Case Name:

Colautti Construction Ltd. v. Ashcroft Development Inc.

Between

Colautti Construction Ltd., plaintiff, and

Ashcroft Development Inc., Ashcroft Homes Inc., Ashcroft Homes

- Central Park Inc., Ashcroft Homes - Crown Pointe Inc., Crown

Pointe Development Inc., 1070280 Ontario Inc., 1230174 Ontario

Inc., David Choo and Shanti Choo, defendants

[2003] O.J. No. 1492

[2003] O.T.C. 360

33 C.P.C. (5th) 230

122 A.C.W.S. (3d) 458

Court File No. 01-CV-18487

 Ontario Superior Court of Justice

C. McKinnon J.

Heard: March 26-28, 2003.

 Judgment: April 29, 2003.

(32 paras.)

Practice -- Discovery -- Use of examination in court -- Judgments and orders -- Summary judgments -- Bar to application, existence of issue to be tried.

Application by the plaintiff Colautti Construction for summary judgment against the defendant homebuilders. In support of its application, Colautti included an affidavit sworn by Jacobs, a non-party, in which he attached as an exhibit a copy of a deposition taken under oath that constituted answers to questions put to him by Colautti's counsel. Colautti also filed an affidavit by its principal, which attached a transcript of another individual's deposition. Colautti also filed a 26-volume motion record and a 56-page factum. Colautti sought $794,475 for charges it claimed were unpaid for construction work performed for the builders pursuant to seven separate contracts. In numerous cases, the charges related to extras that were outside the written contracts. The builders claimed that some of the extras were covered by the contracts and that others were not legitimate charges. The builders had counterclaimed against Colautti for deficiencies in the work performed.

HELD: Application dismissed. The deposition evidence was inadmissible as there was no consent to use the examinations of the non-parties. It was impossible to determine credibility issues on the application. There were triable issues arising out of the litigation.

Statutes, Regulations and Rules Cited:

Ontario Rules of Civil Procedure, Rules 20.01, 20.04(2), 20.06, 21.01, 31, 31.06(1)(b), 34, 39, 39.04(2).

Counsel:

Raymond G. Colautti, for the plaintiff.

Paull N. Leamen, for the defendants.

1 C. McKINNON J.:-- I have concluded that this motion for summary judgment must fail. Given the compendious record placed before the court I shall set out in some detail my reasons for concluding that this case is not appropriate for summary judgment.

2     I shall also comment on the propriety of filing evidence obtained on an examination for discovery, and thereafter incorporated by reference into an affidavit, and determine whether such evidence constitutes "other evidence" within the meaning of Rule 20.01 of the Ontario Rules of Civil Procedure.

3     I shall first deal with the procedural issue.

Rule 20.01:

meaning of "other evidence"

4     Rule 20.01(1) provides:

A plaintiff may ... move with supporting affidavit material or other evidence for summary judgment on all or part of the claim in the statement of claim.

5     In support of its motion for summary judgment, the Plaintiff, as part of its motion record, included an affidavit of Christopher Jacobs wherein he deposed, among other things, that Exhibit "A" to his affidavit constituted a true copy of a deposition taken under oath which constituted answers to questions put to him by the solicitor for the Plaintiff. He deposed that he attended before the official court reporter on September 13, 2001, that a transcript was taken, and that the answers which he made to the questions put were true and accurate to the best of his knowledge, information and belief. The transcript comprised answers to 508 questions and constituted 138 pages of transcript. As well, amended as an exhibit to the affidavit of Ronald Colautti was a transcript of the deposition of William Buchanan held at the offices of the solicitors for the Plaintiff on September 20, 2001. No affidavit incorporating the evidence given by deposition has been filed by William Buchanan.

6     Counsel for the Defendants submits that such evidence is inadmissible on a motion for summary judgment because there is no rule which authorizes such a highly unusual procedure, other than the reference to "other evidence" found in Rule 20.01. Mr. Leamen points to Rules 31, 34 and 39 which provide that the court may grant leave to examine a third party for discovery, other than an expert engaged by or on behalf of a party in preparation for contemplated litigation; that every party to a proceeding other than the examining party shall be given not less than two days' notice of the time and place of the examination; and that on the hearing of a motion a party may not use in evidence the party's own examination for discovery or the examination for discovery of any person examined on behalf of or in place of, or in addition to, the party unless the other parties consent.

7     In the case of Lana International Ltd. v. Menasco Aerospace Ltd. (2000), 50 O.R. (3d) 97 (O.C.A.), the Court of Appeal determined that "other evidence" within the meaning of Rule 20.01 does not include a party's own examination for discovery. In that case, one of the parties to the litigation moved for summary judgment to have claims against him dismissed. In support of his motion he did not provide an affidavit. Rather, he relied upon his own examination for discovery and parts of the examinations of two co-defendants and affidavits sworn by his lawyer that appended certain documents. The motions judge granted the motion on the basis that he believed "the entire record" was before him.

8     Speaking for the Court of Appeal, O'Connor J.A. concluded that the "other evidence" referred to in Rule 20.01 does not permit a party to rely upon his or her own examination for discovery. Rather, Rule 39.04(2) prevailed. That Rule provides that:

On the hearing of a motion, a party may not use in evidence the party's own examination for discovery or the examination for discovery of any person examined on behalf or in place of, or in addition to, the party unless the other parties consent.

9     It was held that because Rule 39.04(2) is specific and Rule 20.01 is general, the specific provision must prevail.

10     O'Connor J.A. held that the policy underlying the specific Rule is that parties wishing to rely on their own evidence on a motion ought not to be able to avoid full cross-examination by using their own examination for discovery instead of providing an affidavit. Rule 31.06(1)(b) prohibits cross-examination going solely to credibility on a discovery. Conversely, cross-examination upon an affidavit is not so restrained.

11     Although the incorporation by reference of an examination for discovery into an affidavit might appear to be an efficient method of placing evidence before the court, I am persuaded that I am bound by the Lana International decision and hold the deposition evidence of Christopher Jacobs and William Buchanan is inadmissible on the motion. In practical terms, this does not greatly change the legal landscape on this motion, as Christopher Jacobs subsequently swore a lengthy and detailed affidavit touching on the same matters as canvassed in his deposition, and upon which he was cross-examined.

12     Mr. Colautti argues that Mr. Leamen could have sought to cross-examine Mr. Jacobs on the evidence given on his deposition, but on analysis, such a procedure would prove to be awkward as Mr. Leamen would be forced to cross-examine on numerous facts set out by counsel for the Plaintiff, as distinguished from the words of the witness himself. What appears on its face to be an efficient practice in fact would prove inefficient. Reviewing the questions and answers put to Mr. Jacobs in the examination for discovery reveals that in many instances, lengthy questions involving assertions of fact are related to the witness by the lawyer for the applicant, and the witness simply adopts the question as his evidence.

13     Absent consent to use the examinations, as contemplated by Rule 39.04(2), they are not admissible, and do not constitute "other evidence" as contemplated by Rule 21.01.

The Motion for Summary Judgment

14     As to the merits of the motion for summary judgment itself, the Plaintiff has filed a 26 volume Motion Record which fills four banker's boxes. The factum filed by the Plaintiff is 56 pages in length. The supplementary factum is 15 pages in length. The Defendant's responding factum is 38 pages in length and its supplementary factum 5 pages in length. Argument on the motion took 3 full days. The initial reaction of a disinterested observer would be to question whether such complexity is contemplated within the rule providing for summary judgment. Nonetheless, the court's obligation is to determine whether there is a genuine issue for trial.

15     The Plaintiff is in the business of performing heavy construction, including blasting, lot grading, installing municipal services, excavating basements and installing roadways. The various defendants are in the business of building homes.

16     The contracts in question commenced in 1998 and continued until the present litigation was commenced in September, 2001. Since 1998, the parties have contracted with one another for the performance of approximately $10 million worth of work. Prior to that time, the parties had fulfilled contracts apparently without serious differences arising.

17     The Plaintiff in this motion is seeking summary judgment for charges which it claims are unpaid totaling $794,475.49. This claim has been carved out of the statement of claim which seeks, in addition to the unpaid sums, and among other claims, the amounts of $2 million for aggravated damages, bad faith, economic coercion, intimidation and defamation; punitive damages against the corporate defendants and David Choo personally in the amount of $1 million. The Plaintiff's statement of claim and motion for summary judgment relate to seven separate contracts with one of two corporate defendants at two separate sites in the City of Ottawa. The Plaintiff's in-house accounting records created 11 separate contract numbers for portions of these seven contracts, each with separate invoicing and accounting. The claim asks for payment "by the corporate defendants or any of them". Seven corporate defendants are named.

18     Predictably, the claim has been aggressively defended and a counterclaim asserted in the amount of $2 million.

19     Notwithstanding the complexity, the Plaintiff asserts that the monetary issues do not require a trial for resolution as there is unequivocal documentary evidence proving the authorization by the various Defendants for the work, equipment, materials and labour supplied and performed.

20     The Plaintiff alleges that it has demonstrated exactly where every cheque issued by the Defendant, Ashcroft, was allocated, and maintains that there remains the balance of $794,475.49 on the seven contracts. In an attempt to simplify the relationship between the parties on each of the seven contracts, for example, the "Central Park Phase 2 Roads Contract", or the "Central Park Phase 2 Basement Excavations Contract", or the "Central Park Commercial Site Contract" and so forth, the Plaintiff has painstakingly assembled all invoices issued on each of the seven contracts, has listed the payments made, and has calculated a balance owing.

21     In numerous cases the charges relate to "extras" that are outside the written contracts. The Plaintiff asserts that an agreement had been entered into between Mr. Choo, the principal of the various Ashcroft companies, and Dennis Colautti on behalf of the Plaintiff, in or about August of 1999, to clarify procedures for the ordering of work, equipment, materials and labour which would constitute "extras" to contracts. Apparently, at that meeting, Mr. Choo agreed not to issue a purchase order if he did not intend to pay for the work and that either he or John Stokes were authorized to issue these purchase orders.

22     The problem arises in that the record is speckled with instances of extras being purportedly authorized by persons other than Mr. Choo or Mr. Stokes. As well, Ashcroft maintains that there are numerous instances where the billing for extras would appear to cover work included in the contract entered into by the parties. Mr. Choo takes the position, not unwarranted from the record, that certain so-called "extras" were not extras at all, and that he should not be bound to pay them. As well, he asserts that he was held hostage by the Plaintiff, and could not continue work unless he signed the authorization submitted by Colautti. There is a credibility contest. It is impossible to determine such issues on a motion. It will be for the judge at trial to decide.

23     Complicating matters even further is the fact that there was a portion of time wherein progress completion certificates were not issued on work performed by the Plaintiff, as contemplated by the various written contracts. The Defendant Ashcroft became embroiled in a dispute with its engineer. The engineer quit. Colautti continued its work. When a new engineering firm was retained, it refused to certify any work performed by Colautti prior to the new firm's retainer. Colautti states that the work was ordered by Ashcroft. Ashcroft demands an accounting.

24     A further matter that frustrates the theoretical basis of the Plaintiff's motion for summary judgment arises from the documentary evidence filed. In many instances, the Plaintiff was receiving money from Ashcroft and applying it to the oldest debt. It is upon this basis that it calculates the sums being sought on this motion, relating to each contract. Unfortunately, many of the cheques issued by Ashcroft were specifically earmarked for named contracts but allocated by Colautti to different, older contracts. Mr. Choo takes the position that in so allocating these payments, Colautti was paying off invoices which Mr. Choo does not acknowledge to be legitimate charges pursuant to specific contracts. This is impossible to resolve on a motion for summary judgment. As well, the record demonstrates that the parties had a habit of commencing work prior to the actual execution of contracts relating to the work. In such circumstances, Parol Evidence will undoubtedly be admissible at the trial to sort out the parties' true intentions.

25     Remarkably, the Plaintiff seeks summary judgment "dismissing or staying the Defendant's counterclaim against the Plaintiff; or in the alternative striking out the Defendant's statement of defence and counterclaim". I have concluded, following a detailed review of the evidence supporting the Defendant's counterclaims, that some of its counterclaims will likely succeed. Just referring to one example, there is the cost to the Defendants of removing fill behind certain units which the Plaintiff agreed to remove, but did not do so. During cross-examination on his affidavit, Mr. Colautti had an explanation of why the fill was not removed, but his very answers raise a triable issue. Another example is a counterclaim relating to a contract wherein the Plaintiff was hired to measure and record rock elevations on certain lands in preparation for designing roads. It is quite clear that there was an error in the recording of the average elevations which ultimately required a redesign of the entire site for a cost of approximately $160,000. In its affidavit material, the Plaintiff seeks to justify its performance with respect to the rock elevations, but the cross-examination of Mr. Colautti reveals, once again, a triable issue.

26     The more one analyzes the record in this action, the more one realizes that it is impossible of determination on a summary judgment motion.

27     The law with respect to summary judgment is quite clear. If there is no genuine issue for trial, summary judgment may issue, in accordance with Rule 20.04(2). It is also the law that the party opposing a summary judgment must show "a real chance of success". See Guaranty Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423, 178 D.L.R. (4th) 1. However, it is also clear from the judgments of the Ontario Court of Appeal in Irving Ungerman Ltd. v. Galanis (1991), 4 O.R. (3d) 545, Aguonie v. Galion Solid Waste Material Inc. 38 O.R. (3d) 161 and Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 164 D.L.R. (4th) 257, 26 C.P.C. (4th), 1, that real life trials remain the preferred mode for the resolution of disputes.

28     In a motion for summary judgment the motions judge cannot assess credibility, weigh evidence or find facts, all of which are functions reserved to the trial judge, although the genuine issue must be material: see Rogers Cable T.V. Ltd. v. 373041 Ontario Ltd. (1994), 22 O.R. (3d) 25 (O.C.G.D.).

29     As is often noted, the responding party must "lead trump or lose risking": See 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 21 O.R. (3d) 547 (O.C.A.). I am entirely persuaded that Mr. Choo in his affidavit and supporting material has succeeded in leading trump and has not risked losing simply because there is not a plethora of supporting affidavits to his evidence. His evidence is detailed and persuasive. He has met the test required in order to convince the court that there are triable issues arising out of the litigation.

30     Mr. Colautti attempted to convince the court that this motion for summary judgment was essential in order to "make order out of chaos". I appreciate that litigation of this kind can be extremely frustrating, time-consuming and costly. I am also persuaded that there is no alternative to a trial (unless the parties consent to arbitration) in the circumstances. I harbour serious doubts that the summary judgment rule was ever contemplated to embrace claims of this complexity. A review of the case law involving motions for summary judgment reveals the assessment of discrete issues, often involving the interpretation of a specific form of words employed in an agreement or contract. There is no case, so far as I can ascertain, that even remotely approximates the complex situation involving the case at bar, with many contracts, a multitude of defendants, issues involving credibility touching on the very meaning of the contracts, and a seemingly meritorious counterclaim.

31     The motion for summary judgment is dismissed.

32     The bringing of the motion for summary judgment on these facts could not be said to be reasonable and it would be difficult to conclude that the costs sanctions contemplated in Rule 20.06 should not follow the result. Failing offers to settle in writing, of which I may be unaware, costs are ordered against the Plaintiff on a substantial indemnity basis.

C. McKINNON J.

cp/e/nc/qw/qlhcc