Court File and Parties

COURT FILE NO.: CV-20-638236 DATE: May 24, 2023

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF the Construction Act, R.S.O. 1990, c.C.30

BETWEEN:

OZZ ELECTRIC INC. Plaintiff -and-

BONDFIELD CONSTRUCTION COMPANY LIMITED, UNITY HEALTH TORONTO, FORMERLY KNOWN AS PROVIDENCE ST. JOSEPH’S AND ST. MICHAEL’S HEALTHCARE, 2442931 ONTARIO INC., and THE SISTERS OF ST. JOSEPH FOR THE DIOCESE OF TORONTO, IN UPPER CANADA Defendants

Counsel:

Jeramie Gallichan for Honeywell Limited, Tel.: 519-571-7629, Email: jeramie.gallichan@gowlingwlg.com Richard Yehia for Zurich Insurance Company Ltd.; Tel.: 416-367-6186; Email: ryehia@blg.com; Luigi Iantosca for Ozz Electric Inc.; Tel.: 434-253-2748, email: liantosca@torkinmanes.com; Fernando Souza for Urban Mechanical Contracting Ltd.; Tel.: 905-695-3100; Email: fsouza@lawtoronto.com;

HEARD: February 15 and March 31, 2023.

Associate Justice C. Wiebe

REASONS FOR JUDGMENT

(Honeywell trial of an issue)

I. INTRODUCTION

[1] This construction lien reference has focused on the determination and distribution of the basic holdback for the work done by the now insolvent general contractor, Bondfield Construction Company Limited (“Bondfield”), concerning the construction of the 17 storey patient care tower (“the Project”) located at 30 Bond Street, Toronto. The owner is Unity Health Toronto, formerly known as Providence St. Joseph’s and St. Michael’s Healthcare (“SMH”).

[2] At the trial management conferences dated June 3 and July 21, 2022 I established two vetting committees, one to vet the remaining subtrade claims for lien (“the Lien Vetting Committee”) and the other to determine the holdback. The Lien Vetting Committee is composed of the lien claimants, Ozz Electric Inc. (“Ozz”), Urban Mechanical Contracting Ltd. (“UMC”), and the Bondfield bonding company, Zurich Insurance Company Ltd. (“Zurich”).

[3] On September 5, 2022 the Lien Vetting Committee reported amongst other things that, in its view, the claim for lien of Honeywell Limited (“Honeywell”) in the amount of $1,639,821.60 had expired as it had been registered too late. The Committee had no other issue with that claim for lien.

[4] At the trial management conference on September 8, 2022 Honeywell disagreed with this conclusion. I required that the Lien Vetting Committee and Honeywell meet with me to devise an expeditious process to resolve this issue. At the trial management conference dated October 31, 2022 we met and, with the consent of all present, I ordered a one-day summary trial of an issue of the timeliness of the Honeywell claim for lien. That trial took place on February 15, 2023. Closing argument took place on that day and on March 31, 2023.

II. BACKGROUND

[5] I begin with a summary of the facts of this case that I gleaned from the evidence and are undisputed.

[6] On January 27, 2015 SMH entered into a public-private partnership construction contract with a special purpose company, 2442931 Ontario Inc. (“ProjectCo”), whereby ProjectCo was to the design, finance and construct the Project. This will be called “the Project Agreement.” ProjectCo was incorporated by and is related to Bondfield. ProjectCo subcontracted the design and construction responsibility to Bondfield. Bondfield’s bonding company, Zurich, issued two bonds for the Project.

[7] Bondfield subcontracted with Honeywell to have Honeywell supply and install a variety of equipment, such as security systems, building automation systems, real-time location tracking systems and enterprise service bus systems. The initial subcontract was signed on December 5, 2015. There were revisions. A final subcontract was signed on January 26, 2017. It will be called “the Subcontract.” The Subcontract was the amalgamation of three prior subcontracts between Honeywell and Bondfield concerning the Project.

[8] There was also a direct agreement between Honeywell, SMH, ProjectCo and Bondfield that concerned rights and obligations (including novation) upon the termination of the Honeywell Subcontract. This direct agreement is not relevant to this trial of an issue.

[9] The work commenced and continued. In August, 2018, however, Bondfield ceased paying certain subtrades and claims for lien were registered. Zurich stepped in to keep the Project going. On December 15, 2018 Zurich and Honeywell signed a ratification agreement to insure Honeywell’s continued supply to the Project under the Subcontract. Honeywell started taking instructions from Zurich appointed parties, Perini Management Services Inc. and EllisDon Ltd. (“EllisDon”).

[10] While not in the motion material, I know from the submissions in the reference that on December 21, 2018 a receiver was appointed over the assets, properties and undertakings of ProjectCo. On April 3, 2019 a court order was issued under the Companies’ Creditors Arrangements Act appointing a monitor, Ernst & Young Inc. (“E&Y”), to monitor the business and financial affairs of Bondfield. E&Y will be called “the Monitor.” Honeywell continued to supply under the Subcontract.

[11] On December 18, 2019 the Monitor delivered a letter to Honeywell. The letter advised that Bondfield had run out of funds. It stated that as of December 20, 2019 Bondfield was ceasing work and demobilizing “unless a funding solution is achieved.” It stated that, if no funding was found, Bondfield would terminate its subcontracts and subcontractors would receive separate written notice in that event. The letter described itself as notice “so that you may cease incurring additional costs at this time pending any resolution of these funding issues.”

[12] On December 20, 2019 Justice Conway issued an order lifting the receivership stay as against ProjectCo to allow SMH to engage the necessary parties, including EllisDon as construction manager, to complete the project pursuant to the Project Agreement. The order directed subtrades to cease taking instructions from Zurich, Bondfield and ProjectCo, and to report to EllisDon. There was no evidence that Honeywell received this order prior to January 8, 2020.

[13] On December 21, 2019 SMH sent a letter to Honeywell advising that it had exercised its right under the Project Agreement to engage EllisDon and other parties to complete the Project. The letter stated that SMH wanted to meet with Honeywell to discuss how best to proceed with its work. On the same day, December 21, 2019 Lorraine Harris of Honeywell responded by email stating that Honeywell was ready to meet and discuss next steps.

[14] On January 8, 2020 the Monitor sent Honeywell another letter. The letter enclosed the Conway order. The letter stated that Bondfield had not found further funding for the project and must “not incur any further financial obligations to its subcontractors.” The letter stated that SMH had the right under the Conway order to engage subcontractors to complete the Project, and that should Honeywell be engaged by SMH in this regard, such engagement would not be as a subcontractor of Bondfield.

[15] On February 21, 2020, 44 days after January 8, 2020, Honeywell registered its claim for lien. It stated in its claim for lien that it supplied services and materials from December, 2015 to January 8, 2020. On March 31, 2020 Honeywell commenced a lien action and registered a certificate of action.

[16] The evidence at the summary trial of an issue on February 15, 2023 was the following: Honeywell filed the affidavit of Donald P. Thibodeau sworn January 31, 2023; the Lien Vetting Committee filed the affidavit of Michael Tamblyn sworn February 3, 2023; both parties filed an Agreed Statement of Facts dated December 31, 2022 and a Supplementary Agreed Statement of Facts dated February 13, 2023.

[17] The hearing on February 15, 2023 was composed of the cross-examination of Mr. Thibodeau and closing argument. There was no cross-examination of Mr. Tamblyn. Because of a potential issue involving the rule in Browne v. Dunn that came up during the closing argument, I emailed the lawyers after the hearing to reconvene virtually for further closing argument on that point on March 31, 2023.

III. ISSUES

[18] Based on the evidence and submissions, I find that the following are the issues to be determined:

a) Has Honeywell proved its claimed last date of supply? b) If so, has Honeywell proved that its supply to its last date of supply was bone fide supply?

IV. ANALYSIS

a) Has Honeywell proved its claimed last date of supply?

[19] It is undisputed that the old Construction Act (“CA”) applies to this case. It is also undisputed that Honeywell was a “subcontractor” under the old CA. Under section 31(2)(a)(ii) of the old CA, where, as here, there was no published certificate of substantial performance of the contract at the time and where, as here, the relevant subcontract was not certified completed at the time, the only measure of whether the subcontractor’s lien has expired is whether its claim for lien was registered on or before the 45th day following “the date on which the person last supplies services or materials to the improvement.”

[20] If Honeywell indeed supplied to January 8, 2020 as it asserts in its claim for lien, its claim for lien registered on the 44th date after January 8, 2020 would be timely by one day. Has Honeywell proved its claimed last date of supply?

[21] It is undisputed that the onus is on Honeywell to prove this point on a balance of probabilities; see Gem in Niagara Homes Inc. v. Dewling et al, 2018 ONSC 3500 at paragraph 22. The only evidence that addressed this issue was in the affidavit of Mr. Thibodeau. I reviewed this evidence and find that it did not meet the onus on Honeywell to prove its last date of supply on a balance of probabilities. The following are my reasons:

a) Mr. Thibodeau is the Senior Contracts Lead for Honeywell. His responsibility was the negotiation and execution of the Subcontract and the direct agreement. The day-to-day execution of the Subcontract scope was done by others. Mr. Thibodeau made that clear in paragraph 14 of his affidavit.

b) In paragraph 46 of his affidavit, Mr. Thibodeau asserts that Honeywell continued to supply services and materials between December 21, 2019 and January 8, 2020. This is a bald statement from Mr. Thibodeau, a non-site, contracts official, with no explanation or corroboration. As such, the statement has little credibility.

c) In paragraph 48 of his affidavit Mr. Thibodeau asserts that Honeywell continued to supply during the Christmas holiday slowdown period. This was another bald statement with no explanation or corroboration. Again, this statement has little credibility.

d) In paragraph 49 of his affidavit Mr. Thibodeau refers to an invoice Honeywell rendered for what he describes as the work done between December 20, 2019 and January 8, 2020. He attached the invoice he refers to. Mr. Thibodeau is clearly mistaken. The invoice is not an invoice for ongoing supply. It is an invoice dated February 18, 2020 for holdback. The invoice states that it is for “holdback for progress to date” in the amount of $599,425.05.

e) In paragraph 56 of his affidavit Mr. Thibodeau listed the unpaid invoices for labour and material supplied up to and including January 8, 2020. There are 9 invoices. 6 of these invoices are for ongoing supply and are dated December 20, 2019 and dates prior to December 20, 2019. The other 3, including the one referred in paragraph 49, are dated February 18, 2020 and are for holdback. Mr. Thibodeau confirmed this in re-examination. This suggests that Honeywell did not supply after December 20, 2019.

f) The holdback invoice Mr. Thibodeau refers to in and attaches to paragraph 49 contains a certain project number, namely project numbered 11882037. In the list of supply invoices referred to in and attached to paragraph 56, the last invoice for supply under project numbered 11882037 is dated December 20, 2018 and describes the “progress to date” for that scope as being in the amount of $5,304,646.48. This is just 2 cents less than the “progress to date” shown on the holdback invoice for this same scope dated February 18, 2020 that Mr. Thibodeau describes in and attaches to his paragraph 49. This suggests that there was essentially no progress in this scope between December 20, 2019 and February 18, 2020.

g) There appear to be two other scopes described in the alleged outstanding Honeywell invoices Mr. Thibodeau listed at paragraph 56 of his affidavit. The existence of three scopes in Honeywell’s accounting records would accord with the evidence given by Mr. Thibodeau at paragraph 12 of his affidavit, namely that the Honeywell Subcontract was an amalgamation of three previous subcontracts. It appears that Honeywell continued to differentiate these three scopes in its accounting.

h) The second scope as indicated in the invoices listed in and attached to paragraph 56 of Mr. Thibodeau’s affidavit is project numbered 14110451. The last supply invoice for this scope as listed in and attached to paragraph 56 of Mr. Thibodeau’s affidavit is dated October 25, 2019 and shows “progress to date” as being $3,441,960.24. There is also a holdback invoice for this scope dated February 18, 2020 and the “progress to date” for this scope is stated in the holdback invoice to be the same $3,441,960.24. This suggests that there was no progress in this scope between October 25, 2019 and February 18, 2020.

i) The third scope as indicated in the invoices listed in and attached to paragraph 56 of Mr. Thibodeau’s affidavit is project numbered 14110639. The last supply invoice for this scope as listed in and attached to paragraph 56 of Mr. Thibodeau’s affidavit is dated December 12, 2019 and shows “progress to date” as being $2,452,743.75. There is also a holdback invoice for this scope dated February 18, 2020 and the “progress to date” for this scope is stated in the holdback invoice to be $2,491,194.75. The difference between these two figures is $38,451. There is no evidence showing that this $38,451 was invoiced. This leaves open the question as to whether this work, if it was done, was of any value. Also, most importantly, there was no evidence as to when the work concerning this $38,451, if it was done, was done.

j) In cross-examination, Mr. Thibodeau advised that he was also tracking delay costs at this time. In paragraph 16 of his affidavit Mr. Thibodeau stated that he was attaching documents evidencing Honeywell’s “payment history.” The attached documents were not explained. In cross-examination, Mr. Thibodeau referred to one item in a schedule in one of these documents. The item is described as an invoice dated December 11, 2019 in the amount of $3,596,024.96. Mr. Thibodeau in cross-examination described this as a delay claim. But, given the date of the item, it proves nothing pertaining to the period between December 11, 2019 and January 8, 2020.

k) There is no evidence from Honeywell as to the exact time its forces worked on the Project between December 20, 2019 and January 8, 2020, if they in fact worked during that time. Usually a subcontractor produces timesheets and supplier invoicing to establish its exact last date of supply. Honeywell did not do that.

[22] With the exception of the point in (j) above about the delay claim, none of this evidence was addressed with Mr. Thibodeau in cross-examination. The focus instead was on the second issue, namely the issue about when Honeywell should have been on notice to cease supplying.

[23] At the end of the Lien Vetting Committee’s responding oral argument, Mr. Tamblyn, a witness, pointed out that the invoice referred to in Mr. Thibodeau’s affidavit paragraph 49 as showing Honeywell supply from December 20, 2019 to January 8, 2020 was actually a holdback invoice, and that all the Honeywell supply invoices attached to Mr. Thibodeau’s affidavit and referred to in paragraph 56 of the affidavit as unpaid invoices were dated on or earlier than December 20, 2019. From this came the discussion as to whether Honeywell had proven its last date of supply. Mr. Gallichan objected, stating that Mr. Tamblyn’s comments was prejudicial to Honeywell as those points were “new” and were never put to Mr. Thibodeau in cross-examination.

[24] After the oral argument, I considered the matter, and on February 16, 2023 asked counsel by email to reconvene to address my concern as to whether the rule in Browne v. Dunn, (1894) 6 R. 67 (H.L.) had been engaged. Eventually, I scheduled a virtual oral argument on the point for March 31, 2023 and set a schedule for written submissions.

[25] Having received and reviewed the written submissions and heard oral argument, I have decided that the rule in Browne v. Dunn has not been engaged. Here are my reasons.

[26] The rule in Browne v. Dunn is a rule of fairness that prevents a witness from being “ambushed” by not giving the witness an opportunity to state his or her position on later evidence that contradicts the witness on a substantial point and is meant to undermine the witness’s credibility. The rule requires that the cross-examiner put that later evidence to the witness; see R. v. Verney (M.) at page 376. There was no such “later evidence” in this case, as the contradictions are in Mr. Thibodeau’s own affidavit evidence.

[27] The Ontario Court of Appeal has expressly stated that the rule in Browne v. Dunn does not apply where the contradictory evidence used to undermine the credibility of the witness comes from the witness’s own evidence. In Yan v. Nadarajah, 2017 ONCA 196, the defendants, landowners, were being sued on an agreement of purchase and sale on a sale they refused to close. In an earlier motion, they filed affidavits denying ever having the intention to sell, ever listing the property for sale, ever being approached for a sale and ever signing an agreement of purchase and sale. The plaintiff brought a motion for summary judgment. In cross-examinations on filed affidavits, the defendants made admissions about listing the property, but insisted they did not sign the agreement. The earlier affidavits were not put to the defendants but were referred to in argument. The motions judge found that the defendants lacked credibility and granted judgment. On appeal, the defendants raised the rule in Browne v. Dunn. The Court of Appeal held in paragraph 16 the following:

In the present case, there was no element of the kind of unfairness or surprise that the rule in Browne v. Dunn protects against. The contradictory evidence used to impeach the appellants came in the form of the appellants’ own affidavits. Moreover, at the beginning of the cross-examination the appellants were asked whether there was anything in their affidavits that was incorrect or needed to be changed. They declined to make any changes or corrections. In the circumstances, there was no violation of the rule in Browne v. Dunn.

[28] The rule as defined by the Court of Appeal in Yan makes most sense where, as here, the evidence in question is the only evidence proffered by the party on the critical point that party has the clear onus to prove. As stated earlier, under the CA, the starting point for the determination of whether a subcontractor such as Honeywell has preserved its lien in time is whether it has proved its claimed last date of supply. How can there be an “ambush” when the party knows, or should know, from the beginning what it must prove? Indeed, to allow the party to prove such a critical point with deficient and contradictory evidence simply because those deficiencies and contradictions were not put to the witness in cross-examination, which is what Honeywell urges me to do, would be tantamount to a reversal of the onus of proof.

[29] Honeywell alleges that it was led to believe its claimed last date of supply would not be contested. In my view, given the onus on Honeywell to prove its claimed last date of supply, Honeywell must prove that the Lien Vetting Committee clearly and unequivocally admitted this fact to avoid having to prove it.

[30] This did not happen. There was not only no evidence of such admission, there was evidence that Honeywell was given early notice to prove this point. By November, 2021 this reference, which was dormant for over two years, was reengaged, and the focus was on determining the Bondfield holdback and getting it distributed to proven Bonfield subtrade lien claimants. Ozz was a driver of that process. On November 1, 2021, Mr. Tamblyn, lawyer for Ozz and eventual member of the Lien Vetting Committee, wrote a telling email to Honeywell’s then lawyer, Zachery Silverberg, copying Honeywell’s U.S. counsel, expressly identifying the problem with the Honeywell supply and holdback invoices and claimed last day of supply that eventually appeared in the Thibodeau affidavit. This email, sent at a time when proving Bondfield subtrade claims for lien was the focus, gave notice to Honeywell that it had to prove its claimed last date of supply and that its invoices hindered that process. With this notice, Honeywell’s subsequent claims of “ambush” lack credibility.

[31] Mr. Gallichan argued that the Lien Vetting Committee report and court directions caused Honeywell to believe it did not have to prove it last date of supply. The Lien Vetting Committee’s report of September 2, 2022 rejected the Honeywell claim for lien due to untimeliness and sited as its reason the contract termination issue. The report, however, contained no admission of Honeywell’s claimed last day of supply. In my directions for the trial management conference of October 11, 2022 I noted under the heading “Issues” that the Lien Vetting Committee had rejected the timeliness of the Honeywell claim for lien. I stated that “the overall issue [concerning timeliness] is the date of termination of the Bondfield subcontract with Honeywell and the triggering of the 45 day lien period for Honeywell.” This was my summary of the general discussion between the parties. Importantly, it did not memorialize any admission by the Lien Vetting Committee as to the Honeywell last date of supply.

[32] The trial evidence was inconsistent with Honeywell’s position about being misled. The filed Agreed Statements of Fact make no mention of this issue. Also, and most importantly, the Thibodeau affidavit itself does not avoid the issue, as it clearly tried to prove the claimed last date of supply. Had Honeywell been misled as it claims, it would not have proffered this evidence. Mr. Gallichan also pointed out that Mr. Souza made equivocal statements in opening and closing argument when asked by me about this issue. Indeed, Mr. Souza made unfortunate equivocal statements, but none amounted to an admission of the Honeywell claimed last date of supply. I do not find that Honeywell was misled as it alleges.

[33] Mr. Gallichan pointed me to several authorities on the rule in Browne v. Dunne. I have examined these authorities and find that none challenge the proposition in Yan that a failure to put contradictions in a witness’s own evidence to the witness in cross-examination is not a breach of the rule.

[34] In R. v. McCarroll, 2008 ONCA 715 at paragraphs 105-106, the Crown propounded to the jury a new theory of the evidence of the main defendant witness that painted it as fabrication. The Crown did not put this theory to the witness in cross-examination. This was found to be a violation of the rule in Browne v. Dunn. I distinguish this case. In the case before me, the question is the credibility of the Thibodeau affidavit due to its own deficiencies and contradictions, not some new theory alleging fabrication.

[35] In R. v. Quanash, 2015 ONCA 237 the failure by the defendant to put the accused’s version of events leading to and shortly after the murder in question to the Crown’s witnesses was found to be a breach of the rule in Browne v. Dunn. I distinguish this case as well. In the case before me, there are no competing versions of events. There is only one version in issue, namely Honeywell’s version that it supplied to January 8, 2020. The issue is whether it has proved this version on a balance of probabilities through the Thibodeau affidavit.

[36] In Alison Braks v. Dundeal Canada (GP) Inc., 2022 ONSC 4015, the failure by the defendants to put to the plaintiff an out-of-court oral statement the plaintiff allegedly gave to an investigator (and that appeared in the investigator’s report) about the subject slip-and-fall incident was found to be a breach of the rule in Browne v. Dunn when the defendants tried later to use that statement to impeach the credibility of the plaintiff. I distinguish this case as well. In the case before me, the Lien Vetting Committee is challenging Mr. Thibodeau’s affidavit based on its internal deficiencies and contradictions, not some prior, out-of-court, inconsistent statement Mr. Thibodeau (or any Honeywell representative) made.

[37] In Curley v. Taafe, 2019 ONCA 368 the issue was whether the plaintiff, a paralegal, willfully held files after the termination of her contract with the defendant, a lawyer. The plaintiff composed a letter that in effect conceded that she knew she was holding files after the contract termination. She was directed to the letter in cross-examination, but gave no explanation for its contents. The defendant later used the letter to attack the credibility of the plaintiff. Referring to the Yan decision, the appellate court found no breach of the rule in Browne v. Dunne. Mr. Gallichan argued that it was the cross-examination that spared the credibility attack. I am not convinced. The reliance by the court on the Yan decision makes me wonder whether the result would have been the same without the cross-examination. In any event, this case does not stand for the proposition that a failure to cross-examine on contradictions in the witness own evidence and writings breaches the rule. That is because the defendant in this case chose to cross-examine.

[38] In R v. Dexter, 2013 ONCA 744 there was a failure by the defendant, an occupant of the subject car at the time of the accident, to put the defendant’s version of the subject car accident to the other occupants of the car at the time, who gave evidence for the Crown. The defendant alleged he was not driving, while the others alleged he was. The defendant attacked the credibility of the evidence of the other occupants. The court found that this was a breach of the rule in Browne v. Dunn. I draw a parallel between this decision and the Quanash decision. Again, in the case before me there are no competing versions of the events.

[39] Mr. Gallichan tried to distinguish the Yan decision by the comment made by the court in that case that the witnesses were asked at the outset of the cross-examinations as whether they wanted to correct or change their affidavits and declined to do so. He pointed out that the Lien Vetting Committee did not do the same in this case. In my view, this was a minor point in the Yan decision. There is nothing particularly magical about those cautionary words. They will rarely put an affiant on notice of unidentified deficiencies in the affidavit the affiant has spent time preparing, reviewing and swearing. The core of the Yan decision is the point about the contradictions within the affiants’ own affidavits being used to impeach the affiant.

[40] Mr. Gallichan complained about the role Mr. Tamblyn played during closing argument. Mr. Tamblyn is the lawyer for Ozz and swore an affidavit in the trial as to the issue of the notice Honeywell received concerning the issue of the timeliness of its claim for lien. What he referred to during closing argument was not the subject matter of his own affidavit. He pointed out the obvious facts about the Honeywell invoices as indicated in the Thibodeau affidavit. He did not usurp the function Mr. Souza had of conducting the trial on behalf of the Lien Vetting Committee. I do not find that Mr. Tamblyn breached the Ontario Law Society’s Rules of Professional Conduct. In any event, what he pointed out had already occurred to me, which led to my questioning on this point.

[41] I make one final comment about the rule in Browne v. Dunn issue. In the end, it seemed somewhat peripheral. Any cross-examination of Mr. Thibodeau would probably have gone nowhere. Mr. Thibodeau is the Contracts Lead for Honeywell. He probably has limited knowledge of what took place on site and how Honeywell billed for its work other than what appears in his affidavit. The problem for Honeywell was just that - the Thibodeau affidavit. If Honeywell did in fact work to January 8, 2020, the corroborating evidence proving that work should have been in the affidavit. It was not. That is probably why Mr. Gallichan urged me just to accept Mr. Thibodeau’s evidence and not recall him.

[42] I, therefore, find that the rule in Browne v. Dunn was not engaged or breached in this case given the Yan decision. As a result, I also find that Honeywell has failed to prove its claimed last date of supply, and that the Honeywell claim for lien has expired.

b) Has Honeywell proved that its supply was bona fide supply?

[43] Having made this finding, it is unnecessary for me to rule on the second issue, namely the issue of whether Honeywell’s supply was bone fide supply. This is now ironic as most of the work leading to and including the trial of an issue concerned this point. On account of this effort, and in the event I am found to have erred on the issue of whether Honeywell has proved its last date of supply, I will make a few comments on this issue as well.

[44] If it had been found that Honeywell had supplied to January 8, 2020, the issue would have been whether Honeywell’s supply up to that date was bona fide supply, namely a genuine, good faith advance of the scope of work under its Subcontract. It was undisputed that the onus rests on Honeywell to prove this point.

[45] Supplying services and materials after a subcontractor lien claimant knows or ought to have known of the termination of the contract to which the subcontractor supplies has been found not to be bona fide supply. That is what I found in my decision in Cos Shore Inc. v. Unimac-United Mgmt. Corp., 2017 ONSC 4813 at paragraph 62. That is what I held in Cos Shor was what Master Albert found in her decision on similar facts in Clarkway Construction Ltd. v 2247129 Ontario Inc., 2016 ONSC 3991. Both cases concerned claims for lien for the rental of equipment to a project after the contract was terminated. Both decisions made it clear that the lien claimant has a positive obligation to make inquiries as to the state of the project, particularly if there is a series of unpaid accounts; see Clarkway, op. cit., paragraph 17.

[46] But this issue of bona fide supply is not confined to cases where the contract is terminated. Lack of bona fide supply has been found to apply to an attendance at the site without authority and without a confirming record to allegedly inspect work for compliance with the Ontario Building Code; see 1442968 Ontario Limited v. Houston Engineering & Drafting Inc. at paragraph 55. It has been found to apply to an attendance at the site to do minor completion work for the purpose of bootstrapping lien rights; see Blockwall Masonry Ltd. v. Arcaio Design at paragraph 27.

[47] In this case, the evidence shows that by December 18, 2019 Honeywell had a series of unpaid invoices. It was not concerned, according to Mr. Thibodeau, because of its ratification agreement with Zurich, which led Honeywell to believe that Zurich would insure payment of the accounts. Yet, Honeywell still remained subject to its Subcontract with Bondfield.

[48] On December 18, 2019 the Monitor wrote Honeywell advising that Bondield was ceasing work on the project because it had no funds. It added that Bondfield must begin an “orderly demobilization from the site unless a funding solution is achieved.” Then, most importantly, the Monitor states the following: “The Monitor is providing the current notice only so that you may cease incurring additional cost at this time pending any resolution of these funding issues.”

[49] In short, the Monitor for Bondfield was advising Honeywell in this letter to cease incurring costs while Bondfield looked for funding. In my view, this was notice that if Honeywell incurred such additional costs, these costs would be at its own risk as Bondfield had no money and may not get further funding. While the letter was not notice of subcontract termination, it was notice giving permission to Honeywell to suspend operation in the circumstances.

[50] When asked about this notice in the December 18, 2019 letter, Mr. Thibodeau stated that he was not sure what it meant. The notice was clear. It is Mr. Thibodeau’s alleged confusion that is puzzling. At minimum, this letter and Mr. Thibodeau’s stated reaction to it should have caused Honeywell to make inquiries of the Monitor and Zurich as to the state of the Project. There is no evidence that Honeywell did that. For Honeywell then instead to incur such additional costs, if it did, would, in my view, have been in defiance of this notice and not only unreasonable, but reckless. It would not have been bona fide supply.

[51] Two days later, on December 20, 2019 Justice Conway issued his order. It brought Bondfield’s performance of its contract work to an end. The order lifted the stay as against Bondfield to allow SMH to take over and complete the Project with its own forces. The order directed Bondfield subcontractors to cease taking instruction from Zurich, Bondfield and ProjectCo.

[52] There is no evidence that Honeywell received this order before January 8, 2020. However, with its outstanding accounts and the December 18, 2019 notice letter from the Monitor in hand, Honeywell should have been vigilant about making regular inquiries of the Monitor and Zurich as to the state of the Project. Had it done so, I am certain it would have received a copy of the Conway order in a timely way and ceased working for Bondfield in accordance with that order.

[53] A day later, December 21, 2019, SMH sent Honeywell a letter advising that SMH had exercised its right under the Project Agreement to engage third parties to complete the Project. The letter advised that SMH was working with EllisDon to direct the work, and asked for a meeting with Honeywell “to discuss how best to proceed with the work you have been doing.” Honeywell responded the same day advising that it was ready to meet to discuss “next steps.”

[54] At minimum, this letter should have caused Honeywell to make inquiries of the Monitor and Zurich as to the status of the Project, inquiries that, in my view, would undoubtedly have led to the disclosure of the Conway order to Honeywell. But the letter does more. It creates the real suspicion that any work Honeywell may have done between December 21, 2019 and January 8, 2020 was done for SMH, not for Bondfield.

[55] The Lien Vetting Committee also argued that the Conway order triggered the running of the lien period for Honeywell “as a matter of law” regardless of when the Conway order was delivered to Honeywell. As I do not have to address this issue, I will not.

[56] This all leads me to the conclusion that Honeywell has failed to meet its onus of proving that supply after the dates of these two letters, December 18 and 21, 2019, and up to January 8, 2019, was bona fide supply under its Bondfield subcontract. As a result, had I found that Honeywell proved its claimed last date of supply, I would have found that its lien had expired in any event.

V. CONCLUSION

[57] In conclusion, I rule that the Honeywell lien expired due to a failure to preserve it in time. The Honeywell claim for lien must be vacated and security posted for it returned.

[58] Concerning costs, as directed, the parties filed costs outlines concerning this trial of an issue on April 6, 2023. Honeywell costs outline shows $80,073.50 in actual costs, $72,066.15 in substantial indemnity costs and $48,044.10 in partial indemnity costs.

[59] The Lien Vetting Committee filed two costs outlines, one for UMC and the other for Ozz. This was because Zurich, the other member of the Lien Vetting Committee, did not take an active part in this trial. The UMC costs outline shows $30,987.99 in actual costs, $27,889.19 in substantial indemnity costs and $18,592.79 in partial indemnity costs. The Ozz costs outline shows $51,111.03 in actual costs, $40,888.82 in substantial indemnity costs and $30,666.62 in partial indemnity costs.

[60] Given the result, it would appear that the Lien Vetting Committee will be entitled to costs. I encourage the parties to make every effort to resolve the issue of costs. If they cannot, the following schedule applies:

• the Lien Vetting Committee must serve and file written costs submissions of no more than three pages on or before June 6, 2023,
• Honeywell must serve and file responding written costs submissions of no more than three pages on or before June 16, 2023, and
• the Lien Vetting Committee may serve reply written costs submissions of no more than one page on or before June 21, 2023.

Released: May 24, 2023

ASSOCIATE JUSTICE C. WIEBE

COURT FILE NO.: CV-20-638236 ONTARIO SUPERIOR COURT OF JUSTICE In the matter of the Construction Act, R.S.O. 1990, c. C.30 BETWEEN: Ozz Electric Inc. Plaintiff

• and - Bondfield Construction Company Limited, Unity Health Toronto, formerly known as Providence St. Joseph’s and St. Michael’s Healthcare, 2442931 Ontario Inc., and Sisters of St. Joseph for the Diocese of Toronto, in Upper Canada Defendants REASONS FOR JUDGMENT Associate Justice C. Wiebe Released: May 24, 2023