COURT FILE NO.: CV-13-491355

DATE: 20150610

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: ALEX FURMANOV, Plaintiff

AND:

HOWARD KEITH JURIANSZ and LIDIA ZAMOSTEAN, Defendants

BEFORE: D.L. Corbett J.

COUNSEL:
Patrick Di Monte, for the Plaintiff

Ronald Lachmansingh, for the Defendants

ENDORSEMENT

[1] At the conclusion of the hearing I indicated that the motion was dismissed, with these reasons to follow.

[2] Mr Furmanov provided services and materials in the construction of the defendants’ house.

[3] The parties dispute whether Furmanov was the contractor or the construction manager for this project. It is clear that the relationship between the parties was intended to be governed by a written contract between the parties, which would make Mr Furmanov a “contractor” within the meaning of the Construction Lien Act, R.S.O. 1990, c. C.30 (“CLA”).

[4] Mr Furmanov claims that he is owed more for his work.

[5] Mr Furmanov did not register a claim for lien within the time periods prescribed by the CLA. He alleges that he did not do so because the parties were in settlement discussions.

[6] The defendants have agreed to sell the house. The closing is imminent.

[7] Mr Furmanov moves for a preservation order under Rule 45.02 of the Rules of Civil Procedure, RRO 1990, Reg 194 on the basis that he has an interest in the property in the nature of a constructive trust arising from his work to improve the property.

[8] Mr Di Monte acknowledges that if the relationship between the parties is governed by contract, then the lien provisions of the CLA apply, and a claim of constructive trust cannot succeed. In this event, an order cannot be made under R.45.02.

[9] However, Mr Di Monte argues that the defendants have pleaded that the contract is voidable because Mr Furmanov was not registered under the Ontario New Home Warranty program, in violation of the New Home Warranty Program Act, RSO 1990, c O.31. If the contract is voidable, and is found to have been voided, then the relationship between the parties is not governed by contract. In this event, Mr Furmanov has a claim in constructive trust. And in this event, the argument goes, an order under R.45.02 can be made.

[10] The argument is ingenious. But it cannot succeed.

[11] First, whether the relationship is governed by contract or by constructive trust, it is still covered by the CLA. A person entitled to a lien under that Act is a person who “supplies” services or materials to an improvement. Mr Furmanov fits within that definition, whether he has a contract with the defendants or not. The Act provides Mr Furmanov with a method to secure his claims: a construction lien. To avail himself of this remedy, Mr Furmanov had to comply with the deadlines in the CLA. Mr Furmanov cannot avoid the consequences of his failure to register his lien by way of R.45.02.

[12] This is no small point. “Subcontractors” under the CLA, by definition, do not have contracts with “owners”. In many cases these subcontractors could establish that their work has benefitted the owner, with a corresponding detriment to the subcontractor. The CLA seeks to establish a balance among all those involved in the construction project, and the juristic reason that a claim in constructive trust and security for that claim is not available for the subcontractor is that the scheme of the CLA would be defeated if that was permitted.

[13] Second, the only way in which this claim could be characterized as a constructive trust, rather than a contract claim, is because of Mr Furmanov’s alleged breach of his obligation to register as a new home builder. Mr Furmanov should not benefit by obtaining security for his claim arising from his own misconduct: equity may step in to afford him a remedy if the contract fails, but not a better remedy than he would have had if he had complied with his obligations.

[14] Mr Di Monte referred to two decisions of Molloy J. in which a contractor was found to have a constructive trust claim that succeeded against Ontario’s claim to forfeiture of property under the Civil Remedies Act, 2001, S.O. 2001, c. 28. I would confine those cases to their facts: they do not concern the ability of a complainant to obtain security in lieu of failure to register a lien. Rather, they concern a priority dispute. In the factual context of a forfeiture hearing, Molloy J. concluded, in effect, that there is no juristic reason for Ontario to be enriched at the expense of a good faith, arm’s length creditor of the person who owned the property subject to seizure.

[15] In addition to these reasons, I also adopt the submissions in paragraphs 61 to 67 of Mr Juriansz’s factum in respect to the constructive trust issue, and in paragraphs 83-89 of the factum for why Mr Furmanov is not entitled to a Mareva injunction.

[16] Execution before judgment, whether by security or otherwise, is the exception to the general rule. Mr Furmanov may still pursue his claim for damages, of course, the primary remedy that he claims in his statement of claim.

[17] The motion is dismissed.

[18] I view the issue on this motion as verging on trite law. The efforts expended on this motion were excessive given the slight impact it will have on the course of this dispute on its merits. Mr Juriansz is entitled to his costs, but I see no reason to go beyond the normal scale of costs for a relatively straightforward motion.

[19] Mr Di Monte asks that these costs be payable in the cause or to the defendants in the cause, or that payment be deferred to the end of the case. He advises that his client is “tapped out” as a result of the defendants’ failure to honour their obligations under the contract or otherwise to pay for all of the work that the plaintiff did on the defendants’ house.

[20] I have some sympathy for the plaintiff in the circumstances of this case. The defendants have sold the house, apparently at a substantial profit. The defendants have pleaded that there were numerous substantial deficiencies in the project, and yet have also pleaded that they spent a total of $6000 to remedy those deficiencies (a small amount given the overall cost of the project was in the range of $1,000,000). The defendants have alleged in their counterclaim that the contract is void at their instance, and that as a consequence Mr Furmanov should be required to repay all the money that has been paid to him, despite the defendants having received the benefit of the work done with the money they paid to Mr Furmanov. This position is patently unreasonable. I repeat oral remarks made during argument: Mr Juriansz, as a senior and respected member of the bar, will do himself no favours by taking such an unreasonable position that it smacks of professional bullying.

[21] The parties should bear these comments in mind in trying to resolve costs. If they cannot agree then Mr Juriansz shall deliver costs submissions by June 24th and Mr Furmanov shall deliver responding submissions by July 2nd.

D.L. CORBETT J.

Date: June 10, 2015