COURT FILE NO.: 07-CV-344157

DATE: 20121116

SUPERIOR COURT OF JUSTICE – ONTARIO

IN THE MATTER OF the Construction Lien Act , R.S.O. 1990, c.C.30

RE: JUDDAV DESIGNS INC., Plaintiff

and

KELLY ANNE MARIE COSGRIFFE, CHRISTOPHER COSGRIFFE and CIBC MORTGAGES INC., Defendants

BEFORE: S. Chapnik J.

COUNSEL:
Kenneth W. Movat and Robin E. Spinks , Counsel for the plaintiff

Stefano G. Tripodi , Counsel for subcontractor, Modular Home Additions Ltd.

Eliot Kolers, Counsel for Kelly Anne Marie Cosgriffe and Christopher Cosgriffe

HEARD: November 14, 2012

ENDORSEMENT

[ 1 ] The defendants seek an order in the nature of an appeal, opposing the confirmation of Master Albert’s report dated January 21, 2011, resulting from a trial heard on September 16 and 17, 2010. In particular, they take issue with the Master’s findings and conclusions set out in written Reasons for Judgment released on November 30, 2010.

BACKGROUND

[ 2 ] Briefly, the plaintiff issued its statement of claim in November 2007 claiming damages under the Construction Lien Act , R.S.O. 1990, c. C30 (the Act ) for renovation and design work completed on the defendants’ home.

[ 3 ] In their defence and counterclaim, the defendants asserted breach of contract and negligence claims against the plaintiff, including a personal injury claim for damages sustained by Christopher Cosgriffe as a result of the plaintiff’s alleged negligence pertaining to the renovation.

[ 4 ] In August 2009, Patillo J. severed the defendant’s personal injury claim from the plaintiff’s claim under the Act , and referred the subject matter of the lien action to Master Albert, a construction lien Master.

THE DECISION OF THE MASTER

[ 5 ] Judy Davies is the sole director of the plaintiff company. As a threshold issue, the Master considered whether the defendants had contracted with the plaintiff company or with Judy Davies carrying on business as JD Design.

[ 6 ] As the plaintiff Juddav was not a named contracting party with the defendants, the Master held it was not entitled to collect monies owing to JD Design under the law of contract. She then considered whether the plaintiff could collect monies from the defendants based on principles of quantum meruit or unjust enrichment and found that the principle of unjust enrichment applied, noting that the parties agreed about the existence of a contract but disagreed as to the correct characterization of the contracting parties and there was no dispute that the services and materials claimed by the plaintiff were supplied. In doing so, she reviewed the relevant case law and statutory scheme and held that the remedy of unjust enrichment is available in actions brought under the Act . Moreover, she found that, in the circumstances of the case, the granting of an equitable remedy was just and fit.

ANALYSIS

[ 7 ] The defendants contend that since no contract existed between the plaintiff and the defendants, the plaintiff’s claim should have been dismissed. Moreover, in awarding it a remedy on the basis of unjust enrichment, the Master exceeded her jurisdiction under the Act and misapplied the law.

[ 8 ] In addition, any equitable arguments should have been addressed and determined in the same proceedings as the negligence action and the Master’s decision to award a remedy in favour of Modular Home Additions Ltd. (Modular), a subcontractor, was clearly wrong.

[ 9 ] The crux of the defendants’ motion lies in its assertion that the plaintiff is wrongly characterized in the decision as a “lien claimant” and the naming of Juddav as the plaintiff, an “error”. It focuses on paragraph 25 of the Judgment which reads:

In the present case, there is clearly an essential connection between Juddav’s claim for unjust enrichment and JD Design and Judy Davies’ project management of the Cosgriffe’s home renovation. Judy Davies is the sole proprietor of Juddav. She performed the work using the style name JD Design. There is no dispute that the services and materials were supplied . The only dispute in that regard is with respect to whether there were deficiencies and whether the contract was for a fixed price or on a “cost plus” basis. Judy Davies is the alter ego of Juddav. In error, she registered the lien in the name of the corporate entity when all of the dealings with the Cosgriffes had been in the name of JD Design or Judy Davies. On that basis, the lien and contractual claim failed. [Emphasis added]

[ 10 ] The Master then proceeded to consider whether the plaintiff could recover on the basis of unjust enrichment “in order to adjust the rights and liabilities of the parties”. The defendants contend that, in doing so, she confused the definition of “lien claimant” under the Act , its application to individual or corporate entities and the relevant case law.

[ 11 ] In summary, the defendants’ main argument is quite simply that the plaintiff is not a lien claimant and no equitable remedy is available to a party who is not a lien claimant. This assertion, however, ignores the rather unique factual circumstances of this case, the statutory scheme and the relevant jurisprudence.

[ 12 ] The scope of a trial under the Act is both broad and comprehensive. Pursuant to section 51, the Court is directed to

…take all accounts, make all inquiries, give all directions and do all things necessary to dispose finally of the action and all matters, questions and accounts arising therein or at the trial and to adjust the rights and liabilities of, and give all necessary relief to, all parties to the action.

[ 13 ] Section 58(4) of the Act deals with the power of a Master on a reference:

A Master or case management Master to whom a reference has been directed has all the jurisdiction, powers and authority of the court to try and completely dispose of the action and all matters and questions arising in connection with the action…

[ 14 ] By virtue of Section 63,

…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.

[ 15 ] Regarding the claim of Modular, the defendants take issue with the Master’s determination that Modular, as subcontractor, had a valid claim for lien. I do not accept the defendants’ submission.

[ 16 ] Section 59(2) of the Act permits a court to consolidate actions and award carriage to any person who has a perfected lien. In this case, more than one action was brought to enforce liens in respect of the same improvement. The Master made a finding of fact that Modular was entitled to recover the full amount of its lien claim from the owners with notice of the holdback. Modular proved its claim for lien and the Master’s determination of its entitlement to reimbursement for the funds spent on the renovation was, in my view, correct.

[ 17 ] What the defendants are attempting to do is, in effect, to have this court retry the case. As regards the lien action, Justice Patillo, when severing the personal injury claim from the construction lien claim, expressed the view that “the action being a claim for lien and/or restitution should be referred to the Master for trial on all issues relating to the work done on the defendants’ property.”

[ 18 ] The Master properly proceeded in that manner. She reviewed and made findings of fact on all the issues raised that related to the work done on the defendants’ property.

[ 19 ] Her decision was thorough, thoughtful and well-reasoned. She exercised her jurisdiction appropriately under the Act and issued an award consistent with the powers prescribed to her. Her reasons do not contain any overriding or palpable error of fact or misapprehension of fact or law. In my view, the Master applied the correct legal principles to the circumstances before her and properly considered the relevant principles gleaned from the jurisprudence. For example, as opposed to several other cases cited by counsel, her finding of an “essential connection” between the plaintiff’s claim for unjust enrichment and the project managed by JD Design and Judy Davies was a correct interpretation of the prevailing law.

CONCLUSION

[ 20 ] In the result, the motion of the defendants is dismissed. An order shall issue confirming the Report of Master Albert dated January 21, 2011. Costs of the motion are awarded to the plaintiff as against the defendants, Kelly Anne Marie Cosgriffe and Christopher Cosgriffe, jointly and severally, in the all-inclusive sum of $9,078.05. This amount is assessed on a partial indemnity basis in accordance with the plaintiff’s costs outline. It is, in my view, reasonable and within the reasonable contemplation of the parties. The plaintiff may provide a portion of the costs award to Modular, if so advised.

Chapnik J.

Date: 20121116