COURT FILE NO.: CV-15-3044-00 DATE: 2018 12 17
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Larry Lee v. Mark Chiarella and 2450766 Ontario Inc., O/A Cradletyme
BEFORE: Dennison J.
COUNSEL: Plaintiff not present and not represented Kim Ferreira, for the Defendants
ENDORSEMENT
[1] This is a motion brought by the defendants, Mark Chiarella and 2450766 Ontario Inc., O/A Cradletyme for an order declaring that the plaintiff’s registered construction lien has expired and therefore the lien should be vacated as well as the certificate of action against title to the property and an order dismissing the underlying action.
Background facts
[2] The plaintiff, Larry Lee, was properly served with the motion material but did not attend court.
[3] The defendant Cradletyme is an Ontario Corporation with its registered head office located at 7015 Ordan Drive, Unit 1, Mississauga. Cradletyme rents the property from Ordan Park Developments limited (“Ordan”).
[4] On May 18, 2015, Mr. Lee entered into an oral agreement with Mark Chiarella on behalf of Cradletyme to complete certain office renovations at the property. The renovations were to be completed before May 31, 2015.
[5] The defendants state that by May 26, 2015 it became apparent to the defendants that Mr. Lee would not be able to complete the renovations by the date stipulated in the contract. In addition, they were of the view that the renovations were deficient, non-compliant with the applicable building codes and completed without proper building permits.
[6] Mr. Chiarella confronted Mr. Lee about the deficient work and requested that Mr. Lee provide Cradletyme with evidence that the renovations were compliant with provincial and municipal by laws, building codes and regulations. The defendants assert that Mr. Lee refused to provide that information and abandoned the property.
[7] In July 2015, Cradletyme had an independent inspector review the renovations that Mr. Lee had completed. The inspector confirmed to Cradletyme that the renovations were unsound and recommended that Cradletyme demolish the work that Mr. Lee completed.
[8] On July 15, 2015, the Electrical Safety Authority wrote to Cradletyme to advise that the electrical work that Mr. Lee completed was not compliant with the Ontario Electrical Safety Code. Cradletyme had no choice but to demolish the renovations that Mr. Lee completed and incur additional costs to redo the renovation work.
[9] In his statement of claim, Mr. Lee agrees that he entered into an oral contract to preform renovation work for Cradletyme. Cradletyme added renovation work to be completed once he started. Mr. Lee stated that when the project was 90% completed, he contacted the defendants for payment but the defendants did not return his call. He further states that the defendants created damage to the renovations to make it look like the renovations were not completed properly. The defendants locked him out of the property and refused to pay him for his work.
The litigation
[10] On June 26, 2015, Mr. Lee registered lien Instrument No. PR2739741 against the Cradletyme property in the amount of $67,600 plus materials.
[11] On July 3, 2015, Mr. Lee perfected the lien by issuing the statement of claim against Cradletyme and Mr. Chiarella.
[12] On July 31, 2015, the defendants filed a statement of defence and counterclaim seeking damages of $19,000 and punitive damages of $20,000.
[13] On August 5, 2015, Mr. Lee filed a defence to the counterclaim.
[14] On August 10, 2015, Mr. Lee brought a motion to add Ordan, (the owner of the property) and Ana Jankowiak (the owner of Cradletyme) as parties to the litigation. On September 4, 2015, Justice Van Melle dismissed the motion. She awarded Ordan costs of $3,372.46. These costs remain outstanding.
[15] On August 25, 2015, Mr. Lee also tried to commence a separate action against Ordan and Jankowiak that mirrored the relief sought in the motion to add the parties. On September 23, 2015, counsel for Ms. Jankowiak and Ordan brought a motion to have the second action dismissed because it was a collateral attack on Justice Van Melle’s decision.
[16] On March 7, 2016, Senior Regional Justice Daley granted the relief sought in the motion and dismissed the second action. In addition, on March 30, 2016, Justice Daley awarded Ms. Jankowiak and Ordan costs of $3,500. Mr. Lee has not paid those costs.
[17] Mr. Lee has taken no further steps to move the original action forward since August 2015. He has failed to set the action down for trial or to obtain an order for trial.
Issues:
[18] This motion raises two issues. Should the order dismissing the lien be granted and should an order be granted to dismiss the action.
Issue One: should an order dismissing the lien be granted?
[19] Section 37(1) of the Construction Lien Act sets out the time after which a lien expires if certain events have not taken place. Section 37(1) states:
(1) 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. 1994, c. 27, s. 42 (1).
[20] Section 37(2) permits a motion to be brought pursuant to s. 46(1) of the Act where a lien has expired. Section 46(1) states:
Where a perfected lien that attaches to the premises has expired under section 37, the court, upon the motion of any person, 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.
[21] In this case more than two years has passed since Mr. Lee commenced the action. Mr. Lee has failed to complete the steps required by s. 37(1) of the Act. As noted in K.H. Custom homes Ltd. v. Smiley, 2015 ONSC 6037, s. 46(1) is mandatory. Where the requirements of s. 37 of the Act have not been complied with the court “shall declare that the lien has expired and dismiss the lien action.” The Court does not have discretion to allow the lien to remain if the criteria set out in s. 37(1) are not satisfied. This is consistent with the purpose of the Act, which is to ensure that construction lien claims are dealt with in an expeditious manner.
Issue 2: Should the Action be set aside?
[22] The Court of Appeal for Ontario held that when sections 46(1) and s. 47(1)(d) of the Construction Lien Act, are read together, they provide the Court with the discretion to either dismiss or permit a claim on the contract to continue without the lien claim. See: Teepee Excavation & Grading Ltd v. Niran Construction Ltd., at paragraph 25. See also: K.H. Custom Homes Ltd., at paragraphs 21-22 and Edgcumbe v. Vicary, 2018 ONSC 2656, at paragraph 25.
[23] In exercising this discretion, the Court must consider the prejudice that each of the parties will suffer and the Court’s preference to have disputes resolved on their merits. There are several factors that lean towards dismissing the underlying action.
[24] First, Mr. Lee was served with this motion but did not attend. There is therefore no evidence before the Court of how Mr. Lee will be prejudiced if the motion is dismissed.
[25] Second, Mr. Lee has done nothing to move this matter forward since August 2015. More than three years have passed. Neither documentary nor oral discovery has taken place. Mr. Lee did not attend to respond to this motion. In Teepee Excavation, the Court of Appeal for Ontario upheld the Master’s decision to dismiss the entire action where nothing of consequence had been done in the proceeding four years. While I recognize that the length of time in this case is a little over three years as opposed to four years this is still not an insignificant period of time. See also: 21114 Ontario Inc. v Stadia Industries Limited, 2014 ONSC 3211.
[26] Third, I also consider it relevant that the defendants are prepared to have the counterclaim dismissed if the action against them is dismissed. This results in a dismissal of the entire proceedings which limits any prejudice Mr. Lee may have suffered had the counterclaim been successful.
[27] The defendants argue that they will be prejudiced if the underlying action is not dismissed as they will have this outstanding action against them. They submit that if the underlying action is not dismissed now they will likely have incur further costs to have the matter dealt given that the plaintiff has done nothing to move the matter forward.
[28] The one factor that weighs in favour of not dismissing the action is that the matter should be heard on its merits and that striking out a claim or dismissing an action is a sever remedy. In the circumstances, I think that it is appropriate that the plaintiff be given one more opportunity to respond to this motion on terms that I will set out below, failing which the action will be dismissed.
[29] The defendants also argued that I could dismiss the action due to the outstanding costs orders made against the plaintiff pursuant to Rules 57.03(2) and Rule 60.12 of the Rules of Civil Procedure. I am not prepared to dismiss the action on this basis for the following reasons.
[30] With respect to the second action, the defendants were not parties to the proceedings. Rule 57.03(2) and Rule 60.12 would not be applicable to that cost order and the matter could not be dismissed on that basis under the rules. As explained in Ortepi v. Pozzuoli (2008), 89 O.R. (3d) 452, 166 A.C.W. (3d) 74 (S.C.J.) “neither 57.03(2) nor rule 60.12 enable a party in one action to move for a dismissal or a stay of that action where the responding party has failed to pay a costs award made in another action.”
[31] That leaves the cost order with respect to adding parties to the original action in the amount of $3,372.46. I would not set aside the action on the sole basis that Mr. Lee has not paid those costs. Striking out a claim is a severe remedy that ought not to be resorted to without at least providing the defendant an opportunity to remedy the situation. See Bell Express Vu Limited Partnership v. Torroni, (2009) 2009 ONCA 85, 304 D.L.R. (4th) 431, 94 O.R. (3d) 614 (C.A.). That being said, Mr. Lee provided no response to this motion that sought to have his action dismissed for failing to pay costs. I find that his failure to respond to this motion on this basis is yet another factor that demonstrates that Mr. Lee has not done anything to move this matter forward.
[32] In all of the circumstances, I order the following:
- The defendants shall serve this endorsement immediately on the plaintiff, Mr. Lee.
- Mr. Lee will have the opportunity, if he so chooses, to serve and file an affidavit setting out his position as to the underlying action should not be dismissed within 20 days after receipt of the endorsement.
- If Mr. Lee chooses to file an affidavit, counsel will contact the trial coordinator’s office to obtain a date that this matter may be heard before me at 9:00 a.m. Mr. Lee is to be advised of the date and proof submitted that he has been advised.
- If Mr. Lee chooses not to file an affidavit within the time period set out in this order, counsel may provide the registrar with the affidavit of service to be sent to my attention and cost submissions of no more than two pages double-spaced. I will then issue my final order and cost decision.
Dennison J.