



COURT OF APPEAL FOR ONTARIO

CITATION: Avedian v. Enbridge Gas
    Distribution Inc. (Enbridge Gas Distribution), 2021 ONCA 361

DATE: 20210531

DOCKET: C68319

Lauwers, Miller and Nordheimer
    JJ.A.

BETWEEN

Bedros (Peter) Avedian, Claudio
    Petti and Mario DOrazio

Plaintiffs (Appellants)

and

Enbridge Gas Distribution Inc.
    operating as Enbridge Gas Distribution, Enbridge Solutions Inc. operating as
    Enbridge Energy Solutions,
Enbridge Inc.
, Lakeside Performance Gas
    Services Ltd. operating as Lakeside Gas Services

Defendants (
Respondent
)

and

Alpha Delta Heating Contractor
    Inc. and Aubrey Leonard Dey

Third Parties

and

TQB Heating and Air
    Conditioning, Brentol Bishop a.k.a. Brent Bishop, Enbridge Solutions Inc.
    operating as Enbridge Energy Solutions, and
Enbridge Inc.

Fourth Parties (
Respondent
)

Christine G. Carter, for the appellants

Cynthia R. C. Sefton, for the
    respondent, Enbridge Inc.

Heard: December 2, 2020 by
    video conference

On appeal from the judgment of Justice Jane
    Ferguson of the Superior Court of Justice, dated April 13, 2020, and from the costs
    endorsement dated June 4, 2020.

B.W. Miller J.A.:

OVERVIEW

[1]

The respondent Enbridge Inc. brought a motion
    for partial summary judgment less than six months before a ten-week trial was
    scheduled to begin, and roughly 18 months after the trial had been scheduled. Predictably,
    the trial date was lost.

[2]

As I explain below, in the circumstances of this
    action, the motion ought not to have been allowed to proceed after the trial had
    been scheduled. Although that reason would, by itself, be a sufficient basis to
    allow the appeal, I also agree with the appellants that the motion judge erred in
    law in concluding there was no issue requiring a trial. The appeal is allowed
    and the action is restored.

BACKGROUND

[3]

The appellants owned a 251-unit apartment
    building at 399 Markham Road in Toronto. On September 14, 2010, a fire and
    explosion caused extensive damage to the building. Earlier that day, three men
     including two of the parties to the action below, Aubrey Leonard Dey and Brentol
    Bishop  arrived at the building without notice and advised the buildings superintendent
    they would be changing the S203P gas regulators outside the building. The
    superintendent told the three men that the gas could not be turned off without
    giving the tenants 24 hours notice. Regardless, the men changed the
    regulators. The meters outside the building were the property of Enbridge Gas Inc.,
    a subsidiary of Enbridge Inc. An investigation later determined that the
    explosion and fire were caused by improper installation of the S203P gas
    regulators.

[4]

Enbridge Gas Inc. had contracted with Lakeside
    Gas Services to service the regulators. Lakeside had subcontracted to Alpha
    Delta Heating Contractor Inc. and Dey. Dey and Alpha Delta had, in turn,
    retained Bishop and TQB Heating and Air Conditioning.

[5]

In 2012, the appellants commenced an action
    against four defendants, including the respondent. Among other claims, the
    appellants pleaded that Enbridge Inc. owed the appellants a duty of care and
    was negligent for failing to provide proper supervision and training to its subsidiary,
    contractors, and subcontractors, causing the fire and explosion.

[6]

In March 2018, the action was set down for a ten-week
    trial to commence in February 2020. In August 2019  roughly seven years after
    the action was commenced and less than six months before the trial was to begin
     the respondent, Enbridge Inc., as well as Enbridge Solutions Inc. brought a
    motion for partial summary judgment seeking the dismissal of the action against
    them. Enbridge Inc. argued that it exercised no control over its subsidiary
    Enbridge Gas Inc. and owed no duty of care to the plaintiffs.

DECISION BELOW

[7]

In September 2019, the motion judge vacated the
    February 2020 trial date. In April 2020, after hearing the summary judgment
    motion in writing, the motion judge dismissed the action as against Enbridge
    Inc. and Enbridge Solutions Inc.

[8]

The motion judges reasons were sparse. The
    motion judge noted that Enbridge Solutions Inc. was dissolved two weeks after
    the explosion, and she stayed the action against it on that basis. The
    appellants do not appeal this aspect of the judgment.

[9]

The motion judge also dismissed the action
    against Enbridge Inc. She did so on the basis that Enbridge Inc. had no control
    over the operations of Enbridge Gas Inc., including control over supervision,
    training, quality control, field work, hiring of contractors, installation of
    meters, repair of meters, meter work and other issues in the lawsuit. She
    noted that Enbridge Inc. is a separate corporate entity and that the
    information provided as part of the examinations for discovery and undertakings
    should have satisfied  the plaintiffs that [Enbridge Inc.] was not a proper
    party. The motion judge held there was no basis to lift the corporate veil
    between Enbridge Inc. and the other corporate entities. She granted summary
    judgment, dismissing the action against Enbridge Inc. and Enbridge Solutions
    Inc. In a separate endorsement, the motion judge ordered $175,000 in costs
    against the appellants.

ISSUES ON
    APPEAL

[10]

The appellants appeal the judgment and costs order,
    except for the dismissal of the action against Enbridge Solutions Inc., on the
    basis that the motion judged erred in the following ways:

1.

by hearing the motion for summary judgment on
    the eve of trial;

2.

in not finding a genuine issue requiring trial with respect to the
    duty of care that Enbridge Inc. allegedly owed the appellants; and

3.

in awarding costs on a substantial indemnity basis.

ANALYSIS

(1)

The Late Application for Partial Summary Judgment

[11]

In March 2018, at a pre-trial conference,
    Firestone J. set February 20, 2020 as the commencement date for the ten-week
    trial and established a timetable for the exchange of expert reports.

[12]

At that conference, Enbridge Inc. did not advise
    the court or the appellants that it intended to seek partial summary judgment. It
    did not do so until August 2019, nearly a year and a half later, and six
    months before the scheduled start of trial. The appellants objected to the
    motion being brought so close to the trial date.

[13]

Nevertheless, the trial dates were vacated over
    the appellants objections, and the motion for partial summary judgment was scheduled
    for January 10, 2020. When the motion judge sitting on January 10 was unable to
    hear the matter, the summary judgment motion was adjourned to March 13, 2020, almost
    a month after the trial had been scheduled to begin. The summary judgment
    motion was ultimately heard in writing.

[14]

The motion should not have been permitted to
    proceed. I draw attention to the Consolidated Practice Direction for Civil
    Actions, Applications, Motions and Procedural Matters in the Toronto Region, (July
    1, 2015), s. 69, in force at the time, which provided that [o]nce trial dates
    are set, there will be no adjournments of the trial except in extenuating and
    exceptional circumstances. There were no extenuating or exceptional
    circumstances present here. When the motion was brought, Enbridge Inc. was in
    the same circumstance and possessed the same knowledge as at the time of the
    March 2018 pre-trial conference before Firestone J. The purpose of the Practice
    Direction, in this respect, is precisely to avoid this sort of last-minute
    manoeuvring to the prejudice of other parties. In the result, the motion for
    partial summary judgment added unnecessary delay, expense, and the squandering
    of available court time:
Butera v. Chown, Cairns LLP,
2017 ONCA 783,
    137 O.R. (3d) 561, at paras. 30-31, 34;
Service Mold + Aerospace Inc. v.
    Khalaf
, 2019 ONCA 369, 146 O.R. (3d) 135, at paras. 14, 23.

[15]

Although this would be a sufficient basis to
    allow the appeal, restore the action, and list it for trial, I also agree that
    the motion judge erred in finding there was no genuine issue requiring a trial.

(2)

Genuine Issue for Trial

[16]

The motion judges decision to grant summary
    judgment in favour of Enbridge Inc. was based on four findings: (1) Enbridge
    Gas Inc. was the entity that owned, operated, and maintained the natural gas
    services to the appellants building; (2) Enbridge Inc. played no operational
    role in either the provision of natural gas to the appellants or the
    maintenance of the equipment serving the appellants; (3) Enbridge Inc. had no
    supervisory role over the operations of Enbridge Gas Inc.; and (4) there were
    no facts providing a basis to lift the corporate veil to impose liability on
    Enbridge Inc. for the obligations of its subsidiary, Enbridge Gas Inc.

[17]

The appellants argue that the motion judge misapprehended
    the basis on which they alleged Enbridge Inc. was liable for the damage caused
    by the individual technicians. They did not argue that the corporate veil
    should be lifted, so as to make Enbridge Inc. liable for the negligence of its subsidiary,
    Enbridge Gas Inc., and its subsidiarys contractors. Their argument, instead,
    was that Enbridge Inc. breached a direct duty it owed to the appellants, by,
inter
    alia
, failing to ensure that all staff and contractors complied with all
    applicable gas fitting legislation, statutes, regulations, by-laws and other
    applicable industry accepted standards.

[18]

The appellants theory of liability, which it
    advanced on the motion, was that Enbridge Inc. had publicly stated, through
    policies of corporate social responsibility and other statements, that it would
    supervise the operations of the companies within its corporate empire  and
    their contractors  for compliance with the policies that Enbridge Inc. adopted.
    The appellants argue that these public statements established a duty of care to
    the appellants. The motion judge did not address the allegation that Enbridge
    Inc. had an obligation to ensure that its contractors complied with applicable
    law.

[19]

The appellants rely on recent case law from the U.K.
    Supreme Court and the Court of Appeal of England and Wales. Both courts have
    held that a parent corporation can be liable to third parties for its actions or
    omissions in controlling or otherwise influencing the actions of a subsidiary,
    based on ordinary principles of tort law:
Vedanta Resources PLC v. Lungowe
,
    [2019] UKSC 20, [2019] 2 W.L.R. 1051;
AAA v. Unilever PLC
, [2018] EWCA
    Civ. 1532.

[20]

The motion judge briefly analyzed whether there
    was sufficient evidence to raise a triable issue as to whether Enbridge Inc.s degree
    of control over Enbridge Gas Inc. could create a duty of care. It consists
    largely of three statements: (1) that Enbridge Inc. is a separate corporate
    entity; (2) that Enbridge Inc. did not have any day to day operational control
    of either the engineering or operations of [Enbridge Gas Inc.]; and (3) that Enbridge
    Inc. had no control over the operation of [Enbridge Gas Inc.] including
    control over supervision, training, quality control, field work, hiring of
    contractors, installation of meters, repair of meters, meter work and other
    issues in the lawsuit.

[21]

The conclusory nature of the analysis makes it
    difficult to accept that the motion judge directed her mind to the issue raised:
    whether there was sufficient evidence to raise a triable issue that Enbridge
    Inc. sufficiently intervened in the management of Enbridge Gas to have incurred
    a common law duty of care to the appellants. The evidence adduced by the
    appellants on the motion included Enbridge Inc.s following public statements
    and policies:

1.

Enbridge Inc. owns and operates Canadas
    largest natural gas distribution company and provides distribution services in
    Ontario;

2.

Gas distribution is one of Enbridge Inc.s five
    business segments, and that the core of Enbridge Inc.s natural gas
    distribution business is Enbridge Gas Inc.;

3.

Enbridge Inc. proactively addresses safety and
    environmental issues by ensuring appropriate mechanisms are in place to monitor
    the safety and environmental aspects of its operations;

4.

Enbridge Inc. provides treasury and other
    management services to Enbridge Gas Distribution Inc. (as Enbridge Gas Inc.
    then was);

5.

Enbridge Inc. adopted a Revised Statement of
    Business Conduct applicable to the Enbridge Group of Companies, their
    Directors, Officers, Employees, Consultants and Contractors;

6.

Enbridge Inc. pledged in its Revised Statement
    on Business Conduct to conduct its business in accordance with the letter and
    spirt of all applicable laws of the countries in which it operates; establish
    and maintain safe working conditions; and require all employees and
    contractors to be aware of and comply with Enbridges applicable health,
    safety and environmental policies.

7.

In its 2015 Annual Information Form, Enbridge Inc.
    made commitments to Corporate Social Responsibility, which it defined as conducting
    business in an ethical and responsible manner, protecting the environment and
    the safety of people.

[22]

Enbridge Inc. argues that, unlike in
Vedanta
,
    there is no evidence that it exercised any control or assumed any duty with
    respect to supervising its subsidiaries. Enbridge Inc. explains that these
    policies, which the appellants argue are evidence of it having assumed a duty
    of care, are merely general, aspirational policies that each subsidiary was required
    to draw on in enacting its own, more detailed policies.

[23]

In my view, whether the policies are evidence of
    Enbridge Inc.s control over Enbridge Gas Inc., and whether the policies can
    generate legal obligations to the appellants, is a novel question of proximity.
    The motion judge did not engage with it. The appellants adduced sufficient
    evidence on the motion to raise a triable issue as to whether Enbridge Inc. had
    undertaken an obligation to the customers of its subsidiaries to set standards
    for its subsidiaries and enforce them. The action against Enbridge Inc. should
    proceed to trial.

DISPOSITION

[24]

The appeal is allowed, the order of partial
    summary judgment and the award of costs are set aside, and the matter is to be set
    down for trial on an expedited basis. The appellants are awarded costs of the
    appeal in the agreed sum of $25,000, inclusive of HST and disbursements.

Released: May 31, 2021 P. L.

B.W.
    Miller J.A.

I
    agree. P. Lauwers J.A.

I
    agree. I.V.B. Nordheimer J.A.


