Trillium Masonry Group Inc. v. Marydel Homes (Beaverton) Inc., 2024 ONSC 5668

2024 ONSC 5668

DIVISIONAL COURT FILE NO.: 1505/24
DATE: 20241018

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Sachs, Lococo and Howard JJ.

BETWEEN:

TRILLIUM MASONRY GROUP INC.

Appellant (Plaintiff)

– and –

MARYDEL HOMES (BEAVERTON) INC. and VITO MONTESANO

Respondents (Defendants)

COUNSEL: Brendan B. Bowles and Katie McGurk, for the Appellant (Plaintiff) Robert Kalanda, for the Respondents (Defendants)

HEARD at Oshawa: September 18, 2024

REASONS FOR JUDGMENT

R. A. LOCOCO J.

I. Introduction

[1] The appellant Trillium Masonry Group Inc. (“Trillium”) appeals the order of Justice Hugh K. O’Connell of the Superior Court of Justice dated January 10, 2024.

[2] Trillium provided masonry services and materials for a residential subdivision being developed by the respondent Marydel Homes (Beaverton) Inc. (“Marydel”). Trillium registered a claim for a construction lien on the title of a subdivision lot. The claim for lien was vacated by court order upon Marydel’s payment of funds into court as security. On Marydel’s subsequent motion, the motion judge reduced the amount of security that Marydel had been required to pay into court.

[3] Trillium submits that the motion judge erred in law by, among other things, providing deficient reasons that prevent meaningful appellate review of the decision. Trillium asks the court to set aside the motion judge’s order and dismiss Marydel’s motion in the court below.

[4] For the reasons below, I would allow the appeal and remit the matter for redetermination by a different judge.

II. Background

[5] In December 2016, Trillium entered into an agreement (the “2016 contract”) with Marydel to supply masonry services and materials for a residential subdivision in Beaverton, Ontario. The respondent Vito Montesano is the principal of Marydel. By the end of 2021, Trillium invoiced Marydel over $7.5 million for its work, which related to subdivision lots that did not include Lot 121. Marydel paid most of the amount invoiced but disputed its obligation to pay the balance, which Trillium calculated to be $193,191.70. Trillium did not register a claim for lien on the title of those subdivision lots within the time required to preserve its lien rights with respect to Marydel’s interest in those lots: see Construction Act, R.S.O. 1990, c. C.30, ss. 14(1), 31, 34(1)(a).

[6] In May 2022, Marydel requested that Trillium perform masonry services and materials for Lot 121 of the subdivision project. Trillium had not previously provided masonry work for that lot. At a meeting between the principals of Trillium and Marydel at Marydel’s offices on May 5, 2022, Trillium provided a three-page written quotation for that work. Both parties signed that document, which indicated on the signature page that it was “Accepted by” each party and “Dated May 5/22” (the “2022 contract”).

[7] Among other things, the 2022 contract provided: “All quantities of clay brick … installed will be charged at a rate of $2.40 per Brick”. It also provided: “The Balance owed of $193,191.70 shall be forwarded to Lot 121 and shall form part of the contract price”.

[8] The parties have conflicting positions with respect to the contents of the 2022 contract, as set out in the evidence before the motion judge.

[9] Trillium’s position is that the document’s terms reflected the parties’ oral agreement, as discussed between their principals prior to its signing. Trillium says that as agreed by the parties, the unpaid balance of $193,191.70 for work performed under the 2016 contract on lots other than Lot 121 was part of the 2022 contact price, to be paid out of the proceeds of sale of Lot 121. Trillium says that it would not have undertaken additional work for Marydel without that clause.

[10] Marydel disagrees. Marydel asserts that Trillium surreptitiously inserted into their quotation the clause relating to the disputed $193,191.70 amount without Marydel’s knowledge or prior agreement.

[11] There is no dispute that Trillium provided masonry services and materials to Marydel at Lot 121. Marydel’s representative signed “Completion Slip” dated June 15, 2022, which indicated the supply of 13,068 bricks to Lot 121. Trillium issued an invoice dated that day to Marydel in the amount of $31,363.20 plus HST for 13,068 bricks at the unit price of $2.40.

[12] On June 17, 2022, Trillium registered a claim for lien pursuant to s. 34(1)(a) of the Construction Act on the title of Lot 121 in the amount of $228,632.12. By order of Associate Justice Wiebe dated July 11, 2022 under s. 44(1) of the Construction Act, the registration of Trillium’s claim for lien was vacated upon Marydel’s posting security into court in the amount of $278,632.12, which included $50,000 as security for costs.

[13] Trillium commenced its construction lien action by Statement of Claim dated October 10, 2022, in which Trillium claimed (among other things) $228,632.12 on account of its registered claim for lien. In the Statement of Defence dated November 9, 2022, the respondents pleaded (among other things) that Trillium’s claim for lien was willfully exaggerated and should be discharged and/or reduced accordingly.

[14] By Notice of Motion dated January 31, 2023, Trillium sought an order under s. 47 of the Construction Act, “discharging the Claim for Lien registered by the Plaintiff, Trillium” on the title of Lot 121.[^1] Section 47 provides in part:

47(1) The court may, on motion, order the discharge of a lien,

(a) on the basis that the claim for the lien is frivolous, vexatious or an abuse of process; or

(b) on any other proper ground.

(1.1) The court may, on motion, make any of the following orders, on any proper ground:

1. An order that the registration of a claim for lien, a certificate of action or both be vacated. [Emphasis added.]

[15] In the alterative, Trillium sought an order under s. 44(5) of the Construction Act, “reducing the amount of security paid into court by Marydel to $44,300.52”. Trillium claimed that the latter amount consisted of the value of the work actually done on Lot 121 in the amount of $31,363.20, plus HST and an additional 25 percent as security for costs. Section 44(5) provides:

Reduction of amount paid into court

(5) Where an amount has been paid into court or security has been posted with the court under this section, the court, upon notice to such persons as it may require, may order where it is appropriate to do so,

(a) the reduction of the amount paid into court, and the payment of any part of the amount paid into court to the person entitled; or

(b) the reduction of the amount of security posted with the court, and the delivery up of the security posted with the court for cancellation or substitution, as the case may be.

[16] On July 20, 2023, the motion judge heard Marydel’s motion and reserved his decision.

[17] On January 10, 2024, the motion judge issued a five-paragraph endorsement with respect to Marydel’s motion (the “Endorsement”). The Endorsement provided, at paras. 1-2:

[1] This motion was succinctly argued and both counsel made direct reference to the material in the CaseLines bundle underpinning this matter.

[2] I agree with the moving parties that the lien must be discharged, but would in its place order that the lien be for the work done on lot 21, which is plead in the alternative by the moving party, with a 25% premium to secure possible costs.

[18] At paras. 3-4, the motion judge requested that counsel attempt to agree on costs, failing which a timetable was set for written costs submissions. At para. 5, the Endorsement concluded:

[5] Once I deal with costs, I will roll into my endorsement on costs more detailed reasons on the motion, but would note that I substantially agree with the position of the moving parties, on its position.

[19] The parties subsequently agreed that Trillium would pay Marydel’s costs of the motion in the amount of $10,000, and counsel so advised the court.

[20] A formal order dated January 10, 2024 disposing of respondents’ motion was issued and entered. After a recital referring to the respondents’ motion for “an Order discharging the Claim for Lien…or in the alternative, reducing the security which was posted to vacate the Claim for Lien”, the operative part of the order provided:

1. THIS COURT ORDERS that the security which was posted into court by the Defendant Marydel Homes (Beaverton) Inc….in the sum of $278,632.12, pursuant to the Order of Associate Justice Wiebe, dated July 11, 2022…to vacate the Claim for Lien of the Plaintiff Trillium Masonry Group Inc.…is hereby reduced to the sum of $44,300.52, which amount is comprised of $35,440.42 for the Claim for Lien, together with $8,860.10 as security for costs, and the balance of $234,331.60 shall be returned to the Defendant Marydel Homes (Beaverton) Inc.

2. THIS COURT ORDERS that the Accountant of the Superior Court of Justice is hereby directed to pay the balance of the posted security in the sum of $234,331.60 to the Defendant Marydel Homes (Beaverton) Inc., as described above, to its lawyers … In Trust.

3. THIS COURT ORDERS that the Plaintiff shall pay costs of the motion to Marydel Homes (Beaverton) Inc., in the amount of $10,000, payable within 30 days of the date of this Order.

[21] In response to counsel’s inquiries, Regional Senior Justice Edwards wrote to the parties to advise that the motion judge would not be providing supplemental reasons.

III. Jurisdiction and standard of review

[22] Trillium appeals from the motion judge’s order, alleging various errors of law, as outlined further below.

[23] The Divisional Court has jurisdiction to hear this appeal. An appeal from a judgment under the Construction Act lies to the Divisional Court, but leave is required to appeal an interlocutory order: Construction Act, ss. 71(1), 71(3). An order that “reduces a portion of the claim [for lien] from being secured to unsecured determines a substantive issue and deprives the lien claimant of certain legal rights. Such an order is a final order and can be appealed” to the Divisional Court under s. 71(1) without leave: see H.I.R.A Ltd. v. Middlesex Standard Condominium Corp. No. 823, 2018 ONSC 3661, 61 C.B.R (6th) 59 (Div. Ct), at para. 22.

[24] The appellate standards of review apply, as set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8, 10, 19, 26-37.

[25] The standard of review is correctness for questions of law, including legal principles readily extricable from questions of mixed fact and law.

[26] The standard of review is palpable and overriding error for questions of fact and for questions of mixed fact and law (where the legal principle is not readily extricable) including with respect to the application of correct legal principles to the facts.

IV. Issues for determination

[27] Trillium submits that the motion judge erred in law as follows:

a. Impossible result: The motion judge erred in law by both discharging Trillium’s lien and replacing it with a lien for a lesser amount, an impossible result under the Construction Act.

b. Deficient reasons: The motion judge erred in law by providing deficient reasons that prevent meaningful review of the decision’s correctness.

c. When reducing the security required to vacate the registration of Trillium’s claim for lien, the motion judge erred in law by either:

i. Misinterpreting the meaning of “price” as defined in the Construction Act, or

ii. Determining a triable issue in the absence of enhanced fact-finding powers equivalent to those that apply on a summary judgment motion, which were not available on a motion under s. 47 or s. 44(5) of the Construction Act.

[28] Those submissions are addressed below.

A. Impossible result

[29] Trillium submits that the motion judge erred in law by both discharging Trillium’s lien and replacing it with a lien for a lesser amount, an impossible result under the Construction Act. Discharge of a lien is “irrevocable” and the discharged lien “cannot be revived”: Construction Act, s. 48. Trillium says that the motion judge’s error is clear from para. 2 of the Endorsement, which provided that “the lien must be discharged, but would in its place order that the lien be for the work done on lot 21, which [Marydel] plead in the alternative”.

[30] I disagree.

[31] As stated in the Notice of Motion, Marydel was seeking either discharge of the registered claim for lien under s. 47 or reduction of the posted security under s. 44(5).[^2] Any perceived ambiguity arising from the Endorsement’s awkward wording is dispelled by the terms of the court’s formal order, which is the subject of this appeal. From that order, it is abundantly clear that the court granted the alternative relief under s. 44(5), not both remedies. In the normal course, counsel indicates their approval of the form and content of the order before it is issued and entered.

[32] As a result, I see no merit in Trillium’s submission.

B. Deficient reasons

i. Legal principles

[33] The Divisional Court recently considered the issue of sufficiency of reasons as grounds for appeal in 1307839 Ontario Ltd. v. Klotz Associates, 2024 ONSC 1120 (Div. Ct.). In Klotz, at para. 29, the court noted that the “modern approach” to considering this issue is found in R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, where the Supreme Court stated, at para. 28:

The simple underlying rule is that if, in the opinion of the appeal court, the deficiencies in the reasons prevent meaningful appellate review of the correctness of the decision, then an error of law has been committed.

[34] In Klotz, at paras. 30-31, the court went on to state:

A deficiency in reasons is not a stand-alone ground of appeal in and of itself. This is because the duty to give reasons is not simply for the purpose of keeping a judge “accountable”. Rather, reasons are necessary to justify and explain the result; to tell the losing party why he or she lost; to provide public accountability and satisfy the public that justice has been done and is seen to have been done; and to permit effective appellate review….

Appellate courts will not interfere where “the reasons demonstrate that the trial judge has considered the important issues in a case, or where the record clearly reveals the trial judge’s reasons, or where the evidence is such that no reasons are necessary”…. Therefore, when considering the sufficiency of reasons, appellate courts should take them as a whole, in the context of the evidence, the arguments and the proceeding itself, appreciating the purposes or functions for which they were delivered…. [Citations omitted.]

ii. Trillium’s position

[35] Trillium submits that the motion judge erred in law by providing deficient reasons that prevent meaningful review of the decision’s correctness. The reasons set out in the Endorsement are incomplete on their face. Trillium argues that this is not a case where the record clearly reveals the judge’s reasons or where appellate review is not warranted on some other basis.

[36] Trillium submits that in reaching the decision to reduce the security required to vacate the claim for lien, the motion judge made one of two errors of law.

[37] The first alternative is that the motion judge erred in law by applying a meaning of “price” that deviates from the definition of that term in the Construction Act.

[38] Section 14(1) of the Construction Act provides:

Creation of lien

14 (1) A person who supplies services or materials to an improvement for an owner, contractor or subcontractor, has a lien upon the interest of the owner in the premises improved for the price of those services or materials. [Emphasis added.]

[39] As set out in the definition of “price” in s. 1(1) of the Construction Act:

“price” means,

(a) the contract or subcontract price,

(i) agreed on between the parties, or

(ii) if no specific price has been agreed on between them, the actual market value of the services or materials that have been supplied to the improvement under the contract or subcontract [Emphasis added.]

[40] Trillium submits that it is clear from the 2022 contract that Trillium agreed to provide masonry services and materials at Lot 121 for an “agreed on” price (per subclause (a)(i) of the “price” definition) that included the $193,191.70 owed to Trillium, and that such amount “shall be forwarded to Lot 121 and shall form part of the contract price”. Trillium says that it was not open to the motion judge to determine a different contract price based on “the actual market value of the services or materials that have been supplied to the improvement”, since subclause (a)(ii) of the “price” definition only applied if there was no agreement between the parties on price: see RJ Concrete & Construction Ltd. v. Eco Depot Ltd., 2022 ONSC 1759, at para. 18.

[41] In the alternative, Trillium submits that the motion judge erred in law by determining a triable issue relating to the contract price under the 2022 contract based on conflicting evidence, in the absence of enhanced fact-finding powers to weigh evidence, evaluate witness credibility and draw inferences, equivalent to the powers available to a judge on a summary judgment motion under r. 20.04(2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[42] Trillium submits that if the motion judge was not relying on the alternative meaning of “price” in clause (a)(ii) of the “price” definition, the only explanation for reducing the posted security would be that the motion judge was under the mistaken belief that he had enhanced fact-finding powers analogous to those that apply on a summary judgment motion. Trillium says that the motion judged erred in law in preferring Marydel’s evidence relating to contract price over Trillium’s conflicting evidence. Trillium submits that enhanced fact-finding powers are not available to the court on a motion under s. 47 or s. 44(5) of the Construction Act: see R & V Construction Management Inc. v. Baradaran, 2020 ONSC 3111, 54 C.P.C. (8th) 91 (Div. Ct.), at para. 61.

iii. Marydel’s position

[43] Marydel does not agree that the motion judge’ decision should be set aside based on insufficient reasons.

[44] Marydel submits that the issue to be resolved in the underlying motion was fundamentally a question of law and that the relevant facts were not in dispute. Marydel argues that the reasons set out in the Endorsement, when considered in the context of the record as a whole, are sufficient to permit appellate review and do not disclose an error of law. Therefore, the appeal should be dismissed.

[45] Marydel submits that the fundamental issue for determination on the appeal (as it was on the motion) is whether a person that has supplied services or materials to an improvement on a particular land is able to make a claim for lien under the Construction Act with respect to services or materials supplied to an improvement on a different land.

[46] Marydel says that the clear answer to that question is no.

[47] Marydel submits that under s. 14(1) of the Construction Act, it is clear that a person who has supplied services or material to an improvement may claim a lien “for the price of those services or materials” that are actually supplied to that improvement. Marydel says that Trillium’s focus on the statutory definition of “price” is misguided, since it ignores those additional key words in s. 14(1). Further support is provided by s. 17, which highlights the necessary connection between the lien amount and the work supplied to the improvement, noting that the lien amount is “limited to the amount owing to the person in relation to the improvement”. In further support of that position, Marydel relies on case law that distinguishes between lienable and non-lienable items that form part of a construction contract price: for example, see Carruthers & Wallace Ltd. v. Mathers & Haldendby Inc. (1995), 26 O.R. (3d) 593, at pp. 602-04.

[48] Even though certain factual matters are contested, Marydel submits there is no dispute that over $193,000 of the lien amount claimed was for work supplied to other lots, under a separate contract, and were unrelated to the actual improvement of Lot 121. Therefore, such work should not be lienable against Lot 121.

iv. Analysis and conclusion

[49] As explained below, I have concluded that the motion judge’s reasons are not sufficient to allow meaningful appellate review of the decision. Therefore, I would allow the appeal and set aside the motion judge’s order.

[50] The reasons set out in the Endorsement are clearly incomplete on their face. The motion judge advised, at para. 2, that he was granting Marydel’s alternative request for relief by reducing the amount of security required to vacate the claim for lien to reflect “the work done on lot 121”. He did not provide any explanation for doing so. He further advised, at para. 5, that he would provide “more detailed reasons on the motion” in a subsequent endorsement. He did not provide supplementary reasons.

[51] As previously noted, deficiency in reasons is not a free-standing basis for appellate intervention: see Klotz, at para. 30; Sheppard, at para. 53. However, as Trillium argued, this is not a case in which the record clearly reveals the motion judge’s reasons or where appellate review is not warranted on some other basis.

[52] In reaching that conclusion, I considered Trillium’s submission that in deciding to reduce the posted security, the motion judge erred in law by either applying a meaning of “price” that deviated from the statutory definition, or exercising purported enhanced fact-finding powers that he did not have to determine the contract price based on conflicting evidence. I also considered Marydel’s submission that Trillium’s focus on the statutory definition of “price” was not helpful to the analysis, since it was clear on undisputed evidence that the motion judge correctly determined the amount of security required to vacate the claim for lien based on work Trillium performed on Lot 121.

[53] In fact, the record below discloses significant controversy on factual issues and provides little assistance in determining the actual basis for the motion judge’s decision or whether it involved reversible errors. Resolving the controversy between the parties would involve interpreting the 2022 contract, with a view to determining whether the parties had agreed upon a “price” as defined in the Construction Act (as argued by Trillium) or a “price for those services and materials” within the meaning of s. 14(1) (as argued by Marydel). “Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix”: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 50. In his reasons, the motion judge did not expressly deal with this issue, nor did his decision contain any findings (factual or otherwise) that would enable this court to assess whether he made any error in his assessment of the issue.

[54] In these circumstances, the motion judge’s order cannot stand. The motion needs to be remitted for reconsideration.

V. Disposition and costs

[55] Accordingly, I would allow the appeal, set aside the motion judge’s order dated January 10, 2024, and remit the motion for redetermination by a different judge.

[56] At the appeal hearing, counsel advised that the parties had agreed that costs of the appeal in the amount of $10,000 should be awarded to the successful party. Counsel confirmed, however, that their agreement did not cover the situation where the appeal is allowed and the decision set aside but the motion is remitted for redetermination.

[57] In these circumstances, Trillium’s counsel submits that costs should still follow the event, with the result that Trillium would receive appeal costs of $10,000. Marydel’s counsel disagrees, arguing that there should be no costs awarded on appeal. The parties agree, however, that the costs of the original motion should be left to the judge who redetermines the motion.

[58] I agree with Marydel that there should be no costs awarded for this appeal. Trillium succeeded in having the motion judge’s order set aside, but neither party received the result they requested. I see no reason why either party should suffer costs consequences on appeal for a situation that was not of their making.

[59] As agreed by both parties, I would order that the costs of the original motion be left to the judge who redetermines Marydel’s motion, taking into account the previously agreed quantum for those costs.

___________________________ Lococo J.

I agree___________________________ Sachs J.

I agree___________________________ Howard J.

Date: October 18, 2024

[^1]: I find it difficult to reconcile Trillium’s request for relief under s. 47 of the Construction Act with the statutory wording. Under s. 47, the court may either order “the discharge of a lien” (s. 47(1)) or order that “the registration of a claim for lien…be vacated” (s. 47(1.1)) Trillium’s request for an order “discharging the Claim for Lien registered by…Trillium” seems to be an amalgam of both kinds of relief. If the “registration of a claim for lien” is vacated pursuant to an order under s. 47(1.1) (or s. 44(2)), the party’s lien rights under s. 14(1) are otherwise not affected, since that lien is not discharged: see Construction Act, s. 48, referred to in para. 29 below.

[^2]: See footnote 1 above.