Court File and Parties

Court File No.: CV23/1096 Date: 2023-08-01 Superior Court of Justice - Ontario

Re: In the Matter of the Construction Act, R.S.O. 1990, c.C.30 – Sierra Construction Inc.

Before: Justice I.F. Leach

Counsel: Lianne J. Armstrong, for Sierra General Contracting Inc.

Heard: In writing

Endorsement

[1] This motion in writing, apparently filed with the court on or about July 20, 2023, was placed before me for the first time this afternoon, with an indication that the matter now requires urgent attention.

[2] By way of general background and context:

a. The moving party, Sierra General Contracting Inc., ("Siera"), is the general contractor in relation to a construction project on specified lands, (in respect of which only the formal legal description has been provided), located within the City of Woodstock.

b. Although the registered owner of the lands is Urban Cliffs Developments Inc., ("UCDI"), it seems that Sierra was contracted to supply services and/or materials to the project by a franchisor, Fast Leaf Inc., and/or a tenant on the property, identified as Beards Lanes Developments Inc.

c. On March 10, 2023, a construction lien of that date was registered against the leasehold interest in the property. That lien, in the amount of $4,120,486.58, was registered in the Oxford County registry office as Instrument No. CO277713.

d. On the same date, (i.e., March 10, 2023), a second construction lien of the same date, (i.e., March 10, 2023), also was registered against the leasehold interest in the property. That lien, in the same amount of $4,120,486.58, was registered in the Oxford County registry office as Instrument No. CO277719. The affidavit filed in support of Sierra's motion explains that this second lien was registered to address the inadvertent omission of naming Beards Lane Inc. as a person to whom Sierra supplied services or materials in relation to the project. It is acknowledged, in the supporting affidavit, that both liens relate to the same project work, and that Sierra actually has only one lien claim in the amount of $4,120,486.58 in relation to the project.

e. The project is not yet complete, and Sierra is returning to perform more work on the project, under its contract relating to the lands.

f. The registered owner of the lands, UCDI, is now in the process of refinancing the property. UCDI's bank, (not identified by name in Sierra's motion material), apparently has indicated that it requires title to the property to be clear of all liens before any financing is approved.

[3] In an attempt to address the concerns and apparent lien clearance requirement raised by UCDI's unidentified bank, Sierra has "agreed to vacate the registration of its construction liens without prejudice to Sierra's construction liens "that have arisen or may arise in relation to the lands and premises", as per sub-paragraph (d) of its notice of motion prayer for relief, and paragraph 4 of the draft Order submitted with the motion.

[4] I have not granted the requested Order for the following reasons:

a. In my view, it is a reasonably clear inference that UCDI's unidentified bank is concerned that existence of the liens currently registered on title by Sierra may compromise in some manner, (via relegation of its priority or otherwise), the contemplated security interest the bank no doubt may wish to register against title to the property as a condition of providing UCDI with renewed financing.

b. In those circumstances, I am troubled by the request for an Order that formal vacating of the liens currently registered on title to the property by Sierra would be "without prejudice to any construction liens of Sierra General Contracting Inc. that have arisen or may arise in relation to the lands and premises". In particular:

i. On its face, such wording would preserve any and all rights Sierra currently enjoys via formal registration of its existing liens on title, despite the liens being formally vacated from title to the property.

ii. In such circumstances, UDCI's unidentified bank, and possibly other parties considering registering further liens or other charges against title to the property, arguably would have their rights compromised by or subordinated to the ongoing rights created by the liens Sierra has registered, without UDCI's unidentified bank or such other parties having any knowledge or notice, via formal registration of liens on title to the property, of any potential concerns and/or legal issues in that regard.

c. Having regard to such matters, it seems to me that there are others, and UDCI's unidentified bank in particular, who clearly may be affected by the relief being sought in this ex parte motion, such that the requested relief should not be granted without those parties being provided with notice of the motion and an opportunity to be heard.

[5] I appreciate that it inherently would be difficult, and likely impossible, to provide actual notice of such a motion to all those who may be affected by the relief being sought, for the reasons I have identified. Indeed, the difficulty or impossibility of providing effective provision of notice to all those who may be considering entering into transactions involving the relevant property is one of the reasons why the registry system was created in the first place.

[6] With respect, it seems to me that, if the real concern is providing UDCI's unidentified bank with assurance that any and all security interests it may wish to register against title to the property will not be affected by the liens Sierra has registered against title, (e.g., by specification that the bank's interests pursuant to any such registered security instruments will be not be subordinated in any way to the liens Sierra has registered), that more targeted relief, sought on notice to the affected bank and with its consent, would be a more appropriate and less problematic request.

[7] Sierra nevertheless is free to seek whatever form of alternative or additional relief it thinks appropriate to address the situation in a manner that also addresses the concerns identified herein.

[8] For now, Sierra's current motion for the relief requested therein is dismissed, without prejudice to its ability to bring a further motion seeking further and better relief, supported by appropriate evidence. Sierra, and any other party having knowledge of the matter, is hereby directed to include a copy of this endorsement with any motion material submitted in that regard.

[9] As the underlying situation apparently involves urgency, and I likely will not be available to deal with any such further motion by Sierra and/or other affected parties over the course of the next several weeks, I wish to make it clear that I am not seized of the matter. Any further motion brought in relation to the matter may be placed before any judge of the court.

"Justice I.F. Leach"

Justice I.F. Leach

Date: August 1, 2023