SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: Milton 1287/12
DATE: 2012-10-15

RE: FLEXIBLE CONTRACTORS INC.

v.

1408023 ONTARIO INC., CMLS FINANCIAL LTD. and 2234185 ONTARIO INC.

BEFORE: Justice M.J. Donohue

COUNSEL: Adam Jarvis, for the Plaintiff

Allan D. J. Dick, for the Defendants

HEARD: September 12, 2012

E N D O R S E M E N T

[ 1 ] The defendants bring this motion to discharge the plaintiff’s lien and Certificate of Action and to dismiss the plaintiff’s action. They do so pursuant to section 47(1) of the Construction Lien Act , R.S.O. 1990 c. C-30 .

[ 2 ] The onus is on the moving party. ( Beaver Materials Handling Co. v. Hejna 2005 23127 (ON SC) , [2005] OJ No. 2733 (S.C.J.) paragraph 24 .

[ 3 ] On summary judgment motions, the courts are now in a position to weigh and assess evidence and draw inferences from the evidence presented to determine whether a trial is necessary. (Rule 20.01 ad 20.04 of the Rules of Civil Procedure ).

[ 4 ] The question is whether “the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?” ( Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764 , paragraph 253 ).

[ 5 ] The responding party must put their “best foot forward”. ( Combined Air Mechanical Services ….para 54).

Litigation Background

[ 6 ] The plaintiff was retained by the tenant to make leasehold improvements.

[ 7 ] The plaintiff worked under two contracts during the fall of 2011. It claimed a lien on January 17, 2012 and registered a certificate of action on March 9, 2012. It issued their statement of claim March 9, 2012.

[ 8 ] The claim for lien was based on an alleged combined contract price of $215,650.33. The plaintiffs were paid $138,205.97. The lien registered was for $77,445.33. (It is noted that their math is not correct.)

[ 9 ] The lien states that services or materials were supplied from August 1, 2011 to December 12, 2011. On cross-examination, the plaintiff admitted the work started after September 20, 2011. This part of the lien is, therefore, also not correct.

[ 10 ] The motion to set aside the lien was originally returnable August 2, 2012. It was adjourned to September 12, 2012 to allow the plaintiff to file responding materials and for cross-examinations to be held if required.

Section 19 Notice Deficiency

[ 11 ] The lien is registered against the owner of the property, 1408023 Ontario Inc. as well as the tenant 2234185 Ontario Inc. Andrew Donaldson admits to being president of both numbered companies but he deposes that each company is owned by different shareholders. This evidence was not disputed by the plaintiff.

[ 12 ] The contracting documents and invoices were with 2234185 Ontario Inc., the tenant. No contrary evidence was provided by the plaintiff.

[ 13 ] The evidence by Mr. Donaldson is that the property owner, 1408023 Ontario Inc., was never given the required written notice under section 19(1) of the Construction Lien Act of the proposed lien.

[ 14 ] The plaintiff had no evidence that written notice was given to 1408023 Ontario Inc. The plaintiff argued that there was constructive notice given as Mr. Donaldson was president of both numbered companies. The plaintiff did not provide any authority in support of that proposition and it is inconsistent with the requirement in section 19(1) of the Act that notice be in writing.

[ 15 ] The law in this area is reviewed by the Divisional Court in 1276761 Ontario Ltd. v. 2748355 Canada Inc., 2006, CarswellOnt 5392 , 55 C.L.R. (3 rd ) 54 . Earlier case law had considered that “notice events” without a written notice to the landlord might suffice in certain cases. The divisional Court clearly found that a written notice was required,

…we conclude that the interpretation in the case law that the notice requirement contemplated in the statute may be fulfilled by ‘notice events’ alone, without a document providing notice in writing, does not conform with the statute. Notice events may only supplement the notice provided. 1276761 Ontario Ltd. v 2748355 Canada Inc. paragraph 26.

[ 16 ] The plaintiff has not proven any evidence of a written notice document. I find this issue does not require a trial. I order the claim for lien vacated as against the defendant 1408023 Ontario Inc., the action against it dismissed and the registration of the claim for lien and certificate of action discharged from the owners’ interest to the property.

Two Contracts of Work

[ 17 ] The plaintiff alleged that the Stucco and Paint (S & P) contract was for $49,612.55, the Balance contract work was alleged to be for $156,037.78. These two total $205,650.33. The lien stated $215,650.33 was claimed to have been done on the property.

[ 18 ] The parties agree that the defendants paid $38,205.97 for work on the S & P contract. The parties agree that the defendants paid $100,000.00 on the Balance contract.

[ 19 ] The plaintiff treated both contracts as one when it filed one lien for the two contracts. This court will do the same for the purpose of this motion.

(a) S & P Contract

[ 20 ] The original quote for this contract was for $43,445.65, as evidenced by the document dated August 17, 2011. The invoice sent to 2234185 Ont. Inc. on December 9, 2011 was for $49,612.65. As the defendant paid the plaintiff $38,205.97, there is a shortfall on that invoice of $11,406.68.

[ 21 ] The defendant agreed that if that were the only issue then the matter would have to go to trial. The dispute over what extras the plaintiff was entitled to would need to go before a judge. The issue as to whether the defendant 2234185 Ont. Inc. was entitled to claims for deficiencies would require a trial judge to assess.

[ 22 ] The defence argued that they can prove an overpayment on the Balance contract such that the potential shortfall issue on the S & P contract is negated and no trial is required.

(b) Balance Contract

[ 23 ] The Balance contract between the plaintiff and the defendant 2234185 Ontario Inc. is dated November 8, 2011 and amounts to $260,000.00. Of that contract, the plaintiff’s evidence is they performed all the work set out in the quantity surveyor’s report of January 11, 2012. The quantity surveyor was Oktay Selcuk. He concludes that the work performed amounted to $146,936.00 plus contractor’s overhead and profit and HST. No information is provided by the plaintiff as to “contractor’s overhead, profit and HST.”

[ 24 ] The report by Mr. Selcuk does not satisfy the Rule 53 requirement of an acknowledgement of expert’s duty. The report does not set out his qualifications, although it is stamped as a quantity surveyor’s report. The report as is would not suffice to allow Mr. Selcuk to give expert evidence at trial. The plaintiff has not put their “best foot forward” in providing a proper expert report for the court’s consideration.

[ 25 ] The report is of limited use as Mr. Selcuk did not attend at the site to assess the work done. His report is based on information provided in drawings, site photos and “some invoices” provided by the plaintiff. He goes on to state:

…it is my understanding from photos and meetings that there are many change orders occurred during the construction without any proper documents and drawings. Therefore it is very difficult for me to quantify all works accurately.

[ 26 ] The plaintiff has not presented credible and reliable evidence how they would prove the value of the work they did that would support the lien claim.

[ 27 ] The defendants, in response, presented evidence that the parties reduced the contract of $260,000.00 for various reasons. On questioning, the plaintiff agreed that the landscaping for $25,000.00 was removed from the contract; cedar canopy work for $60,000.00 was removed from the contract; the sidewalks were not done for $15,000.00; and the asphalt for $60,000.00 was removed. (On questioning, the plaintiff could not remember what the asphalt costing was but his quote of December 17, 2011 confirmed a $60,000.00 amount.) When the contract is reduced for removals it becomes $100,000.00.

[ 28 ] The plaintiff gives evidence that they had to do more excavation than contemplated. They seek payment for having to dig to eight feet rather than four feet for a trench for a wall they were to build.

[ 29 ] However, the plaintiff agreed that, for a specified amount, it would excavate to the depth required by the soil engineer. The defendants provided affidavit evidence that it is the contractor’s responsibility to dig to the depth that the soil engineer requires. The plaintiff provided no contrary evidence or argument.

[ 30 ] The issue becomes then, of the $100,000.00 that was left on the contract, what work did the plaintiff do. On questioning, the plaintiff confirmed that he was to building 200 linear feet of wall and he did not do so. He did not pour any of the concrete for those walls. He admitted that he did only half of the forming of the wall. He admitted that he did not build the 55,000 square foot concrete floor of the patio. He admitted that part of the curb work was not done. The conclusion must be that he did less than $100,000.00 of the contracted work.

[ 31 ] On questioning, the plaintiff agreed that they had done excavation services; supplied 5 MPA concrete forms and footings; built some wall forms and rebar; installed some piers and columns; provided some footing concrete and rebar; and, as of December 9, 2011, that was all of the work they performed on the property. The plaintiff invoiced the defendant 2234185 Ontario Inc. for those five items in the total amount of $100,000.00, which was an amount that the numbered company had paid in advance.

[ 32 ] There is evidence that, on the same day the invoice was sent to the numbered company, Mr. Donaldson wrote stating that the amount billed was excessive for the work that had been done.

[ 33 ] Affidavit evidence from defence witnesses was given that some of the work that was done had no value. The formwork and location of some of the concrete piers deviated from the architectural plans. The defence expert report by Mr. Grosso is dated July 4, 2012. His evidence is that the value of the work done by the plaintiff had a value of between $27,600.00 and $18,500.00 rather than the $100,000.00 that was billed. (Mr. Grosso is a construction consultant and general contractor. His curriculum vitae was attached as was his Form 53 acknowledgement of expert’s duty.) His estimates do not address the costs to the defence of remedying the deficiencies and damages.

Conclusion

[ 34 ] A full appreciation of the issues to be tried can be discerned from the evidence filed by the parties. Having carefully reviewed the issue, I have concluded no trial is required in this action. There is a sufficient record provided between admissions of the plaintiff, the expert evidence of the defence, and the documents produced for me to have a full appreciation of the evidence and issues. I find that the amount paid to the plaintiff ($138,000.00) exceeds the value of any work done on the property. The matter does not require a trial for me to determine that there are no monies owing under the lien.

[ 35 ] I, therefore, order a discharge of the plaintiff’s lien and certificate of action as against 2234185 Ontario Inc. I dismiss the plaintiff’s action as against 2234185 Ontario Inc. I order the claim for lien and the certificate of action shall be vacated from title to the lands.

The defendant CMLS Financial Ltd.

[ 36 ] The statement of claim stated the defendant CMLS is a financial institution which holds a mortgage on a portion of the lands.

[ 37 ] No submissions were made by either party as to the claim. If the parties require the court to consider that claim then written submissions are required within 14 days.

Costs

[ 38 ] If the parties are unable to agree on costs, they are to file written submissions of not more than three pages, not including offers to settle, within 14 days of this order.

M.J. Donohue, J.

DATE: October 15, 2012

COURT FILE NO.: Milton 1287/12

DATE: 2012-10-15

SUPERIOR COURT OF JUSTICE - ONTARIO RE: FLEXIBLE CONTRACTORS INC. v. 1408023 ONTARIO INC., CMLS FINANCIAL LTD. and 2234185 ONTARIO INC. BEFORE: Justice M. J. Donohue COUNSEL: A. Jarvis, for the Plaintiff D.J. Dick, for the Defendants ENDORSEMENT M.J. Donohue, J.

DATE: October 15, 2012