Court File and Parties

COURT FILE NO.: CV-16-556982 DATE: September 14, 2018

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Vestacon Limited v ARC Productions Ltd. and 1302207 Ontario Limited cob as Allied Properties AND RE: Plan Group Inc. v 1302207 Ontario Limited cob as Allied Properties REIT, 364 Richmond Street West Inc. cob as Allied Properties REIT, Arc Productions Ltd., Deloitte Restructuring Inc. in its capacity as Receiver of Arc Productions Ltd. and Vestacon Limited (court file CV-16-559916)

BEFORE: Master C. Albert

COUNSEL: J. Margie and A. Lee, for Vestacon on motions #1 and #2; fax: 416-368-3467 K. Eccleston and S. Clark for Vestacon on motion #3, fax: 416-504-2722 C. Raphael and M. Spence for 1302207 Ontario Limited and 364 Richmond Street West Inc.; fax: 416-863-1515 M. Round and N. Kharouba for Plan Group on motion #4; fax: 416-364-7813

Reasons for Decision, 4 Motions

A. Overview

[1] Lien claimant Vestacon Limited (“Vestacon”) claims $1,990,602.49 for construction services and materials supplied as general contractor to improve tenanted premises owned by 1302207 Ontario Limited (“Peter Co.”) and by 364 Richmond Street West Inc. (“Richmond Co.”) and leased to Arc Productions Limited (“Arc”).

[2] Vestacon registered a claim for lien on June 6, 2016 and perfected its lien by registering a certificate of action on July 19, 2016. The lien is registered only against PIN 21412-0315 LT, the PIN that corresponds to municipal address 134 Peter Street and registered to Peter Co. as owner. Vestacon’s lien claim is not registered against PINS 21412-0004 LT and 21412-0313 LT, the PINS that correspond to the municipal address for 364 Richmond Street West and registered to Richmond Co. as owner.

[3] Plan Group Inc. ("Plan Group") supplied electrical services and materials as a subcontractor to Vestacon. On August 9, 2016 Plan Group registered a claim for lien for $841,383.13 as instrument AT4304518 for the supply of electrical services and materials from November 10, 2015 to June 25, 2016. The Plan Group lien claim is registered against PINS 21412-0315 LT and 21412 – 0313 LT, and identifies Peter Co., Richmond Co. and Arc Productions Ltd. as owners. Plan Group registered a certificate of action on September 13, 2016 as instrument AT4339916.

[4] Both Plan Group and Vestacon assert that three certificates of substantial performance (“CSP”s) published in the Daily Commercial News are invalid and that the lien claim period began later than the last of the three publication dates.

[5] Vestacon claims that the CSPs should be declared invalid because (i) Vestacon as contractor did not apply for the first and second CSP's, (ii) the actual dates of substantial performance were later than the dates specified in the CSP's and (iii) the CSP’s are technically deficient.

[6] The project is complicated. Originally two separate buildings, Allied Properties REIT (“Allied”), as developer, linked the two buildings with a multi-storey atrium and built a 12-storey tower atop one of them. Arc leased premises in both buildings.

[7] Arc, the party that contracted with Vestacon, declared bankruptcy in January 2017 [^1]. Vestacon's only potential source of recovery is the property owner provided Vestacon’s lien claim was properly preserved and perfected. Similarly, as a subcontractor, Plan Group's claim against the owner depends on whether its lien claim is valid. In an effort to prove that their lien claims are timely, the lien claimants seek to declare all three CSP’s invalid, or in the case of Vestacon, alternatively declare the first two CSP's invalid, and again in the case of Vestacon calculate the commencement of the lien claim period from the date the contract was completed and in the case of Plan Group calculate the commencement of the lien claim period from the date of last supply of services and materials. Peter Co. and Richmond Co., as owners, challenge the section 19 notices to landlord and also seek to have the liens of both Vestacon and Plan Group declared invalid as expired.

[8] Both Vestacon and Plan Group issued statements of claim naming Arc as a defendant but as a bankrupt Arc is not participating in these proceedings.

[9] The four motions that were heard together claim the following relief:

(a) Motion #1: Peter Co. asks the court to declare Vestacon’s lien claim expired and dismiss action CV-16-556982 as against Peter Co.

(b) Motion #2: As a corollary to motion #1, Vestacon asks the court (i) to declare that Vestacon’s claim for lien was registered in time; (ii) to declare all three CSP’s, or alternatively the first two CSP's, invalid; and (iii) to grant leave to add Richmond Co. as a defendant to Vestacon’s action and amend the statement of claim accordingly.

(c) Motion #3: Vestacon, as lien claimant, asks the court to find that it served a proper notice on the landlord/owner pursuant to section 19 of the Construction Lien Act, R.S.O. 1990, c.C.30 (the “Act”). Because Arc is bankrupt Vestacon’s claim against the owner is predicated on serving a proper section 19 notice and the absence of the owner serving a Form 3 notice denying responsibility.

(d) Motion #4: Peter Co. and Richmond Co. ask the court (i) to declare Plan Group’s lien claim expired, and (ii) to dismiss action CV-16-559916.

[10] To the extent that leave pursuant to section 67 of the Act is required to bring any of these motions, leave is granted. I find that both tests are met: the motions are necessary and raise issues that, upon determination, are likely to expedite resolution of the issues in dispute.

B. Background

[11] Peter Co. is the registered owner of 134 Peter Street. Richmond Co. is the registered owner of 364 Richmond Street. The two registered owners are single purpose nominee corporations formed solely to hold title to the properties. Allied is the parent company of both of these owners (See Appendix “I”).

[12] Arc, as tenant, entered into two leases, one with Peter Co. as its landlord for floors 2, 3 and 4 at 134 Peter Street and one with Richmond Co. for floors 1, 2, 3 and 4 at 364 Richmond Street West. Peter Co. registered a notice of lease on October 20, 2015 as instrument AT4041180 against PIN 21412-0315 LT, the PIN for 134 Peter Street. Richmond Co. registered a notice of lease on October 27, 2015 as instrument AT4048050 against PINS 21412-0004 LT and 21412-0313 LT, the PINS for 364 Richmond Street West. Prior to entering into these leases Arc had been a tenant of Allied at another of its properties.

[13] Allied owns multiple properties, generally taking title by way of a sole purpose nominee corporation. Allied PM is Allied’s property management team and, for purposes of the Vestacon project, its authorized agent. Neither Peter Co. nor Richmond Co. have bank accounts or in any way manage or operate the properties to which they hold title.

[14] On or about July 24, 2015 Vestacon and Arc entered into a CCDC 5B construction contract for Vestacon to carry out leasehold improvements at the property that is described in the contract as “134 Peter Street and 364 Richmond Street West”, described with particularity at article A-3 of the contract as “new facilities to be located in a combination of 134 Peter Street (Levels 2, 3 and 4) and 364 Richmond Street West (Levels 1, 2, 3 and 4) in Toronto”.

[15] The premises is in a newly developed project called the Queen Richmond Centre West (referred to as “QRC West”). It is made up of the original two low-rise historic buildings (municipal addresses 134 Peter Street and 364 Richmond Street West) linked by a newly constructed atrium. A new 12-storey tower was built atop 134 Peter Street.

[16] Prior to construction Allied provided a construction manual to Vestacon for the entire project. The construction manual set out the standards to be applied to the entire construction contract, including procedures, practices, rules and regulations, and specified the landlord’s contact person for specific tasks or projects. Four individuals were listed as the Allied contact team, with contact information provided, including email, phone and fax information. Two of the individuals identified were Alicia Scott, Property Manager and Elson McCalla, Facilities Manager.

[17] The construction manual provided that it was a requirement for Vestacon to submit a “Form 3” notice, signed. A Form 3 notice under the Act is a “landlord’s notice to contractor”, served in response to a section 19 notice (Form 2) from a tenant’s contractor. A Form 3 notice is a landlord’s notification to a contractor that the landlord denies responsibility for payment for leasehold improvements carried out pursuant to a contract between a tenant and a contractor.

[18] On November 30, 2015 Vestacon delivered a package of startup documents to Allied by email. Also on November 30, 2015 Vestacon began work on levels 2, 3 and 4 at 134 Peter Street. The package of start-up documents was made up of a covering email and a multi-paged attachment. The covering email, dated November 30, 2015, is from Marc Alarcon of Vestacon to Alicia Scott, Property Manager and Elson McCalla, Facilities Manager, both named in Allied’s construction manual as contacts for Allied. The email reads:

“As per your Construction Manual, please find the start-up documents regarding Arc Productions project at 134 Peter Street, floors 2, 3, 4 & 364 Richmond St. West, floors 1, 2, 3, 4:

13 items are listed including:

5. Notice to Landlord – 134 Peter St.
6. Notice to Landlord – 344 Richmond St. W”

[19] The actual notices that were included in the email package of start-up documents contain the following wording [^2]:

NOTICE TO LANDLORD UNDER SUBSECTION 19(1) OF THE ACT

CONSTRUCTION LIEN ACT

To: Allied Properties REIT, the landlord of 134 Peter Street

From: Vestacon Limited, a contractor, who has entered into a contract with your tenant, Arc Productions Ltd., to supply services and materials to make the following improvement to the above named premises: Interior renovation of existing office space (Tenant Build-out).

This contract was entered into on contract pending signatures (date)

A. You may inspect a copy of this contract at Vestacon’s office between the hours of Appointment only and every Monday to Friday.

Date: November 17, 2015

Vestacon Limited

4211 Yonge Street, Suite 301

Toronto, ON M2P) 2A9

Warning: Subsection 19(1) of the Construction Lien Act provides as follows (s.19(1) is recited)

[20] Vestacon included the same notice for 364 Richmond Street, changed only as to the address.

[21] X-Design Inc. (“X-Design”) was Arc’s consultant and payment certifier. On March 9, 2016 Vestacon received a CSP from X-Design and caused it to be published in the Daily Commercial News, certifying that the services and materials supplied by Vestacon in respect of the improvement at floors 2, 3 and 4 of 134 Peter Street had been substantially performed as of February 23, 2016 (“CSP #1”). Vestacon had not applied to X-Design for CSP #1 for 134 Peter Street. Vestacon asserts that X-Design issued the CSP for the purpose of Arc’s occupancy prior to completion of the contract. Vestacon wanted to be able to rely on February 23, 2016 as the cut-off date for identifying any construction deficiencies so that it would not be liable for damage caused by Arc’s occupancy prior to completion of the contract.

[22] Vestacon asserts that CSP #1 is invalid because Vestacon did not apply for it, notwithstanding that Vestacon sent CSP #1 to the Daily Commercial News for publication. There is no evidence that X-Design performed the statutory calculation prescribed by subsection 2(1) of the Act to determine whether Vestacon’s contract work met the statutory test for substantial performance. The evidence suggests the contrary: the report of Nexus, Arc’s project manager, shows that as of February 29, 2016 the contract work was only 75 percent complete. Vestacon also challenges the validity of CSP #1 because of omissions in its content.

[23] On April 21, 2016 Vestacon received a second CSP from Arc’s consultant X-Design and caused it to be published in the Daily Commercial News, certifying that the services and materials supplied in respect of the improvement at floors 1, 2, 3 and 4 of 364 Richmond Street West had been substantially performed as of April 21, 2016 (“CSP #2). Vestacon had not applied to X-Design for a CSP for 364 Richmond Street West. Vestacon asserts that CSP #2 is invalid because it did not apply for it notwithstanding that Vestacon sent CSP #2 to the Daily Commercial News for publication. Vestacon also challenges the validity of CSP #2 because of deficeincies in its content.

[24] X-Design issued a third CSP certifying that the services and materials supplied in respect of the improvement at both 134 Peter Street and 364 Richmond Street West had been substantially performed as of April 15, 2016 (“CSP #3”). Vestacon caused CSP #3 to be published in the Daily Commercial News on April 22, 2016. In this case Vestacon had asked X-Design to issue CSP #3 certifying substantial performance of the entire contract. However, on these motions both Vestacon and Plan Group argue that CSP #3 is invalid based on deficiencies in its content.

[25] Throughout this period Arc’s project manager Nexus documented the status of the project as a single contract for work at both 134 Peter Street and 364 Richmond Street West.

[26] Vestacon did not apply for release of holdback until June 6, 2016, when it applied for release of holdback for the entire contract. Also on June 6, 2016 Vestacon registered its claim for lien against PIN 21412-0315LT, the property registered to owner Peter Co. and identified municipally as 134 Peter Street. Vestacon did not register its lien claim against PINS 21412-0004 LT and 21412 – 0313 LT, the lands registered to owner Richmond Co.

[27] On August 9, 2016 Plan Group registered its claim for lien for $841,383.13 as instrument AT4304518 claiming a lien and payment for the supply of electrical services and materials from November 10, 2015 to June 25, 2016. The Plan Group lien claim is registered against PINS 21412-0315 LT and 21412 – 0313 LT, the PINS that identify the properties registered to owners Peter Co. and Richmond Co. and identified municipally as 134 Peter Street and 364 Richmond Street West. Plan Group registered a certificate of action on September 13, 2016 as instrument AT4339916. The Plan Group lien claim is not registered against PIN 21412-0004 LT, being one of the two PINS for the lands at 364 Richmond Street West.

C. Issues

[28] Regarding motion #3, the court must determine whether the notices that Vestacon relies on as the section 19 “notices to landlord” are valid notices given in accordance with the Act. If so, then the issues raised in motions 1 and 2 must be decided. The analysis that follows begins with motion #3, followed by motions #1 and #2 together, and then concludes with motion #4.

[29] The issue on motion #3 is whether notices given by email to the owner’s agent and included in a bundle of start-up documents were given properly and if so, whether they are proper notices to the landlord by a contractor of an intention to hold the landlord liable to pay for a tenant’s renovations.

[30] If proper notice was given the next issue, as posed in motions #1 and #2, is whether Vestacon’s lien claim was registered within the prescribed period. This requires the court to determine when the lien claim period commenced, which in turn requires the court to consider the validity of the three CSP’s.

[31] If Vestacon’s lien claim was preserved in time, the next question is whether its lien claim, registered only against the PIN for 134 Peter Street (PIN 21412-0315 LT), also encumbers 364 Richmond Street West, registered to a different but related owner and legally described by different PINs. The issue turns on whether the 364 Richmond Street lands are “lands appurtenant to 134 Peter Street”. Richmond Co. argues that Vestacon is attempting to bootstrap an expired lien claim in respect of 364 Richmond Street West onto the back of the lien claim for 134 Peter Street.

[32] If the court finds that the Vestacon lien claim extends to 364 Richmond Street West as lands enjoyed with 134 Peter Street, then the issue is whether it is appropriate to grant leave to Vestacon to amend its claim and add Richmond Co. as a defendant.

[33] Regarding motion #4, both Peter Co. and Richmond Co. assert that Plan Group’s claim for lien was not preserved in time, relying on the same argument as in motions #1 and #2. The issue is whether Plan Group’s August 9, 2016 claim for lien was registered within 45 days of publication of a valid CSP or, alternatively, if none of the CSP’s are valid, whether the Plan Group lien claim was registered within 45 days of the date of the last supply of services and materials.

D. Analysis

a. Motion #3: Did Vestacon properly serve valid section 19 notices?

[34] Vestacon asks the court to declare that the notices it relies on as section 19 notices are valid notices properly served such that Peter Co and Richmond Co. are liable, as landlords, to Vestacon as supplier of construction services and materials. Validity turns on whether Vestacon served the notices properly, named the proper party as landlord and provided sufficient information in the section 19 notices.

[35] The purpose of a section 19 notice under the Act is for a contractor to put the registered owner on notice that the contractor will be supplying services and materials to improve the owner’s building at the request of a tenant, and in the event that the tenant fails to pay the contractor will claim payment from the registered owner. The registered owner has 15 days to give notice to the contractor denying liability for payment to the tenant’s contractor.

[36] If the registered owner denies liability then a contractor can decide whether or not to proceed with the tenant’s project, knowing that there would be no lien rights against the landlord if the tenant fails to pay for the services and materials supplied.

[37] Section 87 of the Act provides that all notices required to be given or that may be given under the Act may be served in the manner permitted by the rules of court or, alternatively, by certified or registered mail. One issue raised in motion #3 is whether the section 19 notices given by Vestacon to the landlord by email were given in compliance with the Act.

[38] The rules of court provide at rule 16 that only an originating process must be served personally or by an alternative to personal service. A section 19 notice is not an originating process and need not be served personally or by an alternative to personal service.

[39] The rules prescribe acceptable methods of serving documents that need not be served personally or by an alternative to personal service. Rule 16.01(4)(b)(iv) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that if the parties consent (or a court orders), then a document may be given by email. The issue is whether the parties in this case consented to the giving of documents by email.

[40] Vestacon relies on the Construction Manual, sections 1.1 and 1.2, as providing Allied’s consent, on its own behalf and on behalf of its nominee corporations Peter Co. and Richmond Co., to deliver documents by email. On that basis Vestacon argues that the section 19 notices were properly delivered by email to Alicia Scott as authorized agent of Peter Co. and Richmond Co.

[41] Allied, Peter Co. and Richmond Co. argue that the notices should have been served on Peter Co. and Richmond Co. rather than on Allied. Vestacon argues in response that the leases identify Allied as the proper party for service. I accept Vestacon’s evidence and argument that the section 19 notices served on Allied constitute service on Peter Co. and Richmond Co.

[42] Peter Co. and Richmond Co. are wholly owned by Allied. Neither Peter Co. nor Richmond Co. have any employees or bank accounts. Allied acted as agent for Peter Co. and Richmond Co. in all materials respects. The business address for Peter Co., Richmond Co. and Allied is the same.

[43] Allied has a complex organizational structure. As argued by Vestacon, that structure is not easily ascertainable or readily apparent to a contractor seeking to give notice under the Act. I reject Vestacon’s characterization of the corporate structure as a “corporate shell game” and prefer to characterize it as a corporate structure created to take best advantage of corporate and other opportunities. However, the complex structure should not be available to nominee corporations sheltering under Allied to defeat the rights of lien claimants on technicalities.

[44] Allied, by providing email addresses in the construction manual, implicitly consented and expected Vestacon to communicate via email. I find that Allied consented to email delivery of documents, including notices.

[45] The evidence of Vestacon’s senior project manager Ryan Ogg is that Vestacon had provided construction services to Allied on at least three other projects in the past and in all cases email had been used and accepted as appropriate for serving a Form 2 notice.

[46] I conclude that Peter Co. and Richmond Co. are nominee corporations directly controlled by Allied and that section 19 notices given to Allied are notices given to Peter Co. and Richmond Co. I find that the section 19 notices given by email on November 30, 2015 were given to Allied’s authorized agent and as such the notices were given to the proper party as required by the Act. The landlord had until December 15, 2015 to deliver a Form 3 response denying liability.

[47] It is not in dispute that Allied did not serve Form 3 notices denying liability in response to Vestacon’s section 19 notices. I find and conclude that Vestacon properly served section 19 notices and that the landlord did not serve the statutory notice required to avoid liability.

[48] The next issue is whether the section 19 notices were proper notices. There is a multi-prong test to determine whether a section 19 notice is valid (See: Industrial Refrigerated Systems Inc. v Quality Meat Packers Limited, 2015 ONSC 4545 [^3] et al at para 4):

(a) The notice must be in writing. In this case it was.

(b) The notice must notify the owner of potential liability and the timeframe within which to deny liability. In this case the notices complied.

(c) The notice cannot be buried in a document delivered for some other purpose [^4]. In this case the two section 19 notices were included in a package of start-up documents, with a covering email that specifically listed and identified the notices.

(d) The notice must be given before the contractor begins work. In this case the notices were given on November 30, 2015 and work started the same day. I find that this criteria is met even if only by a part of a day.

[49] The real issue is whether a reasonable landlord, in this case Allied, would know that its interest in the property could be subject to a contractor’s lien claim. Allied, through its property management team and project management team, was involved in the leasehold improvement project from the outset. Allied knew or ought to have known that its interest could be subject to a contractor’s lien claim.

[50] The problem in this case arose because Allied’s property management team did not understand the significance of receiving a Form 2 notice. Laura Trujillo, a vice-president of Allied Properties REIT and an employee of Allied PM, admitted that Allied’s employees were not trained regarding section 19 notices.

[51] Peter Co. argues that Vestacon failed to draw the section 19 notices to Allied’s attention and as a result the Allied property managers who received the notices did not appreciate their significance and did not respond. The test is not a subjective one that requires the court to assess the state of mind and knowledge of the party receiving the notice. Rather, the test is objective: was the notice served as required by the Act?

[52] Vestacon relies on the decision of Master Wiebe in Trenchline Construction Inc. v Unimac-United Management Corp., 2016 ONSC 6136 [^5], and argues that by analogy section 19 notices should be treated informally in the same manner as written notices of lien under section 24 of the Act. Section 24 applies to notices given to a payor. If given in accordance with the Act then the payor is required to retain more than the 10 percent statutory holdback amount. I agree that the analogy applies.

[53] Peter Co. argues that a section 19 notice cannot be buried or overshadowed in a document delivered for some other purpose, and that determination is a question of fact: 1276761 Ontario Ltd. v 2748355 Canada Inc., 2006 CarswellOnt 5392 [^6]. I agree. In this case the covering email specifically listed as items 5 and 6 out of 13 items delivered in the attachment to the email:

“5. Notice to Landlord – 134 Peter St.” “6. Notice to Landlord – 344 Richmond St. W”

[54] I find that on the facts of this case the section 19 notices were not buried or overshadowed in a document delivered for some other purpose.

[55] Peter Co. argues that Allied specifically denied liability for the cost of tenant improvements in the construction manual at pages 212 and 222. The manual provides at page 212 that all such work shall be at the sole cost of the tenant and at page 222 that the tenant must clear title of all lien claims. I do not accept that these provisions in the construction manual preemptively constitute compliance with a landlord’s obligation to deliver a Form 3 notice to avoid lien liability to a tenant’s contractor if the contractor has given a Form 2 notice to the landlord.

[56] The next issue is whether Vestacon named the proper party as landlord. Peter Co. argues that the section 19 notices are invalid because they name the wrong entity as landlord or because they lack sufficient information. The notices read:

“To: Allied Properties REIT, the landlord of 134 Peter Street” and “To: Allied Properties REIT, the landlord of 364 Richmond Street West”

[57] For reasons already explained, I find that Peter Co. and Richmond Co. are nominee corporations created for the sole purpose of holding title to the properties. Allied is the parent company and the party named in the lease document with Arc as the party to be given notices. Naming “Allied Properties REIT” as the party to whom the section 19 notices are given is not fatal to the validity of the notices.

[58] The next issue regarding the section 19 notices is whether the content of the notices was sufficient. There are three concerns: (i) the section 19 notices do not identify the construction contract by date but rather they refer to a contract that had not yet been signed; (ii) the description of the work is sparse, described as “Interior renovation of existing office space (Tenant Build-out)” and (iii) the notices do not specify a time for the landlord to attend and inspect the construction contracts but rather specify that an appointment may be made.

[59] The purpose of the section 19 notice is to inform a landlord that a contractor is about to begin a construction project for a tenant and if the tenant fails to pay then the contractor will hold the landlord responsible for payment. Allied was directly involved in the tenant improvements referred to in the section 19 notices. Allied specified how the project was to be carried out and, in their construction manual, Allied listed multiple obligations to which the contractor was required to adhere. I am satisfied that Allied was fully informed as to the nature of the construction project and the tenant improvements that Vestacon was about to undertake for Arc as tenant of the premises.

[60] I conclude that the section 19 notices in this case provided sufficient information to meet the intent and purpose of a section 19 notice under the Act.

[61] For all of these reasons I conclude that Vestacon delivered proper section 19 notices to Peter Co. and Richmond Co. and that responding Form 2 notices denying liability by the landlord were not given to Vestacon.

b. Motions #1 and #2: Did Vestacon preserve its claim for lien in time?

[62] It is well settled law that a motion pursuant to section 47 of the Act to declare a construction lien expired or to otherwise summarily dismiss an action to enforce a lien claim is akin to a motion for summary judgment.

[63] Summary judgment is appropriate where it will allow for a fair and just determination of the issue in dispute without a trial [^7]. The parties to such a motion are expected to lead their best evidence, to put their “best foot forward”, to “lead trump”, or risk failure [^8]. The party responding to such a motion must meet the onus of proving that there is a genuine issue for trial [^9].

[64] In Motion #1 Peter Co. asks the court to declare that Vestacon’s lien rights expired prior to June 6, 2016, the date on which Vestacon registered its $1,990,602.49 claim for lien, on the basis that the lien claim was registered more than 45 days after March 9, 2016, the publication date of CSP #1.

[65] Peter Co. further asks the court to dismiss Vestacon’s action as against Peter Co., there being no contractual relationship between Vestacon and Peter Co. If the lien claim expired prior to registration then in the absence of a direct contractual obligation to pay, the action as against Peter Co. must be dismissed summarily as there would be no genuine issue for trial.

[66] Vetsacon’s position is that it supplied services and materials under a single contract and any CSP published prior to substantial performance of the entire contract is void, subject to the exception in subsection 2(2) of the Act, discussed later in these reasons. Vestacon argues that subsection 2(2) does not apply because the 364 Richmond Street West portion of the project was not incapable of being completed expeditiously, but rather its completion was accelerated by reason of Change Directive #1 (“CD1”). Subsection 2(2) of the Act is for the benefit of a contractor seeking early release of holdback when a portion of the contract work cannot be completed expeditiously. That was not the case here.

[67] In Motion #2 Vestacon asks the court to declare that its claim for lien was registered in time, relying on either CSP #3 published on April 22, 2016 as the commencement of the 45 day period within which to register a claim for lien, alternatively relying on the actual completion of the contract, achieved on June 6, 2016 if all three CSP’s are declared invalid. For Vestacon to succeed on the first ground, the court would have to find that CSP’s #1 and #2 are invalid. To succeed on the alternative ground, the court would have to find that all three CSP’s are invalid and that actual contract completion was on or after April 22, 2016.

[68] CSP #1 was published on March 9, 2016, certifying that the contract had been substantially performed as of February 23, 2016, that date coinciding with occupancy of 134 Peter Street. However, the Nexus report shows that as of that date the contract was only 75 percent complete.

[69] “Contract” is a defined term. The contract in this case is between Arc and Vestacon. It is a single contract for the improvement to floors 2, 3 and 4 at 134 Peter Street and floors 1, 2, 3 and 4 at 364 Richmond Street West. It is not two separate contracts. However, for purposes of signing CSP’s, X-Design appears to have treated the contract as two separate contracts, one for the work carried out at 134 Peter Street and a separate contract for the work carried out at 364 Richmond Street West. On that basis X-Design issued separate CSP’s.

[70] The Act defines substantial performance in section 2. It specifies that a contract is substantially performed when it is ready for use or when it is being used for the purpose for which it is intended and, if not 100 percent complete, substantial performance is reached when the cost to complete the contract work is below a threshold amount calculated by applying the statutory formula.

[71] Subsection 2(1)(b) of the Act sets out the formula to calculate whether substantial performance of a contract has been achieved. It provides:

“(1) For the purposes of this Act, a contract is substantially performed,

(a) When the improvement to be made under that contract or a substantial part thereof is ready for use or is being used for the purpose intended; and

(b) When the improvement to be made under that contract is capable of completion or, where there is a known defect, correction, at a cost of not more than,

(i) 3 per cent of the first $500,000 of the contract price,

(ii) 2 per cent of the next $500,000 of the contract price, and

(iii) 1 per cent of the balance of the contract price.

[72] When CSP#1 was published the threshold as calculated by applying the statutory formula had not been reached.

[73] According to the March 1, 2016 payment certificate the contract price was $3,591,516.10 plus HST, and the value attached to the contract work remaining to be completed was $799,828.62 plus HST. Attaching quantifications to the statutory formula, substantial performance would require that the value of contract work remaining to be completed not exceed an amount that is less than $100,000.00. The evidence filed shows that the actual value of contract work completed after publication of CSP#1 was $1,334,183.74 plus HST. It is clear that the monetary test for substantial performance of the contract had not been achieved when CSP#1 was certified by X-Design and then published.

[74] X-Design made a serious mistake by treating the Vestacon-Arc contract as if it were two separate contracts. X-Design issued CSP#1 prematurely, before the contract had been substantially performed.

[75] Vestacon asserts that CSP#1 was published in error and relies on the evidence of Ryan Ogg, senior project manager for Vestacon, at paragraph 30 of his affidavit:

“However, one hour before Mr. Alarcon forwarded the email chain to Mr. Baerveldt, Mr. Baerveldt, had apparently sent the Peter Street CSP to the Daily Commercial News to be published”.

[76] Vestacon also relies on an email from Mr. Van Kessel, President of Nexus, Arc’s project manager, to X-Design’s Ms Ross, questioning whether a CSP for 134 Peter Street could be separated from the CSP for 364 Richmond Street West.

[77] Neither party lead evidence from X-Design regarding the statutory formula or any of the CSP’s. Nor is there any evidence that Vestacon or X-Design took steps to publish a retraction of CSP #1. However, whether or not CSP #1 was published in error is not the issue. The issue is whether, as a matter of law, CSP #1 is invalid because the contract had not been substantially performed when X-Design certified substantial performance, the consultant having considered only one portion of the contract work without taking into account the remaining contract work.

[78] Peter Co. relies on subsection 2(2) of the Act which contemplates that a single contract may provide for more than one improvement and that the distinct improvements may be certified as substantially performed separately. Subsection 2(2) provides that:

“where a substantial part of an improvement is ready for use or is being used for the purposes intended and the remainder of the improvement cannot be completed expeditiously for reasons beyond the control of the contractor, or where the owner and the contractor agree not to complete the improvement expeditiously, the incomplete portion may be hived off from the contract price to determine substantial performance.” Emphasis added

[79] The purpose of section 2(2) of the Act is to expedite release of holdback in extraordinary cases where completion of a contract is delayed beyond the control of the contractor seeking release of holdback. In that event, if the portion of the contract that has been completed can be severed, then a CSP for the completed portion of the contract may be issued and published. If subsection 2(2) of the Act is invoked the total contract price would be reduced by the portion of the contract that cannot be completed expeditiously and then the test for substantial performance would be applied to the balance. (See: Soo Mill & Lumber C0. V JJ’s Hospitality Ltd., 1993 CarswellOnt 814 [^10]). However, in the absence of consent of the contracting parties or an inability to complete the contract expeditiously, section 2(2) does not apply.

[80] 134 Peter Street was complete and ready for occupancy by February 23, 2016. 364 Richmond Street West was not. The contract provides a single contract price but separate construction schedules, with different start dates and completion dates. The parties agreed that 134 Peter Street would start first and be completed first and that 364 Richmond Street would follow. The completion date for the 364 Richmond Street West component of the contract work was extended by 32 days from February 29, 2016 to April 1, 2016, shortly beyond the completion and occupancy dates for 134 Peter Street and only 22 days after publication of CSP#1.

[81] The issue is whether the “remainder of the improvement”, being the 364 Richmond Street West portion, was incapable of being completed expeditiously for reasons beyond Vestacon’s control.

[82] Peter Co. relies on CD1 as evidence that the two addresses must be treated separately for purposes of the determining the validity of the CSPs. CD1 was issued by Jillian Ross of X-Design on January 26, 2016 and provides as follows:

“The following are changes to the construction contract….”

Description of changes

1. In accordance with the provisions of Clause GC 6.3-Change Directive of the Contract, you are hereby directed to proceed immediately with all measures necessary to ensure Substantial Performance of the work on the 364 Richmond Street West component of the Project s achieved by April 1, 2016.

2. This direction is provided in the context of a defined delay in construction activities resultant from delays in completion of the base building work and Landlord’s Work that have deferred the full start of site activities from the agreed November 9, 2015 date until January 8, 2016.

3. The principle method of work acceleration shall be via deployment of additional trade work crews to the site. Emphasis added

4. Following final resolution of all related costs associated with implementation of this Change Directive, a change order will be issued to amend the Contract Amount.”

[83] CD1 was issued because delay in the landlord’s work delayed Vestacon’s ability to complete Arc’s tenant improvements to 364 Richmond Street by the original completion date. It provides for acceleration of Vestacon’s work by deploying additional work crews to complete the 364 Richmond Street West component of the work with a short delay of 32 days.

[84] Peter Co. relies on the decision of Justice Loukidelis in Bob Dionisi & Sons Ltd. v F.J. Davey Home for the Aged, 1992 CarswellOnt 855 [^11] for the proposition that a staged contract can be severed for the purpose of declaring substantial performance of the various stages of work. I find that the Bob Dionisi case is distinguishable from the present case. In Bob Dionisi the project was contractually staged. The nursing home was to be improved by building a new wing called the G Wing and renovating several of the existing wings, with the residents to be moved from wing to wing as the work progressed. The contract provided for three component prices, one for each of the stages, plus a contingency allowance. G Wing was completed and the residents were moved into it. The stages of the work subsequent to G Wing would take well over a year to complete. The contractor applied for substantial performance of G Wing so that holdback could be released.

[85] In contrast, the contract between Vestacon and Arc provides a single contract price. Vestacon issued invoices without separating the project by address. The second of the two building addresses was to be completed within a month of the first, unlike the delay in the Bob Dionisi case where the subsequent stages would not be completed for well over a year after completion of G Wing. I find that the Bob Dionisi case is distinguishable on its facts and does not apply.

[86] Unlike the owner and the contractor in the Bob Dionisi case, there is no evidence that Arc and Vestacon agreed that the contract would not be completed expeditiously. In fact, CD1 accelerates rather than delays completion.

[87] Because the contract work at both 134 Peter Street and 364 Richmond Street West was carried out pursuant to a single contract, CSP #1 was premature and must be declared invalid unless the exception in subsection 2(2) of the Act applies.

[88] Applying subsection 2(2) of the Act, I find that the reason for delay was beyond the contractor’s control. However, I do not find that the length of the delay constitutes an inability to complete the contract work expeditiously.

[89] Regarding the alternative test for applying section 2(2) of the Act, there is no evidence of an agreement between Arc and Vestacon to treat 134 Peter Street and 364 Richmond Street West separately for purposes of determining substantial performance.

[90] X-Design similarly issued CSP #2 for 364 Richmond Street West separately from 134 Peter Street. CSP#2 was published on April 21, 2016. Vestacon attempted unsuccessfully to retract it on the basis that Vestacon had not applied for CSP#2 and that it was invalid because it omitted the 134 Peter Street portion of the contract. Nevertheless it was published.

[91] For the reasons already expressed I find that subsection 2(2) of the Act does not apply: the contract cannot be severed for purposes of certifying substantial performance of the 364 Richmond Street West portion of the contract separately from the 134 Peter Street portion of the contract. There was no extraordinary delay and CD1 called for the acceleration of the contract such that the two components were completed within roughly a month of each other. X-Design improperly severed the contract for purposes of certifying substantial performance in CSP #1 and CSP #2.

[92] Vestacon then instructed X-Design to issue a CSP for the entire contract for the premises described as 134 Peter Street floors 2, 3 and 4 and 364 Richmond Street West, floors 1, 2, 3 and 4. In making this request Vestacon met the precondition in subsection 32(2) of the Act which requires that the contractor request the CSP for the contract. In response X-Design issued CSP #3 and Vestacon caused it to be published.

[93] It is important to keep in mind the rationale underlying the CSP procedure: it is to create certainty for the release of holdback and provide an outside date by which potential lien claimants must register lien claims that encumber the property. As stated by Justice Valin in Kappeler Masonry Corp v Winston Hall Nursing Homes Ltd., 2001 CarswellOnt 2730 [^12], contractors who ignore the publication of a CSP do so “at their peril”.

[94] CSP #3 pertains to the entire contract (134 Peter Street and 364 Richmond Street West) and was published on April 22, 2016. When CSP#3 was issued the completion stage of the contract met the statutory test for substantial performance. Vestacon applied for release of holdback on June 6, 2016, 45 days following the publication of CSP#3. Nevertheless, Vesatcon argues that CSP#3, too, was invalid on other grounds. Plan Group also argues in motion #4 that CSP#3 is invalid. For Vestacon’s purposes if CSP#3 is valid then its claim for lien was timely. For Plan Group if CSP#3 is valid then its lien claim expired.

[95] The court has been reluctant to declare a CSP invalid and thereby extend the lien claim period on technical grounds. In For-Con Construction Ltd. v 1120062 Ontario Inc., 1998 CarswellOnt 3644 [^13] Master Sandler refused to declare a CSP invalid on a technicality where the payment certifier had failed to provide a copy to the contractor as was required by the Act. (s.32(1)(4)). Master Sandler opined that his ruling protects the certificate system:

“ by not allowing a lien claimant who had the means available to register its liens in time, but did not, to invalidate a certificate and its publication on a technicality and thereby get an extension of the time to register its lien”.

[96] The For-Con case is distinguishable. In For-Con the payment certifier had not provided a copy of the certificate to the contractor. The certificate itself was not invalid. In the present case the payment certifier issued CSP #1 before the contract had been substantially performed. The certificate itself was erroneous and breached the requirements of the Act.

[97] I find that the CSP #1 is invalid because at the time of publication the contract had not been substantially performed and the contract could not be severed under subsection 2(2) of the Act for purposes of certifying substantial performance of a portion of the contract work.

[98] For the same reasons, CSP #2 issued by X-Design solely in respect of the 364 Richmond Street West portion of the contract, is invalid because that component of the work could not be separately certified. However, the issue is moot because the next day, on April 22, 2016, CSP #3 certifying the entire contract as substantially performed was published. The last day to register a lien claim in respect of the CSP #2 and CSP #3 is the same because 45 days after the April 21, 2016 publication date of CSP #2 was a Saturday thereby extending the 45-day registration period to the following Monday, June 6, 2016, the same deadline for registering a construction lien based on CSP #3.

[99] Subsection 32(2) prescribes the contents of a CSP. Vestacon argues that CSP#3 is invalid because the requirements of a CSP as prescribed by section 32 of the Act have not been met and the omissions cannot be cured by section 6 of the Act.

[100] However, Vestacon’s position is that all three CSPs are invalid because:

(i) the certificates identify and describe the lands only by municipal address and not by legal description, and

(ii) the contract had not been substantially performed by any of the publication dates of March 9, 2016, April 21, 2016 or April 22, 2016.

[101] As to the first argument, subsection 32(2)(e) of the Act requires a CSP to include “where the lien attaches to the premises, a concise description containing a reference to lot and plan or instrument registration number sufficient to identify the premises”. None of the CSP’s issued by X-Design contained such a description.

[102] Section 6 of the Act allows minor irregularities to be cured, including irregularities in certificates issued under subsection 32(2) of the Act:

“No certificate…is invalidated by reason only of a failure to comply strictly with subsection 32(2) …unless in the opinion of the court a person has been prejudiced thereby, and then only as to the prejudice suffered.”

[103] The irregularity in this case is that the CSP’s describe the premises solely by municipal address and floor number and not by legal description or instrument registration number. Peter Co. and Richmond Co. have not proven prejudice to either of them arising from the failure to include the legal description of the premises in the CSP’s. If anyone was prejudiced it was Vestacon: had the correct legal description been included in the CSP’s then Vestacon would have had the correct information as to the PIN’s against which to register its construction lien. Peter Co., Richmond Co. and Allied cannot rely on this irregularity to their benefit to invalidate the CSP’s.

[104] Vestacon claims prejudice by the failure to include a proper legal description in the CSP’s, relying on the decision of L. A. Legault Electric Ltd. v 951034 Ontario Inc., 1995 CarswellOnt 2737 [^14]. In that case Justice Morin found the CSP so defective as to be invalid. The CSP that was published in that case on November 26, 1992 omitted significant pieces of information that are required by subsection 32(2) of the Act and Form 6. One of the omitted pieces of information was the proper identification of the property. Justice Morin found that the absence of a “legal and concise description containing a reference to a lot and plan or instrument registration number sufficient to identify the premises” to be a significant and serious omission, and not a minor irregularity that could be cured by section 6 of the Act. He stated at paragraph 22 that “the integrity of the system with respect to certificates of this nature must be protected” and declared the CSP invalid. Similarly the omission of a proper legal description in CSP #1, CSP #2 and CSP #3 is serious. It is not a minor irregularity that can be cured by section 6 of the Act and the omission prejudiced Vestacon.

[105] As to Vestacon’s second argument, the evidence suggests that as of the April 22, 2016, publication date of CSP #3, the value of the work left to be completed and actually completed was $354,211.33 plus HST, an amount in excess of the monetary threshold prescribed by the formula in subsection 2(1)(b) of the Act. The consultant certified actual completion of the contract on June 6, 2016, with a contract value of $4,274,113.86 plus HST. Vestacon preserved its claim for lien the same day.

[106] I agree with Vesatcon on both issues and find that by reasons of the deficiencies in the content of the three CSP’s, all three of the CSP’s are invalid.

[107] In the absence of a valid CSP the 45 day period within which to register a claim for lien begins to run, in the case of a direct contractor (in contrast to a subcontractor) from the date the contract is completed (subsection 31(2)(b) of the Act). In this case the contract had been substantially performed but not completed as of April 22, 2018. The evidence shows that contract work continued through to June 2016. In any event, the contract completion date is clearly later than April 22, 2016. On that basis Vestacon preserved its claim for lien in time by registering its lien on June 6, 2016.

[108] All of the evidence required to determine whether Vestacon’s claim for lien expired was available to the parties on the motion. They filed ten volumes of evidence on motions #1 and #2. They also conducted cross-examinations. Peter Co.’s motion to declare the Vestacon claim for lien expired does not raise a genuine issue that requires a trial.

[109] I find that in respect of motion #1, Vestacon preserved its claim for lien within the time required by the Act. Peter Co.’s motion to declare the Vesatcon lien claim expired is dismissed.

c. Motions #2: Does Vestacon’s lien include 364 Richmond Street West?

[110] In Motion #2 Vestacon asks the court to declare that its claim for lien is valid as against 364 Richmond Street West and Richmond Co. and to grant leave to add Richmond Co. as a defendant to Vestacon’s action CV-16-556982.

[111] Unless the court finds that the lien claim extends to 364 Richmond Street West, the motion to add Richmond Co. as a defendant must fail because there would be no cause of action against Richmond Co. independent of the lien claim, there being no direct contract between the parties. To succeed Vestacon must prove that 134 Richmond Street West constitutes lands “enjoyed with” 134 Peter Street. The lien claim was not registered against the PIN for 364 Richmond Street West nor does it name Richmond Co. or Allied as owners or identify the municipal address for 364 Richmond Street West.

[112] In the “statements” portion of the registered claim for lien Vestacon claims [^15]:

Name and address of Owner: 1302207 ONTARIO LIMITED, 520 King Street West, Suite 300, Toronto, Ontario M5V 1L7 (as Landlord);

Name and address of person to whom lien claimant supplied services or materials ARC PRODUCTIONS (to leasehold interest only) 230 Richmond Street East, Toronto, Ontario M5A 1P4 (also as owner);

Time within which services or materials were supplied from 2015/11/30 to 2016/06/03

Short description of services or materials that have been supplied Interior Alterations;

Contract price or subcontract price $4,830,300.81 (Extras and HST inclusive)

Amount claimed as owing in respect of services or materials that have been supplied $1,990,602.49 (Extras and HST inclusive)

The lien claimant claims a lien against the interest of every person identified as an owner of the premises described in said PIN to this lien.

[113] Premises is defined in section 1 of the Act as follows:

“premises” includes,

(a) The improvement,

(b) All materials supplied to the improvement, and

(c) The land occupied by the improvement, or enjoyed therewith, or the land upon or in respect of which the improvement was done or made. Emphasis added

[114] The issue is whether 346 Richmond Street West constitutes "lands enjoyed" with 134 Peter Street. Vestacon relies on the following facts to answer the question in the affirmative:

(a) Allied, Peter Co. and Richmond Co. are related companies: Peter Co. and Richmond Co. share three officers and directors who are also president, chief executive officer, executive vice president and chief operating officer, and vice-president and chief financial officer of Allied.

(b) Throughout the development process Allied treated the two addresses as a single complex, describing the proposed new complex as a “16 storey development…with a five storey atrium linking two existing buildings”. The developer and the City of Toronto treated the two buildings as a single complex for planning and zoning purposes.

(c) At the planning stage, when the Toronto Committee of Adjustment denied certain variances, Allied appealed to the Ontario Municipal Board (“OMB”). In allowing the appeal and approving the proposal the OMB recognized that the plan called for the “amalgamation of two pieces of land with two buildings on them”, combining two lots and the existing buildings.

(d) Allied took title of 134 Peter Street and 364 Richmond Street West using nominee corporations formed solely for the purpose of taking title. Neither Peter Co. nor Richmond Co. have separate bank accounts. The project operates with shared common expenses paid for by Allied out of a common bank account.

(e) 134 Peter Street and 364 Richmond Street West were developed together and were and are marketed together as QRC West. During construction Allied attended construction meetings and was recorded in meeting minutes.

(f) The two buildings are physically adjacent and linked by an internal door in the atrium lobby available to be used by authorized occupants with access fobs, allowing them to access from one building from the other without exiting QRC West.

(g) 134 Peter Street and 364 Richmond Street West share mechanical and electrical systems. If Peter Co. turned off the electrical or mechanical systems for 134 Peter Street, then 364 Richmond Street West would not have adequate electrical or mechanical services. The two addresses also share gas, water, mechanical maintenance, security personnel, sprinkler testing, fire alarm servicing and garbage services.

(h) Vestacon entered into a single contract with Arc on July 24, 2015 for improvements to both 134 Peter Street (floors 2, 3 and 4) and 364 Richmond Street (floors 1, 2, 3 and 4). The contract provides that Vestacon’s work at 134 Peter Street would be completed first so that it could be occupied while Vestacon completed the 364 Richmond Street floors. The contract specifies at Article A-3 a proposed substantial completion date of February 29, 2016 for the entire contract.

(i) Vestacon issued combined invoices that included both 134 Peter Street and 364 Richmond Street.

(j) Delays in the landlord’s work at 364 Richmond Street caused a modest delay, extending the completion date from February 29, 2016 to April 1, 2016. Peter Co.’s Thomas Burns gave Arc an additional tenant improvement allowance to compensate for the delay, a factor consistent with Peter Co. and Richmond Co. operating the two building addresses as a single property and the tenant improvements as a single contract.

(k) The lease agreements between Peter Co. and Arc provide that the tenant improvement allowances could be used interchangeably for any portion of the project at either address.

(l) 134 Peter Street and 364 Richmond Street West offer shared amenities to the tenants of QRC West.

[115] Peter Co. and Richmond Co. rely on the following facts to support their contention that 364 Richmond Street West does not constitute lands “enjoyed with” 134 Peter Street:

(a) 134 Peter Street and 364 Richmond Street West have different owners.

(b) There were separate construction schedules and separate startup documents for each of 134 Peter Street and 364 Richmond Street West. Construction meetings and minutes tracked the progress of 134 Peter Street and 364 Richmond Street separately.

(c) Arc as tenant began moving into the 134 Peter Street floors in March 2016 and had fully moved into 134 Peter Street by April 5, 2016, prior to completion of the work at 364 Richmond Street West.

[116] It is apparent from the evidence filed on this motion that QRC West is a unique development. For all purposes other than registered title the development of QRC West merged two properties into one.

[117] Allied took ownership of the lands on which the original buildings were situate separately through two nominee companies, Peter Co. and Richmond Co. Allied developed the two properties together to form a single, new complex called QRC West but retained title to the two parcels of land under the original separate but related corporations.

[118] It is not unusual for a large complex to have multiple PINS. It is also not unusual for a lien claim that is registered against multiple PINS to inadvertently omit one or two PINS. The distinguishing feature in this case is that the two omitted PINS are registered to a different owner, Richmond Co. That owner is not at arm’s length to Peter Co., the owner of the PIN against which the Vestacon lien was registered.

[119] Peter Co. and Richmond Co. argue that Vestacon cannot succeed on both motion #1 (declaring the first two CSP’s invalid for failure to include 134 Peter Street and 364 Richmond Street in the same CSP) and motion #3 (declaring the section 19 notices to landlord valid notwithstanding that separate section 19 notices were issued for 134 Peter Street and 364 Richmond Street West) because the findings that the court must make for Vestacon to succeed on motion #1 would necessarily require Vestacon to fail on motion #3. I disagree.

[120] While the argument is a clever one, the statutory language of sections 2 and 32 of the Act require the contract to be considered as a whole for the purpose of certifying substantial performance. On the other hand, section 19 refers to the “interest of the owner” and is designed to notify an owner of a contractor’s intention to hold the landlord responsible for leasehold improvements. In view of the separate registered owners it was appropriate to send separate section 19 notices. The strict language of sections 2 and 32 is not present in section 19.

[121] Vestacon’s argument in favour of extending the Vestacon lien claim to include the lands owned by Richmond Co. is based on the proposition that the main lands subject to the Vestacon lien claim are the 134 Peter Street lands described in the Vestacon lien claim, and the 364 Richmond Street West lands are lands “enjoyed therewith”. Vestacon argues that on that basis the claim for lien registered against 134 Peter Street also encumbers the 364 Richmond Street West lands registered to owner Richmond Co.

[122] Whether or not adjoining lands are “land(s) enjoyed therewith” is a question of fact. Relevant factors include commonality of officers and directors, whether separate legal owners are related, whether there is a visible separation or property line and whether there is an integrated or common use.

[123] In Phoenix Drywall v Mississauga Rest Home Two Inc., 1988 CarswellOnt 766 [^16] adjacent lands had been severed and divided into separate ownership by related but not identical owners. The lands of one registered owner were used as a rest home with a building situated on the lands. The lands of the second registered owner were used as a parking lot for the rest home. The contractor had supplied services and materials to the building located on the rest home lands. The contractor mistakenly registered the lien claim against the parking lot lands instead of the rest home lands. The owner of the rest home lands moved to discharge the lien claim on the basis that it had been registered against lands to which services and materials had not been supplied. The lien claimant by cross-motion sought to amend the claim for lien and statement of claim to add the owner of the lands against which the services had been supplied

[124] Justice Goodearle found that despite separate legal ownership the severed lands served “a common and integrated use” with a global objective, namely the running of a rest home.

[125] I find the facts of the Phoenix case similar to the present case. The registered owners of 134 Peter Street and 364 Richmond Street are related. There are common officers and directors and both nominal companies are owned by the same parent company. The two addresses are operated as a single development known as QRC West. The properties are physically adjacent and there is an access door linking the two buildings through the atrium. The fact that an access fob is required does not detract from the connecting link between the buildings. The two buildings share electrical and mechanical services and facilities. The two separate municipal addresses form a single complex that is marketed as QRC West. As in the Phoenix case, QRC West serves a common and integrated use as a commercial complex.

[126] Unlike the Phoenix case, the lien claimant did not neglect to register the claim for lien against the lands where services and materials had been supplied. Rather, the lien claimant failed to identify one of two related owners and failed to register the lien claim against two PINS. The lien identifies some but not all of the lands that were improved, and one of two related owners.

[127] Peter Co. relies on Master Sandler’s decision in Williams & Prior Ltd. v Taskon Construction Ltd., 2003 CarswellOnt 474 [^17] where the lien claimant had failed to identify the landlord by name. Master Sandler found that this was a serious and fatal error. The present case is distinguishable because the lien claim names Peter Co. as owner and Peter Co is related to Richmond Co., owner of the adjacent lands. In Williams & Prior the landlord was prejudiced, having no way of knowing that the contractor intended to claim against it. In the present case Peter Co. was on notice and it cannot be said that Richmond Co. had no knowledge of Vetsacon’s lien claim, since the parties are related and the same individuals are involved in running both companies, both companies being owned by the same company.

[128] In my view the facts of this case are sufficiently close to the facts in the Phoenix case to persuade me to apply the reasoning of Justice Goodearle. Vestacon’s motion to declare the Vestacon lien valid as against 364 Richmond Street West as lands enjoyed together with the 134 Peter Street lands is granted.

[129] Having so found, it is appropriate to add Richmond Co. as a defendant and leave to do so is granted. Vestacon’s motion to amend the statement of claim in the form filed at Tab 4 of volume 6 of the motion record for motion #2 is granted.

d. Motion #4: Did Plan Group’s lien claim expire?

[130] In motion #4, Peter Co. and Richmond Co. ask the court to find that the lien claim registered by Plan Group on August 9, 2016 for $841,383.13 expired prior to registration [^18].

[131] Peter Co. and Richmond Co. further ask the court to dismiss Plan Group’s action as against Peter Co. and Richmond Co. on the grounds that in the absence of lien rights or a direct contractual obligation to pay, Plan Group has no right of recovery from either of them and there is no genuine issue for trial.

[132] By purchase order dated November 10, 2015 Plan Group subcontracted with Vestacon to supply electrical services and materials to 134 Peter Street and 364 Richmond Street West. Initially the contract price was $877,269.85 but with change orders added the total contract price increased to $1,084,970.00, both amounts inclusive of HST.

[133] Plan Group registered its lien claim against the lands owned by both Peter Co. and Richmond Co. However, as a subcontractor without a direct contract with the owner, if the lien claim expired then Plan Group would have no cause of action and action CV-16-559916 as against Peter Co. and Richmond Co. must be dismissed.

[134] Motion #4 is akin to a summary judgment motion: the court must determine whether there is a genuine issue for trial. The parties are expected to lead their best evidence.

[135] The lien claim period for a subcontractor is set out in subsection 31(3) of the Act. The court must determine whether Plan Group registered its lien claim within 45 days of the last day to preserve a lien claim. As a subcontractor who supplied services and materials to the improvement after the last of the dates certified as the date of substantial performance in CSP #3, or as a subcontractor who supplied services and materials in the absence of a valid CSP, the lien claim period begins to run from the date of last supply: subsection 31(3)(b). In either of those scenarios, the subcontractor’s lien rights expire 45 days after the earlier of:

(i) the date of last supply, or

(ii) the date certified in a CSP in respect of the subcontract. emphasis added

[136] Peter Co. and Richmond Co. assert that CSP #3 is valid and the Plan Group lien claim expired, having been registered more than 45 days after the April 22, 2016 publication date of CSP #3. Even if CSP #3 is valid, it would not apply because Plan Group continued to supply services and materials after April 22, 2016, through to June 2016.

[137] There is no evidence of a CSP issued for the Plan Group subcontract. Therefore, in this case, the applicable timeframe for Plan Group to preserve a lien claim commenced on the date of last supply.

[138] Plan Group's position is that all three CSP's are invalid and the 45 day lien claim period commenced on Plan Group's last day of supply of services and materials. Plan Group asserts that its lien claim was registered within 45 days of the last day of supply of services and materials but argues in the alternative that determining the validity of the CSP's and the last day of supply are genuine issues that require a trial.

[139] This court has already determined in motions #1 and #2 that CSP's #1, #2 and #3 are invalid for failure to comply with the requirements of section 32 of the Act and determination of that issue does not raise a genuine issue that requires a trial.

[140] The remaining issue in motion #4 is whether Plan Group registered its claim for lien within 45 days of its last supply of services and materials under the subcontract. On that issue I find that the evidence relied on in this motion is insufficient to determine that issue and there is a genuine issue that requires a trial.

[141] Plan Group asserts that the date of last supply of services and materials under the subcontract was June 25, 2016. The claim for lien was registered on August 9, 2016, exactly 45 days later. If the date of last supply was earlier than June 25, 2016 then the lien claim expired.

[142] It is well settled law that deficiency repairs or a trivial amount of work will not extend the lien claim period and allow a subcontractor to resurrect an otherwise expired lien claim [^19]. A modest amount of supply cannot be used to bootstrap expired lien rights.

[143] Peter Co. and Richmond Co., relying on time sheets for labourers, assert that the value of the labour actually supplied by Plan Group on June 25, 2016 was only $490.33. Such an amount reflects roughly 0.01% of the contract price of almost one million dollars. On that basis Peter Co. and Richmond Co. argue that only a trivial amount of work was performed on June 25, 2016 and the “date of last supply” must have been prior to June 25, 2016. Plan Group disagrees, arguing that this evidence has been taken out of context.

[144] Plan Group’s evidence is that they supplied $60,001.45 of services and materials after May 30, 2016 and that none of it would have been for deficiency repairs because the deficiency report did not list any electrical items that were within the scope of Plan Group’s subcontract.

[145] Plan Group’s evidence is that from April 16, 2016 to June 25, 2016, Plan Group supplied 133 hours of labour at a value of $11,485.06 plus materials priced at $25,359.92. Plan Group also claims that its sub-subcontractor continued to work on the project during that time period, charging $14,083.60 on April 21, 2016 and $23,291.00 on May 18, 2016. These amounts total $74,219.58.

[146] Plan Group’s further evidence is that after May 30, 2016 it supplied services and materials in the amount of $60,001.45. Plan Group argues that the services and materials provided during this timeframe and up to June 25, 2016 are part of a chain of attendances by different employees carrying out contract work to complete the subcontract. Additional evidence is required as to the exact nature and value of the work that was carried out during the timeframe that ended on June 25, 2016.

[147] On the totality of the evidence regarding the date of last supply I find that there is a genuine issue that requires a trial. The motion brought by Peter Co. and Richmond Co. to declare the Plan Group lien expired and to dismiss their action must fail.

E. Conclusion

[148] For the reasons expressed, and by way of summary of the findings and decisions made throughout these reasons, this court finds, declares and orders as follows:

(a) Regarding motions # 1 and 2:

(i) CSP#1 published on March 9, 2016 in respect of 134 Peter Street is invalid;

(ii) CSP#2 published on April 21, 2016 in respect of 364 Richmond Street West is invalid;

(iii) CSP#3 published on April 22, 2016 in respect of both 134 Peter Street and 364 Richmond Street West is invalid; and

(iv) The contract having been completed on or about June 6, 2016, the Vestacon claim for lien was preserved within 45 days thereafter and has not expired.

(b) Regarding motion #2:

(i) the Vestacon lien claim is valid as against the 364 Richmond Street West lands; and

(ii) leave is granted to add Richmond Co. as a defendant and to amend the statement of claim in the form filed at Tab 4 of volume 6 of the motion record for motion #2.

(c) Regarding motion #3, the section 19 notices to landlord given by Vestacon are valid section 19 notices served in accordance with the Act and the landlord has not served a form 3 notice denying liability.

(d) Regarding motion #4, the motion brought by Peter Co. and Richmond Co. to declare the Plan Group lien claim expired and dismiss the action is dismissed.

F. Costs

[149] The parties should attempt to resolve the issue of costs themselves. If the parties cannot resolve the issue of costs, they shall attend before me on Wednesday, October 3, 2018 at 10:00 a.m. to argue the issue of costs.

Master C. Albert.

Released: September 14, 2018

Appendix “I”

COURT FILE NO.: CV-16-556982 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: RE: Vestacon Limited v ARC Productions Ltd. and 1302207 Ontario Limited cob as Allied Properties

• and - RE: Plan Group Inc. v 1302207 Ontario Limited et al REASONS FOR DECISION, 4 MOTIONS Master C. Albert Released: September 14, 2018

[^1]: Deloitte Restructuring Inc. was appointed interim receiver for ARC on August 2, 2016 and receiver for Arc on August 10, 2016. Arc filed an assignment in bankruptcy on January 31, 2017, with Deloitte appointed as trustee in bankruptcy. [^2]: italic font is used for the pre-printed portions of the prescribed form [^3]: per Perell, J. [^4]: Industrial Refrigerated Systems Inc. v Quality Meat Packers Limited, 2015 ONSC 4545 citing 127661 OntarioLtd. V 2748355 Canada Inc., (2006), 55 C.L.R. (3rd) 54 (Ont. Div., Ct.) at paras 33-35 [^5]: at paragraphs 81 - 87 [^6]: at paras 32-34 [^7]: Hryniak v Mauldin, 2014 SCC 7 [^8]: Urbacon Building Groups Corp. v Guelph (City), 2012 ONSC 81 at para 8 [^9]: Brian T. Fletcher Construction Co. v 1707583 Ontario Inc., 2009 CarswellOnt 2805 at para 26 [^10]: at para 33-34 [^11]: 1992 CarswellOnt 855 [^12]: 2001 CarswellOnt 2730, [2001] O.J. No. 3008 [^13]: (Ont. Gen.Div.) at para 34 [^14]: at para. 21. [^15]: Italic font is used for the pre-printed portions of the claim for lien registration form [^16]: 1988 CarswellOnt 766 [^17]: 2003 CarswellOnt 474 [^18]: In its statement of claim Plan Group claims $587,848.59. [^19]: Aplewood Glass & Mirror Inc. v Baun Construction Inc., 2009 CarswellOnt 7122 at para 11 and 12 citing and adopting Canadian Rogers Eastern Ltd. v Canadian Glas [1993] O.J. No. 2985 and Arcon Group Inc. v. Jelco Construction Ltd. [2001] O.J. No. 4661