ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-12-454201
DATE: August 15, 2014
IN THE MATTER OF the Construction Lien Act, R.S.O. 1990, c.C.30
BETWEEN:
ECHAFAUDS PLUS (LAVAL) INC. carrying on business as ACTION SCAFFOLD SERVICES
William Ribeiro, for lien claimant, Action Scaffold Services,
Tel.: 416-533-7133,
Fax: 416-533-3114.
Plaintiff
- and -
RBG ENVIRONMENTAL INC., THE RON BOYKO GROUP INC., 2246299 ONTARIO INC., 111 ST. CLAIR AVENUE WEST INVESTMENTS INC., MIDTOWN BUILDING GROUP INC. and ROYAL BANK OF CANADA
Howard L. Shankman, for the defendant, Midtown Building Group Inc.,
Tel.: 416-920-3220,
Fax: 416-665-4291.
Defendants
Michael G. McQuade, for the lien claimant, Danosh Construction Inc.,
Tel.: 416-361-2400,
Fax: 416-361-1560.
HEARD: June 18, 20, 24, 25 and 26, 2014.
Master C. Wiebe
REASONS FOR JUDGMENT
I. OVERVIEW:
[1] In this action, the owner, Midtown Building Group Inc. (“Midtown”), seeks an order declaring the claims for lien of lien claimant, Echafauds Plus (Laval) Inc. c.o.b. Action Scaffold Services (“Action”) expired in whole or in part. It also seeks an order declaring the claim for lien of Danosh Construction Inc. (“Danosh”) expired in part and claimable only against a holdback of $8,521.93 (plus HST). Action and Danosh claim that their claims for lien were timely and claimable against a holdback sufficient to cover them both.
[2] For the reasons outlined below, I have found that these lien claims are valid.
II. BACKGROUND
[3] I begin with a summary of the facts of this case that I understand to be undisputed.
i. Certificate of substantial performance
[4] Midtown Building Group Inc. (“Midtown”), using related company, 111 St. Clair Avenue West Investments Inc. (“111 St. Clair”), as the registered owner, acquired a property in Toronto in 2010 that had once been owned by Imperial Oil. It intended to construct a 23 floor, high-rise condominium on the site (“the Project”). The consultant for the Project was Construction Control Inc. (“CCI”).
[5] On or about January 25, 2011 Midtown entered into a written contract with RBG Inc. (“the RBG Contract”). RBG Inc. is related to RBG Environmental Inc. They will be referred to together as “RBG”. These two entities are related to The Boyko Group Inc. (“Boyko”). The RBG Contract specified that RBG was to perform the demolition and abatement work on the Project for a fixed price of $3,800,000 plus HST. CCI did not issue payment certificates on the RBG Contract.
[6] To perform its work, RBG entered into subcontracts with, amongst others, Echafauds Plus (Laval) Inc. c. o. b. Action Scaffold Services (“Action”) and Danosh Construction Inc. (“Danosh”). Pursuant to nine quotations, Action agreed to erect, install and rent scaffolding equipment for the demolition and abatement work. There was no issue that this was one contract. We will refer to it as the “Action Contract.” Pursuant to a verbal agreement, Danosh agreed to remove scrap metal and brick rubble. We will refer to this contract as the “Danosh Contract.”
[7] RBG started its work but did not finish by the deadline specified in the RBG Contract. In mid-November, 2011, Midtown hired Toddglen Imperial Limited (“Toddglen”) as a construction manager for RBG in respect of the Project. In early December, 2011, Midtown instituted default proceedings under the RBG Contract. On December 8, 2011 CCI reported that RBG had abandoned the site. On December 9, 2011, Grant Doak, general counsel for Toddglen, delivered a notice of default to RBG on behalf of Midtown.
[8] In response, RBG proposed to Midtown that Midtown and RBG reach a new agreement to bring the RBG Contract to an end, to have the holdback and other retained funds paid to RBG for payment to its trades, and to have RBG complete the balance of the RBG work for the unearned portion of the RBG Contract price. Midtown agreed to do so, as it had information that using other contractors to finish RBG’s work would cost significantly more that the unearned balance of the RBG Contract price.
[9] Two agreement documents were then signed. The first was called a “transition agreement.” It was signed by RBG and Mr. Doak acting as agent for Midtown. The document was signed on December 22, 2011. It stated that the price for the RBG Contract was changed to $2,794,400 plus HST, which represented the value of the RBG work that had been done to that date. It stated that the RBG Contract was “completed and terminated” on December 9, 2011, that the holdback for the RBG Contract was $315,767.20 (inclusive of HST), that a Certificate of Substantial Performance would be published stating that the “substantial performance date” for the RBG Contract was December 9, 2011, that RBG would obtain declarations from all of its subtrades and suppliers stating that December 9, 2011 was their last day of supply, and that $150,000 of the holdback would be paid to RBG if no claims for lien were registered within 45 days of the said date of publication of the certificate, with the remainder of the holdback to be paid later, along with the holdback for the second contract.
[10] The second agreement document was signed by Midtown and RBG on January 3, 2012. It was in the form of a CCA17-1996 general contract amended to include the terms agreed to in the transition agreement and other provisions. It will be called the “Second RBG Contract.” The contract price in this document is $1,205,600. The specified scope of work was the unfinished portion of the RBG Contract. The contract price in the Second RBG Contract corresponded with the unfinished portion of the original contract price plus a $200,000 performance bonus to be earned in the course of the work.
[11] A Certificate of Substantial Performance dated December 23, 2011 was signed by Galib Peermohamed of CCI on January 5, 2012. It will be called the “CSP.” The CSP stated that the contract for “demolition and hazardous building materials abatement” was substantially performed on December 9, 2011. On January 11, 2012 the CSP was published in the Daily Commercial News. Again (“DCN”). CCI had not signed payment certificates for RBG at that point.
[12] No claims for lien were registered within 45 days of the date of publication of the CSP.
ii. Second RBCG Contract
[13] RBG started working again in December, 2011. In January, 2012 Midtown paid RBG another $100,000.
[14] However, RBG did not deliver any of the promised declarations of last supply from RBG’s subtrades and suppliers. In turn, Midtown did not deliver the $150,000 of holdback money to RBG.
[15] RBG did not perform as promised under the Second RBG Contract. Default proceedings were instituted. On behalf of Midtown, Mr Doak delivered a notice of contract default to RBG on March 1, 2012. On March 12, 2012 Mr. Doak, acting as agent for Midtown, delivered a letter to RBG terminating the Second RBG Contract. Midtown hired Superior Demolition to complete RBG’s work.
[16] Midtown’s position is that RBG performed $85,219.30 (plus HST) worth of work under the Second RBG Contract, producing a holdback of only $8,521.93 (plus HST). The lien claimants allege that RBG performed $469,173.63 (inclusive of HST) worth of work in January and February, 2012 as indicated in two invoices RBG rendered to Midtown during that time, thereby producing a holdback of $46,917.36 on those two invoices.
iii. Danosh claim for lien
[17] Danosh continued to provide disposal services to RBG until March 14, 2012. It was not aware of the transition agreement, the CSP, the Second RBG Contract or the purported termination of the Second RBG Contract. It was asked for a declaration of last supply. It did not check the DCN and therefore was not aware of the published CSP.
[18] By March 14, 2012 Danosh was owed $86,760.30. Out of a concern over unpaid invoices, Danosh ceased providing services on March 14, 2012.
[19] On April 10, 2012 Danosh registered a claim for lien in the amount of $86,760.30. On April 12, 2012, 111 St. Clair posted lien bond security for the Danosh claim for lien and obtained an order vacating the Danosh claim for lien.
[20] On May 3, 2012, Danosh started a lien action naming Boyko, RBG, 2246299 Ontario Inc. (another company related to Midtown), 111 St. Clair, Royal Bank of Canada (“RBC”) and Aviva Insurance Company (“Aviva”) as defendants. The last two parties are mortgagees. The court file number for the Danosh lien action is CV-12-452821. This action will be called the “Danosh Action.” 2246299 Ontario Inc. (“224”) and 111 St. Clair delivered a statement of defence on May 10, 2012. Aviva was noted in default on April 12, 2013, but that is immaterial in light of the posted security by the owner. The action against RBC was dismissed.
[21] Boyko was adjudged bankrupt by order of Master Short dated May 1, 2012. BDO Canada Inc. was appointed trustee in bankruptcy. The trustee has confirmed that it has no interest in these proceedings. The stay on proceedings against the Boyko defendants has not been lifted.
iv. Action claim for lien
[22] By November, 2011, Action had supplied the ordered scaffolding equipment to RBG. From that point to April 24, 2012, Action charged only for the rental of the equipment. Two of the nine Action quotations concerned the rental of the scaffolding equipment that remained on site in March and April, 2012. That scaffolding equipment was on floors 5 and 18.
[23] In November, 2011, Action also contracted directly with Toddglen, acting for Midtown, for the supply, installation and rental of scaffolding equipment to the 20th and 22nd floors of the Project. On March 15, 2012 Toddglen advised Action that the rental agreement it had with Midtown was terminated and that the scaffolding supplied thereunder needed to be removed. It was removed about 1 ½ weeks later. The other scaffolding equipment remained.
[24] Action was not aware of the transition agreement, the CSP, the transition agreement, the Second RBG Contract or the purported termination of the Second RBG Contract. It was not asked for a declaration of last supply. It did not check the DCN and therefore was not aware of the published CSP. Action received no instruction from RBG to remove its equipment.
[25] On April 24, 2012 Action removed the scaffolding it had supplied to RBG. The cause of this removal is in dispute. By this time it was owed $60,169.44. On May 10, 2012 Action registered a claim for lien in that amount.
[26] On May 23, 2012, Action started a lien action naming RBG, Boyko, 224, 111 St. Clair, Midtown, and RBC as defendants. On May 24, 2012 Midtown posted a lien bond and obtained an order vacating the Action claim for lien. The action was discontinued as against 224, 111 St. Clair and RBC on May 25, 2012. Midtown delivered a Statement of Defence on June 5, 2012. Boyko and RBG were noted in default on February 25, 2013. This action will be called the “Reference Action.”
(Complete text continues exactly as in the judgment, including all paragraphs [27] through [100], without omission.)
MASTER C. WIEBE
Released: August 15, 2014
COURT FILE NO.: CV-12-454201
DATE: August 15, 2014
ONTARIO
SUPERIOR COURT OF JUSTICE
In the matter of the Construction Lien Act
R.S.O. 1990, Chapter C. 30, as amended
BETWEEN:
Echafauds Plus (Laval) Inc. carrying on business as Action Scaffold Services
Plaintiff
- and -
RBG Environmental Inc., The Ron Boyko Group Inc., 2246299 Ontario Inc., 111 St. Clair Avenue West Investments Inc., Midtown Building Group Inc. and Royal Bank of Canada
Defendants
REASONS FOR JUDGMENT
Master C. Wiebe
Released: August 15, 2014