CITATION: Berkley Insurance Company v. Rob Piroli Construction Inc., 2016 ONSC 990
COURT FILE NO.: CV-15-526959
DATE: 20160208
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BERKLEY INSURANCE COMPANY
Applicant
– and –
ROB PIROLI CONSTRUCTION INC.
Respondent
Richard Yehia for the Applicant
Myron W. Shulgan, Q.C. for the Respondent
HEARD: February 5, 2016
PERELL, J.
REASONS FOR DECISION
A. INTRODUCTION
[1] This motion raises three issues, although in the result, only the first issue needs to be addressed.
[2] The first issue is: Can a party to a proceeding by application under Rule 14 of the Rules of Civil Procedure obtain an injunction as its exclusive primary relief and not as ancillary relief? The second issue is: When can a party to a contract obtain a mandatory injunction to compel the performance of an obligation to pay money? The third issue is: Assuming there is jurisdiction by application to compel the performance of an obligation to pay money, has the applicant satisfied the test for a mandatory interlocutory injunction?
B. FACTUAL AND PROCEDURAL BACKGROUND
[3] In late 2012 or early 2013, the Town of LaSalle hired Piroli Construction as a general contractor to build a municipal building.
[4] The municipal building project proceeded, and between November 2014 and January 2015, Berkley Insurance agreed with Piroli Construction to post construction lien bonds for it to vacate construction liens claims of $972,876.38 in the aggregate by the following subcontractors: (1) D & M Glass and Mirror Ltd., $142,245; (2) Acapulco Pools Ltd., $92,375; (3) Nadalin Custom Floors Ltd., $63,968, (4) Ground Effects Ltd., $71,060; (5) Aztec Electrical Supply Ltd., $347,790; (6) Poirier Electric Ltd., $34,958.71; (7) Rene G. Roy & Sons, $182,912.84; and (8) Franklin Terrazzo Company Ltd., $37,566.83.
[5] Rob Piroli and his wife Lucy Piroli agreed to indemnify Berkley Insurance for any losses it suffered from posting the lien bonds. Mr. and Mrs. Piroli provided security for their indemnification, and they submit - but do not provide any evidence to support their submission - that the security exceeded the value of the bonds.
[6] As additional security should Berkley Insurance be called to pay on the construction lien bonds, Piroli Construction undertook to Berkley Insurance that it would direct the Town of LaSalle to pay Piroli Construction’s lawyers, Robert G. Millson Professional Corporation, (“Millson Professional Corp.”) $486,154 and that it would direct Millson Professional Corp. to forward $191,000 to Berkley Insurance and to retain the balance in trust to be available to indemnify Berkley Insurance should a demand be made for payment of the construction lien claimants.
[7] Piroli Construction admits that it breached its undertaking to Berkley Insurance. Piroli Construction made no direction to the Town of LaSalle. Rather, Piroli Construction received $486,154 from the Town, and it used the money to pay subcontractors.
[8] Mr. Piroli testified that his company does not now have any money to pay Berkley Insurance.
[9] Piroli Construction says that it settled the lien claims of Ground Effects Ltd., Poirier Electric Ltd., and Franklin Terrazzo Company Ltd. However, it has provided no evidence in this regard, and save for one lien bond, the lien bonds have not been returned to Berkley Insurance for cancellation.
[10] No call has to date been made on the construction lien bonds issued by Berkley Insurance, but in this proceeding by application, Berkley Insurance seeks an order that: (1) Piroli Construction pay $441,484.27 in trust to Millson Professional Corp., (Rob Piroli Construction’s lawyers) as security of certain lien bond claims; and (2) Piroli Construction pay $191,000 in trust to Berkley Insurance, for the lien claim of Aztec Electrical Supply Inc.
C. DISCUSSION AND ANALYSIS
1. Position of the Parties
[11] Berkley Insurance submitted that there were no material facts in dispute and it was admitted that Piroli Construction had breached its promise to have money paid into trust as security for the lien claims. In accordance with the test for a mandatory injunction Berkley Insurance submitted that it had demonstrated a strong prima facie case, had shown that there would be irreparable harm if the mandatory injunction were not granted, and had shown that the balance of convenience favoured granting the injunction.
[12] Piroli Construction resisted the motion by arguing that: (1) in a proceeding by application, Berkley Insurance was not entitled to injunctive relief as its exclusive primary claim; and (2) Berkley Insurance has not satisfied the test for a mandatory interlocutory injunction including failing to show irreparable harm and for failing to provide an undertaking as to damages. In the last regard, Piroli Construction submitted that Berkley Insurance could not demonstrate irreparable harm, because it could not show that the common law remedy of damages for breach of contract was inadequate to do justice and, therefore, the equitable remedy of a mandatory injunction was not justified and should not be granted.
2. Injunctive Relief in a Proceeding by Application
[13] Berkley Insurance has commenced a proceeding by application under the Rules of Civil Procedure. Rule 14.05(3) specifies when an application may be brought under the Rules; it states:
Application under rules
14.05 (3) A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,
(g) an injunction, mandatory order or declaration or the appointment of a receiver or other consequential relief when ancillary to relief claimed in a proceeding properly commenced by a notice of application;
(h) in respect of any matter where it is unlikely that there will be any material facts in dispute.
[14] It is not disputed that Berkley Insurance’s exclusive relief sought on this application is a mandatory injunction compelling Piroli Construction to honour its undertaking to have moneys paid to be held in trust as security for a call on the lien bonds. From this admitted circumstance, Piroli Construction argues that the relief claimed by Berkley Insurance is not ancillary to relief claimed in a proceeding properly commenced by notice of application; rather, it is the sole primary relief claimed and, therefore, not a proceeding that can be brought by application.
[15] Relying on Justice DiTomaso’s short endorsement in Eurodesign Upholstering Ltd. v. Marcantonio, 2004 Carswell 9752 (Ont. S.C.J.), Berkley Insurance argues that properly interpreted the phrase “when ancillary to relief claimed in a proceeding properly commenced by a notice of application” modifies “other consequential relief” but does not qualify the words “an injunction, mandatory order or declaration or the appointment of a receiver.”
[16] I disagree with Berkley Insurance’s interpretation of rule 14.05(3)(g).
[17] It is not clear from Justice DiTomaso’s terse endorsement how he interpreted rule 14.05(3)(g). What is clear is that on October 16, 2004, in a proceeding by application, he heard a preliminary objection to a motion for injunctive relief, and he did allow the motion to proceed, possibly because he thought that the injunctive relief being claimed was consequential relief to other relief in what was a commercial law dispute.
[18] In any event, the motion did go ahead, and it was heard on October 18, 2004 only to be dismissed on its merits by Justice Marchand. See Eurodesign Upholstering Ltd. v. Marcantonio, [2004] O.J. No. 4589 (S.C.J.).
[19] After dismissing the motion on its merits, at paras. 23 and 24 of his decision, Justice Marchand addressed the jurisdictional issue as an alternative reason for dismissing the motion; he stated:
- The court must also note that the proceedings themselves might be improper as such application may only proceed if authorized by statute or by the Rules; all other proceedings being required to proceed by way of an action pursuant to Rule 14.01. The applicant specifically relies of Rule 14.05(3)(g), which reads as follows:
A proceeding may be brought by application ... Where the relief claimed is, …
(g) an injunction, mandatory order or declaration or the appointment of a receiver or other consequential relief when ancillary to the relief claimed in a proceeding properly commenced by a notice of application; ….
- The only relief claimed is injunctive in nature and clearly not ancillary to anything permitted by the Rules. The applicant has effectively sought a permanent injunction by way of summary judgment; the approach taken is not to be encouraged, and on that basis alone I would have dismissed the application.
[20] Justice Marchand’s decision was affirmed by the Court of Appeal; see Eurodesign Upholstering Ltd. v. Marcantonio, [2005] O.J. No. 91 (C.A.), although the Court did not address the jurisdictional question.
[21] I agree with Justice Marchand. In my opinion, the words “when ancillary to the relief claimed in a proceeding properly commenced by a notice of application” do qualify the words “an injunction, mandatory order …” and since the only relief claimed in this application is injunctive or mandatory in nature, the application should be dismissed.
3. Injunction to Compel the Performance of an Obligation to Pay Money
[22] The above conclusion is dispositive of this application and, therefore, it is not necessary to address the merits of the request for an injunction.
D. CONCLUSION
[23] For the above reasons, I dismiss Berkley Insurance’s application.
[24] If the parties cannot agree about the matter of costs, then they may make submissions in writing beginning with Piroli Construction’s submissions within 20 days of the release of these Reasons for Decision followed by Berkley Insurance’s submissions within a further 20 days.
Perell, J.
Released: February 8, 2016
CITATION: Berkley Insurance Company v. Rob Piroli Construction Inc., 2016 ONSC 990
COURT FILE NO.: CV-15-526959
DATE: 20160208
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BERKLEY INSURANCE COMPANY
Applicant
– and –
ROB PIROLI CONSTRUCTION INC.
Respondent
REASONS FOR DECISION
PERELL J.
Released: February 8, 2016