Court File and Parties
Date: 2017/01/10 Superior Court of Justice – Ontario
In the matter of the Construction Lien Act, R.S.O. 1990, c. C-30 as amended
Re: Kyle Stephen Chambers carrying on business under the firm name and style of Norox Basement Applications, Plaintiff And: James MacLaren Prouse, Defendant And: Steven Patrick Chambers carrying on business under the firm name and style of Norox Basement Applications, Third Party
Before: Justice A. K. Mitchell
Counsel: J. Battin, counsel for the plaintiff and third party J. Nicholson, counsel for the defendant
Heard: November 18, 2016 and January 6, 2017 (at Woodstock)
Endorsement
Overview
[1] In this action, the plaintiff claims a lien (pursuant to the Construction Lien Act) against lands owned by the defendant for basement repair work purported to have been performed by the plaintiff and for which he remains unpaid. The plaintiff is the 20 year old son of the third party. The defendant defends this lien action, in part, on the basis that the plaintiff lacks jurisdiction to claim a lien because the defendant contracted with the third party, not the plaintiff.
[2] This motion was originally returnable before me on November 18, 2016. At that time, the defendant sought only an order discharging the construction lien and certificate of action registered against title to his lands on the basis the plaintiff was not a proper lien claimant. In the alternative, the defendant sought an order vacating the construction lien and certificate of action upon payment into court of the reduced sum of $10,642.66. In the further alternative, the defendant sought an order vacating the construction lien and certificate of action upon payment into court of the claimed amount of $34,527.26.
[3] On the original return of the motion on November 18, 2016, I found that the primary relief sought by the defendant was akin to summary judgment and so adjourned the matter to January 6, 2017 to allow the third party, Stephen Chambers (“Steve”), to respond to the allegations of the defendant. To facilitate a pending transaction involving the defendant’s lands, an order was made on consent of the parties that the lien and certificate of action were to be vacated from title to the lands upon payment of the sum of $25,777.26 by the defendant to his lawyer, Cohen Highly LLP, in trust. Payment was made in accordance with my endorsement and pursuant to the Order of the Honourable Justice Raikes dated December 22, 2016, the lien and certificate of action were vacated from title to the lands.
[4] Pursuant to an Amended Notice of Motion filed December 20, 2016, the defendant now seeks an order granting summary judgment dismissing the claim of the plaintiff, Kyle Stephen Chambers (“Kyle”) on the basis Kyle is not a proper lien claimant and did not contract with the defendant, James MacLaren Prouse (“Prouse”), and returning the funds held in trust.
Background
[5] The undisputed relevant facts are as follows:
- On January 28, 2014, a sole proprietorship having the business name “Norox Basement Applications” was registered. The address of the principal place of business was listed as 30 Hardy Avenue, Tillsonburg, Ontario. The activity carried on by the business was listed as “basement repairs”. Steve was listed as the sole proprietor and as the individual authorizing the registration. This business name registration remains active.
- On May 21, 2014, an individual identified as “Robyn Hanson” registered a sole proprietorship having the business name “Norox Basement Applications”. The address of the principal place of business was listed as 1469 Highway 3, Delhi, Ontario. The activity carried on by the business was listed as “basement waterproofing”. This business name registration was cancelled on December 11, 2014. Hanson is the former common-law partner of Steve.
- On November 17, 2014, Kyle registered a sole proprietorship having the business name “Norox Basement Applications”. The address of the principal place of business was listed as 56487 Heritage Line Straffordville, Ontario. The activity carried on by the business was listed as “basement waterproofing”. This business name registration was amended on December 17, 2014 and remains active.
- On April 1, 2016, Prouse entered into a written contract with “Norox Basement Applications” (“Norox”) for the repair of his basement foundation. The contract was on a preprinted form of Norox. The contact information for Norox preprinted on the form is: “1469 Hwy 3, RR #3, Delhi, Ontario, N4B 2W6, Ph: 226.970.2777 email: steve@norax.ca”. Steve signed the contract as “Company Rep”.
- On April 5, 2016, Prouse entered into the main contract with Norox for the repair of his basement foundation. The contract was prepared on the same preprinted form and was signed by Steve as “Company Rep”.
- On April 8, 2016, the same preprinted form was used to reflect additional work and signed by Steve as “Company Rep”.
- On April 15, 2016, an amending contract prepared on the same preprinted form was signed by Prouse and Steve as “Company Rep”.
- On April 23, 2016, two preprinted forms were completed and signed by Steve as “Company Rep”.
- On November 3, 2006, Steve made an assignment in bankruptcy. He remains an undischarged bankrupt.
Analysis
[6] Once it is established by the defendant that there is no genuine issue requiring a trial, the onus shifts to the plaintiff to prove on a balance of probabilities that Kyle contracted with Prouse for the repair of his basement foundation. The defendant takes the position that at all times he contracted with Steve, as sole proprietor, not his son, Kyle.
Test for Summary Judgment
[7] Pursuant to r. 20.01(3) of the Rules of Civil Procedure, a defendant to an action may move for summary judgment dismissing all or part of the claim against it. If the court is satisfied there is no genuine issue requiring a trial, the court must grant summary judgment.
[8] Hyrniak v. Mauldin, 2014 SCC 7 is the leading case. Recognizing that affordable and timely access to the civil justice system is paramount, the Supreme Court of Canada has interpreted r. 20.03 to require motions judges to utilize their enhanced powers under Rule 20 to weigh evidence, evaluate credibility and draw reasonable inferences where appropriate in order to expand the cases capable of being disposed of summarily without the need for costly and protracted litigation.
[9] This is one of those cases. While credibility is an issue, the independent documentary evidence allows me to evaluate the credibility of the parties, weigh their respective evidence and decide issues of credibility. The facts comprising the factual matrix are not in dispute. It is presumed that the parties have placed before me all relevant and necessary evidence. That is, the plaintiff has put his best foot forward. It is assumed for purposes of this motion that no better evidence exists upon which to decide the issues.
[10] I find that the defendant has met his onus of establishing there is no genuine issue requiring a trial. The onus now shifts to the plaintiff to establish that he has a claim against Prouse.
Does Kyle have a contractual claim against Prouse?
[11] It is trite law that in any commercial contract there must be consensus ad idem (i.e., a meeting of the minds) with respect to, among other matters, the parties. As was noted by this court in Logikor Inc. v. Bessey Tools Inc., 2013 ONSC 5052 at para. 29. Whether the parties have reached consensus ad idem is an objective assessment. The accepted test is whether a reasonable observer would infer from the words or conduct of the parties that a contract has been concluded. As was noted by this court in The TDL Group Corp. v. DXStorm.com Inc., 2013 ONSC 5718 at para. 174:
The test for the formation of a contract, i.e. the existence of a consensus ad idem, is well established. The issue is whether the parties have indicated to the outside world, in the form of an objective reasonable bystander, their intention to contract in light of all of the material facts, in respect of a contract whose essential terms can be determined with reasonable certainty: see Ron Ghitter Property Consultants Ltd. v. Beaver Lumber Company Limited, 2003 ABCA 221 at para. 9. and G.H.L. Friedman (sic), The Law of Contract in Ontario, 4th ed. (Scarborough, Ont.: Carswell, 1999) at p. 15. In particular, the law is not concerned with a party’s subjective intentions, but only with the manifested intentions of the parties as revealed by their objective actions. (emphasis added)
[12] At some point in 2014 three active business name registrations for the business name “Norox Basement Applications” were in effect in the same small geographic area. One related to a business which conducted basement repairs and two related to businesses conducting basement waterproofing. The business name registration effected by Steve refers to a Tillsonburg address. The Prouse property on which the work was undertaken is, similarly, located in Tillsonburg. The nature of the work performed by Norox for Prouse was basement repairs not basement waterproofing which is consistent with the business conducted by Steve as a sole proprietor.
[13] The phone number, email address and address on the preprinted Norox form are those of Steve and in the case of the address, is connected to Ms. Hanson, his former common law partner, and is the address noted in her business name registration.
[14] An e-mail sent by Steve to Gary Olyschlager, project manager (friend and neighbour of Prouse) (“Olyschlager”), while the project was ongoing contains the following statements by Steve relevant to the issue. He states in part:
“I am just finally hearing about why you were screaming at my son/employee about.”
“Please stop screaming at my workers.”
“My workers do not have to nor do they have the authority to answer or reply to your harassment.”
These statements are clear and unambiguous. Olyschlager yelled at Kyle, Steve’s son and employee, and Steve demanded such conduct cease. Furthermore, Steve states unequivocally that Kyle as an employee has no authority to address the concerns of Olyschlager.
[15] In his responding affidavit sworn December 12, 2016, Steve attempts to explain away the import of independent documentary evidence consistent with the defendant’s position. His explanations do not have the ring of truth. Even if true, his explanations after the fact do little to assist the reasonable observer because these explanations were unknown to Prouse or any “reasonable observer” at the time the contract was entered into and throughout the duration of the project.
[16] The defendant submits that all of his dealings were with Steve. At no time during the project did either Prouse or Olyschlager have discussions with Kyle regarding the progress of or concerns with the repairs. During the course of the foundation repair Prouse met Kyle only once. It is undisputed that Prouse was never told that Steve was acting as agent for Kyle. In fact, Steve acknowledges in his affidavit that he did not advise Prouse he was employed by Kyle. During the course of their dealings, Steve held himself out as a sole proprietor carrying on business as Norox. Similarly, Kyle conducted himself in a manner consistent with being an employee of his father’s business.
[17] Kyle conflates the concepts of a corporation and a sole proprietorship. A sole proprietorship is not a separate legal entity with one or more individuals having authority to represent the interests of that separate legal entity. In this case Norox is a sole proprietorship – it is either the sole proprietorship of Kyle or the sole proprietorship of Steve. Both sole proprietorships were active in the Spring 2016.
[18] Since this motion was first before the court, the plaintiff has had many weeks to compile an evidentiary record in support of his position in this litigation. He has failed to do so. Notably absent from the responding materials are the following:
(a) T4 statements for Steve as employee of Kyle’s sole proprietorship; (b) IT returns of Kyle to show income from his sole proprietorship rather than as an employee; (c) IT returns of Steve to show employment income from Kyle; (d) Bank statements for the Norox business account in the name of Kyle for the months of April, May and June 2016 showing deposits matching the cheques issued by Prouse in payment for the work done by Norox; and (e) Copies of contracts executed by Kyle as “Company Rep” for Norox for other projects ongoing in the Spring of 2016.
[19] The defendant argues that Kyle commenced this litigation as plaintiff to avoid the claims of his bankrupt father’s creditors. Perhaps this is the case but it is not necessary for me to determine the motive underlying the plaintiff’s position being taken in this litigation which is contrary to the position taken by Steve in Spring 2016. There is not a shred of evidence – documentary or otherwise – to support a finding that at the time the contracts were entered into, Prouse and Steve did not intend to contract with each other. There was a meeting of minds as to the parties. The subsequent statements of the plaintiff and the third party do not alter what the intentions of the parties were in the Spring 2016. The actions of the parties and the documents objectively viewed support a finding that at the time the contracts were entered into, Steve manifested an intention to contract with Prouse and Prouse manifested an intention to contract with Steve. There was consensus ad idem. The contracts exist, are valid and binding and are enforceable against the parties – Steve and Prouse. The fact the plaintiff and third party now take a different position is irrelevant to a determination of the issue.
[20] Accordingly, I am not persuaded on a balance of probabilities that Kyle as sole proprietor carrying on business as “Norox” contracted with Prouse. Rather, I find that Steve as sole proprietor carrying on business as “Norox” contracted with Prouse for the repair of Prouse’s basement foundation.
Disposition
[21] The defendant’s motion is granted and Kyle’s purported lien claim is dismissed and the funds held in trust by Cohen Highley LLP, shall be returned to the defendant. While I question the motives of the plaintiff and the third party in naming Kyle as plaintiff in this lien action and fear the parties have been less than honest and candid with the court in the face of compelling and overwhelming evidence establishing Steve’s sole proprietorship as the contracting party, I am not prepared to make specific findings as to their motives nor am I prepared to make findings of bad faith. However, due to my suspicions, I am not prepared to simply replace Steve for Kyle as plaintiff in this action nunc pro tunc. Despite the dismissal of this lien claim Steve may pursue recovery of amounts which may be owing to him on account of work performed by him under the contracts. Steve is without a lien claim but maintains an unsecured claim for these amounts.
Costs
[22] As the successful party, Prouse is prima facie entitled to his costs of the motion and the action. Absent agreement of the parties, written submissions regarding costs of the motion shall be submitted in accordance with the following schedule:
(a) defendant’s submissions not to exceed 5 pages in length to be served and filed within 7 days; (b) plaintiff’s and third party’s responding submissions each not to exceed 5 pages in length, 7 days thereafter; and (c) any reply submissions not to exceed 3 pages in length, 3 days thereafter.
[23] The defendant is entitled to his costs of the action as agreed or assessed.
“Justice A. K. Mitchell” Justice A. K. Mitchell Date: January 10, 2017