COURT FILE NO.: CV-13-10301-00CL DATE: August 2, 2016

ONTARIO

SUPERIOR COURT OF JUSTICE

Commercial List

BETWEEN:

THE TORONTO DOMINION BANK Applicant

Gregory D. Hersen for BDO Canada Limited, receiver for 450477 Ontario Limited o/a Chartrand Equipment Tel.: 416-863-1188, Fax: 416-863-0305.

-and-

Maria Ruberto for Toromont Industries Limited cob Toromont CAT, Tel.: 905-273-3300, Fax: 905-273-6920.

450477 ONTARIO LIMITED a/o CHARTRAND EQUIPMENT Respondent

Howard Wise and Michael Wilson for Val Rita Tire Sales Ltd., Tel.: 416-979-2211; Fax: 416-979-1234.

HEARD: January 15, 2016.

APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT , R.S.C. 1985, c. B-3 , AS AMENDED, AND SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.O. 1990, c. C-43, AS AMENDED

Master C. Wiebe

REASONS FOR JUDGMENT

I. INTRODUCTION

[1] 450477 Ontario Limited o/a Chartrand Equipment (“Chartrand”) was a general contractor that was hired by Detour Gold Corporation (“Detour”) to construct an improvement to the Tailing Management Area at the Detour Gold Mine in Timmins, Ontario between October, 2012 and October, 2013 (“the TMA Project”). Specifically, Chartrand was retained to supply heavy equipment general contracting services, and the Chartrand work on the TMA Project was the construction of a tailings dam at the Detour Gold Mine.

[2] By order of Justice Morawetz dated October 18, 2013, BDO Canada Limited (“BDO”) was appointed as Chartrand’s Receiver without security over all of the assets of Chartrand (“the Receivership Order”). On August 7, 2014, Chartrand was assigned into bankruptcy.

[3] Ten of Chartrand’s subcontractors (“the Lien Claimants”) registered construction liens against the title to the TMA Project. BDO also registered a claim for lien. Eventually, BDO reached an agreement with Detour under which Detour paid BDO an amount in excess of $5 million in return for a discharge of the construction liens. In turn, in accordance with a claims vetting process in an order from Justice D. Brown dated June 3, 2014, BDO resolved the claims of six of the Lien Claimants, and made an interim payment of the settlement funds.

[4] By order of Justice Wilton-Siegel of the Commercial List dated July 28, 2015, a construction lien master was charged with the responsibility of resolving the outstanding issues concerning three of the four Lien Claimants with whom BDO did not reach an agreement. These were the claims of Toromont Industries Ltd. (“Toromont”) in the amount of $1,533,940, Val Rita Tire Sales Ltd. (“Val Rita”) in the amount of $365,313, and DJB Align Boring Customs Limited (“DJB”) in the amount of $90,871. I assumed responsibility for this reference.

[5] I conducted two trial management conferences concerning this reference, one on September 4, 2015 and the other on November 15, 2015. In these two trial management conferences, I excluded the DJB claim from proceeding, and determined that the only issue to be resolved concerning the Toromont and Val Rita claims was the “lienability” of their claims, as the parties agreed to the quantum of those claims. The agreed upon quantum for the Toromont claim is $1,366,177.31; for Val Rita it is $329,279.47. There are no other issues.

[6] I ordered that the lienability issue be determined by a trial of an issue by motion format. I ordered that all evidence be by way of affidavits and cross-examinations on affidavits conducted in advance of a one day appearance for “final argument,” with the argument supported by facta, books of authority, trial records, the affidavits and the transcripts of the cross-examinations. The day of the final argument was January 15, 2016.

[7] I have decided that both claims in their entirety are for services and materials that are lienable.

II. EVIDENCE

[8] In the trial of an issue, Toromont delivered an affidavit sworn of David C. Wetherald, Vice-President of Human Resources and the Legal and Corporate Secretary of Toromont, sworn October 9, 2015. In response, BDO delivered an affidavit of Matthew Marchand, manager of corporate financial recovery services at BDO, sworn November 11, 2015. In reply, Toromont delivered an affidavit of Mr. Wetherald sworn November 19, 2015. There was a cross-examination of Mr. Marchand on November 30, 2015, and a cross-examination of Mr. Wetherald on November 30, 2016. At the hearing, Toromont purported to include in its Trial Record a further affidavit from Mr. Wetherald sworn January 7, 2016, but Toromont withdrew that affidavit.

[9] In the trial of an issue, Val Rita delivered an affidavit of Justin Murray, secretary of Val Rita, sworn September 29, 2015. In response, BDO delivered an affidavit of Mr. Marchand sworn November 4, 2015, and a supplementary affidavit of Mr. Marchand sworn November 12, 2015. In reply, Val Rita delivered an affidavit of Mr. Murray sworn November 17, 2015. There was a cross-examination of Mr. Marchand on November 30, 2015, and a cross-examination of Mr. Murray on December 4, 2015.

[10] The credibility of the witnesses was not in issue. There were issues of hearsay evidence.

[11] The following is the critical evidence that is not in dispute. The Detour Gold Mine is about 185 km northeast of the Town of Cochrane. It is a remote location. The mine is a large scale open pit operation. It is the second largest gold mine in Canada. The construction of the mine has been going on for several years. Chartrand had several contracts with Detour, one of which was for the TMA Project.

[12] Concerning the Chartrand equipment that was the subject of the Toromont and Val Rita work, Chartrand owned some that equipment and rented the remainder. Mr. Marchard stated, based on hearsay evidence from Guy Chartrand, former operations manager at Chartrand, that most of this equipment was leased, that only four pieces of this equipment were new when they arrived on site, that this equipment was not inspected prior to being used on site, that all of the leased equipment was returned in the end to the lessors, and that all of the equipment was capable of being used on other construction projects. Some of this equipment was stored at Chartrand’s premises in Timmins, and the remainder was located on the site. There was no affidavit from Mr. Chartrand at the trial.

[13] The TMA Project work caused significant wear and tear on Chartrand’s equipment. The work involved crushing, processing and hauling large quantities of rock. This was understood by all, including the owner.

[14] Toromont had an existing credit agreement with Chartrand. At Chartrand’s request, Toromont supplied rental equipment, parts and services to Chartrand for the purpose of the Project in 2013 prior to the Receivership Order. A part of Toromont’s initial lien claim included an amount for unpaid equipment rental charges. This portion of the Toromont lien claim was resolved by BDO some time ago. It is the unpaid invoices for the repair materials and services that are in dispute.

[15] Concerning materials, Toromont had a contract directly with Detour dating back to the summer of 2011 whereby Toromont established an on-site parts warehouse facility (“the DT Store”) to provide fast and efficient parts supply support to contractors and subcontractors on the Detour Gold Mine site. This warehouse service was open 7 days a week, 24 hours a day, 365 days a year. The purpose of this facility was to insure that construction equipment on site could be repaired as quickly as possible on site, thereby insuring a work flow that had minimal repair interruption. Many of the alleged unpaid invoices to Chartrand for parts came from the DT Store.

[16] The subject parts invoices also concern parts that were not supplied from the DT Store. Required parts that were not in the DT Store were ordered and shipped to Chartrand at the site from Toromont’s Timmins warehouse (“Toromont Warehouse”). This was done through a dedicated daily run to the site using a trucking service that Toromont hired for that purpose.

[17] In addition, to insure round-the-clock parts service to Chartrand, Toromont redirected the phone lines to the DT Store and the Toromont Warehouse to its Toronto/Concord location whenever the DT Store and the Toromont Warehouse happened to close. The Toronto/Concord location was kept open during these times to ensure immediate service of parts. Some of the subject invoices concerned this supply as well.

[18] Concerning services, Toromont entered into an agreement with Chartrand whereby Toromont’s pool of excess labour in Ontario and Manitoba was made available to Chartrand through a dedicated project manager for the Project named Carl Hamlyn. Mr. Hamlyn organized the repair services to meet Chartrand’s demands. The Toromont technicians whom Mr. Hamlyn managed for Chartrand were based in the Toromont Warehouse, and performed their repair work for Chartrand on demand either on site or in the Toromont Warehouse. The purpose of this arrangement was to insure the least interruption in work flow due to repairs. The subject Toromont invoices for services concerned this work. The invoices did not identify what work was done off-site.

[19] Val Rita provided giant tire repair and replacement services, and other mechanical repair services, to Chartrand in relation to the Project. Chartrand subcontracted with Val Rita to provide these repairs on Chartrand equipment starting in late 2012 when an unrelated service-provider was unavailable. Mr. Marchand stated in his affidavit that he had been advised by Mr. Chartrand that Val Rita’s work included the removal of replaced tires from the site for re-use for non-construction purposes. Val Rita’s invoices for these repairs are in issue.

[20] Concerning Val Rita services, Val Rita’s technicians were made available to Chartrand on demand 24 hours a day, 7 days a week, through a two-way radio system. On demand, the technicians would travel to the equipment’s location on the site to perform the repairs immediately. The purpose of this arrangement was to keep the construction equipment on the Project working with minimal interruption. Interestingly, after the Chartrand insolvency, Val Rita continued supplying its repair services directly to Detour.

[21] Toromont’s invoices stated that its work was provided pursuant to the Ontario Repair and Storage Liens Act, R.S.O. 1990, c. R.25 (“RSLA”) , and showed no holdback retention. Toromont did not advance an RSLA claim as Chartrand did not sign the RSLA Acknowledgment on its invoices.

[22] Val Rita’s invoices also did not show holdback retention. Val Rita advanced a claim in some way under the RSLA against lessors of the leased equipment, and received a settlement payment for its RSLA claims in the amount of $293,577.43.

III. ISSUES

[23] The following are the issues to be determined:

1. What is the test for the lienability of the services in issue?
2. What is the test for the lienability of the materials in issue?
3. Does the Toromont claim meet those tests?
4. Does the Val Rita claim meet those tests?
5. What is the relevance of the claims or potential claims under the RSLA ?

IV. ANALYSIS

1. What is the test for the lienability of the services in issue?

[24] Under the Construction Lien Act, R. S.O. c. C.30 (“CLA”), section 14(1), subcontractors who supply “services and materials” to an improvement, have liens on the interest of an owner for the “price” of those services and materials. Under CLA section 1(1), “supply of services” is defined. The relevant portion of the definition is the following: “work done or service performed . . . in respect of an improvement.” All parties agreed that the work done by Toromont and Val Rita was not done “upon” an improvement, which is the other part of the definition. The definition goes on to expressly include “the rental of equipment with an operator” in the definition.

[25] It is well settled law that a purported lien claimant has the onus of proving that its services and materials fall under the CLA , and that a strict interpretation is to be applied to determine whether a lien is granted by the CLA to a particular claimant; see Clarkson Co. Ltd. v. Ace Lumber Ltd. [1963] S.C.R. No. 110 (S.C.C.) at page 4, and 697470 Ontario Ltd. v. Presidential Developments Ltd., (1989) 69 O.R. (2d) 334 (Ont. Div. Crt.) at paragraph 7.

[26] Mr. Hersen argued that the courts have interpreted the phrase, “in respect of” to pertain only to work done “off-site.” I do not agree. The phrase, “work . . . in respect of,” appeared under the Mechanics Lien Act, R.S.O. 1980, 261 (“MLA”), section 6(1) in relation to the work on a construction project that would give rise to a lien. Mr. Hersen referred me to the case of George Wimpey Canada Ltd. v. Peelton Hills Ltd. et al., (1982) 35 O.R. (2d) 787 (OCA). In this case, the Court of Appeal at paragraph 24 examined the history of the phrase, “in respect of,” in the context of a claim for lien registered on a subdivision for work done on road allowances that indirectly benefitted the subdivision. In dismissing the lien claim, the Court expounded on the meaning to be given to the phrase, “in respect of.” It held that the phrase broadened the availability of liens beyond work done “upon” a project. It gave as examples two instances of what it called “off-site” work where the expanded definition had been found to give lien rights. One example was the work of a blacksmith in sharpening tools to be used in a mine, which the Divisional Court in Davis v. Crown Point Mining Co. [1901] O.J. No. 134 (Ont. Div. Crt.) found was work “upon, or in respect of” a mine and, therefore, lienable. The other example was the preparation of plans by an architect. The Court in Wimpey did not find that the expanded definition, “in respect of,” related only to off-site work.

[27] Cases concerning liens for work done off-site have developed a functional test for the determination of lien rights concerning such work. Kevin McGuiness called this the “nexus” test; see Kevin McGuiness, Construction Lien Remedies in Ontario (1977: Carswell, Toronto) at page 40. He described the test for lien rights in relation to off-site services as the following: “”those services must be an integral and necessary part of the actual physical construction of the improvement, or directly related to the process of construction irrespective of where the work is done.” This test for off-site services, which focuses on the importance of the function served by the work, was adopted by the Divisional Court in granting lien rights for the off-site leveling of dirt; see Benny Haulage Ltd. v. Carosi Construction Ltd., 1998 CarswellOnt 3006 (Div. Crt.) at paragraph 78 . It was adopted by the court in relation to the disposal of construction rubbish off site; see Re Desourdy 1949 Paving Inc. (Trustee of) [2000] O.J. No. 1560 (S.C.J.) at paragraph 15 .

[28] Some cases concerning on-site but non-construction services have applied the same “nexus” thinking. Noteworthy is the case of M.W.M. Construction of Kitchener Ltd. v. Valley Ridge Inc. [1993] O.J. No. 493 (Ont. Gen. Div.) . In this case, the court dealt with the lienability of on-site security services. Relying on the expanded definition, “in respect of,” West J. held in page 5 that these services were lienable. He relied on four factors in reaching this decision: the services were provided entirely on the subject land; the services were provided during the construction period; the “owner considered the engagement of a security service to be necessary for the protection of the site from potential loss due to theft or vandalism”; and all of the contractors and subcontractors benefitted from this service.

[29] This decision indicates that the test for on-site, non-construction services should also be a functional one that turns on whether the subject services were viewed by the construction parties, particularly the owner, as being necessary for the completion of the construction, and whether all of the construction parties benefitted from the services. This makes intuitive sense to me. The test should be a functional one, namely one that turns on the importance of the function to the project served by the work, not on the geographical location of the work or on the object of the work. If the construction parties, particularly the owner, viewed the services to be necessary for the completion of the project, it makes no sense to deny the service provider the same remedies enjoyed by the other construction parties.

[30] In M.W.M. West J. relied heavily on a decision of the Alberta Court of Appeal in Alberta Gas Ethylene Co. v. Noyle 1979 CarswellAlta 273 (Alta. C.A.) . This is an instructive decision, because the facts are, in my view, analogous to on-site equipment repair work. The Court was dealing with a claim for lien of a company that had supplied plumbing and gas to rented portable buildings on site. These portable buildings provided food and sleeping accommodations to the construction labourers, as there were no food services or sleeping accommodations nearby. The Alberta legislation contained a definition for work what was almost the same as the CLA section 1(1) definition for services. The Court held that the subject services were lienable. It reasoned in paragraph 28 that to do otherwise would create an irrational distinction between the lessors of the buildings, who had lien rights, and those who made the buildings work. The Court went on to reason that the work in question was “in respect of “ the improvement because “the contractors and owners deemed [the catering services and sleeping accommodations] necessary to enable them to expeditiously construct the plant.”

[31] In my view, the Alberta Gas Ethylene Co. decision is highly instructive as to the test under the CLA for the lienability of equipment repair work. Catering services and sleeping accommodations provide the necessary “repair” function for labour on a construction site. Similarly, equipment repairs provide the necessary “repair” function for the equipment the labourers use. Therefore, if the owners and contractors require an on-site catering and sleeping service due to the remoteness of the project and the need to keep the project moving and if the work of making that service operable is lienable, should there not be the same result if the owner or contractor require a dedicated, on-site, equipment repair service due to the remoteness of the project, the rigors of the work, and the need to keep the project moving? Furthermore, it makes equally no sense to give lien rights to lessors of construction equipment, who have those rights under the CLA , and not to those equipment repairers whom the owner and the contractor know will be needed to keep that equipment running on the project.

[32] However, there are cases which have held that equipment repair work per se is not lienable. These were provided by Mr. Hersen. I have reviewed these cases to determine whether they are binding on me, or persuasive. I have found that they are neither. These decisions pre-date the CLA . Many concern statutory provisions that do not include the expansive language of the CLA ’s definition of services. They focus, overly in my view, on the object of the repair, namely the fact that equipment repair work on its face improves the personal property of the contractor or the equipment lessors, not the improvement.

[33] The first decision is that of the Ontario Court of Appeal in George Taylor Hardware Ltd. v. Canadian Associated Gold Fields Ltd. [1929] O.J. No. 23 (Ont. C.A.) . Here the Court dealt with the lienability of materials, namely certain tools that had been supplied for mining construction. It appears that the subject material included wrenches, shovels, coke, chalk, tinfoil, oil, pails, and rivets. At the time, the applicable MLA gave lien rights to anyone who “furnishes any material to be used in the making and constructing of any mine.” The Court referred to the American decision of Johnson v. Starrett, (1914), 127 Minn. 138, p. (Minnesota S.C.) where the Minnesota Supreme Court drew the distinction between materials consumed in a project, such as dynamite and gasoline, and materials that repair equipment. The Court held that the latter did not give rise to lien rights as they improved personal property, not the improvement. The Court in George Taylor adopted this reasoning in paragraph 8, stating that the “supplies for repairs and parts of excavating machinery were not lienable, being merely contributions to the personal property of the contractors.”

[34] I do not find this decision either binding on me or persuasive. First, the case concerned materials, not services. Second, the case dealt with a statutory definition of materials that did not contain a clause that resembled the modern expansive definition of services, namely the phrase “service performed . . . in respect of an improvement.” Indeed, it did not contain the modern expansive definition of materials, which includes the phrase, “used to facilitate directly the making of the improvement.” Third, the decision focuses too much on the object of the repair to be useful in interpreting these modern definitions. The expansive definitions in the present CLA require, in my view, an examination of the function served by the subject services and materials and its importance to the construction project.

[35] In Re Bodner Road Construction Ltd. (1963), 5 C.B.R. (N.S.) 293 (Man. Q.B.) Nitikman J., of the Manitoba’s Court of Queen’s Bench in Bankruptcy, dealt with the lienability of equipment repair services. He applied the provisions of the Manitoba Mechanics’ Lien Act, R.S.M., 1954 c. 157 concerning lienable services to the question of whether the trades who had provided equipment repair services to a bankrupt contractor under a contract for the construction of drainage and embankment on a provincial road could claim a lien. The statutory definition of lienable services included the phrase “service upon or in respect of” construction, which is much the same as the present definition of services in the CLA . He reviewed several cases, including the George Taylor Hardware decision, and concluded on page 308 that equipment repair services were not lienable as they were not “consumed” in the construction and “might well be the renewing of dilapidated machinery.” He referred favourably to the decision in Johnson v. Starrett.

[36] This decision concerned a statutory definition of services that was comparable to the expanded definition of “services” in the CLA. However, I find this decision neither binding on me nor persuasive. First, it is a decision of a Manitoba judge interpreting a Manitoba statute. Second, His Honour did not give the phrase, “in respect of,” any special meaning. He drew inspiration from cases which interpreted statutes that did not have this clause, such as George Taylor Hardware. I think that this clause has special meaning for the reasons already outlined above. Third, I find neither logical nor fair the distinction His Honour drew between repair materials and services that are “consumed” by a project, and repair services and materials that are accepted by the construction parties as being vital to the completion of a project despite not being “consumed” by it. In the latter case, it seems to me that the repairers are as much a part of the construction team as is, for instance, the excavator, and should be given the same security under the CLA.

[37] In Re Malvern Construction Co. [1964] O.J. No. 454 (Ont. H.C. in Bank.) , Bankruptcy Registrar Rose dealt with a construction trust claim under the then MLA section 3. This section specified that monies received by a contractor or subcontractor constituted a trust fund for the benefit of workmen and subcontractors “who have supplied material on account of the contract.” The purported trust claimant rented, operated and maintained heating and dewatering equipment for a sewer trenching contractor. A part of the service was “24 hour” repair and maintenance of the equipment. Drawing an analogy between trust and lien rights and relying on the lien decisions in Bodner and Clarkson, Registrar Rose found in paragraph 13 that the repair and maintenance work did not give rise to a trust claim as it was not “an active participation in the performance of the [construction] service on the part of the lien claimant.”

[38] I also do not find this decision binding on me or persuasive. First, it is a decision of an Ontario Master sitting as a Registrar in Bankruptcy. Second, it is a decision concerning trust entitlement, not lien rights. Third, I do not find the MLA provisions at the time concerning trust entitlement analogous to the modern expansive definition in the CLA concerning lienable services, which includes the phrase, “in respect of” the improvement. Fourth, I respectfully disagree with the proposition that dedicated equipment repair service for construction equipment is not “active participation” in an improvement, particularly when such a service is accepted as being essential to the completion of the project.

[39] Finally, in Re Joe Pasut Contractors Ltd. [1973] O.J. No. 603 (Ont. H.C.) Ferron J. also dealt with the purported construction trust claim of a subcontractor to a bankrupt contractor. The subcontractor supplied tires and gas, and performed repairs on the contractor’s vehicles. His Honour referred to the applicable provision of the MLA concerning trust entitlement. He referred to the George Taylor Hardware decision. He held in paragraph 11 that “materials” for the purpose of trust entitlement included the gas and oil, but not the tires and the repair work, as those items “went to improve the bankrupt’s personal property.”

[40] I also do not find this decision binding on me or persuasive. First, while this is an Ontario judge, the decision concerned trust entitlement, not lien rights. Second, as stated earlier, I do not find the MLA provisions at the time concerning trust entitlement analogous to the CLA provision concerning lienable services. Third, I am not persuaded for the reasons already stated that the “consumption” theory of lienability for repair services provides a logical or fair limit to the phrase, “in respect of,” in relation to repair services that are accepted as essential to the improvement.

[41] I have, therefore, reached the conclusion that there is no authority that compels or persuades me to hold that equipment repair services are per se not lienable. As a result, I do not do so.

[42] Rather, I have concluded that, for the reasons stated earlier, the most appropriate test for determining whether the subject services of Toromont and Val Rita were lienable is the functional “nexus” test signaled by the court in M.W.M. This test focuses on the importance of the work’s function to the project, namely whether the construction parties, particularly the owner, considered the subject services necessary for the completion of the project and whether the services benefitted the majority of the contractors and subcontractors. This is the test I will apply.

2. What is the test for the lienability of the material in issue?

[43] Under CLA section 1(1), “materials” is defined. The first part of the definition is that “materials” include “movable property” “that becomes, or is intended to become, a part of the improvement, or that is used directly in making of the improvement or that is used to facilitate directly the making of the improvement.” The second part expressly includes rented equipment without an operator for use in making the improvement.

[44] All parties were in agreement that none of the subject parts became a part of the improvement, which is the first portion of the first part the definition. Therefore, I will focus on the second portion of the first part of the definition.

[45] As to the test for materials “used directly in making of the improvement,” Mr. McGuiness’s view was that this pertains to materials that are consumed in the making of the improvement, but that do not form a part of the improvement; McGuinness, op. cit., page 55. What comes to mind are materials such as oil and gasoline used for construction vehicles, coal used to power hoists, and explosives used to clear a site. These have been found for some time as giving rise to lien rights, see Joe Pasut, op. cit., paragraphs 5 and 7, and R. v. Canadian Indemnity Co., 1963 CarswellMan 8 (Q.B.) at paragraph 29 . The parties are in agreement that none of the materials in question here were consumed in the making of the improvement. They agree that all of the material was used to repair construction machinery used in making the improvement.

[46] That brings us to the last part of the first portion of the definition, namely whether the materials were “used to facilitate directly the making of the improvement.” Mr. McGuiness in his text was of the view that this phrase expanded the lien rights to those who supplied material, such as equipment and tools, used but not consumed in the course of the construction. He then made the following statement: “. . . in order to claim a lien in respect of a supply of tools, it is necessary to show that the tools were supplied to the improvement, rather than on the contractor’s or subcontractor’s general account or independent credit.” He then used as examples certain small tools that rarely survive a project, such as drill bits, saws and shovels; see McGuiness, op. cit., page 56.

[47] In my view, what Mr. McGuiness described is essentially the functional nexus test I described earlier, but applied here to tools and equipment. Tools, including parts to repair tools and equipment, can be found to have been “supplied to the improvement” where their supply was accepted by the contracting parties, particularly the owner, as being necessary for the completion of the improvement and where that supply benefitted all contractors and subcontractors.

[48] This only makes sense to me. There is no rational reason to draw a distinction between repair service and repair parts. If both are accepted by the construction parties as being essential to the advancement of the project, the repair parts suppliers should be given the same construction lien remedies that the other members of the construction team get. I should also add, referring back to the Alberta Gas Ethylene Co. decision, that there is no rational reason for drawing a distinction between the lessors of construction equipment, who expressly have lien rights for their unpaid equipment rent under the CLA , and the repair parts suppliers who make that leased equipment run in circumstances where the construction parties anticipate an unusually high level of repair.

[49] The more functional nexus test of lienability for materials has been accepted in other cases. In BMV Investments Ltd. v. SaskFerco Products Inc. [1993] 114 Sasj, R, 306 (Sask Q.B.), the court interpreted a definition of “materials” in the governing Saskatchewan The Builders’ Lien Act that is quite similar to the present Ontario definition in the CLA . The court accepted the lienability of the rental charges for onsite food and washroom trailers, stating at paragraph 25 that these materials “clearly facilitated the construction, because otherwise, workers on the project would have consumed much costly time if required to move or be transported offsite to be able to use such facilities.”

[50] In Tam-Kal Ltd. v. Stock Mechanical Inc. [1998] O.J. No. 4577 (Gen. Div.) , affirmed at [1999] O.J. No. 4371 (Ont. C.A.) , found the supply of wires to a trailer and fire extinguishers on a construction site to be lienable. Referring to the SaskFerco decision, Justice Ground found in paragraph 37 that, “these more recent authorities properly broaden the category of lien claimants to include persons who provide materials or services which are necessary or required for the purpose of constructing the improvement and which facilitate the construction of the improvement although not necessarily directly incorporated into the improvement.”

[51] I have already dealt with the leading cases against the lienability of repair materials; see George Taylor Hardware, op. cit., and Joe Pasut, op. cit.. I am not compelled to follow these decisions because they deal with statutory provisions that do not contain the expanded definition of “materials” in the CLA . I am also not persuaded by them because, again, they focus on the object of the repair materials and adopt the “consumption” theory of lienability, which is a view not compatible with the nexus theory of lienablity I have adopted.

[52] I, therefore, find that the applicable test for the lienability of materials is the same nexus test I described for the lienability of services.

3. Does the Toromont claim meet those tests?

[53] What are the indicia of the “nexus” test I have described as it relates to the Toromont repair materials and service? The following are, in my view, the critical ones:

• Was the Chartrand equipment subjected to excessive wear and tear on the TMA Project?
• Did the construction parties, particularly Detour, require an extraordinary commitment from Toromont to the improvement as a result?
• Did the Toromont supply benefit all contractors and subcontractors?

[54] As to the level of wear and tear on the Chartrand equipment, the evidence was clear that the TMA Project created such excessive stress. The work involved the crushing, processing and hauling of large quantities of rock.

[55] On this subject, Ms. Ruberto referred me to an obiter dictum comment made by County Court Justice Millward in Blackwood Hodge Equipment Ltd. v. Wakeman & Trimble Contractors Ltd. (Trustee of) [1985] B.C.J. No. 2734 at paragraph 15 . His Honour was determining whether a subcontractor who had supplied, installed, tested and removed integrated screening plants for work on a tailings pond had a lien under the British Columbia legislation. He determined that there was no lien. In the course of his ruling, Justice Millward reviewed the caselaw on liens for repair work, and concluded interestingly that there would be lien rights for repair work if it was the “result of wear and tear endured by the equipment through active participation in the performance of the work done on, to, or for the improvement.” His Honour purported to anchor this comment in case authority. I was not able to find this anchor in the cases he referred to. However, I agree with his comment. Equipment that is subjected to excessive wear and tear experience`s some level of the “consumption” in the project that the caselaw has recognized as giving rise to lien rights in the supply of such products as gas, oil and explosives.

[56] As to the commitments required of Toromont as a result of such wear and tear, the evidence is clear that there was an usual commitment required of Toromont by both Detour and Chartrand. Both the owner and the contractor were aware that vital equipment would break down on the TMA Project on a regular basis, and therefore required that Toromont make an extraordinary commitment of resources. Concerning the repair services, the evidence is clear that Chartrand agreed with Toromont to commit its excess labour for Manitoba and Ontario to the TMA Project through a dedicated Project Manager, Carl Hamlyn.

[57] There was argument over the fact that some of these services were supplied off-site and that the Toromont invoices did not differentiate between the on-site and off-site work. This distinction would only have significance if I had accepted Mr. Hersen’s argument that the phrase in the CLA section 1(1) definition of services, “in respect of,” applied only to off-site work. As stated earlier, I do not accept that argument. In fact, for the purpose of the nexus test I have described, I see no significance in the distinction between on-site work and off-site work.

[58] Concerning the parts supply, the most telling fact was that Detour, the owner, had contracted with Toromont separately in 2011, well before the Chartrand contract, to have Toromont set up and run the DT Store on site to provide all contractors and subcontractors with expeditious supply of stock repair parts. It was from this store that several of the subject Toromont repair parts invoices emanated. The existence of this DT Store was a telling fact, with broad implications, in my view. It showed that the owner, Detour, knew and took steps to insure that, in light of the rigors of the work, there was an extraordinary repair presence to keep the equipment working. Given this background, it seems only fair that the owner’s interest should be liable to being encumbered by construction liens from the repairers.

[59] Furthermore, for non-stock items, Toromont made these available to Chartrand expeditiously from the Toromont Warehouse through a dedicated daily run. Furthermore, when the DT Store and the Toromont Warehouse were closed, Toromont took the extraordinary step of facilitating emergency runs of material from Toromont’s Concord store. These steps, I find, were all done either with the expressed or tacit approval of Chartrand and the owner. The purpose, again, was to insure that the TMA Project was not interrupted by equipment breakdown.

[60] As to whether Toromont’s work benefitted contractors and subcontractor, I find that it definitely benefitted all parties who worked for Chartrand, the general contractor. Concerning the TMA Project, this meant all of the parties on that improvement. Indeed, the benefit of Toromont’s DT Store branched even further, since that store supplied parts to parties on other improvements on the site. There is no doubt that Toromont’s work benefitted all parties to the improvement.

[61] There was much argument over the “consumption” of the equipment by the TMA Project’s wear and tear. There was an issue as to whether the Chartrand equipment was new or not new before the equipment started its work. There was an issue as to whether the Chartrand leased equipment was returned to the lessors. There was an issue as to whether the Chartrand equipment was used again on other projects after the TMA Project.

[62] The evidence on these issues was suspect to say the least. Mr. Marchand made statements in his affidavit on these issues that emanated from Mr. Chartrand, and it was not at all clear that Mr. Chartrand was not available to give direct evidence on these points. Messrs. Wetherald and Murray made statements under cross-examination that Mr. Hersen argued rendered these issues moot. This led an argument over which party had the onus to prove or disprove lienability, and whether BDO had met its onus (if the onus was on BDO) through Mr. Marchard’s hearsay evidence using the functional test for the admission of hearsay evidence as outlined by the Supreme Court of Canada in R. v. Finta, [1994] 1 S.C.R. 701 (S.C.C.).

[63] Given the applicable test of lienability as I have framed it, namely the functional nexus test, I do not consider these factual issues relevant. Therefore, I make no finding on these points.

[64] I find that Toromont has met the applicable test of lienability for the entirety of its claim.

4. Does the Val Rita claim meet those tests?

[65] Applying these same indicia of the nexus test to the Val Rita claim, I have come to the same conclusion, namely that the Val Rita claim is lienable in its entirety.

[66] Concerning the question of the wear and tear on the Chartrand equipment that Val Rita serviced, I have already found that this wear and tear was excessive. Val Rita’s work involved the repair and replacement of giant tires (and related mechanical repair work) on the large-scale equipment that crushed, processed and hauled the rock.

[67] Concerning the question of whether the construction parties, particularly Detour, required an unusual level of commitment to the Project from Val Rita, the evidence is undisputed that Val Rita’s employees were required to be on call 24 hours a day, 7 days a week, to service the equipment, and that the equipment Val Rita serviced was all on-site. This was done by way of a two-way radio system. I find that this level of commitment was required not only by Chartrand, but by the owner, Detour. Most telling for me was the fact that, after the Chartrand insolvency, Detour contracted with Val Rita to continue its intensive repair work in order to keep the Project going. I find that both Chartrand and Detour expressly and implicitly required an extraordinary level of commitment to the Project by Val Rita.

[68] Concerning the question of whether Val Rita’s work benefitted all of the contractors and subcontractors on the Project, I find that the evidence is clear that it did. Val Rita’s job was to service all of the Chartrand equipment in order to keep it going.

[69] I, therefore, find that Val Rita has met the test of lienability for the entirety of its claim.

[70] There was, again, much argument here over the “consumption” theory of lienability for repair work. I will not repeat what I have already stated on this point. An additional issue arose in this regard with the Val Rita claim. BDO made the interesting argument that, as there was evidence that the rubber from the scrap tires was used for non-construction purposes, the repaired tires were not “consumed” by the Project. Had I viewed the “consumption” theory to be vital to my decision, I would not have given this argument weight. The conversion of the rubber to another purpose is, in my view, sufficient evidence that the tires were consumed for construction purposes by the Project. However, I do not find it necessary for my decision to make this ruling, and I do not do so.

5. What is the relevance of the claims or potential claims under the RSLA ?

[71] Mr. Hersen argued for BDO that, as Toromont provided its work pursuant to the RSLA and as Val Rita pursued claims under the RSLA , they should be estopped from pursuing claims under the CLA as well . The RSLA provides that a repairer of an “article,” defined as “tangible personal property other than a fixture,” has a lien against that article for either the price of the repair or the value of the repair.

[72] The Toromont invoices contain the following sentence: “Pursuant to the Ontario Repair and Storage Liens Act or the Manitoba Garage Keepers Act, as applicable, the undersigned hereby acknowledges itself indebted to Toromont Industries Ltd. in the amount of this invoice.” There is then a space for a signature of an authorized officer of the recipient of the invoice. It is undisputed that none of the Toromont invoices were acknowledged by a signature in this space. Ms. Ruberto stated that Toromont did not advance non-possessory claims under the RSLA because its invoices were not acknowledged in writing. She also stated that Toromont did not seize equipment to enforce RSLA claims. These propositions were not disputed.

[73] The Val Rita invoices do not expressly refer to the RSLA . However, it is undisputed that Val Rita advanced claims under the RSLA against some of the lessors of Chartrand’s equipment. The total of these claims was $561,937.36. Val Rita settled these claims for the amount of $293,577.43. It is undisputed that this settled amount does not form a part of the quantum of the Val Rita claim for lien.

[74] Mr. Hersen’s argument appears to be twofold. First, simply the existence of RSLA rights takes repair work out of the ambit of the CLA. For this argument, he relied on the decision in Re Canario Development Corp. and Fitzsimmons, MacFarlane [1987] O. J. No. 2624 (O.S.C.) at paragraph 5 . Second, by taking steps to invoke the RSLA, both Toromont and Val Rita have effectively elected to secure their claims under the RSLA and should be estopped from pursuing claims under the CLA.

[75] Concerning the first point, I note that no one referred me to any section of the either the RSLA or the CLA that expressly prohibited the pursuit of claims under either statute if claims were made under the other statute. The argument was that the existence of the RSLA impliedly required that repair work be secured exclusively through that statute. The Canario decision concerned a claim for lien under the CLA for legal services by a lawyer, which legal services were covered under the Solicitors Act, R.S.O. 1980, c. 478. The services included the preparation, negotiation and supervision of contracts, and the clearing of title of liens. Justice Quinlan dismissed the claim for lien on a summary judgment motion stating that the services were either covered by the Solicitors Act or they were not. He stated the following: “it is not open to claim legal services under the Construction Lien Act, 1983 as an alternative to the summary method provided in the Solicitors Act.”

[76] I find the Canario decision neither binding nor persuasive. First, it concerns services covered by the Solicitors Act , not the RSLA . Therefore, I am not bound to follow it as a matter of stare decisis. Second, the nexus between legal services and the construction work is tenuous at best. It was not necessary for Justice Quinlan to have relied on statutory interpretation to have reached his conclusion. His Honour also did not engage in a detailed analysis of the Solicitors Act. I, therefore, find this decision of limited use in a case such as the one before me where the work in question, equipment repair, is in much closer nexus to the construction work. When there is such a close nexus, the governing statutes must clearly prohibit the existence of dual rights. As stated by Ruth Sullivan in Sullivan on the Construction of Statutes, 6 th edition (Markham: LexisNexis, 2014) at page 338, there is a presumption of statutory overlap when two provisions are applicable without conflict to the same facts. I was advised of no such expressed prohibition of overlapping rights in the RSLA and the CLA .

[77] Therefore, I do not find that the existence of the RSLA takes repair services and equipment per se out of the ambit of the CLA.

[78] Concerning Mr. Hersen’s second point, there is authority for the proposition concerning at least claims under the Personal Property Security Act (“PPSA”) that taking steps to assert possessory or non-possessory rights under that statute, the PPSA , amounts to an irrevocable election not to pursue rights that may have existed under the CLA for the same supply; see Pinehurst Woodworking Co. v. Rocco, 1986 CarswellOnt 669 (Ont. Div. Crt.) at paragraphs 46 . This is instructive authority, as the RSLA specifies a path for the assertion of claims under the RSLA that resembles the path outlined for the assertion of claims under the PPSA . Under the RSLA a repairer may take possession of the repaired article to assert his or her claim, or, where the repairer does not take possession, may assert a non-possessory lien by taking the following two steps: getting a signed acknowledgment of the indebtedness from the owner of the article; and registering the “claim for lien” electronically under the PPSA ; see Darrel M. Gold, “Rights and Remedies: A Summary of the Workings of the Repair and Storage Liens Act,” in . Haber, Harveys, eds., Repair and Storage Liens Act: A Practical Guide (Toronto: Canada Law Book, 2012) at pages 51 and 52. Therefore, it is a real issue, in my view, as to whether Toromont and Val Rita took steps that amount to such an election of the RSLA over the CLA.

[79] The Pinehurst decision outlines some important nuances to this “election” analysis. In that case, a builder of tenant improvements had done so under a conditional sale agreement with the commercial tenant. This agreement had a title retention clause. The builder registered a financing statement under the PPSA. Eventually, when the builder was not paid in full, it repossessed some of the items that had been installed, such as cabinets, changing room doors and sliding doors. It registered a construction lien in relation to the remainder of its outstanding accounts. On behalf of the Divisional Court, Justice Sutherland stated that the PPSA and the CLA contemplated the co-existence of rights under those statutes for goods supplied to a building site. He went on to say that this co-existence comes to an end when the claimant makes its decision to assert its rights under one or the other of the two statutes. In this case, the decision to repossess certain items, according to Justice Sutherland, amounted to an election of the PPSA over the CLA. He added that this election applied only to the items against which the election has actually been exercised, not to all of the items governed by the conditional sale agreement. After he reviewed some authority on this point, His Honour stated the following: “I found nothing suggesting that a repossession of some of the goods sold under a particular conditional sale contract meant that the vendor could not proceed under the Mechanic’s Lien Act with respect to other goods sold under that contract or that a foiled attempt to repossess precludes a future assertion of a lien claim.”

[80] I draw the following conclusions from this decision. First, similarly, and as referred to earlier, the RSLA and the CLA contemplate the co-existence of rights under those two statutes for the supply of repair services and materials that have a close nexus with a construction project. Again, I was advised of no provision under either statute that prohibited such co-existence. Second, the assertion of rights for unpaid repair services and materials under the RSLA , either by way of possessory or non-possessory claims, would similarly amount to an election not to proceed under the CLA that the court should enforce. To do otherwise, would be a contradiction as between the two statutes. Third, this election applies only to those repaired articles against which the claimant has actually asserts its RSLA possessory or non-possessory claims, not to the other articles, despite the fact that these other articles have been supplied under the same contract.

[81] Applying these points to the evidence, I have concluded that there is no evidence that Toromont made an election to enforce its rights, such as they were, under the RSLA . Its invoices made reference to the RSLA and contained a space for Chartrand to acknowledge in writing its indebtedness. However, I was given no evidence that Chartrand signed any of these invoices acknowledging its indebtedness. I was given no evidence that Toromont registered an RSLA claim for lien under the PPSA. I was given no evidence that Toromont took possession of any of the repaired equipment.

[82] The onus of proving this “election” point fell, in my view, on BDO, since this is an affirmative defense. In other words, it is a defence that becomes relevant only when the lien right is otherwise established. I find that BDO has failed to meet its onus in relation to the Toromont claim.

[83] The evidence concerning Val Rita is different. While it is undisputed that Val Rita advanced claims under the RSLA in some way against the lessors of the leased equipment and obtained a settlement payment, there is no evidence as to how these claims were advanced. There was no evidence that Val Rita took possession of equipment, or formally asserted non-possessory claims by obtaining acknowledgments of debts and registering an RSLA claim for lien under the PPSA , or just sent correspondence . Furthermore, there is no evidence that what Val Rita got paid under the RSLA concerned all of the equipment it repaired or just some of it. Without clarity on these points, I am driven to the conclusion, and I conclude, that BDO has again failed to meet its onus of showing the Val Rita elected to pursue its claims under the RSLA to the exclusion of the CLA.

[84] I, therefore, find that neither Toromont nor Val Rita should be prohibited from pursuing their claims for lien by virtue of the RSLA .

V. CONCLUSION:

[85] I, therefore, find that the claims for lien of both Toromont and Val Rita in their entirety are for lienable services and materials.

[86] As to costs, on January 19 and 20, 2016 the parties delivered costs outlines. In the Toromont matter, BDO delivered a costs outline that showed partial indemnity costs of $46,122.49 and substantial indemnity costs of $59,857.84. Toromont delivered a costs outline that showed partial indemnity costs of $36,434.90, substantial indemnity costs of $53,871.51 and full indemnity costs of $71,308.12. All figures are tax inclusive.

[87] In the Val Rita matter, BDO delivered a costs outline that showed partial indemnity costs of $47,335.85 and substantial indemnity costs of $61,724.18. Val Rita delivered a Bill of Costs that showed partial indemnity costs of $31,384.09 and substantial indemnity costs of $46,427.22. These figures are tax inclusive.

[88] Generally costs follow the event. In this trial of an issue, Toromont and Val Rita have been entirely successful. If the parties are unable to agree on costs, counsel may file written submissions on costs. Submissions may not exceed three pages. The submissions of Toromont and Val Rita must be served and filed by August 16, 2016. The submissions of BDO must be served and filed by August 30, 2015. Any reply submissions from the owners must be served and filed by September 2, 2016.

Released: August 2, 2016

Master C. Wiebe

COURT FILE NO.: CV-13-10301-00CL DATE: August 2, 2016

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: THE TORONTO DOMINION BANK Applicant

• and - 450477 ONTARIO LIMITED a/o CHARTRAND EQUIPMENT Respondent REASONS FOR JUDGMENT Master C. Wiebe

Released: August 2, 2016