In Arcamm Electrical Services Ltd. v. Avison Young Real Estate Management Services LP, 2024 ONCA 925, the Court of Appeal analyzed the interplay between contributory fault and summary judgment. Specifically, the court held that where contributory fault is raised, summary judgment cannot be awarded without determining that issue.
Background
The defendant, 4342 Queen St. Niagara Holdings Inc. (“Queen”), owns a commercial property in Niagara Falls, Ontario. In June 2021, there was an electrical failure at the property that resulted in a complete power outage.
The defendant, Avison Young Real Estate Management Services LP (“Avison”), managed the property and engaged the Plaintiff, Arcamm Electrical Services Ltd. (“Arcamm”), to restore power, which involved the removal and replacement of two transformers. Arcamm performed the work and issued a series of invoices for payment.
Queen’s insurer, Aviva Insurance Company of Canada (“Aviva”), had been paying the Arcamm invoices but stopped when it learned that Arcamm might have improperly stored the original transformers, resulting in them being irreparably damaged.
In June 2022, in a separate action, Queen sued Aviva for a declaration that Queen was entitled to payment from Aviva for all amounts that Queen might be liable (the “Queen Action”). In July 2022, in another separate (subrogated) action, Aviva sued Arcamm in relation to the damaged transformers (the “Subrogated Action”).
Also in June 2022, Arcamm brought a motion for summary judgment in the Arcamm Action, which was returnable in January 2023. Arcamm’s position was that its invoices should be paid because it was not disputed that Arcamm had performed the work. Arcamm indicated that trial was not necessary to decide that issue.
Queen opposed the motion and contended that its contributory default defence raised a genuine issue for trial. Specifically, Queen indicated that this defence would impact Arcamm’s recovery, and that granting the motion would risk inconsistent and contradictory findings in the Subrogated Action.
The motion judge acknowledged that determining liability for the transformer failure would require a full evidentiary record, but nonetheless awarded summary judgment. The court focused on the fact that the invoiced work had been performed by Arcamm. The court concluded that Queen had benefited from that work and that liability for the invoices was not an issue that required trial.
Queen appealed, arguing that the motion judge failed to consider whether contributory fault could reduce or negate Arcamm's claim for payment, and whether that issue required trial.
Contributory Fault – A Genuine Issue for Trial
The Court of Appeal held that contributory fault, though often associated with negligence in tort claims, also applies in contract disputes.
In its contributory fault defence, Queen alleged that Arcamm mishandled the transformers by improperly storing them in a humid and/or dusty environment. According to Queen, this resulted in extensive damage to the transformers.
The court found that these were contested facts and concluded that they could not be resolved on a summary judgment motion.
The Risks of Summary Judgment
The Court of Appeal emphasized the procedural risks of deciding matters on summary judgment. The court noted that the evidentiary record included complex, disputed facts requiring expert analysis. A determination of contributory fault demanded credibility assessments and witness testimony, and these issues were ill-suited for the summary judgment process.
The court also found that granting summary judgment risked inconsistent findings in the Queen Action and/or Subrogated Action, which involved similar questions about liability and damages.
For these reasons, the Court of Appeal set aside the judgement of the lower court and dismissed the motion for summary judgment.
Conclusion