COURT FILE NO.: CV-19-79025
DATE: 2019/09/19
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Reno Rescue (Ottawa) Ltd.
Plaintiff/Respondent
– and –
Alicia Ashton and Derek Vilis
Defendants/Moving parties
Phillip Wallner, Counsel for the Plaintiff
Paul Jakubiak, Counsel for the Defendants
HEARD: August 1, 2019 (Ottawa)
endorsement
H.J. Williams, J.
Overview
[1] The moving parties are the defendants Alicia Ashton and Derek Vilis, who own a home in Ottawa. The moving parties request an order vacating a lien registered against their home and an order for security for costs.
[2] The respondent is the plaintiff Reno Rescue (Ottawa) Ltd., a general contractor hired to renovate the moving parties’ home.
The motion to vacate the lien
[3] The Construction Lien Act, R.S.O. 1990, c. C. 30 (“CLA”), and not its successor, the Construction Act, R.S.O. 1990, c. C. 30, applies to this motion because the parties’ contract was signed before July 1, 2018.
[4] The homeowners argue that a lien the contractor registered against their property should be vacated because it had expired before it was perfected.
[5] Liens expire unless they are both preserved and perfected within timelines in the CLA.
[6] A lien will expire unless it is preserved within 45 days after the contract is either completed or abandoned. A lien is preserved by filing the claim for lien in the land registry office and registering it against the property. Once a lien has been preserved, it will expire if it is not perfected within 45 days of the last day on which it could have been preserved, which is 90 days after the contract is either completed or abandoned. A preserved lien is perfected by starting an action to enforce the lien and, in some cases, registering a certificate of action against the property.
[7] In this case:
• The homeowners argue that the contractor last worked at their home on October 18, 2018 and that, after that date, the contract was abandoned.
• The lien was preserved on November 29, 2018. The homeowners do not take issue with the date of preservation of the lien.
• The contractor issued a statement of claim on January 18, 2019. Although there was no evidence with respect to when the certificate of action was registered against the property, the homeowners have not raised this as an issue and concede that the lien was perfected on January 18, 2019. (Defendants’ factum, para. 34.) The homeowners argue that, because the last work on their home was performed on October 18, 2018, the deadline for perfection was January 16, 2019 and that the lien expired two days before it was perfected.
[8] As the contract was not completed, the issue in this case is when it was abandoned, triggering the 45-day period for preservation and then perfection of the lien.
[9] The homeowners argue that the contractor abandoned the project on August 28, 2018 when it removed its sign and equipment from the premises and returned the homeowners’ keys. The homeowners admit that the contractor continued to work on the project after receiving a payment from them on August 30, 2018 but argue that all of the work done by the contractor after August 30, 2018 was done for the purpose of justifying the next progress payment and that it was evident that the contractor did not intend to complete the job.
[10] The homeowners concede that work continued until October 18, 2018 but say that no work was done after that day. The homeowners rely on information they obtained from a sub-contractor, Gary Singh, who stated in an email that October 18, 2018 was the last day of work on the project. The homeowners say that they told the contractor that they would be at home on October 19, 2018 and that no work could be done that day. They say that no work was done on Saturday, October 20, 2018, Sunday, October 21, 2019 or Monday, October 22, 2019. They say that when a worker arrived at their home on Tuesday, October 23, 2018, they did not permit him to enter the property because it had become clear to them that the contract was at an end.
[11] The contractor argues that the earliest possible date the project could be considered to have been abandoned is October 23, 2018, the day the homeowners refused to give the contractor’s worker access to the property.
[12] Whether a project has been abandoned is a question of fact. (Wildberry Homes Inc. v. Prosperity One Credit Union Limited, 2008 CanLII 70790 (ON SC) at para. 16.) Abandonment occurs when there has been both a cessation of work and an intention not to complete the contract. (Wildberry Homes Inc., at para. 21.)
[13] I accept that work on the project ended on October 18, 2018. However, the homeowners have failed to convince me that the contractor did not intend to complete the contract. For the following reasons, I find that the contractor intended to complete the contract right up until the homeowners refused to allow the contractor’s worker to enter their home on October 23, 2018:
• Although the homeowners now argue that the contractor had abandoned the project when the last work was done October 18, 2018, an email from one of the contractor’s sub-contractors, Mr. Singh, put in evidence by the homeowners, states that Mr. Singh was at the home the morning of October 19, 2018 to meet with the contractor’s principal, Hugh Trueman, “to review areas we needed to have addressed for our work (bathroom, framing, ducting, electrical etc.)” Mr. Singh said that he met Mr. Trueman at the home and that Mr. Trueman informed him that that the clients had sent him an email to say that they did not want any work completed that day.
• The homeowners emailed Mr. Trueman on October 22, 2018 to express concerns about their sump pump well and to say that they wanted him to know about the situation so that he could address it. Although it is arguable, and the homeowners in fact argued, that the homeowners would have asked Mr. Trueman to fix the sump pump well problem whether the contract had been abandoned or not, there was no hint in the homeowners’ email that they believed that the contractor had abandoned the contract, that they considered the contract to be at an end or that there had been any change in the status of their relationship with the contractor since the previous Thursday, when the sub-contractor was on site. In their email, the homeowners did not appear to doubt that the contractor would come to their house to deal with the sump pump well problem; to the contrary, they appeared to expect him to address it. The contractor did, of course, send a worker to the homeowners’ home the following day.
• On October 11, 2018, the contractor had requested a meeting with the homeowners to discuss a number of matters, including finishing options for their home. On October 17, 2018, the contractor had proposed that they meet on October 22, 2018 at 5:30 p.m. The homeowners agreed to this date and time in an email they sent to the contractor the evening of October 18, 2018. I find that the contractor would not have arranged a meeting for the afternoon of October 22, 2018 to discuss work on the project if he had decided not to complete it. The contractor’s uncontradicted evidence was that the October 22, 2018 meeting was rescheduled to later in October but ultimately did not take place because of the breakdown in the parties’ relationship.
• I do not accept the homeowners’ arguments that the contractor’s intention to abandon the project dated back to August 28, 2018. The contractor’s evidence, which I accept, is that he put work on the project hold at that time because the homeowners had failed to make an anticipated payment. In an email dated August 29, 2018, the contractor had informed the homeowners that if they did not provide him with a cheque the following day, all scheduled work would be cancelled. The homeowners gave him the cheque and work then resumed and continued until October 18, 2018.
[14] I find that the contractor did not abandon the contract before October 23, 2019 and that the lien, which was perfected on January 18, 2019, was both preserved and perfected in accordance with the timelines in the CLA.
[15] The homeowners also argued that the lien should be vacated because the lien amount is exaggerated. I reject this argument. Exaggerated claims are addressed in s. 35 of the CLA, which provides a remedy for a person who suffers damages as a result of a lien which is grossly in excess of the amount owed.
[16] In conclusion, the motion for an order vacating the lien is dismissed.
Motion for security for costs
[17] The parties agree that Rule 56.01(d) of the Rules of Civil Procedure applies to this motion: The plaintiff is a corporation and there is good reason to believe that it has insufficient assets in Ontario to pay the costs of the defendants.
[18] Once the defendant has shown that one of the six sub-paragraphs of Rule 56.01 applies, sub-paragraph (d) being one of them, the onus shifts to the plaintiff who must then show that it is impecunious, that it has a meritorious case or that, for some other reason, it would be unjust to require it to post security for costs. (Brown v. Hudson’s Bay Company, 2014 ONSC 1065, 2014 ONCS 1065 at para. 45.)
[19] The homeowners argue that the contractor has failed to prove that it is impecunious. The homeowners argue that a plaintiff facing a motion for security for costs must lead detailed evidence to prove impecuniosity, including the production of all sources of income, a description of all assets and liabilities and details of any assets disposed of or encumbered since the start of the action. (Morton v. Canada (Attorney General), 2005 CanLII 6052, 75 O.R. (3d) 63 (S.C.) at para. 32.) The homeowners argue that the contractor’s evidence in support of his plea of impecuniosity falls short.
[20] The contractor is a corporation with one director and one shareholder. The corporation’s director and shareholder are the same person, Mr. Trueman. Mr. Trueman says that the contractor’s business failed as a result of its contract with the homeowners. Mr. Trueman made a personal assignment in bankruptcy in January, 2019. It was his third personal bankruptcy. Mr. Trueman’s evidence is that his shares in the contractor are now vested in his trustee in bankruptcy, which also has control of the company. Mr. Trueman says that his bankruptcy has stripped him of his assets, including any equity he had in his home and his retirement savings.
[21] As I have already noted, the homeowners advanced the position is that there is good reason to believe that the contractor has insufficient assets in Ontario to pay their costs. The homeowners also introduced the following evidence relevant to the contractor’s financial situation:
• That they had good reason to believe that the contractor is closing its operations;
• That the contractor has not maintained business insurance;
• That the contractor no longer employs the worker the homeowners turned away from their house on October 23, 2018;
• That the contractor does not have an active website or a telephone number with a voicemail greeting that identifies it;
• That at least nine of the workers who had worked on their home had unpaid accounts with the contractor in respect of their project;
• That other workers who had worked on their home were owed money by the contractor for concurrent or former projects;
• That the contractor is the defendant in an on-going court action; and
• That a demand letter had been sent to the contractor by the potential plaintiff in another action.
[22] Based on the evidence before me on the motion, I am satisfied that the contractor is impecunious. Further, although the evidence does not permit me to assess the strength of the contractor’s case with any degree of certainty, I am also satisfied that the contractor’s claim is not obviously devoid of merit. In the circumstances, it would be unfair to make an order for security for costs that would have the effect of preventing the contractor from pursuing its action, particularly given that the contractor maintains that the failure of its business was the result of the homeowners’ failure to comply with the terms of the parties’ contract and their termination of the contract. (DiFilippo v. DiFilippo, 2013 ONSC 5460 at para. 30.)
[23] The homeowners’ motion for security for costs is dismissed, without prejudice to the homeowners’ right to bring a further motion at a later date should it become obvious, as the litigation proceeds, that the contractor’s claim has no merit.
Costs
[24] If the parties cannot agree on the costs of this motion,
• the plaintiff may deliver written submissions of no more than three pages in length within 14 days of the date of this decision;
• the defendants may deliver written submissions in response of no more than three pages in length within 14 days of the date of receipt of the plaintiff’s submissions;
• the plaintiff may deliver any reply submissions of no more than three pages in length within seven days of the date of receipt of the defendants’ submissions.
[25] The costs submissions may be filed by sending them to me, care of the trial coordinator.
Date: September 19, 2019
Madam Justice H. J. Williams
COURT FILE NO.: CV-19-79025
DATE: 2019/09/19
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Reno Rescue (Ottawa) Ltd.
Plaintiff/Respondent
– and –
Alicia Ashton and Derek Vilis
Defendants/Moving parties
BEFORE: Madam Justice H.J. Williams
COUNSEL:
Phillip Wallner, Counsel for the Plaintiff
Paul Jakubiak, Counsel for the Defendants
endorsement
Madam Justice H. J. Williams
Released: September 19, 2019