Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.
Edited by Steven Graham
Parks v McAvoy, 2022 ABQB 294
Summary Judgment | Personal Liability | Negligence | Breach of Contract
The Plaintiff applied for summary judgment against the Defendant Woodparke Homes Ltd. and its principal, Steve McAvoy, alleging damages incurred by breach of contract, negligence, and fraudulent misrepresentation in the building of the Plaintiff’s home by the Defendants.
The Justice in Chambers concluded that the matter was unfit for summary judgment for a number of reasons. While noting that the volume of material does not automatically preclude the possibility of summary judgment, the Court noted that the materials submitted in the context of the application exceeded 10,000 pages. The Court concluded the volume of material demonstrated the extent of disagreement between the parties, and fairness could not permit a ruling without proper testing of the evidence at a trial.
The Court further noted that there were causation issue issues that made summary judgment unfeasible. The Plaintiff argued that the Defendant Woodparke was liable for deficiencies in the home because it was the general contractor. Expert evidence conflicted on the cause of issues like mould and the extent of any structural deficiencies. The disagreements among the experts contributed to the Court not being able to determine the application summarily:
[80] There is no prohibition on granting summary judgment on the basis of written expert evidence. However, where the nature of the expert evidence is particularly technical or complicated, the value of viva voce testimony is clear. This is first because the expert’s qualifications and opinions will be subject to live cross-examination with a right of reply. Secondly, the Court may wish to ask its own clarifying questions directly of the expert, who, it should be remembered, is independent of the party who retained him or her and is giving evidence for the benefit of the Court; Henry Hill & Associates Inc v Santos, 2021 ONSC 6051 at para.32.
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[84] It is not that summary judgment based on conflicting expert opinion is never available, but this is not a case of one expert report versus another. There are many, many conflicting expert reports dealing with 4 completely different possible causes of two different types of damage (structural deficiencies and water ingress). Nothing about that is suitable for summary judgment.
The Plaintiff also argued that the Court did not have to determine which of the alleged issues were attributable to the work of various subcontractors hired by the Defendant; his position was that summary judgment was appropriate against the Defendants, and the Court could then later determine apportionment as between the Defendants and Third Parties. The Court noted the law is conflicted as to whether a general contractor can be held liable for the work of its subcontractors. After reviewing some of these authorities, the Court concluded that while a general contractor may be held liable for certain negligent acts of subcontractors, it did not mean the Court could ignore causation:
[94] In my view, that feature distinguishes these cases from the case at bar. The deficiencies in the Parks’ home might have been caused by any one of the subcontractors or some permutation of them. It is not sufficient to present a laundry list of deficiencies – even if there was no dispute about the severity – and say it does not matter what or who caused them. There is no liability in contract or in tort without causation and I cannot find some sort of generalized causation based on the damage ultimately uncovered.
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[97] Given the large and conflicting evidentiary record, I have no idea who the principal “doer” (or doers) of the harm is or are. Without the ability to make that finding, I do not believe I can find the general contractor vicariously liable on a summary basis.
The Court also refused to draw any inference that the deficiencies in the construction of the house were obviously not up to industry standards such that no non-negligent general contractor would have failed to see them. Indeed, the Court noted the Plaintiff and his family lived in the house for 4 years before noticing any issues:
[101] It is always tricky to draw inferences on a summary judgment application; Henry Hill & Associates v Santos, 2021 ONSC 6051 at para.54. Here, I cannot, on a balance of probabilities, infer that any deficiencies present in 2014 were so obvious that the Woodparke Defendants must have known about them. That may be an appropriate inference to draw at trial but it is not appropriate to do so at this stage of the proceedings.
The Court further considered the effect that any summary ruling would have on the claims against the numerous third parties named (who did not participate in the application), particularly the possibility of determining or at least implicating causation when they did not have the opportunity to present or test evidence:
[104] I agree these are legitimate concerns. Even if I accepted some mash-up of expert evidence as establishing a generalized causation sufficient to grant judgment against the general contractor, how could I do so without fettering the discretion of the trial judge to some extent? What if he or she disagreed completely and found that no one had been proven negligent?
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[107] I must ask myself if the fact-finding necessary to Parks’ summary judgment motion could impact the disposition of other matters in this lawsuit; Canadian Imperial Bank of Canada v Deloitte & Touche, 2016 ONCA 922 at paras.37-38. The answer to that is clearly “yes”.
The Court found the possibility of prejudice to the third parties and other named defendants too serious to grant summary judgment.
The Court also noted that the Plaintiffs still advanced several claims against the same Defendants, related to these events, but which did not form part of the summary application. The Court noted that the parties would therefore still be going to trial, and that there was no real efficiency to be found by granting any summary judgment at this stage:
[114] Parks’ counsel provided a number of cases in which partial summary judgment was granted and of course, the Rule envisions that possibility. However, in my view, there are few efficiencies to be gained here by granting summary judgment, given that the parties and many of their disputes would nevertheless remain; Bloomex Inc v Canadian Broadcasting Corporation, 2021 ABQB 214 at paras.40-43.
Ultimately the Court determined that it was not appropriate to grant summary judgment:
[119] To return to the Weir-Jones test, I would not exercise my discretion in favour of granting summary judgment here because it would not result in appreciable savings of time or money. But even if that were not the case, there remain issues of causation and damages that cannot be resolved on this record in a way that is fair to the parties; the parties to this motion and the other Defendants and Third Parties who were not party to this motion.
The Defendant McAvoy concurrently applied for summary dismissal of the claims alleged against him in a personal capacity. McAvoy was the sole director of the Defendant Woodparke Homes:
[125] The claims against McAvoy are in contract, tort and breach of trust/fiduciary duty but arise from two very different sets of facts; (1) the building of the house; and (2) the project accounting. McAvoy brings this application for summary dismissal saying that: (1) the claims relating to the construction are properly claimed only against Woodparke Homes and not against him as a director thereof; and (2) the accounting-related claims are barred by the Limitations Act, RSA 2000, c.L-12.
The Court found no evidence to support the Plaintiff having entered into a contract with McAvoy personally, and therefore concluded it was appropriate to summarily dismiss any breach of contract claim as against McAvoy himself:
[132] […] This is a discreet issue where that clear finding of fact will reduce the claims available against the director of the corporate defendant, which is the party that should answer for the alleged construction deficiencies at trial; Hryniak at para.60.
The Court further found that the Plaintiff’s claims for negligent construction, even if proven, could only be proven against Woodparke Homes and not McAvoy personally:
[139] The fact that a director may be involved in retaining or reviewing the work of subcontractors is a necessary consequence of the fact that a company cannot act other than through its agents or employees. There are no acts here done by McAvoy – other than the ones reviewed next – which exhibit a separate identity or interest from Woodparke Homes. These claims against McAvoy are dismissed.
The Court also summarily dismissed claims against McAvoy for misrepresentation and breach of fiduciary duty, finding no evidence that McAvoy knew or concealed any deficiencies, or that he held any personal fiduciary duty in respect of the construction of the house:
[153] In this case, there was no undertaking given by McAvoy to forsake his own interest in any aspect of his involvement with the construction of Parks’ home. I have already found that the contractual and tortious duties owed to Parks were owed by Woodparke Homes, not by McAvoy. Although the situation will be somewhat different in respect of the handling of money on this project, there is no basis whatsoever to impose fiduciary duties on McAvoy personally in respect of the construction itself.
The Plaintiff advanced a number of accounting-related claims against McAvoy, alleging that he used the Plaintiff’s money on other projects. A number of these the Court found could have been discovered by the Plaintiff and the Plaintiff failed to seek proper relief within the applicable limitation period, and these were dismissed:
[170] In my view, there are two very different kinds of accounting claims being made by Parks against McAvoy. The first are inconsistencies in the arithmetic – these would include complaints that the final price exceeded the estimate, as well as complaints that Parks was overcharged for work or materials not supported by receipts and invoices. If true, those are injuries which in my view were easily discoverable no later than January 6, 2016. Parks knew the estimated price of the construction and knew what he had actually paid. He knew or could have easily discerned that the invoices he had at that time did not equal the amount he had paid. Any discrepancies could have been and should have been questioned at that time.
However, certain accounting claims were permitted to continue, as they were not previously discoverable:
[172] However, there are a second set of accounting claims made against McAvoy that he took money from Parks and misappropriated it to the costs of remediating his own home following the 2013 flood. That is an injury that would not have been discoverable by review of the accounting information provided to Parks in 2014. Without knowing that funds were being co-mingled, Parks would not have been alive to the possibility that his money was being spent elsewhere. He may have resigned himself to paying more than he originally bargained for and to accepting a partial accounting, but he cannot be said to have conceded claims for misappropriation of funds without some indication that had happened.
In sum, the Court dismissed the Plaintiff’s application for summary judgment, but found sufficient basis to summarily dismiss some specific allegations as against the Defendant McAvoy personally, while others were permitted to remain.