1140676 Ontario Inc. v. 2650997 Ontario Inc. et al, 2021 ONSC 143
COURT FILE NO.: CV-19-496-00
DATE: 2021-01-06
SUPERIOR COURT OF JUSTICE – ONTARIO
IN THE MATTER OF THE Construction Lien Act, R.S.O. 1990, c. C 30
RE: 1140676 Ontario Inc., O\A John Cress Contracting, Plaintiff (Moving party)
v.
2650997 Ontario Inc. and Derek Cress, Defendants (Responding parties)
HEARD: December 14, 2020
BEFORE: Fitzpatrick J.
COUNSEL: Anthony Potestio, for the Plaintiff
Nathan Wainwright, for the Defendants
Additional Reasons for Decision
[1] On December 14, 2020, I rendered a decision on two motions that were before me. In the body of the endorsement, I indicated I would provide more fulsome reasons for two aspects of my decision. These are the additional reasons.
The Discharge Motion
[2] At paragraph 22 of the endorsement I said “The Discharge Motion raises some important issues concerning the administration of the Construction Act”. I said that as I was initially attracted to the submission by the defendant that the amendments to section 47(1) of the Construction Act, represented an expansion to the discretion of a motions judge when contrasted to the former provisions of section 47 of the Construction Lien Act. The respective sections are as follows:
Construction Act (current version section 47(1)
General powers of the court
Power to discharge
47 (1) The court may, on motion, order the discharge of a lien,
(a) on the basis that the claim for the lien is frivolous, vexatious or an abuse of process; or
(b) on any other proper ground. 2017, c. 24, s. 37 (1).
Power to vacate, etc.
(1.1) The court may, on motion, make any of the following orders, on any proper ground:
An order that the registration of a claim for lien, a certificate of action or both be vacated.
If written notice of a lien has been given, a declaration that the lien has expired or that the written notice of the lien shall no longer bind the person to whom it was given.
An order dismissing an action. 2017, c. 24, s. 37 (1); 2018, c. 17, Sched. 8, s. 15 (1).
Conditions
(1.2) An order under subsection (1) or (1.1) may include any terms or conditions that the court considers appropriate in the circumstances. 2017, c. 24, s. 37 (1).
Construction Lien Act (former section 47(1)
General power to discharge lien
- (1) Upon motion, the court may,
(a) order the discharge of a lien;
(b) order that the registration of,
(i) a claim for lien, or
(ii) a certificate of action,
or both, be vacated;
(c) declare, where written notice of a lien has been given, that the lien has expired, or that the written notice of the lien shall no longer bind the person to whom it was given; or
(d) dismiss an action,
upon any proper ground and subject to any terms and conditions that the court considers appropriate in the circumstances. R.S.O. 1990, c. C.30, s. 47 (1).
Direction by court
(2) Where a certificate of action is vacated under subsection (1), and there remain liens which may be enforced in the action to which that certificate relates, the court shall give any directions that are necessary in the circumstances in respect of the continuation of that action. R.S.O. 1990, c. C.30, s. 47 (2).
[3] Upon reflection and comparing the two sections I do not agree with the defendant’s submission that the provisions of the new Construction Act did anything to expand the discretion of a motions judge on a section 47 motion to discharge. The traditional test under section 47 of the Construction Lien Act was articulated in Beaver Materials Handling Co. Ltd. v Hejna, 2005 CanLII 23127 (ONSC) at para. 24. In my view, this test was necessarily modified by the later ruling of the Supreme Court of Canada in Combined Air Mechanical Services Inc. v. Flesch 2014 CSC 8 No. 7. Combined Air expanded the discretion of a motions judge on a summary judgment motion to weigh evidence among other things. Beaver Handling correctly identifies section 47 motions to discharge as being akin to motions for summary judgment. In my view the law regarding summary judgment has significantly evolved since 2005 and correspondingly a motions judge has a greater discretion to discharge a lien if it is patently demonstrable that a party has no right to a lien.
[4] In my endorsement of December 14, 2020, I set out why it was my view the plaintiff could not succeed at a trial in proving its lien. The agreement at issue and the construction services provided were not directed at completing an improvement on the defendant’s lands. This is a fundamental underpinning of the ability of a contractor to file a lien against land. The parties’ agreement on what constituted the terms of the contract demonstrate that what happened was an extraction operation and not an improvement operation. There was no intent by the parties that whatever the plaintiff did, it would be allowed to claim a construction lien. Any actions were for the plaintiff’s benefit to extract and not for the defendant to have its lands improved. The plaintiff had the opportunity in contract to make clear its desire to support any future claim it had against the defendant by creating some secondary right to lien the lands. The description of the contractual terms from both sides contains no such provision. Therefore, the plaintiff cannot claim a lien and it should be discharged.
The Preservation Motion
[5] I indicated at paragraph 22 of my endorsement of December 14, 2020, that I wanted to provide some additional comments concerning why I was prepared to grant the plaintiff’s preservation motion. Here are those reasons.
[6] In my view, there is no question that the essential dispute between these two parties is about what to do with a quantity of wood and rock that has been extracted. The difficulty arises because the plaintiff had been unable to move the material, and it appears the defendant wants to sell the land where the material now sits.
[7] In my view, the defendant’s objection to the preservation motion rested on technical grounds. The defendant relied on the fact that the plaintiff’s pleading was drafted as a lien action rather than an express claim to preserve the property. It also argued that the material had no significance or relevance to any issue in the proceeding.
[8] I disagree.
[9] I see the role of a Judge in dealing with civil litigation problems as being one where form cannot overcome substance. Trying to do the right thing is what this process is all about. In this case, because of the cooperative work of counsel, this has been made simple.
[10] In this matter, both counsel have been fair and frank in articulating the facts which form the substance of the dispute. The dispute has been coloured by the fact that the parties are related, which often times imports a degree of irrational animosity to what should otherwise be a straightforward commercial problem.
[11] The extracted rock and wood are what this entire action is about. What happens to this material is entirely relevant to the only issue in the proceeding. In my view, the only issue in the proceeding is how much money does each party get from the sale of the material now preserved and that which has been previously extracted. If the plaintiff was not allowed to preserve the property, it could be sold along with the land and the ability to fairly litigate the matter would be unduly compromised.
[12] This would prevent the plaintiff from being able to deal with the material as it contracted with the defendant to do. Damages could be an appropriate remedy, but I see a less intrusive and direct way to assist the parties in having their matter fairly adjudicated. That is to have the property preserved pending further agreement or trial. I expect the parties should be actively working to see the material sold for market prices but that may be subject of a further conference down the road.
[13] I am granting the preservation order as I find that the plaintiff has satisfied all branches of the test in BMW Canada set out at paragraph 20 of my December 14, 2020 endorsement. In particular, the balance of convenience favours the plaintiff. I do not agree that preservation of the material will affect the land sale that the defendant may have. The evidence of this before the Court was at best speculative. In any event, it seems to me that the land can be sold regardless of a preservation order. The defendant will have to cooperate with the plaintiff in either moving the material or selling it beforehand or to provide for notice to the potential vendor that they are not to disturb the material pending a further court order.
[14] The extracted material is relevant to an issue in the proceeding. There is a serious issue to be tried namely the market price for the material. In my view a fair adjudication of this issue requires the material to be preserved so as to enable both sides to advance their respective positions. I find the balance of convenience favours the plaintiff.
[15] I advised counsel at the close of the last attendance on December 14, 2020 that I was of the preliminary view that success was divided on the motions. However, if the parties cannot agree on costs of these motions, I will entertain brief written submissions on the issue of costs. Counsel for the defendant will provide submissions of no more than two pages plus a bill of costs within seven working days of the release of these reasons. Counsel for the plaintiff will then provide their submissions of no more than two pages plus a bill of costs within seven days of the receipt of the defendant’s submissions.
[16] If the court does not receive the defendant’s submissions in the time set out above, the court will treat the matter of costs as settled.
[17] In any event of the disposition on costs the appeal period for the decision rendered in the December 14, 2020 endorsement will commence on January 25, 2021.
“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick
DATE: January 6, 2021
1140676 Ontario Inc. v. 2650997 Ontario Inc. et al, 2021 ONSC 143
COURT FILE NO.: CV-19-496-00
DATE: 2021-01-06
SUPERIOR COURT OF JUSTICE - ONTARIO
IN THE MATTER OF THE Construction Lien Act, R.S.O. 1990, c. C 30
RE: 1140676 Ontario Inc., O\A John Cress Contracting, Plaintiff (Moving party)
v.
2650997 Ontario Inc. and Derek Cress, Defendants (Responding parties)
HEARD: December 14, 2020
BEFORE: Fitzpatrick J.
COUNSEL: Anthony Potestio, for the Plaintiff
Nathan Wainwright, for the Defendants
ADDITIONAL REASONS FOR DECISION
Fitzpatrick J.
DATE: January 6, 2021
/lvp