Robert John Kennaley

This decision concerns the interim distribution of the admitted basic holdback under the Construction Act in a complex construction lien reference.

The court fixes the minimum basic holdback obligation of 35 Mercer Limited and orders pro rata payment to certain validated lien claimants, while holding the balance pending further determination of disputed liens, particularly that of 1086289 Ontario Inc. o/a Urban Electrical Contractors.

The ruling addresses the allocation of holdback among multiple classes of lien claimants and the treatment of disputed and unproven liens.

The appellant, Seargeant Picard Incorporated (SPI), appealed a "boomerang" summary judgment order that found the respondents' (Saxbergs') action for breach of a construction contract was not statute-barred.

SPI argued the motion judge erred in the discoverability analysis and in granting the boomerang order.

The Court of Appeal dismissed the appeal, finding no reversible error in the discoverability analysis, particularly regarding the application of the "appropriate means" test under the Limitations Act, 2002, and upheld the boomerang order given the parties' agreement and the thoroughness of the motion judge's review.

The applicant, Dalren Limited, sought payment of a final invoice and construction lien holdback, arguing that the prompt payment provisions of the Construction Act applied.

The respondents, Loadstar Trailers Inc. and 1978327 Ontario Ltd., contended that these provisions did not apply because the procurement process for the improvement commenced before July 1, 2018, falling under the Act's transitional rules.

The court found that the procurement process indeed began before the critical date, and that the applicant, despite not owning the land at the outset, qualified as an 'owner' under the Act for the purpose of commencing the procurement process.

Consequently, the prompt payment provisions were deemed inapplicable, and the application was dismissed.

This endorsement determined the costs for two previous motions where the Defendants (Oakleigh and Aurelia) were successful.

The Plaintiff's request for further settlement disclosure was denied in the "undertakings motion," and the Defendants successfully obtained a reduction of their security bond in the "security motion." The court awarded partial indemnity costs of $15,000 for the undertakings motion.

For the security motion, the Defendants' requested costs of $258,901.81 were reduced to $174,522.94, primarily by applying the "least expensive course" principle under s. 86(2) of the Construction Act to significantly reduce consulting fees.

The Plaintiff was ordered to pay the fixed costs forthwith.

The defendants, Aurelia Limited Partnership and Oakleigh Holdings Inc., brought a motion under section 44(5) of the Construction Act to partially reduce the security posted to vacate the plaintiff Demikon Construction Ltd.'s claim for lien.

The defendants argued that direct payments made to subcontractors, for which they had not received credit, should reduce the lien security.

The court found that these direct payments were valid under section 28 of the Act and should reduce the lien amount.

The motion was granted, reducing the lien security from $5,085,812.66 to $1,581,587.83.

The defendant, Seargeant Picard Incorporated (SP), moved for summary judgment to dismiss the plaintiffs', Scott and Rachel Saxberg (the Saxbergs), action on the grounds that the claim was barred by the Limitations Act, having not been commenced within two years of discovery.

SP argued the claim was discoverable in October 2012 when they refused to perform certain recommended "repairs" at their cost.

The Saxbergs contended the issues were "upgrades" and the true extent of damage was not discovered until June 2015, when extensive water damage was uncovered during subsequent work.

The court dismissed SP's motion, finding that the Saxbergs' claim was discovered in June 2015, and therefore, the action commenced on July 25, 2016, was within the two-year limitation period.

This case involved a construction dispute where the plaintiff, Save On Contracting, claimed construction liens and damages against the defendant property owners.

The defendants counterclaimed for costs to complete and correct deficiencies, alleging Save On repudiated the contract.

The court analyzed the contract's interpretation regarding Tarion warranty security, whether one of the defendants was a "builder" under the Ontario New Home Warranties Plan Act, and whether Save On fundamentally breached the contract.

The court found that Save On repudiated the contract by making groundless payment demands and abandoning the site.

Consequently, Save On's claims were dismissed, and the defendants were awarded damages for the costs of completing the work and correcting deficiencies.

The appellants, lien claimants in a condominium development bankruptcy, appealed a motion judge's decision regarding the quantum of their priority under section 78(2) of the Construction Act.

They argued for a 20% priority due to two building mortgages, while the receiver contended it was a single 10% holdback deficiency.

The Court of Appeal granted leave to appeal, finding the statutory interpretation issue important.

On the merits, the Court of Appeal upheld the motion judge's interpretation, affirming that the priority is limited to the single 10% holdback deficiency, regardless of the number of building mortgages.

The appeal was dismissed.

The applicant corporation sought leave for its principal to represent it in a construction lien action, despite having legal counsel.

The respondents opposed, raising concerns about the principal's advocacy ability and seeking security for costs.

The court granted leave on the condition that the applicant post $56,000 as security for costs by a specified date.

The court found that while the principal's advocacy ability was a concern, it did not meet the "too high a threshold" for denial, but imposed the security for costs to "level the playing field" and ensure procedural fairness, given the existing security posted by the defendants in the construction lien context.

Failure to post the security would result in the claim and defence to counterclaim being stayed.

The plaintiff, SRK Woodworking Inc., brought a motion to amend its pleadings to add new parties (officers and directors of the defendant, Devlan Construction Ltd.) and to join a breach of trust claim with its existing construction lien action.

The court examined the transitional provisions of the Construction Act and the impact of the repeal of the former prohibition on joining trust claims with lien claims, as well as the re-location of the permissive joinder of breach of contract claims to a regulation.

The court found that the prompt payment and adjudication schemes of the new Act did not apply to this case, and therefore, there was no reason to prohibit the joinder of trust and lien claims.

The motion to add the new defendants and amend the Statement of Claim was granted.

The applicants, CRD Construction Ltd. and Rob Leshuk, sought a declaration that their insurers, Aviva Insurance Company of Canada and Economical Mutual Insurance Company, had a duty to defend them against a counterclaim and to reimburse their legal fees.

The court found that Economical had waived its right to deny the duty to defend due to a reservation of rights letter and its acceptance.

However, the court found that the applicants' breaches of the duty of cooperation constituted non-compliance, making relief from forfeiture unavailable against Aviva, and that the applicants failed to prove their conduct was reasonable for relief from forfeiture against either insurer regarding the duty of cooperation.

Economical was ordered to defend and reimburse the applicants, while the application against Aviva was dismissed.

The appellants appealed a summary judgment decision granting payment of invoices for demolition and clean-up work performed on their fire-damaged property.

The motion judge found no genuine issue requiring a trial regarding the amount owing.

The respondent had provided comprehensive documentation including receipts, supplier invoices, worker timesheets, and the final amount had been audited by a company appointed by the appellants' insurer.

The appellants did not cross-examine and failed to raise sufficient doubt about the amount.

The Court of Appeal upheld the summary judgment and dismissed the appeal.

The appellant appealed an order of the Superior Court of Justice dismissing his action under Rule 21(a) on the basis that the contractual provision at issue—a covenant to insure—could be determined as a matter of law.

The Court of Appeal found that Rule 21(a) was improperly applied because the covenant could not be interpreted in isolation from the contract as a whole or in a factual vacuum.

The motion judge did not have the contract itself before him, making it impossible to determine the objective intentions of the parties according to principles of contract interpretation.

The appeal was allowed, the motion judge's order was set aside, and costs were awarded to the appellant.

Rassaun Services Inc. (RSI) brought a motion to renew a Certificate of Pending Litigation (CPL) against the Elgin Road property, which had been initially issued without notice.

The defendants opposed the renewal, arguing that RSI lacked a reasonable claim to an interest in the land.

The court found that RSI failed to establish a triable issue regarding its claim, as the evidence presented amounted to mere suspicion rather than proof of a proprietary interest or a statutory trust under the Construction Act.

The motion to renew the CPL was dismissed, and the CPL was discharged.

Costs were reserved to the motion judge presiding over the adjourned matter.

Plus Development Group Corp. brought a motion to oppose the confirmation of a Master's Report, which had awarded Roni Excavating Ltd. $523,241.99 plus costs for excavation work, including extras for the removal of contaminated soil.

Plus Development argued that the Master erred in evidentiary rulings, findings of fact regarding Roni Excavating's knowledge of soil conditions, and the authorization of extras.

The court dismissed Plus Development's motion, confirming the Master's Report, finding no palpable or overriding error in the Master's evidentiary rulings or findings of fact.

The court affirmed that Roni Excavating was entitled to charge for the removal of contaminated material as an extra, as contemplated by the contract and authorized by Plus Development's agent.

This endorsement addresses the costs arising from a successful Rule 21 motion where the defendant struck out the plaintiff's claim for breach of contract and negligence.

The court awarded costs to the successful defendant, affirming the general principle that a successful party is entitled to costs, especially when the matter was resolved early, minimizing legal fees and court resources.

The defendant's proposed costs of $10,000 were found to be fair and reasonable and were not disputed by the plaintiff.

The plaintiff, Devlan Construction Ltd., moved for summary judgment against the defendant, 2345171 Ontario Inc. (Guelph Medical Imaging), for outstanding construction costs related to tenant improvements, including alleged extras.

The defendant disputed authorization for the extras, the accounting, alleged deficiencies, and the profit margin.

Applying the Hryniak v. Mauldin framework, the court found that authorization for the extras was clearly given, dismissed the deficiency claims due to lack of pleading and evidence, and resolved the accounting and profit issues in favour of the plaintiff.

Summary judgment was granted for $105,599.74 plus pre-judgment interest, and funds paid into court to lift a construction lien were ordered to be paid out to the plaintiff.

This endorsement addresses an issue regarding the payment of costs from trust funds in a construction lien proceeding.

Quality Rugs of Canada Limited sought to have its previously awarded costs for a motion and action paid from the Trust Funds, which were established to secure claims of various lien claimants.

The court declined this request, affirming its prior costs endorsement.

The court reasoned that the issue had been previously decided, that "Other Lien Claimants" were not parties to Quality Rugs' specific proceeding and should not bear its costs, and that allowing such payment would create an impermissible priority for Quality Rugs' costs contrary to the rateable distribution provisions of the Construction Lien Act.

The plaintiff sought to enforce a Quebec default judgment against the personal defendant, Lorenzo Panarese, in Ontario.

Panarese challenged the Quebec court's jurisdiction and argued that the judgment should not be enforced due to breach of natural justice or fraud.

The court found that the Quebec court had a real and substantial connection to the dispute and that Panarese had attorned to its jurisdiction by participating in the Quebec proceedings without reserving on jurisdiction.

The court dismissed the defences of natural justice and fraud, concluding that the evidence did not support a finding of fraud and that issues of service and the right to be heard were already litigated and decided in Quebec.

The Ontario court granted recognition and enforcement of the Quebec judgment against Panarese.

This costs endorsement addresses three sets of costs arising from prior motions: Quality Rugs' unsuccessful claim for carriage/salvage costs, Quality Rugs' successful summary judgment motion, and Quality Rugs' costs of the action.

The court applied principles from the Courts of Justice Act and Rule 57.01 of the Rules of Civil Procedure, emphasizing proportionality and reasonable conduct.

Quality Rugs' claim for salvage costs was dismissed, with the court finding its tactics unreasonable and the claimed services not benefiting the lien class.

Consequently, Quality Rugs was ordered to pay partial indemnity costs to Carriage Counsel ($20,125 plus HST) and Casaco/Casimiro ($4,000 plus HST) for that motion.

For its successful summary judgment motion, Quality Rugs was awarded $7,500 plus HST from Casaco/Casimiro.

For the action, Quality Rugs was awarded $10,000 plus HST from Sedona Development Group (Lorne Park) Inc., Sedona Development Group Inc., Casaco Developments Inc., and Casimiro Holdings Inc. The court found Quality Rugs' overall costs claims to be disproportionate to the amount at stake and its conduct in pursuing salvage costs to be unreasonable, though not egregious enough for substantial indemnity.

The costs orders were subject to set-off.