Court File and Parties

COURT FILE NO.: CV-19-394 DATE: 2023-05-18 ONTARIO SUPERIOR COURT OF JUSTICE

IN THE MATTER OF the Construction Act, R.S.O. 1990, c. C.30

B E T W E E N:

BUILT BY ENGINEERS CONSTRUCTION INC. Plaintiff/Defendant by Counterclaim Dennis Crawford, Counsel for the Responding Plaintiff

- and -

CORONATION MEDICAL PLAZA INC. Defendant/Plaintiff by Counterclaim Greg Murdoch, Counsel for the Moving Defendant

HEARD: October 20, 2022 and written submissions The Honourable Justice C.D. Braid

Reasons on Motion to Discharge Lien

I. Overview

[1] Coronation Medical Plaza Inc. (“Coronation”) is the owner and landlord of a commercial property in Cambridge (“the property”). In 2015, Coronation contracted with Built By Engineers Construction Inc. (“BBE”) for the construction of three commercial buildings on the property. At the time the contract was negotiated, the cost of the project was estimated to be more than $5 million.

[2] BBE commenced a construction lien action against Coronation and has registered a lien on the property. Coronation has brought a motion seeking to discharge the lien under s. 47 of the Construction Act, R.S.O. 1990, c. C.30 because it was not registered in time in accordance with the Act. The following issues arise on this motion:

A. What are the statutory considerations for the timeliness of a lien? B. Are the fact-finding powers under Rule 20 available on this motion? C. Is there a triable issue regarding whether the lien was timely?

[3] For the reasons set out below, the motion is dismissed.

II. Analysis

A. What Are the Statutory Considerations for the Timeliness of a Lien?

[4] The Construction Act, which came into force on July 1, 2018, does not apply if the contract was entered into before July 1, 2018. In this case, the parties entered into the contract in 2015. Accordingly, pursuant to s. 87.3(1)(a) of the Construction Act, the provisions of the former Construction Lien Act (“CLA”) and its regulations apply as it read on June 29, 2018.

[5] Coronation has brought a motion seeking to discharge BBE’s lien because it was out of time. A lien expires 45 days after the contract was completed: CLA, s. 31(2)(b). A contract shall be deemed to be completed when the price of completion, correction of a known defect or last supply is not more than the lesser of (a) 1% of the contract price and (b) $1,000. In this case, $1,000 would apply: CLA, s. 2(3).

[6] In this case, the lien was registered on February 25, 2019. I must therefore examine whether the contract was completed by January 11, 2019, which is 45 days before the lien was registered.

B. Are the Fact-Finding Powers Under Rule 20 Available on this Motion?

[7] There are several factual matters in dispute on this motion. The parties made submissions regarding the credibility of witnesses, inferences that should be drawn and how evidence should be weighed. Counsel made submissions as though I had the fact-finding powers that would be available to the court on a summary judgment motion.

[8] On a summary judgment motion, the court shall consider the evidence submitted by the parties and may exercise any of the following powers for the purpose of determining whether there is a genuine issue requiring a trial, unless it is in the interest of justice for such powers to be exercised only at a trial: (1) weighing the evidence; (2) evaluating the credibility of a deponent; and (3) drawing any reasonable inference from the evidence: Rules 20.04(2)(a) and (2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[9] I directed counsel to file written submissions on whether the enhanced powers available to a judge under Rule 20.04(2.1) apply to a s. 47 Construction Act motion to determine whether a lien should be discharged. In their written submissions, both parties acknowledge that the enhanced powers are not available on a s. 47 motion.

[10] A s. 47 motion to discharge a lien is analogous to a summary judgment motion because the test on this motion is whether there is a triable issue in respect to any of the bases on which discharge of the lien is sought. However, a s. 47 motion to discharge a lien and a Rule 20 motion for summary judgment are procedurally different: R&V Construction Management Inc. v. Baradaran, 2020 ONSC 3111 (Div. Ct.); Maplequest (Vaughan) Developments Inc. v. 2603774 Ontario Inc., 2020 ONSC 4308 (Div. Ct.).

[11] On this motion to discharge the lien, the court does not have the enhanced powers that would be available on a summary judgment motion.

C. Is there a Triable Issue Regarding Whether the Lien Was Timely?

[12] On a s. 47 motion, I must determine whether there is a triable issue in respect to any of the bases on which discharge of the lien is sought. I shall therefore consider whether there is a triable issue regarding whether the contract between Coronation and BBE was completed on or before January 11, 2019.

[13] BBE states that, as of January 11, 2019, there was more than $80,000 worth of work to be done. On the other hand, Coronation states that it was less than $1,000. If Coronation is correct, the lien was out of time.

[14] The parties entered into a contract in 2015. BBE was paid $5,241,256.24 for its invoices 1 to 16 and the applicable holdback. BBE also performed separate tenant improvement contracts for Coronation, which were separately invoiced and paid.

[15] On December 19, 2016, BBE certified that the work was substantially performed, which meant that the balance of work to be completed as of that date was minor and was worth no more than $60,700 (according to s. 2(1) of the CLA).

[16] On February 25, 2019, BBE registered a lien in the amount of $898,281.54 against the property. Coronation discovered the lien while searching title, and were taken by surprise, having received no notice from BBE.

[17] The parties have filed conflicting evidence, with the primary areas of disagreement falling into three categories:

1. Were the second coat of asphalt and the installation of lawn sprinklers removed from the scope of the contract?
   • Coronation states that the second coat of asphalt and the installation of lawn sprinklers were verbally removed from BBE's scope of work in 2017 because Coronation decided to have other contractors complete the work. BBE has not provided any communications in which it sought to schedule times for the remaining asphalt application or the installation of lawn sprinklers.
   • For reasons that are unclear, BBE’s first affidavit on this motion made no mention of these two items as being part of the unfinished contract work. BBE’s supplementary affidavit disputes that this work was removed from the scope of work and says that BBE would never have agreed to do so, given the thin profit margins on this project.
   • On discovery, BBE admitted that it registered the lien on February 25, 2019 because the job was complete. However, it takes the position on the motion that the asphalt and lawn sprinklers constituted outstanding work that was part of the contract.
   • If this work was removed from the scope of the contract, that would significantly impact the value of the work to be done on January 11, 2019.
2. Was BBE’s alleged fear that Coronation would go bankrupt a legitimate reason for holding back invoices?
   • After BBE certified substantial completion of the project on December 19, 2016, it did not issue any invoices to Coronation for more than two years. BBE agrees that it held back invoices, even though it is good business practice to regularly issue invoices so that a client can contemporaneously review the work claimed to have been performed. BBE states that it did not issue invoices during this period because it was worried that Coronation would declare bankruptcy.
   • Brian Collier, a representative of BBE, stated that Shawn and David Hopps of Coronation were volatile and that both threatened to bankrupt one or more of their corporations. Collier stated that BBE made a decision to refrain from delivering invoices for work performed on the contract until the tenant improvements were paid in full. Shawn and David Hopps deny being volatile or making any threats of bankruptcy. During cross-examination, Collier admitted that Shawn Hopps had never threatened to declare bankruptcy. Collier also stated that David Hopps threatened to declare bankruptcy in a voicemail message that Collier did not save.
   • BBE continued working on separate tenant improvements worth $2 million, which were paid. BBE also continued to bid on projects for companies associated with David Hopps and was awarded some of these contracts during the same time that it claims to have been holding back invoices out of concern for getting paid.
   • Coronation submits that Collier’s credibility is called into question by his evidence on this issue.
3. Did BBE’s work after January 15 relate to correcting its own defects and/or separate tenant work?
   • The parties have provided conflicting evidence and submissions regarding whether the work performed by BBE on or after January 11, 2019 related to correcting its own defects and/or separate tenant work, which would not extend the time to register a lien.
   • If Coronation’s evidence were accepted on this issue and the first issue, the value of the work, as of January 11, 2019, would be less than $1,000.

[18] These are disputed factual issues that cannot be determined without making findings of credibility.

[19] Coronation submits that this motion should be treated as a summary judgment motion. It states that there would be no procedural unfairness because the materials filed and arguments made implicitly assumed that the enhanced powers could be used on this motion. On the other hand, BBE submits that it was not given proper notice.

[20] Although Coronation argues that BBE has been given sufficient notice and the motion should be converted to a summary judgment motion, I decline to do so. Even if the enhanced fact-finding powers were available to me, I would be unable to make findings of credibility in this case without hearing viva voce evidence. The disputed issues require findings of fact and credibility properly made by a trial judge who would have the benefit of oral evidence and cross-examination.

[21] In addition, even if the motion were converted to a summary judgment motion, deciding the issue of the timeliness of the lien would not fully resolve all trial issues. It would only be a partial summary judgment that would risk inconsistent findings regarding the validity of some of the claims.

[22] There are factual issues that impact whether the value of the contract work remaining by January 11, 2019 was less than $1,000. I cannot resolve those issues without hearing from witnesses. Even if I was able to convert this to a Rule 20 motion, I decline to do so.

[23] There are triable issues regarding whether the lien was timely. Therefore, the s. 47 motion must be dismissed.

III. Conclusion

[24] For all of these reasons, a trial is required to determine whether the lien is timely. Coronation's motion to discharge the lien is dismissed.

[25] Because I am familiar with some of the facts in issue in this case, I am willing to make myself available for a pretrial on a date before the end of August 2023. If counsel wish to attend a pretrial before me, they should contact the trial co-ordinator who will set up a Zoom meeting at 9:00 a.m. on any day that I am scheduled in court.

IV. Costs

[26] The parties are directed to provide written costs submissions, which shall be no longer than two typed pages, double-spaced, in addition to any relevant Bill of Costs. The plaintiff shall provide costs submissions by May 31, 2023; and the defendant shall provide costs submissions by June 12, 2023. If submissions are not received by June 12, 2023, costs shall be deemed settled.

Braid, J. Released: May 18, 2023