Bemar Construction Ltd. v. Canada, docket T-1215-91

Date: 19991020

Docket: T-1215-91

BETWEEN:

     BEMAR CONSTRUCTION LTD.

                                     Plaintiff

     - and -

     HER MAJESTY THE QUEEN

                                     Defendant

     REASONS FOR JUDGMENT

GIBSON J.:

[1]      These reasons arise out of an application on behalf of the defendant for summary judgment, in accordance with Rules 213 to 219 of the Federal Court Rules, 1998¹. The defendant also seeks costs. The defendant"s application was filed on the 19^th of May, 1999 and heard at Edmonton, Alberta on the 23^rd of August, 1999.

[2]      The following is a brief summary of the facts underlying this action. In October of 1989, the defendant, as represented by the Minister of Public Works, invited bids for the construction of a Royal Canadian Mounted Police detachment facility and residence at Faust, Alberta. The plaintiff obtained from the defendant a pre-bid information package consisting of specifications, drawings and instructions to bidders. The plaintiff claims that the defendant represented to it that the following would be as stipulated in the pre-bid information package: the manner in which the construction of the project could be, and was to be, carried out; the work contemplated at the time of tender; the site information; the suitability of the materials in terms of their intended purpose; and the suitability of the construction for the site conditions.

[3]      The plaintiff was the successful bidder for the construction of the project. The plaintiff began work on the project in 1989 and work continued until approximately the end of 1990. Progress payments were made in accordance with the construction contract until sometime in the summer of 1990. By that time, it had been ascertained that the soil conditions at the project site were wetter and less stable than indicated in the pre-bid information package. In the result, problems had developed with the stability of the foundations and, more generally, with the construction of the project.

[4]      A meeting took place on the 30^th of August, 1990, in an effort to get the project back on track. The meeting was attended by, among others, solicitors for both the plaintiff and the defendant. On the 21^st of September, 1990, the solicitor for the plaintiff wrote to the solicitor for the defendant in the following terms:

Further to the discussions and correspondence regarding the above matter, our client is prepared to make the following proposal to Public Works Canada:

1.      Bemar hereby requests a relaxation of specification section 02220 paragraph 3.4.4 which specifies the degree of compaction required for the backfill material placed under the floor slab in the R.C.M.P. Detachment basement; specifically, Bemar requests that the compaction specification be lowered from 96% to 90% density. It is understood between the parties that Public Works Canada will assume responsibility for any settlement or other movement of the basement floor slab.

2.      Bemar hereby agrees to, at its own expense, repair the remaining structural components of the building which will be approved by and completed to the satisfaction of the engineer for Public Works Canada. The cracks under 3/16ths of an inch wide will be repaired by the method of epoxy injection at Bemar"s expense.

3.      Public Works Canada hereby agrees to immediately release the $35,000.00 holdback with respect to cracking of structural components. It is understood that in the event that the cracking is not repaired prior to substantial completion, the $35,000.00 may be held back at that time.

4.      Bemar will make every effort to complete the project by October 31; an extension of time for completion may be required however, as a result of the delays which have occurred to this date.

5.      Following acceptance by Public Works Canada of the foregoing, Bemar hereby releases Public Works Canada from any and all claims arising at the site prior to September 15, 1990.

If the foregoing is acceptable to Public Works Canada please endorse your signature on the bottom of this letter and return the same to us at your earliest convenience.

[5]      Under the heading "ACCEPTANCE", Public Works Canada accepted the proposal on the 24^th of September, 1990. The accepted proposal was returned to the solicitor for the plaintiff under cover of a letter from the solicitor for the defendant, also dated the 24^th of September, which included the following sentence:

A change order will be issued in the next few days, formally incorporating this agreement into the contract.

While a change order in some form was issued by the defendant, its form is in dispute as well as the fact that it purported to deal only with the issue of compaction density.

[6]      As indicated earlier, the plaintiff continued or resumed work on the project until some time late in 1990. When the plaintiff left the construction site, the project was not completed.

[7]      The statement of claim herein was issued on the 6^th of May, 1991. It alleges that, in breach of its duty, Public Works Canada was guilty of negligence in making representations in the pre-bid information package that were clearly wrong and that resulted in the plaintiff suffering loss and damage, including consequential loss, loss of profits, loss of business opportunity and loss of reputation. It is noteworthy that the statement of claim alleges no wrong doing on the part of the defendant after the 15^th of September, 1990.

[8]      In separate but interrelated issue statements, the parties identify the following as the issues on this application for summary judgment:

-      whether, from the 24th of September, 1990, there existed a valid settlement agreement;

-      if a valid settlement agreement existed, whether this Court has, in all of the circumstances of this matter, a discretion to reject the settlement agreement agreed to out of Court by the solicitors for the parties where the solicitor for the plaintiff may not have been both authorized and instructed by the plaintiff in respect of the settlement agreement; and

-      whether the defendant can rely upon the alleged settlement agreement when, in submissions on behalf of the plaintiff, it is alleged that the defendant subsequently breached its construction contract with the plaintiff by failing to pay the plaintiff for work done under the contract.

[9]      The principles underlying determination of an application for summary judgment in this Court are now reasonably well settled. Those principles are clearly enunciated in Granville Shipping Co. v. Pegasus Lines Ltd. S.A. et al². For a motion for summary judgment to succeed, the Court must be convinced that the case ought not to proceed to trial because there is no genuine issue to be tried. The question is not whether a party cannot possibly succeed at trial, but whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial. The mere existence of apparent conflict in the evidence does not preclude summary judgment; the Court should take a "hard look" at the merits and decide if there are issues of credibility to be resolved. While the foregoing does not encompass all of the principles outlined in Granville Shipping , I am satisfied that it is a reasonable summary of the principles most important to the determination of this matter.

[10]      Notwithstanding the excellent submissions before me on behalf of the plaintiff, I am satisfied that the offer of settlement quoted above, once accepted on behalf of the defendant, constituted a binding contract of settlement between the plaintiff and the defendant. On its face, it was in no way contingent on the issuance of a change order "...incorporating [it] into the [construction] contract". It stood alone and was binding on the parties. In the result, unless overridden by this Court or voided by subsequent action on the part of either party, the plaintiff thereby released the defendant from any and all claims "... arising at the [construction] site prior to September 15, 1990". It was not in dispute before me that all of the claims reflected in the plaintiff"s statement of claim arose prior to the 15^th of September, 1990 and I am satisfied that they arose by reason of conditions "...at the [construction] site...".

[11]      In Scherer v. Paletta³, a matter in which the defendant moved for judgment, Mr. Justice Evans wrote at page 534:

It is clear from the material that counsel for the opposing party at no time prior to the acceptance of the offer on May 10, 1965, had knowledge of any limitation upon the solicitor"s authority to settle the counterclaim.

...

The question for determination is whether the defendant is entitled to enforce by way of a judgment the settlement agreed to by counsel for the plaintiff, in view of the dispute as to the limitation of the retainer of which he was unaware.

...

The authority of a solicitor to compromise may be implied from a retainer to conduct litigation unless a limitation of authority is communicated to the opposite party.

At page 535, Mr. Justice Evans continued:

A solicitor whose retainer is established in the particular proceedings may bind his client by a compromise of these proceedings unless his client has limited his authority and the opposing side has knowledge of the limitation, subject always to the discretionary power of the Court, if its intervention by the making of an order is required, to inquire into the circumstances and grant or withhold its intervention if it sees fit; and, subject also to the disability of the client. It follows accordingly, that while a solicitor or counsel may have apparent authority to bind and contract his client to a particular compromise, neither solicitor nor counsel have power to bind the Court to act in a particular way, so that, if the compromise is one that involves the Court in making an order, the want of authority may be brought to the notice of the Court at any time before the grant of its intervention is perfected and the Court may refuse to permit the order to be perfected. If, however, the parties are of full age and capacity, the Court, in practice, where there is no dispute as to the fact that a retainer exists, and no dispute as to the terms agreed upon between the solicitors, does not embark upon any inquiry as to the limitation of authority imposed by the client upon the solicitor.

In this matter, a limitation of authority with regard to settlement, imposed by the plaintiff on its solicitor, is alleged. It was not disputed before me that neither the defendant nor its solicitor was aware of any such limitation. Nor was any want of capacity on the part of the plaintiff alleged. Further, no intervention on the part of this Court or any other Court was alleged to be required to implement the settlement.

[12]      In Pearson v. Plester et al⁴, Mr. Justice Twaddle defined the issue there before the Court in the following terms at page 464:

This appeal raises the important question of whether a Queen"s Bench judge has a discretion to reject a settlement which, though agreed to out of court by the solicitors, may not have been authorized by one of the parties.

Mr. Justice Twaddle refers to the Scherer decision, above, as the "leading authority" on the issue and cites from it. He concludes at pages 467-8:

The extent to which this exception [the exception cited in Scherer where a Court order is required to perfect a settlement] applies to cases in which a court"s intervention is a mere formality, as distinct from an exercise of its discretion, is a matter which need not detain us in this case. The settlement here required no order of the court to give effect to it. The court was called upon to give effect to it only when the plaintiff refused to be bound by it. The defendants might have commenced a separate action for breach of contract, but chose as a matter of procedural convenience to seek summary judgment in the existing action. The court was not asked to lend its aid to give effect to the settlement: it was only asked to enforce the obligations which the parties had taken upon themselves contractually.

Precisely the same might be said here.

[13]      I am satisfied that the post-settlement agreement conduct of the parties is irrelevant in this matter. That conduct is not pleaded by the plaintiff in its statement of claim, nor could it now be. Thus any alleged wrong-doing on the part of the defendant after the 24^th of September, 1990 is simply not before the Court.

[14]      On the basis of the evidence before the Court, and the foregoing analysis, I conclude that there is no genuine issue to be tried in this matter, the plaintiff having agreed to release the defendant from any and all claims arising at the site prior to the 15^th of September, 1990, which encompasses all claims made in this action, and the plaintiff being bound by that agreement. Further, I am satisfied that the plaintiff"s case herein is so doubtful that it does not deserve consideration by the trier of fact at a future trial. While there are certainly issues of credibility on the evidence now before the Court, having taken a "hard look" at the merits of the matter, I am satisfied that the credibility issues, however determined, would not affect the outcome of this action.

[15]      For the foregoing reasons, the defendant"s application for summary judgment is granted with costs in favour of the defendant in respect of the motion and the action.

                         _______________________________

                         Judge

Ottawa, Ontario

October 20, 1999

__________________

¹      SOR/98-106, 5 February, 1998.

²      (1996), 111 F.T.R. 189 at 193.

³      (1966), 57 D.L.R. (2d) 532 (Ont. C. A.).

⁴      (1989), 65 D.L.R. (4^th ) 463 (Man. C. A.).