Court File and Parties

Oshawa Court File No.: CV-19-3182 Date: 2022-04-26 Ontario Superior Court of Justice

Between: Kirubakaran Mahendran, Plaintiff – and – 9660143 Canada Inc., Sandeep Singh, 1713691 Ontario Inc. and Karl Nodel, Defendants

Counsel: Brian Sherman, Counsel for the Plaintiff 9660143 Canada Inc. and Sandeep Singh, Self-Represented Howard W. Reininger, Counsel for the Defendants, 1713691 Ontario Inc. and Karl Nodel

Heard: April 22, 2022

Reasons for Decision

DE SA J.:

[1] The action by the Plaintiff was issued pursuant to the Construction Act and claims a lien with respect to the property owned by the Defendant, 9660143 Canada Inc., whose principal is Sandeep Singh.

[2] The Plaintiff also claims priority of its alleged lien against the mortgagee on the property 1713691 Ontario Inc. (“Ontario Inc.”) and its principal Karl Nodel.

[3] The Claim relates to work the Plaintiff did in 2018 and 2019 in building a new home at 252 Church Street in Markham (the Subject Property).

[4] In 2018, the registered homeowner, 9660143 Canada Inc., whose principal is Sandeep Singh (“Singh”) listed the Subject Property for sale. It was a bungalow, and at the time, the Plaintiff made an offer to purchase the Subject Property.

[5] In May of 2018, the Plaintiff signed an Agreement of Purchase and Sale for the Subject Property. However, the transaction was never materialized.

[6] Instead, around mid-July, 2018, they came up with the agreement to carry out the work on the Subject Property in order to sell it. The Plaintiff agreed to provide services on the home, and Singh agreed to pay him for his services once the Subject Property was sold. Singh agreed to pay him for his time, labor and materials, plus a percentage of the profit from the proceeds of the sale.

[7] The Plaintiff worked on the Subject Property for close to a year and went deeply into debt for it.

[8] Without the Plaintiff’s knowledge, Singh obtained a second mortgage in favour of Ontario Inc. in November of 2018. Ontario Inc. also assumed the first mortgage on the Property. These two mortgages essentially left the Subject Property mortgaged for more than its market value.

[9] The action was commenced by the Plaintiff in November 2019, as a construction lien claim for priority over Ontario Inc.’s mortgage. The Plaintiff obtained a construction lien on the Subject Property.

[10] Ontario Inc. sought to vacate the lien taking the position that the Plaintiff was never a “contractor” within the definition of the Act, he was in fact an owner and not entitled to a lien.

[11] The motion was heard by Regional Senior Justice Edwards. On the motion, Justice Edwards determined that the Plaintiff was an owner and not a traditional lien claimant and vacated the Plaintiff’s lien. He explained at para. 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.

An order shall issue discharging the claim for lien and vacating the certificate of action.

[12] The Plaintiff has appealed the Order of Justice Edwards to the Divisional Court, which appeal is pending. The appeal has been perfected and the parties are waiting for a hearing date to be scheduled by the Divisional Court.

[13] The Plaintiff erroneously assumed that filing the Notice of Appeal automatically stayed the Order of Justice Edwards.

[14] Rule 63.01, however, makes clear that a Notice of Appeal does not stay any provision of the Order under appeal except for the payment of money.

[15] In or around late January to early February 2022, Ontario Inc. and its principal Karl Nodel, as mortgagee, listed the Subject Property for sale.

[16] On or around February 5, 2022, the Plaintiff filed a Caution on the Property and sought to amend his claim and obtain a Certificate of Pending Litigation to protect his interest in the Subject Property, or in the alternative, funds from the sale be paid into court as the matter proceeds.

[17] The Plaintiff maintains that he is merely seeking to obtain a CPL to preserve his interest/priority as against the Defendants pending the appeal.

[18] The Defendants take the position that the remedy of a Certificate of Pending Litigation is not available to a lien claimant where the lien has expired and/or has been vacated.: Scepter Industries Ltd. v. Georgian Custom Renovations Inc. (Divisional Court), 2019 ONSC 7515.

[19] The Defendants also take the position that a motion for a CPL and leave to amend the Statement of Claim while an appeal is pending from an Order of which a decision has been made on the existing pleading is a collateral attack on the Order being appealed.: 424317 Ontario Ltd. v. Silber, 1989 4335 (ON SC).

[20] I agree with the Defendants that to grant a CPL in the circumstances would not be appropriate given the outstanding appeal and the general position taken by the Plaintiff.

[21] Under Rule 63.01, an interlocutory or final order may be stayed on such terms as are just,

(a) by an order of the court whose decision is to be appealed; (b) by an order of a judge of the court to which a motion for leave to appeal has been made or to which an appeal has been taken. O. Reg. 465/93, s. 8.

[22] Rule 63.01(a) grants me the jurisdiction to stay the Order of Justice Edwards pending the appeal before the Divisional Court.

[23] In my view, there is potential merit to the appeal [^1], and under normal circumstances, a stay of the Order would be warranted pending a determination of the Divisional Court.

[24] In this case, however, the lien has already been vacated by the Defendants and the Property has also already been listed by the Defendants for sale.

[25] The parties have agreed to raise the issue before a single judge of the Divisional Court. However, in the interim, the Plaintiff has no protection should the Subject Property be sold.

[26] Accordingly, if the Subject Property is sold in the interim, a portion of the proceeds ($500,000) shall be paid into Court by the Defendants pending a final determination by the Divisional Court.

Justice C.F. de Sa

Released: April 26, 2022

[^1]: A “contractor” under the Act is defined as “a person contracting with or employed directly by the owner to supply services or materials to an improvement and includes a joint venture entered into for the purposes of an improvement or improvements.