MONCTON, a municipal body corporate, Plaintiff, v. ARCHITECTURE 2000 INC., 2022 NBKB 185

Moncton v. Stantec et al., 2022 NBKB 185 IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF MONCTON MC-811-2016 BETWEEN: MONCTON, a municipal body corporate, Plaintiff, -and- ARCHITECTURE 2000 INC. and STANTEC ARCHITECTURE LTD., bodies corporate, Defendants, -and- CASTLE ROCK CONSTRUCTION SERVICES INC ., and VALRON ENGINEERS INC. , Third Parties. DECISION Before: Justice Jean-Paul Ouellette Date of Hearing: September 14, 2022 Date of Decision: September 29, 2022 At: Moncton, New Brunswick Appearances: Peter T.

Zed, Q.C., and John Morrissy , Esqs., for Moncton, Conor O’Neil , Esq., for both Defendants. OUELLETTE, J. [ 1 ] The City of Moncton (“Moncton”) retained the services of Architecture 2000 Inc. and Stantec Architecture Ltd. (“Stantec”) as their consultants in a construction project for an addition to the Moncton Museum to be known as the Transportation Discovery

Centre. [ 2 ] The project was divided into phases.

The first Phase encompassed foundation and structural steel work and, Phase 2, the installation of a glass structure comprised of an aluminum skylight and glass paneling which was to be attached to the structural steel erected during Phase 1. [ 3 ] Phase 1 was substantially completed on August 21, 2012, as confirmed by Stantec’s Certificate of Substantial Performance assessing the Phase 1 work including the structural steel work. [ 4 ] Stantec further advised Moncton that the building was constructed in accordance with the plan and specifications submitted to and approved by the municipality. [ 5 ] Phase 2 began in the fall of 2012 with Dora Construction (“Dora”) being awarded the construction contract.

After a survey of the as-built structural steel was commissioned, it revealed that the structural steel built in Phase 1 was misaligned and deviated from the intended design location of the structural steel as prescribed in the Phase 1 contract. [ 6 ] Stantec was notified by Dora of its position on October 30, 2012, that the misaligned structural steel would delay completion of the project and result in additional costs. [ 7 ] Moncton, relying on Stantec, was advised and led to believe that: (

i) The misaligned structural steel did not constitute a legitimate impediment which ought to delay the substantial performance date of Phase II Work or result in additional costs to the City; (ii) DORA’s claim that the misaligned structural steel would delay completion of the Project and/or result in additional costs was unfounded, and that DORA/GSI could fix and/or work around the misaligned structural steel within the parameters of their existing contracts; and (iii) The delays and additional costs alleged by DORA/GSI were attributable solely to DORA/GSI/IGB’s failure to identify and adapt to the specific circumstances of the structural steel, and not any legitimate issue with the structural steel itself, as the survey of the steel was DORA’s responsibility and was existing and available for inspection at time of DORA’s tender. [ 8 ] For the record, GSI and IGB are sub-contractors to Dora. [ 9 ] During the duration of Phase 2, Stantec maintained its position of not being at fault or otherwise responsible for any other additional costs and delays as alleged by Dora.

Dora also alleged that Stantec ought to have identified the misaligned structural steel prior to certifying the Phase 1 work as complete. [ 10 ] Numerous discussions were held between and among Stantec and other contractors and sub-contractors, during the period of November 2012 to July 15, 2014, when Moncton was served with a claim by Dora for change of contract price and a statement of claim.

A mechanic’s lien was issued by Dora and a subcontractor who each commenced actions against Moncton to protect the lien pursuant to the Mechanic’s Lien Act . [ 11 ] Stantec was asked by Moncton’s solicitor to respond to the claim in order to better assess Moncton’s position regarding the claim. [ 12 ] On November 19, 2014, Stantec’s opinion, prepared by Ian MacLaughlan states, among other things: In review of the claim dated July 15, 2014 on the above mentioned project, we have reviewed the information in its entirety and have comments broken out below with our responses corresponding to

Section 2 - Statement of Claim. 1. Contract Agreement We are in agreement with this statement 2. Phase I Structure […] Based on the countless

schedule changes that had not resulted from the client or his consultants, the work should have been completed well over a year ago. GSI stated in their letter of April 10th, 2013, that all additional costs now reflected in their claim would be bore ( sic ) by them, and therefore no additional extra should be entertained for this item. 3. Phase I Structure Outlined in item number 2 above . 4. Mechanical & Electrical Systems […] No

schedule impact should be assessed for this item as it was not on the critical path that has been clearly outlined with the sloped glazing. 5. Changes to the Contract […] Change orders were not on critical path or deemed concurrent and therefore no additional time/impact will be associated with this item . […]

6. This item was not black and white as reflected in Dora’s statement of claim […], one of the main reasons that the purlins could not be identified was due to lack of information/shop drawings from your subcontractor . In fact that is one of the reasons Dora removed GSI from site.

Several times. [Emphasis added] [ 13 ] On March 2, 2015, Moncton received Stantec’s formal written findings addressing Dora’s Intent to Claim which was identical to the first opinion with the exception of the following additional paragraphs at the end of its findings: We would like to reiterate that the claim presented by DORA was incomplete as documentation referenced was not included, and correspondence outlining direction and time lines has not formed information provided. In

summary we feel the extended construction

schedule is based primarily on the failure to install the sloped glazing as this item was the projects primary critical path item. All items were addressed / resolved with respect to Phase 1 Structure very early in the project as reflected above and the contractor still failed to meet his promised schedules outlined for a period extending 1 year beyond these dates and submitted schedule.

If you have any questions on the above information, please feel free to contact the undersigned at any time. [Emphasis added] [ 14 ] As provided for under the contract between Dora and Moncton, Dora proceeded to arbitration to resolve their dispute. Moncton’s main witness for this arbitration hearing was Mr. MacLaughlan. [ 15 ] In preparation for this hearing, Moncton’s solicitor informed Stantec that Stantec would not be third partied in relation to the arbitration. Mr. MacLaughlan’s response was that he would not need a lawyer as he was not third partied. [ 16 ] Mr.

MacLaughlan was questioned on Stantec’s findings at the arbitration hearing. The transcript provides as follows: Q.147 Rather just generally in this

section 6.6 for claims for a change in the contract price, will you agree that as the consultant named in the contract between Dora and the City of Moncton it was your responsibility to make findings with respect to a claim after a claim has been submitted? A. Yeah we’re definitely the conduit for the contractor to put in the - any discrepancy or claim, acting as the City’s representative it would flow through us, yes. […] Q.151 Would you agree or do you know that you had an obligation as the consultant to make a finding with respect to a claim for an increase in the contract price within thirty working days? A.

No. Q.152 So is that no you weren’t aware of that timeline? A. No I wasn’t aware of that timeline . Q.153 You have reviewed and provided findings to Dora’s claim number 1 for an extension to the time of completion and additional payment for delays in this matter? A. Correct. Q.154 And you are aware that that claim was submitted on or about July 15, 2014? A. Yes, I think the date that I had seen was July 31st it was delivered to the mayor’s office but close enough. Q.155 And the date of your findings is February 27th 2015? A.

Correct . [Emphasis added] [ 17 ] The arbitration hearing was held from November 16-20, 2015, and on March 1, 2016, the arbitrator rendered his decision. He writes: In its defence, the City has adopted the position taken by the Consultant during the course of the Project and has endorsed the acts of the Consultant. Indeed, following receipt of Dora’s formal claim of July 15, 2014, the City turned it over to the Consultant for response, which response is dated February 27, 2015. The only evidence called by the City at the hearing was that of the Consultant.

Bruce Tait, Director of Municipal Facilities for the City, was called as a witness by GSI. He acknowledged that the City relied on the Consultant for a solution to the steel problem once it became known. He further acknowledged that the City did not consider moving all of the steel in the first instance, but looked to Dora for a solution. In short, the City’s position on the steel was communicated to Dora by the Consultant. [ 18 ] As a result of the arbitration decision Moncton had to pay to Dora: (

i) the arbitration award of $386,559.23 to DORA and GSI (the “ Arbitration Award ”); (ii) an additional $194,459.34, representing interest on the amount awarded to DORA, legal costs, disbursements, reimbursement of the arbitrator’s fee, and applicable HST (the “ DORA Costs ”) (iii) an additional $192,954.79 representing interest on the amount awarded to GSI, GSI’s legal costs, disbursements, reimbursement of the arbitrator’s fee, and applicable HST (the “ GSI Costs ”); and

(iv) $35,311.13 in arbitration fees to the Arbitrator (the “Arbitration Fees”) [19] On December 5, 2016, Moncton filed this action against Stantec claiming indemnity/contribution in the form of damagesequal to the amount Moncton was required to pay as a consequence of the Arbitration Decision. [20] Moncton’s position, prior to the City being required to pay certain amounts as a consequence of the Arbitration Decision, wasthat there was no injury, loss or damage to Moncton on which a claim against Stantec could be based. [21] Stantec’s motion for

summary judgment filed on January 22, 2022, alleges that there is no genuine issue requiring a trial,alleging that the claims of Moncton are statute barred as they were brought after the expiration of the limitation period prescribed bysection 5(1) and 14(1) of the Limitation of Actions Act, SNB 2009, c L-8.5 (the “Act”). ISSUE [22] The only issue to be decided is whether Moncton filed its statement of claim within the limitation period prescribed by section5(1) and/or 14(1) of the Limitation of Actions Act as a genuine issue requiring trial.

ANALYSIS AND CONCLUSION [23] Stantec suggested that section 5(1) and 14(1) of the Act made no distinction between meritorious and non-meritorious claimsof liability to contribute as both were triggered not when the claimant had all the facts to prove its claim but when an arguable claim forcontribution could have been discovered. [24] Stantec also suggested that section 14(1), as with section 5(1), has a two year prescription period for bringing a claim forcontribution which can begin to run before the payment, settlement or judgment with the beginning of the limitation period being on theday the claimant first knew or ought reasonably to have known that the person was liable. [25] Rule 22.04, of the Rules of Court, governs the disposition of a motion for

summary judgment: 22.04 Disposition of Motion General

(1) The court shall grant

summary judgment if (

a) the court is satisfied 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 it is appropriate to grantsummary judgment. [26] The question as to what constitutes a “genuine issue requiring a trial” was addressed in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, in the following terms: [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. […] [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. […] [27] In ruling on

summary judgment motions, Rule 22.04(2) sets out the powers of the Court in considering the evidence: Powers

(2) In determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the partiesand may exercise any of the following powers for the purpose, unless it is in the interests of justice for those powers to be exercised onlyat a trial: (

a) weighing the evidence; (

b) evaluating the credibility of a deponent; and (

c) drawing a reasonable inference from the evidence. [28] In O’Toole v. Peterson, 2018 NBCA 8 , the Court stated that the moving party is the one making the allegation thatthere is no genuine issue requiring a trial. At bar, Stantec bears the burden of persuading the Court it has established, on a balance ofprobabilities, that no genuine issue requiring a trial exists. [29] In Russell et al. v. Northumberland Co-Operative Limited, 2019 NBCA 70 , the Court states that there is a two-stepprocess to be followed in determining whether there is a genuine issue requiring trial. The first step is to determine if the evidence put

before it reveals a genuine issue requiring a trial. Subsequently, if the assessment of the filed evidence leads to the conclusion that theremay be a genuine issue requiring a trial, the judge then needs to determine if that trial can be avoided by resorting to the fact-friendlypowers under Rule 22.04. [30] At this hearing, Stantec submitted that Moncton had actual or constructive knowledge of the material fact or facts upon whicha plausible inference of liability on the part of Stantec could be drawn more than two years before this action was brought. [31] Stantec submits that Moncton’s claim is barred by

section 5 of the Limitation of Actions Act which provides: General limitation periods 5(1) Unless otherwise provided in this Act,no claim shall be brought after the earlier of (

a) two years from the day on which the claimis discovered, and (

b) fifteen years from the day on which the actor omission on which the claim is basedoccurred. 5(2) A claim is discovered on the day onwhich the claimant first knew or oughtreasonably to have known (

a) that the injury, loss or damage hadoccurred, (

b) that the injury, loss or damage was causedby or contributed to by

an act or omission, and (

c) that the act or omission was that of thedefendant. Délais de prescription ordinaires 5(1) Sauf disposition contraire de laprésente loi, toute réclamation se prescrit parcelui des délais ci-dessous qui expire le premier:

a) deux ans à compter du jour où sontdécouverts les faits y ayant donné naissance;

b) quinze ans à compter du jour où a eu lieul’acte ou l’omission sur lequel elle est fondée. 5(2)Les faits ayant donné naissance à laréclamation sont découverts le jour où leréclamant a appris ou aurait dû normalementapprendre :

a) que sont survenus les préjudices, les pertesou les dommages;

b) que les préjudices, les pertes ou lesdommages ont été causés entièrement ou enpartie par un acte ou une omission;

c) que l’acte ou l’omission était le fait dudéfendeur. [32] In Grant Thornton LLP v. New Brunswick, 2021 SCC 31 , the rule of discoverability of a cause of action arises, forpurposes of a limitation period, when the material facts upon which it is based have been discovered or ought to have been discovered bythe plaintiff through the exercise of reasonable diligence. As to the degree of knowledge required to discover a claim for purposes ofsection 5 of the Act “… a claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which aplausible inference of liability on the defendant’s

part can be drawn” (para. 42). [33] Both parties filed affidavits in support of their position. At bar, this action was filed on December 5, 2016, claimingindemnity/contribution in the form of damages equal to the amounts Moncton was required to pay as a consequence of the arbitrationdecision rendered on March 1, 2016. [34] Moncton relies on section 14(1) of the Act as follows:

Contribution 14

(1) Subject to subsection (2), no claim for contribution in respect of a payment that a claimant has made, or a liability that a claimant has incurred by virtue of a settlement or judgment, shall be brought against a person after the expiry of the earlier of (

a) the period of 2 years that begins on the day the claimant first knew or ought reasonably to have known that the person was liable to make the contribution, and (

b) whichever of the following periods expires last: (

i) fifteen years from the day the act or omission that gave rise to the payment, settlement or judgment occurred, and (ii) five years from the day of the payment, settlement or judgment. Contribution 14

(1) Sous réserve du paragraphe (2), la réclamation visant l’obtention d’une contribution que présente un réclamant en raison d’un versement qu’il a effectué, ou d’une dette qui lui incombe en vertu d’un règlement à l’amiable ou d’un jugement, se prescrit par celui des délais ci-dessous qui expire le premier :

a) un délai de deux ans qui commence à courir à compter du jour où le réclamant a appris ou aurait dû normalement apprendre que la personne était tenue de verser la contribution;

b) celui des délais ci-dessous qui expire le dernier : (

i) quinze ans à compter du jour où a eu lieu l’acte ou l’omission qui a donné lieu au versement, au règlement à l’amiable ou au jugement; (ii) cinq ans à compter du jour où a lieu le versement, le règlement à l’amiable ou le jugement. Moncton suggests that the date of discoverability of the liability by Stantec was March 1, 2016, when the decision was rendered by the arbitrator. They filed their action on December 5, 2016. [ 35 ] Stantec suggests that Moncton’s claim is not a claim for contribution and, even if it was, this action was brought beyond the limited time prescribed by

section 14 of the Act for bringing a claim for contribution. [ 36 ] In the present case, Stantec suggests that the evidence establishes that in the summer of 2014 Moncton had known for several months of the allegations by Dora that it was being delayed by the manner in which Stantec was administering the Phase 2 contract and had already initiated its own investigation into Stantec’s performance of its duties under the contract with Moncton. [ 37 ] By July 15, 2014, Moncton had received information from Dora on its claim for additional compensation under the Phase 3 contract using the same allegations of wrongdoing, i.e., that the delays were due to its consultant’s “mishandling” of the Phase 1 steel issue. [ 38 ] On October 10, 2014, Dora commenced its action to enforce a lien, securing the claim presented on July 15, 2014.

Moncton failed to appreciate that they could have a potential claim against Stantec. Stantec alleges that Moncton knew or ought to reasonably have known that Stantec could be liable to make a contribution for its handling of the Phase 1 steel issue. Moncton opines otherwise. [ 39 ] Moncton contends that a claim for contribution under

section 14 is not defined by when a person is considered “liable to make the contribution” but is defined as when a “contribution in respect of a payment that a claimant has made… by virtue of a settlement or judgment”. This has not been judicially considered. [ 40 ] The New Brunswick Office of the Attorney General does, however, provides some guidance in its “Commentary on Bill 28: Limitation of Actions Act ” (the “ LAA Commentary ”), stating that

section 14 was intended to provide a “more complete” statement of the limitation periods for contribution than in other recent Acts (i.e., Ontario, Saskatchewan and Alberta), at page 10 as follows: This

section provides a more complete statement of the limitation periods for contribution than other recent Acts. Ontario and Saskatchewan link both the discovery period and the ultimate period to the time when process is served, though process will not be served in all contribution cases. Alberta and ULCC add settlement as an additional trigger, but only address the ultimate period. Alberta cases such as Condominium Plan 9512180 v. Prairie Land Corp. [2008] A.J.

No. 492 have now suggested that the discovery period begins when the defendant knows or ought to know that it has a claim for contribution against the third party. [ 41 ] In Johnson v. Southwest Concrete et al. and Dr. Chisholm , 2019 NBQB 305 , Grant, J., dealing with the

section of the Limitation of Actions Act that applies to the commencement of a third-party claim, wrote: [26]

Section 5 is a general limitation which only applies if there are no other provisions in the Act covering a particular claim.

Section 7 of the Act provides that unless provided otherwise in

Part 3, which deals with special limitation periods such as claims for recovery of land, personal property and the like, the general limitation periods do not apply to special limitation periods. [ 42 ] Under Section 14(1)(

a) and (b), dealing with a claim for contribution, the limitation period is triggered on the day the claimant has settled the claim, or a liability, incurred by virtue of a settlement or judgment. Often, the expiry of the earlier limitation period is two years after the claimant first knew or ought reasonably to have known that the third party was liable to make the

contribution and whichever of the following expires last: 15 years from the act or omission that gave rise to the payment, settlement or judgment and 5 years from the day of the payment, settlement or judgment. [ 43 ] The wording of

section 14 is much different than that of

section 5; it is just as clear and straightforward. In

section 14 the wording includes “ liability that a claimant [the Plaintiff] has incurred by virtue of a settlement or judgment ” and “ liability of the person [Stantec] to make a contribution ”. [ 44 ] The word “liability” should be given its ordinary meaning, that is that liability equates to responsibility that is absolute. [ 45 ] Claims for contribution are dependent on the plaintiff having “incurred liability by virtue of settlement or judgment.” The wording of

section 14 reiterates that the cause of action does not accrue between joint tortfeasors until the liability of one has been determined. [ 46 ] The first part of section 14(1)(

a) is deemed applicable at bar as there was a judgment issued on March 1, 2016, by the arbitrator. The only issue therefore is to decide if the limitation period begins on the day the claimant first knew or ought reasonably to have known that the person was liable to make a contribution. If it was only related to knowledge the test becomes the same as the test of discoverability under

section 5 of the Act which has no application to a claim for contribution. The wording of section 14(1) (

a) relates to the knowledge of the plaintiff or whether the plaintiff ought to reasonably have known that the settlement or judgment has made the claimant liable to make a claim against a third party for contribution. [ 47 ] It is the conclusion of this Court that

section 5 of the Act is not applicable, and

section 14 of the Act is relevant to set the limitation period in this matter. [ 48 ] Stantec suggested that Moncton has only recently advanced its claim for contribution and not a claim for damages for breach of contract or negligence and therefore

section 14 has no relevancy, and the applicable limitation period is mandated by section 5(1) of the Limitation of Actions Act which, in any event, does not raise a claim for contribution when reviewing its amended statement of claim. [ 49 ] The claim by Moncton in its statement of claim is for the damages it suffered as a result of Stantec’s negligent breach of contract and breach of its duties of care to Moncton subsequent to the arbitration decision which is the basis of their claim for contribution.

Moncton elaborated in its brief by using the words “claiming indemnity/contribution with form of damages equal to the amount the City was required to pay as a consequence of the Arbitration Decision”. The amount claimed is clearly detailed in the original statement of claim which has since been amended twice for other reasons. [ 50 ] This is not a new claim by Moncton and Stantec cannot be prejudiced by this claim even if it was not evident from reading the amended statement of claim that Moncton was seeking contribution. To call it indemnity/contribution or damages has the same effect for the parties.

Had Moncton not been made liable by the arbitrator, there would have been no claim made against Stantec as Moncton relied on and adopted Stantec’s position based on the representations made during the construction, denying Dora’s claims. [ 51 ] Notwithstanding the above, prior to this hearing, Moncton filed a motion to amend its pleading to clearly reflect that their claim is a claim for contribution if it failed to do so previously. Both motions were heard one after the other.

The Court will grant this motion to amend for the reasons given in the decision rendered on this day. [ 52 ] Consequently, the limitation period would not have been expired on December 16, 2016, when Moncton filed its statement of claim against Stantec. I find that there is no merit in Stantec’s motion for its application that the third party claim against it is barred by the provisions of the Limitation of Actions Act . DISPOSITION [ 53 ] Stantec’s motion for

summary judgment is therefore dismissed with costs in favour of Moncton in the amount of $2,000. DATED this 29 th day of September 2022. ______________________________________ Jean-Paul Ouellette Justice of the Court of King’s Bench of New Brunswick, Trial Division