Court File and Parties

Newmarket Court File No.: CV-17-132315-00 Date: 20190531 Ontario Superior Court of Justice

Between: NIGECO CONTRACTING LTD. Plaintiff – and – DAN AIZENSTROS also known as DANIEL AIZENSTROS and ROYAL BANK OF CANADA Defendants

Counsel: Adam Wainstock, for the Plaintiff/Responding party Christine Kellowan, for the Defendants/Moving Parties

Heard: April 4, 2019

Reasons for Decision

CASULLO J.:

Overview

[1] The Defendant, Dan Aizenstros (“Aizenstros”), submits that the construction lien registered by the Plaintiff, Nigeco Contracting Ltd. (“Nigeco”), was registered out of time and is therefore invalid. Accordingly, Aizenstros seeks a declaration that Nigeco’s construction lien has expired, and an order vacating same.

[2] Aizenstros also seeks costs against Nigeco, Nigeco’s principal, Nicklas Fani (“Fani”), and against Nigeco’s lawyer, Adam Wainstock.

[3] Nigeco submits that the contract was never completed and that the lien was registered within 45 days of the date that Aizenstros abandoned the contract.

[4] The issues to be determined are whether the contract was terminated or abandoned, by whom, and when.

[5] This matter is framed with reference to the Construction Lien Act, R.S.O. 1990, c C.30 (the “Act”), as the contract was entered into before July 1, 2018.

Background

[6] Aizenstros entered into a contract with Nigeco for the partial tear-down and reconstruction of an existing residential home in Thornhill. While the original substantial completion date was August 15, 2016, the completion of the project was pushed back due to delays. Nigeco continued to work on the project into May 2017.

[7] Walk-throughs were conducted during the project to discuss progress and address any questions Aizenstros or his wife had.

[8] On June 5, 2017, Nigeco submitted its final invoice, including the holdback invoice, to start the holdback clock running. Fani believed that, pursuant to the terms of the contract, holdback did not need to be released to Nigeco until 46 days after the invoice was due.

[9] Nigeco acknowledges that the project was not complete when the final invoice was submitted. However, it had reached substantial completion as defined in the Act, and it was Fani’s evidence that he expected the remaining work to be completed between June 5 and July 20, 2017, when the holdback became due.

[10] It appears the parties enjoyed a good working relationship until this final invoice was submitted. On the same day it was received (June 5, 2017), Aizenstros sent a letter through his lawyer requesting that the outstanding deficiencies be rectified within seven days, following which the contract would be terminated.

[11] The deficiencies were not completed within the seven days and the contract was terminated by letter dated June 13, 2017. The letter states that, by his account, Aizenstros had overpaid Nigeco for the work actually completed, and the construction delay had resulted in out-of-pocket losses. All told, Aizenstros estimated damages in the vicinity of $115,000. Nigeco was invited to contact Aizenstros’ lawyer to discuss settlement.

[12] Fani responded to this letter the same day, although his affidavit evidence indicates the response was drafted and sent before he had seen the lawyer’s letter. Fani’s email was sent to Aizenstros directly and each of the deficiencies Aizenstros had set out were addressed. Fani suggested the parties conduct a walk-through to compile a mutually agreeable list of work that remained outstanding, which would then be completed within the 45-day deficiency period. In this email, Fani twice reiterated that Nigeco was prepared to attend and complete the project.

[13] In reply, by way of email dated June 19, 2017, Ms. Kellowan, counsel for Aizenstros, advised Mr. Wainstock, counsel for Nigeco, that her clients were interested in resolving the matter. Ms. Kellowan suggested that arrangements be made for Nigeco to come back on site to address the deficiencies. Part of the arrangement would include a walk-through of the deficiencies, which would thereafter be completed within an agreed-upon timeframe.

[14] Ms. Kellowan specified that the site meeting and walkthrough would be “without prejudice” to the notice of termination.

[15] The lawyers spoke that same day (June 19, 2017) to discuss the timing of the walk-through, and the amounts owed to Nigeco. Mr. Wainstock then sent Fani an email advising of this discussion, and directing that he reach out to Aizenstros to schedule the walk-through directly.

[16] Mr. Wainstock’s email to Fani does not indicate that the walk-through is to be on a “without prejudice” basis.

[17] The walk-through took place on June 22, 2017. Aizenstros and his consultant, Daniel Saban, attended the walkthrough, although Aizenstros left before it was complete. Between June 28, 2017 and July 14, 2017, Fani and Aizenstros exchanged emails regarding the results of the walk-through.

[18] On July 14, 2017, Fani requested an outstanding progress invoice of $33,314.13 be paid, leaving approximately $97,000 owing under the contract.

[19] Aizenstros did not reply to this request, nor to Fani’s follow-up correspondence of July 25, 2017. On August 3, 2017, Nigeco informed Aizenstros the contract was at an end, and that it would be taking steps to register a lien on the property.

Position of the Parties

[20] Aizenstros takes the position that the lien is invalid because it was registered in excess of 45 days after Aizenstros terminated the contract (June 13, 2017) or, in the alternative, 45 days after Nigeco abandoned the contract (June 5, 2017).

[21] Nigeco submits that the lien is valid if it is determined that the contract was terminated or abandoned after June 20, 2017.

Discussion

Was the Contract Abandoned?

[22] A contract is abandoned when there is both a cessation of work and a lack of intention to carry the work through to completion. (See: Baeumler Quality Construction Inc. v. Pirraglia, 2018 ONSC 7610, at para. 25).

[23] Aizenstros states that a series of events between May 19 and June 5, 2017, support a finding that Nigeco abandoned the contract, including the last time work was performed, Nigeco’s removal of tools and equipment from the job site, and the removal of Nigeco’s temporary fencing.

[24] Counsel for Nigeco advised the court that the fencing was removed on Aizenstros’ request, given that landscaping was to be completed by different contractor which would use its own fencing. Further, the tools were removed from the job site because the Aizenstros’ were getting ready to move in.

[25] I do not find that these instances are determinative of a lack of intention on Nigeco’s part to carry the work through to completion. For one thing, Nigeco consistently advised Aizenstros that it was willing to complete the project until discussions over payment broke down.

[26] As Albert J. held in Homewood Development Inc. v. 2010999 Ontario Inc., 2013 ONSC 4441, continuing discussions do not support a conclusion that a contract is abandoned. In other words, if the parties continue to discuss payment and the completion of the project, the contractor is maintaining its intention to return to complete a contract and the contract is not abandoned.

[27] In the case at bar, I find that the contract was not abandoned.

Was the Contract Terminated?

[28] Whether a contract is terminated is to be determined by the intentions of the parties.

[29] Aizenstros submits that he terminated the contract by letter dated June 13, 2017. In support of this position, he relies on the recent decision of Justice de Sa in Scepter Industries Ltd. v. Georgian Customer Renovations Inc., 2018 ONSC 988. In Scepter, a termination letter ended all negotiations and discussions between the parties, and the court found that the contract was terminated.

[30] However, that is not what happened here. The site visit, and the subsequent discussions regarding resolution, all took place after what Aizenstros claims is his termination letter of June 13, 2017.

[31] Aizenstros’ conduct after June 13, 2017, is not consistent with a terminated contract. For example, there was never an intention to have another contractor attend and complete the work – Aizenstros did not tell Nigeco it was not welcome back to the project. Further, the June 22, 2017 site visit was carried out with the parties in attendance, and a list of deficiencies and incomplete work was compiled. The parties continued discussing the results of the site visit for a couple of weeks.

[32] With respect, if Aizenstros was firm about the June 13, 2017 termination, he would not have agreed, on July 5, 2017, to allow Nigeco to complete the project.

[33] I agree with Nigeco that Aizenstros is trying to have it both ways: to start the clock on Nigeco’s lien rights with his letter of June 13, 2017, while still negotiating with Nigeco to complete the contract into early July, 2017.

[34] I find that the contract was not terminated by Aizenstros on June 13, 2017. Rather, the contract was terminated by Nigeco on August 3, 2017, when it advised Aizenstros that, given his failure to reply to its efforts to resolve the dispute, it would be registering the lien on his property.

Additional Relief

[35] In his Notice of Motion, Aizenstros also sought costs against Fani and Mr. Wainstock, on a substantial indemnity basis, for participating in the preservation, perfection, and prosecution of an expired lien pursuant to section 86 of the Act.

[36] This additional relief was not argued by counsel for Aizenstros during the motion. Mr. Wainstock addressed the issue. In respect of costs against counsel, Mr. Wainstock submitted these should only be awarded where there is evidence of bad faith, malice or negligence. I agree. Neither bad faith, malice nor negligence has been established against Mr. Wainstock, and costs are not available against him.

[37] Fani is not a party to this action, and thus costs are likewise not available against him.

Conclusion

[38] For the foregoing reasons, the motion is dismissed.

Costs

[39] At the conclusion of the hearing, it was agreed that upon release of the decision, the parties were to contact the trial coordinator’s office to obtain a date for a one-hour costs hearing. I invite the parties to do so if they cannot come to an agreement on costs.

Madam Justice A.A. Casullo Released: May 31, 2019