Provincial Partitions Ltd. v R.O.M. Contractors Inc. cob Ross Clair Contractors,
2015 ONSC 2839
COURT FILE NO.: CV-13-474920
DATE: April 30, 2015
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Provincial Partitions Ltd. v. City of Toronto, R.O.M. Contractors Inc. cob Ross Clair Contractors, R.O.M. Contractors Limited and Toronto Transit Commission
BEFORE: Master C. Albert
COUNSEL: J. Armel, for the moving party defendant Ross Clair
P. Guaragna, for the responding party plaintiff
MASTER C. ALBERT
ENDORSEMENT
R.O.M. Contractors Inc. and R.O.M. Contractors Limited (“Ross Clair”), having secured the contract to build the TTC Wheel Trans Transportation Office, subcontracted with Provincial Partitions Ltd. (“Provincial”) to carry out a portion of the work. Provincial supplied most of its services and materials by January 10, 2012 and then supplied nothing more until January 2013. On January 25, 2013 Provincial registered a construction lien for $414,237.69 as instrument AT3223759. Provincial subsequently reduced the amount of its lien claim to $181,901.29. On July 26, 2013, on consent, Ross Clair posted a lien bond for $150,000.00[1] as security to vacate the lien.
Ross Clair seeks an order:
a) discharging Provincial Partitions Ltd.’s (“Provincial’s”) lien claim as expired;
b) returning the bond that Ross Clair posted as security to vacate the lien claim, and
c) damages, including bonding costs.
- The critical issue is whether the last date of supply for the purpose of registering a lien claim was January 10, 2012 or January 23, 2013. Did the installation of two spandrel glass panels (the " panels") in January 2013 constitute the last supply or was it an attempt to bootstrap and revive lien rights that had expired on February 24, 2012?
Leave to bring the motion
Leave is required to bring interlocutory motions under the Construction Lien Act, R.S.O. 1990, c.C.30, s.67(2) (the "Act"). To meet the test for leave the motion must either be necessary or it must in some way expedite resolution of the issues in dispute.
I agree with Justice Rocchetti in 4 Star Drywall (99) Ltd. v Nanak Homes Inc.[2] at paragraph 11 that leave to bring an interlocutory motion is appropriate where a significant issue is likely to be resolved by hearing the motion. In such cases the motion will likely achieve cost savings and shorten the trial.
I find that in the present case the issue of whether the lien claim was preserved in time is a significant issue, the resolution of which will likely accomplish these objectives. Leave is granted to bring this motion on that basis.
Background
Ross Clair was the general contractor on the project, which initially called for the erection of two pre-assembled buildings on TTC lands. Ross Clair subcontracted with Provincial to supply the two buildings. The project specifications changed and construction proceeded using traditional construction methods.
A dispute arose between the parties as to the scope of work required under the subcontract. They disagreed over whether a number of items fell within the scope of the subcontract work or whether the items were chargeable as extras.
By January 10, 2012 the construction required by Provincial pursuant to the subcontract was complete except for the installation of the panels. Ross Clair’s position is that the panels fell within the scope of the subcontract work. Provincial’s position is that they were extras to the subcontract. The value attached to the panels is $6,359.62, including HST, being the amount that Provincial’s sub-subcontractor Explore 1 invoiced to Provincial after the work was completed between January 20 and 23, 2013. There is no evidence that Provincial invoiced Ross Clair for the panels after receiving the invoice from Explore 1. Ross Clair did not receive a copy of the Explore 1 invoice from Provincial until May 2013. By then the lien claim had been registered and the statement of claim had been issued.
By January 2012 the site was ready to receive the panels. The only reason they were not installed is that the parties were in a payment dispute.
Ross Clair challenges Provincial’s credibility because the lien claim amount has changed three times. The lien claim was registered for $414,237.69. On consent, but without prejudice, Provincial agreed to accept security of $120,000.00 for the lien claim plus $30,000.00 for costs to vacate the lien claim. Taking a without prejudice position allowed Provincial time to reflect on the quantum of its lien claim without binding it to the agreed upon $120,000.00 to which it had consented as reduced security for the lien claim. Subsequently Provincial confirmed on a “with prejudice” basis that its lien claim is reduced to $181,901.29.
Ross Clair asks the court to conclude from these varying amounts of the lien claim that Provincial’s credibility is compromised because it does not know the amount of its lien claim. I do not agree that compromised credibility is the appropriate inference for the court to draw. An agreement to accept reduced security for a lien in the absence of a subsumed lien claim suggests that the lien claimant is concerned about its ability to prove its lien claim in the higher amount. In such cases a lien claimant acting responsibly will accept reduced security to avoid costs or other sanctions. I do not draw the inference that it compromises Provincial’s credibility as suggested by Ross Clair.
Last day of supply
- Section 31(3) of the Act applies to a subcontractor’s lien claim. It provides that such person’s lien claim expires 45 days following the last supply of services and materials:
(3) Subject to subsection (4), the lien of any other person,…
(b) for services or materials supplied to the improvement where there is no certification or declaration of the substantial performance of the contract, or for services or materials supplied to the improvement after the date certified or declared to be the date of the substantial performance of the contract, expires at the conclusion of the forty-five-day period next following the occurrence of the earlier of,
(i) the date on which the person last supplied services or materials to the improvement, and
(ii) the date a subcontract is certified to be completed under section 33, where the services or materials were supplied under or in respect of that subcontract. Emphasis added
The issue is whether the date of last supply was January 10, 2012 or January 23, 2013. If the former, then the lien was registered out of time and if the latter, then it was timely.
Whether the last supply relied upon by a lien claimant serves to extend the time within which to preserve lien rights is a question of fact in each case. The onus rest with the plaintiff to prove timeliness of the lien on a balance of probabilities.
Does subsection 2(3) of the Act apply to subcontractors?
- Both parties rely on subsection 2(3) of the Act as providing a formula for determining the date of last supply. That section defines “last supply” as follows:
- (1) For the purposes of this Act, a contract shall be deemed to be completed and services or materials shall be deemed to be last supplied to the improvement when the price of completion, correction of a known defect or last supply is not more than the lesser of
(a) 1 per cent of the contract price; and
(b) $1,000.00.
It is not disputed that the value of the last supply, based on the Explore 1 invoice to Provincial to supply and install the panels, was $6,359.62. What counsel failed to address was whether the deemed completion formula in subsection 2(3) of the Act applies to subcontracts. Both counsel argued as if subsection 2(3) applies to subcontracts, focusing on the quantum and whether the value of the work was under or over the threshold. Their assumption that subsection 2(3) applies to subcontracts is unsupported in law.
In Canadian Rogers Eastern Ltd. v Canadian Glass[3] Master Sandler reviewed the law applicable to the date of last supply in the case of a subcontract and the expiry of a subcontractor’s lien rights. The contract in issue was to supply entrance doors, delivered to the site on March 19, 1993. All but $15,209.96 of the contract price was paid. The subcontractor returned to the site to repair dents in the doors. The parties disagreed as to whether this new work arose from damage caused after the doors were installed, or whether it was rectification of deficiencies. The subcontractor relied on the date of supply of the remedial work and registered a lien for the unpaid $15,209.96 owing on the subcontract.
In Canadian Rogers at paragraphs 16 through 59, Master Sandler conducted a comprehensive review and analysis of the Act and the cases on the issue of whether subsection 2(3) of the Act applies to subcontracts or whether it is confined to contracts between an owner and a general contractor. He concluded that it applies only to contracts and does not apply to subcontracts.
Master Sandler's rationale is based on the statutory definition of "contract" as "a contract between the owner and the contractor" and the need for deeming provisions to allow for certainty in such contracts for the purpose of determining the date of substantial completion and the release date for holdback funds. That definition does not apply in the case of subcontracts, nor does the rationale for deeming completion based on the value of work not yet completed.
For the reasons given by Master Sandler in Canadian Rogers, and applied in subsequent cases, I find that the threshold calculation in subsection 2(3) of the Act applies to contractors' liens but not to subcontractors' liens.
Was the work performed in January 2013 trivial or an attempt to bootstrap lien rights?
Provincial admits that all of the services and materials under the subcontract had been supplied by January 10, 2012 except for the supply and installation of the panels valued at $6,359.62. Ross Clair characterizes the installation in January 2013 as the completion of deficiency work. Provincial characterizes the supply as original contract work, either under the original scope of the contract or as an authorized extra.
In support of its position that the installation of the panels in January 2013 was the completion of deficiency work Ross Clair relies on Provincial’s admission that it never sent an invoice to Ross Clair for the work performed by Explore 1. That is not determinative of the issue.
Ross Clair also relies on two lists prepared by TTC’s consultant and delivered to Ross Clair. The first is from January 2012 and the second is from May 2012. The panels are listed as a “new” item to be completed on both lists. The labeling of the lists as “deficiency lists” does not determine that the items listed therein are in fact deficiencies. The lists include contract items not yet completed.
It is not disputed that Provincial was required to install the panels. When Provincial did not install them in January 2012 Ross Clair took no steps to impose and implement a deadline for Provincial to return and complete the work, to terminate the subcontract or to bring in another subcontractor to complete the work. Ross Clair simply allowed the work to remain undone. From Provincial's perspective it was outstanding subcontract work.
The cases are consistent that minor amounts of outstanding deficiency repair work for which the subcontractor is not entitled to be paid an additional amount does not qualify as the last supply of services and materials for purposes of counting the 45 day lien claim period. Those cases do not apply because Provincial's last work was not deficiency repair work.
The issue is whether an item that has not yet been completed, in contrast to an item that was completed deficiently and requires rectification, can be deferred for an extended period of time and then relied upon to extend what would otherwise have been an earlier date of last supply for the purpose of calculating the 45 day period for a subcontractor to preserve a lien claim. There are various reasons why a subcontractor's work may experience a hiatus, including site readiness, sequencing of work, payment disputes and delay or shortage of materials.
In my view the facts of the present case are consistent with a finding that the subcontract between Ross Clair and Provincial remained incomplete pending installation of the panels. If Ross Clair had been dissatisfied with that arrangement then it would have taken steps to compel Provincial to complete the work or else it would have terminated the contract and brought in another contractor to complete the remaining item. The deemed completion provisions of subsection 2(3) of the Act do not apply to deem the subcontract as complete before completing the last new items of work.
On these facts I find that Provincial’s attendance on site by sending Explore 1 to install the panels from January 20 to 23, 2013 was for the purpose of completing the work required pursuant to the contract, either within the contract's original scope of work or as a required extra. On that basis, January 23, 2013 was the date of last supply.
The next issue is whether the items left to be done were trivial or for the mere purpose of bootstrapping expired lien rights. Each case turns on its facts. Relevant considerations include motivation for the delay and whether the work was trivial in nature.
Provincial takes the position that the reason for the one year delay in completing the final item is that the site was not ready to receive the panels earlier. However, on cross-examination on the affidavit of verification, on May 3, 2013, Mr. Logozzo of Provincial admitted that the reason for the delay of one year was the dispute between Provincial and Ross Clair over payment. That cross-examination took place only four months after the events that gave rise to the lien claim and is much closer in time than the date of his affidavit filed on the motion, prepared in 2015. I accept as more credible the explanation given in 2013 and find that Provincial's motivation for delaying completion of the final contract item was a payment dispute.
Another motivation was Provincial's desire to assert its lien rights. On December 10, 2012 Mr. Logozzo of Provincial sent an email to Matt Axelson of Explore 1, copied to Mr. Frankland, president of Provincial. The email reads:
“Matt, if the glass is not back in time before next week, can we install the glazing frames in. I just need to show presence and have someone from TTC acknowledge that presence.”
Clearly Provincial wanted to have its presence on site documented for a purpose. One such purpose would be to establish the date of last supply for the purpose of starting the 45 day period in which to register a lien claim. Provincial was unable to provide any other plausible purpose for Provincial requiring Explore1 to “show its presence” to TTC. I find that this evidence is consistent with Ross Clair’s theory that Provincial was attempting to assert lien rights by installing the panels. The issue is whether such motivation negates the supply of services in January 2013 as the date of last supply if what was supplied was new contract work and not rectification of deficiencies or trivial items.
Ross Clair asserts that Provincial’s sole reason for its attendance to install the panels in January 2013 was for the purpose of reviving an expired lien claim. I disagree. If the work was not trivial and was required to complete the subcontract then even if Provincial's motivation was to revive what it feared might be an expired lien claim it would not undermine the date of last supply if the work otherwise qualifies. I accept Provincial's explanation that it decided to proceed with the installation of the panels in January 2013 with the hope that it would trigger Ross Clair to pay Provincial the unpaid balance owing. Its motivation is not fatal to its lien claim.
On the issue of whether the last supply was trivial in nature I have reviewed the cases presented by counsel carefully to assess their applicability to this case.
In Applewood Glass & Mirror Inc. v Baun Construction Inc.[4] Master Polika rejected as last supply work that was held back as an insurance policy to revive an otherwise expired lien claim. The contract in issue pertained to the door frames and the front entrance of the Sheraton Hotel on Queen Street in Toronto. The last supply was an electric transfer hinge to replace an ordinary butt hinge for a door. The replacement item was installed more than 45 days after all of the other contract work had been completed. The lien claimant admitted that delaying installation of the electric transfer butt hinge was used as a lever to extract payment on the contract.
The Applewood case is distinguishable on its facts because in that case the last work performed was minor deficiency rectification of work already completed in contrast to the present case where the last supply was new work. Furthermore, the value of the last item in Applewood was $560.00 on a $50,236.50 contract, a minor amount. In the present case the value of the last item was $6,359.62 on a $489,037.50 contract, requiring several days to complete. I find that it was not a trivial amount of work.
In Blockwall Masonry Ltd. v Arcaio Design[5] Justice DiTomaso pronounced that an attempt to bootstrap lien rights after their expiry by performing additional work will not extend the time within which the claim for lien must be registered, failing which it is not preserved. In that case the masonry subcontractor had sent a sub-subcontractor to the site to perform some cleanup items more than 45 days after the job had been completed and fully invoiced. Justice DiTomaso found that the cleanup was remedial work, did not add value to the improvement and was trivial in nature.
I find that the facts in Blockwall are distinguishable from the present case where the January 2013 work added at least $6,359.62 of value to the improvement. The last work performed by Provincial was not trivial in nature.
I agree with Justice DiTomaso and Master Polika that a trivial, minor amount of work will not revive otherwise expired lien rights. In both of those cases the item of work in issue was trivial, minor and in the nature of deficiency repairs. The last services and materials supplied in Provincial's case are distinguishable.
Conclusion
I find that the services and materials supplied by Provincial from January 20 to 23, 2013 constitute the last supply of the work under the subcontract and that Provincial's claim for lien was preserved within 45 days thereafter, within the time prescribed by the Act. Provincial's lien claim has not expired.
Ross Clair's motion to discharge Provincial's lien claim is dismissed.
Master C. Albert .
DATE: April 30, 2015
Provincial Partitions Ltd. v R.O.M. Contractors Inc. cob Ross Clair Contractors,
2015 ONSC 2839
COURT FILE NO.: CV-13-474920
DATE: April 30, 2015
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Provincial Partitions Ltd. v City of Toronto, R.O.M. Contractors Inc. cob Ross Clair Contractors, R.O.M. Contractors Limited and Toronto Transit Commission
BEFORE: Master C. Albert
COUNSEL: J. Armel, for the moving party defendant Ross Clair
P. Guaragnaa, for the responding party plaintiff
ENDORSEMENT
DATE: April 30, 2015
[1] Security of $120,000.00 for the lien claim plus $30,000.00 for costs, the reduced amount on consent of the partiers and without prejudice
[3] 1993 CarswellOnt 833
[4] 2009 CarswellOnt 7122
[5] 2007 CarswellOnt 5451