Court File and Parties
Court File No.: CV-13-494318 Date: June 27, 2016
Superior Court of Justice - Ontario
Re: Alberto Becerra (o/a Homespaces and Sweethomespaces.com) v Ennamuel Ronchin, Nancy Ronchin, Toronto Dominion Bank and Homeservice Canada Ltd.
Before: Master C. Albert
Counsel: M. Donald for Becerra, moving party plaintiff F. Costantini, for the responding party Homeservice Canada Ltd. J. Sestito for the responding parties Emmanuel and Nancy Ronchin and TD Bank
Endorsement
Master C. Albert
Mr. Becerra asks the court for leave to issue a fresh as amended statement of claim in the action issued on December 6, 2013 pursuant to the Construction Lien Act, R.S.O. 1990, c. C.30 (the “Act”). This is not his first pleading amendment. Mr. Becerrra now seeks to increase the quantum of his claim, add new grounds of recovery and join with his construction lien claim a claim for recovery from Homeservice in respect of construction services provided to renovate a property other than the defendant Ronchins' property.
A preliminary issue in interlocutory motions brought in actions issued pursuant to the Act is whether leave ought to be granted to permit the moving party to bring the motion.
If leave is granted for Mr. Becerra to bring this motion the next issue is whether the court should grant leave to issue the proposed pleading amendment in the form of the fresh as amended statement of claim produced at the motion hearing (as distinct from the various versions of the proposed amended pleading served in the moving party's motion record).
For the reasons that follow I find that leave ought not be granted to bring this interlocutory motion. Had leave been granted I would not have granted leave to issue the proposed fresh as amended statement of claim. On December 22, 2014 Homeservice Canada Ltd. (“Homeservice") served a demand for particulars on Mr. Becerra. The portions of the proposed fresh as amended statement of claim that are not improper may be provided as particulars of the pleading for which Master Sandler granted leave on July 30, 2014.
Background
Homeservice is in the business of matching suppliers of construction services and materials to property owners seeking contractors, for which Homeservice charges a fee. Homeservice introduced Mr. Becerra and the Ronchins to each other. Mr. Becerra supplied services and materials to renovate their home. The Ronchins were not happy with the result. Mr. Becerra claims that he was not paid in full. He registered a claim for lien and issued an action against the Ronchins for payment. He later added Homeservice as a defendant to the action, alleging that the construction contract was a three way contract between himself, the Ronchins and Homeservice. With the proposed new amendment before the court on this motion he seeks to introduce claims for punitive damages and damages arising from another project unrelated to the Ronchins, namely an earlier construction project for which Homeservice had introduced Mr. Becerra to non-parties, the Whitalls.
Regarding the Ronchin construction project and lien claim the relevant facts are as follows. Mr. Becerra registered a construction lien on September 25, 2013 as Instrument AT3415278, claiming payment of $75,000.00 and lien remedies for the supply of services and materials from May 1, 2013 to September 25, 2013 to improve the Ronchins’ property at 83 Bonacres. He issued a civil action on December 6, 2013.
Notwithstanding that the claim for lien alleges that he supplied services and materials up to September 25, 2013, in Mr. Becerra’s original, amended and proposed statements of claim he pleads that the Ronchins terminated the contract on September 9, 2013. Query whether he supplied services and materials up to September 25, 2013 as attested to in his claim for lien.
Mr. Becerra issued a statement of claim on December 6, 2013 against the Ronchins and the TD Bank claiming payment of $29,022.17 and lien remedies. On December 22, 2013 the Ronchins defended and counterclaimed for $10,000.00. TD Bank also defended.
On May 22, 2014 the Ronchins moved to add Homeservice as a third party defendant. In response Mr. Becerra brought a cross-motion to amend the statement of claim and add Homeservice as a defendant. The two motions came before Master Sandler on June 18, 2014. Master Sandler determined that it was not necessary to add Homeservice as both defendant to the main action and third party. He adjourned the motions to July 2, 2014, peremptory on all three parties, to allow Mr. Becerra’s new counsel time to draft the proposed amended pleading. As a condition of the adjournment Master Sandler directed Mr. Becerra’s counsel to serve the proposed amended statement of claim by June 26, 2014.
The motions returnable on July 2, 2014 did not proceed. Mr. Becerra’s counsel had not prepared the proposed amended pleading. The Ronchins and Homeservice did not object to a further adjournment on condition that they be paid costs and Master Sandler adjourned the motions to July 30, 2014, again marked peremptory, to “proceed that day no matter what”, with costs thrown away fixed at $500.00 to each of the defendants and the proposed third party, to be paid by the plaintiff by July 23, 2014. Master Sandler further ordered that Mr. Becerra serve the draft proposed amended statement of claim by July 23, 2014. He ordered that if Mr. Becerra failed to comply with the terms of the adjournment his action would be dismissed and the lien claim discharged. Clearly Master Sandler was concerned about Mr. Becerra's delay in advancing his claim.
On the return date of July 30, 2014 Master Sandler endorsed the record with clear directions for the wording of the order. He granted (i) leave to Mr. Becerra to add Homeservice as a defendant and (ii) leave for Mr. Becerra to amend the statement of claim in the form filed with the court on July 30, 2014 (the "July 30, 2014 amendment"). Master Sandler further ordered Mr. Brecerra to serve and file the amended statement of claim within 20 days of issuing the order. He further ordered that prior to Homeservice delivering a defence to the amended claim it could serve a demand for particulars. Master Sandler ordered Mr. Becerra to pay costs of $500.00 to each of the defendants.
Mr. Becerra failed to comply with Master Sandler’s order of July 30, 2014. In October 2013, almost three months later, the Ronchins and TD Bank brought a motion to strike the claim or in the alternative to compel compliance with Master Sandler's order. Homeservice brought a similar motion.
On October 30, 2014, the day that the motions were returnable before Master Sandler, Mr. Becerra presented the draft order and Master Sandler signed it, rendering adjudication of the motions on their merits unnecessary. However it had been necessary for the defendants to bring the motions in order to compel Mr. Becerra to advance his claim or alternatively to have the claim dismissed. In his endorsement Master Sandler noted the failure of Mr. Becerra’s prior lawyer to comply with his order and ordered that lawyer to pay costs to the defendants.
The amended statement of claim was finally issued on November 19, 2014 and that is the date on which Homeservice was added as a defendant. Mr. Becerra changed lawyers again.
In the amended statement of claim for which Master Sandler granted leave on July 30, 2014 Mr. Becerra advanced a claim for $60,000 against all defendants. Defendants Ronchins and TD Bank defended on or about December 9, 2014. The Ronchins increased their counterclaim to $30,000.00 and cross-claimed against Homeservice for $30,000.00 plus contribution and indemnity.
On or about December 22, 2014 Homeservice served a demand for particulars on Mr. Becerra.
On or about March 17, 2015 Homeservice delivered its statement of defence, cross-claim and counterclaim. The counterclaim is for $60,000.00 plus contribution and indemnity as against Mr. Becerra and the cross-claim is for contribution and indemnity from the Ronchins.
On or about July 27, 2015, almost one year after the July 30, 2014 amendment, Mr. Becerra proposed to the defendants another amendment to his pleading in the form of a proposed fresh as amended statement of claim. Several versions of the proposed new pleading followed.
The motion record for the motion that is presently before the court was served on the defendants on October 2, 2015. It contains at Tab S a proposed fresh as amended statement of claim that is different from the version of the pleading for which Mr. Becerra asks leave of the court on this motion. The final version of the proposed pleading was not provided to the responding parties until just shortly prior to the motion hearing on April 20, 2016. The main difference in the two versions of the proposed new pleading is that the version served with the motion record did not advance a claim against the TD Bank.
The proposed fresh as amended statement of claim for which the court is asked to grant leave claims: a) as against the Ronchins and the TD Bank: i) $65,848.07 for breach of contract (this is an increase in quantum from the July 30, 2014 amendment but is less than the $70,000.00 claimed in the claim for lien); ii) $65,848.07 for unjust enrichment (new claim: not previously pleaded); iii) punitive, aggravated and exemplary damages (new claims, not previously pleaded); iv) lien remedies; and b) as against Homeservice: i) $108,824.64 for breach of contract, including a claim for $15,000 regarding an unrelated earlier construction project owned by non-parties named Whitall (quantum of claim increased from the $60,000.00 claim in the July 30, 2014 amendment; new claim regarding the Whitall project); ii) $108,824.64 for unjust enrichment, including $15,000.00 for the Whitall project and return of a bond posted with Homeservice in or about 2008 (new claims: not previously pleaded); and iii) a charge against holdbacks (new claim: not pleaded in the July 30, 2014 amendment).
Notwithstanding that Mr. Becerra relies on construction services and materials supplied in or prior to September 2013, his lawsuit remains at the pleadings stage almost three years later due entirely to the manner in which he and his various lawyers have conducted the litigation.
Leave
Mr. Becerra’s action was issued under the Construction Lien Act. Actions under the Act are different from ordinary civil actions. The rules of practice apply only to the extent that they do not conflict with the Act.
Sections 67 provides:
- (1) The procedure in an action shall be as far as possible of a summary character, having regard to the amount and nature of the liens in question. (2) Interlocutory steps, other than those provided for in this Act, shall not be taken without the consent of the court obtained upon proof that the steps are necessary or would expedite the resolution of the issues in dispute. (3) Except where inconsistent with this Act, and subject to subsection (2), the Courts of Justice Act and the rules of court apply to pleadings and proceedings under this Act. emphasis added
The Act provides a mechanism for construction lien claims to be decided in as summary a fashion as is suitable to meet the needs of the case. Interlocutory steps not specifically permitted by the Act require leave of the court and interlocutory orders may not be appealed (s. 91 of the Act). A motion to amend pleadings is interlocutory and requires leave.
While Mr. Becerra did not specifically seek leave to bring this interlocutory motion in his notice of motion such relief is captured in paragraph (d), the catch-all portion of his notice of motion, seeking “such further and other relief as this Honourable Court may deem just”. I am satisfied that Mr. Becerra’s motion does not fail merely because he failed to specifically seek leave to bring this interlocutory motion.
The test for leave is specified in subsection 67: the moving party must prove that the motion is either necessary or that it will expedite the resolution of the issues in dispute.
The motion will clearly not “expedite the resolution of the issues in dispute". To the contrary, if leave is granted to bring the motion and the motion succeeds on its merits then the litigation would become more complex. It would become further bogged down with the exchange of new pleadings, increased quantums, new allegations not previously made including claims for punitive and aggravated damages, new claims for damages arising from an earlier construction project that did not involve the Ronchins or their property, new claims for unjust enrichment and new claims based on quantum meruit. It would also increase complexity in that the proposed new quantum as against Homeservice exceeds the amount claimed in Mr. Becerra's claim for lien. I find that the motion would not expedite resolution of the issues in dispute and that branch of the test for leave fails.
The alternative test for leave is that of necessity: is the motion necessary? Mr. Becerra relies on the test of necessity and argues that leave is necessary because the nature of the contract in this case is unique and it is important to clarify the relationship of the parties. He argues that leave to further amend the claim is necessary in order to do justice between the parties and determine all issues as between the parties, including issues that date back to 2008 or shortly thereafter as between Mr. Becerra and Homeservice involving a bond that Mr. Becerra claims he posted and also involving a completely unrelated construction project on lands owned by non-parties, the Whitalls.
In my view Mr. Becerra misconstrues the test of necessity in section 67 of the Act. It is not necessary to grant leave to hear a motion to amend pleadings where the amendment is sought on the basis that the contractual relationship of the parties is complex. Particulars of the complexities can be advanced as particulars of the pleading. In this case Homeservice served a demand for particulars.
Much of the proposed new pleading is either statute barred or contrary to restrictions on joinder under the Act. The balance of the proposed amended pleading involves tweaking wording or particularizing claims advanced in the July 30, 2014 amendment. The test of necessity is not met when the motion proposed to be advanced is for leave to amend a pleading to advance impermissible claims or particularization of claims already advanced.
In Salter Farrow Pilon Architects Inc. v. Thunder Bay Regional Hospital Justice Platana reviewed the case law regarding the "special regime" enacted by the Legislature for actions under the Act, including the complete procedural regime provided for in the Act, intended to reduce costs and delays in actions under the Act. In my view the test for leave to bring an interlocutory motion is a significant component of the procedural regime designed to eliminate interlocutory motions that are not necessary and would increase rather than reduce costs and delays.
Mr. Becerra has been given many indulgences and opportunities to plead his case properly. In actions brought under the Act, as in this case, there comes a time when no additional delay can be tolerated for a further indulgence to a party attempting to add additional claims and revise or particularize claims already pleaded. The mandate statutorily directed by the Act is the construction lien claims must be adjudicated as expeditiously as the facts and circumstances of the lien claim action reasonably require.
I find that the interlocutory motion brought by Mr. Becerra is neither necessary nor would it expedite resolution of the issues in dispute. The test for leave has not been met and the motion is dismissed on that basis.
Merits of the Motion
Had I not dismissed the motion for failure to meet the test for leave I would have dismissed it on its merits.
The test for pleading amendments under the Act is a more stringent test than the test applied under Rule 26. The overriding requirement that proceedings under the Act be determined expeditiously conflicts with the case law that has developed under Rule 26 whereby any pleading amendment is permitted absent evidence of prejudice that cannot be compensated by costs or an adjournment. Under the Act, motions to amend pleadings must meet a more onerous test including an assessment of whether the proposed pleading amendment would meet the mandate under the Act to conduct proceedings summarily having regard to the amount and nature of the lien claim.
Limitations Act issue
Regarding the proposed new claims of unjust enrichment, punitive, aggravated and exemplary damages, a claim against Homeservice for holdback funds and refund of a bond posted more than two years earlier, and a claim against Homeservice arising from services and materials supplied to improve the property of non-parties (the Whitalls), the Limitations Act, 2002, S.O. 2002, c. 24 applies. Section 5(1) of the Limitations Act provides that a proceeding shall not be commenced in respect of a claim more than two years after the day on which the claim was discovered or ought to have been discovered.
Mr. Becerra has not provided any evidence to show that his claim was not discoverable on or before the second anniversary of September 9, 2013, the date the Ronchins terminated Mr. Becerra's services, or September 25, 2013, the date Mr. Becerra relies on in his claim for lien as the date of last supply of services and materials.
More than two years have passed since the cause of action as against the Ronchins arose. The last possible date that the cause of action could have arisen is September 25, 2013, the date asserted in Mr. Becerra's claim for lien as the last date of supply of services and materials.
As for the proposed claim against Homeservice regarding the Whitall project, the proposed pleading recites a 2008 contract between Mr. Becerra and Homeservice. On the motion for leave to amend the pleading Mr. Becerra provided no evidence that the cause of action regarding the Whitall project and the bond allegedly paid to Homeservice arose within two years prior to Mr. Becerra bringing this motion to amend the claim against the Ronchins, TD Bank and Homeservice to add these new causes of action to the lien claim proceeding.
If a plaintiff seeks to add new claims and asserts that the limitations period has not expired because he did not know of the claims and with due diligence could not have discovered the claims, then the party seeking to add the new claims must provide "an evidentiary record such that the court may determine if there is an issue of fact or of credibility on the discoverability allegation" (See: Guay v BhD Financial Group). Mr. Becerrra has supplied no such evidentiary record to show that there is a genuine issue of discoverability.
The limitations clock does not stop running until a proceeding is launched. In the case of a motion to amend a pleading, the proceeding is launched either when the motion record is served (arguably) or more correctly when the motion record is filed with the court. This is akin to the issuance of an action or application stopping the limitations clock where a plaintiff is launching a fresh proceeding. Service of an intention to issue a proceeding prior to issuance does not initiate the proceeding. Similarly, service of a notice of motion together with a without prejudice letter and without a motion record does not constitute the launching of a proceeding to amend a pleading in an existing action.
Mr. Becerra argues that the limitations clock stopped running on September 9, 2015 when he served a notice of motion as part of a "without prejudice" communication. I reject this argument. The most obvious basis for rejection is that it was part of a without prejudice communication and as such did not start a proceeding. The argument is also flawed because the motion was not brought on September 9, 2015, the motion record was not served on that date and the proposed fresh as amended statement of claim in the form in which Mr. Becerra asks the court to grant leave was not served that day.
The earliest date on which the motion to further amend the statement of claim can be considered to have been brought is October 2, 2015, being the date the motion record was served, or alternatively October 20, 2015 when the motion record was filed in the court with December 6, 2015 fixed as the return date to hear the motion. Giving Mr. Becerra the benefit of the doubt and for the purpose of this motion only, accepting September 25, 2013 as the last date of supply and termination of the contract, and accepting October 2, 2015 as the date on which the motion to amend was brought, it is still beyond the applicable two year limitation period.
Consequently, had leave been granted for the motion to be adjudicated on its merits I would have dismissed the motion to issue a fresh as amended statement of claim to the extent that it seeks to add new causes of action after expiry of the limitations period.
The paragraphs of the proposed fresh as amended pleading that offend the Limitations Act are paragraphs 1 and 2 (regarding new claims for unjust enrichment, punitive, aggravated and exemplary damages, and a charge against holdbacks), paragraphs 9, 10, 11 and 25 (regarding new claims arising from the 2008 contract between Mr. Becerra and Homeservice), and paragraphs 17 and 28(regarding holdback), 21 (new allegations regarding termination and subcontractors), 24, 34, 36 (regarding the Whitall project), 31 (regarding claims in quantum meruit), 32, 33, 34 and 39 (regarding claims for unjust enrichment), 37 and 38 (regarding claim for loss of profits), 42 (regarding claim for return of bond) and 43 (increased quantum of claim calculated on the basis of statute barred claims).
Trust claim
- Mr. Becerra proposes to join with the construction lien claim against the Ronchins and Homeservice a breach of trust claim against Homeservice. In paragraph 26 of the proposed fresh as amended statement of claim Mr. Becerra claims that Homeservice comingled funds. This is in effect a breach of trust claim and is precluded from joinder with a construction lien claim by reason of section 50(2) of the Act. It is an improper pleading in this action. Had the motion proceeded on its merits paragraph 26 of the proposed pleading would not have succeeded on the basis that it is an improper pleading.
Improper Joinder
Mr. Becerra proposes to join with the construction lien claim against the Ronchins and Homeservice a claim against Homeservice arising from an earlier construction project involving a different property owner, the Whitalls.
Section 55(1) of the Act provides that a plaintiff in an action may join with a lien claim a claim for breach of contract or subcontract. The phrase "contract or subcontract" must be considered in the context of the Act as a whole. There must be an essential connection between the lien claim and the claim that the plaintiff seeks to join with the lien claim (See the discussion of this issue by Justice Seppt in Clark’s Electrical Service Ltd. v. Gottardo Construction Ltd.). Claims without an essential connection are more properly advanced in separate actions.
There are two main reasons why an essential connection is required. The first pertains to the statutory mandate that construction lien actions be decided in as summary a manner as is appropriate to meet the needs of the case. Related but inessential civil claims are not permitted to be joined out of a concern that they might bog down, delay and increase costs of the lien action. The second reason for this restriction on joinder is that the parties to the non-lien action to be joined would be deprived of the procedural entitlements and protections, including interlocutory motions as-of-right and appeal rights, unavailable to parties to lien actions. For these reasons the restrictions on joinder must be applied strictly.
In this case the claims that Mr. Becerra seeks to join with the lien claim are claims in contract arising from a 2008 agreement. Aside from the obvious difficulty in that the claims are statute barred by reason of the passage of time, they are not lien claims. If joined with the Becerra lien claim against the Ronchins these new claims would be subject to the special procedural restrictions that apply only to construction lien actions under the Act, restrictions that do not apply to ordinary civil actions and would not apply had Mr. Becerra issued these claims in an ordinary action or a Rule 76 action. These restrictions are significant and include a prohibition on interlocutory motions and examinations for discovery without leave of the court and a prohibition on appeals from interlocutory orders.
I find that in addition to the Limitations Act basis for refusing the proposed amendments, the amendments Mr. Becerra seeks that would add claims arising from the 2008 contract with Homeservice regarding the Whitall project, the alleged loss of referrals from Homeservice and the claim for return of a 2008 bond must be refused on the basis that there is no essential connection to the action arising from the lien claim Mr. Becerra registered against the Ronchins property. The Ronchins are entitled to a summary a disposition of the lien claim action without it being joined with other causes of action that have no essential connection to the lien claim action issued against recourse against their lands or against security posted in place of their lands.
The paragraphs of the proposed amended pleading that improperly attempt to join claims that do not have an essential connection to the lien claim action, and which are precluded on that basis from joinder with a lien claim action, are paragraphs 24, 25, 26, 34, 36, 41 and 42.
Conclusion
Much of the proposed fresh as amended statement of claim is rejected as offensive to the Limitations Act, the restrictions in the Construction Lien Act against joining contract claims that have no essential connection to the lien claim and the prohibition against joining a trust claim with a lien claim action.
The balance of the proposed amended pleading is either a rewording of the July 30, 2014 amendment or a particularization of that pleading, for which leave to amend is not required.
For all of these reasons, had leave to bring the motion been granted, Mr. Becerra’s motion to further amend the statement of claim in the form of the proposed fresh as amended statement of claim would have been refused.
Counsel may make submissions on costs at the return of the reference hearing on June 27, 2016 or on such other date as is fixed by the court.
Master C. Albert. DATE: June 27, 2016
COURT FILE NO.: CV-13-494318 DATE: June 27, 2016 SUPERIOR COURT OF JUSTICE - ONTARIO RE: Becerra v. Ronchin BEFORE: Master C. Albert COUNSEL: M. Donald for Becerra (moving) plaintiff F. Costantini, for (responding) defendant Homeservice Canada Ltd. J. Sestito for (responding) Ronchins and TD Bank ENDORSEMENT Master C. Albert DATE: June 27, 2016