Avision Construction v. Trustees of the Siri Guru Singh Shaba, 2016 ONSC 6457
CITATION: Avision Construction v. Trustees of the Siri Guru Singh Shaba, 2016 ONSC 6457
COURT FILE NO.: C-739-16
DATE: 2016-10-17
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Avision Construction Group Inc. - Plaintiff
AND:
Trustees of the Siri Guru Singh Shaba of Cambridge and the Bank of Nova Scotia - Defendants
BEFORE: The Honourable Mr. James W. Sloan
COUNSEL: Dennis Touesnard - Counsel for the Plaintiffs (Responding Party) Bhupinder Nagra- Counsel for the Defendants (Moving Party)
HEARD: October 13, 2016
Judgment
[1] This action arises out of a construction project to build a temple in Cambridge.
[2] The defendants bring this motion seeking summary judgment to vacate the lien.
Position of the Defendant “Trustees”
[3] It is the position of the trustees that:
a) they entered into a Stipulated Price Contract CCDC2 (contract) for $2,953,805.31 in or around June 2013,
b) the contract has been paid for in full,
c) the plaintiff did not attend the site to perform any work or supply any material beyond May 2015,
d) the last day the plaintiff was on site was November 12, 2015,
e) by December 2015, the plaintiff was in breach of the contract, the site was not substantially complete as agreed to in the contract and therefore the contract was deemed abandoned,
f) on December 15, 2015, the trustee’s lawyer wrote a letter to the plaintiff requesting it provide a solution to remedy the current situation so that it could complete the contract for the price that was agreed to,
g) on December 16, 2015, the plaintiff wrote to the trustee’s lawyer stating they were owed money, but did not suggest any remedy or express any willingness to negotiate a solution,
h) on December 29, 2015, the trustee’s lawyer wrote a letter to the plaintiff, formally terminating the contract,
i) on May 20, 2016 the plaintiff registered the claim for lien,
[4] The defendant therefore submits that the claim was not registered within 45 days and is therefore invalid.
[5] The defendant further submits that the Act does not state that it is up to the contractor to determine when the contract is abandoned.
The Plaintiff’s Position
[6] The plaintiff’s position is that:
a) the trustees, through their representative Suki Takhar (Suki) approached the plaintiff in or about April 2013 with respect to constructing the Temple.
b) Suki indicated that the financing was in place,
c) the work was to be carried out on a time and materials basis,
d) the plaintiff would receive $10,000 per month as the project manager and would also receive profit and overhead towards the actual expenses incurred in completing a project,
e) after the plaintiff had retained contractors and started work, Suki advised them there was insufficient money available to pay for the project and that the trustees would require bank financing,
f) Suki advised in order to obtain the bank financing the bank would require a stipulated Price contract,
g) Suki advised that he would be responsible for submitting the value of the work completed so as to obtain bank financing,
h) Suki advised the plaintiff, that he was confident the members of the Temple would donate sufficient funds in order to complete the project,
i) the plaintiff then prepared monthly invoices for the trustees which would be submitted to Suki, who would then approve the draws. Suki would then attend at the plaintiff’s office on behalf of the trustees and using the plaintiff software would submit an invoice that he advised the plaintiff would be in a form acceptable to the Bank. Suki was solely responsible for allocating what percentage of work had been completed pursuant to the schedule,
j) at various times the trustees wanted changes to the scope of work and for each change a written change order was entered into,
k) the change orders totalled $571,214.63,
l) as a result of substantial payment arrears the plaintiff wrote to the trustees on November 30, 2015, advising that further work would not be carried out unless invoice #2600 was paid and that further payments would be made on a monthly basis within 5 days of invoicing,
m) the trustees refused to agree to make any payments on the arrears as detailed by the plaintiff, and also refused to commit to ongoing regular payments on account of work and therefore work on the project was suspended,
n) the project had never been abandoned and the plaintiff has been, since November 30, 2015, ready, willing and able to complete the contract but needs to be paid for its previous work and have a commitment to be paid or future work
[7] The plaintiff submits that the 45 days under the Construction Lien Act (Act) does not start to run until the contract has been completed or abandoned and this project was not completed and was not abandoned.
[8] The plaintiff submits that in this case there was a cessation of work, but not an abandonment, and that in order to constitute abandonment a cessation of work would have to be permanent in the sense that the plaintiff did not intend to carry the project to completion.
[9] Therefore they submit the lien was registered in time and is valid.
Issues
[10] This case essentially distills down to two questions.
[11] The first one is, whether or not the contract was abandoned more than 45 days before the lien was registered.
[12] The second question is essentially whether or not, at this stage of the proceedings based on a paper record, I am able to determine that issue within the parameters of the Hyrniak decision.
Defendant’s Submissions on the Facts
[13] The defendant submits, it is obvious from the following facts, that by December 29, 2015 the plaintiff’s position was, if you don’t pay me, I won’t complete the project and that the defendant’s position was, we have already paid you for the whole contract.
[14] The defendant points to the following evidence for its submission:
[15] By letter dated November 30, 2015 the defendant demanded payment of $865,000. (Exhibit D to the affidavit of Mr. Badial).
[16] At paragraph 18 of Mr. Badial’s affidavit he states the trustees did not believe they owed the money and were not prepared to pay it.
[17] By letter dated December 15, 2015, the defendant’s lawyer wrote to the plaintiff:
At present, we are two years from the original date stated for substantial completion and the building is not yet ready to be occupied. In fact, our client has paid you at least the amount of the stipulated price contract and is now being asked for further funds in order to complete the project.
At this time, we would like your position as to the reason for delay and further your proposal on how to rectify the situation. Time is of the essence in this matter.
[18] The plaintiff wrote to the defendant’s lawyer on December 16, 2015, but did not suggest any remedy or express any willingness to negotiate a solution.
[19] The defendant’s lawyer wrote to the plaintiff on December 22, 2015, stating that the plaintiff had breached the contract and the last paragraph of that letter reads:
I will wait to hear from you within the next 24 hours if you have a real plan to rectify any of the breaches and if we cannot come to a satisfactory resolution then I will be advising the bonding company and proceeding to mitigate my client’s damages.
[20] Not having received a response to their December 22, 2015 letter, the defendant’s lawyer wrote to the plaintiff on December 29, 2015, stating in part:
“While you have not carried out work for quite some time now you are being formally put on notice that you are not to attend to 1070 Townline Road Cambridge for any reason. In the event you are found to be on the premises it will deemed to be a trespass.”
[21] In cross-examination on his affidavit, Mr. Medeiros who was the person corresponding on behalf of the plaintiff, confirmed in answers to questions 111 through 115, that he received the December 29, 2015 letter, he understood the letter, understood plaintiff was not to attend at the premises and confirmed that from that day forward, no one on behalf of the plaintiff attended at the premises.
[22] At pages 61 & 62 of his cross examination, Mr. Medeiros confirmed that in November 2015, the plaintiff would not commence work on the site until its invoice number 2600 was paid.
[23] In the registered construction lien it states under the heading Claimant(s) the document reads “I Mr. Guilherme Medeiros, President, and the agent of the lien claimant and have informed myself of the facts stated in the claim for lien and believe them to be true”.
[24] Under the heading Statements the construction lien states “Time within which services or materials were supplied from 2013/06/25 to 2016/05/20.”
[25] This timeframe for the supply of services and material to the project is false, is contradicted directly by Mr. Medeiros and can serve no other purpose than to try to assist the plaintiff trying to bring itself within the 45 day time period set out in the Act to register a lien.
Plaintiff’s Submissions on the Facts
[26] The plaintiff states that the parties’ lawyers were having ongoing conversations, to try to resolve what appeared to be at that time, an impasse.
[27] In a letter dated April 21, 2016 from the plaintiff’s lawyer to the defendant’s lawyer the letter states in part:
I am writing in furtherance to our telephone conversation of April 11, 2016.
… Matters have been at a standstill for many months and a substantial amount of money is owing to Avision for work carried out to date due to your clients financing problems.
As discussed in our call, we would like to get matters resolved between our respective clients as we understand that funding is, or will shortly be available to your client so that matters can move forward…. Avision continues to be ready and willing to complete the project, provided that:
your client can demonstrate that it has its financing in place;
payment of the outstanding balance is made to a vision, or alternatively arrangement satisfactory to a vision for payment of the balance in instalments are agreed-upon; and
the price for completion of the project can be agreed upon by the parties.
It is for your client to determine if it wishes to work to a resolution of this matter on the basis of the parameters mentioned above, whereby Avision would complete the project, or whether your client prefers to settle up for what is owed to Avision and engage another contractor to complete the project.
I had hoped to hear from you following our call on April 11, 2016 once you had spoken to your client. I would appreciate hearing from you in this regard at your very earliest convenience.
[28] No response was received by the plaintiff to the April 11, 2016 telephone conversation or April 21, 2016 letter.
[29] It is not possible to find that the contract was abandoned when there is ongoing communication and discussions regarding the project and its financing.
[30] For a summary judgment motion such as this the defendant is obligated to put its best foot forward and it has not filed an affidavit from Suki Takhar, the person who had all the personal dealings with the plaintiff.
[31] In addition the defendant did not include in their motion material the letter of April 21, 2016.
Law
[32] Section 31(2)(b) of the Act reads as follows:
(2) Subject to subsection (4), the lien of a contractor,
(a) for services or materials supplied to an improvement on or before the date certified or declared to be the date of substantial performance of the contract, expires at the conclusion of the forty-day-period next following the occurrence of the earlier of,
(i) the date on which a copy of the certificate or declaration of the substantial performance of the contract is published as provided in section 32, and
(ii) the date the contract is completed or abandoned; and
(b) for services or materials supplied to the improvement where there is no certification or declaration of the substantial performance of the contract, or for services or materials supplied to the improvement after the date certified or declared to be the date of substantial performance, expires at the conclusion of the forth-day-period next following the occurrence of the earlier of,
(i) the date the contract is completed, and
(ii) the date the contract is abandoned.
[33] The defendant relies on the case of Dieleman Planner Co. v Elizabeth Townhouses Ltd. 1074 SCC CarswellBC where at paragraph 8 the court states:
It is clear work ceased, but in my view cessation of work and abandonment are not necessarily co-existent. In order to constitute abandonment a cessation of work would have to be permanent in the sense that it was not intended to carry the project to completion. Work on this project ceased before 10th December but the evidence is clear that it was intended that work be resumed when the financial problems had been overcome. It is likely that those problems would be overcome because the cost of completion was more than offset by the funds remaining to be advanced on the mortgage.
[34] This case is based on the Mechanics Lien Act of British Columbia and the requisite section read:
(2) A claim for lien for materials supplied may be filed as in this Act provided at any time after the contract to supply the materials has been made, but not later than 31 days after the improvement to which the material has been supplied has been completed or abandoned, or the contract for the construction or making of the improvement otherwise determined (emphasis added)
[35] The defendant also relies on the Paris Construction Co. Ltd. V. J A V Residences et. al. 1985 CarswellOnt 827, where the court considered the meaning of the word abandonment as it is used in the Act.
[36] The Paris Construction case sites with approval a 1915 decision to the effect that:
An abandonment of the contract contemplated by this section is, not leaving a work under the belief that the contract is completed, but knowing or believing that the contract was not completed, declining to go on and complete it.
It is clear that work ceased, but in my view, cessation of work and abandonment are not necessarily co-existent. In order to constitute abandonment a cessation of work would have to be permanent in the sense that it was not intended to carry the project to completion.
[37] In the Paris Construction case the parties continued to carry on conversations up to and including the date of discovery. The contractor stating his intention to complete the project with the owner suggesting when the money might be coming so the project could resume.
[38] In this case the defendant argues, based on the evidence that they have presented, the cessation of work was permanent and therefore constituted abandonment.
[39] The plaintiff essentially relies on the same cases, and argues that in this case, as in the Dieleman and Paris cases there were ongoing negotiations with respect to financing and completion of the project.
[40] The defendant also relies on the case of Astro Contracting Ltd. v. McArthur et. al. 1986 CarswellBC 719, where at paragraph 11 the court states:
The evidence discloses, in my view, that until October 19, 1983, when H. McArthur wrote to the plaintiff advising that he had retained another contractor, there remained some possibility that the parties would resolve their differences and that the plaintiff would resume work. I consider that the October 16, 1983, letter constituted the termination of the contract and therefore is a date from which the 31 day time period in s. 22 began to run. The lien affidavit having been filed on November 14, 1983, I find was filed within a time limited by s. 22.
[41] The plaintiff submits that termination of a construction contract is not abandonment under the Act and the act must be strictly interpreted.
[42] With respect to the Astro case, they submit the BC legislation is very different because it contemplates more than two ways of determining when the time limit should start to run.
[43] The plaintiff submits that Rule 20 of the Rules of Civil Procedure applies to this motion and before the court discharges or vacates a construction lien before trial without security being posted, the court must determine whether a genuine issue exists for which a trial is required and if a genuine issue exists the motion must be refused.
[44] On a motion for summary judgment under Rule 20, each party must put their best foot forward and in this case, the defendant chose not to file an affidavit by Suki, the person having by far, the most knowledge of the situation.
[45] Instead they filed an affidavit from a board member who reviewed documents but had no personal involvement with the plaintiff.
[46] The plaintiff relies on the Dieleman case where the court essentially found, that although work had ceased, the evidence was clear that it was intended that work be resumed when financial problems had been overcome and therefore the running of the time limit was suspended.
[47] The plaintiff submits that the above reasoning in the Dieleman case applies to this case and particularly so where the defendant did not respond to the April 21, 2016 letter.
[48] Therefore the plaintiff submits if the court found on the facts of this case that the project would move forward if the financing situation was resolved, that is a live evidentiary issue and should be allowed to go to trial.
Findings
[49] Financing issues for the temple project were present right from the start.
[50] The parties do not agree on whether this was a time and materials project or a stipulated price project.
[51] There are allegations against the defendant that it was trying in some way to obtain financing by manipulating documentation being given to the bank by it.
[52] The December 15, 2015 letter is one inviting negotiations.
[53] The December 22, 2015 letter, while it speaks of mitigating damages does not indicate that the defendant is actively looking for a contractor to complete the project, and a court may construe it as a negotiating tactic.
[54] My findings with respect to the December 29, 2015 letter are similar to those for the December 22, 2015 letter.
[55] No evidence was presented to me at the hearing that the defendant has done anything about moving forward with the completion of its temple project.
[56] I find it unsettling that the defendant did not include in its materials the April 21, 2016 letter from the plaintiff’s lawyer. It is obvious from the contents of the letter that discussions which may very well be found to be negotiations were held between the lawyers on April 11, 2016.
[57] It seems unusual to the court that the defendant’s lawyer would not reply to the April 21, 2016 letter.
[58] I also find it unsettling that, Suki Takhar, who appears to the court to be the only person associated with the defendant, with personal knowledge of virtually all if not all of the dealings between the parties, did not swear an affidavit in support of the motion.
[59] There is no unequivocal evidence from the defendant stating that they told the plaintiff that they would never pay them anymore monies and did not want them back on the project no matter what happened.
[60] In fact the evidence before this court is that discussions took place between the parties as late as April 11, 2016.
[61] It may very well be that the defendant was experiencing financing problems and while the plaintiff was addressing those financing problems from the point of view of obtaining further monies, it is also arguable from the April 21, 2016 letter, and the defendant’s lack of the response, that the defendant was trying to get the plaintiff to reduce its demands, which of course would ultimately mean that the defendant would require less money to complete its project.
[62] On the evidence before me at this stage of the proceedings it appears that the plaintiff was at all times able and willing to complete the contract.
[63] I therefore dismissed the defendants motion with costs.
[64] If the parties are unable to agree on costs, Mr. Touesnard shall forward his brief submissions on costs to me by October 24, 2016. Ms. Nagra shall forward her/his brief response to me by October 31, 2016. Mr. Touesnard shall then forward his reply, if any, to me by November 4, 2016. Cost submissions may be sent to my attention by email, care of Kitchener.Superior.Court@ontario.ca
Justice James W. Sloan
Date: October 17, 2016