R & V Construction Management Inc. v. Baradaran

Ontario Reports Ontario Superior Court of Justice Belobaba J. March 14, 2019 145 O.R. (3d) 625 | 2019 ONSC 1551

Case Summary

Construction liens — Actions — Procedure — Section 58(4) of Construction Lien Act not giving construction lien master powers of judge — Construction lien master not having jurisdiction on motion for summary judgment to use enhanced powers provided to judges under rule 20.04(2.1) of Rules of Civil Procedure — Construction Lien Act, R.S.O. 1990, c. C.30, s. 58(4) — Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 20.04(2.1).

A construction lien matter was referred to a construction lien master for trial. The defendant brought a motion for summary judgment dismissing the action. The master dismissed that motion and ruled in favour of the plaintiff. In doing so, she used the enhanced powers in rule 20.04(2.1) of the Rules of Civil Procedure. The defendant brought a motion for an order refusing confirmation of the master's report.

Held, the motion should be granted.

There is nothing in the Construction Lien Act, and in particular in s. 58(4) of the Act, that gives a construction lien master the powers of a judge. A construction lien master therefore does not have jurisdiction on a motion for summary judgment to use the enhanced powers provided to judges under rule 20.04(2.1).

RSG Mechanical Inc. v. 1398796 Ontario Inc., 2015 ONSC 2070 (Div. Ct.), folld

90 George Street Ltd. v. Reliance Construction Canada Inc., 2012 ONSC 1171 (S.C.J.); Campoli Electric Ltd. v. Georgian Clairlea Inc., 2017 ONSC 2784 (S.C.J.); Kieswetter Demolition (1992) Inc. v. Traugott Building Contractors Inc., 2014 ONSC 1397 (S.C.J.), consd

Other cases referred to

6007325 Canada Inc. (c.o.b. Group 5) v. LPQ 18 Yorkville Avenue Inc., 2010 ONSC 2844 (S.C.J.); DCL Management Ltd. v. Zenith Fitness Inc., 2010 ONSC 5915 (S.C.J.); Hamilton Landscaping & Paving v. 603893 Ontario Inc., 1988 CarswellOnt 760 (H.C.J.); Limen Structures Ltd. v. Brookfield Multiplex Construction Canada Ltd., 2016 ONSC 5107 (S.C.J.); Orphan Well Assn. v. Grant Thornton Ltd., 2019 SCC 5; PCR Contractors Inc. v. Wilson Station Development Corp., 2015 ONSC 6319 (S.C.J.); R & V Construction Management Inc. v. Manoucher Baradaran, 2018 ONSC 3148; Rizzo & Rizzo Shoes Ltd. (Re); Royal Oak Railing & Stair Ltd. v. MyHaven Homes Ltd., 2016 ONSC 423 (S.C.J.); Walsh Construction/Bondfield Partnership v. Chartis Insurance Co. of Canada, 2017 ONSC 3985 (S.C.J.)

Statutes referred to

Construction Act, R.S.O. 1990, c. C.30, ss. 58(4) [as am.], 67(1), (2) (3) [rep.], 87.3(1) Courts of Justice Act, R.S.O. 1990, c. C.43, s. 66(3) Mechanics' Lien Act, R.S.O. 1970, c. 267 [rep.], s. 31(3) The Mechanics' and Wage Earners' Lien Act, 1923, S.O. 1923, c. 30 [rep.], s. 47

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 1.03(1), 20, 20.04(2), (2.1), 37.02(1), (2), 54.09(5)

Authorities referred to

Glaholt, Duncan, and David Keeshan, The 2016 Annotated Ontario Construction Lien Act (Toronto: Carswell, 2016) Glaholt, Duncan, and David Keeshan, The 2018 Annotated Ontario Construction Lien Act (Toronto: Carswell, 2018)

MOTION for an order refusing the confirmation of a master's report.

Kenneth E. Wise, for defendant/moving party. Brennan Maynard, for plaintiff/responding party.

[1] BELOBABA J.: — The issue on this motion relating to the confirmation of a master's report in a construction lien reference is quite narrow: When deciding a motion for summary judgment, does a construction lien master have the statutory jurisdiction to use the so-called "enhanced powers" provided to a judge under rule 20.04(2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194?

[2] The issue is not institutional capability but statutory jurisdiction. Provincially appointed masters are just as capable as federally appointed judges to weigh the evidence, assess credibility and draw reasonable inferences, and no one suggests otherwise. But do they have the statutory authority to do so?

[3] In my view, the applicable statutes and rules as currently worded cannot be reasonably construed to provide masters with the jurisdiction to weigh the evidence, assess credibility or draw reasonable inferences as set out in rule 20.04(2.1). If these enhanced powers are to be provided to masters, a legislative amendment is needed.

[4] For the reasons set out below, the defendant's motion for an order refusing confirmation of the master's report is granted. The enhanced powers that are explicitly limited to "judges" under rule 20.04(2.1) do not extend to include the learned masters of this court. The master should have dismissed the motion for summary judgment and proceeded with the trial.

Background

[5] A construction lien matter was referred by a judge of this court to a construction lien master for trial. The defendant brought a motion for summary judgment asking that the plaintiff's lien action be dismissed. Master Albert reviewed the affidavit evidence and the parties' submissions and ruled in favour of the plaintiff -- the defendant's motion for summary judgment was dismissed and the plaintiff was awarded the $78,573.70 balance owing on the home renovation project. 1

[6] There is no dispute that the learned master used the enhanced powers in rule 20.04(2.1) to find in favour of the plaintiff. She weighed evidence, assessed credibility and drew reasonable inferences. Indeed, in her report, the master concluded, as she had in two earlier cases, 2 that "as a reference master, I have all of the powers of a judge to determine this summary judgment motion", 3 including the enhanced powers. 4 She referred to s. 58(4) of the Construction Lien Act ("CLA") [now Construction Act] 5 to support this enlarged jurisdiction. Section 58(4) of the CLA provides as follows:

Powers of master on reference

58(4) A master or case management master to whom a reference has been directed has all the jurisdiction, powers and authority of the court to try and completely dispose of the action and all matters and questions arising in connection with the action, including the giving of leave to amend any pleading and the giving of directions to a receiver or trustee appointed by the court.

[7] This very provision was considered by the Divisional Court in RSG Mechanical, 6 albeit in the context of a stare decisis issue and whether a construction lien master was bound by the decision of a Superior Court judge. The Divisional Court concluded that s. 58(4) of the CLA did not give the master the standing or powers of a judge. The court's analysis of s. 58(4) is directly on point:

Counsel submitted that having the ". . . jurisdiction, powers and authority of the court . . ." has the effect of making the referee, in this case the Master, a judge of the Superior Court of Ontario . . . As I see it, this is incorrect. The section does nothing other than provide for the conduct of the reference. It does not change the position of the referee within our judicial structure. The Master continues to have the status and place that comes from being a Master. He does not, for the purposes of the reference, obtain the standing of or become a judge. 7

[8] This decision and in particular the commentary just noted is, in my view, determinative. Because I am bound by Divisional Court decisions, I could stop my analysis at this point. However, for the sake of completeness I will consider the additional arguments advanced by counsel on both sides that largely focus on the other statutory provisions in the CLA.

[9] My overall conclusion, however, like that of the Divisional Court, will be that s. 58(4) of the CLA does not change the standing or powers of the construction lien master to those of a judge. Even if I give full force, as I must, to the "modern" approach to statutory interpretation -- that the subsections of an Act must be read "in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament" 8 -- there is nothing in the CLA, and in particular in s. 58(4), that can fairly and reasonably be interpreted as providing construction lien masters hearing summary judgment motions with the jurisdiction to exercise the enhanced powers in rule 20.04(2.1) that have been explicitly limited to judges.

[10] I will explain my decision by first examining the Rules and then the CLA.

[11] I note that the CLA was amended in 2017, changing the name of the statute to the Construction Act and adding a range of important procedural and substantive changes. 9 None of these changes apply herein because the home renovation contract in question was entered into in 2016 -- before the amendments took effect in 2018. The CLA provisions continue to apply in the analysis that follows. 10

Analysis

(1) The Rules

[12] Rule 20.04(2) provides that "the court" shall grant summary judgment if "the court is satisfied that there is no genuine issue requiring a trial". "Court" means the Superior Court of Justice and is commonly understood to include both judges and masters. "Court" is defined in rule 1.03(1) as including "a master having jurisdiction to hear motions under Rule 37". Under rule 37.02(1) a "judge" can hear any motion in a proceeding. Under rule 37.02(2) a "master" can also hear any motion in a proceeding but with the following proviso: "except a motion, (a) where the power to grant the relief sought is conferred expressly on a judge by a statute or rule".

[13] Rule 20.04(2.1), which falls within this proviso, expressly provides that in determining whether there is a genuine issue requiring a trial, only a "judge" has the jurisdiction to utilize the enhanced powers -- that is, "weighing the evidence, evaluating the credibility of a deponent or drawing any reasonable inference from the evidence".

[14] In other words, a master may decide a matter by way of summary judgment if he or she is satisfied that that are no genuine issues requiring a trial. But in coming to this determination, given the explicit limitation in rule 20.04(2.1), a master cannot weigh evidence, assess credibility or draw reasonable inferences. The matter must proceed to trial.

[15] The case law on point is divided but only at the masters' level. I have already referred to the decisions of Masters Polika (2010), Sandler (2010) and Albert (2016 and 2017) 11 -- all of whom relied on s. 58(4) of the CLA to give them the enlarged jurisdiction to use the enhanced powers. On the other hand, Master MacLeod, now Justice MacLeod, concluded in 2012 that the enhanced powers as set out in the 2010 amendments to Rule 20 could only be used by judges, and not by masters. In 90 George St. v. Reliance Construction, 12 Master MacLeod explained the impact of rule 20.04(2.1) as follows:

[J]udges (but not masters) are now given a certain amount of authority to determine evidentiary disputes even if there are genuine issues of credibility. In general it is fair to say that the old rule permitted summary judgment to be granted if a claim or a defence clearly had no merit and of course summary judgment remains available on that basis. The new rule permits judges to decide cases on their merits without a trial if it is just to do so.

If there is a genuine question of fact or of mixed fact and law then the master . . . may grant summary judgment if the question can be determined without a trial. This will seldom be the case for the master because the powers added to the rule in Rule 20.04(2.1) and 20.04(2.2) are not accessible to masters. Thus, there will be a class of cases in which notwithstanding that there is a genuine issue that could be tried, a judge can decide the merits without a trial whereas a master cannot.

[16] Master Short agrees. See, for example, his 2017 decision in Campoli Electric v. Georgian Clairlea [at para. 202]: 13

As a Master, I exercise only a subset of the jurisdiction of a judge and accordingly under the rule as currently drafted, I do not have access to the enhanced fact-finding role in Rule 20.04(2.1) or the mini trial process in 20.04(2.2).

[17] Although there is disagreement in the case law at the masters' level, there is no such disagreement in the decisions of judges of this court, and in particular the Divisional Court. The case law at this level is clear that the enhanced powers set out in rule 20.04(2.1) can only be used by judges. In Kieswetter v. Traugott, 14 Justice Heeney agreed with Master MacLeod, stating succinctly that

a Master does not have the power to weigh evidence, evaluate credibility and draw reasonable inferences from the evidence that is granted to a judge on a summary judgment motion, pursuant to Rule 20.04(2.1). 15

[18] Recall as well the decision of the Divisional Court in RSG Mechanical, 16 discussed above, where the court concluded that s. 58(4) of the CLA "does nothing other than provide for the conduct of the reference" and that s. 58(4) does not change the position of the referee within our judicial structure:

The Master continues to have the status and place that comes from being a Master. He does not, for the purposes of the reference, obtain the standing of or become a judge. 17

[19] I agree with Masters MacLeod and Short and with Justice Heeney. I am also persuaded and probably bound by the commentary of the Divisional Court in RSG Mechanical. I therefore have no difficulty concluding that masters may hear summary judgment motions on construction lien references, and more generally in other matters, pursuant to rule 20.04(2). In doing so, however, they may not use the enhanced powers set out in rule 20.04(2.1) because these expanded powers are explicitly limited to judges.

[20] And, as I explain below, there is nothing in the CLA that suggests otherwise.

(2) The CLA

[21] Both sides agree that statutory provisions such as those in the CLA prevail over the Rules of Civil Procedure. Section 66(3) of the Courts of Justice Act provides that the Rules Committee cannot make rules that conflict with a statute. 18 Section 67(3) of the CLA provides that the rules of court shall apply to the proceedings under this Act "except where inconsistent with this Act".

[22] The plaintiff says that denying masters the jurisdiction to use the enhanced powers in rule 20.04(2.1) is inconsistent with the scope and purpose of the CLA. The plaintiff argues, correctly, that the CLA is remedial legislation that was designed to provide security for work and materials supplied by contractors and a relatively inexpensive and efficient way to resolve construction lien disputes. 19 And further, as this court has noted, that the CLA should be "implemented procedurally in such a way as to advance the objective of providing a summary and inexpensive remedy". 20

[23] However, as is obvious from a plain reading of the CLA, the legislated remedy of choice was the summary trial, that is, a summary procedure in an action.

[24] See, for example, the following subsections:

Court to dispose completely of action

51. The court, whether the action is being tried by a judge or on a reference by a master, a case management master or a person agreed on by the parties,

(a) shall try the action, including any set-off, crossclaim, counterclaim and, subject to section 56, third party claim, and all questions that arise therein or that are necessary to be tried in order to dispose completely of the action and to adjust the rights and liabilities of the persons appearing before it or upon whom notice of trial has been served; and

(b) shall take all accounts, make all inquiries, give all directions and do all things necessary to dispose finally of the action and all matters, questions and accounts arising therein or at the trial and to adjust the rights and liabilities of, and give all necessary relief to, all parties to the action.

Procedure generally

Summary procedure

67(1) 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.

Powers of master on reference

58(4) A master or case management master to whom a reference has been directed has all the jurisdiction, powers and authority of the court to try and completely dispose of the action and all matters and questions arising in connection with the action, including the giving of leave to amend any pleading and the giving of directions to a receiver or trustee appointed by the court.

(Emphasis added)

[25] The focus on summary trials is understandable given that the relevant provisions in the CLA and its predecessor Mechanics' Lien Act 21 were enacted decades ago, long before the Osborne Commission and the 2010 amendments to the rules providing for enhanced powers in summary judgment motions. 22 The possibility of a summary judgment motion is provided under s. 67(2) of the CLA but only with "leave of the court" and only if the motion is "necessary" or will "expedite the resolution of the issues in dispute". 23

[26] There is nothing in the CLA to suggest that a master may assume all the powers and authority of a "judge" when hearing a summary trial, let alone when hearing a summary judgment motion. The provisions in the CLA routinely refer to "the court", "masters" and "judges" -- the drafters of the CLA were obviously alive to the distinctions in these word choices. If s. 58(4) was intended to bestow upon masters "all the powers and authority" of a "judge" when hearing motions for summary judgment, it could easily have said so. And this certainly could have been made clear in 2017 when the CLA was substantially amended. By not changing the language in any of the above-noted provisions, it must follow that no changes were intended. I therefore find that the expanded powers set out in rule 20.04(2.1) and expressly limited for use by judges are not inconsistent with any of the provisions in the CLA.

Disposition

[27] The defendant's motion for an order refusing confirmation of the master's report is granted. The enhanced powers that are explicitly limited to "judges" in rule 20.04(2.1) cannot be used by the learned masters of this court.

[28] The impugned report is set aside and, under rule 54.09(5), the matter is returned to a construction lien master for trial.

Costs

[29] At the hearing of this motion, I asked counsel for their cost estimates (on a partial indemnity basis) should they prevail on this motion. Mr. Maynard, for the plaintiff, would have sought $10,000. Mr. Wise, for the defendant, was content with $5,000. At the close of the hearing, I invited further submissions relating to the jurisdiction issue herein. Both sides forwarded detailed written arguments which likely added another $3,000 or more (on a partial indemnity scale) to their overall cost estimates. I therefore find it fair and reasonable to fix costs at $8,500, payable forthwith by the plaintiff to the defendant.

[30] Order to go accordingly.

[31] My thanks to counsel on both sides for the additional submissions.

Motion granted.

Notes

1 R & V Construction Management Inc. v. Manoucher Baradaran, 2018 ONSC 3148.

2 Limen Structures Ltd. v. Brookfield Multiplex Construction Canada Ltd., 2016 ONSC 5107 (S.C.J.), at para. 23; and Walsh Construction/Bondfield Partnership v. Chartis Insurance Co. of Canada, 2017 ONSC 3985 (S.C.J.), at para. 18. I note that in 2010 just after Rule 20 was amended, it was Master Polika who first decided that masters could use the enhanced powers set out in rule 20.04(2.1) given the language in s. 58(4) of the Construction Lien Act, R.S.O. 1990, c. C.30: see 6007325 Canada Inc. (c.o.b. Group 5) v. LPQ 18 Yorkville Avenue Inc., 2010 ONSC 2844 (S.C.J.), at paras. 13-17. See, also, Master Sandler's commentary to similar effect in DCL Management Ltd. v. Zenith Fitness Inc., 2010 ONSC 5915 (S.C.J.), at para. 9.

3 Supra, note 1, at para. 4.

4 Limen and Walsh, supra, note 2.

5 R.S.O. 1990, c. C.30.

6 RSG Mechanical Inc. v. 1398796 Ontario Inc., 2015 ONSC 2070 (Div. Ct.).

7 Ibid., at para. 37.

8 Orphan Well Assn. v. Grant Thornton Ltd., 2019 SCC 5, at para. 194, citing Rizzo & Rizzo Shoes Ltd. (Re) (1998), 36 O.R. (3d) 418, [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2.

9 Construction Lien Amendment Act, S.O. 2017, c. 24.

10 Ibid., s. 87.3(1).

11 Supra, note 2.

12 90 George St. v. Reliance Construction Canada Inc., 2012 ONSC 1171 (S.C.J.), paras. 28 and 36.

13 Campoli Electric Ltd. v. Georgian Clairlea Inc., 2017 ONSC 2784 (S.C.J.).

14 Kieswetter Demolition (1992) Inc. v. Traugott Building Contractors Inc., 2014 ONSC 1397 (S.C.J.).

15 Ibid., at para. 8.

16 RSG Mechanical, supra, note 6.

17 Ibid., at para. 37.

18 Courts of Justice Act, R.S.O. 1990, c. C.43, s. 66(3).

19 PCR Contractors Inc. v. Wilson Station Development Corp., 2015 ONSC 6319 (S.C.J.), at para. 20; Report of the Attorney General's Advisory Committee on the Draft Construction Lien Act, 1982, Appendix A to Duncan Glaholt and David Keeshan, The 2016 Annotated Ontario Construction Lien Act (Toronto: Carswell, 2016) at 691.

20 Hamilton Landscaping & Paving v. 603893 Ontario Inc., 1988 CarswellOnt 760 (H.C.J.), at para. 11.

21 Mechanics' Lien Act, R.S.O. 1970, c. 267.

22 The summary procedure set out in s. 67(1) of the CLA was introduced in substance by s. 47 of The Mechanics' and Wage Earners' Lien Act, 1923, S.O. 1923, c. 30, and carried forward into the CLA when it was enacted in 1983. The reference model for lien proceedings was introduced in 1960 in s. 31(3) of The Mechanics' Lien Act, R.S.O. 1960, c. 233 and was carried forward into the CLA in 1983. See Duncan Glaholt and David Keeshan, The 2018 Annotated Ontario Construction Lien Act (Toronto: Carswell, 2018), at 462-63 and 497.

23 See Perell J.'s analysis in Royal Oak Railing & Stair Ltd. v MyHaven Homes Ltd., 2016 ONSC 423 (S.C.J.), at paras. 16-17.