Court File and Parties

COURT FILE NO.: 59321/19, 59492/20, 59518 / 20 DATE: 2022-02-25 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Sutton Forming Inc. v. Homes by DeSantis (Lake) Inc. and Halton Forming (High Rise) Ltd. (59321/19) Pilosio Canada Inc. v. Homes by DeSantis (Lake) Inc. (59492/20) Hi-Lite Rental Sales – Jasco Systems Inc. v. Sutton Forming Inc. (59518/20)

BEFORE: Mr Justice Ramsay

COUNSEL: Michael Mazzuca and Derek Kim for Sutton; T.B. Rotenberg and Connor Merino for Halton; J. Clarke and Jonathan Frustaglio for Pilosio; Calvin Zhang for Hi-Lite; Michael Cooper for DeSantis

HEARD: February 25, 2022, at St Catharines by teleconference

Endorsement

[1] These are motions in three actions to which the Construction Lien Act, R.S.O. 1990, c. C.30 (“the Act”) applies in accordance with s.87.3 of the Construction Lien Amendment Act, 2017, S.O. 2017, c. 24. The contract was entered into before the Construction Act came into force.

[2] Homes by DeSantis (Lake) Inc. (“DeSantis”) is the owner of a construction project in Grimsby.

[3] DeSantis hired Halton Forming (High Rise) Ltd. (“Halton Forming”) to do concrete forming work. Halton Forming subcontracted with Sutton Forming Inc. (“Sutton”). Sutton sub-contracted to Hi-Lite Rental Sales – Jasco Systems Inc. (“Hi-Lite”), Pilosio Canada Inc. (“Pilosio”) and others.

[4] In its report under s.39 of the Act, DeSantis advised that the contract price was $6,722,139 including HST. That amount is not in dispute.

[5] Pursuant to the contract, on July 25, 2019, the contract manager certified under the contract that the work was 95% complete. Ninety-five percent of the contract amount is $6,386,032.

[6] According to DeSantis’ letter under s.39 of the Act, it actually paid Halton $4,811,582 exclusive of HST. With HST the total is $5,477,088. Using that amount would lead to a holdback of $547,088.

[7] Halton registered a construction lien for $1,285,050. Sutton registered a construction lien for $1,153,174.38. Sutton’s sub-contractors also registered construction liens. The liens have all been vacated upon deposit of security.

[8] In its motion on file 59321/19 Sutton asks for (a) an order granting Sutton leave to bring this motion; (b) an order declaring that DeSantis’ minimum holdback obligation is $638,603 or in the alternative $547,088; and (c) an order directing DeSantis to pay $149,569 from the minimum holdback to Sutton; (d) an order that interest be added to the amounts in (b) and (c).

[9] Halton supports Sutton’s motion. Hi-Lite and Pilosio ask for payment of the amounts held back for them. All of Sutton’s other sub-contractors’ claims have been satisfied or settled. DeSantis does not oppose paying Hi-Lite and Pilosio.

[10] DeSantis disputes the accuracy of the July 2019 certificate, without particularizing or documenting the errors. DeSantis also alleges deficiencies in the work done by Halton and Sutton. It does not object to the court granting leave to bring the motion but submits that the court has no power at this stage to order distribution of the holdback amounts or in the alternative that it should not do so when further documentary disclosure is yet to be made. Furthermore there is no urgency because the holdback amounts are all secured. Finally, the court should not order payment of interest at this stage.

[11] How is the holdback to be calculated? The Act provides:

22 (1) Each payer upon a contract or subcontract under which a lien may arise shall retain a holdback equal to 10 per cent of the price of the services or materials as they are actually supplied under the contract or subcontract until all liens that may be claimed against the holdback have expired or been satisfied, discharged or otherwise provided for under this Act.

[12] The literal words of the section are not ambiguous. I interpret the meaning of the words, taken with the context of the Act as a whole and its purpose, to mean that the holdback is based on the contract price as the services are provided. It is not based on the total contract price, or the amounts actually paid.

[13] DeSantis’ minimum holdback, therefore, is 95% of the contract price, or $638,603.

[14] I dispose of DeSantis’ objections as follows:

a. The certificate was given by DeSantis’ own agent under the contract. The contract gives it a time in which to issue an amending certificate, which it has not done. Its objections to the certificate are not particularized or documented. It has not discharged its onus to disprove the contract price and level of completion. DeSantis is not in any event entitled to set deficiency claims off against the holdback. See s.30 of the Act.

b. Section 67 of the Act gives me the power to follow a procedure that is “as far as possible of a summary character.” I interpret “as far as possible” to mean that I can make an order provided the record is sufficient to let me decide the question fairly and efficiently without the need for further procedure, something like summary judgment. The interlocutory proceeding is permitted by s.67(2), as it will expedite the resolution of the issues in the dispute. The holdback provision, along with the rest of the Act, is designed to protect the subcontractors at the lower end of the pyramid from the hardship of litigation delay. There is no reason for subcontractors with clear entitlement to wait until the issues between the major parties are completely disposed of: Urbacon v. Guelph (City). Sutton is not at the lower end of the pyramid, but it, too, is entitled to protection.

c. I may speculate that further documentation could bear on the determination of Halton and Sutton’s claims, but they will not affect the holdback, or the amounts owed to the sub-sub-contractors. Nor has DeSantis given me any reason to doubt that anyone will be entitled the amounts in question on these motions.

d. Section 22 of the Act does not require holdback of interest in addition to the 10%. The holdback itself does not give rise to a right to payment of interest: Trenchline Construction v. Unimac, 2016 ONSC 8183. If I order interest, I will be ordering amounts beyond the holdback, which I do not think it appropriate to do at this stage.

[15] For these reasons I made the following orders under the Construction Lien Act:

a. I grant leave to bring the motion under s.67(2) of the Act.

b. I declare that DeSantis’ minimum holdback is $638,603.

c. I order DeSantis to release the following amounts from the holdback:

i. $148,705 to Sutton; ii. $30,428 to Hi-Lite; iii. $95,000 to Pilosio.

[16] I heard from the parties on costs and order DeSantis to pay, within 31 days:

a. $15,000 to Sutton; and b. $9,000 to Halton Forming.

[17] I make no order as to costs for or against Hi-Lite or Pilosio.

J.A. Ramsay J. Date: 2022-02-25