CITATION: Tremblar Building Supplies Ltd. v. 1839563 Ontario Limited, 2020 ONSC 6302
COURT FILE NO.: 272/20 DATE: 20201020
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Pierce, D.L. Corbett and Kristjanson JJ.
B E T W E E N:
TREMBLAR BUILDING SUPPLIES LTD.
Raymond G. Colautti and Anita Landry, for the Appellant
Appellant
- and -
1839563 ONTARIO LIMITED, THE LIGHTING BOUTIQUE INCORPORATED, RAYMOND PITTAO, 538318 ONTARIO LTD. and 391568 ONTARIO LTD.
John D. Leslie and Michael J. Brzezinski, for the Respondents
Respondents
Heard: October 13, 2020
REASONS FOR DECISION
D.L. Corbett J. (Orally):
[1] The appellant (“Tremblar”) appeals the decision of King J. (2020 ONSC 1316) granting summary judgment and dismissing the appellant’s claims against the owner of a construction project to which the appellant supplied materials as a subcontractor.
[2] The material facts are not in dispute. Tremblar provided lighting supplies as a subcontractor of Keystone General Contracting (“Contractor”). Contractor, in turn, provided services and materials to the respondent Lighting Boutique (“Owner”) in connection with a building project.
[3] Within the lexicon of the Construction Lien Act, Lighting Boutique was an “owner”, Contractor was a “contractor”, and Tremblar was a “subcontractor”.[^1] The construction project was an “improvement”. Tremblar’s materials were “provided to the improvement”.
[4] Tremblar had a “subcontract” with Contractor but no contract with Owner. Contractor had a “contract” with Owner and a “subcontract” with Tremblar.
[5] Tremblar was not paid for all the materials it supplied to the improvement. It claims that it is owed $30,326.95 (plus interest and costs) on the basis of its subcontract with Contractor. Tremblar was entitled to, but did not, register a claim for lien for what it was owed pursuant to the Construction Lien Act. Thus, it lost its construction lien rights by failing to exercise them.
[6] Contractor was declared bankrupt. Thus, Tremblar was a creditor of Contractor and entitled to pursue payment of its claim through Contractor’s bankruptcy proceedings.
[7] Tremblar sued the Owner for the money Tremblar is allegedly owed by Contractor on the subcontract. It alleged two causes of action against Owner:
a. breach of trust under the trust provisions of the Construction Lien Act; and
b. unjust enrichment.
[8] Owner moved for summary judgment on the basis that:
a. it owes no trust duty to Tremblar under the Construction Lien Act; and
b. the Construction Lien Act provides a comprehensive code for securing obligations arising on construction projects. It balances the interests among the many parties involved in a construction project. It does not provide for unjust enrichment claims for persons not in privity of contract, and this provides a juristic reason for any deprivation suffered by the appellant and corresponding benefit enjoyed by the respondent in the circumstances of this case.
Decision on Appeal
[9] The motions judge agreed with the owner. He found that the Construction Lien Act requires “privity of trust’ for a trust claim to lie under the Act. There being no privity of trust between Tremblar and Owner, the trust claim could not succeed. The motions judge accepted that the Construction Lien Act provides a comprehensive scheme for construction and that permitting unjust enrichment claims to be grafted on to that scheme would undermine its balance. This, he concluded, was a juristic reason for any deprivation suffered by the appellant and corresponding benefit obtained by the respondent.
Summary and Disposition
[10] The motion judge was correct on both points. For the reasons that follow, the appeal is dismissed, substantially for the reasons given by the motion judge.
Analysis
[11] The Construction Lien Act creates two distinct sets of obligations and remedies relevant to this appeal: the construction lien and the construction trust. These obligations and remedies are in addition to and overlie the contractual rights and obligations between the parties.
[12] This creates three potentially intersecting sets of rights and obligations arising from the same facts. The Construction Lien Act is remedial legislation and provides additional obligations and rights to those provided by the common law. Those additional rights and obligations do not imply the existence of further rights and obligations that do not arise under contract law or the Construction Lien Act.
[13] This case illustrates this point. But for the Construction Lien Act, Tremblar would be restricted to its rights in contract law. It would have no direct recourse against Owner, with which it had no contractual relationship. If it obtained judgment against Contractor and remained unpaid, then it might have recourse against Owner under either the law of debtor/creditor (if Contractor was not bankrupt), or under the Bankruptcy and Insolvency Act (if Contractor was bankrupt). There would be no Construction Lien Act trust remedies. There would be no remedies for unjust enrichment.
[14] The Construction Lien Act creates additional rights and obligations, two of which relate to this appeal. The first is the construction lien. Appellant was entitled to assert this right by registering a construction lien. It would have been entitled to a rateable share of the statutory “holdbacks” Owner was obliged to retain from what it paid to Contractor. This creates security and a direct right of action between Tremblar and Owner, a person with which it has no privity of contract – something created by the Act. The appellant chose not to avail itself of this claim and lost it as a result.
[15] The second relevant regime created by the Act is the construction trust. This is a statutory trust, and it is created by, and limited by, the terms of the Construction Lien Act. The trust runs with contractual obligations, but only in respect to money received or receivable by the trustee in respect to the improvement. Owners do not hold funds in trust for subcontractors. Otherwise, owners would have a positive obligation to ensure that contractors apply their funds properly. Owners do not have that trust obligation under the Act and it would undermine the structure of relations under the Act to find otherwise.
[16] Tremblar argues that this court’s decision in Great Northern (2019 ONSC 3671) contains dicta supporting its position. I find no such dicta in Great Northern, which dealt with the disposition of funds the trial court found owing to contractor. On the basis of the court’s judgment, money was payable to contractor. That money, belonging to contractor, was impressed with a trust in favour of contractor’s subcontractor. Another creditor of contractor sought priority to the money that was impressed with a trust. That claim would have caused contractor to breach its trust obligations to subcontractor. There was no claim that owner owed a trust obligation to the subcontractor – it owed the money to contractor. All of this arose in the context of a construction lien action – one in which subcontractor had a direct right of action against owner up to the amount that owner owed to contractor under the contract. Great Northern does not dispense with the requirement of privity of trust for trust claims under the Act.[^2]
[17] Tremblar argues that there is but one trust created by the CLA. That is not so. The Act creates an owner’s trust (CLA, s.7) and a contractor’s trust (CLA, s.8). The trustees and the beneficiaries of these two trusts are distinct, as clearly set out in these provisions.
[18] The appellant argued that there is authority for its unjust enrichment argument in the decision of Douglas J. sitting as a single judge of the Divisional Court on appeal from Deputy Judge Goldstein of the Small Claims Court in N.K.P. v. Boyko (2016 ONSC 3016). We agree that the decision in N.K.P. assists the appellant. However, N.K.P. is wrongly decided and is not supported by other caselaw. The Supreme Court of Canada’s decision in Moore v. Sweet, (2018 SCC 52, [2018] 3 SCR 303) does not assist the appellant: in that case the court found that the statutory regime created by the Insurance Act did not preclude a claim of unjust enrichment that arose from events not contemplated by the regime, subsisting between two competing beneficiaries of an insurance benefit. In the case at bar, the situation is the precise sort of situation that the Construction Lien Act was designed to address and augmenting the scope of claims available would undercut the balance established by the Act. The comprehensive scheme of rights and obligations under the Construction Lien Act is the juristic reason for precluding claims for unjust enrichment by subcontractors against owners.
[19] For these reasons the appeal is dismissed with costs to the respondent fixed in the agreed amount of $10,000, inclusive.
___________________________ D.L. Corbett J.
I agree: ___________________________ Pierce J.
I agree: ___________________________ Kristjanson J.
Date of Decision: October 13, 2020
Written Reasons Released: October 20, 2020
CITATION: Tremblar Building Supplies Ltd. v. 1839563 Ontario Limited, 2020 ONSC 6254
COURT FILE NO.: 272/20 DATE: 20201020
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Pierce, D.L. Corbett and Kristjanson JJ.
BETWEEN:
Tremblar Building Supplies Ltd.
Appellant
– and –
1839563 Ontario Limited, The Lighting Boutique Incorporated, Raymond Pittao, 538318 Ontario Ltd. and 391568 Ontario Ltd.
Respondents
REASONS FOR DECISION
D.L. Corbett J.
Date of Release: October 20, 2020
[^1]: The Construction Lien Act, RSO 1990, c. C.30, as it read on June 29, 2018, continues to apply to this case as the contracts were entered into in 2012: Construction Lien Amendment Act, 2018, SO 2017, c..24 (Bill 142), s,87.3(1)(a). [^2]: See Robert Nicholson Construction Company Ltd. v. Edgecon Construction Inc., 2016 ONSC 3107 (Div. Ct.).