Court File and Parties

COURT FILE NO.: CV16-0378 DATE: December 18, 2018 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: PRYERS CONSTRUCTION LTD. Plaintiff

– and –

MVMB HOLDINGS INC., SCOTT BIRNIE and RIVERSIDE FORD SALES LIMITED Defendants

COUNSEL: Clinton H. Culic, for the Plaintiff Brett Hodgins and Alexander Bissonnette, for the Defendants

HEARD: November 21 and 22, 2018 (at Brockville)

REASONS FOR JUDGMENT

PEDLAR J.

[1] The plaintiff, Pryers Construction Ltd. (“Pryers Ltd.”) is solely owned, operated and controlled by Steve Pryer (“Pryer”).

[2] Scott Birnie (“Birnie”) is the owner, sole director and sole officer of both the corporate defendants, MVMB Holdings Inc., (“MVMB”) and its tenant, Riverside Ford Sales Limited (“Riverside”). MVMB owns the land upon which the construction lien herein has been placed by the plaintiff (the “Property”).

[3] A number of interim invoices for work done were presented to Riverside and paid by the Royal Bank on behalf of the defendants. A string of projects were discussed between Birnie and Pryer. Invoices were presented by the plaintiff and were paid in a timely fashion, except the two invoices representing the outstanding balance of $34,601.66.

[4] The last significant work was done on April 27, 2016 and the final work was done on May 15, 2016. Invoice #129 in the amount of $34,601.66, as representing the outstanding claim by the plaintiff, was issued on May 18, 2016. The defendants have neglected or refused to pay it.

[5] By reason of supplying services and materials as aforesaid, the plaintiff is claiming to be entitled to a lien upon the interests of the defendants on the property for the sum of $34,601.66, together with the costs of this action, pursuant to the provisions of the Construction Lien Act R.S.O. 1990, c.C.30.

[6] On the 19th of May, 2016, as Instrument No. LE81606, the plaintiff caused to be registered the following Claim for Lien against the title to the property in the Land Registry Office of the Registry Division of Leeds:

Name of Lien Claimant: Pryers Construction Ltd. Address for Service: 6404 Concession 6, Addison, ON K0E 1A0 Name of Owner: MVMB Holdings Inc. Address: 25 Eleanor Street, Brockville, ON K6V 4H9 Name of Person to Whom Lien Claimant Supplied Services or Materials: Scott Birnie Address: 25 Eleanor Street, Brockville, ON K6V 4H9 Time Within Which Services or Materials Were Supplied: February 7, 2016 to April 27, 2016 Short Description of Services or Materials That Have Been Supplied: Complete renovation Contract Price of Subcontract Price: $36,622.55 Amount Claimed as Owing in Respect Of Services of Materials That Have Been Supplied: $34,601.66

[7] The plaintiff claims a lien against the interests of the defendants as owners of the premises described in Schedule “A” to the statement of claim and commonly referred to as 25 Eleanor Street, Brockville, Ontario K6V 4H9, the business premises of Riverside as tenant and MVMB as registered owner of the property.

[8] Around mid-October 2015, Birnie and Pryer entered into an oral agreement for Pryers Ltd. to do renovation work at Riverside. All negotiations took place directly between Birnie and Pryer. Pryer thought that Riverside owned the property until the title was searched for the purpose of claiming a lien and it was discovered by Pryer for the first time that MVMB owned the property, not Riverside.

[9] One of the issues to be decided in this case is whether the Construction Lien Act, which was in force at the time the improvements herein were made by the plaintiff and the contract entered into with the defendant, Riverside, was made, is to be the governing legislation for these parties. The new Construction Act came into effect as of July 1st, 2018.

[10] I find that the old Construction Lien Act prevails where the contract for improvement was entered into prior to July 1, 2018. There is nothing expressly stated in the new legislation that it was to be retroactive.

[11] The Ontario Court of Appeal in the case of St. Jean (Litigation Guardian of) v. Cheung, 2008 ONCA 815, found at Tab 9 of the Defendants’ Book of Authorities, states at paragraph 39:

[39] Legislation has retroactive application when the effect of applying it to particular facts is to deem the law to have been different from what it actually was when the facts occurred. The rationale that underlies the presumption against retroactive application is explained in Sullivan on the Construction of Statutes, 5th ed. (Markham: LexisNexis Canada Inc., 2008), at p. 677:

It is obvious that reaching into the past and declaring the law to be different from what it was is a serious violation of the rule of law. As Raz points out, the fundamental principle on which [the] rule of law is built is advance knowledge of the law. No matter how reasonable or benevolent retroactive legislation may be, it is inherently arbitrary for those who could not know its content when acting or making their plans. And when retroactive legislation results in a loss or disadvantage for those who relied on the previous law, it is unfair as well as arbitrary.

For these reasons it is strongly presumed that legislation is not intended to be retroactive.

[12] Under the Construction Lien Act, a claimant was required to register a claim for lien within 45 days and to commence an action to enforce the lien before the end of the next 45 days after which the lien could have been registered. Therefore, the action must be commenced to enforce the lien within 90 days of the last supply of services or material. If not, the lien will expire and the lien right is lost.

[13] These deadlines are imposed by the Construction Lien Act when a claimant is seeking the benefits of registering a lien. It is important to note that those benefits provide parties entering into agreements to provide goods and services to improve a property are provided with protection very few others have. That protection is to ensure a source of funds available to pay for any outstanding amounts due that remain owed to the person claiming the lien.

[14] Section 57 of the Construction Lien Act in effect at the time this lien claim was registered and perfected states as follows:

57. Parties.--(1) The person serving the notice of trial and all persons served with notice of trial are parties to the action. (2) Adding parties.—Subject to section 54, the court may at any time add or join any person as a party to the action.

[15] Section 54 has no relevance to these proceedings.

[16] The plaintiff relies on the provisions of Section 57(2) of the Construction Lien Act as meaning what it says, on its face. The defendant herein claims the protection of the Limitations Act, noting that two years expired before a motion was brought in these proceedings at the opening of trial on November 19, 2018, to add the defendant, Riverside. That motion was granted and Riverside is a party defendant in this action, but the defendants contend that there is no possibility of that claim succeeding, in view of the two year Limitations Act restriction.

[17] The plaintiff responds by referring to Section 19(1) of the Limitations Act, as well as the schedule attached thereto, along with Section 31 and 36 of the Construction Lien Act. Those sections read as follows:

19. Other Acts, etc.—(1) A limitation period set out in or under another Act that applies to a claim to which this Act applies is of no effect unless, (a) the provision establishing it is listed in the Schedule to this Act; or (b) the provision establishing it (i) is in existence on January 1, 2004, and (ii) incorporates by reference a provision listed in the Schedule to this Act. Act prevails –(2) Subsection (1) applies despite any other Act. Interpretation—(3) The fact that a provision is listed in the Schedule shall not be construed as a statement that the limitation period established by the provision would otherwise apply to a claim as defined in this Act. Same—(4) If there is a conflict between a limitation period established by a provision referred to in subsection (1) and one established by any other provision of this Act, the limitation period established by the provision referred to in subsection (1) prevails.

[18] SCHEDULE – (SECTION 19) Act Provision Arbitration Act, 1991 subsection 52(3) Assignments and Preferences Act subsections 26(2) and 27(2) Business Corporations Act subsections 157(2), 185(18) and (19), 188(9), (13) and (14), and 189(5) Business Practices Act subsection 4(5) City of Toronto Act, 2006 subsections 214(4), 250(2), 270(4) and 351(4) Civil Remedies Act, 2001 subsections 3(5) and 13(7) Commodity Futures Act section 60.4 Community Small Business Investment Funds Act, 1992 subsections 40(8) and (9) Construction Act sections 31 and 36 Corporations Act subsection 37(2) Creditors’ Relief Act, 2010 subsection 12(1) Drainage Act section 111 Education Act subsection 218(2) and subsection 11(3) of Schedule I Environmental Bill of Rights, 1993 section 102 Environment Protection Act subsection 108(1) Estates Act subsection 44(2) and 45(2) and section 47 Estates Administration Act subsection 17(5) Expropriations Act section 43 Family Law Act subsection 7(3) Fines and Forfeitures Act subsection 6(2) Forestry Workers Lien for Wages Act subsection 8(1) and 26(1) Fuel Tax Act subsection 8(13) Gasoline Tax Act subsection 5(13) Income Tax Act section 38 Insurance Act section 148, statutory condition 14, section 259.1 and section 281.1 International Commercial Arbitration Act, 2017 section 10 Libel and Slander Act section 6 Liquor Licence Act subsection 44.1(4) Mortgages Act subsections 21(2) and 54(2) Municipal Act, 2001 subsections 273(5), 380(4) and 415(2) Municipal Conflict of Interest Act subsections 9(1) and (3) Municipal Elections Act, 1996 subsections 58(2), 63(1), 80(6) and 83(2) Ontario Home Ownership Savings Plan Act section 18 Personal Property Security Act subsections 44(13) and (14) Prohibiting Profiting from Recounting Crimes Act, 2002 subsections 4(5) and 6(6) Public Lands Act subsection 34(3) Reciprocal Enforcement of Judgments Act subsection 2(1) Reciprocal Enforcement of Judgments (U.K.) Act paragraph 1 of article iii of the Schedule Securities Act section 129.1, subsection 136(6) and sections 138 and 138.14 Succession Law Reform Act section 61 Taxation Act, 2007 section 139 Title Drainage Act subsection 2(3) Tobacco Damages and Health Care Costs subsection 6(1) Recovery Act, 2009 Tobacco Tax Act subsection 6(10) and 24(5) Trustee Act subsection 38(3)

[19] The relevant portions of Sections 31 and 36 of the Construction Lien Act read as follows:

31 (1) Unless preserved under section 34, the liens arising from the supply of services or materials to an improvement expire as provided in this section. (2) Subject to subsection (4), the lien of a contractor, (a) for services or materials supplied to an improvement on or before the date certified or declared to be the date of the substantial performance of the contract, expires at the conclusion of the forty-five-day period next following the occurrence of the earlier of, (i) the date on which a copy of the certificate or declaration of the substantial performance of the contract is published as provided in section 32, and (ii) the date the contract is completed or abandoned; and (b) for services or materials supplied to the improvement where there is no certification or declaration of the substantial performance of the contract, or for services or materials supplied to the improvement after the date certified or declared to be the date of substantial performance, expires at the conclusion of the forty-five-day period next following the occurrence of the earlier of, (i) the date the contract is completed, and (ii) the date the contract is abandoned. (5) Where a person who has supplied services or materials under a contract or subcontract makes a declaration in the prescribed form declaring, (a) the date on which the person last supplied services or materials under that contract or subcontract; and (b) that the person will not supply any further services or materials under that contract or subcontract, then the facts so stated shall be deemed to be true against the person making the declaration. 1983, c.6, s.31.

36 (1) A lien may not be perfected unless it is preserved. (2) A lien that has been preserved expires unless it is perfected prior to the end of the forty-five-day period next following the last day, under section 31, on which the lien could have been preserved (3) A lien claimant perfects the lien claimant’s preserved lien, (a) where the lien attaches to the premises, when the lien claimant commences an action to enforce the lien and, except where an order to vacate the registration of the lien is made, the lien claimant registers a certificate of action in the prescribed form on the title of the premises; or (b) where the lien does not attach to the premises, when the lien claimant commences an action to enforce the lien.

[20] The parties disagree on the meaning, and importance, of Section 19(1) of the Limitations Act, referred to above.

[21] The plaintiff takes the position that by referring to Sections 31 and 36 of the Construction Lien Act, the Limitations Act is stating that because of the special privileges that come with a lien claim, of tying up the owner’s property until the claim is satisfied or discharged by payment into court of the amount claimed, that Section 19(1) indicated the Construction Lien Act, with its specific additional remedies available to a claimant, is unique and governed by its own specific statutory process, rather than by the Limitations Act.

[22] The defendants claim that they are entitled to both the protections of the specific provisions for claiming a lien under the Construction Lien Act and the limitation period for commencing an action for breach of contract.

[23] I find that with the definition of action contained within the Construction Lien Act itself, as being an action under Part VIII of the legislation, the most logical interpretation is that the unique form of seeking a lien for work and materials supplied to improve an owner’s property is confined to the Construction Lien Act itself. That Act provides a very specific set of instructions to preserve a lien and includes Section 52(2) which has been repealed by the current legislation but was in force at the relevant time of the dealings between the plaintiff and defendants in this matter.

[24] Under the provisions of that section and in the factual circumstances of this case where Pryer dealt exclusively with Birnie, it is clear that Pryer was acting as the agent for Pryers Ltd. and Birnie, the agent for Riverside. Pryers Ltd. sent their written estimates and invoices to Riverside.

[25] It is difficult to see how there has been any prejudice to Riverside for including it as a party, subject to any defence they may have as to liability or quantum of the claim. There was no one, other than Birnie, representing Riverside throughout these proceedings and he is fully aware of all the negotiations and discussions that went on and gave evidence about his interpretation of the arrangements between Pryers Ltd. and Riverside.

[26] The defendants referred to the reported case of Becerra v. Ronchin, 2016 ONSC 4232. In that case, the Master refused to allow the motion and states at paragraph 36 as follows:

Limitations Act issue

Regarding the proposed new claims of unjust enrichment, punitive, aggravated and exemplary damages, a claim against Homeservice for holdback funds and refund of a bond posted more than two years earlier, and a claim against Homeservice arising from services and materials supplied to improve the property of non-parties (the Whitalls), the Limitations Act, 2002, S.O. 2002, c.24 applies. Section 5(1) of the Limitations Act provides that a proceeding shall not be commenced in respect of a claim more than two years after the day on which the claim was discovered or ought to have been discovered.

[27] Paragraph 45 also states:

The paragraphs of the proposed fresh as amended pleading that offend the Limitations Act are paragraphs 1 and 2 (regarding new claims for unjust enrichment, punitive, aggravated and exemplary damages, and a charge against holdbacks), paragraphs 9, 10, 11 and 25 (regarding new claims arising from the 2008 contract between Mr. Becerra and Homeservice), and paragraphs 17 and 28 (regarding holdback), 21 (new allegations regarding termination and subcontractors), 24, 34, 36 (regarding the Whitall project), 31 (regarding claims in quantum meruit), 32, 33, 34 and 39 (regarding claims for unjust enrichment), 37 and 38 (regarding claim for loss of profits), 42 (regarding claim for return of bond) and 43 (increased quantum of claim calculated on the basis of statute barred claims).

[28] The plaintiff’s position is that there is a distinction between that case and the case before the court at this time in that this plaintiff, Pryers Ltd., is not proposing any new claims, but simply adding a new party, who is fully aware of all the issues throughout the process of the terms of contract being negotiated, the work performed and all discussions between the parties during this litigation.

[29] I note there was also particular emphasis in Becerra v. Ronchin, supra, on Section 67 of the Construction Lien Act regarding the action being as far as possible of a summary character and interlocutory steps should only be those that are necessary and with expedited resolution of the issues in dispute, whereas this action has included extensive arguments over definitions of who is to be a party and who is an “owner” under the Construction Lien Act. I find the distinction to be valid and am not persuaded that this ruling is applicable to the action before this court at this time.

[30] The defendants also rely on the case of Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469. This decision was rendered on June 12, 2008. It was an action about the effect of the Limitations Act on an action in tort wherein a motion judge held that even though the action was statute barred by a two year limitation under the Limitations Act, that there was a discretion under common law doctrine of special circumstances to extend time to commence action where no action had been commenced within the limitation period. The motion judge found the special circumstances existed where there was inadvertence on part of the plaintiff’s counsel and no prejudice to the defendant. The court concludes at paragraphs 27 and 28 as follows:

27 I conclude that s.20 does not refer to the extension of a limitation period under the new Act through the application of the common law doctrine of special circumstances to the Rules of Civil Procedure. Rules 5.04(2)) and 26.01 must now be applied giving effect to the new Act.

28 In that regard, I add for the sake of completeness that the decision of the motion judge, which followed a line of cases in the Superior Court where extensions were granted that did not involve any amendment of or addition to an existing action, was an error of law even had the doctrine of special circumstances applied. Both the common law doctrine from Basarsky v. Quinlan and the Rules of Civil Procedure contemplate only the power to amend or add a claim or party to an existing action. They did not give the court the authority to allow an action to be commenced after the expiry of a limitation period.

[31] It is interesting to note that the only reference to Section 19 of the Limitations Act and the Schedule attached to it is contained in paragraph 8 and the relevant portion of that paragraph is stated in the following sentence: “Section 19 eliminates limitation periods contained in other statutes, except those specifically referred to in the new Act or the Schedule to it.”

[32] The plaintiff in this action relies on the reported decision of the Ontario Court of Appeal of Bikur Cholim Jewish Volunteer Services et al v. Langston et al, 2009 ONCA 196, 94 O.R. (3d) 401, decided on March 4, 2009 after the above mentioned case of Joseph v. Paramount Canada’s Wonderland, supra. This is an application largely related to interpretation of the Estates Act and the Section 38(3) of the Trustee Act, along with the effect on those sections of the Limitations Act 2002. The court makes the following statements, beginning at paragraph 50:

[50] In Giroux Estate, this court held that the common-law doctrine of fraudulent concealment applies to suspend the running of the limitation period in s. 38(3) of the Trustee Act. The court also held that this doctrine survives the Limitations Act, 2002. As Moldaver J.A. said, at para. 33:

I would not give effect to that argument. In my view, s. 38(3) was exempted from the new Act so that its common law status would be preserved and it would remain immune from the discoverability rule. In other words, the legislature intended that s. 38(3) should continue to be governed by common law principles. The doctrine of fraudulent concealment is one such principle.

[51] Similarly, this court has held that the doctrine of special circumstances is available to permit a court to add parties to an existing action, despite the expiration of the limitation period in s. 38(3): Swain Estate v. Lake of the Woods District Hospital (1992), 9 O.R. (3d) 74, [1992] O.J. No. 1358 (C.A.). In Swain, the special circumstances doctrine was applied where the estate was the plaintiff and sought to add additional defendants. Also see [page 418] Basarsky v. Quinlan, [1972] S.C.R. 380, [1971] S.C.J. No. 118. Although we are not referred to any cases where the special circumstances doctrine was applied against an estate, I can see no basis in principle for distinguishing the two types of cases. Both types of cases turn on the same limitation period in s. 38(3). Applying the reasoning in Giroux Estate, the doctrine of special circumstances also survives the enactment of the Limitations Act, 2002, despite the fact that the doctrine has been abolished by s. 20 of that Act for cases governed by the limitation periods set out in that Act. Also see Meady v. Greyhound Canada Transportation Corp. (2008), 90 O.R. (3d) 774, [2008] O.J. No. 2338 (C.A.), at para. 22.

[52] Accordingly, if the plaintiffs in any existing action can show special circumstances, the Lorraine Penna estate can be added as a party…. The motion judge did not consider the application of the doctrine of special circumstances.

[33] The court went on to find that this was not a case for the application of the doctrine of special circumstances to permit adding that particular party to the action as a defendant and allowed the appeal in part.

[34] It should be noted that s. 38(3) of the Trustee Act is one of the statutory provisions listed in the attachment to s. 19(1) of the Limitations Act, along with the Construction Act s. 31 and s. 36 and a number of other pieces of legislation, in which specific sections are noted relating to the process to commence actions, or seek remedies.

[35] The plaintiff submits that the defendants have not referred to one case that states that, if a section of a piece of legislation is referred to in the attachment to s. 19(1) of the Limitations Act, that the doctrine of special circumstances is unavailable to permit a court to add parties to an existing action, despite the expiration of the limitation periods set out in the other provisions of the Limitations Act.

[36] With regards to what the court should consider special circumstances in exercising its discretion, the plaintiff relies on the Ontario Court (General Division) decision of Gracey v. Thomson Newspapers Corp. (1991), 4 O.R. (3d) 180, where the court makes the following statement:

Limitation periods cannot be ignored. The expiry of a period creates some presumption of prejudice to the defendant. The onus is upon the plaintiff to show that there is no prejudice. Every case must be considered on its own merits (see Deaville v. Boegeman (1984), 48 O.R. (2d) 725, 14 D.L.R. (4th) 81). A limitation period should not be waived to allow the addition of a cause of action, except under special circumstances (see Basarsky v. Quinlan, [1972] S.C.R. 380, 24 D.L.R. (3d) 720). The Basarsky case related to the addition of a claim against existing defendants. However, I believe that the principle applies to new defendants, where there are special circumstances and there has been no prejudice.

While there can be no set rules as to what the court should consider as special circumstances in exercising its discretion, the following should be considered:

(a) knowledge by the defendant of the intent of the plaintiff to sue for damages, within the limitation period; (b) notice of the claim within the limitation period; (c) the absence of prejudice to the defendant or proposed added defendant; (d) the existence of a prima facie action; (e) good faith on the part of the plaintiff; (f) the absence of any deliberate attempt to delay on the part of the plaintiff.

[37] I accept that the doctrine of special circumstances has survived the Limitations Act, as indicated in the Ontario Court of Appeal decision of Bikur Cholim Jewish Volunteer Services v. Langston, supra, and that applying the principles outlined in Gracey v. Thomson Newspapers Corp, supra, to the specific facts of this rather unusual story, where one person is the director and sole authority for two corporate defendants, one of which was included in the original lien claim and action, while the statement of defence of the other two defendants at paragraph 39 states as follows:

39. Scott and MVMB submit that neither defendant is an “owner” as defined by section 1(1) of the Construction Lien Act, RSO 1990, c 30 (the “Act”). The proper owner for the purposes of the plaintiff’s lien and this action is Riverside.

...eliminates any hint of prejudice to any defendant by adding Riverside as a party to these proceedings. Those facts, together with the Ontario Court of Appeal decision of Bikur Cholim Jewish Volunteer Services v. Langston, supra, together with Section 57(2) of the Construction Lien Act, means that the defendant, Riverside, is properly a party to this action and does not have the protection of the Limitations Act of a two year limit that would apply if this were a simple claim based on contract rather than the unique provisions of the Construction Lien Act. In order to maintain and perfect a lien, there are much more restrictive limitations which must be observed, but then the process itself is to be expedient and simplified as much as possible in keeping in mind the realities of the relationship between the parties and the type of work done, the quality of that work and the terms of any agreement reached between the parties.

[38] I find that the Construction Lien Act, as it was in 2016, prevails over the Limitations Act in this specific regard in these unique circumstances. The lien claimant is put to strict time limits, as the requirement of maintaining the lien, and the defendants’ claims that the implications of the Construction Lien Act being mentioned in the table to Section 19(1) of the Limitations Act refers only to the retention of the rights to the lien itself and not the adding of parties. I do not accept that submission, as s. 36 of the Construction Lien Act is referred to specifically in the attachment to Section 19(1) of the Limitations Act and s. 36(3) requires an action to enforce the lien to be commenced within a very restricted 90 day period on which the lien could have been preserved pursuant to s. 31. That requirement for an action to be commenced is much more restrictive than the two year period allowed by the Limitations Act and replaces that two year period. If that 90 day commencement of an action timeframe is not met, then a simple action for breach of contract can be commenced and would be subject to the Limitations Act. Parties in a lien action, may be added after the 90 day limitation period has elapsed at any stage of the proceedings if there are special circumstances. The authorities quoted above make that clear.

[39] Another issue that was raised during the course of these proceedings was whether MVMB, the registered owner of the property herein, is in fact an “owner” pursuant to the definition of owner in the Construction Lien Act, in effect as of the date the action was commenced in June of 2016. That definition of “owner” is contained at Section 1(1) and reads as follows:

“Owner” means any person, including the Crown, having an interest in a premises at whose request and, (a) upon whose credit, or (b) on whose behalf, or (c) with whose privity or consent, or (d) for whose direct benefit, an improvement is made to the premises but does not include a home buyer.

[40] In my view, there is no question that Riverside is an “owner” as Birnie clearly was their representative and as sole director and operating officer of that company, he dealt with the plaintiff throughout the relevant discussions and negotiations. The other defendants even pleaded in their statement of defence, as referred to above, that Riverside should be the proper defendant as “owner” under the definition set out in the Act.

[41] I find that, because of the unique circumstances here that Birnie is the controlling person behind both Riverside and MVMB, that it is only common sense that Birnie, without the knowledge of Pryer, on behalf of Pryers Ltd., created a situation where, unknown to the plaintiff, Birnie acting on behalf of MVMB was both requesting the improvements, and upon whose credit the improvements were made on the property. On behalf of MVMB, he also had privity and consented to the improvements made to the property by the plaintiff.

[42] With regard to the personal responsibility of the defendant, Scott Birnie, as opposed to the two corporations that he owns and operates, the defendants rely on the Court of Appeal decision of Yaiguaje v. Chevron Corporation, 2018 ONCA 472, in dealing with the issue of piercing of the corporate veil, the court makes the following comments, starting at paragraph 67:

[67] This court has repeatedly rejected an independent just and equitable ground for piercing the corporate veil in favour of the approach taken in Transamerica: see Boyd v. Wright Environmental Management Inc., 2008 ONCA 779, 243 O.A.C. 185, at paras. 44-45; Parkland Plumbing & Heating Ltd. v. Minaki Lodge Resort 2002 Inc., 2009 ONCA 256, 250 O.A.C. 232, at paras. 50-51; and Indocondo Building Corp v. Sloan, 2015 ONCA 752, 259 A.C.W.S. (3d) 691, at para. 9.

[68] The Supreme Court of Canada has protected the principle of corporate separateness without suggesting a standalone just and equitable exception. In Sun Indalex Finance v. United Steelworkers, 2013 SCC 6, [2013] 1 S.C.R. 271, at para. 238, Cromwell J. rejected the submission that a subsidiary should be liable for a breach of fiduciary duty committed by its parent corporation, holding that “unless there is a legal basis for ignoring the separate corporate personality of separate entities, those separate corporate existences must be respected.” See also Continental Bank Leasing Corp. v. Canada, [1998] 2 S.C.R. 298, at paras. 108-112.

[70] The Transamerica test is consistent with the principle reflected in the various business corporation statutes in Canada that corporate separateness is the rule. Where the corporate form is being abused to the point that the corporation is not a truly separate corporation and is being used to facilitate fraudulent or improper conduct, the law recognizes an exception to this rule. It is important that courts be rigorous in their application of the Transamerica test because the rule is provided for in statute and stakeholders of corporations have a right to believe that, absent extraordinary circumstances, they may deal with the corporation as a natural person.

[43] Under all the circumstances of this case, I find that Scott Birnie should not be held liable for any successful claims by the plaintiff for the improvements done and unpaid for. I do not find that there has been significant evidence of bad faith and certainly no evidence of fraudulent activity on his part or with respect to either corporation that he controls. There are a number of legitimate reasons to incorporate businesses, including a legitimate concern to protect personal liabilities, but also tax considerations, ability to retain earnings, etc. The equitable grounds for piercing a corporate veil have been rejected by Canadian courts and the principles referred to above are the governing principles. It is established law that supports the incorporation of businesses in the manner done so by the defendant, Birnie. There is no evidence being provided at this trial to justify establishing his personal liability. The plaintiff sent their invoices to Riverside quite properly. They were not aware of the existence of MVMB Holdings and I dealt with that in my ruling, as set out above.

[44] Most of the time and effort surrounding the hearing of this trial was taken up with procedural motions and technical arguments about definitions and interpretation of various pieces of legislation. Section 67(1) in force at the time the action was commenced states that: “the procedure in an action shall be as far as possible, of a summary character, having regard to the amount and nature of the liens in question.”

[45] In support of the motions argued, I received four factums and four books of authorities from the parties. The only sense in which Section 67(1) of the Act was complied with was in the brevity of the evidence. The plaintiff called only one witness, being Steve Pryer, who was the sole owner, operator and controller of Pryers Ltd., who performed the work and provided the materials in question.

[46] The defendants called only Scott Birnie, who is the owner, sole director and sole officer of both the corporate defendants, MVMB and Riverside.

[47] Pryer gave evidence that he dealt exclusively with Birnie and agreed to take over renovations that had been started by someone else, based on a time and material contract. The time rate agreed upon was $35.00 an hour for his staff and $45.00 an hour for himself. They agreed that material would be billed to Riverside with a 10% mark-up for Pryers Ltd. He reviewed the Plaintiff’s Book of Documents, which is filed as Exhibit #1 in these proceedings. Invoice #102 at Tab 1 of the Book of Documents was paid in full in the amount of $19,119.00, with no complaints. Invoice #106 at Tab 2 was also paid in full in the amount of $22,153.67, based on labour and materials with hourly rates shown. Tab 3 was Invoice #110 in the amount of $24,119.00, which has not been paid. That invoice is dated February 7, 2016. Items include subcontract work by Greg Ferguson, apparently a mason, for $668.25; spray foam ceiling around new firewall December 14 and 15, billed at $621.50. The invoice also shows that the plaintiff paid FJT painting the amount of $5,130.00 and supplied doors, frames and hardware for the service area in the amount of $8,213.33 and three pieces of laminated glass for shop doors supplied, for a total cost of $336.60 and an additional bill for material supplied but not quoted in the amount of $1,934.57.

[48] It must be noted that that only $4,440.00 of the $21,334.25 listed on this invoice, before HST is charged, is related to labour cost. All other items charged were for payment of subcontractors, such as the painter, the spray foam and the block work and materials supplied, such as doors, frames and hardware for the service area and three pieces of laminated glass for the shop doors. It should also be noted that no labour had previously been charged for the time period between December 14 and 17 for either the workers for Pryers Ltd. or Steven Pryer himself. There is an additional 36 hours charged for the time between December 21 and February 5 for installing ceiling tiles, doors, drywall work and trim in the showroom as well as an additional $1,934.57 related to material that was not previously charged or quoted.

[49] During his evidence, Birnie was unable to contradict the fact that the plaintiff had paid FJT Painting the sum of $5,130.00 or that any of the materials or subcontractors had been supplied, and paid for, by the plaintiff. His only concern was that the cost of the project was beyond what he understood to be a time and material agreement with a maximum cost of $60,000.00. In his view, the work was not even half done at the time this invoice was received. He had already paid out over $41,000.00 as billed in Invoice #102 and #106.

[50] The defendant, Birnie, gave evidence that in December, around the 13th, of 2015, he had become concerned after paying the amounts indicated above and with the state of the work not being half done, he requested a meeting with Pryer to discuss the outstanding work that required completion on or about December 16. Pryer gave an estimate #41, which is at Tab 9 of the Plaintiff’s Book of Documents.

[51] Invoice #114 dated March 6, 2016 is an invoice that is entirely based on that estimate, provided in estimate #41 and that invoice was paid. The statement of defence describes this as the second contract that required Pryers Ltd. to complete all outstanding work for the costs quoted in estimate #41.

[52] The unpaid Invoice #110, referred to above, claiming the amount of $24,119.00, was dated February 7, 2016, according to the document at Tab 3 of the Plaintiff’s Book of Documents. The plaintiff’s evidence is that all the items listed in Invoice No. #110 as subcontract work or material supplied, are over and above the estimate at Tab 9 dated December 16, 2015. At paragraph 21(a) of the statement of defence and counter-claim, the defendants plead that some of the labour invoiced in Invoice #110 had been performed prior to the making of the second contract, which would have been prior to December 16, 2015, which is the date on the estimate at Tab 9. The invoice for completing that work is Invoice #114, dated March 6, 2016. Invoice #110 does, in fact, relate to work done prior to December 16 and some reference is made to work between December 14 and 17, as well as December 21 to February 5.

[53] The evidence of Pryer was that the work in the estimate at Tab 9 and the invoice at Tab 5 was related to the service area, which seems quite consistent with the specified items on both those documents. It is clear that the work and materials itemized in Invoice #110, there was an item on estimate #41 at Tab 9 and Invoice #114 at Tab 5 relating to installing “ten new doors as drawn for $2,500.00.” I cannot make any conclusion about those two items and whether there is any duplication or conflict as it was not explored in the evidence given by either of the witnesses.

[54] Paragraph 21(b) of the statement of defence and counterclaim is apparently incorrect based on the evidence heard at the trial. It is not really contested that the plaintiff has paid the printing subcontractor $5,130.00, plus an additional $3,471.60, billed in Invoice #129, filed at Tab 8, which remains unpaid.

[55] Paragraph 21(c) of the statement of defence and counterclaim complains about 24 hours of labour being charged for installation of two grab bars and a mirror in each washroom, while the evidence given by Pryer and shown on Invoice #116 at Tab 6 of the plaintiff’s business records shows that there were a number of other items supplied and installed, including six cartons of ceiling tiles. This is the invoice in the amount of $3,030.34 that remains unpaid and about which the defendant Pryer complains there is an overcharge for labour for the installation of two grab bars and a mirror in each washroom, which is clearly incorrect. The evidence of Pryer is that it was very difficult to drill through the ceramic tiles and he reduced his hourly rate and time involved in order to not overcharge for labour in a job he did not expect to be as complicated as it turned out to be.

[56] It is also to be noted that at Tab 7, there is an invoice #126, dated April 29, 2016, totalling $2,382.81 for cabinets for the coffee area, countertops, etc., with the work performed apparently on April 6 and April 27. That invoice, together with payment by the defendant, Riverside Ford, is a clear contradiction to the defendant’s position that the invoice at Tab 5 was intended to cover all remaining work. The defendant, Birnie, produced a photocopy of some notes he had made regarding a discussion himself and Pryer. One item on that was $1,750.00 for cabinet and counter plus approximately $100.00 for sink and taps. That was written on the back of an invoice and the evidence of Pryer is that he never saw that document and it is not signed and it goes on refer to other items unrelated to this claim.

[57] The evidence is undisputed between the parties that the defendants hired Richard Gummer, a local highly respected contractor, to take over as a project manager because of the defendant’s concerns about the increasing costs of the project. Richard Gummer reviewed all the time sheets and receipts related to all invoices presented by the plaintiff and, also, arranged for the plaintiff to do a number of items of remedial work, which the plaintiff estimates resulted in about 143 hours, equalling about $5,000.00 in labour costs for which the plaintiff did not bill the defendants. He also considered most of that work unreasonable and not required by any Building Code or reasonable expectation of performance. He reviewed Exhibit #3, being the Scott Schedule, and explained that many items listed are not required under any Building Code and he did the remedial work as requested and did not charge the defendants in those cases. Some of the items were simply cosmetic and some were not completed because he was asked to leave the job and items, such as the lunchroom ceiling were not something he was asked to do and the defendants were not billed for that work. I am not prepared to go through all the evidence on each item on the Scott Schedule. The plaintiff was the only one to answer any questions about this in detail and his answers seemed reasonable.

[58] Some of the responsibility of Richard Gummer was to review Exhibit #2, which is the original copy of his 2015 Daytimer to make sure that his time, as charged, was correct and also to review the various receipts for materials provided as well as subcontractors paid.

[59] It is notable that it is not contested that Richard Gummer was satisfied with the remedial work done by the plaintiff as well as the correctness of the hours charged for labour on the various invoices and materials supplied and subcontractors paid. It is also uncontradicted and agreed between both witnesses called at the trial that Richard Gummer recommended to the defendants to pay the plaintiff what it is are claiming in this action.

[60] The defendants have filed Exhibit #4, which purports to be services that Mr. Gummer provided, and for which he has billed the defendants, who are claiming a setoff for any amounts owing to the plaintiff. Richard Gummer did not testify at the trial, but the defendants are relying on these notes apparently made by Richard Gummer. A quick examination of those notes indicates that many other issues relating to subcontractors, such as Maggio Flooring, consumed a fair bit of Mr. Gummer’s time. There are also references to other subcontractors like Ford Electric and a cabinet company out of Kingston, along with other items that are hard to relate to any responsibility of the plaintiff. There is also the issue of this document not being served as a business record and the author of the document is alleged to be Richard Gummer, who did not give evidence. I cannot rely on this type of evidence under these circumstances and am unable to give it any weight and even though it was introduced, the plaintiff’s counsel has indicated an objection to the contents being admissible and I must agree.

[61] Based on the above noted findings, I grant judgment in favour of the plaintiff in the amount of $34,101.66 as claimed. I would ask counsel to present an order approved as to form and content to contain the usual terms. That judgment will, of course, be against the two corporate defendants and not against Scott Birnie, personally.

[62] If the parties are not able to agree on costs, I would invite written submissions on costs not to exceed three typed pages plus a draft Bill of Costs by the plaintiff within 30 days of this decision with a 10 day right of reply to the defendants.

[63] This was a case that was unusual in the complexity of the issues as related to the amount of the claim and I expressed my concerns about that at the time of the first appearance of the parties before the court. It is regrettable that this amount of time, effort and money has gone into this proceeding and has created an issue of access to justice for the parties involved. In my view, this is an extreme example of complicating a case that results in the process becoming a big part of the problem for the parties. That is deeply regrettable. Somewhere along the way, reason and common sense gave way to allow a fairly straightforward dealing between two members of a small community to be put through an unreasonable path in seeking justice. I am comforted by the fact that this case is a true exception to the norm, but do feel badly for the parties involved.

The Honourable Mr. Justice K. E. Pedlar

Released: December 18, 2018