NEWMARKET COURT FILE NO.: CV-18-135796-00

DATE: 20210929

EDA Development Group Inc. v. Zhou

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: EDA Development Group Inc., Plaintiff

AND:

Jianxiong Zhou, Defendant

Jiangshui Shi, Defendant to the Counterclaim (not appearing)

BEFORE: The Honourable Madam Justice M.E. Vallee

COUNSEL: Andrew Ostrom, Counsel, for the Plaintiff

Paul Starkman, Counsel for the Defendant

HEARD: September 22, 2021

Ruling on motion

[1] This was a construction lien action. The plaintiff failed to set the matter down for trial within the statutory two year period so the lien was dismissed and the certificate of action was vacated. The question is what should happen to the action? Should it proceed as a contract action or should it be dismissed? The defendant brings this motion for an order dismissing it. I note that plaintiff’s counsel for this motion is the third lawyer for the plaintiff. Mr. Ostrom is not responsible for the problem.

Applicable Law

[2] The Construction Lien Act R.S.O. 1990 c. C. 30 applies to this matter because it relates to a contract entered into before July 1, 2018. Section 46 states that where a perfected lien has expired, the court may on the motion of any person declare that the lien has expired and shall make an order dismissing the action to enforce the lien…

[3] The parties agree that a motion judge has discretion to permit a claim on the contract to continue without a lien claim.

[4] The defendant relies on Teepee Excavation & Grading Ltd. v. Niram Construction Ltd., 2000LanLII 3347 ON CA, in which the court upheld a Master’s decision to dismiss the action. Nothing had been done in four years to advance the action.

[5] The plaintiff relies on Edgcumbe v. Vicary, 2018 ONSC 2656, which states that the court should consider the prejudice to the plaintiff if an action is dismissed as well as the principle of having disputes resolved on their merits.

[6] The court ought to look at all of the circumstances including the steps that have been taken in the litigation.

The Defendant’s Position

[7] The defendant states that it has overpaid for the work done. The amount of the lien was greater than the amount that the plaintiff’s bookkeeper said was owing. The plaintiff claims payment for certain invoices but cannot prove that it has paid them. It created invoices after the fact to support the amount claimed.

[8] The claim was issued in 2018. The plaintiff dragged its feet on producing an affidavit of documents. It stated that Covid precluded it from going back into its building where the documents were located. The business was closed. The defendant states that Covid protocols did not prevent this.

[9] In 2019, a year after the lien was registered, plaintiff’s counsel sent a letter to defendant’s counsel stating that the plaintiff wished to issue a fresh as amended claim to include a mortgagee as a party and to add to the claim $440,000 for business losses. Business losses cannot be claimed in a lien action. The mortgage was registered when the property was purchased. It was not a building mortgage so priority over it could not be claimed.

[10] Time went by without the plaintiff’s producing an affidavit of documents. In July 2020, the defendant offered to dismiss its counterclaim and consent to the action’s being transferred to Small Claims Court on the condition that the plaintiff bear its own costs relating to the lien. The plaintiff would have had to slightly reduce the amount of its claim. It refused. The defendant states that the plaintiff has failed to move the matter forward. The affidavit of documents is deficient. The plaintiff has not paid the costs of the last order.

Analysis

[11] In this matter, the plaintiff’s inactivity was almost as long as it was in Teepee. Three and a half years have passed since the claim was issued.

[12] The defendant has argued this motion as if it were a motion for summary judgment. Its position is that the claim has no merit. It has overpaid for the work. This is not a motion for summary judgment. I cannot determine whether there is a genuine issue that requires a trial. The plaintiff did not defend this motion with that issue in mind.

[13] The defendant states that it has been prejudiced by the plaintiff’s failure to move the action forward; however, it does not state any particular prejudice. For example, no relevant documents have been lost in the interim. No witnesses are now unavailable. Even though this action might now be better suited to proceed in Small Claims Court, the plaintiff chose not to forego its Superior Court costs to date. It might be entitled to them if it is successful on the claim.

Conclusion

[14] Generally, disputes should be resolved on their merits. I am not satisfied that the defendant has suffered prejudice. The motion is dismissed.

Costs

[15] At the conclusion of the motion, counsel made submissions on costs. The defendant requested $11,081.00 on a partial indemnity basis if successful.

[16] Prior to the motion, the parties were cross-examined on their affidavits. This motion was booked for 60 minutes. The defendant filed numerous volumes totaling 423 pages. In addition to the motion record, they included three supplementary motion records, a factum, a fresh as amended factum, a book of documents, two supplementary books and transcripts. The motion record was 106 pages. All the rest of the volumes were 317 pages not including the transcripts. This is far in excess of what is reasonable for the court to read for a 60 minute motion. Much of it was not necessary.

[17] On his motion confirmation form, defendant’s counsel estimated 40 minutes for his submissions. On a 60 minute motion, each party has 20 minutes for submissions. The moving party has a short time for reply. The remainder of the time is for the court to consider the matter. At the outset, the court questioned whether this would be a 60 minute motion, given the extensive materials. Defendant’s counsel said, “I don’t think I’ll be very long.” On that assurance, the motion began with a reminder that counsel had 20 minutes. At the 20 minute mark, counsel stated that he had just a bit more to go. Subsequently, he was reminded that he had exceeded the allowable time as well as just a bit more. In total, counsel took 54 minutes to make his submissions, almost the entire time allotment for the whole motion. Plaintiff’s counsel kept to the allowable time. In total, with reply, the motion took 1.5 hours.

[18] This is unacceptable. The court’s resources are strained as a result of Covid. The court’s schedule functions when counsel follow the rules. This matter should have been scheduled for a long motion but counsel attempted to shoehorn it into a short motion to avoid the wait for a long motion date. The matter was not complex. Counsel spent a considerable amount of time attempting to demonstrate that the claim had no merit. If he had focused on the test, he could have made submissions in 20 minutes.

[19] Given all of the above, I find that a fair and proportionate costs amount for the plaintiff to pay to the defendant is $5,000.

VALLEE J.

Date: September 29, 2021