argue for the application of two exceptions to the principle of privity of contract in relation to theclaims of 119.

[24] The first is that a party to a contract may act as an agent for a third party in entering a contract, thereby creating privity betweenthe third party and the other party to the contract. [25] The Responding parties correctly cite McCannell v. Mabee-McLaren Motors, Ltd., (BC CA), [1926] 1 D.L.R.282 (B.C.C.A.) as authority for this principle. [26] However, that case makes clear that the application of the agency exception depends on the intention of the three parties asreflected in the contract.

In that case the contract was found to be entered into by the agent company with the Appellants on behalf of theRespondent. As Justice Macdonald noted at page 3, “The agreement carries this implication.

The appellants and respondent eachentered into an agreement with … [the company found to be an agent] containing in effect rules and conditions governing their commonrelations to that company. [emphasis added]” [27] The contract at the time it is made must contain the “implication” of an intent by the three parties that there be privityestablished between the third party and the party with whom the agent enters into the agreement. [28] The second exception was articulated in Fraser River Pile & Dredge Ltd. v.

Can-Dive Services Ltd., (SCC),[1999] 3 S.C.R.108 at para. 32 by Justice Iacobucci for the Court: 32 In terms of extending the principled approach to establishing a new exception to the doctrine of privity of contract relevant to thecircumstances of the appeal, regard must be had to the emphasis in London Drugs that a new exception first and foremost must bedependent upon the intention of the contracting parties. Accordingly, extrapolating from the specific requirements as set out in LondonDrugs, the determination in general terms is made on the basis of two critical and cumulative factors: (

a) Did the parties to the contractintend to extend the benefit in question to the third party seeking to rely on the contractual provision? and (

b) Are the activitiesperformed by the third party seeking to rely on the contractual provision the very activities contemplated as coming within the scope ofthe contract in general, or the provision in particular, again as determined by reference to the intentions of the parties? [29] The intention of the parties to the contract at the time they entered it is a fundamental requirement for the application of thisexception to privity. C. The Elements of the Tort of Fraudulent Misrepresentation or Deceit [30] In Hryniak v.

Mauldin, supra at para. 87 Justice Karakatsanis confirmed the elements of the tort of deceit and and alsoconfirmed that it must be proven on a balance of probabilities: 87 As discussed in the companion Bruno Appliance appeal, the tort of civil fraud has four elements, which must be proven on a balanceof probabilities: (1) a false representation by the defendant; (2) some level of knowledge of the falsehood of the representation on thepart of the defendant (whether knowledge or recklessness); (3) the false representation caused the plaintiff to act; (4) the plaintiff'sactions resulted in a loss. [31] In Toronto-Dominion Bank v.

Leigh Instruments Ltd. (Trustee of), (ON SC), [1998] O.J. No. 2637 (Ct. J.Gen. Div.); affirmed by the Ontario Court of Appeal without discussing the point at (ON CA), [1999] O.J. No. 3290,Justice Winkler, as he then was, set out at para. 478 further principles governing the proof of deceit against a corporation: 478 Where fraudulent misrepresentation is alleged against a corporation, the intention to deceive must still be strictly proved.

Further, inorder to attach liability to a corporation for fraud, the fraudulent intent must have been held by an individual person who is either adirecting mind of the corporation, or who is acting in the course of their employment through the principle of respondeat superior orvicarious liability. D. The Elements of the Tort of Negligent Misrepresentation [32] In Queen v.

Cognos Inc., (SCC), [1993] 1 S.C.R. 87 at para. 33 Justice Iacobucci set out the elements of thetort of negligent misrepresentation: 33 The required elements for a successful Hedley Byrne claim have been stated in many authorities, sometimes in varying forms.

Thedecisions of this Court cited above suggest five general requirements: (1) there must be a duty of care based on a "special relationship"between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) therepresentor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonable manner,on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damagesresulted. E.

Aggravated Damages [33] The Responding Parties make no submissions in response to the submission by the Moving Party that aggravated damages arenot available in this case to a corporation. The Moving Party relies upon the following passages in Thomas Management Ltd. v. Alberta(Minister of Environmental Protection), [2006] A.J. No. 1332 (Alta. C.A.) at paras. 16 to 19: 16 What damages can a corporation be awarded? The law on this question is clear. A corporation suffers a tangible injury when itsuffers economic loss due to a breach of contract.

However, because a corporation has no feelings, it cannot suffer an intangible injury,the type of injury aggravated damages seek to compensate. (See Pinewood Recording Studios Ltd. v. City Tower DevelopmentCorp. (1998) 40 C.L.R. (2d) 84 (B.C.C.A.) at 72; Lewis et al. v. Daily Telegraph, Ltd., [1963] 2 All E.R. 151 (H.L.) at 156.) 17 In Walker v. CFTO (1987) (ON CA), 59 O.R. (2d) 104 at 113, Robins J.A. considered the damages suffered by acorporation in a defamation suit:

A company whose business character or reputation (as distinct from the character or reputation of the persons who compose it) isinjuriously affected by a defamatory publication is entitled, without proof of damage, to a compensatory award representing the sumnecessary to publically vindicate the company's business reputation. But a company has no feelings and, therefore, as Lord Reid notesin Lewis [supra, full citation removed] at 156, "[a] company cannot be injured in its feelings, it can only be injured in its pocket".

Hence,unlike an individual, a company is not entitled to compensation for injury to hurt feelings or, it follows, to compensation by way ofaggravated damages for a loss of this nature. 18 This principle can be applied equally to an action for breach of contract. If a corporation suffers a loss of reputation due to a breachof contract, and the Hadley test is met, the corporation can be awarded damages to redeem its business reputation.

However, noaggravated damages can be awarded to the corporation because it is incapable of suffering intangible injuries such as embarrassment,hurt feelings or humiliation. 19 The damages stemming from mental anguish are obviously intangible. It is thus clear that a corporation cannot be awardedaggravated damages for mental anguish arising from a breach of contract. F. The Test for Awarding Punitive Damages [34] In Spadafora v. Dominion of Canada General Insurance Co., 2013 ONSC 182 , [2013] 113 O.R. (3d) 782 (Ont.

Sup.Ct.) at paras. 52 and 53 Justice Reilly discussed the principles governing the awarding of punitive damages: 52 So too do I dismiss, without reservation, the claim for aggravated punitive and exemplary damages in the amount of $1,000,000.00.In the leading case of Whiten v.

Pilot Insurance Company, 2002 SCC 18 , [2002] 1 S.C.R. 595, the Supreme Court of Canadaset out the principles governing punitive damages at para. 94: (1) punitive damages are very much the exception rather than the rule, (2) imposed only if there has been highhanded, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degreefrom ordinary standards of decent behaviour, (3) where they are awarded, punitive damages should be assessed in such an amount reasonably proportionate to such factors as theharm caused, the degree of the misconduct, the relative vulnerability of the plaintiff and any advantage or profit gained by the defendant, (4) having regard to any other fines or penalties suffered by the defendant for the misconduct in question, (5) punitive damages are generally given only where the misconduct would otherwise be unpunished or where other penalties are orare likely to be inadequate to achieve the objects of retribution, deterrents and denunciation, (6) their purpose is not to compensate the plaintiff, but (7) to give a defendant his or her just dessert (retribution), to deter the defendant and others from similar misconduct in the future(deterrence), and to mark the communities collective condemnation (denunciation) of what has happened, (8) punitive damages are awarded only when compensatory damages, which to some extent are punitive, are insufficient to accomplishthese objectives, and (9) they are given in an amount that is no greater than necessary to rationally accomplish their purpose, (10) the jury should be told that while normally the state would be the recipient of any fine or penalty for misconduct, the plaintiff willkeep punitive damages as a "windfall" in addition to compensatory damages, (11) judge and juries in our system have usually found that moderate awards of punitive damages, which inevitably carry a stigma in thebroader community, are generally sufficient. 53 The conduct of the defendant in this case, even if an award of damages for breach of contract is ultimately found to be appropriateat the end of trial, is far from the "highhanded, malicious, arbitrary or highly reprehensible conduct that would justify an award forpunitive or aggravated damages.

Therefore, I dismiss the claim for aggravated, punitive and exemplary damages. IV. ANALYSIS [35] I will now address each of the claims subject of the Defendant’s motion, relying upon the principles and evidence set out above. A.

The Claims by 119 [36] The Moving Party seeks a dismissal of the claims of 119 on the basis that 119 has no privity of contract with it. [37] In the case at bar neither of the exceptions to privity of contract argued by the Responding Parties can apply given the clearintent expressed in the contract that only 152 be party. [38] The contract in question was made May 6, 2003 between the Defendant and 152. Moreover, in

Article 16.01, 152 agreed “notto sub-let this contract or any portion thereof without the consent in writing of the” Defendant. No such consent was adduced inevidence; at most there was some billing documentation of the Defendant referring to 119. [39] The Responding parties argue in the alternative that I should grant leave to amend their Statement of Claim or to bring a motionto amend it, to put forward 119’s claims by way of unjust enrichment.

[ 40 ] I reject this argument. The action was commenced in 2007. This alternative argument was not the subject of discovery. It was first raised only in the Plaintiffs’ Supplementary Factum dated January 31, 2018. It is still not the subject of a proper motion to amend the Statement of Claim. In these circumstances I find it unfair to grant the relief sought. [ 41 ] I, therefore, order that the claims of 119 be dismissed, since there is no issue requiring their trial.

Despite this holding I will examine each of the remaining claims as made by both Plaintiffs, on the footing that there was no privity issue as regards 119. B. The Plaintiffs’ Claim for Aggravated Damages [ 42 ] The Defendant seeks a dismissal of the Plaintiffs’ claim for aggravated damages because the Plaintiffs, as corporations, lack the human feelings, the injury to which aggravated damages are a remedy. [ 43 ] The Plaintiffs do not make submissions in response to this attack. [ 44 ] In my view, based on the principles I have reviewed above, the Defendant’s position is well founded.

I, therefore, order that the Plaintiffs’ claim for aggravated damages be dismissed, since there is no issue requiring a trial in relation to that claim. C.

The Claims for Fraudulent and Negligent Misrepresentation [ 45 ] The Plaintiffs’ claims for fraudulent and negligent misrepresentation as pleaded in the Statement of Claim allege that Bruno Antidormi, Toronto Region Vice President of the Defendant, promised on behalf of the Defendant to make up to the Plaintiffs the improper back charges by giving them two more large projects; that in or around April 2007 “it became clear that these additional project contracts were not going to be engaged, rendering false and fraudulent the previous representations.” [ 46 ] The Plaintiffs support those allegations with the affidavit evidence of Mr.

Ulrich to the same effect. [ 47 ] The Defendant argues that there is no issue requiring a trial in relation to the Plaintiffs’ claims of fraudulent and negligent misrepresentation, because there is no evidence of the required elements of reliance causing loss.

Specifically, the Defendant contends that, even if Antidormi made the representations alleged, the Plaintiffs did not rely upon them to their economic detriment, since they did not refrain from suing for the allegedly improper back charges. [ 48 ] The Plaintiffs’ response is that first, assuming that Antidormi made the representations as alleged, those statements caused the Plaintiffs to delay in launching their suit, thereby resulting in their inability to obtain further documentation to support the suit. [ 49 ] Second, the Plaintiffs argue that the fraudulent and negligent misrepresentation claims are so interconnected with the allegations of fraudulent acts supporting the claim for punitive damages that the fraudulent and negligent misrepresentation claims must go to trial along with the punitive damages claim. [ 50 ] The claims for fraudulent and negligent misrepresentation must be dismissed, and I so order; in view of the absence of any evidence of loss or damages caused by the alleged misrepresentations , there is no issue requiring a trial in relation to those claims.

D. The Claim for Punitive Damages [ 51 ] The Moving Party argues that partial

summary judgment is appropriate regarding the Plaintiffs’ claim for punitive damages, because the Plaintiffs have adduced on this motion no evidence to support the allegations of a fraudulent scheme which are its factual underpinning. [ 52 ] The Responding Parties argue that the evidence which will be called at trial in relation to the allegations of a fraudulent scheme is the same as that which will be called regarding the claim for damages for breach of contract, which is not the subject of this motion; and that, therefore, granting partial

summary judgement respecting the punitive damages claim raises an unacceptable risk of findings of fact at trial which are inconsistent with my own. [ 53 ] Relying on the principles reviewed above I accept that argument of the Responding Parties. It is not appropriate for me to sever off the claim for punitive damages when the trial judge will inevitably have to consider the matter of the back charges in trying the breach of contract claim.

The validity of the back charges is at the heart of the breach of contract claim; whether there was a fraudulent scheme executed by the Defendant regarding the back charges will necessarily be assessed by the trial judge in determining that issue of validity. [ 54 ] I, therefore, dismiss the motion as regards the claim for punitive damages. V. COSTS [ 55 ] I will receive written submissions as to costs limited to 4 pages, excluding a bill of costs. The Defendant is to serve and file its submissions within 14 days from release of these reasons.

The Plaintiffs are to serve and file their submissions within 14 days from service of the Defendant’s submissions. There shall be no reply. __________________________ Bloom, J.

DATE: June 27, 2018 CITATION : 1526806 Ontario Inc. v. Ellisdon Corporation, 2018 ONSC 4064 COURT FILE NO.: CV-14-1640-00 DATE: 2018 06 27 SUPERIOR COURT OF JUSTICE – ONTARIO 1526806 Ontario Inc. and 1198934 Ontario Inc., carrying on business as Basic Structure Engineering Glazing Contractors Plaintiffs - and - Elllisdon Corporation Defendant COUNSEL: Anne Kennedy and Marc Whiteley, Counsel for the Moving Party, the Defendant, Ellisdon Corporation George Limberis, Counsel for the Responding Parties, the Plaintiffs ENDORSEMENT Bloom, J. DATE: June 27, 2018