OSHAWA COURT FILE NO.: 06-45784

DATE: 20141706

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JOSEPH PROCHAZKA

Plaintiff

– and –

44 BOND STREET WEST DEVELOPMENT INC. and R.O.M. CONTRACTORS INC., carrying on business as ROSS CLAIR

Defendants

Self-Represented

J.A. Armel, for the Defendant R.O.M Contractors Inc., carrying on business as Ross Clair

HEARD: May 27, 2014

REASONS FOR JUDGMENT

DiTOMASO J.

INTRODUCTION

[1] By Statement of Claim dated August 21, 2006, the Plaintiff Joseph Prochazka (“Prochazka”) commenced an action pursuant to the provisions of the Construction Lien Act R.S.O. 1990, c. C.30 claiming judgment in the amount of $110,000 against the Defendants 44 Bond Street West Development Inc. (“44 Bond Street”) and the Defendant R.O.M. Contractors Inc., carrying on business as Ross Clair (“Ross Clair”) on account of drywall services provided by Mr. Prochazka to the Defendants regarding the construction of a condominium project located at 44-50 Bond Street in the City of Oshawa (“the Project”).

[2] Mr. Prochazka is a drywall contractor. Ross Clair is a general contractor and was also the project manager in respect of the Project. 44 Bond Street was the owner of the lands and premises in Oshawa where the condominium units were being constructed.

[3] The action was discontinued as against the owner 44 Bond Street. Mr. Prochazka caused to be registered a lien against the subject lands on July 12, 2006.

[4] Ross Clair vacated Mr. Prochazka’s claim for lien by way of payment of a lien bond into court to the credit of Mr. Prochazka’s action.

[5] The pleadings raise a number of issues. In his Statement of Claim[^1], Mr. Prochazka alleges that Ross Clair retained him personally on or about September 13, 2005 to perform general construction work and to supply all labour regarding drywall services to the Project. He claims that he worked on the Project until May 31, 2006 when Ross Clair terminated his services. He claims that he is owed $110,000 for such services and labour rendered.

[6] Ross Clair denies that it entered into a contract with Mr. Prochazka personally in relation to the Project. In the Statement of Defence, Ross Clair states that it did not enter into a contract with Mr. Prochazka in respect of the Project. Rather, Ross Clair alleges that pursuant to purchase order #06-033-1 dated September 30, 2005 it entered into a contract with 945179 Ontario Limited carrying on business as Centennial Drywall (“Centennial Drywall”) for the supply of all labour for installation of drywall partitions/ceilings, metal door frames and t-bar ceils/tile, installation and taping ready for paint (“the Contract”). The said Contract was in the amount of $512,000 plus GST[^2]. Further, at para. 6 of the Statement of Defence, Ross Clair alleges the Contract stipulated that Centennial Drywall was required to employ members of Drywall Acoustic Drywall Lathing and Insulation Local 675 of the United Brotherhood of Carpenters and Joiners of America (“Local 675”) in relation to all drywall work to be completed on the Project. The Contract further stipulated that Centennial Drywall was to totally complete its work by the end of January 2006, pending production of all other trades[^3].

[7] Ross Clair has pleaded that it did not have a contract with Mr. Prochazka. The contract was with Centennial Drywall. Therefore, Ross Clair states that Mr. Prochazka did not supply services or materials to the Project and is not entitled to a lien upon the interest of the owner of Project. Ross Clair states that Mr. Prochazka’s lien ought to be discharged[^4].

[8] By order of Salmers J. dated August 6, 2013, the trial of a discrete issue was ordered The issue to be decided is whether Ross Clair’s Contract was with Joseph Prochazka personally or with some other entity.

[9] This court dealt with that discrete but critical issue at trial on May 27, 2014 – almost eight years after the Statement of Claim was issued.

ISSUE

[10] As stated, the issue to be determined is whether Ross Clair’s contract is with the Plaintiff Joseph Prochazka personally or with some other entity.

POSITIONS OF THE PARTIES

Position of the Plaintiff Joseph Prochazka

[11] Mr. Prochazka submits that he had a verbal agreement with the owner of Ross Clair, Sean Richardson about the price of the Contract and who was going to do the work. He submits that Mr. Richardson agreed with Mr. Prochazka that the Contract price was $512,000. As for who would do the work, they agreed that Mr. Prochazka was going to do the work personally and that he would assemble a crew of workmen known to him in order to perform the work on the Project. They further agreed payments for the work would be made to Mr. Prochazka’s sole proprietorship, Rako Interior and to NTC Interior, a sole proprietorship of Mr. Prochazka’s friend.

[12] Mr. Prochazka submits that there was no written contract entered into between Ross Clair and all arrangements were verbal. Further, he submits that payments were never made to Centennial Drywall.

[13] Lastly, Mr. Prochazka submits that Ross Clair owes him money based upon his verbal agreement with Mr. Richardson that Mr. Prochazka personally would perform the drywall, taping and metal frame work at the Project.

Position of the Defendant Ross Clair

[14] Ross Clair submits that its contract was with Mr. Prochazka’s numbered company namely, 945179 Ontario Limited, carrying on business as Centennial Drywall in respect of the Project. Ross Clair issued a purchase order to the numbered company carrying on business as Centennial Drywall in the amount of $512,000 plus GST. The purchase order was signed by Mr. Richardson on behalf of Ross Clair. Although Mr. Richardson recalled seeing a signed copy on behalf of Centennial Drywall, he could not locate such a document.

[15] Further, both Ross Clair and Centennial Drywall were union companies bound by a Residential Agreement with Local 675. Pursuant to this agreement, Ross Clair was required to use union sub-trades and Centennial Drywall was required to use union labourers. Unbeknownst to Ross Clair, it is submitted that Centennial Drywall was using both union and non-union workers on the Project and Centennial Drywall was not making remittances to the union contrary to the Residential Agreement.

[16] As a result, the union grieved against both Ross Clair and Centennial Drywall to the Ontario Labour Relations Board.

[17] Ross Clair denies that it entered into a contract with Joseph Prochazka personally for drywall work on the Bond Street Project. It submitted that Mr. Prochazka was not entitled to perform the work personally. Rather, Ross Clair contracted with Centennial Drywall to perform the work. Both companies were union companies and were bound by their agreement with the union Local 675.

[18] Accordingly, Ross Clair submits that Mr. Prochazka’s lien be discharged and his action be dismissed with costs.

ANALYSIS

The Evidence – The Plaintiff’s Case

[19] Mr. Prochazka testified at trial. Also testifying on behalf of the Plaintiff were two labourers Mariusz Bochenek and Paul Prancik and an associate Paul Jurik.

Mariusz Bochenek

[20] Mr. Bochenek testified that he never worked for Centennial Drywall on the Project and never received a cheque from Centennial Drywall. He worked with Mr. Prochazka and other workers. He received cheques from either Rako Interior or NTC Interior.

[21] In cross-examination he admitted that he knew that he was a member of union Local 675. Put to him was that under the Collective Agreement he could only work under the union. However, Mr. Bochenek testified that he did not have a job. He knew that he had to work on a union job but he was desperate. He could not recall if he saw union labourers on the Project. He thought Centennial Drywal had closed and did not exist anymore. He did not know that the business could be closed so non-union workers could be taken on. He did not know that Mr. Prochazka could take on non-union work.

[22] In re-examination he did not agree that he would have to work only for the union but that he could take on other jobs as well.

Paul Prancik

[23] As in the case of Mr. Bochenek, Mr. Prancik was approached by Mr. Prochazka to help frame drywall at the Project. He was not approached by Centennial Drywall. He had worked for Centennial Drywall a long time ago. He usually worked for a company named Four Seasons Drywall but was not working when approached by Mr. Prochazka. He only worked on the Project for a few weeks and then returned to work for Four Seasons Drywall.

[24] In cross-examination, Mr. Prancik agreed that he was a member of union Local 675 and was waiting for a call to do a union job. He was on the waiting list. It was his view that while waiting he was allowed to look for private work and that nobody mentioned that he could not do this although he never asked the union if he was permitted to do non-union work. Mr. Prancik testified that he knew that Centennial Drywall was a union company.

Paul Jurik

[25] Mr. Jurik is the sole proprietor of NTC Interiors. He was approached by Joseph Prochazka to do work on the Project. Mr. Jurik is not a union member. He previously did work for Centennial Drywall which he knew to be a union contractor. He knew Centennial Drywall to be bound by a Collective Agreement with the union but was unaware of all stipulations. Mr. Prochazka called him for help. He did not know if the job was a union or non-union job but decided to help Mr. Prochazka anyway. He was not paid by Centennial Drywall on the Project. Rather, he received the cheque directly from Ross Clair pursuant to direction from Centennial Drywall. Mr. Jurik was unaware of the contractual arrangements between Ross Clair and Joseph Prochazka.

[26] In re-examination he testified that with the funds from Ross Clair, he paid other workers who were working with Mr. Prochazka. He did the same thing after receiving a cheque or cheques from Rako Interior.

Joseph Prochazka

[27] Mr. Prochazka testified at trial. His evidence in chief was rather brief as compared to cross-examination. He denied that he was known as “Centennial Joe”. He testified that he never approached Mr. Richardson as Centennial Drywall. Further, he never ever performed work at the Project in the name of Centennial Drywall. Rather, he testified that he had an agreement with Mr. Richardson that Mr. Prochazka personally would do the drywall work with Mr. Prochazka’s labourers.

[28] In cross-examination, Exhibit 1 purchase order #06-033-1 dated September 20, 2005 was put to Mr. Prochazka. This purchase order is directed to Centennial Drywall 945179 Ontario Limited to the attention of Joe Prochazka regarding this project. The purchase order stipulated under “Scope of Work” that all drywall work must be performed by Local 675 or Oshawa local chapter. The purchase order amount was $512,000 as negotiated. Mr. Prochazka submitted no quotes or any documentation in writing and he denied that this was the only document showing the relationship between the parties and that he had cheques which were not shown to the court. He testified that he started work on September 13, 2005 and the purchase order was dated two weeks after the start date. He agreed that the identity of the numbered company was correct and that it was his numbered company. Previously, Centennial Drywall did work for Ross Clair on the Clarkson School Project. That project was a union job regarding which Centennial Drywall made remittances to the union and completed its obligations with the union.

[29] Mr. Prochazka agreed that Ross Clair knew that Centennial Drywall was bound by a Collective Agreement with the union and Ross Clair knew that Centennial Drywall was a union company. Although asked for production of the Collective Agreement with the union at examinations for discovery Mr. Prochazka could not produce such a document. He was shown the most recent copy of the Residential Agreement between Interior Systems Contractors Association of Ontario and Drywall Acoustic Lathing and Insulation Local 675 effective May 13, 2013 to April 30, 2016 (Exhibit 4). He has seen this document before.

[30] Also put to him was Schedule “A”, agreement between Local 675 and Centennial Drywall 945179 Ontario Limited dated February 10, 1998. He identified his signature on page 2 of the document where he signed as president of Centennial Drywall. He agreed that pursuant to Schedule “A” he was bound to Local 675.

[31] Put to him were various provisions of the agreement.

[32] Paragraph 2 provides that the employer (Centennial Drywall) is the sole and exclusive bargaining agent of various employees including drywall employees engaged in the residential sector of the construction industry. Mr. Prochazka agreed with this provision.

[33] Paragraph 3 provides that the employer and the union agree that this Agreement constitutes a Voluntary Recognition Agreement within the meaning of the Ontario Labour Relations Act. Mr. Prochazka agreed that the document was signed voluntarily.

[34] Paragraph 4 of the agreement was put to Mr. Prochazka. Paragraph 4 provides that the employer shall be bound by the Collective Agreement. Mr. Prochazka agreed that Centennial Drywall is bound by the Collective Agreement for drywall work and further agreed that he was not allowed to do the work personally.

[35] It should be noted that Schedule “A” (Exhibit 2) was signed by Gord Webster on behalf of Local 675. Mr. Webster later gave evidence for the defence at this trial.

[36] Mr. Prochazka agreed that he could not get jobs on his own outside of the Collective Agreement. Put to him was that he was not allowed to do work personally and circumvent the union because he was bound by the Collective Agreement. His response was “I can because I need to make a living”. Mr. Prochazka testified that he made the decision that he would no longer be part of the union and decided to carry on personally.

[37] Put to Mr. Prochazka was the proposition that Centennial Drywall had not been making remittances to the union pursuant to the Collective Agreement and that the union had obtained a judgment in excess of $20,000 against Centennial Drywall which amount was never paid. Put to Mr. Prochazka was the proposition that he wanted to avoid the union so he decided to perform the work personally.

[38] Read into the record were a series of questions and answers from the transcript of Mr. Prochazka’s examination for discovery held December 15, 2008. Those questions and answers run from page 54 question 286 to page 55 question 293 as follows:

Q. The garnishment was served December, 2005, meaning the application started well before then. You’re saying May or June ’05 is when you knew about the court application right?

A. I didn’t know about court application. Like in May or end of April when they said like I owe them so much, $20, 000.

Q. So you knew about some sort of proceeding going on with the union?

A. Yes.

Q. As early as May or June ’05?

A. Yes.

Q. You didn’t start the job on Bond Street until September 2005; correct?

A. Yes.

Q. So at that point in September you more or less knew the union was chasing you for $20, 000; right?

A. Yes.

Q. That’s why, because the union was chasing you, that’s why you wanted to avoid any further problems and in your evidence you’re saying that you entered into the job ---

A. In July or August I still did for Ross Clair.

Q. You didn’t let me finish.

A. Okay. Okay.

Q. I’m talking about Bond Street. When you started Bond Street you wanted to avoid the union so that’s why you’re saying today that you entered into the job in your personal capacity to avoid the union?

A. Yes.

[39] What is clear from this exchange is that Mr. Prochazka was having difficulty with Local 675 and knew that the union was pursuing him for $20,000 in September of 2005. Mr. Prochazka knew that when he started work on the Project he wanted to avoid the union. He admits that is why he entered into the job in his personal capacity to avoid the union.

[40] He was taken to Exhibit 4, the Residential Agreement previously referred to effective May 13, 2013 to April 30, 2016. Mr. Prochazka disagreed with Article 3.01 of the Agreement which stipulates that the employer shall only employ or hire members of the union who are in good standing as long as the Union can supply qualified employees in sufficient numbers who are capable of performing the work required. Mr. Prochazka relied on the deal made with Mr. Richardson as the basis for his denial.

[41] The purchase order (Exhibit 1) was put to Mr. Prochazka. He testified he first saw this document in May of 2006 and testified that the document was fraudulent.

[42] Put to him was Article 3.02 which provides that an employer shall not sub-contract work covered by this Agreement except to an employer who is bound by the provisions of this Agreement. Mr. Prochazka testified that the provision says whatever it says and means nothing to him. Again he relied on his position that he personally contracted with Ross Clair and not Centennial Drywall.

[43] However, he admitted that he used the union members on the job and did not remit payments to the union. He also used non-union workers on the Project. He testified that he was aware that Ross Clair was bound by the Collective Agreement with the union. He knew this because he had previously done work on the Clarkson School Project. He then contradicted this evidence and stated that he did not know that Ross Clair was bound to the Collective Agreement or that Ross Clair was a union company.

[44] Mr. Prochazka’s evidence in respect of union Local 675 grievance against Centennial Drywall brought to Ontario Labour Relations Board (“the Board”) regarding the Project was vague. At first he did not know if the grievance went to the Board then he stated that there was no grievance against Centennial Drywall regarding the Project. However there was. Put to him was Exhibit 3 being a decision of the Ontario Labour Relations Board dated August 23, 2006 regarding the union grievance 945179 Ontario Limited carrying on business as Centennial Drywall pertaining to the Bond Street Project and the non-remittance of monies by Centennial Drywall pursuant to the Collective Agreement. In the Board’s reasons, evidence of Sean Richardson and Gordon Webster is cited and accepted by the Board. The Board found that Centennial Drywall was bound to the Collective Agreement and that it never called the union’s hiring hall for men and never made remittances to the various trust funds as required on behalf of workers for this project. The union had men ready, willing and able to perform work on this project.

[45] Mr. Prochazka testified in cross-examination that this was the first time that he had seen a copy of this decision. He never participated in the hearing although he had the opportunity to do so. He agreed that he decided not to participate in respect of the hearing.

[46] He did not recall if he saw union representative Gord Webster on the Project job site.

[47] He agreed with paragraph 7 of the decision, namely with the evidence of Mr. Webster that Centennial Drywall never called the union hiring hall for men and never made remittances to various union trust funds required on behalf of workers for this project.

[48] Also put to him was paragraph 8, sub-paragraph (b) of the decision wherein the Board declared that 945179 Ontario Limited, carrying on business as Centennial Drywall violated that Collective Agreement in Articles 3 and 6 by failing to employ and continue to employ members in good standing of the applicant and to pay the wage rates and make remittances in accordance with the Collective Agreement. Mr. Prochazka testified that he did not know how the Board came to this conclusion after having agreed with Mr. Webster’s evidence and after agreeing that he refused to participate in the hearing process.

[49] Mr. Prochazka also agreed that he was unaware of the Board’s decision and was unaware that he could ask the Board to reconsider its decision pursuant to Board’s rules, Rules of Civil Procedure.

[50] In re-examination, Mr. Prochazka testified that the questions regarding the proceedings before the Board made no sense and again reasserted that he contracted personally to work on the Project. First time that he saw the purchase order (Exhibit 1) was on May 28, 2006. The purchase order was never created before that date.

The Evidence – The Defendant’s Case

[51] Sean Richardson and Gord Webster testified on behalf of Ross Clair.

Sean Richardson

[52] Mr. Richardson testified that he is the owner of Ross Clair and was the construction manager on the Project. Ross Clair was also a general contractor and hired certain sub-contractors regarding this condo Project. He testified that Centennial Drywall was onsite doing drywall work by the end of September 2005.

[53] Mr. Richardson testified that Ross Clair is bound by the Residential Agreement with union Local 675. Ross Clair has been a union company for 42 years. He identified the Residential Agreement marked Exhibit 4. An agreement similar or identical to it was in place in 2005-2006. He testified that Ross Clair was bound by this agreement and that union sub-trades were also bound by the agreement and this would apply to employers and labourers performing drywall work.

[54] Ross Clair’s obligation was to hire only union personnel or sub-trades. If Ross Clair were to hire non-union labourers, there would be a grievance and repercussions from the Board. Such repercussions typically would result in substantial fines. It was not Ross Clair’s practice to knowingly hire non-union workers. Mr. Richardson agreed that Ross Clair was grieved by union Local 675 because Centennial Drywall chose not make remittances and that there were also non-union labourers on the Project contrary to the agreement. Put to him and marked as Exhibits 5 and 6 were union Local 675 grievance against Ross Clair dated April 25, 2006 (Exhibit 5) and the Notice of Garnishment between union Local 675 as creditor, 945179 Ontario Limited, carrying on business as Centennial Drywall as debtor, and Ross Clair as garnishee dated June 22, 2006 (Exhibit 6). The amount being the subject of the garnishment was the sum of $20,544.24.

[55] Mr. Richardson testified about purchase order #06-033-1 (Exhibit 1). This was a standard purchase order generated by Ross Clair to a sub-contractor. Mr. Richardson would have prepared this document prior to the start of the job, sometime before the start of the Project, sometime in 2005. The purchase order is directed to Centennial Drywall and numbered company 954179 Ontario Limited. The information regarding the numbered company came directly from Mr. Prochazka himself. Mr. Richardson testified that Mr. Prochazka was commonly known as “Centennial Joe”.

[56] The first time that he met Mr. Prochazka was in respect of the Project and not in relation to the Clarkson School Project.

[57] It was Mr. Prochazka who identified his company regarding the Project. The purchase price was negotiated between Mr. Prochazka and Angus Ogg, chief estimator for the company. Mr. Ogg may have told Mr. Richardson what the contract price was and that price was approved by Mr. Richardson. Mr. Richardson approved the insertion of the purchase order amount in the document at $512,000 (as negotiated). He recalled receiving the purchase order signed by him and he assumed that the purchase order was also signed by Mr. Prochazka on behalf of Centennial Drywall.

[58] Mr. Richardson also testified that Ross Clair has been in business for 42 years in the construction of industrial, commercial and institutional/residential projects. It was not typical for Ross Clair to enter into contracts with individuals. He testified that the company did not do that. He went on to testify that Ross Clair would contract with companies that were union because Ross Clair was also bound by a union agreement. Further, he testified that Ross Clair would not contract with an individual regarding a contract in the amount of $512,000. He went on to testify that the sum of $512,000 was for labour only. This drywall contract was well over 1.2 million dollars with material included. He testified that there is no individual capable of doing such a project.

[59] He testified that he did have a discussion with Joe Prochazka about the found amount pursuant to the union grievance. He had asked Mr. Prochazka why the union had grieved. Mr. Prochazka replied that Mr. Richardson should not worry about it. Mr. Richardson was worried and needed to look after this problem. He knew that both Ross Clair and Centennial Drywall had agreements with the union. In early 2006, Mr. Richardson directed Centennial Drywall to be removed from the Project job site. Mr. Prochazka registered a lien against the Project lands and Ross Clair obtained a lien bond to vacate the lien from the Project and expended the sum of $3,438 in this regard. (See Exhibit 7 invoice #154316 dated September 5, 2006.)

[60] In cross-examination, Mr. Richardson acknowledged that he did not have a copy of the agreement with Mr. Prochazka’s signature on it. It was somewhere in the office of Ross Clair and could not be located. After the garnishment was received by Ross Clair, Mr. Richardson was not sure if further payments were made to Rako Interiors. When asked why payments were being made not to Centennial Drywall but to some other parties, Mr. Richardson testified that he made payments pursuant to direction by Mr. Prochazka who told Mr. Richardson that Prochazka was going through a divorce.

[61] Mr. Richardson knew Mr. Prochazka represented himself as a unionized contractor. He testified that Mr. Prochazka could not turn around one day as a unionized contractor and on another day represent himself as a non-unionized contractor. It was Mr. Richardson’s understanding that once certified as a union contractor, that status would continue until that contractor was de-certified. Mr. Richardson knew that Centennial Drywall was a union contractor.

[62] Mr. Richardson denied that he entered into a verbal agreement with Joseph Prochazka for Mr. Prochazka personally to provide drywall services on the Project. He knew that Centennial Drywall had an agreement with the union because of previous history going back to the Clarkson School Project. He bluntly stated that if Mr. Prochazka had suggested to Mr. Richardson to contract with Mr. Prochazka personally to circumvent the union, Mr. Richardson would have thrown Mr. Prochazka out of his office. He has testified that the verbal agreement never happened.

[63] Further, he testified that he would not have allowed anyone on the job site without a purchase order. He testified that the purchase order was given at his office and he would not have allowed any drywall work to be done without it.

Gord Webster

[64] In chief, Mr. Webster testified that he was the business representative for union Local 675. He had attended the Board in respect of the grievance process against both Centennial Drywall and Ross Clair.

[65] He testified that he knew Mr. Prochazka and had in fact signed Mr. Prochazka’s company operating as Centennial Drywall to the Collective Agreement many years ago. Mr. Webster identified his signature on Exhibit 2. Mr. Webster testified that the effect of signing such an agreement could only be reversed through the de-certification process.

[66] Mr. Webster testified that if a drywall contractor executed Schedule “A”, the drywall contractor could work for a non-union general contractor but still had to make remittances.

[67] Mr. Webster testified that Mr. Prochazka was not entitled to act in a personal capacity and thereby not make remittances to the union. Mr. Prochazka was not entitled to use non-union labourers as there would be repercussions and exposure to loss of wages and damages at the Board. Centennial Drywall was obliged to use union labourers and make remittances to the union. Centennial Drywall did not pay such remittances in respect of the Bond Street Project.

[68] Mr. Webster testified that he visited the Project site in Oshawa where he met Mr. Jurik. After that, on site he saw Mr. Prochazka with whom he had previous dealings. Mr. Webster was told contradictory things as to who was performing the drywall job. He testified that he had told Mr. Prochazka that Mr. Prochazka was not allowed to perform non-union work on the Project. Mr. Webster investigated deeper and found the Ross Clair connection. Mr. Richardson told Mr. Webster that Centennial Drywall was working for Ross Clair. After being told, union Local 675 grieved against both Centennial Drywall and Ross Clair. He agreed with Mr. Richardson’s evidence as to what transpired before the Board. At the Board, Mr. Prochazka was visibly angry Mr. Webster did not have any conversations with him. Mr. Webster testified that Centennial Drywall is a party to the Schedule “A” agreement marked as Exhibit 2. Mr. Webster was not cross-examined regarding his evidence adduced in examination in chief.

Findings

[69] For the following reasons, I find the Defendant Ross Clair did not enter into a contract with Joseph Prochazka personally for drywall services in respect of the Project. Rather, I find that Ross Clair pursuant to purchase order #06-033-1 dated September 30, 2005 entered into a contract with 945179 Ontario Limited, carrying on business as Centennial Drywall (“Centennial Drywall”) for the supply of labour regarding the installation of drywall, installation and taping and metal framing in respect of the Project. I further find that Mr. Prochazka’s limited company 945179 Ontario Limited operating as Centennial Drywall contracted with Ross Clair to provide the contract work stipulated in purchase order Exhibit 1. Ross Clair did not have a contract with Joseph Prochazka personally. The contract was with Centennial Drywall. Further, Mr. Prochazka’s characterization of the contract between himself personally and Ross Clair is nothing more than a failed attempt to circumvent the contractual obligations binding Centennial Drywall by contract with union Local 675.

[70] Mr. Prochazka testified that there was a verbal agreement that the work on the Project would be done personally by him and a group of his workers. He testified that he came to this verbal agreement with Sean Richardson, the owner of Ross Clair. His testimony was that he never agreed that the drywall work on the Project would be done by Centennial Drywall and there was no contract signed by Mr. Prochazka that Centennial Drywall would do the work. Further, no payment was received by Centennial Drywall. Rather, payment was made to his sole proprietorship Rako Interiors and NTC Interior, the sole proprietorship of Mr. Jurik. The purchase order signed in the office by both parties never happened.

[71] This court does not find the evidence of Mr. Prochazka is either credible or trustworthy. His characterizing his contract with Mr. Richardson as being a personal one as opposed to a contract between Ross Clair and Centennial Drywall is not borne out by the evidence.

[72] Mr. Prochazka on February 10, 1998 signed the Schedule “A” to the Collective Agreement that between his company Centennial Drywall 945179 Ontario and union Local 675. Mr. Prochazka was taken through the terms of the Schedule “A” and was in agreement regarding paragraph 2, 3 & 4 of the agreement. The evidence is uncontroverted that Mr. Prochazka’s numbered company carrying on business as Centennial Drywall was bound by the Collective Agreement. That meant that Centennial Drywall recognized the union as the sole and exclusive bargaining agent of all labourers including drywallers employed by Centennial Drywall engaged in the residential sector of the construction industry. Centennial Drywall entered into the agreement voluntarily and Centennial Drywall was bound by the Collective Agreement.

[73] Therefore, Centennial Drywall was a union company and as such was bound to hire union labourers and make remittances to various trust funds on behalf of workers for the Project.

[74] On Mr. Prochazka’s own evidence, he knew that Centennial Drywall had contravened its obligations in respect of its Collective Agreement with union Local 675. This is evidenced by his own testimony at his examination for discovery reproduced in his evidence above. In particular the answer to question 293 at p. 55 of the transcript of his examination for discovery is remarkably telling:

Q. I’m talking about Bond Street. When you started at Bond Street you wanted to avoid the union so that’s why you’re saying today that you entered into the job in your personal capacity to avoid the union?

A. Yes.

[75] Local 675 grieved against both Centennial Drywall and Ross Clair. In respect of its grievance against Centennial Drywall, the Ontario Labour Relations Board issued a decision dated August 23, 2006 marked as Exhibit 3. The Board found that Centennial Drywall was bound to the Collective Agreement with Local 675. It further heard the evidence of Sean Richardson and Gordon Webster with Mr. Prochazka choosing not to appear or participate in the proceeding.

[76] At paragraph 8 of its decision, the Board in the absence of the appearance or participation of Centennial Drywall and the un-contradicted viva voce and documentary evidence submitted by Local 675 the Board concluded as follows:

a) declares that 945179 Ontario Limited c.o.b. as Centennial Drywall is bound to the Interior Systems Contractors Association of Ontario and Drywall Acoustic Lathing and Insulation Local 675 effective May 1, 2004 to April 30, 2007 (the “Collective Agreement”);

b) declares that 945179 Ontario Limited c.o.b. as Centennial Drywall violated that collective agreement in Articles 3 and 6 by failing to employ and continue to employ members in good standing of the applicant and to pay the wage rates and make remittances in accordance with the Collective Agreement;

c) orders 945179 Ontario Limited c.o.b. as Centennial Drywall to pay to the applicant forthwith the amount of $176, 443.68 as damages inclusive of filing and hearing fees pursuant to section 133 (13) of the Act.

[77] Further, Local 675 pursued Ross Clair as is evidenced by its grievance (Exhibit 5) and Notice of Garnishment (Exhibit 6). I find that Mr. Prochazka knew that Centennial Drywall was a union company and that Ross Clair was also a union company. Any such evidence suggesting the contrary by him is false and therefore, rejected by this court.

[78] Given this contextual evidence amplified by the evidence of Mr. Richardson and Mr. Webster, it is inconceivable that Mr. Prochazka could maintain his position that he personally contracted with Ross Clair and not his company. Mr. Prochazka is simply trying to avoid his union obligations to make remittances and to hire union employees as was clearly identified by the Board in its reasons dated August 23, 2006. Mr. Prochazka in commencing this action in his personal capacity attempted to do what he was not permitted to do by virtue of Centennial Drywall’s agreement with union Local 675. I find he cannot circumvent his union obligations by simply declaring himself to be personally a non-union contractor when all of the evidence establishes that it was his corporation 945179 Ontario Limited, carrying on business as Centennial Drywall that operated as a union company.

[79] The two witnesses called by Mr. Prochazka, Mr. Bochenek and Mr. Prancik were really of no assistance to Mr. Prochazka’s case. Both of these individuals were union drywallers. They were waiting to be called by the union to perform work. Instead, they were called by Mr. Prochazka directly and offered work. Both of them needed work and so they went to work on the Project. They were paid through cheques from either Rako Interior or NTC Interior. Their evidence was of no assistance to the court as to whether Centennial Drywall was still in existence. Neither of them could offer any reliable evidence in respect of whether non-union workers could perform work on the Project. Mr. Jurik was also called by Mr. Prochazka and asked for his assistance. He too was aware that Centennial Drywall was bound by a Collective Agreement with the union but was not aware of all the stipulations. His evidence was ambiguous as to whether the Project was a union or non-union job. He decided to help Mr. Prochazka regardless. He testified that the cheques were received directly from Ross Clair pursuant to direction from Centennial Drywall. He was unaware of the contractual arrangement between Ross Clair and Mr. Prochazka.

[80] There was no evidence from Mr. Prochazka to contradict the basic principle that Centennial Drywall was bound to the union unless Centennial Drywall became de-certified as a union contractor.

[81] Mr. Prochazka chose not to cross-examine Mr. Webster on the essential aspects of his evidence. There was no evidence that Mr. Prochazka commenced any de-certification process for Centennial Drywall. There was no evidence that Centennial Drywall no longer existed as a corporation. Mr. Prochazka knew that Ross Clair was a union contractor. Mr. Webster’s evidence was that Centennial Drywall could contract with non-union contractors but still had to pay remittances to the union. Mr. Prochazka knew that Ross Clair was a union contractor and was bound to the union because Mr. Prochazka had done previous work for Ross Clair on the Clarkson School Project which was a union job.

[82] It is clear from the evidence that by September, 2005 Centennial Drywall was experiencing union problems which Mr. Prochazka decided to avoid in respect of the Project by characterizing the contracting party with the Ross Clair as himself in a personal capacity. Thereby, Mr. Prochazka to his way of thinking would completely avoid any exposure to Local 675 regarding the fulfillment of contractual obligations with the union.

[83] Given this contextual background, Mr. Prochazka’s evidence and the evidence of his witnesses do not support his position that he personally, and not Centennial Drywall, contracted with Ross Clair to provide drywall services regarding the Project.

[84] I do not accept Mr. Prochazka’s evidence that the purchase order (Exhibit 1) dated September 30, 2005 was a fraudulent document. There is no evidence that such a document was created after September 30, 2005 notwithstanding Mr. Prochazka’s evidence that he did not see this purchase order until May 23, 2006. There is no evidence as to the surrounding circumstances as to how he came to see the purchase order in May of 2006. There was no evidence as to what he did when he first saw the purchase order according to his testimony. I do not agree with Mr. Prochazka’s evidence that because no purchase order was ever produced with his signature on behalf of Centennial Drywall, therefore no contract existed as between Ross Clair and Centennial Drywall.

[85] I accept the evidence of Mr. Richardson that this purchase order was prepared by himself in the office of Ross Clair and the information as to who the purchase order was made out to came from Mr. Prochazka himself. The purchase order is made out to Centennial Drywall #945179 Ont. Ltd. The fax number of 905-238-1700 is the same as the telephone number that appears on Exhibit 2 being Schedule “A” agreement signed by Mr. Prochazka and Mr. Webster on February 10, 1998.

[86] Further, the terms of the purchase order are clear. Item 2 under Scope of Work provides:

2. SCOPE OF WORK: Supply all labour for installation of all drywall partitions/ceilings, metal door frames and t-bar ceiling/tile, insulation and taping ready for paint (drywall must be Local 675 or Oshawa local chapter)

[87] The purchase order is clear that all labour must be through Local 675 or Oshawa local chapter. Further, the purchase order amount $512,000 (as negotiated). On its face, the purchase order is with Centennial Drywall not Mr. Prochazka personally and drywall labour must be through union Local 675 or Oshawa local chapter. Further, when Mr. Prochazka was questioned about the Residential Agreement marked as Exhibit 4, Articles 3.01 and 3.02, he disagreed with the provisions of Article 3.01 and again asserted that he personally contracted with Ross Clair and Centennial Drywall was not the contracting party. He also testified that the provisions of 3.02 meant nothing to him and again he contracted personally not through Centennial Drywall for this project. This having been said, he testified that he had used union members on this job and had not remitted any payment to the union. He also testified that he used non-union workers on the job. He agreed that Ross Clair was bound by the agreement. Further, I find incredible that Mr. Prochazka did not know how the Board came to its conclusion when he agreed with Mr. Webster’s evidence accepted by the Board and where Mr. Prochazka refused to participate in the hearing. He agreed with the paragraph 7 of the decision where it was found that Centennial Drywall never called the union hiring hall for men and never made remittances to the various trust funds as required on behalf of workers for this Project.

[88] I find as a fact that Mr. Prochazka carried on his drywall business through his numbered company known as Centennial Drywall. That company was a union company. He cannot avoid his union obligations by one day carrying on business through Centennial Drywall and the next day purporting to carry on the same business in a non-union personal capacity. Mr. Prochazka’s evidence that Ross Clair accepted Mr. Prochazka’s attempt to avoid his union obligations is rejected by this court. Rather, I accept the evidence of Mr. Richardson.

[89] I accept Mr. Richardson’s testimony that the purchase order was negotiated between Mr. Prochazka’s numbered company carrying on business as Centennial Drywall and Ross Clair. The purchase order is clear that the drywall labour must be through union Local 675 or Oshawa local chapter. The information about Centennial Drywall in the purchase order dated September 30, 2005 came from Mr. Prochazka himself. The amount of the purchase order of $512,000 (as negotiated) came to Mr. Richardson through his chief estimator Angus Ogg who also dealt with Mr. Prochazka. Mr. Richardson signed the purchase order and assumed that it was signed by Mr. Prochazka on behalf of Centennial Drywall. Unfortunately, no signed copy by Mr. Prochazka could be tendered into evidence. However, I accept the evidence of Mr. Richardson that Ross Clair has been in business for 42 years and has been involved in the construction of industrial, commercial and institutional/residential projects. For 42 years, Ross Clair has been a union company. It is not typical for Ross Clair to enter into contracts for individuals. Ross Clair does not adopt that practice. Rather, Ross Clair goes to companies that are union companies because Ross Clair is bound by its agreement with the union. The amount of the purchase order is $512,000 for labour only. I accept Mr. Richardson’s evidence that the contact with material would have been for over 1.2 million dollars. I accept his evidence that no individual was capable of performing such a job and that is why Ross Clair contracts with union companies to do this type of work.

[90] I also accept Mr. Richardson’s evidence in respect of discussions that he had with Mr. Prochazka after the union had grieved. Mr. Richardson had asked why the union had taken grievance proceedings against Centennial Drywall and Ross Clair. I accept Mr. Richardson’s evidence where Mr. Prochazka replied that there was nothing to worry about. Indeed, Mr. Richardson was correct in believing that there was certainly something to worry about. His company faced the consequences of appearing before the Board and Mr. Prochazka registered a lien against the Project which caused Ross Clair to obtain a lien bond to vacate the lien from the Project. It cost Ross Clair $3,438 to bond off the lien (Exhibit 7 Invoice number 154316 dated September 5, 2006).

[91] Further, Mr. Richardson testified that it was not Ross Clair’s practice to knowingly hire non-union workers. He learned that Ross Clair was grieved by Local 675 because Centennial Drywall chose not to make remittances and there were non-union labourers on the job in contravention of the Collective Agreement. I accept Mr. Richardson’s evidence in cross-examination where he denied that he had a verbal agreement with Mr. Prochazka that drywall services on the Project would be provided by Mr. Prochazka personally. Mr. Richardson went on to testify that he knew Centennial Drywall had an agreement with the union because of the previous history on the Clarkson School Project. He denied that the verbal agreement never happened. More to the point, he testified that if Mr. Prochazka suggested to Mr. Richardson that Ross Clair contract with Mr. Prochazka personally to circumvent the union, Mr. Richardson would have thrown Mr. Prochazka out of his office.

[92] It was Mr. Prochazka who was having union problems not Ross Clair. There was no reason, motive, or incentive on the part of Ross Clair to involve itself in Mr. Prochazka’s union problems. As far as Ross Clair was concerned, there was no reason to go looking for union problems where Ross Clair had been a union company for 42 years and had no interest in having any issues with the union. Given Mr. Richardson’s evidence, Mr. Prochazka’s evidence of a verbal agreement previously described makes absolutely no sense. What makes sense is that Mr. Prochazka had union problems and was trying to circumvent the union obligations owed by Centennial Drywall. I further find that the payment of cheques directed by Mr. Prochazka to sole proprietorships was in furtherance of his scheme to avoid his union obligations.

[93] I accept the evidence of Mr. Richardson and find his evidence to be credible for the reasons given.

[94] I also found the evidence of Mr. Webster to be credible. He has known Mr. Prochazka since at least February 10, 1998. In fact, Mr. Webster signed Mr. Prochazka’s numbered company carrying on business as Centennial Drywall to the agreement marked Exhibit 2. None of Mr. Webster’s evidence was controverted. Mr. Webster visited the job site and spoke with Mr. Prochazka he was told something about the Plaintiff contracting with somebody else. He told Mr. Prochazka that he was not allowed to work for a non-union contractor and that he could circumvent the union. Mr. Webster investigated further and found there was a connection between Ross Clair and Centennial Drywall. The union then grieved against both parties. His evidence was clear and consistent that Mr. Prochazka was not entitled to use non-union labourers. He was obliged to use union labourers and to make remittances to the union. He was clear that Centennial Drywall did not pay remittances on the Project. He agreed with Mr. Richardson’s evidence as to what transpired before the Board, the hearing which lead to the Board’s decision of August 23, 2006. Mr. Prochazka chose not to pay certain fees and attend the hearing before the Board. Based on the testimony of Mr. Richardson and Mr. Webster adverse findings were made against Centennial Drywall in respect of Centennial Drywall’s conduct regarding this very Project.

[95] For these reasons, I accept the evidence of Mr. Richardson and Mr. Webster over the evidence of Mr. Prochazka and his witnesses. The court rejects the evidence of Mr. Prochazka that in his personal capacity he contracted with Ross Clair to perform drywall work on the Project. To the contrary, Mr. Prochazka`s numbered company operating as Centennial Drywall was the contracting party with Ross Clair. Mr. Prochazka has relied on his version of the verbal agreement which I reject. The rejected verbal agreement was an artificial device by which Mr. Prochazka sought to avoid his responsibilities and union obligations in circumstances where his numbered company carrying on business as Centennial Drywall had breached those obligations with union Local 675.

[96] Counsel for Ross Clair cited the decision of Master Albert in Bayan Construction Ltd v. Cusimano, LaCavera and HSBC, 2008 CarswellOnt 2210, 169 A.C.W.S. (3d) 950, 70 C.L.R. (3d) 123. It is submitted, and I agree, that this decision is applicable to our case where it is alleged that the wrong party liened a project. The issue identified at para. 6 of Bayan is similar to the issue in this case namely, is the Plaintiff and lien claimant the contracting party.

[97] At para. 16 in Bayan, it was held there was no reason for the owners to believe and no basis upon which they ought to have known that they were doing business with an incorporated entity, quite the opposite. The reverse is true in our case, there was no reason for Ross Clair to believe that it was dealing with Mr. Prochazka in a personal capacity as opposed to his incorporated entity.

[98] Mr. Richardson believed at all material times that he was dealing with Mr. Prochazka`s company operating as Centennial Drywall. On the facts of the Bayan case, Master Albert found that the contract was between the Plaintiff personally, and the owner defendants.

[99] At para. 19 in Bayan, Master Albert considered the Statement of Defence where it was pleaded that the defendants never contracted with the Plaintiff corporation but rather with the individual. The Plaintiffs reply was a bald denial. In our case, at para. 5-8 inclusive, Ross Clair denied entering into a contract personally. Rather, Ross Clair pleaded it entered into a contract to perform drywall work for the Project with 945179 Ontario Limited carrying on business as Centennial Drywall. Mr. Prochazka would have known of Ross Clairs pleadings on September 13, 2006 shortly after the Statement of Defence was delivered. Nevertheless, Mr. Prochazka took no steps either to deliver a reply or amend his pleadings regarding what party contracted with Ross Clair. In our case, as in Bayan, Ross Clair submitted that Mr. Prochazkas claim should be dismissed on technical grounds. In Bayan, the defendants advanced this argument because they contracted with an individual not a corporation. In our case Ross Clair submits that it contracted with the corporation and not Mr. Prochazka in a personal capacity. For the reasons given, this court finds that there was no agreement between Mr. Prochazka in a personal capacity and Ross Clair to provide drywall services to the Project. To the contrary, this court finds that Ross Clair contracted with Mr. Prochazkas company, 945179 Ontario Limited, carrying on business as Centennial Drywall for the supply of drywall services. The claim for payment ought to have been made by Centennial Drywall and not through Mr. Prochazka personally. For these reasons I find that Mr. Prochazka`s claim must be dismissed.

CONCLUSION

[100] Mr. Prochazka is not the proper party to claim the lien and issue the claim. The claim for lien of Joseph Prochazka registered on July 12, 2006 as instrument number DR519509 in the Registry Office of the Land titles division of Whitby in accordance with Schedule “A” attached is discharged and his claim is hereby dismissed.

[101] The accountant for the Ontario Superior Court of Justice is hereby directed to return lien bond KGHOPC64733 issued by Kingsway General Insurance Company in the full amount of $137,500 assigned to account number 500582 to law firm of Goldman, Sloan, Nash & Haber LLP for cancellation.

[102] As for costs, including the cost of obtaining the lien bond in the amount of $3,438, if the parties are unable to settle costs they shall contact the trial coordinator at Barrie to arrange an appointment to address the issue of costs.

DiTomaso J.

Released: June 17, 2014

[^1]: Plaintiff’s Statement of Claim at paras. 6,7,8 [^2]: Ross Clair Statement of Defence at para. 5. [^3]: Ross Clair Statement of Defence at para. 6 [^4]: Ross Clair Statement of Defence at para. 7