High Performance Energy Systems Inc v. Halifax (Regional Municipality), 2023 NSCA 16

Nova Scotia Court of Appeal Citation: High Performance Energy Systems Inc v. Halifax (Regional Municipality) , 2023 NSCA 16 Date: 20230321 Docket: CA 509177 Registry: Halifax Between: High Performance Energy Systems Inc (in Receivership and by its Assignee, 3289444 Nova Scotia Limited), and 3289444 Nova Scotia Limited a body corporate (a.k.a. High Performance Energy Systems Stakeholders Group) Appellants v. Halifax Regional Municipality, Northeast Equipment Limited, a body corporate, and Fred M. Dunphy Excavation and Construction Limited, a body corporate Respondents Judge: The Honourable Justice David P. S.

Farrar Appeal Heard: December 7, 2023, in Halifax, Nova Scotia Subject: Unjust enrichment – Striking of pleadings

Summary: High Performance entered into a contract with the Halifax Regional Municipality for the design and construction of a heating and cooling system at Alderney Gate in Dartmouth. High Performance failed to perform the contract in accordance with its terms. The contract was terminated by HRM on May 31, 2009. Builders’ lien actions were filed naming both HRM and High Performance as respondents. High Performance crossclaimed against HRM for breach of contract and for unjust enrichment.

HRM crossclaimed against High Performance for contribution and indemnity for any amounts it might have to pay to the lien claimants. High Performance defended HRM’s crossclaim on the basis it was HRM that was primarily responsible to the lien claimants so it had no right to contribution and indemnity from High Performance. HRM moved to strike the crossclaim of High Performance and to strike its defence to HRM’s crossclaim. The motion judge allowed HRM’s motion. High Performance appeals arguing that the motion judge erred in striking its claim for unjust enrichment based on the Limitation of Actions Act .

Issues: Did the motion judge err in striking the crossclaim of High Performance for unjust enrichment and striking its defence to the crossclaim of HRM? Result: Held. The motion judge did not err in striking the crossclaim or striking the defence of High Performance. The crossclaim for unjust enrichment had no reasonable prospect of success. Any remedy which High Performance had was in damages for contract. The contractual claim was statute barred and was not an issue on the appeal. The unjust enrichment claim could not succeed where the parties were governed by the terms of a contract.

High Performance’s defence to HRM’s crossclaim was struck on the basis that it was primarily liable to the lien claimants and not HRM. Appeal dismissed with costs to HRM in the amount of $5,000. This information sheet does not form part of the court’s judgment. Quotes must be from the judgment, not this cover sheet. The full court judgment consists of 77 paragraphs. Nova Scotia Court of Appeal

Nova Scotia Court of Appeal Citation: High Performance Energy Systems Inc v. Halifax (Regional Municipality) , 2023 NSCA 16 Date: 20230321 Docket: CA 509177 Registry: Halifax Between: High Performance Energy Systems Inc (in Receivership and by its Assignee, 3289444 Nova Scotia Limited), and 3289444 Nova Scotia Limited a body corporate (a.k.a. High Performance Energy Systems Stakeholders Group) Appellants v. Halifax Regional Municipality, Northeast Equipment Limited, a body corporate, and Fred M. Dunphy Excavation and Construction Limited, a body corporate Respondents Judges: Farrar, Bryson and Derrick JJ.A.

Appeal Heard: December 7, 2022, in Halifax, Nova Scotia Held: Appeal dismissed with costs, per reasons for judgment of Farrar J.A.; Bryson and Derrick JJ.A. concurring Counsel: Jasmine Ghosn, for the appellants Randolph Kinghorne, for the respondent Halifax Regional Municipality Blair Mitchell, for the respondent Northeast Equipment Limited (not participating) Brian Bailey, for the respondent Fred M.

Dunphy Excavation and Construction Limited (not participating) Jason Cooke, for PricewaterhouseCoopers, Receiver of High Performance Energy Systems Inc (not participating) Reasons for judgment: Background [ 1 ] This proceeding has a long history. It arises out of two actions commenced under the Builders’ Lien Act , R.S.N.S. 1989, c. 277 , as amended, by Fred M.

Dunphy Excavation and Construction Limited (“Dunphy”) and Northeast Equipment Limited (“Northeast”) against Halifax Regional Municipality (“HRM”) and High Performance Energy Systems [1] (“High Performance”) back in 2009. [ 2 ] Dunphy and Northeast were subcontractors hired by High Performance to work on a project relating to the design and construction of a heating and cooling system on lands owned by HRM at Alderney Drive in Dartmouth (“the Project”). The lands are commonly referred to as Alderney Gate. High Performance was engaged in the business of energy delivery and storage systems.

The directors and majority shareholders of High Performance were James Bardsley, David Stewart and Peter Beaini. Bardsley was also the president. [ 3 ] On September 15, 2007, HRM entered into a Contract with High Performance which required High Performance to design and construct cooling and heating systems at Alderney Gate. The Contract was to be completed at a fixed price payable by HRM in the amount of one million dollars ($1,000,000) plus HST.

The total construction costs were estimated to be $3.6 million plus HST. [ 4 ] The Contract contemplated that upon substantial completion by High Performance, HRM and High Performance would enter into a twenty year capital lease agreement which provided for High Performance to operate and maintain the building retrofits and an advanced energy system. The lease would only come into effect upon High Performance’s substantial completion of the construction. [ 5 ] By February 2009, High Performance’s work on the project was effectively halted.

On March 27, 2009, HRM notified High Performance that it was in default under the Contract. [ 6 ] On April 20, 2009, Northeast registered its lien against High Performance and HRM seeking payment of outstanding accounts issued to High Performance. [ 7 ] On April 29, 2009, High Performance, through Bardsley, advised HRM that High Performance was insolvent. [ 8 ] On May 31, 2009, the Contract was terminated by HRM.

[ 9 ] On June 5, 2009, Dunphy registered its lien against HRM and High Performance seeking payment of invoices submitted to High Performance. [ 10 ] On June 10, 2009, HRM received an invoice from High Performance, backdated to May 11, 2009, for $751,620.91, allegedly with respect to additional work it said it provided on the Project.

On that same day, High Performance provided HRM with two other invoices dated May 22, 2009, one relating to the cooling system in the amount of $1,130,000 and one relating to the heating system for $1,808,000. [ 11 ] On July 20, 2009, High Performance filed its own lien on Alderney Gate asserting it had not been paid for labour and materials on the construction in the amount of $3,689,620.91, which was the total of the invoices sent on June 10, 2009 referred to above.

That lien was never perfected by filing a Certificate of Lis Pendens and accordingly it expired by operation of law. [ 12 ] It was apparent that High Performance’s inability to complete the project was due, in part, to a dispute between Bardsley, Stewart and Beaini which made it difficult for it to carry on business. [ 13 ] On July 5, 2010, Stewart, Beaini and High Performance filed a Notice of Application in court against James Bardsley, seeking relief under the Third

Schedule of the Companies Act , R.S.N.S. 1989, c. 81 , as amended. One of the remedies sought was for Stewart and Beaini to bring an action in the name of High Performance against the HRM to pursue any claims arising from the Contract for Alderney Gate. An interim application was heard before Justice Pierre Muise on November 24, 2010. [ 14 ] In refusing to grant Stewart and Beaini leave to commence a derivative action against HRM on behalf of High Performance the application judge left that determination to be decided on the main application.

In doing so he noted the parties were at odds over whether the proposed action (and others) was founded on a valid claim: [39] It is clear, from reading the affidavit evidence, that Stewart and Beaini, on the one hand, and Mr. Bardsley, on the other hand, are at odds in relation to whether the proposed actions are founded on valid claims. They are at odds as to whether it is in the interests of the company to commence those actions.

The ultimate determination as to whether or not a final order granting leave to bring the proposed derivative actions should be granted will be made at the conclusion of the main application herein. In the meantime, refusing to grant interim leave would, in my view, preserve the balance and the status quo between the parties until that time. […] [41] Based on the foregoing, I conclude that it would not be appropriate for me to grant interim leave to bring the derivative actions requested by the Applicants. [Emphasis added.

Unreported 2011 NSSC 24 .] [ 15 ] Stewart, Beaini and Bardsley were back in court before Justice Gerald Moir on the main application for oppression relief. The hearing was held intermittently over nine days between February 28, 2011 and October 25, 2011. On May 10, 2012, Justice Moir released his decision in Stewart v. Bardsley , 2012 NSSC 191 , where he thoroughly reviewed the events leading to the termination of High Performance’s Contract with HRM. [ 16 ] In discussing the conduct of Stewart, Beaini and Bardsley, Justice Moir did not pull any punches.

He had this to say about their operation, the company, and their conduct in the legal proceedings: [9] After a couple years, the principals found themselves embroiled in hopeless financial disputes. They engaged in dubious tactics, never facing the essential problems of the company's flimsy legal and accounting foundation. Their major customers became exasperated with the results. [10] Against that background, Mr. Stewart and Mr. Beaini came to court in March of 2009 to get relief under the shareholder oppression provisions of the Third

Schedule of the Companies Act against outrageous tactics engaged in by Mr. Bardsley, who was backed at that time by the outside investor. This court reversed the purported effects of the tactics. [11] The shareholder oppression order also provided for just what the company needed: the appointment of a chartered accountant to prepare financial statements, imposition of duties to co-operate with the accountant, appointment of an auditor, and imposition of duties to cooperate with the auditor.

The order also froze all payments to directors including salary, and it froze payments for expenses incurred before the order except trade payables, non-director employee salaries, and expenses approved unanimously by the directors. [12] Almost immediately, all three principals were in default of the order. Mr. Bardsley engaged in outrageous tactics again. The investor switched sides. Mr. Stewart and Mr. Beaini engaged in unfair tactics against Mr. Bardsley, tactics that were violations of the very order they had obtained. The chartered accountant appointed by the court was unable to complete his work.

No audit was ever done. To this day, the principals have no understanding of the serious impediment financial disorganization caused to their venture. [13] Despite their own failures, Mr. Stewart and Mr. Beaini seek more remedies under the Third Schedule. […] [ 17 ] He also made note of Justice Muise’s earlier decision denying leave to commence the derivative actions on the grounds the issue could be determined when the main application was heard.

However, nothing was done to incorporate it into the application which Justice Moir had before him: [16] The applicants made a motion before Justice Muise for various interim relief, including permission to start some derivative actions. Justice Muise dismissed the part of the motion about derivative actions on the ground that it could be determined when the application is heard. However, nothing appears to have been done to incorporate that into the application.

[ 18 ] In the application before Justice Moir, Stewart and Beaini blamed Bardsley for the termination of the Project and other jobs High Performance was engaged in. They sought damages against Bardsley for lost opportunity. Justice Moir found that the complaints against Bardsley, insofar as the Project was concerned, were unwarranted; the Contract was properly terminated by HRM and the invoices which had been submitted by High Performance were not justified: [125] Termination of the Alderney Landing Contract . Mr. Julian Boyle was the municipal engineer in charge of Alderney Landing.

He dealt with High Performance when it worked on a feasibility study, when the contracts were developed, and during performance. He was also involved in the successful effort to get an agreement for federal funding. [126] Mr. Boyle dealt with various individuals including Mr. Bardsley, Mr. Stewart, and Mr. Beaini. He understood all to be employees of High Performance. [127] High Performance failed to complete the contract with the municipality. No certificate of substantial [completion] was ever delivered. Thus, no certificate of acceptance was given to High Performance.

It never came close to completion. [128] In February of 2009, well over a year after the contract with the municipality was signed, work came to a halt. A claim for lien for almost $80,000 was filed. The three principals met with Mr. Boyle and confessed that a further $335,000 was owing for services, materials, and equipment. They admitted that completion would cost a further $200,000 to $300,000. [129] Mr. Boyle demanded that High Performance employ a project manager, as it had contracted to do, and that it produce a revised work schedule.

These demands were reiterated by the city solicitor in a letter. [130] On March 27, 2009 the city solicitor wrote again to the three principals. She complained that High Performance had failed to employ a project manager. She complained that work was at a halt. She activated the notice of default provisions so that High Performance faced termination and a claim for completion costs, unless a project manager was in place and work resumed within ten days. [131] Mr. Boyle’s impression was that High Performance was “coming undone”. Bardsley had purported to fire Stewart and Beaini.

The shareholder oppression order had reinstated them, and it required cooperation. Yet the three found themselves bickering in front of a major client. Mr. Boyle told them they were like “Children playing in the playground … and arguing about whose ball it is”. [132] The contract was terminated on May 21, 2009. [133] Mr. Stewart and Mr. Beaini blame Mr. Bardsley for the termination. They rest their blame on “Mr. Bardsley’s improper disclosure of financial information to HRM”.

They point to the first ground in the formal termination dated May 21, 2009: High Performance Energy Systems Inc. (“HPES”) has become insolvent. During a meeting with HRM employees on April 29, 2009, James Bardsley, an officer and director of HPES, advised that HPES was insolvent and provided documentation detailing the same. [134] The blame is unwarranted. Firstly, all three principals as much as admitted insolvency when they met with Mr. Boyle in March. The claim for lien against city lands, the outstanding payables, and the halt in work show as much. Secondly, the criticism of Mr.

Bardsley ignores the other grounds for termination: HPES has abandoned the Work, as defined under the Agreement. HPES and its subcontractors effectively halted work at the Alderney 5 Project site in early February of 2009. HPES is in default under the Agreement. HRM declared HPES to be in default under

article 25.1 of the Agreement by letter dated March 27, 2009. HPES has failed to take the necessary steps to end this default. HPES allowed a builders’ lien to be placed by a subcontractor on the lands of HRM and has not met any of the milestones set out in HRM’s letter of April 28, 2009. HRM confirmed the continuing nature of HPES’ default by letter dated May 11, 2009. [135] The municipality undertook completion itself. It spent about $700,000. The systems only became operational in February or March of 2010. [136] On High Performance letterhead, Mr. Beaini and Mr. Stewart wrote to Mr.

Boyle shortly after termination. They showed their titles as “Managing Director”. They submitted invoices claiming an astonishing $3,681,620. The first $2,930,000 concerns title transfers, as if the contract had been completed by High Performance. The balance is for purported extras, not one of which had been authorized. [137] About the same time as the unfounded invoices, Mr. Bardsley submitted to the municipality “Unsolicited Proposal to HRM Continuation of Alderney 5 Energy Project Mechanical, Electrical & Infrastructure Services For the Completion of the Cooling/Storage Project”.

As I said, the municipality decided to do the work on its own. [Emphasis added.] [ 19 ] Justice Moir’s decision was appealed to this Court and was dismissed ( Bardsley v. Stewart , 2014 NSCA 106 ).

None of the findings made by Justice Moir and set out above were in issue on the appeal. [ 20 ] On September 3, 2013, PricewaterhouseCoopers (“the Receiver”) was appointed receiver for High Performance by Order of Justice Moir. [ 21 ] On January 6, 2015, High Performance, through the Receiver, commenced a crossclaim against HRM by filing a Statement of Defence and Crossclaim in the consolidated Builders’ Lien action. [ 22 ] In the Defence and Crossclaim it sought contribution and indemnity from HRM for any damages it may have to pay to the lien

claimants, damages for breach of contract, and for unjust enrichment/ quantum meruit . [2] [ 23 ] On May 20, 2015, the Receiver assigned any rights that High Performance had against HRM to 3289444 Nova Scotia Limited, the appellant in this proceeding. The assignment agreement provided as follows: All the rights, title and interest of the [High Performance] in the matters described below: 1.

All rights and claims of [High Performance] against Halifax Regional Municipality concerning the construction, operation or leasing of an in ground cold storage system for the Alderney 5 complex in Dartmouth, Nova Scotia including those claims set out in the Notice of Defence and Crossclaim in HFX No. 311787. [ 24 ] HRM, in an Amended Defence and Crossclaim dated August 21, 2015, defended the main action and the crossclaim.

It also sought contribution and indemnity from High Performance for any amounts it may have been liable to pay the lien claimants. [ 25 ] By Notice of Motion dated May 8, 2015, HRM moved for an Order striking the crossclaim of High Performance and striking the Statement of Defence to HRM’s crossclaim.

They did so on the basis that the crossclaim was an abuse of process or was otherwise barred by the Limitation of Actions Act . [ 26 ] On January 18, 2018, High Performance filed an Amended Notice of Motion [3] seeking to disallow any limitation defence which HRM may have. [ 27 ] The motions were heard together before Justice Glen McDougall on November 14 and 15, 2017 and January 18, 2018. By decision dated June 22, 2020 (reported 2020 NSSC 192 ), he found: 1. High Performance’s motion to disallow HRM’s limitation defence was denied; 2.

HRM’s motion to strike out the crossclaim brought against it by High Performance was granted; 3. The motion of HRM to strike out the Statement of Defence of High Performance to HRM’s crossclaim was allowed; 4. That High Performance would pay costs to HRM in the amount of $16,000 (Order dated August 31, 2021). [ 28 ] The motion judge did not address HRM’s abuse of process argument given its success on their other arguments (¶72). [ 29 ] High Performance appeals from the decision and order.

HRM has filed a Notice of Contention saying the motion judge’s decision could be upheld on the alternative ground that High Performance’s crossclaim is an abuse of process. [ 30 ] It is not necessary to address HRM’s Notice of Contention. I am satisfied the motion judge did not err in dismissing High Performance’s claim and striking its defence. Issues [ 31 ] The Notice of Appeal filed by High Performance sets out 32 grounds of appeal with a number of sub-grounds of appeal. It reads more like a submission than it does a Notice of Appeal. [ 32 ] In its factum, it identifies three issues.

After considering the Notice of Appeal, the Notice of Contention, the issues identified in High Performance’s factum, and the arguments on appeal, I will summarize the issues on this appeal as follows: 1. Did the motion judge err in granting

summary judgment on High Performance’s crossclaim against HRM for unjust enrichment? 2. Did the motion judge err in granting

summary judgment and striking out High Performance’s defence? 3. Did the motion judge err in failing to disallow HRM’s limitations defence? Standard of Review Issue 1 and Issue 2 [ 33 ] The standard of review applicable to decisions on

summary judgment motions is well known. We will not intervene “unless wrong principles of law were applied, or insofar as the judge was exercising a discretion, a patent injustice would result” ( Burton Canada Company v. Coady , 2013 NSCA 95 , at ¶19). Issue 3 [ 34 ] This issue involves the motion judge identifying the correct legal test. If he has identified the correct legal test his application of the test to the evidence is also a question of law and is to be reviewed on the correctness standard.

If the motion judge identified the proper test and properly applied it, his decision is to be reviewed on a palpable and overriding error standard ( McPherson v. Campbell , 2019 NSCA 23 , ¶18 and cases cited therein). Issue 1: Did the motion judge err in granting

summary judgment and striking out High Performance’s crossclaim against HRM for unjust

enrichment?

Analysis [35] High Performance makes a number of arguments about why the trial judge erred in striking its claim for unjust enrichment:they include the claim for unjust enrichment is sustainable even though the parties were subject to a contract; limitation of actions acts donot apply to claims made in equity; and High Performance was suffering from “corporate incapacity” because of a dispute between itsshareholders and therefore the limitation period could not run against it. [36] I will address the last two limitations arguments made by High Performance summarily by simply stating that the motion judgedismissed the contractual claim based on the limitation period.

He did not strike the unjust enrichment claim on that basis. To understandthe distinction, context is necessary. [37] In High Performance’s crossclaim, it alleged HRM was liable to it both in contract and for unjust enrichment. [38] After reviewing the law on

summary judgment in some detail, the motion judge turned his mind to whether there were anymaterial facts in dispute on the contractual claim between HRM and High Performance that required a trial. [39] In addressing the contractual claim, he determined there were no material facts in dispute with respect to the contract: [67] The following material facts are not in dispute: • HRM and HPES entered into a contract, dated September 13, 2007, which sets out the terms they agreed to be bound by; • HPES contracted with Northeast and Dunphy to provide materials and to perform services in fulfillment of HPES’s contractualobligation to HRM; • Northeast registered a Builders’ Lien against HRM’s lands at Alderney Gate due to HPES’s failure to render payment of itsinvoices.

Northeast’s lien was registered on April 20, 2009; • Dunphy registered a similar Builders’ Lien against HRM’s lands at Alderney Gate on June 5, 2009; • The contract between HRM and HPES was terminated by written correspondence signed by HRM’s mayor – Peter Kelly – anddated May 21, 2009.

This was done only after HPES was given notice of default which it took no steps to rectify; • HPES’s default under the Contract left HRM with the decision to either cap its losses to what had already been spent or to take onthe risk and added cost of hiring other contractors to complete the project on the Municipality’s behalf; • HRM chose the latter option and spent considerable sums of money completing the Project and correcting deficiencies left behindby HPES; • HRM gave no express or implied indemnification to HPES for the claims of Northeast and Dunphy; • HPES not only abandoned the Project but it also failed to answer the Claims made by Northeast and Dunphy leaving it to HRM todeal with; • HPES only filed its defence to HRM’s crossclaim and commence its own crossclaim against HRM on January 6, 2015 nearly fiveyears after the one year limitation period for commencing an action against the Municipality had expired and more than two years afterthe Receiver for HPES was appointed. [68] Based on the undisputed facts in this case there is nothing that would require a trial as it pertains to HRM and HPES. [40] Based on these undisputed facts, the motion judge concluded High Performance’s claim in contract was statute barred as beingcommenced more than five years after the limitation period expired.

In its factum, High Performance does not take issue with the motionjudge’s decision on when the limitation period began to run for the contractual claim. It focuses on the unjust enrichment claim. [41] After addressing the contractual claim, the motion judge turned his attention to High Performance’s claim for unjustenrichment.

He struck that claim not because it was statute-barred but rather because it was unsustainable due to the existence of theContract: [69] As for HPES’s claims based on unjust enrichment and quantum meruit, they cannot be used as a means of circumventing astatutory limitation period. [See Caglar v. Moore, (On Sc), at paras. 34 and 35.] The equitable relief sought isinextricably linked to the alleged breach of contract. [70] I rely on the case of Rillford Investments Ltd. V.

Gravure International Captial [sic] Corp. (MB CA), [1997] 7W.W.R. 534, where, at para. 29, it is written: 29 As to unjust enrichment, I have serious reservations about the direct linkage suggested by plaintiff’s counsel between theprinciples of quantum meruit and the newer concept of unjust enrichment. It is difficult to see how the remedy of unjust enrichmentcould be implied when the plaintiff’s claim in quantum meruit is met head-on by the existence of an express contract. See Peter KiewitSons’ Company of Canada Ltd. et al. v. Eakins Construction Ltd., (SCC), [1960] S.C.R. 361.

But even if the principlesof unjust enrichment are applicable, the law is clear as noted in Rathwell v. Rathwell, (SCC), [1978] 2 S.C.R. 436, that “acontract” can constitute a juristic reason for the enrichment (at p. 455). As a recent example of this, see the decision of this Court in Hill

Estate v. Chevron Standard Ltd. et al. (1992), (MB CA), 83 Man.R. (2d) 58 (at p. 70): Decided cases are of little assistance in determining what is meant by “juristic reason.” It simply comes down to this: if there is anexplanation based upon law for the enrichment of one at the detriment of another, then the enrichment will not be considered unjust andno remedy, whether by constructive trust or otherwise, will be available.

For example, there might be a contract between the partiesunder the terms of which an enrichment by one at the expense of the other is contemplated or justified. [emphasis added] [71] The equitable doctrine of unjust enrichment applies where there is no juristic reason for a party to benefit at the expense ofanother. As indicated in Rillford, supra, “the plaintiff’s claim in quantum meruit is met head-on by the existence of an expresscontract.” The same applies to HPES’s claim based on unjust enrichment. Any damages that HPES might have sought are deriveddirectly from the Contract.

HPES breached its contract with HRM when it ceased work on the Project in February of 2009. HPES wasnot prevented from carrying out its obligations under the Contract because of any actions taken by HRM. HPES must bear theresponsibility for its failure to honour its contractual obligations to the Municipality. [Emphasis added.] [42] The motion judge’s decision to disallow the claim of unjust enrichment is consistent with this Court’s recent decision inOrganigram Holdings Inc. v.

Downton, 2020 NSCA 38, where Bryson J.A. found that a claim for unjust enrichment ought to be struckwhere a contract is present: [39] Organigram makes a strong argument that this is an untenable cause of action. They cite authority that unjust enrichment isunsustainable when a contract is present. Organigram begins its attack on the judge’s ruling with a quotation from Garland v.Consumers’ Gas Co., 2004 SCC 25 which sets out the well-known tri-part test for unjust enrichment: 1. An enrichment of the defendant; 2. A corresponding deprivation of the plaintiff; and 3.

An absence of juristic reason for the enrichment. [40] Focusing on the third criterion, Organigram relies upon these comments in Garland: [44] … in my view, the proper approach to the juristic reason analysis is in two parts. First, the plaintiff must show that no juristicreason from an established category exists to deny recovery. … The established categories that can constitute juristic reasons include acontract (Pettkus, supra), a disposition of law (Pettkus, supra), a donative intent (Peter, supra), and other valid common law, equitable orstatutory obligations (Peter, supra).

If there is no juristic reason from an established category, then the plaintiff has made out a primafacie case under the juristic reason component of the analysis. [Emphasis added] [41] Organigram criticizes the judge for failing to refer to binding and persuasive authority supporting its submission that a contractprecludes a successful plea of unjust enrichment citing Garland, supra; Evanoff Enterprises Ltd. v. Pioneer Hi-Bred Ltd., 2009 ABQB223 at ¶63; Boulanger v. Johnson & Johnson Corp., [2002] O.J.

No. 1075, aff’d (ON CA), 174 OAC 44; Williams v.Canon Canada Inc., 2011 ONSC 6571 at ¶232, aff’d 2012 ONSC 3692. […] [49] Here Ms. Downton has pleaded facts material to a breach of contract. Those facts cannot simultaneously sustain an unjustenrichment claim. Where Ms. Downton explicitly refers to unjust enrichment, she fails to plead facts material to that claim. [43] The facts pleaded by High Performance in its crossclaim all relate to the existence of the Contract between HRM and HighPerformance. The crossclaim in its very first paragraph provides the following: 1.

This crossclaim arises from the termination of a multi-million dollar contract as between HRM and HPES. [44] It then goes on to detail the terms of the contract concluding as follows: 53. HPES states that HRM’s termination, whether with or without cause, is unconscionable, without reasonable compensation, unlessa claim for unjust enrichment/quantum meruit is appropriate in this case. [45] As outlined in its pleading, High Performance’s claim for unjust enrichment is inextricably linked to the Contract.

It cannotcircumvent the express terms of the Contract in an effort to seek compensation it would not be entitled to under the Contract itself. [46] The motion judge did not err in striking High Performance’s claim for unjust enrichment. I would dismiss this ground ofappeal.

Issue 2: Did the motion judge err in striking out High Performance’s defence to the crossclaim? [47] The motion judge’s decision on this point is very brief: [53] My ruling on the limitation defence in favour of HRM, in effect, precludes HPES from defending against HRM’s crossclaim […] [48] It is unclear to me what High Performance is attempting to argue on this issue. In its factum, High Performance’s submissioncomprises one paragraph:

71. HRM has approximately $100,000 that is deemed held in trust for the benefit of lien claimants. Those funds are required to be available by law, as of a date that preceded any purported “termination” of a contract, since HRM did pay 90% of its contribution payment to HPES prior to such purported termination. HRM wishes to argue that Dunphy’s lien is out of time. If there is any balance remaining in the holdback, since Northeast’s claim is less than $100,000, then whatever balance is remaining must be given to the Receiver.

The Motions Judge, however, struck out the HPES defence. [ 49 ] Again, some context is necessary. [ 50 ] There are two plaintiffs remaining in the consolidated lien action: Northeast Equipment Limited, which claims the amount of approximately $79,000 for the supplies and materials and for work done on the project; and Fred M. Dunphy’s Excavating and Construction Limited claim for approximately $123,000 for materials and supplies provided to the project. [ 51 ] Originally, HRM defended the Dunphy lien as out of time.

However, it did not take that position before the motion judge, nor did it dispute the amounts owing to the two sub-contractors. [ 52 ] High Performance also does not dispute the amount owing to Northeast and Dunphy. In its Notice of Appeal it says this: 32(

d) In the fourth bullet on page 32, the learned motions justice states, “HPES not only abandoned the Project but it also failed to answer the Claims made by Northeast and Dunphy leaving it to HRM to deal with”.

The fact is, before HRM brought its motion, the HPES Receiver had already approved the claims of Northeast and Dunphy, and it was put on the record numerous times that HPES was not disputing the funds owing to Northeast and Dunphy. [Emphasis added.] [ 53 ] The fourth bullet at page 32 of the motion judge’s decision referred to above says the following: • HPES not only abandoned the Project but it also failed to answer the Claims made by Northeast and Dunphy leaving it to HRM to deal with; [ 54 ] The builders’ lien holdback is $100,000 (also not in dispute).

High Performance says there is a possibility that money will be left over once the claims of Northeast and Dunphy are determined and if its defence is struck it has no means to recover the excess. [ 55 ] High Performance and HRM both agree that Dunphy and Northeast are owed the amounts they claim and there are no deficiencies in their work. The potential of any amount being left over is extremely remote. Having said that, I cannot see how the motion judge striking the defence to crossclaim somehow precludes High Performance from claiming any excess builders’ lien holdback after Northeast and Dunphy are paid.

There is simply no correlation between the two. [ 56 ] I can only assume High Performance intended to argue the motion judge’s finding High Performance’s crossclaim is statute barred does not preclude it from defending HRM’s crossclaim. If this is the point of the ground of appeal, it is not apparent from High Performance’s factum or oral arguments. I will, nevertheless, address it. [ 57 ] The Amended Notice of Defence with Crossclaim dated August 21, 2015 filed by HRM makes the following crossclaim: 7.

By way of crossclaim, the Defendant HRM repeats the allegations contained in its Statement of Defence, and pleads that the Defendant HPES is liable to the Defendant HRM to the extent that the Plaintiff successfully makes out its claim against the Defendant HRM, as a result of the following: (

a) The Defendant HPES’ breach of the Contract when it failed to pay for the services, materials and benefits alleged to have been provided by the Plaintiff in respect of the lands described by the Plaintiff in its Claim of Lien; and (

b) the Defendant HPES’s obligation under the Contract to engage, supervise and pay subcontractors and to indemnify and hold the Defendant HRM harmless in relation to all claims relating to or arising from the same. [8.] The Defendant HRM claims against the Defendant HPES as follows: (

a) indemnification and contribution from the Defendant HPES for any judgment obtained by the Plaintiff against the Defendant HRM; … (

c) damages for breach of Contract; (

d) costs; and (

e) such other relief as this Honourable Court deems appropriate. [Emphasis added.] [ 58 ] HRM’s crossclaim against High Performance is for any amount it has to pay to the sub-contractors. Although the claim for “damages for breach of contract” at first blush appears broader, when read in context of the whole crossclaim, the breach of contract is the failure to pay the subcontractors. [ 59 ] I am assuming the damages HRM seeks from High Performance are over and above the builders’ lien amount.

In other words, to the extent that HRM is liable to the sub-contractors for an amount in excess of $100,000, they claim contribution and indemnity for that amount from High Performance. [ 60 ] In the Statement of Defence filed by High Performance on January 6, 2015 [4] , it defends the crossclaim on the basis any

amounts due to Dunphy and Northeast are the responsibility of HRM: 2. Except as hereinafter expressly admitted, and except as may be expressly admitted in the attached Statement of Crossclaim, thisparty denies all allegations in the Statements of Claim of all the plaintiffs in this proceedings, and in the Crossclaim of the HalifaxRegional Municipality (“HRM”). 3. For reasons stated in the attached Statement of Crossclaim, HPES is not responsible for any claims in this proceedings, and inparticular, any outstanding payments that may be due to Northeast Equipment Limited (“Northeast”) or to Fred M.

Dunphy Excavatingand Construction Limited (“Dunphy”).

Rather, it is the defendant HRM that is solely responsible for these claims. [61] Although it is difficult to understand how the motion judge could strike the defence on the basis of a limitation period, thedefence should be struck for the following reasons: • Northeast and Dunphy did not have a direct contract with HRM; • High Performance acknowledges the amounts owing to Dunphy and Northeast; • HRM’s crossclaim only relates to any amounts over and above the builders’ lien holdback that it would be required to pay(I find it difficult to imagine a scenario where that would occur); • Any amounts that are owing to Dunphy and Northeast are the responsibility of High Performance. [62] As a result, there are no material facts in dispute that HRM could be directly liable to Northeast and Dunphy.

HighPerformance’s defence has no reasonable chance of success. The motion judge did not err in striking it. [63] Albeit for somewhat different reasons than the motion judge I would dismiss this ground of appeal. Issue 3: Did the motion judge err in failing to disallow HRM’s limitation defence? [64] Under this ground of appeal, the appellant makes two arguments which may be summarized as follows. [65] High Performance’s claims in equity against HRM are not subject to a limitation.

In support of this argument in its factum, HighPerformance refers to its pre-hearing brief filed before Justice McDougall where it cites Carvery v. Nova Scotia (Attorney General), 2015NSSC 199 and other cases to advance its position. [66] The second argument made under this ground of appeal is that High Performance, hobbled by dysfunction amongst itsshareholders and directors, was under “corporate incapacity” and therefore unable to make a decision.

As a result, the limitation periodshould not run against the corporation. [67] To say “corporate incapacity” is a novel argument with respect to a limitations defence would be an understatement. Noauthority has been cited to support the argument, nor has such a concept ever been recognized at law. [68] In any event, once again High Performance misunderstands the basis upon which the motion judge dismissed the claim forunjust enrichment.

As explained under the first ground of appeal, the motion judge did not dismiss High Performance’s claim for unjustenrichment based on the Limitation of Actions Act, but rather on the existence of the Contract. For ease of reference, I will repeat hisdecision on that point: [69] As for HPES’s claims based on unjust enrichment and quantum meruit, they cannot be used as a means of circumventing astatutory limitation period. [See Caglar v. Moore, (On Sc), at paras. 34 and 35.] The equitable relief sought isinextricably linked to the alleged breach of contract. [69] Caglar v.

Moore, cited by the motion judge, was a case referred to him by High Performance on the motion. [70] High Performance relied on Caglar v. Moore to support its position that limitation periods do not govern actions for unjustenrichment. The excerpt referred to by High Performance is as follows: [33] […] In my view, it is clear that the Limitations Act does not govern actions for unjust enrichment as they are not one of theclosed list of actions enumerated therein. [71] The motion judge relied on Caglar v.

Moore to support his conclusion that High Performance could not circumvent theprovisions of the limitation period by simply pleading unjust enrichment. He referred to the following paragraphs from the decision: [34] In Luscar Ltd. v. Pembina Resources Ltd. (1994), 1994 ABCA 356 , 24 Alta. L.R. (3d) 305 (C.A.), leave to appeal toS.C.C. dismissed, [1995] S.C.C.A. No. 6, the Alberta Court of Appeal spoke out strongly against the use of an unjust enrichment claim asa means of circumventing a statutory limitation period.

In that case, the litigants were parties to an agreement which contained a clauserequiring written notice of new acquisitions. A dispute arose over whether the defendant had breached this term of the contract. Theplaintiffs sued, but not until the applicable limitation period for causes of action in breach of contract had expired. The plaintiffs pleadedunjust enrichment in order to avoid the limitation period.

On appeal, the Conrad J.A. stated at paras. 114, 115, 117, 119 and 120: A claim for unjust enrichment may lie in circumstances where the plaintiff has no recourse through contract law, or where there is someother reason for equity to intervene. The Canadian test of general application to found a claim in unjust enrichment is outlined inRathwell, supra, at p. 455: . . the facts must display an enrichment, a corresponding deprivation, and the absence of any juristic reason -- such as a contract ordisposition of law -- for the enrichment.

Where there exists a contract under which parties are governed, and one party gains by a breach of the same, that party is not truly enriched, because the breaching party takes that gain subject to its liability for breach of contract. If the other party does not sue within the time set out in the Limitations Act, then, without more, there is a juristic reason for the gain because the breaching party is entitled to rely on the intended limitation. However, unjust enrichment was not developed simply to provide an alternative remedy to that offered by the contract, without more.

Otherwise, the remedy would impact directly on the rights of all parties to rely on the normal limitation period for breach of contract. … Allowing the claim for unjust enrichment in this case would mean that every time a limitation period for breach of contract expires, a plaintiff can rely on unjust enrichment , since the very nature of time limitations results in a benefit to one party and deprivation to the other. As a result, not only would the statutory laws creating limitations of action be circumvented, but the whole area of contractual damages would be undermined .

The contract was a juristic reason for any enrichment in the case at bar, given that notice was contemplated by it, and the limitation period for an action for the breach has expired. [Emphasis added] [35] The foregoing sections of Luscar were cited approvingly by Justice Haines in Ross v. Coseco Insurance Company , supra . At para. 23, Haines J. added the following observation: In short, the doctrine of unjust enrichment was not developed to provide an alternative remedy to that offered by contract. Nor was it developed to allow litigants to avoid applicable limitation periods.

As indicated in Luscar, permitting an action to be prosecuted as a claim for unjust enrichment in circumstances where the claim arises from a breach of a contract would be tantamount to eliminating any legislated limitation period for breach of contract . [Emphasis added] [Emphasis in the original.] [ 72 ] There was no reason for the motion judge to consider setting aside the limitations defence as it related to the unjust enrichment claim as he clearly dismissed the unjust enrichment claim because the contract governed the relationship between the parties, not on the basis of the limitation period. [ 73 ] Further, Justice Moir in Stewart v.

Bardsley had determined High Performance failed to perform the Contract in accordance with its terms; HRM properly terminated the Contract; and High Performance was not entitled to any further payments under the contract. High Performance cannot now argue it is entitled to damages when the existence of the Contract precludes recovery by way of unjust enrichment. [ 74 ] I would dismiss this ground of appeal. Conclusion [ 75 ] During the course of this appeal a number of issues were raised, including by the Panel.

They included the ability of the receiver to assign the cause of action to 3289444 Nova Scotia Limited; the fact that High Performance has been struck off the Registry of Joint Stock Companies and no longer exists as a legal entity; and whether High Performance could commence a crossclaim for unjust enrichment against HRM under the Builders’ Lien Act . [ 76 ] It was not necessary to address any of those issues to dispose of this appeal. [ 77 ] The appeal is dismissed with costs to HRM in the amount of $5,000 inclusive of disbursements. Farrar J.A. Concurred in: Bryson J.A. Derrick J.A.