Court File and Parties

COURT FILE NO.: 14-59786 DATE: 2020/06/03 COURT OF ONTARIO, SUPERIOR COURT OF JUSTICE

In the matter of the Construction Lien Act, R.S.O. 1990, c. C.30, as amended

RE: ROD THOMPSON, AS TRUSTEE OF THE LOCAL 93 CARPENTERS & FLOOR LAYERS AND THE OTTAWA CONSTRUCTION LABOUR RELATIONS ASSOCIATION TRUST FUNDS, Plaintiff (Lien Claimant)

AND:

CARLETON UNIVERSITY, LOUIS W. BRAY CONSTRUCTION LIMITED, 1803680 ONTARIO INC., COB AS F & H CONCRETE FORMING, Defendants

BEFORE: Mr. Justice Calum MacLeod

COUNSEL: Michael C. Mazzuca, for the Plaintiff, (Local 93 trust fund) Nadia J. Authier, for the Defendant, (LWB)

HEARD: In Writing

Costs DECISION

[1] I must deal with the costs of a construction lien trial that took place in 2019 and the subsequent determination or admission that the plaintiff’s liens were valid. The lien claimant in this case was a union trust fund and the lien represented monies owed to or on behalf of workers hired by F & H Concrete Forming which was a subcontractor to Louis W. Bray Construction Limited on a parking structure at Carleton University. Thompson v. Carleton University, 2019 ONSC 4336, (2019) 92 CLR (4th) 33 (SCJ)

[2] It is an unfortunate reality in construction lien litigation that to prove the amount of holdback liability, the subtrade lien claimant – or in this case the union trust fund – must prove not only the amount owed to it by the defendant with whom it had a contract but the value of that defendant’s contract with the payor at the next level of the construction pyramid. In this case the union had to prove the value of the work done by F & H at the time its contract was terminated. It is that value that established the amount of LWB’s statutory holdback and the limit of its liability to the plaintiff.

[3] In a situation such as this where the sub-contractor is insolvent and has few if any useful records, the plaintiff is in the unfortunate situation of litigating for what amounts to 10 cents on the dollar. That is because the owner’s statutory holdback is 10% of the “price of the services or materials as they are actually supplied under the contract or sub-contract.” ss. 22 (1) and 23 (1) of the Construction Act, R.S.O. 1990, c. C.30, as amended

[4] At the trial I found that the value of the work completed by F & H was $1,108,276.60 and the holdback liability was $110,827.66. plus HST. I gave judgment accordingly. I found that there was no liability for additional “notice holdback” because there were no additional funds owing to F & H. Any amounts invoiced by F & H were more than offset by setoffs and counterclaims. Although the holdback liability was only 10%, it was necessary to prove the $1,108,276.60 to get to that result.

[5] Sadly, the costs incurred by both parties equalled or exceeded the amount of the judgment. The matter could have been settled in 2016 had the defendant accepted the plaintiff’s offer to settle in the amount of $100,000.00. [3] Although both parties agree that Rule 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 does not apply, that offer to settle is still a relevant consideration in awarding costs.

[6] Of equal significance is the fact that the defendant’s own calculations made by its own payment certifier demonstrated the value of the work done under the contract and the amount of the holdback. It was only after the liens were registered that the defendant attempted to recalculate and rework the progress calculations to reduce its holdback liability.

[7] The Act is remedial legislation and the 10% basic statutory holdback is a requirement created by the Act for the benefit of subtrades, suppliers and workers who might otherwise have no remedy when the subcontractor or contractor who hired them becomes insolvent. The priority given to union trust claims is indicative of the legislative intention to protect workers in the construction industry. Seeking to reduce the statutory holdback by retroactive adjustment to the books of the payor and by advancing arguments that complicate and prolong the legal proceeding are not strategies that should be rewarded.

[8] To be clear, I am not making a finding that the recalculation by LWB was dishonest or fraudulent. The management of the defendant may well have believed it was entitled to make those adjustments. The decision to pay suppliers of F & H directly without amending the contract or changing the calculation of progress draws may have been an error in judgment that the defendant later regretted. Nevertheless, it was a strategy pursued after the fact to defeat a valid lien claim. Had the defendant accepted the plaintiff’s offer, it would have paid less than the amount its own payment certifier said was owing and it would not have been necessary to go to trial.

[9] I also agree with the plaintiff that the defendants made little effort to respond to the request to admit or to otherwise narrow the issues.

[10] Under these circumstances, I agree with the plaintiff that it is entitled to substantial indemnity costs of the trial. Plaintiff’s counsel charged his client a reduced rate but even at that rate, the legal fees would eat up the judgment. Sometimes that is a sad reality of litigation but in a case such as this when there was an offer to settle and where the plaintiff was successful on the basic holdback calculation (though not on other points certainly) it is in keeping with the remedial purpose of the legislation to require that the cost of going to trial be paid by the unsuccessful defendant.

[11] I have reviewed the bill of costs and the written submissions of the parties. Fixing costs is not a precise or mathematical exercise and since Rule 49 does not specifically apply, there is no precise date after which substantial indemnity costs should run. The overall objective is to fashion a costs award that is just and represents a reasonable amount for the successful party to recover under all of the circumstances.

[12] I have the bill of costs but no supporting dockets. Overall, however, given the six years of litigation, I find the time expended including the use of junior lawyers to be reasonable.

[13] I fix the costs at $85,000 plus HST for fees ($96,050) and I accept the $7,934.37 in disbursements. Costs are therefore fixed at $103,984.37.

Mr. Justice C. MacLeod Date: June 3, 2020