Krypton Steel Inc. v. Maystar General Contractors Inc., 2018 ONSC 3836
CITATION: Krypton Steel Inc. v. Maystar General Contractors Inc., 2018 ONSC 3836
DIVISIONAL COURT FILE NO.: 776/17
DATE: 20180620
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: KRYPTON STEEL INC., Plaintiff/Appellant
AND:
MAYSTAR GENERAL CONTRACTORS INC., and THE CITY OF TORONTO, Defendants/Respondents
BEFORE: LEDERER J.
COUNSEL: Bruce R. Jaeger, for the Plaintiff/Appellant
Iris Pichini, for the Defendants/Respondents
HEARD at Toronto: June 18, 2018
ENDORSEMENT
[1] This is an appeal from an order of Master Short dismissing a lien claim but allowing the underlying action to continue.
[2] Krypton Steel Inc. undertook work on a project at 25 Mendelssohn St. in the city of Toronto. It installed steel cladding and aluminum panels. Maystar General Contractors Inc. was the general contractor. On April 8, 2011, Krypton Steel Inc. registered a construction lien. On April 19, 2011, an order was made by the master that the construction lien be vacated upon Maystar General Contractors Inc. posting as security a lien bond in the amount of $175,171.53: $140,137.22 for the lien and $35,034.31 as security for costs. On May 12, 2011, Krypton Steel Inc. issued a statement of claim, thus perfecting its claim to the lien.
[3] By order of a judge of this Court dated May 8, 2013, the claim was referred to the master at Toronto for trial.
[4] Thereafter, until November 16, 2017, there were no further filings or appearances in court directed to having the matter proceed to trial. On November 16, 2017, in response to a motion brought on behalf of Maystar General Contractors Inc., Master Short made an order declaring that the lien claim had expired and was dismissing the action. As the Construction Lien Act permits the motion was brought without notice and dealt with in the absence of Krypton Steel Inc.[^1] In making this order the Master required that it be mailed to the directors of Krypton Steel Inc. within 10 days and that the bond be left in place until at least December 15, 2017. Presumably this was done to give Krypton Steel Inc. a chance to respond, which it did.
[5] The parties appeared before Master Short on December 14, 2017. The Master amended his order. He determined that, as with his earlier order, the lien claims should be dismissed but the action should not be. It was allowed to continue.
[6] What was the cause of the change? Although the order of May 8, 2013, the one referring the matter to the master for trial, made mention of it, the Master in making the amendment made note of the fact that he had not considered the impact of section 37(1) of the Construction Lien Act which, so far as I can tell, was not brought to his attention:
Expiry of perfected lien
37 (1) A perfected lien expires immediately after the second anniversary of the commencement of the action that perfected the lien, unless one of the following occurs on or before that anniversary:
An order is made for the trial of an action in which the lien may be enforced.
An action in which the lien may be enforced is set down for trial.
[7] What this section makes clear is that a lien claim has a life span. It lasts for two years from perfection to its being ready for trial either before a judge (s. 37(1) para. 2) or for a trial further to a reference to a master (s. 37(1) para.1). If neither one of the two conditions is satisfied the lien expires and the proceeding is made vulnerable to a motion brought pursuant to section 46(1) of the Act:
46 (1) Where a perfected lien that attaches to the premises has expired under section 37, the court, upon the motion of any person, shall declare that the lien has expired and shall make an order dismissing the action to enforce that lien and vacating the registration of a claim for lien and the certificate of action in respect of that action.
[8] Master Short, having acknowledged that he had not taken account of s. 37(1) considered it and concluded that neither of the two conditions had been satisfied and that the lien had expired. It is on this basis that he found that the lien should be dismissed but, determined that, the claim should be allowed to proceed. The action could proceed but the security provided first, by the lien, and then the bond which replaced it would be lost.
[9] It is this finding which is the subject of this appeal.
[10] The parties agree that the issue at hand is a question of law. The standard of review is correctness.
[11] I begin by observing that it is accepted and trite that the court has no ability or discretion to set aside, ignore, step around or adjust a limitation or time period set by statute. Any flexibility imposed on time periods found in the Rules of Civil Procedure[^2] or the idea that these periods begin to run from the moment a reasonable person would have discovered he or she had a claim as found in the Limitations Act,[^3] do not apply.[^4]
[12] Counsel for Krypton Steel Inc. submits that the second of the two conditions was met by the order of the court made referring the proceeding as a reference to the master.
[13] I disagree.
[14] The order does note at paragraph 2:
THIS COURT ORDERS AND ADJUDGES that the Plaintiff has satisfied the requirements prescribed by Section 37 (1) of the Construction Lien Act R.S.O., Chapter C.30, as amended.
[15] This does not decide anything. The order was on consent. There is no suggestion that any submissions were made or argument put to the judge:
ON READING the Affidavit of Stephen Wong, filed, the pleadings herein and the Consent of the solicitors for all parties…
[16] In the absence of any argument it cannot be said that the court determined anything. The judge accepted what counsel provided.
[17] Before going further I note that s. 37(1) para. 1 refers to an order for “the” trial rather than “a” trial. The word “trial” is introduced by the “definite article”, the word: “the” and not the “indefinite article”, the word “a”. While not determinative this distinction is instructive.
[18] The Divisional Court has confirmed the principle that the time in which a lien expires is mandated by statute and leaves no room for the exercise of judicial discretion. Speaking to the two-year period set out in section 37(1) and with respect to the provisions of section 46, the Divisional Court in Benjamin Schultz & Associates Ltd. v. Samet noted:
It was argued in the Ramrock case and in the present case that the court had a discretion to relieve against the operation of limitation periods, and that the court should exercise its discretion in special circumstances. While the Ramrock decision refers to lands of third parties, I would adopt the following reasons as being applicable to the present case:
... it is my respectful view that the legislature, in enacting s. 37, intended by the wording therein to eliminate any lien from further validity upon the expiry of 2 years if no date for trial is fixed within 2 years of the date of commencement of the action. The effect of this section is to invalidate encumbrances to the land of third parties simply by the operation of time.
It is a statutory mandate and leaves no room for judicial discretion.
Section 46, likewise, provides for a mandatory disposition upon the motion of any person. Upon such a motion the court shall and must declare the lien expired, dismiss the action and vacate the lien.
This language is pure and unequivocal and leaves no room for judicial intervention to preserve an action….
While there is no evidence of prejudice to any party in the present case, this is irrelevant, because there is no discretion in the court. Section 37 extinguishes a lien. It is not a limitation period and cases such as Basarsky v. Quinlan, 1971 5 (SCC), [1972] S.C.R. 380, 24 D.L.R. (3d) 720, giving the court power to grant relief from limitation periods, are not applicable.[^5]
[19] The Construction Lien Act is designed to ensure that construction lien claims are dealt with in an expeditious manner. In this respect, it imposes on a lien claimant the obligation of moving its lien claim along even after the lien is preserved and perfected. If a trial date is not obtained or if a lien action is not set down for trial within two years of the date of the commencement of the action, the perfected lien expires. The court has narrowly construed the section and unless the party can show that the failure to comply is not the result of its own action/inaction the failure is fatal to the claim.[^6]
[20] The organization of the process outlined in the Construction Lien Act was reviewed by Master Sandler in the case of Pineau v. Kretschmar Inc.:[^7]
If any party (usually, the plaintiff) wants a master to hear the case, (the usual procedure), then this party must obtain a judgment of reference under s. 58(1) of the Act to a Toronto master or case management master…
The form of this judgment of reference is mandated by Ont. Reg. 175, R.R.O. 1990, s. 2(16) and Form 16… Form 16 contains four specific paragraphs, the most important of which provides that “… this action be referred to the master at Toronto … for trial”…
Once the judgment of reference has been obtained, then the party obtaining that judgment (or, in fact, any other party) must make a motion to the court (a master), without notice, to have a date, time and place fixed for the trial of the action. This is a routine motion…
Once this order has been obtained, the party who obtained it (usually the plaintiff) must serve a properly worded notice of trial … This notice of trial is a critical document. The person serving this notice of trial, and all persons served with it are “parties to the action” …
[21] The Master then goes on to confirm the following critical finding:
I have previously ruled that a judgment of reference under s. 58 (1) is not an “order fixing a trial date” under s. 37(1) 1. An order under s. 60(1) is required in order to stop the time running.
[22] It is at this point that the difference between the definite article (“the”) and the indefinite article (“a”) becomes pertinent. Section 60 of the Construction Lien Act says:
Application to fix date for trial or settlement meeting
60 (1) Any party may make a motion to the court without notice to any other person at any time after,
(a) the delivery of the statements of defence, or the statements of defence to all crossclaims, counterclaims or third party claims, if any, where the plaintiff’s claim is disputed; or
(b) the expiry of the time for the delivery of these statements of defence in all other cases,
to have a day, time and place fixed for the trial of the action, or for the holding of a settlement meeting under section 61, or both.
[23] For the two year time period to stop running a specific trial date must set. This is “the” trial which is referred to in s. 37(1) of the Construction Lien Act rather than “a” trial which is not. In the present case no order under section 60 has been obtained. The two year period has run its course. The Order of the court made on May 8, 2013, was said to be an order under s. 58(1) of the Act. That is to say, it is the order referring the proceeding to the master for trial. It does not on its own demonstrate and is not representative of compliance with the requirements of section 37(1) of the Construction Lien Act. The fact that the parties advised the judge, through their consent to the order, that they had been satisfied does not change the fact that they had not been.
[24] Counsel for Krypton Steel Inc. pointed out that Master Sandler did say that he had seen a circumstance where, on consent, a judge had combined both a s. 58(1) order and a s. 60(1) order in a situation where the time limit was about to expire. That may be. The problem is that there is nothing in the order made by the judge in the case presently being decided that fulfills the requirements of s. 60(1). The difficulty this has created is self-evident. The order was made on May 8, 2013. Five years have gone by and Krypton Steel Inc. has done nothing to move this matter to trial. It may be true that its prior counsel died and that the Law Society took over and would not release the file for six months thereafter. By my calculation that would have ended during January 2017 but still nothing happened until Maystar General Contractors Inc. brought its motion to the master in November of 2017. Master Sandler did address these concerns:
If the action is to be tried by a master, (the usual procedure), than an order under s. 60(1) cannot validly be made by a master unless there is already in existence a judgment of reference under s. 58(1). In my view, the “order” contemplated by s. 37(1) 1. is a legally valid order made with lawful jurisdiction. As I have already held, the order of Master Saunders of May 8, 2000, para. 2, is not such an order. And further, and in any event, this order fails to fix “a day, time and place” for the trial but merely provides for the trial to take place “in the week of October 30, 2000 or such subsequent date as may be agreed to be between counsel or ordered by this court” (sic). This wording is not sufficient to be an “order” within s. 61 and 37(1) 1.
The purpose of s. 37 is to ensure that lien claims are brought forward for trial in a timely way. Liens are a creation of statute and seriously interfere with an owner’s rights to deal with its property. Once an action is set down for trial or an order is made fixing a day, time and place for the trial, then the action will move inexorably towards trial, no matter whether the plaintiff does anything further or not. So lien actions (and their related lien claims) cannot continue on for, and on title for, many years. If such actions are not put into the court trial system within two years, using one of the procedures described in s. 37, then the lien (or liens) expires….[^8]
[25] Finally, I address paragraph 1 of the Order of the Court made on May 8, 2013, referring this proceeding to a trial to be heard by the Master. It says:
THIS COURT ORDERS AND ADJUDGES that this action be and the same is hereby referred to the Master at Toronto for trial pursuant to Section 37(1) of the Construction Lien Act, R.S.O. 1990 Chapter C. 30, as amended, that a Trial Record need not be filed until at least six (6) months prior to the trial date, that this action not be placed on the trial list without further notice of this Honourable Court and at the same be without prejudice to any party’s rights and obligations to deliver and/or amend pleadings, exchange productions, attend discoveries and/or mediation or take any further steps as could have been taken prior to the setting down of this action for trial without leave of the Court.
[26] A reading of this clause suggests that the preconditions to an order under section 60(1) of the Construction Lien Act setting the date, time and place for trial or for the holding of a settlement meeting had not been met at the time the order of the court was made. What seems clear is that the judge relied on the consent and, because of it, failed to appreciate the limitations imposed by the statute.
[27] The order of the Master, as amended upon the appearance before him on December 14, 2017, responds to this conundrum by the exercise of his discretion to permit the action to continue even though the lien has expired and the bond is therefore to be released.[^9]
[28] The appeal is dismissed.
[29] I have heard no submissions as to costs. If the parties are unable to agree I will consider written submissions on the following terms:
(1) On behalf of the Respondent, Maystar General Contractors Inc. no later than 15 days following release of this endorsement. Such submissions to be no longer than 4 pages double spaced not including any Costs Outline, Bill of Costs or caselaw that may be referred to.
(2) On behalf of the Appellant, Krypton Steel Inc. no later than 10 days thereafter. Such submissions to be no longer than 4 pages double spaced not including any Costs Outline, Bill of Costs or caselaw that may be referred to.
(3) On behalf of the Respondent, Maystar General Contractors Inc., if necessary in Reply, no later than 5 days thereafter. Such submissions to be no longer than 2 pages double spaced.
Lederer J.
Date: June 20, 2018
[^1]: Construction Lien Act R.S.O. 1990, Chapter C.30, as amended, s. 46(3)
[^2]: R.R.O. 1990O. Reg. 194: Rule 3.02(1) states: Subject to subrule (3), the court may by order extend or bridge any time prescribed by these rules or an order, on such terms as are just.
[^3]: S.O. 2002, c. 24,Sched. B s. 4 and s. 5 state: Basic limitation period 4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. 2002, c. 24, Sched. B, s. 4. Discovery 5 (1) A claim is discovered on the earlier of, (a) the day on which the person with the claim first knew, (i) that the injury, loss or damage had occurred, (ii) that the injury, loss or damage was caused by or contributed to by an act or omission, (iii) that the act or omission was that of the person against whom the claim is made, and (iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and (b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
[^4]: [Footnote missing in original document]
[^5]: (1994), 1991 7330 (ON SC), 4 O.R. (3d) 771 (Div. Ct.) quoting Ramrock Electric v. Lords & Ladies (1989), 34 C.L.R. 26 (Ont. H.C.J.) at paras. 5-10 and see Graham Bros. Construction Ltd. v. Correct Building Corp., [1991] O.J. No. 863 (Gen Div.)
[^6]: 310 Waste Ltd. v. Casboro Industries Ltd., 2006 32747 (ON CA), 83 O.R. (3d) 314, 2006 CarswellOnt 2335 (Ont. C.A.)
[^7]: [2004] O.J. No. 396
[^8]: Ibid at paras. 48 and 49
[^9]: Teepee Excavations & Grading Ltd. v. Niran Construction Ltd. 2000 3447 (ON CA), [2000] O.J. No. 2554, 133 O.A.C. 247, 189 D.L.R. (4th) 210 49 O.R. (3d) 612