Construction Law

A construction crane collapsed onto a partially completed retirement residence, causing significant property damage covered by the owner’s “all risks” construction insurance policy.

The owner’s insurer commenced a subrogated action and co‑defendants sought contribution and indemnity from the contractor and crane supplier.

The moving parties sought summary judgment dismissing the crossclaims, arguing that the construction contract contained an insurance covenant allocating the risk of property loss to the owner’s project insurance and benefiting contractors and subcontractors.

The court held that the covenant barred claims against those parties and prevented contribution claims under the Negligence Act.

The court further held that the insurer’s waiver of subrogation and the doctrine recognizing insurable interests of trades on construction projects also barred the claims.

All crossclaims against the moving parties were dismissed.

A third party brought a summary judgment motion seeking dismissal of a third party claim brought by a defendant in a construction-related subrogated action following flood damage to a property.

The defendant relied on contractual indemnity provisions to shift liability to the third party.

The court held that the anti-subrogation rule did not bar the third party claim because the defendant was not an insured under the builder’s risk policy.

However, the contractual provisions relied upon did not clearly indemnify the defendant for its own negligence, which must be expressed in the clearest terms.

The third party claim was therefore dismissed on summary judgment.

A contractor commenced a construction lien action after supplying refrigeration equipment to a tenant operating on leased premises.

The landlord sought summary judgment dismissing the lien claim and related claims, arguing it was not an “owner” under the Construction Lien Act and that the claims in contract, unjust enrichment, and quantum meruit were improperly advanced.

The court granted partial summary judgment dismissing the contract claim against the landlord and rejecting a request to pierce the corporate veil, and struck the unjust enrichment and quantum meruit claims as improperly joined under s. 55 of the Construction Lien Act.

However, the court held that factual issues remained regarding whether the landlord qualified as a statutory “owner” and whether the lien was timely preserved.

The action was therefore referred to a master for determination of the remaining construction lien issues.

In a construction lien reference involving multiple solar farm projects, the defendant brought a motion for security for costs against the plaintiff contractor.

The plaintiff corporation had ceased operations and possessed no assets other than potential recoveries from ongoing litigation, making any future costs judgment likely unenforceable.

The court held that the threshold under Rule 56.01(d) of the Rules of Civil Procedure was met and that the plaintiff failed to demonstrate that ordering security would be unjust.

Arguments relating to delay, counterclaims, and alleged defendant-caused impecuniosity were rejected or given limited weight.

Exercising its discretion and balancing proportionality concerns, the court ordered the plaintiff to post security for costs in the amount of $225,000.

Following a motion for partial summary judgment concerning withheld payments, delay claims, and back-charge claims in a construction dispute, the parties made written submissions regarding costs.

The plaintiff had succeeded only on the delay claim portion of the motion while the remainder of the issues were directed to trial.

The court considered the cost principles under s. 131 of the Courts of Justice Act and Rule 57.01 of the Rules of Civil Procedure, including the parties’ divided success and the effect of settlement offers.

The court found that neither party had achieved sufficient success to justify a costs award and that the offers to settle did not trigger Rule 49 consequences.

Two subcontractors registered construction liens for unpaid work on a residential construction project.

The court considered whether the liens were preserved within the 45‑day statutory period under the Construction Lien Act based on the date of last supply of services or materials.

After reviewing the evidence, the court found that neither subcontractor proved that qualifying work occurred within the preservation period, and both liens had therefore expired.

The subcontractors also advanced alternative claims for restitutionary quantum meruit against the owners.

The court rejected those claims, holding that unjust enrichment remedies against owners would undermine the statutory construction lien regime where contractual relationships and lien remedies already governed the parties’ rights.

The plaintiff contractor brought a motion to amend its statement of claim to add the spouse of the defendant corporate officer as a defendant for breach of the trust provisions of the Construction Lien Act.

The claim arose from unpaid invoices for drilling and blasting services performed on multiple solar energy projects, with the plaintiff alleging that trust funds received by the contractor were diverted.

The court considered whether the claim against the proposed defendant was statute‑barred and whether leave should be granted under the Rules of Civil Procedure to add a party.

The court held that the limitation period for the trust claim began when the trust monies were received, not when the plaintiff last performed work.

Because the motion to add the new defendant was brought within two years of discovering the payment of trust funds, and any prejudice could be remedied by costs, leave to amend was granted.

The applicant sought an order appointing a mediator/arbitrator under a construction contract dispute clause arising from a fire that occurred more than a decade after project completion.

The respondent argued that the dispute was properly before the courts, particularly as the applicant had commenced a multi-party action against numerous defendants not bound by the arbitration clause.

The court held that the arbitration provisions were intended to operate during the course of the construction project and that ordering arbitration would create parallel proceedings and potential prejudice to other parties.

Relying on prior authority addressing similar procedural conflicts, the court found that the applicant could not pursue arbitration against one party while simultaneously litigating broader claims in court.

The application was dismissed.

The plaintiff contractor brought an action for damages alleging breach of contract or, alternatively, negligent misrepresentation arising from negotiations to renovate premises for a fitness franchise.

The plaintiff argued that the parties reached a binding agreement through meetings, draft contracts, and text messages indicating work would commence, despite the absence of a signed contract.

The defendant maintained there was never a clear acceptance of the plaintiff’s proposal and that negotiations remained conditional on financing, lease arrangements, and other unresolved terms.

The court held the plaintiff failed to establish a meeting of the minds or acceptance of the offer and found no evidence of misleading representations.

The action and the defendant’s counterclaim were both dismissed.

The plaintiff general contractor brought an action against a roofing contractor and its principals for breach of contract and negligence arising from the installation of a flat roof on a Toronto property.

Expert evidence established that the roof installation failed to comply with manufacturer guidelines and industry standards, lacked a required cover board, and allowed water infiltration into the building.

The defendants alleged that the document signed was merely an estimate and that subsequent leakage resulted from design changes and damage caused by other contractors.

The court found a binding contract existed and accepted expert evidence that the roof was improperly installed and in a failed condition.

Damages were awarded for roof replacement, interim repairs, crane costs, and documented cleanup expenses.

The moving parties sought a stay of five construction lien actions commenced by the construction manager and general contractor, arguing the disputes were subject to contractual arbitration clauses.

The dispute arose from a large construction project involving numerous subcontractors and more than fifty lien claims consolidated into a construction lien reference under the Construction Lien Act.

The court considered whether arbitration should proceed despite the risk of multiplicity of proceedings and the exclusion of subcontractor lien claimants from the arbitral process.

The court held that the moving parties had waived arbitration by first commencing litigation, had delayed unduly before seeking arbitration, and that a stay would cause unfairness and fragmented proceedings.

Exercising discretion under the Arbitration Act, 1991 and the Courts of Justice Act, the court refused the stay so that all disputes could proceed in the single court reference.

The plaintiff contractor brought a motion seeking a preservation order under Rule 45.02 of the Rules of Civil Procedure to secure an alleged constructive trust interest in a residential property that was about to be sold.

The moving party had supplied services and materials for the construction of the property but failed to register a construction lien within the time limits prescribed by the Construction Lien Act.

The plaintiff argued that if the contract were voidable due to non‑registration under the New Home Warranty Program Act, he could assert a constructive trust claim and obtain security through a preservation order.

The court held that the Construction Lien Act governs claims arising from the supply of services or materials to an improvement regardless of whether the claim is framed in contract or constructive trust.

Allowing a preservation order would undermine the statutory lien scheme and permit the plaintiff to circumvent the Act’s deadlines.

The motion was dismissed.

A contractor commenced a $205 million action against a public transit authority arising from a major subway expansion contract.

The authority moved under Rule 21.01(1)(a) for determination of a contractual clause prohibiting litigation until the contractor’s final invoice had been processed, and sought a stay under s. 106 of the Courts of Justice Act.

The court held that interpretation of the clause was a pure question of contractual interpretation suitable for determination on a Rule 21 motion.

The provision was enforceable between sophisticated commercial parties and clearly prohibited commencing an action before the contractual triggering event.

As the triggering event had not yet occurred, the action was stayed pending its occurrence.

Contractors sought indemnity under a builder’s risk insurance policy for costs incurred repairing corroded aluminum window frames during construction of a Toronto building.

The corrosion resulted from exposure to de‑icing chemicals and trapped liquid caused by construction practices.

Insurers relied on policy exclusions for corrosion and faulty workmanship.

The court held the corrosion exclusion did not apply because the corrosion was caused by a peril not otherwise excluded, namely faulty workmanship, which the policy treated as covered resultant damage subject only to deduction of the cost that would have been incurred to rectify the workmanship before the loss occurred.

Coverage therefore applied, but the precise deduction for proper workmanship could not be determined on the record and required further process.

The defendant moved to pay funds into court to discharge a construction lien registered against her property.

She sought to reduce the amount payable into court on the basis that the plaintiff’s lien claim was deficient.

The court held that a reduction under s. 44(2) of the Construction Lien Act requires clear and unequivocal proof that the lien is excessive or improper.

On the motion record, the court was unable to assess the strength of the parties’ cases and found the required evidentiary threshold had not been met.

The motion was therefore dismissed, leaving the defendant free to seek discharge of the lien by paying the required amount into court under the statute.

The owner of a condominium construction project moved to reduce posted security and obtain summary judgment discharging or reducing a contractor’s construction lien claims.

The moving party argued the contractor’s liens should be eliminated or reduced because a subcontractor’s lien action had been dismissed, because contract prices allegedly contained PST eliminated by the introduction of HST, and because the owner paid $40,000 directly to a sub‑subcontractor.

The court held that dismissal of the subcontractor’s lien did not affect the contractor’s lien rights, as lien entitlement is based on the contract price between owner and contractor under the Construction Lien Act and not on the subcontractor’s separate claims.

The court also rejected the alleged PST credit due to insufficient evidence.

The motion succeeded only to the extent that the contractor’s liens and posted security were reduced by $40,000 corresponding to the direct payment to the sub‑subcontractor.

A corporation operating under a registered business name commenced a construction lien action seeking payment of management fees, reimbursable expenses, and loss of profit arising from a residential construction management contract.

The homeowners disputed the lien, arguing they believed they were contracting with individuals rather than the corporation and alleging improper invoicing under the Business Names Act.

The court found the parties clearly understood that the corporation operating as the business name was the contracting construction manager and that any technical deficiency in identifying the corporate name on invoices caused no prejudice.

The court upheld the lien claim, finding the disputed charges fell within the contractual reimbursement and management fee provisions.

The homeowners’ counterclaim and a separate personal action against the corporate principals were dismissed.

A construction lien dispute arose between a masonry contractor and homeowner defendants concerning the pricing method for bricklaying and stone masonry work on a new residential build.

The contractor asserted a pricing structure based on a per‑brick charge for brickwork and a per‑square‑foot charge for stone, while the homeowners argued that all work was priced solely on a per‑square‑foot basis.

The court preferred the contractor’s interpretation of the contract and found the defendants’ calculation incorrect.

The court also held the lien was preserved and perfected within the time limits under the Construction Lien Act because minor finishing work remained when the lien period began running.

Judgment was granted for the contractor for the unpaid balance and the homeowners’ counterclaim and related personal action against the company principal were dismissed.

A systems integration contractor sued an electrical subcontractor for breach of contract on two correctional facility projects involving integrated security systems.

The dispute concerned the scope of work, including responsibility for supplying and installing wiring and terminating field devices.

The court found the subcontractor breached the contracts by refusing to perform required work and drew an adverse inference due to spoliation of electronic evidence and fabricated quotes.

The subcontractor’s counterclaim for unpaid work was dismissed.

The court also held the company’s principal personally liable for breach of the statutory trust under the Construction Lien Act but declined to declare the debt non‑dischargeable in bankruptcy.

A third party engineering consultant brought a motion for summary judgment dismissing a contribution and indemnity claim brought by the defendant in a construction dispute.

The plaintiff contractor alleged extra costs after encountering subsurface conditions different from those described in a geotechnical evaluation prepared by the third party.

The court held that contribution and indemnity under the Negligence Act requires that the third party be directly liable to the plaintiff.

Given the plaintiff’s admissions that it did not challenge the third party’s bore hole testing or interpretation and had no information about offshore subsurface conditions, no cause of action existed against the third party.

The third party claim and the related fourth party claim were dismissed.