COURT FILE NO.: CV-20-644073
DATE: 2020 12 17
SUPERIOR COURT OF JUSTICE - ONTARIO
IN THE MATTER OF the Construction Act, RSO 1990, c. C.30, as amended
RE: EUGENIO PETRASSO o/a EP CONSTRUCTION, Plaintiff
- and -
FITZROY FULLER, JASPAL BHANDAL and SWARANJIT SANDHAR, Defendants
BEFORE: Master Todd Robinson
COUNSEL: A. Jia, for the plaintiff
V. Ibe, for the defendant, Fitzroy Fuller
HEARD: December 16, 2020 (by videoconference)
REASONS FOR DECISION
[1] Eugenio Petrasso o/a EP Construction (“Petrasso”) moves for an order extending the time for service of the statement of claim to December 30, 2020. Fitzroy Fuller (“Fuller”) opposes the motion. Neither Jaspal Bhandal nor Swaranjit Sandhar appeared, although duly served.
[2] For the reasons that follow, I grant the requested extension.
Background
[3] On April 17, 2020, Petrasso registered a claim for lien in the amount of $38,182.69 against Fuller’s property at 88 Bude Street, Toronto, claiming supply of services and materials to Fuller for “garage and deck build, brickwork, installation of window, removal of studs”. Petrasso issued the statement of claim in this action and a certificate of action on July 16, 2020. Although not reflected on the cropped parcel abstract in the materials, I am advised that the certificate of action was registered against title to the property.
[4] In addition to seeking a declaration of entitlement to lien and claiming for the unpaid liened services and materials, Petrasso also claims for an additional $126,000 for termination of contract and unquantified additional amounts for extras and materials. Petrasso further claims priority over the charges against the property in favour of Jaspal Bhandal and Swaranjit Sandhar.
[5] The statement of claim was not served within the 90-day period prescribed by s. 1(2) of O Reg 302/18 under the Construction Act, RSO 1990, c C.30, which expired on October 14, 2020. Petrasso’s position is that the failure to serve the claim was due to inadvertence. This motion was thereafter booked and served by regular mail on November 30, 2020, and subsequently also served by alternative to personal service on Jaspal Bhandal and by personal service on Swaranjit Sandhar.
Relevant Law
[6] Pursuant to s. 1(3) of O Reg 302/18 under the Construction Act, the court may extend the time for service of a statement of claim on a motion served and filed either before or after the 90-day service period has expired. In this case, Petrasso has moved after the expiry.
[7] Petrasso relies on the decision of the Court of Appeal in Chiarelli v. Wiens (2000), 2000 CanLII 3904 (ON CA), 46 OR (3d) 780 (CA), which is a case dealing with extension of the time to serve a statement of claim in a motor vehicle accident action governed by the Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”). In Chiarelli, the Court of Appeal held, at para. 12, that the basic consideration on a motion to extend the time for service is whether the extension will advance the just resolution of the dispute, without prejudice or unfairness to the parties, and that the plaintiff has the onus of proving that extending the time for service will not prejudice the defence. Petrasso also points to para. 16, where the Court of Appeal held that “prejudice that will defeat an extension of time for service must be caused by the delay.”
[8] The only other case put before me is MGI Construction Corp. v. 2273865 Ontario Inc., 2015 ONSC 4716 (Master), which was decided under s. 53(2) of the former Construction Lien Act (the predecessor provision to s. 1(3) of O Reg 302/18). Master Albert discussed relevant factors on an extension motion as follows:
- Relevant factors to exercising discretion to extend time to serve the statement of claim are:
a) The length of delay and whether the limitation period has expired;
b) The explanation for the delay in serving the statement of claim and in bringing the motion to extend time: are the reasons compelling? and
c) Is the defendant prejudiced by the delay in serving the statement of claim?
[9] Master Albert applied the above-noted factors and, on the record before her, determined that it was not appropriate to exercise her discretion to extend the time to serve the statement of claim for the lien claim, although permitted the non-lien claims to continue. She declared that the plaintiff’s lien had expired.
Analysis
[10] I agree with Fuller that the assessment on a motion to extend the time for service of a statement of claim in an action governed by the Construction Act has different considerations than in an action governed by the Rules. They are not, however, completely dissimilar.
[11] During submissions, Fuller’s counsel characterized the three factors identified by Master Albert in MGI Construction as a “three-part test”. I do not agree with that characterization. While those factors are relevant considerations, they are not the only ones. The Court of Appeal has held that the court should not fix in advance rules or guidelines regarding when an extension should be refused, but rather that each case should be decided on its facts with a focus on whether the defence is prejudiced by the delay: Chiarelli, supra at para. 17. Although Chiarelli was decided in an action governed by the Rules, I see no reason why that principle should not also apply in an action governed by the Construction Act.
[12] In my view, given the scheme of the Construction Act, tolerance for delay and assessment of prejudice in a lien action are viewed through a different lens, having particular regard to the requirement in s. 50(3) that lien actions be as far as possible of a summary character. The lien is a special remedy afforded to contractors, subcontractors and workers, governed by strict statutory timelines. Notably, a lien expires and the lien remedy is lost if the lien is not preserved or perfected in accordance with the Construction Act, or if there has been no set down or order for trial in an action in which the lien may be enforced before the second anniversary of perfection: Construction Act, ss. 31, 36, and 37.
[13] In MGI Construction, supra at paras. 16-17, Master Albert summarized her view of the significance of the 90-day service deadline as follows:
The Act provides a procedural code for construction lien claims, with truncated limitation periods that are intended to expedite the resolution of lien actions. The reason for this is that the Act bestows rights on a lien claimant that exceed the rights of an ordinary plaintiff in a civil action: the claim is secured by the property (or security posted in lieu of the property) and lien claimants enjoy priorities over other creditors. The trade-off is that lien claims are to proceed expeditiously (see section 67 of the Act), and many of the procedures permitted in an ordinary action (i.e. as-of-right discoveries, interlocutory motions and appeals from interlocutory decisions) are not permitted, or are only permitted with leave, in a construction lien action.
It follows that compliance with the 90 day period within which to serve the statement of claim is required to meet the objective of the Act to achieve an expedited resolution of the claim. While the court has discretion to extend this limitation period, to exercise that discretion, compelling reasons are required.
[14] The 90-day service deadline is not of the same character as the mandatory deadlines in ss. 31, 36, and 37. It is a deadline that the legislation expressly contemplates may be extended by the court. Fuller submits that MGI Construction supports a requirement for “compelling reasons” to extend the service deadline before the court should grant any indulgence to a plaintiff where there has been non-compliance with the 90-day deadline. In this case, Fuller argues that Petrasso’s evidence is woefully lacking, comprised solely of a legal assistant’s affidavit relying on hearsay evidence with no direct evidence from Petrasso himself regarding his intentions to pursue enforcement of the lien or serve the claim.
[15] Petrasso’s evidence is indeed sparse. The brief affidavit filed only generally outlines the nature of the dispute, the relationship of the parties, the issuance of the claim, and makes statements sworn on information and belief regarding inadvertence in failing to serve the claim and that Petrasso “always intended to pursue this claim against the Defendants.” The only evidence of any steps taken by Petrasso after issuing the claim is in the responding record. Fuller has included several emails from Petrasso sent to Fuller on August 20, 2020 confirming an intention at the time to enforce the lien. Fuller’s affidavit states that he received no further communications from or on behalf of Petrasso after that date until the materials for this motion were served.
[16] Neither party has tendered any evidence to address the existence or non-existence of prejudice. Fuller argues that the lien itself constitutes prejudice, relying on Master Albert’s statement in MGI Construction, supra at para. 19 that “the existence of a lien against the property that requires the owner to post security to clear title is prejudicial to the defendant”. This is, effectively, a form of presumed prejudice arising from any lien. Nothing in the record supports any actual prejudice suffered by Fuller by reason of Petrasso’s lien. Fuller argues that the presumed prejudice from the lien is itself sufficient in this case to refuse an extension, since Petrasso has failed to tender any evidence rebutting prejudice. Petrasso argues that it would clearly be prejudicial to his interests for the court to refuse extension, particularly given the shortness of the delay.
[17] Fuller’s arguments regarding delay and prejudice represent too rigid an approach to what should be a contextual assessment on the particular facts of a case. In my view, relevant prejudice in the context of an extension motion must arise during the period of delay. The extent of required evidence to explain delay and rebut prejudice will depend on the nature and extent of delay and the particular facts of each case.
[18] In MGI Construction, the time between expiry of the 90-day service period and actual service of the statement of claim was nearly 1.5 years. It was an important factor in Master Albert’s decision that the plaintiff took no steps to transfer the file from its former lawyers, who it was suing, or to follow up on the status of the action for a lengthy period of the delay. That explanation was not viewed as credible and thereby not sufficiently compelling to warrant an extension.
[19] Here, the delay between expiry of the 90-day service period and bringing this motion is approximately six weeks. That delay is not inordinate. While direct evidence from Petrasso would have been preferable, in the particular circumstances of this case, I am sufficiently satisfied from the evidence regarding inadvertence that the failure to serve within 90 days was not intentional. I am also satisfied that the delay between expiry of the service period and bringing this motion has not given rise to any prejudice that would not already have been present had the claim been served in time. This is not a case where the defendant was unaware of the lien or the lien claimant’s intention to enforce the lien. Fuller acknowledges receipt of the lien from Petrasso on April 19, 2020, and the emails on August 20, 2020 stating, “I’m enforcing my lien on the property so pay your bills”.
[20] In this case, the delay and alleged prejudice are not of a degree that will impact a fair or just disposition of the lien claim on its merits or that support finding of conduct by Petrasso that is sufficiently contrary to the summary nature of lien proceedings to warrant denial of the lien remedy entirely. I accordingly grant Petrasso’s requested extension to December 30, 2020.
Costs
[21] At the conclusion of argument, I invited costs submissions in the event each party was successful or unsuccessful. Petrasso did not seek costs in the event of success, acknowledging that the order would be an indulgence by the court. Fuller seeks costs in any event, and submitted a costs outline for $1,384.25 in costs on a partial indemnity basis, inclusive of HST and disbursements. Fuller submitted that, if successful, a partial indemnity award of $1,300.00 would be appropriate in the circumstances. If unsuccessful, Fuller submitted that costs should still be awarded to him, but that at least no costs should be awarded to Petrasso.
[22] Petrasso was successful in the motion, but it was necessary only by reason of inadvertence in failing to comply with the 90-day service deadline. It was not unreasonable for Fuller to oppose and put Petrasso to the task of satisfying the court in argument why the deadline should be extended. Particularly given the scant evidentiary record put forward by Petrasso, there is no doubt that the extension, which preserves the lien from a de facto expiry, is an indulgence. In my view, it is fair and appropriate that the price of that indulgence is payment of some costs to Fuller. I accordingly fix costs payable to Fuller on a partial indemnity basis at $1,000, inclusive of HST and disbursements.
Order
[23] For the foregoing reasons, I order as follows:
(a) The deadline for service of the statement of claim in this action is hereby extended to December 30, 2020.
(b) Petrasso shall pay to Fitzroy his costs of this motion on a partial indemnity basis, fixed in the amount of $1,000.00, inclusive of HST and disbursements, and payable within 30 days.
(c) Petrasso shall forthwith serve a copy of this endorsement (and any formal order taken out) on each of Jaspal Bhandal and Swaranjit Sandhar.
(d) This order is effective without further formality.
MASTER TODD ROBINSON
DATE: December 17, 2020