Court File and Parties
COURT FILE NO.: 91128/15 (Oshawa)
MOTION HEARD: 2019 08 13
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: W.S. Nicholls Construction Inc.
v.
Barton-Malow Canada, Inc., Kenaidan Contracting Ltd., Courtice Power Partners, a joint venture comprised of Kenaidan Contracting Ltd. and Barton-Malow Canada, Inc., The Regional Municipality of Durham, The Regional Municipality of York and Covanta Durham York Renewable Energy Limited Partnership
BEFORE: MASTER R. A. MUIR
COUNSEL: Julie K. Parla and Patrick Healy for Covanta Durham York Renewable Energy Limited Partnership Andrew Gurlesky and Darcia Perry for W.S. Nicholls Construction Inc. Robert E. Hutton for Insulcana Contracting Ltd. Anthony Scane and James Round for Courtice Power Partners
REASONS FOR DECISION
[1] The defendant Covanta Durham York Renewable Energy Limited Partnership (“Covanta”) brings this motion pursuant to section 47(1) of the Construction Lien Act, RSO 1990, c. C30 (the “CLA”) for an order dismissing this action against Covanta.[^1] The defendant Courtice Power Partners (“CPP”) supports Covanta’s position. The plaintiff is opposed. The lien claimant Insulcana Contracting Ltd. (“Insulcana”) supports the plaintiff’s position.
[2] Covanta and CPP have agreed that if this action is dismissed against Covanta, the crossclaims between Covanta and CPP should be dismissed without costs.
BACKGROUND
[3] The plaintiff’s claim arises out of the construction of an improvement known as the Durham York Energy Centre, located in Clarington, Ontario (the “Project”). The Project was a substantial undertaking and resulted in many construction lien and other claims. I have been appointed to case manage all claims arising from the Project, pursuant to the direction of RSJ Fuerst.
[4] In November 2010 Covanta entered into an agreement with The Regional Municipality of Durham and The Regional Municipality of York whereby Covanta would design, build, construct and operate a facility to be known as the Durham York Energy Centre. The initial contract price was more than $235 million.
[5] CPP is a joint venture between Barton-Malow Canada, Inc. and Kenaidan Contracting Ltd. In December 2011 Covanta entered into a sub-contract with CPP for the supply of construction related services and materials in connection with the Project. In effect, Covanta subcontracted its construction obligations to CPP. CPP then entered into various sub-subcontracts with trade contractors for the supply of services and materials required to complete CPP’s scope of work.
[6] One of the CPP sub-contracts was with the plaintiff. It was dated June 7, 2012 (the “WSN Sub-Contract”). The plaintiff’s scope of work was described in the WSN Sub-Contract as including the erection of mechanical equipment, materials and components in relation to boilers, air pollution controls and a steam turbine generator, along with other related work.
[7] On October 2, 2013, the plaintiff entered into an agreement with Insulcana to supply and install insulation and jacketing in relation to the plaintiff’s scope of work under the WSN Sub-Contract.
[8] All claims from the Project have now been resolved except for the plaintiff’s claim and the claim being advanced by Insulcana.
[9] The plaintiff registered a claim for lien on February 13, 2015. It claimed that $35,779,391.63 was owing to it by its payer, CPP. The plaintiff’s statement of claim was issued on March 27, 2015. The plaintiff named CPP, Covanta and the two owner municipalities as defendants. This action was subsequently discontinued against the municipalities. The action continues against CPP and Covanta. In its claim, the plaintiff seeks payment from both of these defendants.
[10] Insulcana also preserved a lien. It then issued its statement of claim on July 10, 2015. It did not name Covanta as a defendant. The plaintiff in this action is the only remaining defendant in the Insulcana action.
[11] CPP also registered a lien on the Project. Its lien was vacated pursuant to the order of Justice Salmers of February 10, 2015 after Covanta posted a bond in the amount of $57,000,000.00. By order of Justice Glass of August 25, 2015, it was confirmed that the liens of the plaintiff and Insulcana were subsumed within the lien of CPP and the bond previously posted by Covanta also stood as security for those liens.
[12] On July 22, 2019 I made a consent order whereby the Covanta bond was replaced with cash security paid by Covanta to cover the liens of the plaintiff and Insulcana. On August 23, 2019 I made a further order replacing the cash security with a bond posted by CPP for the full amount of the liens of the plaintiff and Insulcana along with security for costs (the “CPP Bond”).
POSITIONS OF THE PARTIES
[13] Covanta argued that this action should be dismissed against it for several reasons. It submitted that the claim is improper as there is no allegation of privity of contract between the plaintiff and Covanta. The plaintiff’s lien has been vacated by the posting of security. There is therefore no sustainable claim against Covanta under the CLA. Covanta also submitted that the equitable claims advanced by the plaintiff are improper in a lien action and barred by section 55 of the CLA. Finally, Covanta took the position that the plaintiff’s equitable claims are simply not viable based on the facts and law.
[14] The plaintiff argued that it has put forward a sustainable unjust enrichment claim against Covanta as pleaded and in the evidence filed in response to this motion. It stated that there exist genuine issues requiring a trial. The plaintiff suggested that Covanta has delayed bringing this motion and noted that Covanta has not specifically pleaded that the plaintiff’s equitable claims are improper as part of this lien action. The plaintiff submitted that section 63 of the CLA allows for a personal judgment in a lien action. It argued that this is a unique case and there is a special relationship between the plaintiff and Covanta supporting a personal judgment based on the equitable claims. For these reasons, the plaintiff submitted that its claims against Covanta should be permitted to proceed to trial.
ANALYSIS
[15] The parties are in general agreement as to the test to be applied on a motion such as this. Section 47(1) of the CLA provides that upon a motion the court may dismiss a lien action on any proper ground. This broad discretion is consistent with the overall objective of the CLA as set out in section 67(1) which provides that the procedure in a lien action shall be summary in character.
[16] A motion to dismiss under section 47(1) of the CLA is similar to a motion for summary judgment and the test is the same. The moving party must satisfy the court that there is no genuine issue requiring a trial. See DCL Management Ltd. v. Zenith Fitness Inc., 2010 ONSC 5915 (Master) at paragraph 4.
[17] The test on a motion for summary judgment is set out in the decision of the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7 as follows at paragraphs 49 and 50:
49 There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
50 These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.
[18] These are the factors and principles I have considered and applied in determining the issues on this motion. In my view, Covanta has met its onus to demonstrate that there is no genuine issue requiring a trial. The plaintiff’s claim against Covanta should be dismissed.
[19] No contract exists between the plaintiff and Covanta and the plaintiff has not made such an allegation in its pleading. The plaintiff alleges that Covanta is an owner within the meaning of the CLA and makes a claim against holdbacks and the security posted by Covanta. Those issues are now moot given the fact that CPP has posted a bond for the full amount of the plaintiff’s lien. Section 44(6) of the CLA provides that once security is posted pursuant to section 44(1) or 44(2) of the CLA, the lien ceases to attach to the land and the holdbacks and instead becomes a charge on the posted security. This is an essential feature of the CLA. Once security is posted, an owner is then free to deal with the land, project payments and financing as necessary without jeopardy to its position.
[20] This is the conclusion reached by Justice Van Melle in Ablesystems Mechanical Ltd. v. AER Comfort Mechanical Services Ltd., [2009] OJ No. 6 (SCJ). The plaintiff in Ablesystems supplied services and materials to the defendant AER Comfort Mechanical Services Ltd. (“AER Comfort”). The plaintiff preserved a lien and AER Comfort posted security. The owner and general contractor brought motions seeking a dismissal of the plaintiff’s claim against them. The plaintiff argued that its claims against the moving parties based on unjust enrichment and quantum meruit should be permitted to continue. At paragraphs 10 and 11 of Ablesystems Justice Van Melle concluded as follows:
10 With respect, I cannot accede to the argument of the plaintiff. I agree with the authorities that state that once a lien has been vacated upon payment of security into court under s. 44(6), the action against the owners and in this case, the general contractor, should be dismissed. They are no longer necessary or proper parties to the action as there is no privity of contract between them and the plaintiff: Concord Carriers Ltd. v. Alnet Holdings Ltd., [2005] OJ No. 3748 (SCJ).
11 The effect of vacating the registration of a lien results in that particular lien claimant looking to the funds in Court as security instead of an interest in the premises. In other words, once vacated, the owner and lenders can deal with the lands as they see fit and the lien claimant no longer has a claim to the lands, and, instead, must assert his or her claim against the funds in Court.
[21] In my view, this decision cannot be distinguished on its facts from the circumstances of the motion before me. A lien claimant whose lien has been vacated by the posting of security by the party with whom it has a contract cannot continue with its claims of unjust enrichment and quantum meruit against an owner or other non-contracting party as part of its lien action. The owner and other party are no longer proper parties. The claims against those parties must be dismissed in such circumstances.
[22] The plaintiff provided no case law contrary to the decision of Justice Van Melle in Ablesystems and the authorities relied upon by her. Ablesystems is binding on this court. The only remaining claims the plaintiff has pleaded against Covanta are the equitable claims of unjust enrichment and quantum meruit. The plaintiff will not be prejudiced in any way by the dismissal of those claims. Its claims against CPP are fully secured by the CPP Bond.
[23] I also agree with Covanta that the claims the plaintiff is advancing are not permitted because of section 55 of the CLA. Section 55(1) provides that only a claim for breach of contract may be joined with a lien claim. The Court of Appeal has recently held that this section prohibits the joining of claims for unjust enrichment and quantum meruit in a lien action. To allow such claims would defeat the purpose of the CLA. The CLA was intended to provide a summary procedure for dealing with lien claims. See Yorkwest Plumbing Supply Inc. v. Nortown Plumbing (1998) Ltd., 2016 ONCA 305 at paragraph 54.
[24] This decision of the Court of Appeal is binding on this court. In my view, it cannot be distinguished on its facts. The plaintiff in Yorkwest Plumbing argued that its lien action should be permitted to proceed with claims of unjust enrichment and quantum meruit against owners with whom it had no contractual relationships. The Court of Appeal rejected this argument. This is precisely the situation before the court on this motion. I see no significance to the fact that Covanta is a contractor as well as an owner as argued by the plaintiff. The important fact in Yorkwest Plumbing is that the plaintiff did not allege it had a contract with the parties is was suing based on unjust enrichment. The same is true in this action. The plaintiff has no contract with Covanta.
[25] In my view, section 63 of the CLA does not assist the plaintiff. That section states that the court may award a lien claimant a personal judgment whether the claimant proves a lien or not. All authorities cited by the parties invoking section 63 of the CLA involve situations where the parties have acknowledged the existence of a contract or near contract. To suggest that this section permits claims based on unjust enrichment and quantum meruit in the circumstances of this action would be contrary to the plain reading of section 55(1) of the CLA and the decision of the Court of Appeal in Yorkwest Plumbing. As the Court of Appeal stated in Yorkwest Plumbing at paragraph 54:
By including s. 55, the Act further defines the extent and intent of actions that can be brought to enforce it.
[26] I also agree that the plaintiff cannot make out a claim of unjust enrichment on the evidence before the court on this motion. The elements of the claim are well known and described in the decision of the Supreme Court of Canada in Garland v. Consumers’ Gas Co., 2004 SCC 25 at paragraph 30. There must be an enrichment of the defendant, a corresponding deprivation to the plaintiff and the absence of a juristic reason for the enrichment. All three prongs of the test must be satisfied.
[27] First, it is clear that Covanta has not been enriched. It participated in a lengthy arbitration proceeding with CPP as required by their contract. An award was made in that proceeding. Covanta has paid all amounts owing to CPP for the work performed under that contract as determined by the arbitrator. There has been no enrichment. Covanta has paid for what it received according to its contract with CPP.
[28] Second, there has been no deprivation to the plaintiff. Its contract claims will continue against CPP. The court will determine what amount CPP owes the plaintiff and the plaintiff’s claim is fully secured by the CPP Bond. The plaintiff has made many allegations in its pleading about the conduct of CPP on the Project and how the plaintiff has incurred damages as a result. Those claims and allegations remain extant and will be determined by this court.
[29] The plaintiff argued that it was the only party to provide evidence on this motion from a person with direct knowledge of the Project. I agree. However, the plaintiff’s evidence is not consistent with its pleading. The failings it identifies in the statement of claim are directed to CPP and not Covanta.
[30] The plaintiff also argued that this was a unique case and it should be allowed to continue with its equitable claims, so it may obtain a just result. I see nothing unique about this action or the Project itself. This is a very typical construction arrangement with the usual contractual relationships all agreed to by sophisticated parties including the plaintiff.
[31] The plaintiff relies on Haas Homes Ltd v. March Road Gym & Health Club Inc., 2003 8607 (ON SC), [2003] OJ No. 2847 (SCJ). At paragraph 22 of Haas Homes the court suggests that a claim based on unjust enrichment may arise where a special relationship can be shown by the indirect conduct of a non-contracting owner. However, the plaintiff has not pleaded a special relationship with Covanta or any facts that might support such a claim against Covanta. Again, the plaintiff’s claims are fully secured by the CPP Bond. There will be no injustice to the plaintiff.
[32] Finally, I do not see delay as a barrier to the relief Covanta is seeking on this motion. The plaintiff is deemed to know the law in connection with advancing equitable claims as part of lien actions. Covanta generally denied that the plaintiff was entitled to equitable relief as part of its defence. Covanta pleaded that any claims the plaintiff may have are exclusively against CPP. The claims arising from this Project have been stayed for several years pending the outcome of the arbitration proceeding between CPP and Covanta. The plaintiff took no objection to the stay orders.
CONCLUSION
[33] I am therefore satisfied that there is no genuine issue requiring a trial with respect to the plaintiff’s claims against Covanta. Covanta is no longer a proper party given that security has been posted. The plaintiff’s claims are fully secured and will proceed against CPP. It will not be prejudiced. Equitable claims are not properly joined as part of a lien action. The plaintiff’s claim for unjust enrichment is not supported by the pleadings or the evidence.
ORDER
[34] I therefore order as follows:
(a) the plaintiff’s action against Covanta is dismissed;
(b) all crossclaims between CPP and Covanta are dismissed without costs;
(c) Covanta’s supplementary motion record dated August 7, 2019 shall be sealed, treated as confidential and not form part of the public record; and,
(d) if the parties are unable to agree on the issue of the costs of this motion, they shall provide the court with brief submissions in writing by September 30, 2019.
Master R. A. Muir
Date: 2019 08 30
[^1]: The Construction Act, RSO 1990 c. C30 (the “Construction Act”) came into force on July 1, 2018. However, pursuant to section 87.3 of the Construction Act, the provisions of the former CLA continue to apply if a contract for the subject improvement was made prior to July 1, 2018. For this reason, the provisions of the former CLA apply to this proceeding.