Superior Court of Justice - Ontario

Citation: 2017 ONSC 5143 Oshawa Court File No.: CV-15-90661 Date: 2017-10-05

Re: TACC Construction Ltd., Plaintiff And: Ajax Audley Developments Limited, Defendant

Before: The Honourable Madam Justice A.M. Mullins

Counsel: Fernando Souza, Counsel for the Plaintiff Karey A. Dhirani, Counsel for the Defendant

Heard: July 13, 2017

Endorsement

[1] On June 19, 2015, an order was made such that $355,448.76 was paid out of court to the plaintiff. $729,386.68 had been paid into court by the defendant to vacate the lien that had been registered by the plaintiff. The defendant moves for leave, if required, to bring this motion and should leave be granted, an order discharging the lien registered by the plaintiff on December 24, 2014 and a release to it of the balance of funds paid in. The defendant more or less concedes that the plaintiff may, with leave, continue the action, just not as a lien claim.

[2] The plaintiff too moves for leave and, as originally framed, sought summary judgment for $298,937.92 together with costs. Summary judgment was not pursued to exhaustion in oral argument, rather, the narrow issue for determination as framed by the plaintiff was: did the parties enter into one contract or five?

[3] If there were five contracts, not one, the plaintiff’s lien was not registered in time and the defendant is entitled to an order discharging the lien and a release to it of the remainder of the funds it paid into court.

[4] The material facts are not disputed. The defendant is a developer. It is, or was, the developer of a residential subdivision in Ajax known as Mulberry Meadows. The plaintiff is in the business of constructing sewers and water mains. The defendant planned the development in seven phases.

[5] Section 47(1) of Construction Lien Act, R.S.O. 1990, c. C.30 (“the CLA”), explicitly allows for a motion seeking the discharge of lien upon any proper grounds. This provision does not import a requirement that leave be granted. It stands independently of s. 67(2) of the CLA. As a statutory provision, it trumps the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, governing the requirement for leave in the prescribed circumstances of r. 48. In my view, therefore, for the defendant to seek the relief they do, they do not require leave.

[6] The plaintiff contends that it entered into one agreement with the defendant. The agreement had five ‘parts’ or tenders. The plaintiff characterizes the agreement as being for the benefit of the entire project. The defendant asserts that the parties entered into five contracts, pursuant to which the plaintiff was to provide mass earthworks, underground services and roads within Phase 1A and 1B of a subdivision. The defendant did not, it contends, contract with the plaintiff for the supply of any services or materials to Phases 2 through 7 of the Mulberry Meadows subdivision.

[7] Each of the five contracts for Phases 1A and 1B, says the defendant, was priced and executed separately by the parties. The payments and holdbacks under the contracts were each individually administered. In order to develop the entire subdivision, counters the plaintiff, the defendant contracted to have the plaintiff build a sanitary and storm retention pond. That pond benefitted all seven phases though the work was, the defendant acknowledges, explicitly part of Phase 1.

[8] It is not disputed that the plaintiff performed the work called for under what it says was one agreement and the defendant says were five agreements, hence the sums paid to date.

[9] The defendant contends that with the exception of the top works, which was work deferred to 2011 to allow for the completion of homes on individual lots, all of the underground servicing and the base course of asphalt was completed within five years, commencing in the spring of 2009.

[10] The contract documents prepared by the defendant’s consultants may be found at Exhibit B to the Affidavit of Mr. Wienberg, sworn February 27, 2015. The materials bear the title “Contract and Specifications for Mass Earthworks, Underground Services and Roads, (Phase 1)” (emphasis added).

[11] The parties executed five Agreements. The Agreements called for the plaintiff to perform the Work required by the Contract Documents for Contract A, Contract B, and Contracts C, D and E respectively. Each Agreement listed the ‘Contract Documents’ and terms to be incorporated. Incorporated by reference were the Information for Tenderers, Form of Tender, the Agreement, Definitions, General Conditions etc. An exact list of General Specifications was given. The Project Specifications No. 1 called for the underground services to be installed in 2009, with the top course asphalt to be undertaken in 2010 and/or beyond.

[12] Article SC7 of the contract materials called for completion of the work on the following terms:

1. Contract A – Mass earthworks – start May 1, 2009, completion September 15, 2009
2. Contract B – Roads to base – Phase 1A – start June 1, 2009, completion August 31, 2009
3. Contract C – Road to base – Phase 1B – start July 15, 2009, completion October 31, 2009
4. Contract D – Roads after base – Phase 1A – start May 2010, completion November 2010
5. Contract E – Roads after base – Phase 1B – start October 2010, completion November 2011

[13] Explicit provision was made that the owner had the right to cancel or terminate the contract at any time.

[14] The evidence establishes that a Certificate of Completion was published for the earthworks, underground services and roads to base asphalt at the Mulberry Meadows Residential Subdivision Plan Phase 1A and 1B, Contracts “A”, “B”, and “C” on April 1, 2010. The date of substantial performance was specified to have been December 18, 2009.

[15] In early 2012, the subject arose as to whether the contract(s) had expired or whether the plaintiff was bound to do work at the prices originally stipulated. The plaintiff performed the work, notwithstanding.

[16] The pricing dispute crystalized when the defendant called upon the plaintiff to complete the work called for under Contract D for roads after base course asphalt, on March 24, 2014. Contract D specified that: “Work items deferred beyond 2010 will be adjusted by the change in the CPI for Ontario as published by Revenue Canada. Price adjustments will be based on the December 31, 2010 CPI.” The consultant adjudicated the dispute in the defendant’s favour on July 31, 2014.

[17] Only Contracts D and E had a price adjustment clause. By contrast, Contracts A, B and C each contained explicit provision that, “All prices tendered…to be valid for 2009.”

[18] For what it’s worth, the administration of payments and holdbacks for the work completed by the plaintiff corresponded to five contracts. Certain of the provisions in the general conditions and supplementary general conditions, mainly those governing payment of holdbacks are consistent with an interpretation that there were five contracts, not one.

[19] The lien that was registered by the plaintiff claimed to be for the supply of concrete curb, sidewalk and asphalt, and related matters, work which is the subject matter of Contracts D and E. The lands against which the lien was registered included three lots in Phase 1B, one in Phase 2, ten in Phase 3, 82 parcels in Phase 4, and all of Phases 5, 6 and 7. The lien is a general lien, registered as against multiple lots and parcels.

[20] The defendant contends that the plaintiff, having not provided any work or materials other than to the road allowances in Phases 1A and 1B, was not entitled to register the lien as against the lots within Phase 1B and those in Phases 2 through 7.

[21] The defendant relies upon the decision of the Ontario Court of Appeal given in George Wimpey Canada Ltd. v. Peelton Hills Ltd. et al., 1982 CanLII 2100 (ON CA), 35 O.R. (2d) 787, 132 D.L.R. (3d) 732 (C.A.). Here, as there, submits the defendant, the work performed was upon municipal road allowances falling within a subdivision plan. Such work does not give rise to a right to lien the lots, notwithstanding the obvious benefit, given the precise wording of the legislation, then the Mechanics’ Lien Act, R.S.O. 1970, c. 267. At the very least, this authority, submits the defendant, prohibits the plaintiff from registering its lien on property within Phase 1 and would not extend to three lots under Phase 1B, either, given the present day definition of premises.

[22] The plaintiff posits that the contract was for work within the entire subdivision, Phases 1 through 7, wherefore having performed work on Phase 1 it was entitled to a general lien under s. 20 of the CLA.

[23] Where an owner enters into a single contract for improvements on more than one premises of the owner, any person supplying services or materials under that contract may choose to have the person’s lien follow the form of the contract and be a general lien against each of those premises for the price of all services and materials to the person supplied to all of the premises according to s. 20 of the CLA.

[24] The plaintiff relies upon the decision given in Ledcor Construction Limited v. Canalfa Liberty Village Homes Inc., 2008 CanLII 87009 (Ont. S.C.). There the master dismissed a motion for summary judgment where there was one contract with four phases of work.

[25] The classical approach to contract interpretation can be summarized as follows:

(1) where there is no ambiguity in a written contract it must be given its literal meaning;

(2) words must be given their plain, ordinary meaning, at least unless to do so would result in absurdity;

(3) the contract should be construed as a whole, giving effect to everything in it if at all possible;

(4) the contra proferentem rule: that language should be construed against the authorial party to a contract if the non-authorial party had no meaningful opportunity to participate in negotiation of the contract, and where a stipulation is capable of two meanings equally;

(5) the ejusdem generis rule: where the language speaks of a particular class or genus, and general words follow, the class first mentioned is regarded as the most comprehensive expression of the class and the general words that follow should be given a more limited meaning consistent with some common characteristic that unites or defines the class or genus; and

(6) if a single transaction is effected by several documents, the whole is treated as one document and must be read together to ascertain the intention of the parties.

See: G.H.L. Fridman, The Law of Contract in Canada, 6th ed. (Toronto: Carswell, 2011), at pp. 451-59.

[26] The Supreme Court of Canada in Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 47, described the proper approach to contract interpretation as a "practical, common-sense approach not dominated by technical rules of construction." The overriding concern is to determine "the intent of the parties and the scope of their understanding." In order to achieve this, “a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.”

[27] In my view, the explicit provisions of the contractual materials are clear. There is no reason to look beyond the plain wording. If there had been but one agreement, there would be no sense to be made of the facts of there being five agreements, each with their own defined scope of work. To be sure, the tender materials for the subdivision appear to have been bundled for the development of Phases 1 and 2, but nonetheless the work was specified to fall within five individual contracts.

[28] For these reasons, the relief sought by the defendant is granted because the lien was registered out of time. The plaintiff’s lien is invalid and the defendant is entitled to the remainder of the sum posted.

[29] Whether there was one or five contracts for work between the parties, in my view s. 20 of the CLA can have no application here, where the plaintiff has registered a lien on premises in respect of which it had no contract and supplied no work or materials, with the exception of the lien registered against the lots in Phase 1B, but for the late registration.

[30] The parties may make brief submissions as to costs, in writing, within 30 days.

Madam Justice A.M. Mullins

Date: October 5, 2017