ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 26048/12
DATE: 2013-07-02
BETWEEN:
984499 ONTARIO INC. operating as EKARTE GENERAL CONTRACTING
Plaintiff
– and –
1159337 ONTARIO LTD. and GARY ULIAS & ASSOCIATES INC. carrying on business as GUPM CONSTRUCTION MANAGERS
Defendants
Brendan D. Bowles as agent for M. Carter, Counsel for the Plaintiff
Christine A. Powell, Counsel for the Defendants
HEARD: June 6, 2013
Whalen, J.
REASONS ON MOTION
[1] The plaintiff is a general contractor that provided materials and services for a hotel renovation project in Sault Ste. Marie. The defendant numbered company is the owner of the lands and building on which the project was conducted and the defendant Gary Ulias & Associates Inc. is the owner’s personal representative and construction manager on the project.
[2] When the plaintiff was not paid for invoices it had submitted, it registered a Construction Lien Claim on November 16, 2012 for the amount of $257,494.24. By my order of December 21, 2012 the Lien was vacated from title when 11593337 Ontario Ltd. paid $357,494.24 into court as security (the amount required by the Act and Rules).
[3] To preserve the lien, the plaintiff must “perfect” it by commencing an action to enforce within a defined 45-day period: Construction Lien Act, R.S.O. 1990, c. C.30, ss. 31, 34 and 36. (“the Act”)
[4] S. 36 of the Act provides:
What liens may be perfected
- (1) A lien may not be perfected unless it is preserved. R.S.O. 1990, c. C.30, s. 36(1).
Expiry of preserved lien
(2) A lien that has been preserved expires unless it is perfected prior to the end of the forty-five-day period next following the last day, under section 31, on which the lien could have been preserved. R.S.O. 1990, R.S.O. 1990, c. C.30, s. 36(2).
How lien perfected
(3) A lien claimant perfects the lien claimant’s preserved lien,
(a) where the lien attaches to the premises, when the lien claimant commences an action to enforce the lien and, except where an order to vacate the registration of the lien is made, the lien claimant registers a certificate of action in the prescribed form on the title of the premises; or
(b) where the lien does not attach to the premises, when the lien claimant commences an action to enforce the lien. R.S.O. 1990, c. C.30, s. 36 (3). (emphasis added)
[5] Section 50 of the Act further provides:
Lien claim enforceable in action
- (1) A lien claim is enforceable in an action in the Superior Court of Justice in accordance with the procedure set out in this Part. R.S.O. 1990, c. C.30, s. 50 (1); 2006, c. 19, Sched. C, s. 1 (1).
Trust claim and lien claim not to be joined
(2) A trust claim shall not be joined with a lien claim but may be brought in any court of competent jurisdiction. R.S.O. 1990, c. C.30, s. 50 (2).
[6] There is no dispute with the procedural aspects of the lien registration, payment into court and resulting vacating of the lien. The question is whether an ensuing Statement of Claim is sufficient to effectively perfect and therefore preserve the lien. If it is, there is no dispute that it was filed within the 45-day limit.
[7] On December 21, 2012, the same day the vacating order issued, the plaintiff issued a Statement of Claim that was properly served on the defendants. The Statement of Claim was not styled “In the matter of the Construction Lien Act…”, as is usual. The prayer for relief sought:
(a) damages “arising from breach of contract currently estimated in the sum of $257,494.24”;
(b) alternatively compensation in the same amount on the basis of quantum meruit;
(c) in the further alternative compensation and/or restitution in the same amount for unjust enrichment;
(d) prejudgment interest;
(e) costs, and;
(f) HST as applicable.
[8] The Statement of Claim then went on to describe the parties, the project, the work done, invoicing and the alleged failure to pay some invoices. Paragraphs 19 and 20 asserted the right to compensation on the basis of unjust enrichment and quantum meruit, then paragraph 21 stated:
- The Plaintiff puts the Defendant 1159337 Ontario Ltd. on notice that it has not been paid and pleads that it is entitled to the protection of and reliance upon the trust provisions of the Construction Lien Act of Ontario.
[9] An “Information for Court Use” form was issued and served along with the Statement of Claim. Rule 14.03(4.1) prescribes and mandates this one-page form, which is to be filed at the same time. The form described the nature of the proceeding as an “action” (as opposed to an application or class action); indicated that it was not a simplified proceeding pursuant to Rule 76, and; stated that it was a “Construction lien”. In so stating, the form asked the claimant to “Select the one item that best describes the nature of the main claim in the proceeding.” The underlining is part of the form. The form offers 24 options with a tick-box beside each. In this case, only the “Construction Lien” option was checked. Other options available included “Construction Law (other than construction lien)”, “Contract Law”, and “Trusts, fiduciary duty”.
[10] The parties agree that the law requires a generous and liberal interpretation of the lien claimant’s form of pleading. See Clarkson Co. v. Ace Lumber, 1963 4 (SCC), 1963 CarswellOnt 28 (S.C.C.); C.M. & D. Drilling & Tunnelling Inc. v. McNally Construction Inc., 2008 CarswellOnt 1261 (S.C.J.); 1610898 Ontario Inc. v. Dinardo, 2006 CarswellOnt 1495 (S.C.J.).
[11] The defendants’ position is that the lien was not preserved because it was not perfected by commencing an action to enforce the lien against the amount paid into court. The prayer for relief in the Statement of Claim did not claim enforcement of the lien and enforcement was not mentioned anywhere else in the document. Nor did it mention the lien claim registered on title, the vacating order, the monies paid into court or perfection of the lien. The only mention of the Construction Lien Act in the entire pleading was in paragraph 21 where the plaintiff gave “notice that it has not been paid and pleads that it is entitled to the protection of and reliance upon the trust provisions of the Construction Lien Act of Ontario”.
[12] An “Information for Court Use” form was issued and served along with the Statement of Claim. Rule 14.03(4.1) prescribes and mandates this one-page form, which is to be filed at the same time. The form described the nature of the proceeding as an “action” (as opposed to an application or class action); indicated that it was not a simplified proceeding pursuant to Rule 76, and; stated that it was a “Construction lien”.
[13] Defendants’ counsel further submitted that the Statement of Claim could not be ignored when interpreting the pleading or the plaintiff’s intent. The meaning and intention of the pleading must be found within the document itself. While a generous and liberal reading of the Statement of Claim was appropriate in order to determine the claimant’s intent, the entire document must be interpreted even-handedly, as a whole, and not selectively. Specifically, a narrow reading of paragraph 21 should not be taken in order to minimize the reference to a trust claim, while interpreting the rest of the document broadly to find that enforcement of the lien was intended. The defendants observed that plaintiff’s failure to make any mention of the lien was ultimately fatal.
[14] Plaintiff’s counsel admitted the extreme inadequacies of the Statement of Claim as an effective pleading, but emphasized the contextual importance of the Information for Court Use form, pointing out that it was mandatory and very pointed. It was not an afterthought. Noting the sole characterization of the action as a construction lien among all the other possible choices in the form, he submitted that “the only rational conclusion was that the action was one to enforce a lien”.
[15] While acknowledging the reference to a construction lien trust claim in paragraph 21 of the Statement of Claim, plaintiff’s counsel suggested that that paragraph was itself seriously deficient in pleading because it was ambiguous.
[16] The issue before the court is a very narrow one. It is a difficult question, however, because of the glaring deficiencies in the Statement of Claim from whatever perspective, lien enforcement or trust remedy. While it is a pleading, I conclude that it is seriously incomplete and lacking in respect of either remedy.
[17] I agree that I must take the Information for Court Use form as part of the pleading process.
[18] There is no doubt that paragraph 21 of the Statement of Claim muddied the water. Yet I agree that it did not clearly assert a trust.
[19] When one looks at the action in its broader context and the steps already taken, it is difficult to think that the plaintiff was asserting anything but a construction lien and its enforcement.
[20] I also recognize that many of the factual pleadings are quite accurate in the context of the construction lien claimed.
[21] The fact of the effectively registered lien claim, the payment of funds into court as security for that lien, the confluence of factual background pleaded with the factual underpinnings of the registered lien claim, the coincidence of the filing of the Statement of Claim with the vacating order and payment into court, and the characterization of the action in the Information for Court Use form all point to an intention to enforce the lien.
[22] I am also mindful of the question of prejudice.
[23] As the plaintiff pointed out, S. 6 of the Construction Lien Act contains curative provisions, although not in respect of a Statement of Claim.
[24] For all these reasons, the defendants’ motion is denied. The plaintiff is ordered to file and serve an Amended Statement of Claim within 20 days of the date of the issuing of these Reasons.
[25] At the end of the hearing of the motion, counsel provided me with their briefs on costs for reference when a decision had been made. Each side sought costs if successful and left it to the court’s discretion.
[26] However, I am not inclined to award costs to any party. The plaintiff was the cause of the motion. Its drafting of the Statement of Claim was woefully lacking and virtually invited the motion that was brought. The issue was validly put by the defendants who I really cannot blame for moving as they did. Still, not having been successful, they should not be rewarded by an award of costs. I conclude that justice is done on both sides by ordering that there be no costs.
Whalen, J.
Released: 2013-07-02