Court File and Parties

COURT FILE NO.: CV-23-0160-00 DATE: 2023-04-27

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Adapt. For Any Situation Ltd., Plaintiff v. Brenen Gyles, Defendant

HEARD: April 27, 2023 BEFORE: Fitzpatrick J.

COUNSEL: N. Melchiorre, for moving party Plaintiff R. Lepere, for responding party Defendant

Endorsement on Motion

[1] The plaintiff brings a motion seeking a Certificate of Pending Litigation (“a CPL”) against a residential property located in the north ward of Thunder Bay (“the House”).

[2] The plaintiff has included a claim for a CPL in its statement of claim. Neither party filed a compendium of the documents they were going to rely on in oral argument as required by Provision II.2 of the August 2, 2022 Provincial Notice to the Profession. The moving party did not file a cost outline.

Background

[3] The person holding the corporate office of President of the plaintiff is the mother-in-law of the defendant.

[4] The defendant bought the House in February 2022. An oral agreement was entered into between the parties (the Agreement). The plaintiff agreed to complete a significant renovation to the House. It would supply all labour and materials for the renovations. The Agreement provided the defendant would pay the plaintiff for its services after the renovations were complete.

[5] The renovations were completed in or about November 20, 2022. The defendant did not pay the plaintiff anything for the work or materials provided to renovate the House. The defendant asserts the work was deficient in many respects and he had to complete substantial portions of the renovations.

[6] On or around April 20, 2022, the plaintiff provided the defendant with a cost summary in respect of the renovations. The total was $28,561.01. This did not include any amounts for mark up, overhead or profit.

[7] On December 5, 2022 the plaintiff advised the defendant by email that the value of the labour and materials provided to renovate the House exclusive of mark up, profit or interest was $184,616.80.

[8] The plaintiff now claims additional unaccounted items brings the total of its claim against the plaintiff to $201,715.89.

[9] The defendant listed the House for sale on March 21, 2023. The defendant has entered into an agreement of purchase and sale for a closing on May 4, 2023. The sale price is $315,000.00.

[10] The plaintiff did not file a construction lien in respect of the construction services it provided to the House.

[11] The plaintiff brings this motion on notice and on an urgent basis.

The Law

[12] The granting of a CPL is provided for by s. 103 of the Courts of Justice Act R.S.O. 1990 and Rule 42 of the Rules.

[13] In a relatively recent decision Jovalyn Tuitt et al v. Ahmed Abou-Gabal et al, 2018 ONSC 4846 H.J. Williams J. of this Court cited with approval a decision of Associate Justice Jolley in Avan v. Benerroch, 2017 ONSC 4729 which provided:

The Test for Leave to Issue a Certificate of Pending Litigation

(1) The purpose of a Certificate of Pending Litigation is to give non-parties notice of a proprietary claim, thereby permitting a party to protect its claim pending the determination of the alleged interest on its merits. It does not, in and of itself, create a right or interest in the land. (Ambassador Electric Inc. v. Fernwood Builders (London) Ltd., 2014 ONSC 3738 at para. 7).

(2) The decision of Master Glustein, as he then was, in Perruzza v. Spatone, 2010 ONSC 841, paragraph 20 sets out the following legal principles which I have considered and which are applicable on a motion for leave to issue a certificate of pending litigation:

(a) The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-Sonic Industries Inc., 1987 CarswellOnt 499 (Ont. Master) ("Homebuilder") at para. 1);

(b) The threshold in respect of the "interest in land" issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C. 43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Ont. Gen. Div. [Commercial List] at para 62);

(c) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has "a reasonable claim to the interest in the land claimed" (G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 CarswellOnt 219 (Ont. C.A.) at para. 20);

(d) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (Ont. Master) at paras. 10-18); and

(e) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc., 1991 CarswellOnt 460 (Ont. Gen. Div.), 1977 CarswellOnt 1026 (Ont. Div. Ct.) at para. 9).

Disposition

[14] The threshold question on a motion seeking leave to obtain a CPL against a property is whether an interest in land is in question.

[15] Despite the plaintiff including a claim for a CPL in its statement of claim, in my view the evidence on this motion discloses no interest in land on the part of the plaintiff in the House. I agree with the submission of the defendant that what is at issue in this matter is a time and materials construction contract. The plaintiff has a claim for money damages. It contracted to be paid money in return for the provision of construction services. That is the extent of their claim. They did not bargain for an interest land. There was no expectation they would obtain a title interest in the land in return for providing construction materials and services. This is not an occasion where the parties were in some kind of joint venture.

[16] The plaintiff’s alternative argument that the evidence discloses there was only an agreement to agree is without merit. The fact the plaintiff kept updating the defendant on its costs, in April and December of 2022 militates against a finding that this arrangement was anything other than a straight up contract for construction services and materials supplied.

[17] At its highest, in respect of the House, the plaintiff had a statutory claim to a construction lien when it completed its work in November 2022. It failed to properly protect its lien rights in time. It cannot convert its claim for money damages into a claim for a title interest in the land. I agree with the submissions of the defendant that the principles set out in paragraph 29 of the Van Geel v. Pennha, 2020 ONSC 6975 decision are applicable. In that decision Aston J. states:

As noted, the plaintiff concedes that it could not claim a CPL respecting the cottage property even if the defendants still owned it. This is consistent with the determination by Sprout J. in Rafat General Contractor Inc. v. 1015734 Ontario Ltd. 2005 CarswellOnt 7519 at para. 3, that it would “subvert the statutory requirements of the Construction Lien Act to allow a contractor to claim an interest, whether by way of equitable mortgage or constructive trust, as a substitute for its lien rights under the Construction Lien Act.” I note in passing that Sprout J. did not limit his conclusion to constructive trust claims but also included the protection of a security interest by means of an equitable mortgage. That decision held that the security interest of a contractor for a lien under the Construction Lien Act expires when the lien is not perfected, and it cannot be revived.

[18] In my view, the equitable principles of constructive trust are not engaged in this matter. The evidence does not disclose the parties were in any kind of fiduciary or special relationship. The plaintiff is a corporation. While there may be family connections, at the end of the day, the conduct of the plaintiff suggests that this is a commercial relationship at best. The corporation expected to be paid money for what it did. The corporation did not expect to obtain an interest in land in return for the value it provided the defendant.

[19] The plaintiff’s claim to obtain a money judgment is alive, any “enrichment” potentially enjoyed by the defendant is still subject to the plaintiff’s claim. The plaintiff is not correspondingly deprived of anything it bargained for in respect of the House per se. In my view, it did not bargain for any interest in the House. It asked to be paid. It did not bargain for a security interest, like obtaining a mortgage. It did not bargain for a partial title interest in lieu of payment.

[20] What is really going on here is that the plaintiff seeks execution before judgment. There are genuine issues to be tried in respect of the quantum of the plaintiff’s claim. However, that is not a triable issue that would lead me to exercise my discretion to grant the plaintiff any relief in respect to this motion. In my view there is no equitable reason to grant a CPL or give any injunctive relief in regard to the potential proceeds from the upcoming sale of the House. The balance of convenience clearly favours the defendant in respect of any alternative relief sought on this motion.

[21] For all these reasons the motion is dismissed with costs payable to the defendant forthwith on a partial indemnity basis. The defendant provided a costs outline. The plaintiff did not. This was not helpful. Two lawyers were engaged by the defendant. In my view costs should be awarded for one. The parties agreed at the commencement of the motion that partial indemnity costs of $3,000.00 inclusive of HST and disbursements was appropriate for the successful party on this motion. Accordingly, costs are fixed payable forthwith by the plaintiff to the defendant in the amount of $3,000.00 inclusive of HST and disbursements.

“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick DATE: April 27, 2023