COURT FILE NO.: CV-23-00000137-0000
DATE: 20240523
SUPERIOR COURT OF JUSTICE – ONTARIO
IN THE MATTER OF the Construction Act, R.S.O. 1990, c. C. 30
RE: JP Reno Inc., Plaintiff, Responding Party
AND
Norman Mark Warner and Sabina Tomic, Defendants, Moving Parties
BEFORE: Justice Spencer Nicholson
COUNSEL: B. Blay for the Plaintiff, Responding Party
S. Adams for the Defendants, Moving Parties
HEARD: May 22, 2024
REASONS ON MOTION
NICHOLSON J.:
[1] This is a construction lien matter. The defendants move to vacate the lien registered against their property and dismiss the lien action. The basis for that request is that the lien has expired.
[2] The issue for determination is whether the contract had been abandoned by the plaintiff or terminated by the defendants more than 150 days prior to the commencement of this action and the registration of the certificate of action.
Background:
[3] The plaintiff, JP Reno Inc., and the defendants, Norman Warner and Sabina Tomic, entered into a contract on or about January 5, 2021 to perform renovations to the defendants’ property. The original contract price was $69,474.83 plus HST.
[4] By August 2022, the renovations had not been completed. The defendants had, in accordance with one change order, and perhaps several other agreements, paid substantially more than $69,474.83. Throughout the renovations, the defendants could not reside at the property. According to the defendants, the plaintiff was prioritizing other contracts ahead of the defendants’ renovation and was sporadically attending to complete the contracted work. According to the defendants, they informed the principal of JP Reno, John Pankiewicz, in August that they were seeking quotes from other contractors to complete the work.
[5] Importantly, the defendants have produced emails between June 2022 and August 2022 in which they express considerable frustration about the pace of the renovations. Mr. Pankiewicz’ responses were clearly intended to placate the defendants and assure them that the work would proceed in a timely fashion.
[6] On August 17, 2022, things came to a head. Mr. Pankiewicz demanded a further $90,000 to continue the renovations. The defendants challenged this further request for money and, according to the defendants, Mr. Pankiewicz became angry and left the property, claiming “this is my house.”
[7] On August 17, 2022, Mr. Pankiewicz emailed the defendants. Within that email, Mr. Pankiewicz referred to the outstanding balance for labour and common materials, detailing the items that were unpaid. Mr. Pankiewicz stated as follows:
“My observation after today’s meeting is after not listening or going over outstanding balance that you don’t have intention to pay for all the labour and common materials which will prevent us from continue work at house. Tomorrow I am sending via email several invoices with price brake that some of them are outstanding from last year. This balance needs to be paid immediately to continue with future work.
Looking forward to your response with 24 hours before escalating this matter to the next level.” (sic)
[8] The next morning, the defendants responded by email. The email begins “This is incorrect! You left our meeting today when we questioned an outstanding balance of $90,000 for labour”. Within the email, the defendants questioned how the costs could have escalated from their discussion in October of 2021. The email indicates that the defendants had paid a total of $177,379 to date. It states that during their meeting, Mr. Pankiewicz indicated $90,000 was outstanding and a further $100,000 would be required, bringing the total costs to $367,379. The email continues as follows:
“On August 3, 2022 you admitted that in the last 20 months you had only done the equivalent of 8 months work on the house, we thought it was less. That still leaves 12 months that you were not at our site.
We trusted you John with the purchase of this home when you inspected and told us it was a very good home with good bones.
We trusted you despite multiple delays, disappearances from this project, and empty promises of it being completed October 2021, Christmas 2021, May 2022, end of October 2022 and end of November 2022.
We were encouraged by family and friends who witnessed previously stated facts to fire you, but we continued to have faith in you and your intentions.
Now, after more than 20 months since you started our house reno, enormous amount of stress and evident health issues caused by that, you have decency to accuse us of not paying our bills on time. We were never a day late when you were ready to issue a bill, and as a matter of fact the last one of $22,600 was paid even without you providing a detailed breakdown of it. We understood it was for the work that had been completed thus far as was the case with previous bills.
It seems to me that not only have you taken advantage of our trust, but of our finances as well.
This does not make sense at all, and you storming out on us saying that you own our house was quite alarming.
[9] On August 17, 2022, the defendants changed the locks to the property so that the plaintiff and his crew could not access the property.
[10] First thing in the morning on August 18, 2022, the plaintiff, with the assistance of the London Police Services, attended the property and retrieved its tools. The plaintiff asserts that some of its tools still remain on the property. The defendants refute that assertion and state that the plaintiff removed all of its tools.
[11] On August 18, 2022, Mr. Pankiewicz also arranged to have the portable toilet retrieved by the rental company. The portable toilet was picked up, on August 25, 2022.
[12] The plaintiff did not attend on the property after August 18, 2022, except to conduct some clean up. The plaintiff asserts that it attempted to contact the defendants on August 19 and 22, 2022 to continue the project. Tellingly, there is no corroborating evidence of the plaintiff communicating with the defendants since that time to arrange to attend the property and continue the contract. The defendants’ phone records do not suggest any such call was made to either of them on the dates alleged.
[13] The defendants hired a new contractor on September 19, 2022 to complete the renovations.
[14] The plaintiff registered its construction lien against the property on October 13, 2022. There is no dispute that the plaintiff preserved its lien within the time period prescribed by section 34 of the Construction Act, R.S.O. 1990, c. C.30 (the “Act”).
[15] On January 20, 2023, the Statement of Claim and Certificate of Action was issued by the Court. On the same date, the Certificate of Action was registered on title.
[16] The issue, accordingly, is whether the claim for lien was perfected in accordance with the Act.
Statutory Framework:
[17] The Act protects contractors who supply work and services to real property. A lien under the Act creates an interest in the premises in favour of an unpaid contractor. In order to benefit from the protection of the Act, a contractor must comply strictly with its requirements (see: Scepter Industries Ltd. v. Georgian Custom Renovations Inc., 2018 ONSC 988, at paras. 20-21).
[18] Liens expire unless they are both preserved and perfected within the specific timelines set out in the Act. Section 31 of the Act provides that unless a lien is preserved under section 34, it expires. Subsection 31 (2) reads as follows:
34 (2) Subject to subsection (4), the lien of a contractor,
(b) for services or materials supplied to the improvement where there is no certification or declaration of the substantial performance of the contract, or for services or materials supplied to the improvement after the date certified or declared to be the date of substantial performance, expires at the conclusion of the 60-day period next following the occurrence of the earlier of,
(i) The date the contract is completed, and
(ii) The date the contract is abandoned or terminated.
[19] I pause to note that previous iterations of section 31of the Act, including the Construction Lien Act, did not include the word “terminated” and provided for preservation within 45 days. This amendment came into effect on July 1, 2018. Accordingly, cases dealing with contracts entered into before July 1, 2018 did not consider the word “terminated” separately from “abandoned”.
[20] Abandonment has been held to have occurred when there is a cessation of work and either an intention not to complete the contract or a refusal to complete the contract. The subjective intentions of the contractor are not determinative (see: Nigeco Contracting Ltd. v. Aizenstros, 2019 ONSC 3364, at para. 22 and Gem in Niagara Homes Inc. v. Dewling, 2019 ONSC 3500, at paras. 27 and 28)
[21] As noted above, there is no dispute that the plaintiff preserved the lien within the 60-day time period.
[22] Subsection 36 (1) of the Act provides that in order to be perfected, a lien must have been preserved. Subsection 36 (2) provides as follows:
36 (2) A lien that has been preserved expires unless it is perfected prior to the end of the 90-day period next following the last day, under section 31, on which the lien could have been preserved.
[23] Perfection under subsection 36(3) requires the commencement of an action to enforce the lien and the registration of a certificate of action on title.
[24] Accordingly, the plaintiff in this case was required to commence the action and register the certificate on title within 150 days from the date the contract was abandoned or terminated, if either event occurred.
[25] In Gem in Niagara, supra, Arrell J. described as follows, at paras 22-23:
[22] The Construction Lien Act provides strict time requirements for lien claimants. The evidentiary burden is on the lien claimant to prove compliance with the statutory timelines of preservation and perfection. The standard of proof is on a balance of probabilities. The time periods are absolute and inflexible. See: Nortown Electric Contractors Associates v. 161975 Ontario Inc., 2010 ONSC 3284 at para. 4; Roe v. Elgaard Developments Inc., 2016 ONSC 7831 at paras. 17, 52.
[23] The law is clear that if the lien claim is not perfected and preserved within the timelines set out in s. 31 and 36 of the Construction Lien Act, the lien must be vacated and the action continue under the ordinary rules: See: Roe, supra at paras. 52, 53; Scepter Industries Ltd. v. Georgian Custom Renovations Inc., 2018 ONSC 988 at paras. 37, 38.
[26] Section 45 of the Act requires the court, upon motion and proof that the lien has not been preserved or perfected to declare that the lien has expired and order that the registration of the claim for lien be vacated. Section 47 grants the court the power, on motion, to discharge a lien and to dismiss an action, “on any proper ground”.
[27] The courts have held that motions under section 47 of the Act are akin to motions for summary judgment under the Rules of Civil Procedure, although they are procedurally different (see: GTA Restoration Group Inc. v. Baillie, 2020 ONSC 5190, at paras. 42-45 and Maplequest (Vaughan) Developments Inc. v. 2603774 Ontario Inc., 2020 ONSC 4308, at para. 25).
[28] Thus, in Maplequest, it was stated that the test is whether there is a triable issue in respect to any of the bases on which discharge of the lien is sought.
[29] In GTA Restoration, Associate Justice Robinson, at para. 56, noted as follows:
[56] In my view, neither R&V Construction nor Maplequest alter the prior case law requiring both the moving party and responding lien claimant to put their best foot forward in s. 47 motions where the court must assess if there are triable issues, such as challenges to timeliness of a lien, quantum of a lien, or lienability of services or materials supplied. On my reading, the Divisional Court has clarified that the evidentiary onus extends solely to the bases on which discharge is sought.
[30] I note that section 50 (3) of the Act directs that lien actions are to be, as far as possible of a summary character, having regard to the amount and nature of the liens in question.
Legal Analysis:
[31] The defendants argue that the contract was abandoned or terminated effective August 17th or August 18th, 2022. They argue that the 150-day period ended prior to the lien being perfected. There is no question that if the contract was abandoned or terminated effective August 18th, or any date prior, then the lien has expired.
[32] The plaintiff takes the position that the contract was never abandoned or terminated prior to the preservation of the lien. Accordingly, the plaintiff takes the position that the lien was perfected within the applicable time period.
[33] The defendants rely heavily upon Gem in Niagara Homes, supra. In that case, Arrell J. held that the contract had been terminated. Factors that supported the termination of the contract included the fact that the lien claimant had taken the blueprints for the project off site and that the portable washroom had been taken off site by the lien claimant.
[34] The defendants also refer to 2280092 Ontario Inc. v. Collins, 2021 ONSC 4365, where Roger J. found that there had been abandonment of the contract in that case. He described that more than minimal cleaning or minimal repairs were required after the abandonment date to evidence an intention to continue the contract.
[35] The plaintiff refers to me to Nigeco, supra. In that case, Casullo J., under the prior iterations of the Act, held that despite the fact that the contractor ceased working on the contract, removed its tools and equipment from the site and removed temporary fencing that it had not abandoned the contract. However, she did so on the basis that Nigeco consistently advised the defendant that it was willing to complete the project until discussions over payment broke down (see: paras 25 and 26). She also found that the conduct of the parties after the breakdown of the relationship did not establish that the contract had been terminated.
[36] There were no such discussions that took place after August 18, 2022 between the plaintiff and the defendants in the case before me. Furthermore, the conduct of the parties after August 18, 2022 are not consistent with an ongoing contract. Rather, all of the conduct on the part of both parties suggests that they had each moved on.
[37] Nigeco is distinguishable on the facts.
[38] The plaintiff also relies upon Baeumler Quality Construction Inc. v. Pirraglia, 2018 ONSC 7610, a decision of Conlan J.. In that case, Conlan J. noted, at para. 25, that there has to be more than simply cessation of work, otherwise any temporary stoppage of work could constitute abandonment, which is not “good policy”. It was thus his view, relying upon Dieleman Planer Co. v. Elizabeth Townhouses Ltd., 1974 CanLII 175 (SCC), [1975] 2 S.C.R 449, that to constitute abandonment, the cessation of work must be permanent. In Dieleman, “permanent” meant that it was not intended to carry the project to completion.
[39] I agree.
[40] However, in Baeumler, Conlan J. was satisfied that there was evidence before him that the lien claimant intended to carry out the work. This included correspondence supporting that proposition. At para. 46, it is described that the exchange of correspondence between the parties continued for weeks and weeks after the date that the defendants asserted the contractor abandoned the project.
[41] Baeumler does not assist the plaintiff in this case as no such conduct evidencing an intention to continue the project exists after August 18, 2022.
[42] I do not disagree with Conlan J.’s comment, at para. 47, that it is “not good policy to encourage the frantic filings of liens by contractors at the first sign of any trouble with their customers”. However, that is not the case before me.
[43] The emails submitted by the defendants in this case between June 2022 and August 18, 2022 make it clear that this was not the “first sign of any trouble”. In particular, the defendants’ emails dated July 26, 2022 and August 2, 2022 demonstrate the defendants’ growing and significant frustration with the plaintiff. The latter reads as follows:
“What is going on?
This past August Civic Holiday long weekend you said you were going to give us an update on when you were returning and you never did. You have only worked one day at the house since May 16, 2022. Each week of July you promised to return only to delay it another week when I called you mid-week to see when you were returning. Not once did you have the curtesy (sic) to initiate calling me to inform us you were not returning. Not once did you apologize for the further delays, you just provided an excuse for why you were not following through on your promise.
This kind of behaviour is not something you would tolerate yourself, as it is extremely disrespectful. We have been more than patient with the delays of our project which you started 20 months ago. You disappeared all of last summer and didn’t return to work on the house until the end of November 2021 despite promising us you would be returning in September 2021.
We continued to trust you despite many broken promises, but this is not acceptable any more. Please give us a date and time to discuss this matter in detail.
[44] The defendants then obtained quotes from other contractors. It is clear from the evidence that the plaintiff was aware of these quotes as he acknowledges them in his email dated August 14, 2022.
[45] Then the parties met on August 17, 2022 and the meeting got heated. According to the evidence, Mr. Pankiewicz stormed off and indicated that “this is my house.”
[46] I find as a fact that the same night, the defendants purchased new locks and changed the locks on the doors.
[47] I further find as a fact that first thing the next morning, the plaintiff called the London Police Services in order to enter the house to retrieve its tools. He retrieved, at the very least, the majority of his tools (and perhaps all). Mr. Pankiewicz even removed the building permit off the front door. On the same date, I find as a fact that Mr. Pankiewicz contacted the company from which it had rented the portable toilet and requested its removal.
[48] No further substantive work was done on the property by the plaintiff after that date. Importantly, there is no satisfactory evidence of any communication by the plaintiff in furtherance of continuing the renovations after August 18, 2022. The plaintiff bears the onus in this case and has not supplied any satisfactory proof of that communication.
[49] Unlike the cases relied upon by the plaintiff, there were no ongoing discussions about payment of invoices or continuing the contract.
[50] The defendants then hired another contractor to complete the work in September 2022.
[51] I have no hesitation in concluding that the cumulative effect of the emails produced on this motion, culminating in the changing of the locks, is satisfactory evidence that the defendants terminated the contract effective August 18, 2022. The tenor of the defendants’ emails, coupled with the changing of the locks, effectively communicated their desire to terminate the contract.
[52] In reaching that conclusion, I have considered the cross-examination of Mr. Warner. Mr. Warner conceded that he never sent the plaintiff an email or text in which he stated unequivocally that the plaintiff was fired or that the contract was terminated.
[53] There was also this exchange during cross-examination:
“35. Q. All right. But you are agreeing with me that your intention in changing the locks was to send a message to John that he was no longer welcome at the property?
A. No. I was afraid of what he would do in the house if we weren’t there. We wanted to be at the house if he, when he—if he came back, or when he came back, we wanted to be there. I was worried he might, the way he acted that evening, telling it was, telling us it was his house, I was worried he might destroy the work he had done.”
[54] I am asked to conclude from that exchange that it was not the defendants’ intention by changing the locks to terminate the contract. Respectfully, that was not the question put to Mr. Warner. Rather, he was asked whether he was sending a message about John returning to the property.
[55] All of the circumstances, in their totality, convince me that the defendants terminated the contract effective August 18, 2022.
[56] If I am wrong about my conclusion regarding termination, I would still find that the plaintiff abandoned the contract on the same date. I do agree with the plaintiff that Mr. Pankiewicz’ email of August 17, 2022 does not demonstrate that the plaintiff was abandoning the project. However, I rely upon the fact that the plaintiff contacted the police to retrieve its tools on that date, contacted the portable toilet company on that date to arrange for the portable toilet to be picked up, performed no further substantive work on the renovations after that date and has provided no satisfactory evidence of communications evidencing an intention to continue the project. All of these factors, seen in the context of the defendants’ emails and locking the doors, leads me to conclude that the plaintiff abandoned this project.
[57] The plaintiff’s abandonment was, as described in Dieleman, permanent in the sense that I find that the plaintiff did not intend to carry out the project to completion. There is absolutely no evidence to support a finding otherwise.
[58] It must be kept in mind that in motions such as these, the contractor will always be inclined to say that it did not intend to abandon the contract. However, that intention must be demonstrated by actions. The actions, or more accurately, inaction, by the plaintiff demonstrate that it had abandoned the contract effective on August 18, 2022.
[59] In my opinion, there is no genuine triable issue with respect to the fact that this lien was not perfected in a timely fashion. The evidence presented on this motion strongly supports that view. Accordingly, I declare that the plaintiff’s lien expired prior to its perfection.
[60] I order that the certificate of action registered against the property shall be vacated and the matter proceed under the ordinary rules to trial.
Costs:
[61] I heard costs submissions from each party at the conclusion of the hearing. It is clear that both parties have expended approximately the same resources on this motion. Both parties essentially asked for the same quantum of costs in the event that they were successful, and both counsel agreed that the amount sought by the other side was reasonable.
[62] Accordingly, I award costs to the defendants, fixed on a partial indemnity basis, in the amount of $11,250, all-inclusive, which I find to be fair and reasonable.
Justice Spencer Nicholson
Date: May 23, 2024