Court File and Parties
COURT FILE NO.: CV-18-6
DATE: June 6, 2018
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GEM IN NIAGARA HOMES INC.
Johanna McNulty, for the Plaintiff
Plaintiff
- and -
KIMBERLY DAWN DEWLING, WILLIAM EDWARD DEWLING, and BLACK ROSE FINANCIAL SERVICES INC.
Derek Sinko, for the Defendants Kimberly and William Dewling
Defendant
HEARD: May 22, 2018
REASONS FOR JUDGMENT
The Honourable Mr. Justice H. S. Arrell
INTRODUCTION:
[1] The defendants Mr. and Mrs. Dewling, hired the plaintiff contracting firm to construct a modular home on their property in Dunnville.
[2] Issues arose and the contractor filed a construction lien against the property pursuant to the Construction Lien Act.
[3] The defendant, pursuant to the Act, obtained an order that upon posting security in the amount of the lien, plus 25% for costs, the lien would be vacated. The defendants fulfilled the terms of that Order and the lien has been vacated.
[4] The defendants now seek an Order returning the security they posted on the basis that the lien was not preserved and perfected within the timelines set out in the Construction Lien Act.
FACTS:
[5] The defendants owned 32 Lakeridge Blvd in Dunnville.
[6] The defendants hired the plaintiff construction company on March 16, 2017 to construct a modular home on the property. Mr. Mills is the principal of the plaintiff and signed the contract on behalf of the plaintiff.
[7] A dispute arose and the defendants became dissatisfied with the plaintiff which in turn felt funds were left owing for work done.
[8] The facts are not in dispute that counsel for the defendants sent a letter on November 22, 2017 informing the plaintiff that the defendants wished the contract terminated.
[9] The defendants swear that on November 28, 2017 they hired Fred Schmoll directly to complete the back deck. Schmoll had previously been working as a sub-trade on the back deck for the plaintiff. Other sub-trades also were hired directly by the defendants and paid directly by them after November 22, 2017.
[10] I find as a fact that on December 2, 2017 Schmoll was working on the back deck. The defendants say this is pursuant to his direct contract with them and not as a sub-trade. Mr. Mills, principal of the plaintiff, attended and refused to leave as requested by the defendants. As a result the defendants called the police who attended and filed an occurrence report. Mr. Mills left with the construction blueprints before the police arrived.
[11] The portable washroom, arranged on site by the plaintiff, was removed on December 2, 2017.
[12] The garbage disposal bin arranged by the plaintiff was removed on December 7, 2017.
[13] The plaintiff, through counsel, responded to the November 22, 2017 letter on December 8, 2017 seeking payment of funds it says were owing.
[14] The plaintiff registered its lien under the Act on January 12, 2018.
[15] This action was commenced by the issue of a statement of claim on March 7, 2018.
POSITION OF THE PARTIES:
[16] The plaintiff argues that the last day worked on the contract was December 9, 2017 and therefore the statement of claim was issued in time to preserve the lien under the Act.
[17] The defendants urge me to find that the last day worked by the plaintiff under the contract was at the latest December 2, 2017 and therefore the claim was not issued in time under the Act.
[18] Counsel also presented a preliminary issue regarding the two lawyers letters mentioned earlier.
[19] The position of the plaintiff is that these letters were privileged and should not be considered by me. The basis of the argument of the plaintiff is that its lawyer’s letter contained an offer and therefore should be considered privileged.
[20] The argument of the defendants is that its letter was clearly not privileged as it informed the plaintiff of their wish to terminate the contract. Certainly if there was any privilege it was theirs to waive and they do so. They further argue that the response on December 8, 2017 was not really a negotiation for settlement as its only offer was immediate payment in full for what the plaintiff said was owing under the contract.
[21] I disagree with the defendants. There was an offer to settle by the plaintiff in the December 8th letter. By accepting that offer the defendants avoided any interest, payment of costs, and a trial. I am satisfied that letter should be deemed confidential and it has not entered into my analysis.
ANALYSIS:
[22] The Construction Lien Act provides strict time requirements for lien claimants. The evidentiary burden is on the lien claimant to prove compliance with the statutory timelines of preservation and perfection. The standard of proof is on a balance of probabilities. The time periods are absolute and inflexible. See: Nortown Electric Contractors Associates v. 161975 Ontario Inc., 2010 ONSC 3284 at para. 4; Roe v. Elgaard Developments Inc., 2016 ONSC 7831 at paras. 17, 52.
[23] The law is clear that if the lien claim is not perfected and preserved within the time lines set out in S. 31 and 36 of the Construction Lien Act, the lien must be vacated and the action continue under the ordinary rules. See: Roe, supra at paras 52, 53; Scepter Industries Ltd. V. Georgian Custom Renovations Inc., 2018 ONSC 988 at paras 37, 38.
[24] The evidence before me is clear that this contract was not completed. That being the case S. 31 of the Act states that the plaintiff’s claim would have expired 45 days from the date the contract was abandoned. S. 36 of the Act states that a preserved lien expires unless it is perfected prior to the end of the 45 day period next following the last day, under S. 31, on which the lien could have been preserved.
[25] There is no dispute that the lien was preserved within the 45 day rule being registered on January 12, 2018.
[26] The dispute arises under S. 36 as the defendants argue since the claim was issued March 7, 2018 which was more than 90 days after the contract was abandoned which they say was on or before December 2, 2017.
[27] S. 31 of the Act is clear that abandonment means the contract is either abandoned or terminated. Abandonment occurs when there is a cessation of work and either an intention not to complete the contract or a refusal to complete the contract. See: Wildberry Homes Inc. v. Prosperity One Credit Union Ltd., 2008 Carswell Ont 8314 (ONSC) at paras 21, 22.
[28] Likewise abandonment occurs when an owner terminates the contract. The subject intentions of the contractor are not determinative. See: Sceptor, supra at paras 33, 34. Abandonment is a question of fact, and cessation of work is a question of fact. See: Wildberry, supra at paras 16, 20.
[29] I agree with plaintiff’s counsel that my authority to entertain this motion is under S. 47 (1) of the Act. Such a motion is comparable to a Rule 20 motion requiring the moving party to show there is “no genuine issue requiring a trial.” See: Beaver Materials Handling Co. v. Hejna, 2005 CanLII 23127 (ON SC), [2005] O.J. 2733 at para 24.
[30] I must find either facts that require a trial or that the contract was not abandoned before December 7, 2017.
[31] The evidence in my view is overwhelming that this contract was over by the last week of November 2017. It was certainly over by December 2, 2017 when the plaintiff Mr. Mills left with the blue prints after the police were called and before they arrived. He could have no other thought then but the contract was over knowing the police had been called to remove him from the property.
[32] The removal of the portable washroom on December 2, 2017 was further evidence that the plaintiff considered the contract at an end. The fact that the claim was registered as early as January 12, 2018 is further proof the plaintiff knew the contract was over and it would be guided by the timelines of the Act if it wished the proceed under the Act.
[33] The statement of claim filed by the plaintiff stated that it believed the last day of work by the plaintiff under the contract was December 9, 2017. There is absolutely no evidence before the court to indicate any work whatsoever was done by the plaintiff, or any sub-trades under its direction, after December 2, 2017.
[34] I am satisfied that the record is clear that no further work by the plaintiff took place after December 2, 2017 and Mr. Mills, for the plaintiff, could have had no illusions after that date that his services were terminated. His actions of removing the blueprints and the portable washroom on that date is further proof of his intentions. Mr. Mills also would have observed his former sub-trade Mr. Schmoll working on the property on December 2, 2017. Clearly Mr. Schmoll was not working for the plaintiff at that point. I accept the evidence of the defendants that by then, Mr. Schmoll had been hired independently by them. The plaintiff argues that there are triable issues surrounding when the contract was abandoned and as such this motion should be dismissed.
[35] The plaintiff alleges that it had prepaid Mr. Schmoll to finish work on the defendants’ property and instructed him to do so after December 2, 2017. It further alleges Mr. Schmoll was paid funds on December 7, 2017 for gas, and again instructed the complete the work by December 9, 2017.
[36] I find these allegations in Mr. Mills’ affidavit unconvincing. The evidence of the defendants is that Schmoll on December 2, 2017 was indeed working on their property but for them and not the plaintiff. There is certainly no evidence by the plaintiff that Schmoll did any work on the property after December 2, 2017, and the defendants confirm he did not. Further, the fact that the plaintiff offered Schmoll gas money on December 7, 2017 indicates he had not been back to the property. The evidence that I accept is that he did not go back to the property at any time after December 2, 2017.
[37] Significantly the plaintiff has led no evidence by Mr. Schmoll as to who he was working for on December 2, 2017 and certainly there is no evidence from him of any instructions being received from Mills about attending the property after December 2, 2017 on behalf of the plaintiff. I would have expected such evidence if it was favourable to the plaintiff on this issue.
CONCLUSION:
[38] The evidence on the record before me is clear that this contract was abandoned at the latest on December 2, 2017. I am satisfied that I have all the facts needed to make that determination. There is therefore no genuine issue for trial and the certificate of action registered again the property will be vacated, the funds posted as security will be returned to the defendants and this matter will proceed under the ordinary rules to trial.
[39] Counsel provided me with draft bills of costs at the end of their submissions and agreed that costs should follow the result.
[40] The bills of costs are virtually identical for each party for costs on a partial indemnity basis at approximately $4000.00 with taxes and disbursements. Clearly that is what the unsuccessful party would have expected to pay. I conclude that is a fair and reasonable amount.
[41] I set costs at $4000.00 inclusive of H.S.T. and disbursements payable by the plaintiff to the defendants Mr. and Mrs. Dewling in 45 days.
ARRELL, J.
Released: June 6, 2018
COURT FILE NO.: CV-18-6
DATE: June 6, 2018
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GEM IN NIAGARA HOMES INC.
Plaintiff
- and -
KIMBERLY DAWN DEWLING, WILLIAM EDWARD DEWLING, and BLACK ROSE FINANCIAL SERVICES INC.
Defendant
REASONS FOR JUDGMENT
HSA
Released: June 6, 2018