Construction Law

Three consolidated applications concerning the duty of various insurers to defend Ontario in connection with a bridge collapse in Elgin County in 2018.

Ontario sought orders requiring Aviva Insurance Company of Canada and Royal & Sun Alliance Insurance Company of Canada to defend two related lawsuits and to share defence costs equally.

The insurers argued they had no duty to defend or, alternatively, that defence costs should be allocated on a "time on risk" basis.

The court found that Aviva and RSA owed a duty to defend based on the allegations of property damage to anchor rods occurring during their respective policy periods, despite the loss of use occurring after the policies expired.

The court rejected the "all sums" approach and adopted a "time on risk" allocation, requiring Aviva to pay 5.5% and RSA to pay 11.1% of defence costs.

The secondary applications by Aviva and RSA against AIG and St. Paul were dismissed as moot.

A construction lien dispute arising from the termination of a mechanical subcontract.

The plaintiff, a mechanical contractor, claimed a lien for unpaid work and damages for wrongful termination.

The defendant, the construction manager, terminated the subcontract citing multiple defaults including failure to provide adequate manpower, delays in completing critical work, and failure to correct deficiencies.

The court found the defendant properly exercised its contractual right to terminate based on the plaintiff's failure to properly and diligently perform the work, but awarded the plaintiff the net unpaid balance of the subcontract after deducting the defendant's completion costs and other back-charges.

The court denied the defendant’s motion to adjourn a peremptory trial week in a Construction Act lien action, finding insufficient medical evidence to support the principal’s inability to participate.

The decision reviews the discretionary nature of adjournment requests, the need for transparency and timely disclosure, and the importance of summary proceedings in lien actions.

The court found no compelling grounds for adjournment and highlighted the risk of prejudice and delay to the plaintiff and the administration of justice.

The plaintiff, The Guarantee Company of North America, sought an extension of time to serve a statement of claim or to validate service in a construction indemnity action.

The court reviewed the lengthy delay in service, the explanations provided, and the resulting prejudice to the defendants.

The motion was dismissed, with the court finding the plaintiff failed to provide a reasonable explanation for the delay and that the defendants would be prejudiced in their ability to defend the action due to lost records and faded memories.

The court considered a claim for lien and breach of contract by Zagros Homes Development Inc. against the owners and construction manager/general contractor of a residential construction project.

The court found that Zagros had a valid subcontract with Cando 1 Construction Inc., that Cando breached the contract by terminating it and hiring the sub-subcontractor directly, and that Zagros was entitled to damages for unpaid work.

However, the court found that Zagros failed to prove the timeliness of its lien claim, and thus the lien was declared expired and vacated.

The creditor brought a motion for an order compelling the garnishee to pay the outstanding judgment amount, arguing strict liability under Rule 60.08(17) due to the garnishee's failure to file a garnishee's statement and make full payment.

The garnishee contended that Rule 60.08(17) remained discretionary and asserted a right to set-off against the debtors due to alleged overpayment on another project and the debtors' insolvency.

The court found Rule 60.08(17) to be discretionary, ordered the immediate payment of a portion of the holdback funds ($35,006), and suspended the payment of the remaining judgment balance ($131,949) pending a determination in a related construction lien proceeding.

This endorsement addresses a motion by TruGrp Inc. to set aside a prior vacating order, specifically concerning the interpretation of the Accountant of the Superior Court of Justice's role as custodian of lien security and the substitution of a letter of credit with a bank draft.

The court had previously directed that the Accountant and the Bank of Montreal (BMO) be served to provide their positions.

Both the Accountant and BMO confirmed that a bank draft could be accepted under specific conditions outlined in the letter of credit or with a further court order for substitution.

TruGrp's concerns regarding lien security extinguishment were addressed by these positions, leading to the effective withdrawal of the motion on its merits, with only costs remaining in dispute.

This motion in a construction action concerned Koler Construction Inc.'s request for Falcon Forming Inc. to provide further particulars and supporting documentation for alleged additional costs and delays, specifically related to items in Falcon's Scott Schedule.

Koler argued that Falcon's position on the contract (labour vs. scope of work) had shifted and that previous disclosures were insufficient.

Falcon contended that its Scott Schedule adequately particularized the claim and that discoveries were complete.

The court found that Falcon's Scott Schedule did not provide full answers to the questions asked, especially given the shifting positions and the fact that the Scott Schedule was particularized after discoveries.

The court ordered Falcon to provide the requested particulars and supporting documents for the delay claims.

The appellant, MGW-Homes Design Inc., appealed an order vacating a writ of enforcement related to an adjudicator's determination under the Construction Act.

The primary issue was whether the Court of Appeal had jurisdiction to hear the appeal, which depended on whether the order constituted a "judgment" under s. 71(1) of the Construction Act, in which case the appeal would lie to the Divisional Court.

The Court of Appeal, interpreting "judgment" broadly consistent with prior case law and the Act's purpose of efficiency, found that the order was a "judgment" under s. 71(1).

Consequently, the appeal was dismissed for lack of jurisdiction, as it properly belonged in the Divisional Court.

Coronation Medical Plaza Inc. brought a motion under s. 47 of the Construction Act to discharge a construction lien registered by Built By Engineers Construction Inc., arguing the lien was not registered in time.

The court determined that the former Construction Lien Act applied as the contract was entered into before July 1, 2018.

The court found that there were significant factual disputes, particularly regarding whether certain work was removed from the contract scope, the reason for delayed invoicing, and whether later work related to defects or separate contracts.

The court declined to exercise enhanced fact-finding powers under Rule 20, as these are not available on a s. 47 motion, and found that the disputed issues required credibility assessments best made at trial.

Consequently, the motion to discharge the lien was dismissed due to the existence of triable issues regarding the lien's timeliness.

The Gilmans moved to dismiss a construction lien action and a civil counterclaim brought by 2675076 Ontario Inc. and Cesare Fazari, citing persistent non-compliance with court orders and undertakings regarding documentation of alleged outstanding construction costs.

The court found that 2675076 Ontario Inc. failed to diligently advance the construction lien action as required by the Construction Act.

Consequently, the construction lien was vacated, and the Construction Lien Action was dismissed.

While acknowledging the persistent non-compliance, the court, applying Rule 60.12, granted 2675076 Ontario Inc. and Mr. Fazari one final 30-day opportunity to fulfill outstanding undertakings for the Civil Counterclaim, failing which it would also be dismissed.

Benoit Construction Inc. (Benoit) sought damages for breach of contract against Hard at Work Inc. (HAW) concerning framing work and equipment rental for a luxury residential home.

HAW counterclaimed for alleged deficiencies and costs to complete.

The court found that a verbal agreement existed for HAW to reimburse Benoit for telehandler rental fees.

The court determined that HAW's termination of the contract was unjustified, as their allegations of shoddy workmanship and deficiencies were not proven, and Benoit was denied the opportunity to correct any issues.

HAW's counterclaim for costs to correct and complete was dismissed.

Benoit was awarded outstanding invoice amounts and damages for breach of contract.

The appellant, Black & McDonald Limited, appealed two orders staying their proceedings in Ontario in favour of British Columbia as the more convenient forum.

The first action was against Eiffage Innovative Canada Inc. and individuals for breach of contract and breach of trust related to a construction subcontract.

The second was against Liberty Mutual Insurance Company under a payment bond.

The Court of Appeal found that the motion judge erred in interpreting an "exclusive jurisdiction" clause in the prime contract as applicable to the subcontract, and that the forum non conveniens factors did not clearly favour British Columbia, thus the high standard to displace the plaintiff's chosen jurisdiction was not met for the Eiffage action.

For the Liberty Mutual action, the Court found the forum selection clause in the payment bond ambiguous and resolved it against Liberty Mutual, also noting the public policy against multiple proceedings risking inconsistent findings.

The appeals were allowed, and the actions were permitted to proceed in Ontario.

This decision addresses costs following a 17-day trial involving two consolidated actions: a construction lien action and a debt recovery action.

The court awarded costs to Kalogon Spar Ltd. and Dino Coliviras, fixing the amount at $190,000 inclusive of disbursements and HST, payable from a standby letter of credit.

The court declined to apply Rule 49 cost consequences due to insufficient evidence from Kalogon regarding costs incurred at the time of settlement offers.

The court considered various factors, including the parties' conduct, the complexity of the proceedings, and the proportionality of the award, noting that both parties displayed inflexibility and Kalogon's principal failed to keep proper records, which significantly increased litigation costs.

The plaintiff, Caruk-Hall Construction Inc. (CH), moved to stay its action and the defendants' counterclaim pending a Tarion regulatory proceeding, or alternatively, to stay or strike paragraphs related to CH's alleged failure to enroll the project under the Ontario New Home Warranties Plan Act (ONHWPA).

The defendants opposed.

The court found a substantial overlap of issues regarding CH's "builder" status and ONHWPA enrollment between the civil action and the Tarion proceeding.

While acknowledging the penal nature of the Tarion charges and potential self-incrimination for CH's principals, the court determined that existing protections (implied undertaking rule, sealing orders) were sufficient.

The court rejected a full stay, noting the Construction Act's mandate for summary lien actions and the lack of evidence for double recovery.

Ultimately, the court granted a limited stay of only the "Overlapping Paragraphs" in the defendants' pleading that directly concerned CH's builder status and ONHWPA enrollment, finding the OCJ to be the more appropriate forum for these specific issues.

Powerline Plus Ltd. brought a motion for an order requiring Platinum Infrastructure Inc. to post security for Powerline's costs in the amount of $202,000.

Platinum opposed, arguing impecuniosity and merit.

The court granted leave for the motion under the Construction Act, finding Powerline established good reason to believe Platinum had insufficient assets, citing indicia of insolvency.

Platinum failed to prove impecuniosity or sufficient assets.

While Platinum showed a good chance of proving Powerline breached the subcontract, its claim quantum was inconsistent, and Powerline's set-off defence had some merit, though lacking cost evidence.

Considering Platinum's litigation conduct, which included unfair practices, the court ordered Platinum to post $100,000 in security for costs, payable in two installments.

The plaintiff, Jennifer Faber, sued First View Properties Inc. for breach of contract regarding defective brickwork on a new home.

The parties had previously reached a settlement under the Tarion New Home Warranty Program, which failed to materialize after the plaintiff served a Statement of Claim that had been issued but not disclosed during settlement negotiations.

The court found the plaintiff acted dishonestly by not disclosing the lawsuit.

While some minor deficiencies in the brickwork were acknowledged by the defendant's expert, the court rejected the plaintiff's claim for full rebricking and general damages, finding no evidence of significant inconvenience or diminution in property value.

The court awarded the plaintiff $4,000 for minor repairs, significantly less than the $100,000 sought.

The plaintiff contractor, RPC Construction Ltd., claimed a construction lien and damages for breach of contract against the defendant owners, Zhiyi Zhou and Li Na Wu, for renovation work on their property.

The defendants denied the claim and counterclaimed for set-off and damages.

The court found that the defendants improperly terminated the contract, entitling RPC to the remainder of the contract price and unpaid extras.

The court dismissed the defendants' counterclaim, largely due to issues of credibility, lack of corroboration, and the doctrine preventing owners from back-charging for deficiencies when they wrongfully terminate a contract and deprive the contractor of the opportunity to correct them.

This decision addresses two motions brought by Trisura Guarantee Insurance Company in the context of construction lien proceedings.

The first motion sought to set aside a charging order obtained by BPR Litigation Lawyers against a construction lien bond without notice to Trisura.

The second motion sought leave to pursue exoneration and payment out of the bond.

The court found that Trisura did not require leave to challenge the charging order, had standing due to its direct proprietary and economic interests under an Indemnity Agreement, and consequently, the charging order was set aside for lack of notice.

However, the court denied Trisura leave to bring its motion for exoneration within the construction lien actions, determining that such a claim, based on a separate Indemnity Agreement, did not expedite the resolution of the lien issues and was already the subject of a separate action in Toronto, posing a risk of inconsistent findings.

The plaintiff, Muskoka Minerals & Mining Inc., supplied sand for indoor volleyball courts and was not paid in full.

It registered a lien and sued the property owner, Gorge Holdings Inc., and the operators.

The court found Gorge Holdings Inc. contractually liable because its employee signed the supply agreement as a purchaser, actively supporting the venture.

Gorge Holdings Inc. was also deemed a "statutory owner" under the Construction Lien Act due to its interest in the premises, request for improvement, and consent/credit provided.

Judgment was granted against Gorge Holdings Inc. for the outstanding amount plus interest, and the lien was upheld.