COURT FILE NO.: CV-3182/19
DATE: 20211006
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE CONSTRUCTION LIEN ACT, R.S.O. 1990,
c.C30, as amended
BETWEEN:
Kirubakaran Mahendran
Plaintiff/Defendant by Counterclaim
– and –
9660143 Canada Inc., Sandeep Singh, 1713691 Ontario Inc. and Karl Nodel
Defendants/Plaintiffs by Counterclaim
Brian Sherman, Counsel for the Plaintiff/Defendant by Counterclaim, Kirubakaran Mahendran
Howard W. Reininger, Counsel for the Defendants/Plaintiff by Counterclaim, 17133691 Ontario Inc. and Karl Nodel
9660143 Canada Inc. and Sandeep Singh, Self-Represented Defendants
HEARD: June 10, 2021
REASONS FOR DECISION
M.L. EDWARDS, RSJ
Overview
[1] This is a motion by the defendants to discharge a claim for lien and vacate a certificate of action on grounds that the plaintiff is not a contractor within the meaning of the Construction Act (The Act).
The Facts
[2] The property at issue in these proceedings is municipally known as 252 Church St Markham, Ontario (the Property). The property is owned by the defendant 9660143 Canada Inc. (Canada).
[3] The plaintiff registered a claim for lien against the property on August 26, 2019 in the Land Titles Office for York Region.
[4] The claim for lien is dated August 23, 2019. The claim for lien claimed for services and materials supplied to the defendants at the Property for the period July 1, 2018 to July 15, 2019.
[5] A statement of claim was issued by the plaintiff in Oshawa on November 29, 2019. The claim was amended on December 4, 2019.
[6] A certificate of action was issued by the court in Oshawa and registered on title in the Land Titles Office for York Region on December 5, 2019.
Position of the Plaintiff
[7] The plaintiff alleges that he entered into an agreement with the property owners pursuant to which he would build and supply services and materials for the construction of a house at the property.
[8] Upon completion, the plaintiff and the owner would sell the house, and the plaintiff would be paid for his time, supervision and materials plus a percentage of the profit on the investment.
[9] The plaintiff alleges that he worked for approximately a year on the construction of the residence and went into substantial debt.
[10] The plaintiff alleges that the agreement with respect to the construction of the residence was a verbal agreement that he entered into in or around mid July 2018. The plaintiff alleges that he commenced working at the property in mid July 2018 and continued with that work until mid July 2019.
[11] The plaintiff takes the position that he is a contractor as defined by the Act and that he provided labour and materials at the property for approximately one year.
Position of the Defendants
[12] The defendants take the position that the plaintiff never was a contractor within the definition of the Act and was in fact an owner of the property and therefore not entitled to a lien.
[13] The defendants also argue that if there was a construction agreement between the plaintiff and the defendants that the agreement was entered into prior to July 1, 2018 and as such is governed by the Construction Lien Act and not governed by the Act.
Analysis
[14] If the plaintiff falls within the definition of “owner” as defined in Section 1 of the Act, he cannot at the same time fall within the definition of “contractor”.
[15] The owner of a property is defined as follows: “any person having an interest in a premises at whose request and for whose direct benefit an improvement is made to the premises”.
[16] A “contractor” is defined as follows: “a person contracting with or employed directly by the owner to supply services or materials to an improvement and includes a joint venture”.
[17] In order to determine whether the plaintiff falls within the definition of owner or contractor, it is important to look at the substance of the relationship and not merely the form of the relationship.
[18] Justice Farley in Big Creek Construction Limited v. York Trillium Development Group Limited 1993 CarswellOnt853 (affirmed by the Divisional Court 1993 Carswell Ont 841) held that the lien claimant had closely identified itself as the owner of the property and as such it would be inappropriate for liens to be placed on the property as to do so would run afoul of the concept that it would be inappropriate for an owner to lien his own property.
[19] The distinction between owner and contractor is addressed by Master Albert in Cohen v. Brin 2013 ONSC 1302. Master Albert framed the issue before him as a question of whether Mr. Cohen agreed to contribute to the project as a contractor and supplier of materials and services or whether he was the partner of the defendant and third party.
[20] Master Albert went on to deal with the question of whether the relationship between the parties was one of a partnership and noted that the existence of a partnership depends on the facts and circumstances of each case and the intention of the parties. The existence of a partnership includes three essential ingredients specifically a business; carried on in common; with a view to profit. Furthermore, the indicia of a partnership as noted by Master Albert include the contribution by the parties of money, property, effort, knowledge, skill or other assets to a common undertaking, a joint property interest and the sharing of profits or losses (see Cohen at paragraph 15).
[21] Having reviewed the evidence in this matter the following comments of Master Albert at paragraph 19 of his reasons in Cohen in my view are determinative of the motion before me:
“I find that the evidence does not support Mr. Cohen's contention that he was merely a contractor. Mr. Cohen's contribution was one of skill and effort. The agreement provides for all design and construction management to be carried out by Mr. Cohen, without the owner having any option to obtain competitive price quotes or hire a project manager other than Mr. Cohen. That provision is consistent with a partnership an inconsistent with the relationship of owner and contractor.”
[22] As part of these proceedings, the plaintiff was cross examined. Part of the focus of the cross examination related to the status of the plaintiff. The following extract from the transcript of the plaintiff's cross examination assists the court in its determination of whether or not the plaintiff was an owner or a contractor. The following extract also demonstrates that the plaintiff was a partner in the construction of the residence and that he was not exclusively a contractor.
1
2 84. Q. But when after you signed it? The deal was
3 supposed to close on June the 6th. Did you have this
4 discussion before June the 6th?
5 A. Yeah, before closing, yes.
6 85. Q. Before June the 6th?
7 A. Yeah, after we changing the mind ---
8 86. Q. I understand. After you change your mind
9 about getting title you had this agreement that you
10 would keep the property in his name ---
11 A. Yeah.
12 87. Q. --- and you would share in the profits when
13 it got sold?
14 A. Yes, you are right.
15 88. Q. But that discussion was before June the 6th?
16 A. Yes, please.
17 89. Q. So you were going to pay for the work done
18 on the property?
19 A. Repeat again.
20 90. Q. You're going to -- you were going to do the
21 construction work?
22 A. Yeah, I -- I put my -- my money -- own money
23 to the construction started.
[23] On the evidence before the Court, I am satisfied that the plaintiff is an owner as defined in the Act. The claim for lien can no longer stand and must be vacated. Having arrived at this determination there is no need to deal with the second issue raised by the defendants relating to the timing of the services provided. The defendant's motion is granted. An order shall issue discharging the claim for lien and vacating the certificate of action.
[24] As it relates to costs, the court had an opportunity at the completion of argument to seek submissions from the parties with respect to costs. The plaintiff indicated that if successful an appropriate of award of costs on a personal indemnity basis would have been in the order of $8000. The defendants seek $6,700.00 on a partial indemnity basis. The plaintiff clearly understood an exposure with respect to costs, and I am satisfied that a fair and reasonable amount to award to the successful defendants is $6,700.00 inclusive HST and disbursements.
M.L. EDWARDS, RSJ
Released: October 6, 2021
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Kirubakaran Mahendran
Plaintiff/Defendant by Counterclaim
– and –
9660143 Canada Inc., Sandeep Singh, 1713691 Ontario Inc. and Karl Nodel
Defendants/Plaintiffs by Counterclaim
REASONS FOR DECISION
M.L. EDWARDS, RSJ
Released: October 6, 2021