CITATION: Louch v. Louch, 2013 ONSC 4755
DIVISIONAL COURT FILE NO: 11-DV-1736 DATE: 20130719
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MATLOW, SWINTON and WHITAKER JJ.
BETWEEN:
ORREN JAMES LOUCH Plaintiff/Appellant
– and –
CAROLYN ANN LOUCH (also known as CAROLYN ANNE LOUCH), LOU LOCHNER and MAGENTA MORTGAGE INVESTMENT CORPORATION Defendants/Respondents
John A. Ryder-Burbidge, for the Plaintiff/Appellant
Clinton H. Culic, for the Defendant/Respondent, Lochner
William W. Walker, for the Defendant/Respondent, Magenta Mortgage Investment Corporation
Heard at Ottawa: April 12, 2013
REASONS FOR JUDGMENT
WHITAKER, J.
[1] This is an appeal by the plaintiff, Orren James Louch, from the order of Power J. dated May 18, 2011.
[2] On the motion of the respondent, Lochner, under section 47 of the Construction Lien Act R.S.O. 1990, c. C.30 (the “Act”), the motion judge discharged the appellant’s construction lien and vacated the registration of the lien and certificate of action on property owned by the respondent, Carolyn Louch (“Carolyn”), the appellant’s estranged wife.
[3] Lochner did not seek an order dismissing the action and none was made.
[4] Lochner and the respondent, Magenta Mortgage Corporation, held first and second mortgages, respectively, on the property. The appellant and Carolyn were building a home on the property. It is undisputed that their oral agreement contemplated that the appellant would receive shares in Carolyn’s company when the house was built.
[5] Lochner served a Notice of Sale under Mortgage for the property on March 26, 2010 before the house was completed. The appellant registered his claim for a lien valued at $257,000 on May 5, 2010.
[6] In the claim for lien registered in May 2010, the appellant claimed to have worked on the property between 2006 and 2010. Despite an altercation with Carolyn in January, 2010, which led to criminal charges and incarceration, the appellant claimed that he had general oral authorization to continue to finish the house, and he and his father did work in March and April 2010. Lochner and Magenta deny that the appellant had authorization to finish the house and suggested that any work performed was done in bad faith.
[7] At the appellant’s cross-examination on his affidavit, he admitted that after his incarceration in January, 2010, he had no further authorization from Carolyn to enter the property or to do any further work on it.
[8] Initially, the appellant had registered a claim for lien on February 25, 2009 and a certificate of action on May 22, 2009.
[9] By earlier order dealing with the same premises, Quigley J. struck the action and vacated two claims for lien and certificates of action, all brought by the appellant. Quigley J. determined these were of no force or effect.
[10] The appellant argues that Power J. erred in law in granting the motion to strike. He argues that the motion judge erred in failing to apply the test for summary judgment under Rule 20 of the Rules of Civil Procedure. Had he used that test, it is argued, he would have been required to refuse to strike the lien because there were serious issues of fact requiring a trial, including Carolyn’s intention to continue the construction contract, the bona fides of the appellant’s intention to continue the work and to register the claim for lien, and the obligation to continue the work under the contract.
[11] After reviewing the material filed on the motion and the submissions of counsel, Power J. found the work alleged to have been done and which formed the basis of the lien, was not done in good faith and was merely intended to “bootstrap the lien”. Power J. referred to Russell v. Ontario Foundation and Engineering Co., [1926] 1 D.L.R. 760 (C.A) where the Court of Appeal noted that a lien may fail where additional work is a fraud or subterfuge to preserve or revive the lien.
[12] At paragraph 39 of the Reasons, the motion judge found there to be “good reason to believe that the lien claim is false and is an attempt to frustrate the mortgagees…”. On this basis Lochner’s motion was granted.
[13] The motion judge rejected the foundational assertions of fact made by the appellant underlying his claims. This evidence was branded as unreliable, in bad faith and false.
[14] It is clear from his reasoning that Power J. had a full appreciation of the record, addressed the appropriate questions and exercised the discretion conferred on him by section 47 of the Act. He correctly determined that, because the motion before him was for an order “discharging” the lien and “vacating” the registration of the lien clam and the certificate of action and not for an order dismissing the action, he was not required to apply the test set out in rule 20.04.
[15] The onus was on the appellant to prove a properly perfected lien. The contract he pleaded was an oral contract which entitled him to payment in shares if the house were completed. The house was not finished. On cross-examination, the appellant stated that he had not been in communication with Carolyn. In these circumstances, and given the timing of the registration of the lien in relation to the mortgage proceedings, the motion judge could reasonably conclude that there was bad faith on the part of the appellant in registering the lien. As noted earlier, where there is bad faith as Power J. found here, the lien may fail.
[16] The appellant had noted Carolyn in default. As a result, she was deemed to have admitted the facts pleaded in the Statement of Claim, including the fact that the contract to build continued in April 2010. Her deemed admission does not bind the remaining respondents in this action. Nor does it create an issue of fact about her intention with respect to the continuation of the contract.
[17] We are satisfied that the motion judge appropriately exercised the broad powers permitted under section 47 of the Act.
[18] Accordingly, we decline to interfere with the order in appeal.
[19] The parties made cost submissions in the event of their success. We acknowledge those factors set out in Rule 57 of the Rules of Civil Procedure which should guide our discretion to award costs. Particularly, costs should be proportionate to the circumstances of the dispute and within the reasonable expectations of the unsuccessful parties. We conclude the respondents, Lochner and Magenta, is each entitled to their costs inclusive of taxes and disbursements, payable by the appellant, Louch, fixed at $4,300.00 payable forthwith.
Whitaker J.
Matlow J.
Swinton J.
Date: July 19, 2013
CITATION: Louch v. Louch, 2013 ONSC 4755
DIVISIONAL COURT FILE NO: 11-DV-1736
DATE: 20130719
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MATLOW, SWINTON and WHITAKER JJ.
BETWEEN:
ORREN JAMES LOUCH Appellant
– and –
CAROLYN ANN LOUCH (also known as CAROLYN ANNE LOUCH), LOU LOCHNER and MAGENTA MORTGAGE INVESTMENT CORPORATION Respondents
REASONS FOR JUDGMENT
Whitaker J.
Released: July 19, 2013