Court File and Parties

COURT FILE NO.: 27095/16 DATE: 2018-10-12 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

9448616 CANADA LTD. Plaintiff – and – FOCAL ELEMENTS LTD., and TVM SAULT INC. and TORONTO DOMINION BANK Defendants

Counsel: Adam Wainstock, for the Defendant, Focal Elements J. Spotswood, for the Defendant, TVM Sault Inc.

HEARD: July 13, 2018

RASAIAH J.

REASONS ON MOTION

OVERVIEW

[1] The defendant Focal Elements Inc. (“Focal”) brought a motion seeking:

a. an Order declaring that the construction lien of the plaintiff 9448616 Canada Ltd. (“944”) has expired;

b. an Order discharging 944’s construction lien (944’s lien”), previously registered as instrument number AL155245 against title to the lands described in Schedule “A” to the motion;

c. an Order dismissing 944’s action, in its entirety;

d. an Order that the funds previously posted by Focal with the Accountant of the Ontario Superior Court of Justice, pursuant to the Order of Master Wiebe dated January 5, 2016 be returned to Focal, with all accrued interest thereon;

e. costs of the motion and action in favour of Focal on a substantial indemnity basis, or in the alternative on a partial indemnity basis; and

f. such further and other relief as this Honourable Court deems just.

[2] Focal relies on/asserts the following grounds set out in its motion:

a. Rules 37.13, 60.12, 15.04(7), 15.04(6) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194;

b. On December 23, 2015, 944 registered its lien bearing Instrument No. AL155245 in the amount of $23,692.26 on title to the lands bearing PIN No. 31539-0154 located in Sault St. Marie, Ontario (hereinafter the “Lands”);

c. On January 5, 2016, Focal obtained an Order vacating the lien of 944 from title to the Lands upon payment into Court of the sum of $29,615.33 representing $23,692.26 for lien plus $5,923.07 for costs under account number 539417 (the “Focal Security”);

d. On February 5, 2016, 944 issued a statement of claim to purportedly perfect its lien;

e. The claim names both TVM and Toronto Dominion Bank (hereinafter the “Mortgagee”) as parties herein;

f. The action should not have named either TVM or the Mortgagee given the posting of security;

g. On Thursday August 4, 2016, Varpio J. made an Order removing Matthew Shoemaker and the firm of Wishart Law Firm LLP as lawyers of record for the plaintiff;

h. the Order stated that within 30 days of the Order being served, 944 was to appoint a new lawyer of record or obtain and serve an Order under r. 15.01(2) granting it leave to be represented by a person other than a lawyer;

i. More than two years have passed since 944’s statement of claim was issued; this action (or any action under which the lien could be enforced) was not set down for trial; and no order was made for the trial of the action within two years of the issuance of the statement of claim herein;

j. 944’s lien has expired;

k. As of May 16, 2018, 944 has not appointed a new lawyer of record nor has it obtained leave to be represented by a person other than a lawyer;

l. The August 4, 2016 Order of Varpio J. further contained the provision that should 944 fail to comply, the court may dismiss its proceeding or strike out its defence; and,

m. Such further and other grounds as counsel may advise and this Honourable Court may permit.

SUMMARY OF THE FACTS

[3] Focal filed an affidavit of Allan Azzam Tawachi in support of its motion. He is the principal of Focal and the affidavit provided the following uncontested information set out in this section.

[4] Focal is a corporation incorporated pursuant to the laws of the Province of Ontario.

[5] The defendant TVM Sault Inc. (hereinafter “TVM”) is the owner of the lands and premises legally described as:

PT PK LT 15 CON 1 AND PT OF WATER LT IN FRONT OF PK LT 15 CON 1 ST. MARY’S, PT PK LT 16 CON 1 AND PT WATER LT IN FRONT OF PK LT 16 CON 1

ST. MARY’S BEING PT 1 1R13068; TOGETHER WITH AN EASEMENT OVER PTS 7, 8 & 9 1R13068 AS IN AL145388; TOGETHER WITH AN EASEMENT OVER PT 6 1R13068 AS IN AL145388; TOGETHER WITH AN EASEMENT OVER PTS 3 & 6 1R13068 AS IN AL 145388; TOGETHER WITH AN EASEMENT OVER PTS 4 & 5 1R13068 AS IN AL145388; CITY OF SAULT STE. MARIE

PIN NO: 31539-0154 (LT)

hereinafter the (“Lands”).

[6] Focal was retained by TVM as a contractor/subcontractor to provide among other things, drywall services to a condominium construction project upon the Lands (hereinafter the “Project”).

[7] The plaintiff, 9448616 Canada Ltd. (“944”) was retained by Focal as a subcontractor on the Project.

[8] On December 23, 2015, the 944 registered a construction lien in the amount of $23,692.26 on title to the Lands (“944’s lien”).

[9] On January 6, 2016, Master Wiebe granted Focal an Order vacating 944’s lien upon Focal posting into Court with the Accountant of the Ontario Superior Court of Justice, certified funds in the amount of $29,615.33, representing $23,692.26 on account of 944’’s lien plus $5,923.07 as security for costs.

[10] On February 5, 2016, 944’s lien was perfected by issuance of its statement of claim (“claim”).

[11] Notwithstanding that the plaintiff’s lien had already been vacated from title, the claim named TVM and the Toronto Dominion Bank as defendants.

[12] Thereafter, on August 4, 2016, Wishart Law Firm LLP and Matthew Shoemaker, on their motion, were removed as lawyers of record for 944 by Order of Mr. Justice Varpio.

[13] In accordance with paragraph 2 of Varpio J.’s Order, 944 was required to comply with r. 15.04(6) and, within 30 days, appoint a new lawyer of record by serving a notice under r. 15.03(2), or alternatively, to obtain and serve an Order under r. 15.01(2) granting it leave to be represented by a person other than a lawyer.

[14] To date, 944 has not complied with Varpio J. ’s Order nor the Rules, as it has neither appointed a new lawyer of record nor obtained and served an Order granting it leave to be represented by a person other than a lawyer. Focal’s lawyers have not received a notice of change of lawyer nor an order granting leave to 944 to be represented by someone other than a lawyer.

[15] The Order of Varpio J. further stated at paragraph three, that in accordance with r. 15.07(7), if 944 did not comply with that Order, the court may dismiss its proceeding.

[16] Counsel for Focal indicated that once security was posted the action should have been discontinued as against TVM Sault Inc. and the Toronto Dominion Bank.

[17] All interested parties and named parties were paged. Only counsel for the defendant TVM Sault Inc. attended and indicated that his client was not opposing the motion but was asking that if the funds were going to be released to Focal, TVM Sault Inc. asks that I order that the fund remain the Focal’s counsel’s trust account to satisfy security for costs which TVM Sault Inc. was seeking on the second motion before me.

ANALYSIS

[18] Focal filed a draft order at the hearing of the motion. I have reviewed that draft order. I am satisfied that an order should issue as requested and my reasons are as follows.

[19] Section 37(1) of the Construction Lien Act, R.S.O. 1990, c. C.30, (“CLA”) provides that a perfected lien expires immediately after the second anniversary of the commencement of the action that perfected the lien, unless one of the following occurs on or before that anniversary: an order is made for the trial of an action in which the lien may be enforced; an action in which the lien may be enforced is set down for trial. That second anniversary date of the commencement of the action has come and gone. As of the date of the hearing an order for the trial of the action was not made, nor was the action set down for trial. As such, the perfected lien is expired.

[20] Where a lien has expired, a motion may be made under section 46, at which time the court shall declare that the lien has expired and shall make an order dismissing the action to enforce that lien and vacating the registration of a claim for lien and the certificate of action in respect of that action; or where a perfected lien that does not attach to the premises has expired under s. 37, the court, upon motion, shall declare that the lien has expired and shall make an order dismissing the action to realize upon that lien.

[21] If the motion is brought on notice, an order as to costs in the action may be made. This motion was brought on notice.

[22] In addition, pursuant to r. 15.04(7) the court may dismiss 944’s proceeding for failure to comply with r. 15.04(6). 944 has not complied with r. 15.04(6). Varpio J.’s order was served on 944. Varpio J.’s order specifically refers to r. 15.04(7) and the option of Focal applying for a dismissal. Since Varpio J.’s order, made just short of two years ago, it appears that 944 has taken no further steps to move the proceeding forward and has abandoned the action. As to exercising my discretion under r. 15.04(7), I would have done so, had the perfected lien not expired.

[23] In addition where a party fails to comply with an interlocutory order, such as the Varpio J. order in this case, r. 60.12 permits the court to stay or dismiss that party’s proceeding or make such other order as is just. 944 has not come forward to explain its non-compliance.

[24] Interested parties with registered liens related to the Project were served with Focal’s motion materials.

[25] All of the registered liens were bonded off of title after security was posted.

[26] On August 26, 2016, TVM was granted an Order vacating the registered lien of Superior Industrial Services (“Superior”) upon posting of security in the amount of $88,860.00 into Court to the credit of Superior’s lien. Accordingly, the lien of Superior has been bonded off of title with its own security, and Superior, is not within the “Focal stream” of registered lien holders.

[27] Where an action is dismissed, the court shall order that any amount that has been paid into court under s. 44 in respect of that action be returned to the person who paid the amount into court, and any security that has been posted be cancelled.

[28] I am not persuaded that I should order that the funds if ordered to be released to Focal be ordered to remain in Focal’s counsel’s trust account. TVM Sault Inc. would have an avenue for relief in respect of any non-compliance by Focal with any order made on security for costs, and that avenue, in my view, would be the proper avenue for relief, if and when such an issue of non-compliance arises.

[29] As to costs, the amount of costs being claimed was not outlined for the court that the court could see in the material filed. Focal shall file within seven days, brief submissions (five pages or less) as to the amount of costs it is seeking for the court to make a determination on the issue of costs.

CONCLUSION

[30] Based on all of the above, I hereby grant the motion.

[31] Order to go in accordance with the draft order filed as amended and signed by me on today’s date.

[32] This issue of costs is adjourned and Focal shall file within seven days, submissions as to the amount of costs it is seeking.

Rasaiah J.

Released: October 12, 2018

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: 9448616 CANADA LTD.

• and – FOCAL ELEMENTS LTD., and TVM SAULT INC. and TORONTO DOMINION BANK REASONS on motion Rasaiah J.

Released: October 12, 2018