1475707 Ontario Inc., operating as Action Electric Construction and Maintenance v. Foran

[Indexed as: 1475707 Ontario Inc. v. Foran]

Ontario Reports

Ontario Superior Court of Justice, Divisional Court, Matlow, Pardu and Donohue JJ. November 5, 2013

117 O.R. (3d) 772 | 2013 ONSC 6882

Case Summary

Construction law — Actions — Motion judge vacating setting down for trial of construction lien action on basis that plaintiff had not yet delivered defence to counterclaim and holding that plaintiff's lien claim had expired as it had not been set down within two years from [page773] commencement of action — Plaintiff's appeal allowed — No injustice resulting if original trial record was not struck and if plaintiff was granted leave to file amended record containing statement of defence to counterclaim.

The motion judge vacated the setting down for trial of the plaintiff's construction lien action on the basis that, at the time the action was set down, the plaintiff had not yet delivered a defence to counterclaim. Having vacated the setting down for trial, the motion judge held that the plaintiff's lien claim had expired as it had not been set down within two years from the commencement of the action, as required by s. 37 of the Construction Lien Act, R.S.O. 1990, c. C.30. The plaintiff appealed.

Held, the appeal should be allowed.

Per Pardu J. (Donohue J. concurring): It was not necessary in the interest of justice to vacate the setting down for trial. There was no reason why the motion judge could not have granted leave to the plaintiff to file an amended record containing the missing statement of defence to counterclaim, leaving the lien action alive. Granting relief by way of an order permitting the filing of an amended record was not necessarily the equivalent of extending the time limit imposed by s. 37 of the Act.

Per Matlow J. (dissenting): The Act recognizes no allowance for granting relief to those who do not comply with s. 37. It matters not that the non-compliance results from something that may reasonably be characterized as an "irregularity". The requirement that an action be set down for trial within the statutory time limit must be interpreted as a requirement that the action be set down correctly in accordance with the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

Cases referred to

310 Waste Ltd. v. Casboro Industries Ltd. (2006), 2006 32747 (ON CA), 83 O.R. (3d) 314, [2006] O.J. No. 3817, 58 C.L.R. (3d) 1, 151 A.C.W.S. (3d) 165 (C.A.); Ravenda Homes Ltd. v. 1372708 Ontario Inc., [2010] O.J. No. 510, 2010 ONSC 881, 90 C.L.R. (3d) 250 (S.C.J.)

Statutes referred to

Construction Lien Act, R.S.O. 1990, c. C.30, ss. 37, 67 [as am.]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 2.01, (1), (b), 25.05, 48.01, 48.02, 48.03

APPEAL from an order vacating the setting down for trial.

David Thompson, for plaintiff (appellant).

Renata Kis, for the defendant (respondent).

[1] PARDU J. (DONOHUE J. concurring): — The plaintiff appeals from an order of Walters J., vacating the setting down for trial of an action brought pursuant to the Construction Lien Act, R.S.O. 1990, c. C.30, as amended (the "Act"). At the time the action was set down, the plaintiff had not yet delivered a defence to [page774] counterclaim. Having vacated the setting down for trial by the plaintiff, the motion judge held that the plaintiff's lien claim expired, as it had not then been set down within two years from the commencement of the action.

[2] Rule 25.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that pleadings are closed when "every defendant who is in default in delivering a defence has been noted in default". The plaintiff, defendant by counterclaim, had not yet delivered a statement of defence to the counterclaim; nor had it been noted in default. Hence, pleadings were not closed. Rule 48.01 provides that "[a]fter the close of pleadings, any party to an action or to a counterclaim who is not in default under these rules . . . and who is ready for trial, may set the action down for trial, together with any counterclaim . . ." (emphasis added). The statement of claim was issued on May 11, 2009. The trial record was served on April 28, 2011. The defence to counterclaim was finally served on October 16, 2012.

[3] Section 37 of the Act provides:

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:

1. An order is made for the trial of an action in which the lien may be enforced.

2. An action in which the lien may be enforced is set down for trial.

[4] The plaintiff accepts that there is no judicial discretion to relieve against the two-year time limit expressed in s. 37 of the Act.

[5] It submits, however, that a court has jurisdiction to relieve against the irregularity of a trial record which did not contain the statement of defence to the counterclaim. He relies on rule 2.01, which provides:

Effect of Non-Compliance

2.01(1) A failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court,

(a) may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute; or

(b) only where and as necessary in the interest of justice, may set aside the proceeding or a step, document or order in the proceeding in whole or in part. [page775]

[6] Section 67 of the Act provides:

Summary procedure

67(1) The procedure in an action shall be as far as possible of a summary character, having regard to the amount and nature of the liens in question.

Interlocutory steps

(2) Interlocutory steps, other than those provided for in this Act, shall not be taken without the consent of the court obtained upon proof that the steps are necessary or would expedite the resolution of the issues in dispute.

Application of rules of court

(3) Except where inconsistent with this Act, and subject to subsection (2), the Courts of Justice Act and the rules of court apply to pleadings and proceedings under this Act

[7] The defendant submits that allowing this relief would be to do indirectly what the court cannot do directly, extend the time limit mandated by s. 37 of the Construction Lien Act.

[8] The purpose of s. 37 is to promote speedy trial of construction lien actions. Filing a trial record has significant consequences limiting a party's ability to take interlocutory steps. To that extent, the plaintiff's action in setting the matter down for trial did expedite this action by likely making further interlocutory steps unavailable.

[9] Here, we see no reason why the motion judge could not have granted leave to the plaintiff to file an amended record containing the missing statement of defence to the counterclaim and leaving the lien claim alive since the trial record was originally filed within two years. There is no reason to believe that an injustice would necessarily result if the original trial record were not struck, a condition mandated by rule 2.01(1)(b) before a step in a proceeding may be set aside.

[10] This was not a case of abuse by the plaintiff filing a trial record before any pleadings in response had been delivered. Both parties dragged their feet at times. The plaintiff had to bring a motion to compel the defendant to deliver an affidavit of documents and to set a date for his examination under oath.

[11] In 310 Waste Ltd. v. Casboro Industries Ltd. (2006), 2006 32747 (ON CA), 83 O.R. (3d) 314, [2006] O.J. No. 3817 (C.A.), the court suggested that imperfect compliance with the rules regarding setting an action down for trial may be the better course when faced with a looming s. 37 deadline, implicitly leaving it open that there could be relief granted against irregularities at a later date.

[12] Here, the plaintiff attempted to file a trial record within two years from the date the statement of claim was issued. There are no particular equities favouring the plaintiff or the [page776] defendant other than the possible loss of a lien to the plaintiff and the preservation of the lien against the defendant.

[13] We do not agree that a trial record which does not comply with the Rules is necessarily a nullity, as suggested in Ravenda Homes Ltd. v. 1372708 Ontario Inc., [2010] O.J. No. 510, 2010 ONSC 881 (S.C.J.). In Ravenda, a defendant argued that pleadings were not closed when the plaintiff set the action down as the defendant had not yet delivered a reply to the statement of defence to its counterclaim. The defendant submitted that the action was therefore not properly set down within two years and that the lien must therefore be discharged.

[14] Quinn J. held that pleadings in reply were not permitted in construction lien actions and that the reply purportedly served by the defendant was a nullity. On that basis, pleadings were closed when the defendant set the action down although a trial record included a reply from one defendant which Quinn J. characterized as a nullity. Quinn J. went on to express the opinion in obiter that had the pleadings still been open when the trial records were filed"I would have found it necessary to hold that the liens had expired".

[15] With respect, we do not see that granting relief by way of an order permitting filing an amended trial record is necessarily the equivalent of extending the time limit imposed by s. 37 of the Construction Lien Act. Such a conclusion would fly in the face of rule 2.01, which specifically provides that "a failure to comply with the Rules is an irregularity and does not render a . . . step, document, or order a nullity". We see no manifest inconsistency between the ability to correct an irregularly filed trial record and the mandatory deadlines imposed by the Construction Lien Act.

[16] Since it was not necessary in the interest of justice to vacate the setting down for trial, the order of Walters J. of January 3, 2013 must be set aside.

[17] An order shall issue as follows:

Paragraph 1 of the Order of Walters J., setting aside the setting down of the matter is vacated, paragraphs 3 and 4 of the Order of Walters J. vacating and discharging the Claim for Lien, and vacating and discharging the Certificate of Action are set aside and an order is substituted granting leave to the plaintiff to file an amended Trial Record, including the missing Statement of Defence to Counterclaim within 30 days of the date of this order.

[18] The parties have agreed that costs, fixed at $3,000, all inclusive, should follow the result of this appeal. They are, accordingly, granted to the plaintiff.

[19] MATLOW J. (dissenting): -- With respect, I do not agree with the disposition of the majority. I would dismiss this appeal. [page777]

[20] The sequence of relevant events appears to be as follows:

• The statement of claim was issued and the action thereby commenced on May 11, 2009.
• The certificate of action was registered on title on May 12, 2009.
• The defendant's statement of defence and counterclaim was served on July 19, 2011.
• The plaintiff's trial record was served on April 28, 2011 and its defective effort to pass the record and set the action down for trial occurred on the same day.
• The plaintiff's defence to counterclaim was served on October 16, 2012.
• The motion before the motion judge was heard and her order was issued on January 3, 2013, nearly four years after the action was commenced.

[21] The purpose of s. 37 of the Construction Lien Act, R.S.O. 1990, c. C.30 is not only, as stated in para. 8, above"to promote speedy trial of construction lien action". It is, in my view, an attempt by the legislature to balance the competing of interests of plaintiffs, who seek to enforce their money claims, and defendants who are landowners and seek to free their affected lands from the clouds of title created by the registration of claims by plaintiffs.

[22] Section 37 of the Act is an unqualified declaratory provision. The Act recognizes no allowance for granting relief to those who do not comply with it, regardless of the reason for the non-compliance. It matters not that the non-compliance results from something that may reasonably be characterized as an "irregularity". The requirement that an action be set down for trial within the statutory time limit must be interpreted as a requirement that the action be set down correctly in accordance with the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The consequences of failure to comply are widely understandably regarded as draconian. Counsel who practice in this area of law fear this provision and wisely take careful steps to comply with it.

[23] In addition to rule 48.01 referred to in para. 2, above, there are other rules that apply to setting an action down for trial. Some of them are the following:

• Rule 48.02, which is set out under the heading"HOW ACTION IS SET DOWN FOR TRIAL". It provides, in part, that a trial record "prepared in accordance with rule 48.03" must not only [page778] be served but must be filed "forthwith" after service "with proof of service".
• Rule 48.03, which is set out under the heading"TRIAL RECORD". It provides, in part, that a trial record "shall contain" "a table of contents, describing each document by its nature and date""a copy of the pleadings, including those relating to any counterclaim or crossclaim""a certificate signed by the lawyer setting the action down, stating" that "the record contains the documents required by clauses (a) to (g)", that "the time for delivery of pleadings has expired", that "where applicable, that a defendant who has failed to deliver a statement of defence has been noted in default" and that "where applicable, that judgment has been obtained or that the action had been discontinued or dismissed against a defendant".

[24] There was no evidence before the motion judge that the plaintiff had, or could properly, comply with these requirements of rules 48.02 and 48.03 when it purported to set the action down for trial because pleadings were not closed solely because of the plaintiff's failure to deliver a defence to the defendant's counterclaim.

[25] The plaintiff's non-compliance with s. 37 was not disputed and, in relation to s. 37 of the Act, it was not a mere "irregularity". In particular, it was not, as suggested in para. 9, above, the act of the plaintiff in omitting to include "the missing Statement of Defence to the Counterclaim". Significantly, as at the time that the plaintiff purported to set the action down for trial, the "missing" defence to the defendant's counterclaim had not yet even been delivered and, when it was later delivered, more than three years had passed since the commencement of the action.

[26] In my view, the motion judge correctly invoked her jurisdiction, as she was entitled to do pursuant to the Rules, to permit the action to proceed as an ordinary claim for money against the defendant.

[27] She also correctly recognized that she had no jurisdiction to grant relief for the plaintiff's non-compliance with s. 37 of the Act. No Rule, including rule 2.01(1) referred to in para. 15, above, can, or does, retroactively or prospectively, apply so as to remedy non-compliance with s. 37, whether the non-compliance stems from an irregularity or something more.

[28] This distinction is critical to a proper appreciation of her order. The motion judge's brief reasons reflect that she recognized it. In my view, her order was correct and now meets the applicable standard of review, correctness. [page779]

[29] FinaIly, I respectfully disagree with the interpretation of 310 Waste Ltd. v. Casboro Industries Ltd. (2006), 2006 32747 (ON CA), 83 O.R. (3d) 314, [2006] O.J. No. 3817 (C.A.), by the majority, set out in para. 11, above. In para. 5 of that decision, the Court of Appeal stated as follows:

This was not a case of impossibility, either legal or practical. On the record before this court, no intervening events over which the appellants lacked control precipitated the expiration of the lien. It was possible for the appellants to attempt to comply with section 37 by setting the action down. They failed to do so.

[30] Similarly, in the case at bar it was not beyond the ability of the plaintiff to comply with s. 37 of the Act. It could easily have closed pleadings by delivering a defence to the defendant's counterclaim in time but it chose not to do so and thereby placed compliance out of reach. This case is not, therefore"a case of impossibility, either legal or practical". It follows that the motion judge was bound by stare decisis to reach the result that she reached and so is this court.

Appeal allowed.

End of Document