CITATION: Summa Engineering Limited v. Sona Construction Limited, 2018 ONSC 5733
Divisional Court File Nos. DC-1065/17 & DC-1066/17
DATE: 20181129
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
C. Horkins, Bale and Labrosse JJ.
BETWEEN:
Eramosa Engineering Inc.
Plaintiff (Respondent)
- and -
The Corporation of the Town of Penetanguishene and Selectra Contracting Inc.
Defendants (Respondent)
- and -
Sona Construction Limited
Appellant
AND BETWEEN:
Summa Engineering Limited
Plaintiff (Respondent)
-and-
Selectra Contracting Ltd. (Respondent), Sona Construction Limited (Appellant) and The Corporation of the Town of Penetanguishene
Defendants
Timothy McGurrin, for the respondent Eramosa Engineering Inc.
Howard L. Shankman, for the respondent Selectra Contracting Inc.
Derek Schmuck, for the appellant Sona Construction Limited
Charles Chang, for the respondent Summa Engineering Limited
HEARD at Oshawa: September 25, 2018
On appeal from the judgments of Justice Guy P. Di Tomaso, of the Superior Court of Justice, dated October 24, 2017, with reasons reported at 2017 ONSC 6380, and 2017 ONSC 6381.
BALE J.
Overview
[1] Sona Construction Limited appeals from summary judgments granted in a consolidated construction lien action. Sona was the general contractor on a construction project in Penetanguishene.
[2] The motions were brought by two lien claimants – Summa Engineering Limited, and Eramosa Engineering Inc. Both Summa and Eramosa were sub-subcontractors who contracted with Selectra Contracting Ltd. Selectra was Sona’s electrical subcontractor.
[3] Summa registered its claim for lien on May 1, 2015, and commenced an action to enforce its lien on June 16, 2015. Eramosa registered its claim for lien on August 6, 2015, and commenced an action to enforce it on September 14, 2015. Subsequently, the registrations of both claims for lien, and related certificates of action, were vacated pursuant to s. 44(1) of the Construction Lien Act (the “Act”), with the result that the liens ceased to be a charge on the holdbacks and other amounts subject to a charge under s. 21, and became instead a charge on the money paid into court (Eramosa lien), and the lien bond (Summa lien).
[4] Summa set its action down for trial in June 2016; Eramosa set its action down in January 2017. These actions and others were then consolidated.
[5] The summary judgment motions were heard together in October 2017. Evidence filed on the motions by Summa and Eramosa established the amounts owed to them by Selectra, and the validity of their liens. No evidence was filed by Sona.
[6] The motion judge granted judgment to both lien claimants against Sona, and ordered that the judgments be satisfied from the money paid into court, and the security posted.
Grounds of appeal
[7] Sona raises the following grounds of appeal:
(i) that the motion judge erred in law in granting judgment without any evidence of the value of the work done by Selectra for Sona;
(ii) that the motion judge erred in law in interpreting the holdback provisions of the Construction Lien Act; and
(iii) that the motion judge erred in law in placing the onus on Sona to lead evidence to establish the quantum of its liability.
Standard of review
[8] The standard of review on an appeal of a judge’s order is set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. On questions of law, the standard is correctness. On questions of fact, the standard is palpable and overriding error. On questions of mixed fact and law, there is a spectrum. Where there is an extricable legal principle, the standard of review is correctness. With respect to the application of the correct legal principles to the evidence, the standard of review is palpable and overriding error.
Analysis
Whether the motion judge erred in law in granting judgment without any evidence of the value of the work done by Selectra for Sona
[9] Selectra subcontracted part of its contract work to Summa and Eramosa. Accordingly, the evidence of the value of the work done by Summa and Eramosa is, in effect, evidence of the value of a part of the work done by Selectra for Sona.
[10] Sona argues that without knowing the total value of the work done under Selectra’s contract with Sona, the value of Sona’s basic 10 per cent holdback cannot be calculated. However, in light of the provisions of s. 21 of the Act, discussed below, the lien claims of Summa and Eramosa are not restricted to the amount of the basic holdback.
Whether the motion judge erred in law in interpreting the holdback provisions of the Construction Lien Act
[11] Sona argues that Summa and Eramosa are entitled only to the basic 10 per cent holdback required by s. 22(1) of the Act, and that the motion judge erred in law in granting them judgment for amounts other than the basic holdback. However, pursuant to s. 21 of the Act, their liens are a charge on the holdbacks required to be retained by Sona, and subject to s. 17(3) (set-off), on any additional amounts owed by Sona to Selectra, in relation to the improvement.
[12] Sona argues that when the money was paid into court, and the security was posted, the liens of Summa and Eramosa were no longer a charge against the additional amounts owed by Sona to Selectra, and that the amount of the charge against the security was restricted to the amount of the basic 10 per cent holdback. However, s. 44(6) of the Act provides that where money is paid into court, or security is posted to vacate a lien, the lien ceases to attach to the premises, and to the holdbacks and other amounts subject to a charge under section 21, and becomes instead a charge on the amount paid into court, or security posted. The charge on the amount paid into court, or security posted, is in the same amount as the former charge on the holdbacks, and other amounts required to be retained: James Dick Construction Limited v. Durham Board of Education (2000), 2000 26990 (ON SCDC), 50 O.R. (3d) 308 (Div. Ct.).
[13] Accordingly, in not restricting the liens to the basic holdback, the motion judge did not misinterpret the holdback provisions, or otherwise err in law.
Whether the motion judge erred in law in placing the onus on Sona to lead evidence to establish the quantum of its liability
[14] Pursuant to s. 17(1) and 17(2) of the Act, the liens of Summa and Eramosa are limited to the least amount owed by Sona to Selectra. On the hearing of the motions for summary judgment, Sona argued that there was no evidence of the amount owed by Sona to Selectra, and that the amount owed was a genuine issue requiring a trial. On appeal, Sona argued both that the amount owed by Sona to Selectra is irrelevant (based on its argument that the lien claimants’ recovery is restricted to the basic holdback), and that in holding that Sona ought to have provided evidence of the amount owed by it to Selectra, the motion judge put the onus on Sona to lead evidence of the quantum of its liability.
[15] The motion judge held that evidence of the amount owed by Sona to Selectra was evidence in relation to facts within the knowledge of Sona, and not within the knowledge of Summa or Eramosa. He held that Sona had not put its “best foot forward”, and that the court was entitled to assume that the record on the motion contained all of the evidence that the parties would present, if there was a trial. I agree.
[16] On this issue, Sona relies on Hi-Tech Group Inc. v. Sears Canada Inc. (2001), 2001 24049 (ON CA), 52 O.R. (3d) 97 (C.A.), at para. 31. In that case, the court held that on a motion for summary judgment, the moving party has the legal burden of satisfying the court that there is no genuine issue for trial (the test in effect at the time), and that the burden never shifts. I would add to that, however, that the issue of whether the legal or persuasive burden has been met is to be considered in the context of all of the evidence, including the evidence, or lack of evidence, of facts showing that there is a genuine issue requiring a trial: rule 20.02(2) of the Rules of Civil Procedure.
[17] Sona’s argument is, in effect, that the onus was on Summa and Eramosa to prove the state of accounts as between Sona and Selectra. In my view, that would be an unfair onus, not only because the lien claimants were not privy to those accounts in relation to their own work, but also because in determining the amount owed by Sona to Selectra, Sona would be entitled to set off any amounts owed to it by Selectra, whether they related to the services of Summa or Eramosa, or not. Under s. 17(3) of the Act, that set-off could include outstanding debts, claims or damages related to the improvement, or if Sona became insolvent, all outstanding debts, claims or damages whether or not related to the improvement. Set-off is a defence, and the onus of proof is on the party asserting that defence - in this case Sona.
[18] Section 14(1) of the Act provides that “a person who supplies services or materials to an improvement for an owner, contractor or subcontractor, has a lien on the interest of the owner in the premises improved for the price of those services or materials.”
[19] Pursuant to section 21 of the Act, those liens are a charge on the holdbacks required to be retained by Sona, and subject to s. 17(3), on any additional amounts owed by Sona to Selectra, in relation to the improvement.
[20] In its statement of defence, Sona pleaded that it had “paid all amounts due and owing before March 2015 to Selectra.” If that were true, Sona’s only liability would be for the basic 10 per cent holdback, because the claims for lien were registered after that date, and there would have been no additional amounts owed upon which the liens could be a charge, under s. 21. However, Sona filed no evidence in support of this defence, and failed to comply with an undertaking given on discovery to provide particulars of the amounts it paid to Selectra.
[21] In an affidavit sworn by Selectra’s controller, he swears that the amounts owed by Selectra to Summa and Eramosa are as claimed, and that there were no delays or deficiencies, in relation to their work. The defence pleaded by Selectra is that the only reason Selectra has not paid Summa and Eramosa is that their contracts contained a “pay when paid” clause, and that Selectra has not received payment from Sona for their work.
[22] In these circumstances, I agree with the motion judge that in order to argue that the amount owed by Sona to Selectra is an issue requiring a trial, Sona ought to have provided evidence that the amount owed was less than the total of the Summa and Eramosa liens.
Disposition
[23] In the result, the motion judge made no error in holding that there was no genuine issue requiring a trial of either action, and the appeals are therefore dismissed.
[24] Sona shall pay Summa’s and Eramosa’s costs of the appeal, each in the sum of $5,000, and Selectra’s costs of the appeal in the sum of $2,000.
Bale J.
I agree: _______________________
C. Horkins J
I agree: _______________________
Labrosse J.
Released: November 29, 2018
CITATION: Summa Engineering Limited v. Sona Construction Limited, 2018 ONSC 5733
Divisional Court File Nos. DC-1065/17 and DC-1066/17 DATE: 20181129
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
C. Horkins, Bale and Labrosse JJ.
BETWEEN:
Eramosa Engineering Inc.
Plaintiff (Respondent)
-and-
The Corporation of the Town of Penetanguishene and Selectra Contracting Inc.
Defendants (Respondent)
-and-
Sona Construction Limited
Appellant
AND BETWEEN:
Summa Engineering Limited
Plaintiff (Respondent)
-and-
Selectra Contracting Ltd. (Respondent), Sona Construction Limited (Appellant) and The Corporation of the Town of Penetanguishene
Defendants
REASONS FOR JUDGMENT
Bale J.
Released: November 29, 2018