Jeremy K. Sacks

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.

The appellant appealed a summary judgment decision and the associated award of substantial indemnity costs.

The Court of Appeal upheld the summary judgment, finding no error in the motion judge's findings of fact.

However, the Court granted leave to appeal costs and substituted an award of partial indemnity costs, as the parties had not made submissions on costs and there was no basis for substantial indemnity costs.

The appeal was otherwise dismissed with costs to the respondents.

The plaintiff subcontractor brought a motion for summary judgment against the individual defendants for breach of trust under the Construction Lien Act.

The corporate contractor had failed to pay the plaintiff for completed flooring work despite receiving funds from the owners and swearing a statutory declaration that all sub-trades had been paid.

The court found a breach of trust occurred and held two of the individual defendants personally liable under s. 13(1) of the Act, finding they had effective control of the corporation and acquiesced in the breach.

The action against a third individual defendant, an employee, was dismissed.