NEWMARKET COURT FILE NO.: CV-16-128474-00

DATE: 20190812

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

A.C. Concrete Forming Ltd.

Plaintiff

– and –

Gary Kaplan, Lisa Kaplan, Cola-Con Structures Inc., and MDK Construction Ltd.

Defendants

S. Siddiqui, for the Plaintiff

R. Sparano, for the Defendants

HEARD: June 27, 2019

REASONS FOR DECISION

de sa j.

Overview

[1] The Defendants, Gary Kaplan and Lisa Kaplan (the “Kaplans”) have brought a motion for a Declaration that the Plaintiff’s lien has expired pursuant to Section 37(1) of the Construction Lien Act, R.S.O. 1990 (the “Act”) – now the Construction Act, R.S.O. 1990, c. C.30. They seek an Order dismissing the action as against the Kaplans.

[2] The Kaplans also seek an Order that the amount paid into court by the Kaplans as security for the lien action, pursuant to Section 44 of the Act, be paid out of court and returned to them.

[3] It is evident from the materials filed that the lien has expired. Accordingly, I order that the amount paid into Court be returned to the Kaplans. While the lien claim is dismissed, the underlying action will proceed under the ordinary rules.

[4] The reasons for my decision are outlined below.

Summary of Facts

[5] On October 13, 2016, and October 25, 2016, respectively, A.C. Concrete, the Plainitff, registered the Lien and Certificate for the Lien Action against the property at issue (the “Property”).

[6] The Statement of Claim for the within Lien Action was issued on October 21, 2016.

[7] The Lien Action claims that A.C. Concrete entered into an agreement with the Defendants, Cola-Con Structures Inc. (“Cola-Con”) and MDK Construction Ltd. (“MDK”), and not Lisa and Gary Kaplan (the “Kaplans”), for the supply of services and materials for the Property (the “Contract”), and that Cola-Con and MDK, not the Kaplans, have breached the said Contract.

[8] While A.C. Concrete did not enter the Contract with the Kaplans, A.C. Concrete did supply services and materials to the Property in the amount of $273,442.39. The services/materials were ultimately supplied for the benefit of the Kaplans, who own the Property. Accordingly, the Plaintiff in its Statement of Claim pleads the doctrine of quantum meruit as against the Kaplans.

[9] On November 29, 2016, A.C. Concrete obtained default judgment against all the Defendants (the “Default Judgment(s)”), and garnished a bank account of Cola-Con, seizing $141,845.48 towards its Lien Claim. As such, the debt alleged as due and owing on the Lien Claim was reduced to $131,596.91 (the “Lien Claim Balance”).

[10] On February 16, 2017, the Default Judgments were set aside, on consent, as against the Kaplans and MDK, and they both delivered pleadings in the Lien Action.

[11] However, Cola-Con was required to bring Motions to set aside the judgment as against it (the “Set Aside Motions”), which A.C. Concrete defended, including by conducting cross-examinations on September 27, 2017.

[12] A.C. Concrete did not otherwise take any steps to move the Lien Action forward as against the Kaplans or MDK.

[13] In the interim, two important events occurred:

(a) On October 19, 2017, the parties to the Lien Action consented to the Lien and Certificate being vacated from title to the Property, subject to the Kaplans paying the Security, made up of the Lien Claim Balance, plus $32,899.23, representing 25 per cent of said balance as costs security, into court as security for the Lien Action.

(b) On October 21, 2018, the Lien expired as the Lien Action was not set down for trial and no Order was made for or with respect to the trial of the Lien Action on or before this date, as required by the Construction Lien Act, R.S.O. 1990.

[14] Instead of taking any steps to set the Lien Action down for trial or get an Order for the trial of the Lien Action on or before October 21, 2018, A.C. Concrete brought a motion and/or obtained an Order on October 18, 2018 to compel Cola-Con to answer undertakings related to its Set Aside Motion.

[15] A.C. Concrete could have addressed the trial of the Lien Action with the court on October 18, 2018, three days before the expiry of the Lien, but took no steps whatsoever at that time or at any time before October 21, 2018 to set the Lien Action down for trial or get an Order for the trial of the Lien Action.

[16] Thereafter, the Kaplans initially brought this Motion to Dismiss without notice, pursuant to s. 46(3) of the Act, returnable on January 22, 2019, but it was scheduled by the court to be returnable on March 21, 2019 (the “Motion to Dismiss”).

[17] At some point in time between those dates, A.C. Concrete became aware of the Motion to Dismiss and took the following steps:

(a) On March 14, 2019, A.C. Concrete brought a Motion with respect to the Set Aside Motion and obtained an Order from Dawe J. for the following:

(i) Striking the Set Aside Motion; and,

(ii) Permitting A.C. Concrete to file a Trial Record by March 20, 2019: This was five months after the Lien had expired and one day before the return of the Motion to Dismiss (the “Dawe Order”).

(b) On March 20, 2019, A.C. Concrete delivered a Trial Record; and,

(c) On March 21, 2019, attended on the without notice Motion to Dismiss seeking an adjournment, which was granted until June 27, 2019, with costs of the attendance that day being reserved to the motions judge on the return of the said Motion.

[18] On April 30, 2019, A.C. Concrete served materials in response to the Motion to Dismiss.

Law and Analysis

General Principles

[19] The Construction Act (formerly the Construction Lien Act, R.S. O. 1990) is legislation designed to give priority and security to contractors who supply work and services to real property. Section 14(1) of the Act provides that, “[a] person who supplies services or materials to an improvement for an owner, contractor or subcontractor, has a lien upon the interest of the owner in the premises improved for the price of those services or materials.”

[20] The Act operates to prevent the homeowner from being unjustly enriched at the expense of contractors or subcontractors through the receipt of unpaid services and materials. This is often extremely important for subcontractors who have no privity of contract with the owner.

[21] It is clear from s. 14(1) of the Act that the lien arises at the time the work is supplied; however, the Act provides that the lien will expire if the lien is not “preserved”. The Act sets out specific time requirements for a lien claimant to “preserve” a lien: Construction Act, R.S.O. 1990, c. C.30, s. 31, s. 34.

[22] A lien that has been preserved expires unless it is perfected prior to the end of the 90-day period next following the last day, under section 31, on which the lien could have been preserved: Construction Act, R.S.O. 1990, c. C.30, s. 36(2).

[23] A lien claimant perfects the lien claimant’s preserved lien in either of the two scenarios:

(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: Construction Act, R.S.O. 1990, c. C.30, s. 36 (3).

[24] Section 37(1) of the Act 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:

1. An order is made for the trial of an action in which the lien may be enforced.

2. An action in which the lien may be enforced is set down for trial.

[25] As evident from section 37(1), to maintain the lien, the Act requires that the plaintiff set the matter down expeditiously. The jurisprudence makes clear that irregularities in process will be tolerated by the courts with a view to maintaining the lien: 1475707 Ontario Inc. Operating as Action Electric Construction and Maintenance v. Foran, 2014 ONCA 830, 328 O.A.C. 201, at para. 41; Teepee Excavation & Grading Ltd. v. Niran Construction Ltd., 49 O.R. (3d) 612.

[26] Where a perfected lien has expired, however, 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: Construction Act, R.S.O. 1990, c. C.30, s. 46(1).

[27] Where an action to enforce a lien is dismissed, pursuant to s. 46(4) of the Act, the court shall also order that:

(a) any amount that has been paid into court under section 44 in respect of that action be returned to the person who paid the amount into court; and

(b) any security that has been posted under section 44 in respect of that action be cancelled.

Application to the Facts of the Case

[28] In this case, the lien has clearly expired. The Order of Dawe J. to set the matter down was obtained by the Plaintiff some five months after the lien’s expiry. The Plaintiff does not seriously contest this fact.

[29] The Defendant, however, not only seeks that the lien be dismissed, but also argues that the Act also contemplates a dismissal of the underlying cause of action. The Defendant acknowledges that the jurisprudence permits contract claims to continue, but according to the Defendant, nothing in the jurisprudence contemplates the continuation of any other types of claims.[^1]

[30] I disagree. The Act contemplates a dismissal of the “action to enforce the lien” as the lien has expired. However, the underlying claim is not extinguished by such an order. The Plaintiff is still able to proceed against the Defendant in relation to the underlying cause.[^2]

[31] The strict time requirements set out in the Act only pertain to the action to enforce the lien, not the underlying cause. To interpret the legislation otherwise would permit for an arbitrary extinguishment of the cause, without notice, and without any consideration for the underlying reasons for the delay. The Defendant’s proposed interpretation also unnecessarily interferes with the court’s ability to ensure justice as between the parties: Beaver Engineering Ltd. v. Swedlove (1994), 1994 CanLII 10529 (ON SC), 17 O.R. (3d) 355 (Ont. Div. Ct.).

[32] Indeed, s. 38 of the Act specifically provides for the preservation of other rights:

The expiration of a lien under this Act shall not affect any other legal or equitable right or remedy otherwise available to the person whose lien has expired.

[33] No doubt, the court retains the discretion to dismiss the claim in its entirety if the circumstances warrant it. In many cases, a dismissal of the action altogether may be justified. With that said, there is nothing which mandates such a dismissal: Teepee Excavating, at para. 24.

Disposition

[34] Having regard to the above, the lien is dismissed. The monies paid into court are to be returned.

[35] The matter as against the Kaplans is to proceed in accordance with the ordinary rules.

[36] I will receive costs submissions from the Defendant within three weeks of this decision. The Plaintiff will have one week thereafter to respond.

Justice C.F. de Sa

Released: August 12, 2019

[^1]: Here, the Plaintiff pleads the doctrine of quantum meruit or unjust enrichment. Support for the Defendant’s position can be found in Ciccocioppo Design/Build Inc. v. Gruppuso, 2017 ONSC 2012, 76 C.L.R. (4th) 293.

[^2]: See Atlas Cabinets and Furniture Ltd. v. National Trust Co. Ltd., 1990 CanLII 1312 (BC CA), 45 B.C.L.R. (2d) 99 (B.C.C.A.). See also Edgcumbe v. Vicary, 2018 ONSC 2656.```