CONSOLIDATED COURT FILE NO.: CV-14-236
DATE: 20150610
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Northridge Homes Ltd.
Eric Gionet, for the Plaintiff
Plaintiff
- and -
The Travellers Motel (Owen Sound) Limited, Chandra Grewal, Pirithi Grewal, The Toronto-Dominion Bank and First Source Mortgage Corporation
Defendants
Allen Wilford, for the Defendants The Travellers Motel (Owen Sound) Limited, Chandra Grewal and Pirithi Grewal.
Nobody appearing for the Defendant The Toronto-Dominion Bank.
Jeff Larry for the Defendant First Source Mortgage Corporation
- and –
Harold Sutherland Construction Ltd.
Douglas Grace, for the Plaintiff
Plaintiff
- and -
The Travellers Motel (Owen Sound) Limited, Chandra Grewal, Pirithi Grewal, The Toronto-Dominion Bank and First Source Mortgage Corporation
Defendants
Allen Wilford, for the Defendants The Travellers Motel (Owen Sound) Limited, Chandra Grewal and Pirithi Grewal.
Nobody appearing for the Defendant The Toronto-Dominion Bank.
Jeff Larry for the Defendant First Source Mortgage Corporation
- and –
CAAJ Construction Inc., 2156559 Ontario Inc., Preet Plumbing & Heating Ltd., A & M Heating & Air Conditioning Ltd., New Starline Painting Ltd. and
Marble and Granite Stonecraft Ltd.
Harjaap Mann, for the Plaintiffs
Plaintiffs
- and -
The Travellers Motel (Owen Sound) Limited, Chandra Grewal, Pirithi Grewal and Northridge Homes Ltd.
Defendants
Allen Wilford, for the Defendants The Travellers Motel (Owen Sound) Limited, Chandra Grewal and Pirithi Grewal.
Eric Gionet, for the Defendant Northridge Homes Ltd.
REASONS FOR DECISION ON MOTION
Conlan J.
I. Introduction
[1] On August 7, 2013, an Owner/Contractor Agreement (“Contract”) was executed by Mr. Dave Rai for Northridge Homes Ltd. (“Northridge”), as the contractor, and Traveller’s Motel Owen Sound (“Motel”), Mr. Pirithi Grewal and Ms. Chandra Grewal (collectively the “Grewals”), as owners.
[2] The Contract was for the construction of a new building on the Motel property located on 9^th^ Avenue East in Owen Sound. The Contract amount was $900,000.00 plus taxes, with some stipulations and a limited scope of work. The commencement date was August 26, 2013, and the completion date was six months thereafter.
[3] From time to time, Change Orders (amendments to the Contract) were signed by the parties. And, from time to time, subcontractors were engaged for some of the work.
[4] It is now June 2015. The construction has not been completed. The Grewals are still operating the Motel. First Source Mortgage Corporation (“First Source”) has taken steps to enforce an alleged default on its mortgage. Very recently, a Notice of Sale was issued. Northridge, the subcontractors and Harold Sutherland Construction Ltd. (“Sutherland”) have advanced lien claims against the property and have issued Statements of Claim under the Construction Lien Act, R.S.O. 1990, chapter C.30, as amended (“CLA”). The Court actions were commenced in September and October 2014 as the result of alleged non-payment by the Motel and the Grewals.
[5] On June 9, 2015, in Owen Sound, I heard a Motion brought by the Motel and the Grewals. That Motion was opposed by Northridge, the subcontractors (CAAJ Construction Inc., 2156559 Ontario Inc., Preet Plumbing & Heating Ltd., A&M Heating & Air Conditioning Ltd., New Starline Painting Ltd. and Marble and Granite Stonecraft Ltd.) and Sutherland. That Motion is not the primary concern of First Source – it simply wants to be paid what it is owed or at least have the mortgage brought in to good standing, failing which it intends to realize on its security.
[6] The Motion brought by the Motel and the Grewals was for some 25 heads of relief, most principally to (i) consolidate three Court files (which relief was granted, unopposed, on an earlier date), (ii) for security for costs (which request was dismissed as abandoned at the commencement of the Court hearing on June 9, 2015), and (iii) to strike/discharge/vacate all of the liens registered by the other parties (which relief is the subject of these Reasons).
[7] Oral argument on the Motion, by all counsel, took less than one-half day at Court. Thousands of pages of materials, however, were filed by the parties in the form of Records, Exhibit Books, Facta, written argument, Books of Authorities and transcripts of examinations of some of the parties.
[8] No treatise would give justice to the density of the materials filed or to the amount of work invested by counsel and the parties. Having read the materials, and having re-read those portions of them highlighted by counsel in their oral submissions at Court on June 9, 2015, I have attempted below to respond to the issues that are necessary to resolve at this stage. Sufficiency of reasons, of course, is not a concept that is measured by their length.
[9] After all counsel and their respective clients have had an opportunity to review and digest these Reasons, I direct that they shall, forthwith, arrange a teleconference with me to discuss where we go from here. That can be arranged through the Trial Coordinator in Owen Sound. We can discuss costs of the Motion decided herein, the outstanding Motions brought by Northridge, whether I ought to case manage this file, whether the parties are interested in having me mediate the matter to try to settle all or some of the remaining issues, a timetable for the litigation, scheduling issues, and so on.
[10] I want to be helpful to the parties. It is in everyone’s interest that the Motel be a success.
II. The Undisputed Facts
[11] Very little is undisputed. That observation, in the end, drives the result of the within Motion.
[12] Besides what is outlined above in terms of the Contract, the parties and the litigation history, virtually everything else is contested but for the fact that the Motel and the Grewals have the unfettered right to post security in order to have the liens discharged. Without the consent of any of the other parties, the amount of the security required to discharge the liens is $489,000.00 (rounded down to the nearest thousand) - $196,000.00 in favour of Sutherland and the remainder in favour of Northridge and the subcontractors.
III. The Law
[13] All counsel agree that the Motion brought by the Motel and the Grewals to discharge the liens is akin to a motion for summary judgment (albeit under the old regime, before Rule 20 of the Rules of Civil Procedure was amended to provide expanded powers and pre-Hryniak v. Mauldin, 2014 SCC 7).
[14] I agree. Subsection 47(1) of the CLA gives me the authority to discharge a lien; vacate a claim for lien, a certificate of action or both; or dismiss an action, “[u]pon any proper ground and subject to any terms and conditions…”.
[15] A motion under subsection 47(1) of the CLA is analogous to a motion for summary judgment under Rule 20. If there is a genuine issue of fact for trial, the matter should be left to the trial judge. 1246798 Ontario Inc. v. Sterling (2000), 2000 CanLII 29031 (ON SCDC), 51 O.R. (3d) 220 (Div. Ct.), at paragraph 12; Beaver Materials Handling Co. v. Hejna, 2005 CanLII 23127 (ON SC), [2005] O.J. No. 2733 (S.C.J.), at paragraph 24; 1353025 Ontario Inc. v. Walden Group Canada Ltd., 2006 CarswellOnt 2583 (S.C.J.), at paragraph 14.
[16] The Motel and the Grewals have filed caselaw which confirms the authority of the Court to discharge a lien. There is no exhaustive list of circumstances in which that remedy might be appropriate. A partial list includes cases of fraud (perhaps the evidence clearly establishes that the lien is premised on a contract where the lien claimant forged the signature of the other party), or a failure to meet the statutory prerequisites (maybe the lien is based on work that was done ten years ago), or gross excessiveness or exaggeration (perhaps the evidence clearly establishes that the lien is for one million dollars while the total value of the labour and materials supplied by the claimant is far less than that), or a lack of any connection between the property against which the lien was registered and the property that the claimant worked on. Those are just examples.
IV. The Law as Applied to the Facts in this Case
[17] The Motel and the Grewals have the burden of proving, on a balance of probabilities, that the liens ought to be discharged.
[18] It must be remembered that the Motion before me, as pleaded, other than in the alternative, did not contemplate any amount of security being posted in order to discharge the liens. It simply asked, primarily, that all of the liens be discharged, period. In submissions, however, counsel for the moving parties suggested, in the further alternative, that $100,000.00 be posted as security by the Grewals in order to vacate all of the liens.
[19] I have not been persuaded, on balance, that the liens ought to be discharged. There are far too many genuine issues of fact that require a trial for their resolution.
[20] As examples, a review of the affidavit evidence and the transcripts of the examinations reveal the following.
[21] First, a trial is required to resolve the issue of why the project was not completed on time. Northridge’s position is that the major reason for that was the stubborn insistence by the Grewals, wrongly it is alleged, that the existing site services at the lot line could be utilized. The Grewals, on the other hand, allege that Northridge is responsible for the delay.
[22] Second, a trial is required to resolve the issue of whether the project was “turnkey”, in other words, all-in for $900,000.00 plus taxes. For the most part, the Grewals say that it was. Northridge says that it was not. The Contract uses the term “turnkey project” but also contemplates changes to the work and extras.
[23] Third, a trial is required to resolve the issue of whether the work done by Sutherland is included in the Contract price. The Grewals seem to imply that it is. Sutherland and Northridge assert that it is not. There is a Change Order which appears to support the proposition that the Grewals and the Motel contracted separately with Sutherland, however, the Grewals maintain their position and are entitled to explain that to the trial judge.
[24] Fourth, a trial is required to resolve the issue of whether certain work performed by Northridge and/or some or all of the subcontractors was shoddy. The Grewals assert that it was, and numerous examples are given (paragraph 30 of the Grewals’ written argument). Northridge and the subcontractors allege that it was not. The photos supplied by the moving parties are helpful, however, they lack context and explanation and (where required) expert opinion.
[25] Fifth, a trial is required to resolve the issue of whether the Contract is even a legal and binding one. The Grewals state that Mr. Rai had no authority to sign it. Mr. Rai disputes that.
[26] Sixth, a trial is required to resolve the issue of whether certain additional costs are indeed proper extras. In many cases, such as footings at the back of the building, the Grewals say no. Northridge says yes. How am I to decide that? In the example of the footings, the Grewals assert that Mr. Rai knew about that expense (almost $6000.00) before the Contract was signed. Mr. Rai disputes that. Someone is either not telling the truth or has a bad memory. Before deciding who, any judge would like to see and hear the witnesses.
[27] I could continue, but to what end? The above six issues are all crucial to determining whether the liens are proper or not. Without a trial, I cannot fairly and justly decide who caused the delay in completing the project, and thus, whether it was breached and, if so, by whom. I cannot decide what was included in the $900,000.00 plus taxes. I cannot decide the competence of the work performed and, by extension, the reasonableness of the amounts charged. I cannot decide whether the Contract was properly executed.
[28] In a sense, the thoroughness of the moving parties’ own materials ought to have made it clear to them that their Motion could not possibly succeed. This is not a case where the documents contain all of the answers, at least not from the perspective of the Grewals. This is not a case where something extrinsic to the competing evidence of the parties clearly brings the issue in dispute out of the realm of being a genuine one that needs a trial to be resolved. This is not a case where the written record reveals that the credibility of one party is so weak that a trial is unnecessary to decide how much of that person’s evidence can safely be relied upon.
[29] In short, this is not a case for summary judgment. Consequently, it is not a case for the discharging of the liens.
[30] Faced with competing factual assertions by each side, on a myriad of items that are highly material to deciding whether these liens are proper or not, on a written record alone, the task is impossible. A trial is required in order to fully appreciate the issues. A trial is required in order to assess credibility.
[31] Finally, on the invitation by counsel for the moving parties to arbitrarily set the amount of security to be posted by the Grewals in order to discharge the liens at $100,000.00, I decline to do so. To set the quantum at anything less than that suggested by the responding parties to the Motion would be to effectively grant partial relief to the moving parties in circumstances where I have already found it impossible to decide the issues in dispute.
[32] Besides, this is not a matter of throwing darts at a board or picking a number out of the air. $100,000.00 is less than what the moving parties owe on the face of the Contract ($900,000.00 plus HST, less $813,589.36 paid to date), excluding any consideration of Sutherland’s work and any extras. It is not a reasonable amount of security.
[33] As much as I want the Grewals and their business to succeed, I cannot gut the claims of the other parties by allowing their liens to be vacated on payment of an arbitrary and unreasonably low amount of security.
IV. Conclusion
[34] For all of the foregoing reasons, the Motion brought by the Grewals and the Motel is dismissed (except of course for the consolidation Order that has already been issued).
[35] The Grewals remain entitled to pay $489,000.00 in order to discharge all of the liens.
[36] I thank all counsel for their helpful materials and submissions.
Conlan J.
Released: June 10, 2015
COURT FILE NO.: CV-14-236
DATE: 20150610
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Northridge Homes Ltd. et al.
Plaintiffs
- and -
The Travellers Motel (Owen Sound) Limited et al.
Defendants
REASONS FOR DECISION ON MOTION
Conlan J.
Released: June 10, 2015