CITATION: Prasher Steel Ltd. v. Pre-Eng Contracting Ltd., 2024 ONSC 4772
DIVISIONAL COURT FILE NO.: DC-23-1315
(Oshawa) DATE: 20240830
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
D.L. Corbett, McGee and Ryan Bell JJ.
BETWEEN:
PRASHER STEEL LTD.
John Margie, Jay Nathwani and Angela Assuras, for the Plaintiff/Respondent
Plaintiff/Respondent
– and –
PRE-ENG CONTRACTING LTD.
Emilio Bisceglia and Daniel Campoli, for the Defendant/Appellant
Defendant/Appellant
HEARD at Oshawa: January 22, 2024
REASONS FOR DECISION
D.L. Corbett J.
[1] After an eighteen-day trial, the trial judge, Boswell J., found (2022 ONSC 3458):
(a) There were two separate subcontracts between the parties, one for “Structural Steel” and one for “Miscellaneous Metals”;
(b) The Respondent, Prasher, failed to preserve its lien rights respecting its claims under the Structural Steel subcontract;
(c) Prasher proved its contractual claim under the Structural Steel subcontract, and was entitled to “personal judgment” in respect to that claim of $83,404.44, including HST;
(d) Prasher preserved and perfected its claim for lien respecting its claims under the Miscellaneous Metals subcontract;
(e) Prasher proved its contractual and lien claims under the Miscellaneous Metals subcontract and was entitled to judgment in respect to those claims in the amount of $15,942.33 including HST;
(f) Prasher was entitled to interest and lien remedies in respect to the findings set out above.
[2] In its Notice of Appeal, the Appellant, Pre-Eng, lists 19 grounds of appeal, plus “such further and other grounds as counsel may advise” and the court permit. In its factum, in addition to addressing the standard of review in this court, Pre-Eng lists six issues (Factum, para. 43):
(a) Whether the trial judge erred in finding that Prasher’s claim for lien included claims under the Miscellaneous Metals subcontract;
(b) Whether the trial judge erred in applying the curative provision in s. 6 of the Construction Lien Act “to save Prasher’s improper claim for lien”;
(c) Whether the trial judge erred in finding that the claim for lien for claims under the Miscellaneous Metals subcontract was timely;
(d) Whether the trial judge erred in finding that the delivery of dollies to the construction site “extended Prasher’s lien rights”; and
(e) Whether the trial judge erred in finding that Prasher was entitled “to a claim for personal judgment under s. 63 of the Act.
(f) Whether the trial judge erred in finding Prasher’s claim “was not statutorily barred by the operation of the Limitations Act”.
[3] Prasher raises one additional issue by cross-appeal: it argues that the trial judge erred in finding that subcontractor liens must be preserved on a subcontract-by-subcontract basis where a subcontractor has undertaken work under two or more subcontracts with the same contractor on the same improvement. On the basis of the arguments made before him, the trial judge applied the decision of the Supreme Court of Canada in Board of Trustees Rocky Mountain School Div. No. 15 v. Atlas Lumber Co., 1954 61 (SCC), [1954] SCR 589 (Rocky Mountain) to conclude that lien claims expire on a subcontract-by-subcontract basis and must be separately liened within the time periods stipulated by the Act.
Applicable Law
[4] As found by the trial judge at para. 80 of the Decision, the Construction Lien Act, RSO 1990, c. C.30 (the “CLA” or the “Act”) applies to the claims in this proceeding. The Statement of Claim was issued on November 14, 2012 and the claims relate to services and materials provided by Prasher to the improvement prior to that time. Subsequently, the CLA was amended substantially and re-named the Construction Act. The trial judge correctly cited and quoted the applicable provisions of the correct version of the CLA.
Overview and Disposition
[5] Three of the first four grounds of appeal turn on findings of fact made by the trial judge. In Pre-Eng’s lengthy “Facts” section of its Factum, it sets out a narrative cited to the record below, rather than referenced to the trial judge’s findings of fact. The facts, in this court, are the facts as found by the trial judge, absent a palpable and overriding error of fact. An appeal is not a re-trial on the record before the trial judge. Pre-Eng has not identified any palpable and overriding error of fact that would justify this court interfering with the trial judge’s factual findings.
[6] The second ground of appeal involves the exercise of discretion which, absent an error in principle, is entitled to deference in this court. Pre-Eng has not identified any error in principle connected to the trial judge’s exercise of discretion.
[7] In respect to the fifth ground of appeal, Pre-Eng argues that Prasher should not have judgment on its meritorious contract claim if its lien failed for technical or procedural reasons. That argument flies in the face of the scheme of the CLA and the established jurisprudence and would lead to an inequitable result.
[8] In respect to the sixth ground of appeal, Pre-Eng did not pursue a limitations argument in the analysis portion of its factum or in oral argument. It appears, from the trial judge’s reasons, that Pre-Eng argued at trial that if personal judgment was not granted in the lien action, then Prasher would be precluded from commencing a fresh action on its contract claims. In light of my conclusions respecting the first five grounds of appeal and in respect to the cross-appeal, and Pre-Eng’s decision not to pursue the limitations argument beyond listing it in its factum, I do not find it necessary or appropriate to address the limitations argument.
[9] Regarding the cross-appeal, the trial judge received little assistance from the parties to distinguish Rocky Mountain – a seventy-year-old decision based on a 1942 Alberta statute that differs materially from the applicable provisions of the CLA. The trial judge erred in law in finding that separate claims for lien must be registered in respect to separate subcontracts between the same parties for the same improvement. Liens arise upon the provision of services or materials to an improvement, and the time to claim a lien expires based on the date of last supply of services or materials to the improvement. Absent certification of substantial performance or completion, it matters not whether a subcontractor provides its services or materials under one subcontract or multiple subcontracts – the subcontractor lien arises upon first supply and persists until expiry following the date of last supply of services or materials.
[10] Therefore, for the reasons that follow, I would dismiss the appeal and allow the cross-appeal. In the result, Prasher is entitled to judgment and lien remedies in respect to $99,346.77, including HST, and the judgment below is amended accordingly.
Jurisdiction and Standard of Review
[11] This court has jurisdiction over this appeal pursuant to s. 71(1) of the CLA.
[12] An appellate standard of review applies to this appeal: correctness for questions of law, and palpable and overriding error for questions of fact. For questions of mixed fact and law, the deferential standard of review applies except in respect to extricable questions of law, which are assessed on a correctness standard of review. See Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65; Housen v. Nikolaisen, 2002 SCC 33, paras. 8, 10 and 36.
Analysis
(a) Issues (a) to (d): the Claims under the Miscellaneous Metals Contract
[13] Before the trial judge, Pre-Eng succeeded in its primary argument on these issues: it argued that Prasher’s claim for lien under the Structural Steel contract had expired and could not be extended by combining those claims with claims under the Miscellaneous Metals Contract. The trial judge accepted Pre-Eng’s argument on this point and concluded (at para. 99):
In my view, s. 31(1), strictly construed, provides for the expiration of lien rights on a contract-by-contract basis. Such an interpretation is consistent with the Supreme Court’s ruling in Rocky Mountain [Rocky Mountain School Division No. 15 v. Atlas Lumber Co., 1954 61, [1954] S.C.R. 589]. A lien claimant cannot enlarge the time limit for filing a claim for lien by artificially merging separate contracts performed on the same improvement.
[14] The trial judge then went on to conclude that the lien claims under the Structural Steel contract were not timely (paras. 100-101, 419[3]) and ordered that the judgment in respect to the Structural Steel contract is enforceable as a personal judgment only (para. 421).
[15] The trial judge made clear findings of fact that (a) Prasher’s claim for lien included its claims in respect to both the Structural Steel Contract and the Miscellaneous Metals Contract (paras. 105-106); (b) Pre-Eng “could not have been under any misapprehension” about this fact (para. 107); (c) the claim for lien was “poorly worded” by describing the services and materials supplied as “structural steel and related materials” (para. 105); and (d) the “poorly worded description” is a “relatively minor error” that “did not prejudice Pre-Eng in any way” (para. 110). These findings were available to the trial judge, on the record before him, and the absence of prejudice to Pre-Eng is reflected in the trial judge’s separate, comprehensive analysis of the claims on a contract-by-contract basis.
[16] The trial judge exercised his discretion to apply the curative provision in s. 6(1) of the Act “to the extent necessary” to address the “poorly worded” description of services in the claim for lien. Given the trial judge’s findings of fact, I see no error in principle in this exercise of discretion.
[17] The trial judge also made clear findings about the timeliness of Prasher’s claim for lien under the Miscellaneous Metals contract. The trial judge found that the date of last supply was August 21, 2012, the day on which $5,500.00 worth of materials under the Miscellaneous Metals contract were delivered to the site (para. 112). The trial judge correctly stated the following applicable principles (at paras. 117-118):
Permitting parties to artificially extend the time limit in which to preserve a lien by the supply of trivial work or materials would undermine the certainty of the time limits in the CLA and the proper functioning of the Act.
[18] Whether any particular supply is “trivial” will be a context-driven assessment. The trial judge then applied these principles and found that the value of last supply ($5,500) was not a “substantial percentage of the overall work” but “could not… be characterized as trivial” (para. 119). The trial judge found that the date of last supply was not so remote from prior work done at the site, in light of the manner in which the entire work was performed, to lead to a conclusion that this last supply was done to extend lien rights: “This is not a situation like Wildberry [Wildberry Homes Inc. v. Prosperity One Credit Union Limited, 2008 70790 (S.C.J.)], where the contractor showed up two-and-a-half months after its last supply and installed a handrail [valued at $84.00] in an obvious attempt to extend its lien rights.” This analysis discloses no palpable and overriding error of fact, no error in law. I would not give effect to any of the first four grounds of appeal.
(b) Issue (e): personal judgment pursuant to [s. 63](https://www.canlii.org/en/on/laws/stat/rso-1990-c-c30/latest/rso-1990-c-c30.html#sec63_smooth) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-c30/latest/rso-1990-c-c30.html)
[19] Pre-Eng argues that the trial judge could not, in law, grant personal judgment against it in respect to the Structural Steel contract because the lien claims respecting those claims failed. Pre-Eng also argues that the trial judge ought not to have exercised his discretion under s. 63 of the Act to grant personal judgment on the Structural Steel claims.
[20] I do not accept either of these arguments.
[21] Section 63 provides:
Subject to paragraph 3 of subsection 36(4) (sheltering), the court may award any lien claimant a personal judgment, whether the claimant proves the lien or not, upon any ground relating to the claim that is disclosed by the evidence against any party to the action for any amount that may be due to the claimant and that the claimant might have recovered in a proceeding against that party.
[22] The discretion afforded by s. 63 applies “whether the claimant proves the lien or not.” In this case, the ground “relating to the claim” was a contract claim inherent in the lien claim. There is no argument available to Pre-Eng that the judgment ordered under the Structural Steel contract was not “disclosed by the evidence”.
[23] Pre-Eng cites one case in support of its position: Tilar Roofing Ltd. v. John Boddy Developments Ltd., (1986), 20 CLR 161 (Master Sischy). Tilar is clearly distinguishable. At para. 6 of that decision, the learned Master stated:
… the exercise of a discretion in granting personal judgment may differ, depending on whether it is determined prior to trial that the plaintiff is not entitled to a lien, or whether this is only discovered after all the evidence has been heard.
[24] In the case at bar, it was in the trial judgment that the court ordered that the claim for lien in respect to the Structural Steel contract was out of time – “after all the evidence ha[d] been heard.” In Tilar, this finding was “determined prior to trial.”
[25] Section 63 exists to address the situation that arose on the trial judge’s analysis in this case – where Prasher had a valid claim in contract, that was proved at trial, but its lien failed because it was not preserved and perfected in time. The trial judge properly applied s. 63 of the Act; I would not give effect to this ground of appeal.
[26] I also note that this issue ceases to have force in light of my conclusion on the issue raised in the cross-appeal: Prasher is entitled to enforce its lien for services or materials supplied to the improvement under the Structural Steel subcontract and is not restricted to a “personal judgment” in any event.
Issue (f): the Limitations Argument
[27] Although Pre-Eng listed a limitations argument in its statement of the issues in its factum, this issue was not argued in the factum, nor was it raised in oral argument. The issue was raised before the trial judge, and he disposed of it as follows (at paras. 122-123):
In the preceding section, I found that Prasher did properly preserve and perfect the Claim for Lien with respect to the miscellaneous metals contract. For that reason alone, the limitations argument fails, insofar as it relates to the miscellaneous metals contract.
Given that I have found that Prasher’s Claim for Lien with respect to the structural steel contract was not properly preserved, it remains to be determined whether Prasher’s claim for any amounts purportedly owing under that contract may continue as an ordinary contract claim for which a personal judgment may be rendered. If not, then Prasher will be out of time to commence a separate proceeding for that relief.
The issue of whether Prasher would be out of time to commence another proceeding does not arise and need not be addressed in light of the disposition of this appeal and cross-appeal.
The Cross-Appeal
[28] The CLA treats “contracts” and “subcontracts” differently for the purposes of establishing deadlines for preserving and perfecting lien claims.
[29] The Act defines “contract” as “the contract between the owner and the contractor…” and “subcontract” as “any agreement between the contractor and a subcontractor, or between two or more subcontractors, relating to the supply of services or materials to the improvement…” (s. 1(1)). Pre-Eng was a “contractor” under a “contract” with the “owner” (the School Board), and Prasher was a “subcontractor” under “subcontracts” with Pre-Eng.
[30] Section 15 of the Act provides that “[a] person’s lien arises and takes effect when the person first supplies services or materials to the improvement.” Nothing in this language provides that a lien arises on a subcontract-by-subcontract basis.
[31] Subsection 31(2) governs expiry of liens of “contractors” and is tied to the substantial performance, completion, abandonment, or termination “of the contract”.
[32] Unless preserved in accordance with the Act, the lien rights of a subcontractor expire 45 days after the earlier of:
(i) the date on which a copy of the certificate or declaration of the substantial performance of the contract is published, as provided in section 32, and
(ii) the date on which the person last supplies services or materials to the improvement, and
(iii) the date a subcontract is certified to be completed under section 33, where the services or materials were supplied under or in respect of that subcontract…. (s. 31(3)).
The word “contract” in subparagraph (i) refers, not to the subcontract under which the subcontractor claim is asserted, but the “contract” between the “contractor” and the “owner” under which the subcontract was let to the subcontractor. No certificate or declaration of substantial performance of the contract bears on the subcontractor claims in this case; paragraph (i) does not apply. Neither the Structural Steel subcontract nor the Miscellaneous Metals subcontract was certified completed under s. 33 of the Act; paragraph (iii) does not apply. Thus, the lien claims of Prasher would have been subject to expiry under paragraph (ii): 45 days after the date on which Prasher last supplied services or materials to the improvement.
[33] Pre-Eng argues that Prasher’s lien rights expired 45 days after the last date of subcontract work or the date of subcontract completion or abandonment, on a subcontract-by-subcontract basis. That argument is in error: that is the test for expiry of a “contractor’s” lien rights under s. 31(2) of the Act; Prasher was a subcontractor and its lien rights are governed by s. 31(3) and not s. 31(2).
[34] Subcontractor lien claims do not expire on a subcontract-by-subcontract basis under s. 31(3)(ii) of the Act: a subcontractor’s lien claims persist until 45 days after last supply “to the improvement” under s. 31(3)(iii). Any owner or contractor wishing to terminate a subcontractor’s lien rights in respect to one of several subcontracts may have recourse to s. 31(3)(iii) of the Act, which would require certification of completion of the subcontract pursuant to s. 33. That was not done in this case.
[35] The Supreme Court of Canada’s decision in Rocky Mountain was based on the language of The Mechanics Lien Act, RSA 1942, c. 236, s.22, which expressly provided for termination of lien rights 35 days after “completion or abandonment of the… subcontract.” The Legislature of Ontario chose to change this language when the CLA was enacted in 1983, and no Ontario court has followed Rocky Mountain to find expiry of subcontracts on a subcontract-by-subcontract basis since that time.
[36] Rocky Mountain does continue to be applied in Ontario in respect to prevenient arrangements, to permit claims under multiple separate contracts to expire on the basis of the date of last supply where there is an arrangement to this effect between the parties: Wood Lumber Co. (Ontario) Ltd. v. Eng, 1999 15030, paras. 18-21 (Div. Ct.); Oaks Precast v. G.L. Trenching Ltd., 28 CLR (2d) 312, paras. 14-19 (OCJ (Gen. Div.)); Larochelle Group Corporation v. Cabral, 2000 2452, paras. 16-19 (ON SC); Ramers Builders Supplies (Toronto) Ltd. v. Roitman, 2004 1281, paras. 31-34 (ON SC); Riddell Contracting Ltd. v. 2004778 Ontario Inc., 2003 16397, paras. 53-57 (ON SC). Aside from cases involving prevenient arrangements, Rocky Mountain does not apply to the expiry of subcontractor lien claims.
[37] On the plain language of s. 31(3)(ii), Prasher’s lien rights in respect to all of the services and materials it supplied to the improvement expired 45 days after the date of its last supply of services or materials to the improvement. The trial judge found as a fact that the date of last supply was August 12, 2012, and thus that the claim for lien was timely. The trial judge erred in concluding that the claims respecting the Structural Steel subcontract had to be preserved separately and earlier than the claims under the Miscellaneous Metals subcontract, and that aspect of the judgment must be reversed.
Disposition and Order
[38] The appeal is dismissed and the cross-appeal is allowed, with costs in the agreed amount of $20,000.00, inclusive, payable within thirty days by Pre-Eng to Prasher. The trial judgment is amended to grant judgment and lien remedies to Prasher against Pre-Eng in the aggregate amount of $99,346.77, including HST.
“D.L. Corbett J.”
“McGee J.”
“Ryan Bell J.”
Date of Release: August 30, 2024
CITATION: Prasher Steel Ltd. v. Pre-Eng Contracting Ltd., 2024 ONSC 4772
DIVISIONAL COURT FILE NO.: DC-23-1315
(Oshawa) DATE: 20240830
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. Corbett, McGee and Ryan Bell JJ.
BETWEEN:
Prasher Steel Ltd.
Plaintiff/Respondent
– and –
Pre-Eng Contracting Ltd.
Defendant/Appellant
REASONS FOR DECISION
D.L. Corbett J.
Date of Release: August 30, 2024