SUPERIOR COURT OF JUSTICE - ONTARIO
2015 ONSC 4716
COURT FILE NO.: CV-13-487405
DATE: July 22, 2015
RE: MGI Construction Corp. v. 2273865 Ontario Inc and Frank Bosso
BEFORE: Master C. Albert
COUNSEL:
T.D. Kerr, for the plaintiff (moving party) Fax: 905-738-5182
M. Katzman, for the defendants (responding parties) Fax: 416-628-2224
MASTER C. ALBERT
ENDORSEMENT
The plaintiff moves to validate service of the statement of claim or, alternatively, extend the time within which to serve the statement of claim in this action brought pursuant to the Construction Lien Act, R.S.O. 1990, c.C.30 (the “Act”). The plaintiff relies on section 53(2) of the Act.
The relevant dates and events are:
May 24, 2013: Date of last supply shown on the claim for lien
July 4, 2013: MGI registers its claim for lien for $137,053.73 (instrument AT3342206)
Aug. 21, 2013: MGI issues its statement of claim for $137,053.73
Aug 22, 2013: MGI registers its Certificate of action (instrument AT3386274)
Aug 29, 2013: Date MGI employee D. Cool deposes he served “the claim”
Jan. 2014: Date MGI’s lawyer Jacobson deposes file would be transferred
March 19, 2015: Date plaintiff’s new counsel serves statement of claim
The defendants admit that the statement of claim was served by registered mail on March 19, 2015 but dispute that it was served personally on August 29, 2013.
The issues are:
a) Whether the statement of claim was served within the 90 days prescribed by the Act.
b) If not, whether the time for service should be extended to March 19, 2015 and service by mail and registered mail validated.
c) Alternatively, if service is not validated or the time for service is not extended, whether the time for service of the civil portion of the action should be extended and validated and that portion of the action permitted to proceed as an ordinary civil action, the lien portion of the claim having expired.
Was the statement of claim served within 90 days of issuance?
The time for service of the statement of claim expired on November 20, 2013. The evidence regarding whether it was served within 90 days of issuance conflicts.
MGI’s employee Darren Cool deposes that on August 29, 2013 he attended at the Arizona Grill Lounge and personally gave a copy of “the claim” to Frank Bosso. Mr. Bosso is the personal defendant and principal of the defendant corporation. Mr. Cool has not attached to his affidavit a copy of the document he purportedly served on Mr. Bosso. No affidavit of service was prepared contemporaneously with this purported service of the statement of claim. Mr. Bosso denies that he was served.
Mr. Jacobson, litigation counsel brought in by MGI’s lawyers Agozzzino Law Professional Corporation (“Agozzino”), deposes that the plaintiff intended to amend the lien claim and add an additional invoice to the claim, requiring an amendment to the statement of claim. For that reason the claim issued on August 21, 2013 was not given to a process server for service. Mr. Jacobson’s affidavit is silent regarding whether he instructed Mr. Cool or anyone from MGI as to how to personally serve the statement of claim in August 2013 or at all. It is not credible that a lawyer would have a client who is a lay person serve a statement of claim without providing instructions as to how it must be done.
The office administrator/ receptionist for Agozzino Law Professional Corporation deposes an affidavit about serving the claim for lien, not the statement of claim. The affidavit is silent regarding whether Agozzino instructed Mr. Cool or anyone from MGI as to how to personally serve the statement of claim in August 2013 or at all.
If the statement of claim was served personally in August 2013 then this motion would not be required. All that would have been required was an affidavit of service from Mr. Cool deposing as to service and then the defendant could have been noted in default. The bringing of this motion corroborates that MGI doubts that the statement of claim was served as required within the prescribed timeframe.
In the face of this conflicting evidence and in the absence of an unequivocal affidavit of service that identifies that the statement of claim was served I find that MGI has not met the burden of proving that the statement of claim was served on the defendants in August 2013 or at all within the 90 days required under the Act.
Extension of time to serve the statement of claim
The defendants admit that the statement of claim was served by registered and ordinary mail on or about March 19, 2015. If it is appropriate to extend time to that date then I am satisfied that it would be appropriate to validate the method of service.
Relevant factors to exercising discretion to extend time to serve the statement of claim are:
a) The length of delay and whether the limitation period has expired;
b) The explanation for the delay in serving the statement of claim and in bringing the motion to extend time: are the reasons compelling? and
c) Is the defendant prejudiced by the delay in serving the statement of claim?
The delay from issuance of the claim and service in March 2015 is one and a half years. The delay from the date of expiry of the time within which to serve the statement of claim is one year and four months. The only explanation offered is that there was miscommunication between MGI and its lawyers. During that time MGI was suing its lawyers (Aggozzino) on a real estate matter. Yet MGI and its principal Sergio Di Nicola, took no steps to transfer this litigation, follow up on this litigation or otherwise move this litigation forward.
It is not credible that a party suing its lawyers would take no steps whatsoever to transfer the file or inquire of the same lawyers that it is suing as to the status of the litigation that the lawyers being sued are handling for him.
I find that MGI has not provided a compelling reason for its failure to effect service of the statement of claim within the 90 days required by the Act or at all before March 19, 2015. Nor has MGI provided a compelling reason for the delay from November 20, 2013 (when the time for service expired) and March 19, 2015 when the statement of claim was served, a period of 16 months.
The Act provides a procedural code for construction lien claims, with truncated limitation periods that are intended to expedite the resolution of lien actions. The reason for this is that the Act bestows rights on a lien claimant that exceed the rights of an ordinary plaintiff in a civil action: the claim is secured by the property (or security posted in lieu of the property) and lien claimants enjoy priorities over other creditors. The trade-off is that lien claims are to proceed expeditiously (see section 67 of the Act), and many of the procedures permitted in an ordinary action (i.e. as-of-right discoveries, interlocutory motions and appeals from interlocutory decisions) are not permitted, or are only permitted with leave, in a construction lien action.
It follows that compliance with the 90 day period within which to serve the statement of claim is required to meet the objective of the Act to achieve an expedited resolution of the claim. While the court has discretion to extend this limitation period, to exercise that discretion, compelling reasons are required.
MGI’s reasons for delay and its efforts to move the case forward are not compelling in this case.
On the issue of prejudice, I find that the existence of a lien against the property that requires the owner to post security to clear title is prejudicial to the defendant. MGI has offered no evidence to rebut this prejudice, such as an offer to pay the cost of borrowing funds to vacate the lien claim if MGI is ultimately unsuccessful at trial.
For these reasons I find that it would not be appropriate to exercise discretion to extend the time to serve the statement of claim regarding the lien claim action and that relief is denied.
The statement of claim not having been served as required by the Act and extension of service having been denied, this court declares that the lien claim registered by MGI has expired.
Proceeding as a civil action
The court’s concerns regarding extending time to serve the statement of claim regarding the lien claim remedies sought in this action do not apply to the civil claim advanced in contract and on a quantum meruit basis, in paragraphs 1(c), 6, 11 and 12 of the statement of claim.
The prejudice to MGI that causes the court concern regarding the lien claim portion of the action are not present in the civil action.
Accordingly I find that it would be appropriate to extend time to serve the statement of claim, to the extent that it claims relief as a civil action, to the date that it was served by mail in March 2015 and to validate service in that manner.
Pursuant to section 63 of the Act the action will proceed as a civil action. Given the amount in dispute the procedure that will apply to the action is the ordinary civil procedure unless the parties agree to continue the action as a summary action under rule 76.
The original statement of claim as issued by the court cannot be located. The plaintiff may use a copy of the court file copy of the statement of claim in preparing the trial record.
The plaintiff shall deliver an amended statement of claim in accordance with these reasons by August 22, 2015.
The time for delivery of the statement of defence is extended to September 30, 2015.
Costs of the motion are fixed at $4,500.00 payable by the plaintiff to the defendants by August 22, 2015.
Master C. Albert .
DATE: July 22, 2015
2015 ONSC 4716
COURT FILE NO.: CV-13-487405
DATE: July 22, 2015
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MGI Construction Corp. v. 2273865 Ontario Inc and Frank Bosso
BEFORE: Master C. ALbert
COUNSEL:
T.D. Kerr, for the plaintiff
M. Katzman, for the defendants
ENDORSEMENT
Master C. Albert
DATE: July 22, 2015