ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-09-10000
DATE: 2013-10-29
B E T W E E N:
CJK Goodmen Inc.
John Kranjc, for the Moving Party/Applicant
Moving Party/Applicant
- and -
SRR Stables Inc., Shawn Robinson, Julie Robinson and North Waterloo Farmers Mutual Insurance Company
Michael Saccucci, for the Respondent William Kennedy
Respondent
HEARD: June 25, 2013
The Honourable Madam Justice J. A. Milanetti
REASONS FOR JUDGMENT
Background
[1] This is a priority dispute between the applicant CJK Goodmen (a contractor) and William Kennedy (a second mortgagee).
[2] Each seek access to insurance proceeds of $43,270.55 paid into court by the defendant North Waterloo Farmers Mutual Insurance Company pursuant to the order of Justice Whitten dated February 13th, 2012.
[3] That order references funds paid by the insurer as a result of fire to premises owned by SRR Stables Inc. and Julie and Shawn Robinson on February 8th, 2007.
[4] The applicant argues that as a lien claimant they have priority – they improved the property (to their detriment), and ultimately enhanced the value for the beneficiaries of the proceeds of the sale. They claim priority pursuant to Section 85 of the Construction Lien Act given the apparent insolvency of the payor.
[5] Mr. Kennedy makes a claim given his status as a mortgagee.
[6] Despite the oral argument and factums filed by each of CJK Goodmen and the non-party, Mr. Kennedy, I find I have more questions than answers. As a result, I have read and reread all of the motion materials numerous times.
[7] It seems that there were two fires destroying the barn and equestrian facilities of the respondents’ property – one on February 8th, 2007 and one on November 7th, 2007.
[8] It would appear that the money in court was paid out by the insurer as a result of the first fire.
Entitlement Of CJK Goodmen Inc. To The Funds
[9] I was told that the applicant CJK Goodmen were hired to reconstruct the barns/equestrian facilities subsequent to the second fire. I was further told that they commenced work (which they valued at $435,000) in EARLY 2008.
[10] I was provided neither evidence nor specifics as to the actual start date or the progress of the work. This is obviously relevant to the timeliness of the lien registered October 22nd, 2008 for the sum of $247,000.
[11] The applicant did obtain a judgment against the personal defendants (for $166,000), and the corporate defendants – now apparently insolvent (for $247,444). I did not see those judgments but was told of them.
[12] I understand that Julie Robinson cannot be found but that Shawn Robinson had made some payments on his personal debt to CJK Goodmen Inc.
[13] In terms of the timeliness of the lien, I read that the applicant learned that money had been paid out by the insurer to the personal defendants on October 15th, 2008. CJK Goodmen’s lien was registered seven days later.
[14] Interestingly, the funds that were paid out appear to have been paid as a result of the February 2007 fire. I did not hear that the applicant was retained to do reconstruction work in connection with that rebuild.
[15] Mr. Kennedy alleges that the lien is out of time as the work was substantially complete by May 2008. The applicants did not respond to this allegation. At the end of the day, the evidence before me is insufficient to establish that a valid, timely lien is in play. It may well have been on time; I cannot say.
[16] As such, I have not been persuaded that the money paid into court by the insurer should be paid out to the applicant CJK Goodmen at this stage. More and better evidence is required.
Entitlement Of William Kennedy To The Funds
[17] Mr. Kennedy is not a party to this litigation. He did however file a motion and factum and sent his counsel to respond to the applicant’s motion.
[18] Mr. Kennedy seeks payment out of the part of the funds held in court. He claims to be a second mortgagee who was shorted when the property was sold under power of sale on April 11th, 2010.
[19] The power of sale proceedings were commenced by the first mortgagee, the Bank of Nova Scotia, who I understand themselves sustained a shortfall. I am at a loss to explain same in the face of payment to the second mortgagee of funds of $203,651.76. The story gets curiouser and curiouser.
[20] It seems that Mr. Kennedy obtained judgment against SRR Stables on September 9th, 2009 for $230,442. The Bank of Nova Scotia obtained judgment against SRR Stables on October 10th, 2009 for $203,471.53 and then commenced power of sale proceedings.
[21] Mr. Kennedy claims entitlement to part of the funds paid into court by the insurer as he sustained a shortfall on his mortgage registered February 4th, 2008. He says he received $203,651.76 from the disposition of the property. I was not told when or by whom. He thus seeks $31,147.10[^1] of the money paid into court pursuant to the Minutes of Settlement between his company Killala and SRR Stables after both fires (in February and November 2007) on December 4th, 2007.
[22] Pursuant to the Minutes, Killala was to be a named a loss payee on the same policy of insurance that had been in place at the time of both fires (again both predate the Minutes and the mortgage).
[23] Most importantly however, Mr. Kennedy’s February 4th, 2008 second mortgage apparently relates to funds that he (and or his company Killala) advanced to SRR Stables and the Robinsons in 2005 or 2006.
[24] Mr. Kennedy said he advanced $250,000 all those years before and that such money had always been intended as a loan.
[25] I am not confident that this mortgage will stand up to scrutiny given its registration so many years after the funds were advanced.
[26] The legal concept of past consideration being no consideration comes to mind. Although this was not raised by the applicant, I have significant concerns as to the propriety of this mortgage and would not order funds paid out to Mr. Kennedy in the absence of further and better evidence.
[27] As such, at the end of the day neither party shall be entitled to payout of these funds paid into court at this juncture. A trial of the issue is required given my numerous and varied concerns about the positions of both of the parties who appeared before me. Viva voce evidence and further/better documentary evidence will be required to be presented. Updated facta shall be required. I would suggest that the matter go to one of our trial sittings (with a time estimate for hearing). It shall be added to a sittings, with formal consent to the date chosen being presented by the parties in writing to the trial coordinator.
[28] Costs of this motion shall be left to the judge hearing the trial of the issue.
MILANETTI J.
Released: October 29, 2013
COURT FILE NO.: CV-09-10000
DATE: 2013-10-29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CJK Goodmen Inc.
Moving Party/Applicant
- and –
SRR Stables Inc., Shawn Robinson, Julie Robinson and North Waterloo Farmers Mutual Insurance Company
Respondent
REASONS FOR JUDGMENT
MILANETTI J.
JAM:mg
Released: October 29, 2013
[^1]: The difference between the judgment of $234,042.13 and his payout of $203,651.76.