Endorsement

Court File No.: CV-21-2913-0000
Date: 2025-02-24
Superior Court of Justice – Ontario

Re: MGW Home Designs Inc., Plaintiff
And: Domenic Pasqualino, Defendant

Before: J.E. Mills
Counsel:
Ian Literovich, for the Plaintiff
Carlo Pasqualino, for the Defendant
Heard: 2025-02-10

Introduction

[1] The plaintiff, MGW Home Designs Inc. (“MGW”), brings a motion to restore the matter to the trial list after it was administratively struck off by the registrar. The defendant, Domenic Pasqualino (“Mr. Pasqualino”), brings a cross-motion to discharge the construction lien registered in respect of this action, and to dismiss the order made by an adjudicator who awarded the plaintiff $119,314.00 following a statutory adjudication process under s. 13 of the Construction Act.

Restoring the Action

[2] The relevant test under Rule 48.11 to set aside a registrar’s order striking a matter from the trial list is the application of the Reid Factors, with a contextual analysis to balance the interests of the parties and to ensure justice is done in all the circumstances. The Reid Factors require the moving party to:

a. provide an adequate explanation for the litigation delay;
b. lead evidence to establish inadvertence in missing the deadline;
c. demonstrate the motion was brought promptly; and
d. establish there was no significant prejudice to the defendant in presenting their case at trial as a result of the plaintiff’s delay.

[3] MGW has satisfied each of the Reid Factors. The administrative notice was sent to counsel of record at a time when he was overseas celebrating a religious holiday. The email notification was simply overlooked by counsel and a sincere apology was given. Immediately upon being notified the matter had been struck from the trial list, this motion was brought to remedy the situation. At no time did MGW abandon the litigation or intentionally delay the proceeding.

[4] Mr. Pasqualino provided no evidence of prejudice that could not otherwise be compensated for by costs or a suspension of interest accrual on any amount that may be found to be owing. The action is a construction lien matter, the merits of which will be proven and defended largely by documents. There is no suggestion the documentary evidence has been lost or compromised. The brief procedural delay from the administrative dismissal will not have materially affected the recollection of any witnesses.

[5] At the hearing, counsel for Mr. Pasqualino advised he takes no issue with the matter being restored to the trial list; he simply challenges whether it should be restored as a construction lien matter with the obligations and protections of the Construction Act, or as an ordinary matter subject to the Rules of Civil Procedure. This issue requires an examination of the cross-motion.

Vacating the Lien

[6] Subsection 47(1) of the Construction Act permits a party to bring a motion to vacate a lien and dismiss an action where the claim is “frivolous, vexatious or an abuse of process; or on any other proper ground.”

[7] Mr. Pasqualino seeks to discharge the lien on the basis MGW has engaged in an abuse of process by allowing the matter to be struck from the trial list. He further submits that various grievances with MGW’s conduct prior to and following the commencement of the lien action amount to an abuse of process.

[8] Abuse of process is a flexible doctrine which is derived from the court’s inherent power to “prevent the misuse of its procedure, in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute.” The conduct must be oppressive or vexatious such that it undermines the just trial process and the proper administration of justice.

[9] The first two grounds raised by Mr. Pasqualino are with respect to the underlying construction project. The conduct preceded the commencement of the litigation and therefore cannot contribute to or constitute an abuse of process. There must be an existing court procedure in order for it to be misused.

[10] None of the other allegations asserted by Mr. Pasqualino amount to an abuse of process, individually or collectively.

[11] A refusal by MGW to participate in examinations for discovery because Mr. Pasqualino has not paid the adjudicator’s order and outstanding court order is neither oppressive nor vexatious. Examinations for discovery in construction lien matters require leave of the Court. I was not advised if leave was obtained by either party but nonetheless, it is entirely reasonable and understandable that MGW would not want to incur further legal costs. More than two years has passed, and after having exhausted all appeals Mr. Pasqualino still has not paid the adjudicator’s order that he was required by statute to pay within ten days of the determination.

[12] Contrary to the allegations of Mr. Pasqualino, MGW has not “weaponized the provisions of the Construction Act to their benefit” with an intention to “tip the scales of justice to their favour” and force Mr. Pasqualino to face “a two-front war”. These statements are nothing more than hyperbole. MGW has simply availed itself of its statutory rights and engaged the interim dispute resolution provisions of the Construction Act.

[13] MGW’s re-filing of the adjudicator’s order in the lien action for enforcement purposes is not oppressive nor is it vexatious. This court file number issue was raised by Mr. Pasqualino in a prior hearing before Chozik J. She was of the view the adjudicator’s order should have been given a separate court file number from the lien action. I agree.

[14] The better course of action would have been to file the adjudication order under a separate court file number as the parties to the lien action may be broader than those engaged in the adjudication process. However, it is not inherently wrong nor is it an abuse of process to file the order in the lien action.

[15] This issue is not addressed in the Construction Act and does not appear to have been judicially considered. The statute simply states any party may file a certified copy of the determination with the court and, on filing, it becomes enforceable as if it were an order of the court. The appropriate process for filing is not indicated.

[16] The adjudication procedure is intended to be a summary process. A dispute may be referred to adjudication regardless of whether an action or arbitration has been commenced. In this matter, MGW had commenced a lien action prior to the referral to adjudication.

[17] The adjudicator’s order is binding on the parties but on an interim basis until there has been a determination of the dispute by the court, by arbitration, or a written agreement between the parties. The same dispute may be re-litigated in a court action or private arbitration, and it may be resolved with a settlement between the parties. It may be set aside on judicial review but only on specified grounds and with leave of the Divisional Court. Mr. Pasqualino was denied leave to have the adjudicator’s order judicially reviewed.

[18] It must be noted the adjudication process is a separate legal proceeding. Once a decision is made it is enforceable by court order. However, as noted above, that decision is not necessarily determinative on a final basis. The adjudicator’s findings and ruling may be raised and/or re-litigated in this construction lien action. The adjudicator’s determination will be relevant, and it is admissible as evidence in this lien action. The determination does not restrict the authority of the court to reconsider the merits of any matter previously considered by an adjudicator.

[19] The Construction Act provides for this interim decision mechanism to keep funds flowing on a construction project while parties litigate the issues in dispute to a final and binding determination, whether before the courts or by private arbitration. The propriety of the adjudicator’s order will necessarily be a live issue in the final determination of the lien claim. In my view therefore, it is not inappropriate for the adjudication order to be filed, or in this case re-filed, in the lien action. It certainly does not amount to an abuse of process.

[20] MGW cannot be faulted for failing to move this matter forward more expeditiously to trial as virtually, if not every step in the proceeding thus far has required a motion to be brought and an order made, typically followed with an appeal of that order being taken.

[21] Lastly, the failure of counsel for MGW to notify Mr. Pasqualino or his counsel of the Assignment Court date does not amount to an abuse of process. It was simply an oversight. The Assignment Court date was evidently in the email correspondence from the Court which, as noted above, was regrettably overlooked by counsel.

[22] Therefore, I find there is no legal or factual basis to discharge the lien on the grounds there has been an abuse of process by MGW.

Adjudication Process & Order

[23] Mr. Pasqualino raises the concern that paying the adjudicator’s order would effectively require him to twice pay for the alleged debt as the lien has been bonded off. Thus far, he has refused to pay the adjudicator’s order as he fears he “will never see those funds again” if he is ultimately proven successful at the lien trial.

[24] This issue was raised before Ricchetti J., and it was expressly addressed in paragraphs 34 to 43 of his decision refusing leave to appeal the adjudicator’s order. I agree entirely with the views expressed by Ricchetti J. If he pays the adjudicator’s order, pursuant to s. 44(5) of the Construction Act, Mr. Pasqualino has the right to seek a reduction of the bond amount pledged as security. MGW consented to that relief when the matter was argued before the adjudicator. This issue is a red herring.

[25] Mr. Pasqualino also takes issue with the adjudication process itself, claiming it constitutes a “shadow court” which effectively treads upon the inherent, constitutionally protected jurisdiction of the Superior Court. Counsel advised that he was not asserting a constitutional challenge to s. 13.5 of the Construction Act and no notice of constitutional question was served, but this submission is effectively just that.

[26] The interplay of the adjudication and construction lien proceedings was previously argued before Ricchetti J. After a full analysis, he found them to be compatible noting at para. 35 of his decision that “Section 13.5(5) of the Construction Act expressly provides that construction disputes may be referred to adjudication regardless of whether there is a court action regarding the same subject matter.” I agree with his analysis. There is no merit to this submission.

Limitation Period Issue

[27] Mr. Pasqualino further submits the lien should be discharged because two years have passed since the lien was registered and the matter is not on the trial list, having been struck off. The action was set down for trial within the two years but as noted above, due to an oversight by counsel the action was administratively struck from the trial list.

[28] Emery J. in Cosmos Hardwood Floors Ltd. v. Singh, 2016 ONSC 2397 at paras. 41 and 42 considered this limitation period issue and definitively held that a claim for a lien does not expire if the action is set down for trial within the two-year anniversary of the lien. If the action is subsequently struck off the trial list, the lien remains valid.

[29] None of the issues raised by Mr. Pasqualino have merit. His cross-motion is dismissed.

Conclusion

[30] Therefore, the matter shall be restored to the trial list as a construction lien action. MGW’s lien shall not be discharged pursuant to s. 47 of the Construction Act as the claim is not, and the conduct of MGW cannot be characterized as frivolous, vexatious or an abuse of process. There are no other proper grounds on which to warrant a discharge of the lien. The security posted by Mr. Pasqualino to bond off the lien shall continue to be held in trust pending an order of the Court or agreement of the parties. The adjudication determination remains valid and enforceable until further Court order or agreement by the parties.

Costs

[31] Having been entirely successful on this motion and cross-motion, MGW is entitled to its costs. Both parties submitted Costs Outlines. MGW’s is marginally higher but that is justified as MGW was required to bring its own motion and then respond to the cross-motion. This necessitated two facta to be delivered which entailed further legal research. Once that is taken into consideration, the two outlines are comparable in terms of the time spent and the fees incurred in the motion and cross-motion.

[32] When considering an appropriate quantum for costs, I am to examine the factors listed in Rule 57.01(1) of the Rules of Civil Procedure. They include the complexity and importance of the matter, the conduct of a party including a party’s denial or refusal to admit anything, any offers to settle and the principle of proportionality. In this regard, the amount of time spent, and the hourly rates charged are to be considered together with the amount that a losing party would reasonably expect to pay.

[33] MGW’s motion ought not to have been required and the cross-motion was ill conceived. Mr. Pasqualino was simply trying to take advantage of a misstep by counsel to his own personal advantage. He was grasping for any ground on which to avoid paying the adjudication order and to have the lien discharged so the bond held with the Court could be cancelled.

[34] The real motivation for his response to the motion and in bringing his cross-motion was expressed by Mr. Pasqualino in his affidavit of January 13, 2025. Mr. Pasqualino claims to be suffering ongoing prejudice in having the security remain paid into Court. He borrowed $400,000 for construction financing and was then required to pay $211,481.18 to bond the lien off title. The loan is evidently due on March 8, 2025. Mr. Pasqualino now wishes to have the funds repaid to his lender and he requires the pledged funds to do so.

[35] While not overly complex, the motion and the cross-motion were important to both parties. Many of the issues raised in the cross-motion had already been litigated in this action and should not have been asserted again by Mr. Pasqualino. His conduct on this motion and cross-motion resulted in the matter being unnecessarily longer to respond to in writing and to argue in Court. Substantial indemnity costs are appropriate.

[36] The time incurred by counsel for MGW appears to be reasonable and proportionate however, there is no breakdown of the tasks completed or the time incurred by counsel on those tasks. The billing rates of counsel for Mr. Pasqualino exceeded those of MGW counsel when year of call is considered. The amount claimed by MGW must have been within the reasonable expectation of Mr. Pasqualino, as the losing party.

[37] MGW is awarded its costs on a substantial indemnity basis fixed in the amount of $14,000 inclusive of fees, disbursements, and HST. The costs are reduced by approximately $2,000 due to the lack of particularity in the Costs Outline. The costs are payable within 30 days.

J.E. Mills
Date: 2025-02-24