Court File and Parties

CITATION: Logger Town Homes Limited v. Jalil Sadeghian, 2013 ONSC 6056

DIVISIONAL COURT FILE NO.: 221/13

DATE: 2013-09-27

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Logger Town Homes Limited, 2243746 Ontario Limited and Akbari Homes Limited, Plaintiffs/Appellants

- v.-

Jalil Sadeghian and Hamideh Yavari, Defendants/Respondents

BEFORE: Mr. Justice H.J. Wilton-Siegel

COUNSEL: Patrick Di Monte, for the Plaintiffs/Appellants Matt Benson, for the Defendants/Respondents

HEARD: September 9, 2013

Endorsement

[1] The appellants appeal an order of Master Albert dated April 22, 2013 (the “Order”) to the extent that it determined that the appellants’ lien against certain lands pursuant to the Construction Lien Act, R.S.O. 1990 c. C.30 (the “CLA”) had expired.

[2] In an endorsement of the same date, the Master concluded that the evidence established that the date of the last work was March 27, 2012. Therefore the lien, which was registered on June 4, 2012, was registered more than 45 days after such date. Accordingly, the Master concluded that the lien had expired pursuant to section 31 of the CLA.

[3] The standard of review on an appeal from an order of a master under the CLA is set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at paras. 8, 10, 19, 25, 27 and 28. On this standard, a decision will be interfered with only if the master made an error of law or exercised his or her discretion on the wrong principles or misapprehended the evidence such that there is a palpable and overriding error.

[4] On the motion before the Master and on this appeal, the appellant argued that section 11 of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B (the “Limitations Act”) applied in the present circumstances to extend the time limit for registration of their lien. They provided an e-mail of a solicitor, Maryam Mohajer (“Mohajer”), in which she stated that she “was engaged in trying to ‘mediated’ [sic] and/or reconcile any differences between [the parties] until the end of May and early June 2012.”

[5] The Master did not address this issue or the respondents’ submissions that: (1) section 11 of the Limitations Act did not apply to the preservation of a lien under section 31 of the CLA; and (2) in any event, Mohajer was not an independent third party and did not conduct an attempted resolution that satisfies the requirements of section 11. The Master’s failure to address these issues is arguably an error of law. However, it is of no consequence as the Master did not err in the conclusion reached in her decision for the reasons set out below.

[6] The principal issue on this appeal is the appellant’s position that section 11 of the Limitations Act extends the period for preservation of a lien under paragraph 34(1)(a) of the CLA. I conclude that it does not for the following reasons.

[7] First, I conclude that section 11 of the Limitations Act does not apply to the time period for preserving a lien under section 34. The following interrelated reasons collectively show that the time periods applicable to preservation of a lien are not covered by the Limitations Act.

[8] Section 2(1) of the Limitations Act provides that the Act applies to “claims pursued in court proceedings”. Section 1 defines a “claim” to be “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”. I do not think that a lien under the CLA is either a “claim” for purposes of the Limitations Act nor is it “pursued in court proceedings”.

[9] Under the CLA, a lien is a statutory right to security for amounts which are the subject of an “action to enforce the lien”. In order to perfect a lien, such an action must be commenced as contemplated within a further 45-day period after the period in section 31 of the CLA for preservation of the lien. While the action would constitute a “claim” for purposes of the Limitations Act, the lien itself is treated as a separate concept that does not, given the definition of a claim, satisfy the requirements for a claim. Similarly, while the action to enforce the lien would be pursued by court proceedings, the lien is preserved under section 34 of the CLA by the filing of a claim for lien on the title of the relevant premises. This distinction between the lien and an action to enforce the lien is made explicit throughout Part V of the Act. It also accords with traditional concepts of common law.

[10] Second, the fact that sections 31 and 36 of the CLA are referred to in the schedule contemplated by section 19 of the Limitations Act is not conclusive evidence of an intention that section 11 should apply to such provisions. Section 19(1) of the Limitations Act operates only with respect to a limitation period in another statute that applies to a claim to which the Limitations Act applies. I think it is clear that a similar qualification must be implied into the provisions of section 19(5), upon which the appellants rely. As noted above, a lien under the CLA is not a claim to which the Limitations Act applies. Moreover, in the case of the reference to section 36, it is possible to interpret the reference in the schedule as relating to the time period for commencing an action to perfect a lien. Accordingly, I conclude that these provisions, and in particular section 19(5), do not determine the issue in this appeal.

[11] Third, while the appellants’ position furthers the general policy objective under the Limitations Act of encouraging settlement where possible, the interpretation of the relevant provisions of the Limitations Act in regard to the CLA should also be informed by the policy of the CLA and the need to avoid a conflict with the established structure of the CLA. I consider that the application of section 11 to the CLA would be contrary to the policy of the Act, namely, that a party holding holdback monies pertaining to a project be in a position to pay out such monies without risk within a reasonable period of time after the last work on a project is completed. The appellants’ position would also conflict with the structure of the CLA which has been held to be a complete code in respect of construction lien actions. Specifically, the appellants’ position would create real, practical difficulties for an owner of a property who pays out a holdback amount after the end of the 45-day period under section 31 of the CLA in the event of a dispute between a general contractor and one or more of its subtrades that was in mediation at the time. The effect of the appellants’ position would be an extension of the right of the subtrades to preserve their liens at a future date if the mediation fails, notwithstanding the owner’s payment to the general contractor. A similar issue could arise in respect of advances under mortgages by a mortgagee who had no knowledge of any such dispute between a general contractor and one or more of its subtrades if such advances are made after expiry of the 45-day period under section 31 of the Act.

[12] The only case law identified by counsel for the purposes of this issue is Sandro Steel Fabrication Ltd. v. Chiesa, 2013 ONSC 658 (S. Ct.). The decision addresses different stages of the process for perfecting a lien and prosecuting an action to enforce a lien under the CLA. Each party claims that it assists their case on this appeal. I do not derive much assistance from this case which is, in any event, not binding on the Court.

[13] Given the foregoing determination, it is not necessary to address the issues of mixed fact and law raised by the respondents regarding the content of Mohajer’s mediation activities and her independent third-party status.

[14] Accordingly, the appeal is dismissed. The respondents seek costs on a partial indemnity basis of an amount in excess of $9,000. The appellants suggest that a reasonable amount would be $5,000 but argue that no costs should be awarded as the appeal was limited to a novel issue of law. The costs sought are in excess of what is reasonable given that this was a straight-forward appeal of a matter that was addressed in the motion before the Master. In any event, I am of the view that the appellants did not act unreasonably in bringing this appeal, given the novelty of the issue and the lack of clarity in the Sandro Steel decision. Accordingly, it is appropriate to require that each party bear its own costs of the appeal.

Wilton-Siegel J.

Date: September 27, 2013