CITATION: Barrie Trim v. Heath et al, 2010 ONSC 2107

BARRIE COURT FILE NO.: 09-069

DATE: 20100409

ONTARIO

DIVISIONAL COURT

SUPERIOR COURT OF JUSTICE

BETWEEN:

BARRIE TRIM & MOULDINGS INC.

Plaintiff (Respondent)

– and –

JANE DEWSBURY and COUNTRY COTTAGE LIVING INC., CARL HEATH and CYNTHIA HEATH

Defendants (Appellants)

K. Owen-King, for the Plaintiff (Respondent)

D.R. Service, for the Defendants (Appellants) Carl Heath and Cynthia Heath

HEARD: March 17, 2010

On appeal from the judgment of Deputy Judge E.F. Symons dated April 7, 2009

HEALEY J.:

[1] This is an appeal from a decision made in the Superior Court of Justice (Small Claims Court) on April 7, 2009. The issue on this appeal is whether the trial judge erred in law in finding the appellants Carl and Cynthia Heath (“the Heaths”) liable to the respondent on the basis of unjust enrichment.

[2] The facts are that the respondent to the appeal, Barrie Trim & Mouldings Inc. (“BTM”) supplied building material ordered by the defendant Country Cottage Living Inc. (“CCL”), which was used in the construction of a cottage on property owned by the appellants (“the Heaths”). It was not in dispute that there was a contract between CCL and the Heaths for the demolition of a cottage and its replacement. A dispute arose between the Heaths and CCL, full payment was not made and CCL registered a lien against the Heaths’ property. BTM was not paid on invoices for provision and installation of a door, trim, stairs and railings totalling slightly over $10,000, and commenced this action against both CCL and Heath, waiving the amount in excess of the jurisdiction of the Small Claims Court.

[3] The trial judge found as a fact that the contractual arrangement for the delivery of material and labour to be used in the construction of the Heaths’ cottage was between CCL and BTM. Further, he found there was no agency relationship between CCL and the Heaths that would bind the Heaths as principal to contracts with BTM. Deputy Judge Symons also found that there was no contract between the Heaths and BTM; the Heaths’ role was to select woodwork and hardware, but the payments were between CCL and BTM. There was no evidence that the Heaths had paid any money to BTM directly, nor were any assurances made that they would do so. The office manager and bookkeeper for BTM testified that the client was CCL and that the only person she spoke with in the course of the dealings was Mr. Dewsbury, the president of CCL.

[4] Deputy Judge Symons concluded that CCL was liable to BTM in the amount of $10,000, and that the Heaths had been unjustly enriched in the amount of $9,144.91, and gave judgment in favour of BTM accordingly.

[5] This appeal raises not only the question posed in the opening paragraph, but also raises the following issue: when a valid claim for lien has been made under the Construction Lien Act, R.S.O. 1990, c.C.30 can a supplier of goods or materials who chooses not to shelter under that lien seek remedy against the homeowner directly on the basis of unjust enrichment?

[6] For the reasons that follow, the appeal is granted and the judgment of Deputy Symons is set aside as against the Heaths (but not CCL), and the action of BTM as against the Heaths is dismissed.

[7] The exact issue under appeal has been dealt with by the British Columbia Supreme Court in two decisions: Elbee Development Corp. v. A&D Masonry Ltd. [1999], 49 C.L.R. (2d) 214 (B.C.S.C.) and Pacific National Exhibition v. Alpine Stone Ltd. 2003 BCSC 852, [2003] 29 C.L.R. (3d) 161 (B.C.S.C.). Both are appeals from decisions of the British Columbia Provincial Court. In both of these cases land owners were sued by material suppliers for improvements done to land – in Elbee Development Corp., the application of stucco and in Pacific National Exhibition, the construction of a fireplace. In both of those cases the plaintiffs had no contracts with the owners. In both of those cases general contractors had agreements with the owners, and separate contracts with the plaintiff suppliers. In both cases the plaintiffs sought relief through the equitable remedy of unjust enrichment based on the test set out in the then-leading Supreme Court of Canada case regarding unjust enrichment, Pettkus v. Bekker, [1980] 2 S.C.R. 834:

(i) enrichment to the defendant;

(ii) a corresponding deprivation to the plaintiff; and

(iii) the absence of any juristic reason for the enrichment.

[8] The ratio of Elbee Development Corp. is set out by Blair J. as follows:

In the instant case, there were no assurances or reliance by A&D upon Elbee which might have led to the finding of a business relationship between the parties from which the remedy of unjust enrichment might be based. There lacks support in the evidence to conclude that Elbee was enriched, although I do conclude that there was a deprivation of A&D, although the deprivation did not necessarily arise from the apparent enrichment to Elbee, but from the contract between A&D with Gold. I further conclude that the juristic reason for the enrichment, if it occurred, came from the contract between Elbee and Gold.

A&D contracted with Gold and its remedy lay against Gold or against the property under the Builders Lien Act, R.S.B.C. 1997, c.45, not in personam against Elbee, which, although the owner of the property upon which A&D worked, did not involve itself in the relationship between A&D and Gold. It was, of course, available for A&D to determine at any time the ownership of the property and exercise its lien rights against Elbee’s property if it had acted within the time restraints imposed by the Builders Lien Act. The legislature, through the Builders Lien Act, provided a remedy for subcontractors such as A&D, recognizing the difficulties for subcontractors to recover where the contractor is unable to pay for the subcontractor’s labour and material. To extend the remedy of unjust enrichment in circumstances such as are found involving A&D and Elbee would be an unwarranted intrusion into the construction field.

[9] In Pacific National Exhibition the subcontractor also had no direct dealings or communication with the owner. Sigurdson J. followed Elbee Development Corp. and found that the juristic reason for the enrichment, if it occurred, came from the contract between the owner and the contractor. Because the plaintiff Alpine Stone had contracted with the builder, Castle Rock or Stevenson Design, its remedy lay in contract with those parties, or against the property or holdback under British Columbia’s Builders Lien Act.

[10] The Supreme Court of Canada’s leading decision on unjust enrichment is now Garland v. Consumer’s Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, 2004 S.C.C. 25. That case holds that if there is not a juristic reason made out by the defendant as a result of application of the established categories, a prima facie case exists of unjust enrichment. However, the defendant can still attempt to rebut the presumption through a consideration of the reasonable expectations of the parties and public policy reasons. In the case under appeal there is no reason to proceed to the juristic reason analysis beyond the established category of contract. There is a contract between CCL and the Heaths which required CCL to provide materials to the Heaths’ property as part of the building contract. That in and of itself is sufficient justification for the enrichment, if any enrichment truly occurred. I say this because it is apparent from the decision of Mulligan J. resulting from the lien action between CCL and the Heaths that the Heaths paid some $183,188 to CCL on account of the contract between them. It is not with certainty then, that BTM can argue that the Heaths have been enriched since payments have been made by them which CCL could have, had it chosen to, allocate to satisfy its debt with BTM.

[11] If I am wrong in stating that the contract between the Heaths and CCL provides a juristic reason, I would go further, as directed by the Supreme Court of Canada in Garland, to consider the reasonable expectations of the parties as well as public policy considerations. Both of these factors favour the Heaths. First, there can be no expectation by CCL that it would be paid by the Heaths and the evidence at trial established that it knew that payment was to come from CCL. Second, as set out in the British Columbia cases cited earlier, there was a remedy available to BTM which it chose not to take. I was advised by counsel that BTM knew of the lien action, but chose not to join in that action and specifically sought an order extricating it after this action had been consolidated with the lien action, which order was granted by McIsaac J.

[12] For all of the above reasons, the appeal is granted. The appellants shall have their costs of the Small Claims Court action as limited by the rules of that court as well as costs of this appeal. If the parties are unable to agree upon costs, they may make brief submissions to me in writing, the appellant’s by April 14, 2010, the respondents’ by April 21, 2010, and any reply, if necessary, by April 24, 2010.

HEALEY J.

Released: April 9, 2010