Frederick J. Matthews

Following a construction lien trial in which the lien claim was declared expired but the plaintiff obtained a modest breach of contract judgment, the court determined issues of prejudgment interest and costs.

The court held that a contractual rate of 2% per month triggered s. 4 of the Interest Act, limiting recoverable interest to 5% per annum because the rate was expressed for a period shorter than a year.

On costs, the court considered Rule 49 settlement offers, proportionality, and the Construction Lien Act provisions governing cost awards.

Although the defendant succeeded on major issues at trial, the plaintiff had limited success and the settlement offers materially affected the analysis.

Weighing all factors, the court awarded the plaintiff partial indemnity costs of $2,000.

A subcontractor sought payment under the Construction Lien Act for drilling and installing underground pipe and claimed extras relating to replacement of damaged pipe and investigation work.

The defendant contractor asserted a set-off, alleging the subcontractor negligently caused pipe damage during installation by continuing to pull the pipe despite encountering an obstruction.

The court held that the damage was reasonably foreseeable and that the subcontractor breached the subcontract by continuing the pull instead of investigating the obstruction.

The contractor did not waive its right of set-off by signing a repair extra, as the contract language did not clearly abrogate common law set-off rights.

After applying deductions and set-offs, the court found a reduced amount payable to the subcontractor and declared the construction lien expired because repair work does not extend lien rights.