Construction Law - OCA

The Court of Appeal for Ontario considered whether Seabrook Bros.

Mechanical Ltd., a subcontractor and lien claimant, was entitled to a revised assessed value for its security in the insolvency proposal of North House Foods Ltd. The court held that there was no appeal as of right under s. 193(a)-(c) of the Bankruptcy and Insolvency Act, but granted leave to appeal under s. 193(e) due to the importance of the issue.

The appeal was dismissed, as the motion judge had not erred in finding that the appellant's security (a lien on a leasehold interest) had no realizable value in the circumstances.

The court clarified the onus on dissatisfied creditors under s. 50.1(4) of the BIA and the limited recourse for lien claimants in insolvency.

Arcamm Electrical Services Ltd. (Arcamm) brought a motion to quash an appeal by 4342 Queen St. Niagara Holdings Inc. (Queen) to the Court of Appeal for Ontario, arguing that the underlying summary judgment, granted in a Construction Act action, should have been appealed to the Divisional Court.

The Court of Appeal dismissed Arcamm's motion, holding that the appeal properly lay with the Court of Appeal because the summary judgment was granted under Rule 20 of the Rules of Civil Procedure based on a contractual claim, not under the Construction Act, and the court's jurisdiction is determined by the substance of the order made.

The appellants appealed a motion judge's order lifting a stay of proceedings under the Bankruptcy and Insolvency Act (BIA) and amending a default judgment to declare the debt non-dischargeable in bankruptcy under s. 178(1)(d) BIA, on the basis that it arose from misappropriation or defalcation while acting in a fiduciary capacity.

The underlying action involved breach of statutory trust under the Construction Act for unpaid construction materials.

The Court of Appeal affirmed the motion judge's decision, finding no error in the refusal to admit extrinsic evidence contradicting deemed admissions from the default judgment, nor in considering the appellants' non-compliance with enforcement orders.

The court upheld the finding that the judgment debt arose from misappropriation or defalcation, emphasizing that the deemed admissions, including an award of punitive damages, demonstrated intentional wrongdoing and conduct markedly departing from ordinary standards of decent behaviour, satisfying the "moral turpitude or dishonesty" threshold for s. 178(1)(d) BIA.

The appellants, construction lien claimants, appealed a Divisional Court decision that granted priority to a vendor-take-back mortgage, including interest and enforcement costs, over their lien claims.

The Court of Appeal affirmed the Divisional Court's ruling, holding that the priority of prior mortgages under s. 78(3) of the Construction Act extends to arrears in interest and enforcement costs, consistent with long-standing judicial interpretation and practice, and that a vendor-take-back mortgage constitutes an "advance" for the purposes of the Act.

The appeal was dismissed with costs.

This grouped appeal concerned four applications seeking declarations that the appellant insurers had a duty to defend the respondent corporations against claims of property damage arising from condominium construction deficiencies.

The application judge found a duty to defend based on the "mere possibility" test and refused ex ante allocation of defence costs.

The Court of Appeal dismissed the insurers' appeal, affirming the application judge's findings that the "mere possibility" test applies to exclusions and that courts should not conduct a "trial within a trial" on duty to defend applications.

The court also upheld the order for pre-notification defence costs and dismissed a cross-appeal regarding the assessment of past defence costs.

The respondent overpaid the appellants for construction work.

The parties agreed to the overpayment and the appellants issued a $150,000 cheque with a request not to cash it.

Subsequently, a demand promissory note was executed for the same amount with an irrevocable direction to a law firm to pay from proceeds of other properties.

When the appellants failed to pay after demand, the respondent brought an application for payment which was granted.

On appeal, the appellants argued that an oral agreement modified the written promissory note.

The Court of Appeal upheld the application judge's decision, finding no error in the application of the parol evidence rule and confirming that the written agreement prevails.

The appellant, a real estate development company, appealed a summary judgment dismissing its action against the respondents regarding a request for proposals for the redevelopment of Toronto waterfront property.

The appellant's proposal was disqualified for listing an ineligible person as an advisor.

When the appellant requested reconsideration, the sponsors declined to rescind the disqualification.

The appellant argued the sponsors owed a duty of fairness in the reconsideration process and that the fairness monitor was inadequately involved.

The Court of Appeal dismissed the appeal, finding no unfairness in the reconsideration process on a factual basis, without deciding the legal question of whether a duty of fairness was owed.

The appellants appealed a summary judgment decision rendered by the motion judge in favour of the respondent on claims for breach of contract and breach of trust under the Construction Act.

The appellants argued that the motion judge erred in finding no genuine issue requiring trial, contending that the case turned on credibility findings that required cross-examination or examination for discovery, which were unavailable under the simplified procedure.

The Court of Appeal dismissed the appeal, finding that the motion judge's factual findings were supported by the evidence and entitled to deference.

The appellant appealed the dismissal of its application for judgment against the respondent for $7,451,662.65 under a settlement agreement.

The parties had contracted for construction of the western portion of the Eglinton Crosstown Tunnel.

The respondent was required to obtain third-party liability insurance, with the appellant as an additional insured.

The appellant was responsible for paying 100% of deductibles for third-party claims.

After substantial performance, the parties settled outstanding contract disputes with mutual releases that included a clause preserving rights and obligations regarding insurance policies.

The respondent withheld $6.4 million from the final settlement payment, claiming it was due for outstanding deductible claims.

The appellant argued the settlement released it from deductible obligations.

The motion judge dismissed the application, finding the release did not release the appellant from its deductible obligations.

The Court of Appeal upheld this decision, finding the release language clearly preserved all rights and obligations relating to insurance policies, including deductible payment obligations.

The appellants appealed the dismissal of their action for construction deficiencies in their cottage.

The motion judge had granted summary judgment to the respondents on the basis that the appellants' claims were statute-barred under the Limitations Act, 2002, finding that the claims were discoverable in 2009 when the appellants first noticed problems with a sinking deck pier.

The Court of Appeal allowed the appeal, finding that the motion judge made material misapprehensions of the expert evidence and erred in his discoverability analysis.

The court held that the appellants did not have sufficient knowledge of the construction defects until receipt of the Terraprobe report in 2012, which identified that the stone retaining wall and cottage foundation had been negligently constructed on loose soil.

The court emphasized that knowledge of a problem is insufficient; the claimant must know that the loss is non-trivial and that litigation is an appropriate remedy.

The appellants retained Birkshire Group Inc. to perform home renovation work.

After the relationship deteriorated, Birkshire registered a construction lien and sued for the balance owing.

The appellants counterclaimed and sued other respondents.

At trial, the judge awarded Birkshire damages and recognized a lien.

The appellants appealed, arguing the trial judge failed to address evidence from two witnesses called after the close of evidence.

The trial judge had determined this evidence was material to credibility issues but made no reference to it in his reasons.

The Court of Appeal found the trial judge's reasons deficient and allowed the appeal, ordering a new trial.

The appellant condominium corporation appealed a Superior Court decision that dismissed its negligence claim against multiple defendants for delay in service.

The claim involved construction defects discovered in 2012 and issued in 2014 but not served within the required six-month period.

The appeal judge reversed the master's decision, finding palpable and overriding errors of fact and law.

However, the Court of Appeal found that the appeal judge's decision was based on a transcription error in the master's reasons (where "institutional" was incorrectly transcribed as "individual"), which created a false inconsistency.

The Court of Appeal allowed the appeal and restored the master's decision, finding that the master properly applied the legal principles regarding delay and prejudice.

Kaymar Rehabilitation Inc. appealed the dismissal of its action against Champlain Community Care Access Centre regarding a 2003 request for proposals for therapy services.

Kaymar challenged the trial judge's interpretation of the RFP documents, arguing that Champlain improperly allowed bidders without therapy services experience to qualify by accepting "professional services" as equivalent experience.

The Court of Appeal upheld the trial judge's interpretation, finding that the RFP documents clearly permitted such equivalents and that Kaymar had accepted these terms by bidding.

The court also addressed the costs award, reducing it from $1,864,000 to $1,675,000 on a partial indemnity basis.

An appeal from a trial judgment concerning a construction contract dispute.

The appellants challenged the trial judge's findings regarding responsibility for drywall deficiencies and the labour rate credited to the appellant.

The appellate court found the trial judge's determination that the appellant assumed responsibility for drywall installed by third parties was fully supported by evidence.

The court also found no error in the trial judge's assessment of the labour rate issue.

The appeal was dismissed with costs awarded to the respondent.

The appellant was charged with violations of the Building Code Act for failing to comply with six orders to comply issued in 2013.

At trial, the appellant sought disclosure of prior charges and prosecutions, including orders to comply issued in 1995 and 1996 that had resulted in withdrawn charges.

The justice of the peace granted the disclosure order.

The respondent municipality applied for certiorari to quash the disclosure order.

The Superior Court granted certiorari, finding the earlier orders were distinct due to different compliance deadlines.

The Court of Appeal allowed the appeal, finding the application judge erred by failing to apply the substantial wrong or miscarriage of justice test and by prematurely determining the relevance issue mid-trial.

This appeal and cross-appeal arose from a failed residential subdivision development project in Fort Erie, Ontario.

The central issues were whether the parties had entered into an enforceable written agreement dated December 13, 2005, whether there was a breach or repudiation of that agreement, and the validity of a construction lien filed by Ravenda Homes.

The motion judge had dismissed Ravenda Homes's breach of contract action, vacated its certificate of pending litigation, allowed its lien action, and allowed the respondent's counterclaim in part.

On appeal, the Court of Appeal upheld most of the motion judge's findings but set aside the award of damages under section 35 of the Construction Lien Act, referring that issue to trial.

The appellants appealed a Superior Court judgment finding that a contract existed between the parties requiring the contractor to bill actual costs plus a 25% markup, and that the contractor had engaged in fraudulent invoicing, overcharging, and double-charging for HST.

The Court of Appeal upheld the motion judge's findings, rejecting the appellants' argument that the work was performed on an ad hoc basis without a formal agreement.

The court found it inconceivable that a two-and-a-half-year project costing over six million dollars with architect plans and a site supervisor could have been conducted without a clear contractual arrangement.

The appeal was dismissed with costs awarded to the respondent.

The appellants (Mastron entities) appealed a motion judge's order that refused to dismiss third and fourth party claims and granted leave nunc pro tunc to Genivar to issue its fourth party claim.

The motion judge held that an order by Hackland J. dated December 10, 2013 was intended to continue the proceedings under the ordinary track rather than under the Construction Lien Act.

The appellants argued the motion judge erred in granting leave nunc pro tunc because the two-year limitation period for commencement of the fourth party claim had expired.

The Court of Appeal dismissed the appeal, finding that the motion judge correctly interpreted Hackland J.'s order as continuing the action on the ordinary track, since the third party claim included claims for breach of contract and negligence in addition to contribution and indemnity, which could only proceed under the ordinary track.

This is an amended endorsement from the Court of Appeal for Ontario modifying a prior costs award.

The appellants requested an increase to the costs awarded in the court's endorsement of April 21, 2017, with the respondent not opposing the modification.

The court increased the costs awarded to the appellants to $8,500 for fees plus $1,539 for disbursements plus HST.

A homebuilder appealed the dismissal of its action against its Commercial General Liability insurer for a declaration of duty to defend and indemnify in relation to a claim by homeowners.

The homeowners had purchased a lot and home where the property grading exceeded municipal standards.

The builder failed to include a required warning in the purchase agreement.

The motion judge dismissed the action, finding no coverage under the CGL policy.

The Court of Appeal upheld the dismissal, finding that the claims were either based on intentional conduct or were clearly excluded under the policy's exclusion clauses, particularly those relating to property damage arising from defects in the builder's work and failure to provide warnings.