The Ontario Court of Appeal's decision in 2099082 Ontario Limited v. Varcon Construction Company, 2020 ONCA 202, shows that summary judgment can be granted in cases involving complex factual and contractual issues and disputed expert evidence.
The decision serves as an excellent example of what the Supreme Court of Canada had in mind in Hryniak v. Mauldin,  1 S.C.R. 87, when it called for the "proportionate, timely and affordable" resolution of disputes where possible.
Varcon Construction Corporation ("Varcon") was the general contractor for a project to construct additional buildings in a correctional facility in Ontario. Varcon hired AWD Contractors ("AWD") as a subcontractor for the project to be responsible for supplying labour and materials related to excavation, installation of granular base, and construction of pipe bedding, among other things.
Following the completion of AWD's work, Varcon refused to pay the remaining balance of AWD's contract price. The action was commenced in 2015 and pleadings closed shortly thereafter.
AWD brought a motion for summary judgment which was granted and Varcon was ordered to pay the balance of the contract price into court. Payment into court allowed Varcon to re-open its pleadings and issue a fresh counterclaim for deficient work performed by AWD arising from a sewage system failure in 2016 (three years after AWD had completed its work).
Varcon claimed that AWD was required to remediate the failed sewage system pursuant to the subcontract and the warranty contained therein. AWD refused.
AWD subsequently brought another motion for summary judgment to dismiss Varcon's counterclaim. Partial summary judgment was granted by the motion judge on the basis that no trial was required to determine that AWD's work was not deficient, AWD did not fail to warn Varcon regarding the unsuitability of certain excavated material, and AWD did not fail to rectify the deficiencies of the sewage system.
However, the motion judge determined there was a genuine issue requiring trial with respect to whether AWD was liable under the warranty provisions in the subcontract.
Issues on Appeal
Varcon appealed the decision of the motion judge to grant partial summary judgment to AWD.
AWD cross-appealed the motion judge's decision to require a trial with respect to the breach of warranty claim advanced by Varcon.
(1) Did the motion judge err in granting partial summary judgment to AWD?
The Court of Appeal dismissed Varcon's appeal.
The Court found that it was open to the motion judge to reject Varcon's expert evidence, which the motion judge found to be unreliable and not credible.
The motion judge had reasoned that the expert's opinion – that the soil compaction had been inadequately performed – was not supportable without reviewing the compaction reports under the area of the sewer pipes done at the time of construction, which he had not seen.
Further, the Court found that the motion judge not did make a palpable and overriding error with respect to a determination of whether AWD completed its work in compliance with the subcontract and in a non-defective way, despite the motion judge making findings outside of what was necessary on the motion.
(2) Did the motion judge err in ordering a trial on the warranty issue?
The Court of Appeal allowed AWD's cross-appeal and found there was no genuine issue requiring a trial with respect to whether AWD breached the warranty under the subcontract.
The warranty provision of the subcontract guaranteed the work of AWD to be in accordance with the Prime Contract. The warranty provided that AWD agreed to repair any damages or fault in their work that was the result of the imperfect or defective work of AWD.
Further, the warranty provision provided that AWD guaranteed Varcon against any loss or damage arising from any defects in material or workmanship completed by AWD under the subcontract.
The Prime Contract governing the subcontract provided that AWD "shall promptly remove from the site of the Work and replace or re-execute defective work...whether or not the defect is the result of poor workmanship, use of defective Material, or damage through carelessness or other act or omission of the Contractor."
Varcon argued that, subject to the terms of the Prime Contract and the warranty provisions of the subcontract, AWD remained liable to Varcon even if AWD's work was not deficient.
The Court of Appeal rejected Varcon's arugument on that basis that a plain reading of the contracts do not support the position that subcontractors involved in this project are liable for any and all defects of the project regardless of whether their own work is deemed defective. Further, the Court stated that Varcon's position does not accord with sound commercial principles and good business sense.
The Court granted summary judgment on this issue and cited Hyrniak v. Mauldin for the requirement that "summary judgment must be granted if there is no genuine issue requiring a trial".
After a seemingly never-ending pattern of the Court of Appeal overturning successful summary judgment decisions, particularly those involving partial summary judgment, it is interesting to see the Court not only uphold the partial summary judgment decision in this case but further grant summary judgment of all the matters at issue.
In Mason v. Perras Mongenias, 2018 ONCA 928, seemingly going against the decision in Hryniak, the Court of Appeal stated that "summary judgment is the exception, not the rule".
This comment has caused many lawyers to be wary of recommending summary judgment motions to their clients. However, in Varcon the Court of Appeal cited Hryniak to state that "summary judgment must be granted if there is no genuine issue requiring a trial".
One wonders whether the Court of Appeal is starting to approach summary judgment more in line with the principles outlined in Hryniak, but Varcon is a good indication that this may be the case and may open the door for further successful summary judgment motions in the future, even in cases involving complex factual and contractual issues and disputed expert evidence.
Rogers Partners LLP is an experienced civil litigation firm in Toronto, Ontario. The firm represents insurers and self-insured companies in numerous areas, including motor vehicle negligence, occupiers' liability, product liability, professional negligence, construction claims, statutory accident benefits, disability benefits, municipal liability, medical negligence, sexual abuse, and insurance coverage disputes.
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