Construction Law

The moving defendant sought to set aside a default judgment, noting in default, and substantial indemnity costs order granted after he failed to attend discoveries and the motion for judgment.

The court applied the Rule 19.08 test considering promptness, explanation for default, and the existence of an arguable defence.

The defendant learned of the judgment only upon service of an examination in aid of execution and moved promptly thereafter, with delay largely attributable to difficulty obtaining the court file.

The court found a plausible explanation for the default and an arguable defence concerning alleged unpaid construction invoices and the contractual requirement for written authorization of extras.

The court also held that the plaintiff’s failure to disclose a prior $60,000 settlement with a co‑defendant—representing most of the total claim—was a significant non‑disclosure that independently justified setting aside the judgment.

A contractor sought payment for remedial road repairs following settlement of municipal sewer trench backfill completed under contract with a municipality.

The contractor alleged the work was extra to the contract and alternatively claimed compensation on a quantum meruit or unjust enrichment basis, asserting that native soil specified for backfill was too wet to compact properly.

The municipality maintained that settlement resulted from insufficient compaction at the lower levels of the trench and that the contractor was contractually responsible for remediation at no additional cost.

The court accepted expert evidence that settlement was caused by poorly compacted backfill and found the contractor failed to prove unsuitable soil or any oral agreement for additional compensation.

The court held the remedial work was required due to deficiencies in the contractor’s work.

The moving parties sought an order requiring the responding party to post $35,000 as security for costs in a construction lien proceeding.

The court found that the threshold for a security for costs order under Rule 56.01 was met because a previous costs award remained unpaid and there was reason to believe the responding party lacked sufficient Ontario assets to satisfy future costs.

The responding party failed to demonstrate impecuniosity with detailed financial disclosure or that the action would be halted if security were ordered.

The court held that hardship alone was insufficient and that robust evidence of inability to raise funds was required.

Security for costs was ordered in the amount sought.

The applicant sought declarations regarding the interpretation and enforcement of settlement Minutes and a third mortgage registered following a construction lien dispute in a residential townhouse development.

The respondent refused to provide partial mortgage discharges required to permit closings of individual unit sales, arguing the settlement lacked consideration, that defaults under a prior mortgage rendered its mortgage in default, and that the applicant breached standard charge terms.

The court rejected these defences, holding that valid consideration existed and that the mortgage and Minutes clearly required the respondent to provide partial discharges to facilitate sales.

The court granted declarations confirming the applicant’s right to register partial discharges and enjoined the respondent from withholding authorization for those discharges.

A request for a reference to determine damages was dismissed as premature.

The defendants brought a motion for summary judgment dismissing a construction defect claim on the basis that it was barred by the two-year limitation period under the Limitations Act, 2002.

The action concerned alleged deficiencies in the installation of exterior stone veneer, which caused persistent efflorescence and latent moisture problems.

The court considered the discoverability principle and whether the plaintiffs knew or ought to have known of the material facts giving rise to the claim.

It held that the plaintiffs reasonably relied on earlier assurances from the contractor and manufacturer that the efflorescence was normal and did not discover the latent defect until a manufacturer’s representative suggested installation deficiencies in August 2010, followed by expert reports.

As the statement of claim was issued within two years of that discovery, the limitation period had not expired and the motion for summary judgment was dismissed.

Following reasons disposing of a motion in a construction lien action, the court was required to quantify the costs payable by the unsuccessful lien claimant.

The moving parties sought partial indemnity costs after succeeding on a motion involving issues including whether the lien should be discharged under s. 47 of the Construction Lien Act.

Applying s. 86(1) of the Act and the factors in Rule 57.01 of the Rules of Civil Procedure, the court assessed the reasonableness of the claimed fees, disbursements, and settlement offer.

The court fixed costs at a reduced amount and declined to order personal liability for costs against individuals associated with the plaintiff corporation because the evidentiary record was insufficient at this stage to meet the legal test for non‑party costs.

Engineering consultants brought a motion under Rule 21.01(3)(d) of the Rules of Civil Procedure to dismiss a third party claim for contribution and indemnity arising from alleged design deficiencies in a warehouse concrete slab.

The moving parties argued that the contractor’s covenant in the main construction contract to obtain wrap‑up liability insurance barred any claim against them and that they could rely on a principled exception to the doctrine of privity to benefit from that covenant.

The court held it was not plain and obvious that the alleged losses would have been covered by the contemplated insurance or that the contract intended to extend such benefits to the engineers.

The pleadings disclosed a potential claim for contribution and indemnity relating to defective design and workmanship.

The motion to dismiss the third party claim as frivolous, vexatious, or an abuse of process was therefore dismissed.

The plaintiff contractor sought payment for flood remediation services and storage charges and asserted a construction lien against the defendant homeowner’s property.

The court held the lien was not preserved within the statutory time limits under the Construction Lien Act and therefore failed.

Because the parties had not agreed to rates for labour, equipment, or other services, the plaintiff could only recover the fair market value of services on a quantum meruit basis.

The court rejected many claimed charges due to lack of proof of fair value or deficient work by subcontractors, and also dismissed the claim for storage charges where storage had originally been agreed to without cost and later unilaterally altered by the plaintiff.

Judgment was granted only for limited plumbing and labour charges totaling $12,797.80, while the defendant’s counterclaim was dismissed for lack of evidence.

The plaintiffs brought a motion for leave to amend their statement of claim in a long‑standing breach of contract action relating to highway reconstruction and alleged misrepresentation of available rock quantities.

The defendant Crown opposed a proposed amendment referring to numerous similar contractor claims against the Ministry, arguing the amendment was irrelevant and would trigger extensive documentary production and prejudice.

The court held that evidence of similar claims existing at the time the contract was executed could be relevant to whether the Ministry knew or ought to have known its representations were inaccurate.

However, claims made after execution of the contract were not relevant.

Leave to amend was granted with the limitation that references to post‑contract claims be removed.

The fourth party brought a motion seeking particulars of allegations made against it in a fourth party claim and an extension of time to deliver a defence.

The court reviewed the purposes of pleadings and particulars under the Rules of Civil Procedure, emphasizing that particulars are ordered only where necessary to permit the responding party to plead intelligently and where the information is not already within that party’s knowledge.

In the context of a multi‑party construction dispute involving third and fourth party claims, the court held that it would be unreasonable to require a third party to particularize allegations more fully than the pleadings already advanced against it.

Limited particulars were ordered regarding which specifications were allegedly breached and who should have been notified of alleged problems.

The moving party also received an extension of time to deliver its defence.

A homebuilder sought summary judgment enforcing minutes of settlement resolving a dispute over construction deficiencies and a $200,000 holdback on a luxury home contract.

The homeowners argued the settlement was unenforceable due to absence of executed releases, alleged duress, nondisclosure of a thermal imaging report identifying further deficiencies, and incomplete performance of settlement obligations.

The court held that settlement agreements are contracts requiring mutual intention and agreement on essential terms, and found the signed minutes constituted a complete and binding agreement.

The failure to exchange releases did not amount to repudiation because the obligation was mutual and both parties continued acting in accordance with the settlement.

Allegations of duress and nondisclosure were rejected on the evidence.

Summary judgment enforcing the settlement was granted.

A contractor commenced a construction lien action seeking payment of the outstanding balance under a contract to convert a crawlspace into an unfinished basement.

The homeowners defended and counterclaimed alleging delay, abandonment, and negligent work causing structural damage to the property.

The trial was bifurcated to determine liability for the shifting of foundation underpinning and basement walls after excavation and backfilling.

The court found the contractor failed to properly monitor the site, arrange required inspections, and manage construction delays in a project where time was of the essence, which contributed significantly to soil instability and structural movement.

Although the homeowners contributed by failing to promptly report flooding and by refusing to authorize an engineering report, the contractor bore the majority of responsibility.

The defendants moved to set aside an ex parte order extending the time for service of a statement of claim in a construction lien action under the Construction Lien Act.

The court held that the plaintiff failed to provide full and frank disclosure of material facts when seeking the extension, particularly regarding communications with prior counsel and the circumstances surrounding the delay in service.

Applying the principles governing ex parte motions, the court concluded the omitted facts might have influenced the original decision to grant the extension.

The court set aside the extension order, invalidated service of the statement of claim, struck the action, and vacated the registered construction lien and certificate of action.

Conditional directions regarding security for costs and leave to amend the statement of defence were also addressed.

A cabinetry contractor brought an action to enforce a construction lien arising from work performed on a custom residential home.

The dispute concerned the contract price, entitlement to extras, whether a $25,000 payment constituted a deposit on the project, whether the lien was preserved in time, and priority between the lien claimant and a building mortgagee.

The court found that the contractor had established a valid contract and entitlement to certain extras, resulting in a total contract price of $59,157 including GST.

The court further held that the $25,000 cheque was a deposit for the project and that the lien was preserved within the statutory period under the Construction Lien Act because substantive work was completed in January 2010.

Applying the statutory priority provisions, the court concluded that the lien claimant had priority over the mortgagee to the extent of the holdback deficiency and a mortgage advance made after the first lien arose.

The parties brought competing summary judgment motions in a construction lien action involving a modest claim and counterclaim arising from a residential contract.

The motions were opposed as premature due to credibility issues and the early stage of the proceedings.

The court emphasized the limits on a master’s powers to weigh evidence under Rule 20 and the proportionality principles under Rule 1.04 and the Construction Lien Act.

Concluding that summary judgment would likely delay resolution, the court endorsed a consent judgment of reference and directed that the matter proceed by way of a short summary trial before a case management master.

Following a trial under the Construction Lien Act involving a commercial renovation contract dispute, the court had awarded judgment to the plaintiff contractor for the net unpaid contract balance after accounting for deficiencies.

The present decision addressed the issue of costs.

The court rejected the defendants’ submission that success was divided and held the plaintiff was the successful party because it obtained a monetary judgment.

Costs were awarded on a partial indemnity basis, but the court reduced the claimed counsel fees and expert disbursements to ensure proportionality with the modest amount in dispute and the relatively low to moderate complexity of the case.

Following settlement of the main action concerning a defective retaining wall, the defendants sought indemnity from a third‑party contractor for costs they were required to pay the plaintiffs.

The court had previously found the contractor liable for defective construction and awarded damages and substantial indemnity costs to the defendants in the third‑party trial.

The remaining issue was what portion of the plaintiffs’ settlement costs should be borne by the contractor under the contractual indemnity clause.

The court held that although the defendants failed to mitigate some damages and not all claims were attributable to the contractor, the contractor’s refusal to accept responsibility and failure to meaningfully participate in settlement significantly increased litigation costs.

Balancing those factors, the contractor was ordered to reimburse 75% of the plaintiffs’ costs paid by the defendants.

Following the settlement of a motion seeking to determine and fix the owner’s statutory holdback under the Construction Lien Act, the court was required to determine the appropriate costs award.

The moving subcontractor argued that the owner delayed addressing the holdback issue, necessitating the motion and increasing litigation costs, and sought enhanced partial indemnity costs.

The responding party argued the motion was over-lawyered and that only minimal costs should be awarded.

The court held that the motion produced a successful result by compelling the owner to fund an interim holdback available for distribution to subcontractors, entitling the moving party to costs.

However, no exceptional circumstances justified enhanced costs, and a fair and proportionate partial indemnity award was fixed.

Costs decision following motions for security for costs in two construction lien actions.

The responding parties sought partial indemnity costs totaling over $12,000 for the motions, while the moving parties argued that costs should not exceed $5,000 and should be payable in the cause or deferred pending resolution of undertakings issues.

The court held that the usual rule that costs follow the event applied and that the security for costs motions were discrete from the undertakings issues.

Applying Rule 57.01, the court found the time claimed for preparation excessive and reduced the requested amounts.

Partial indemnity costs of $5,000 and $3,500 respectively were awarded, inclusive of disbursements and HST.

The moving party contractor sought partial summary judgment declaring that funds held by the owner constituted trust monies under the Construction Lien Act and requested immediate payment.

The owner acknowledged the funds were subject to a statutory trust but asserted a right of set-off for alleged delay and deficiency damages under the contract.

The court examined the interaction between the trust provisions and the statutory holdback regime, holding that once lien rights of subcontractors have expired, funds may cease to be characterized as holdback and the owner may assert set-off rights against trust funds.

Because the validity and quantum of the set-off claim and the lien claim remained disputed, these issues constituted triable issues.

Partial summary judgment and immediate payment were therefore inappropriate.