Endorsement

Court and Parties

Court File No.: CV-21-00087734-0000
Date: 2025-06-05
Superior Court of Justice – Ontario

Re: KE Electrical Ltd., Plaintiff
And: Giant Tiger Stores Limited, and MP Lundy Construction Inc., Defendants

Before: M. Fortier, Associate Justice

Counsel:
Nadia Authier, for the Defendant MP Lundy Construction Inc.
Andrea Lee and Lance Spitzig, acting agents for David Debenham, counsel for the Plaintiff
Jay Nathwani, co-agent for counsel for the Plaintiff

Heard: January 16, 2025

Introduction

[1] This is a construction lien action. The defendant MP Lundy Construction Inc. (“Lundy” or “the defendant”) brings a motion seeking a declaration that the plaintiff, KE Electrical Ltd’s (“KE”) lien has expired. The defendant also seeks an order for the return of the security posted to vacate the plaintiff’s lien and an order that the action continue as an ordinary action for breach of contract and delay.

[2] The plaintiff opposes the motion and brings a cross-motion for an order amending the court file number of the Amended Trial Record from CV-21-00087734-00A1 to CV-21-00087734-0000, nunc pro tunc to the date that the Amended Trial Record was originally filed on October 2, 2023.

Background

[3] The plaintiff, KE, entered into a contract with Lundy, whereby KE was to provide electrical work for a project owned by the defendant, Giant Tiger Stores Limited (“Giant Tiger”).

[4] During the Project, disputes arose between Lundy, KE, and Giant Tiger regarding extras and delays to the completion of the Project. As a result of these disputes, on September 27, 2021, KE registered a construction lien on title to the Project in the sum of $3,578,347.41 plus HST.

[5] On October 4, 2021, MP Lundy posted a lien bond in the amount of $4,293,533.00 (inclusive of $250,000 in security for costs) with the Accountant of the Superior Court of Justice and vacated the Lien.

[6] On October 26, 2021, KE issued a Statement of Claim to perfect its construction lien and the defendants delivered their respective statements of defence and crossclaims thereafter.

[7] Giant Tiger was granted leave by order of Associate Justice Kaufman (as he then was) dated April 19, 2022 to issue a Third Party Claim against certain project consultants.

[8] On April 20, 2022, Giant Tiger issued its Third Party Claim under Court File No. CV-21-00087734-00A1 naming Canderel Construction Management, GKC Architects S.E.N.C., and Goodkey Weedmark & Associates Limited as the third parties.

[9] Following the commencement of the Third Party Claim, KE obtained an order for Reference from Justice Parfait on October 11, 2022, referring both the Lien Action and the Third Party Action to an Associate Judge for trial. Although the plaintiff secured the order for reference, no subsequent order for trial was obtained.

[10] Between September 14, 2023 and October 2, 2023, the plaintiff made three attempts to set the action down for trial. The first two attempts were unsuccessful. An Amended Trial Record served on October 2, 2023 was ultimately accepted for filing by the court. The parties proceeded to examinations for discovery in both the Lien Action and the Third Party Claim in March 2024.

[11] While the first two attempts contained errors that were subsequently corrected, all three Trial Records served by the plaintiff consistently used the court file number and style of cause for the Third Party Action. Both the court file number and style of cause for the Third Party Action were also used in the Pre-Trial Certification and Request Form, as well as in the Requisition setting the action down for trial.

[12] On April 30, 2024, the Ottawa Case Management Coordinator sent an email to counsel for the defendants and third parties proposing trial dates for the Third Party Action. In that same email, the Case Management Coordinator notified the defendants and third parties that only the Third Party Action had been set down for trial. The defendant’s counsel advised David Debenham, counsel for the plaintiff, of this issue.

[13] Lundy brings this motion seeking a declaration that KE’s construction lien has expired, as it was not set down for trial within two years after perfection, as required by section 37(1) of the Construction Act, RSO 1990, c C.30. Lundy argues that it was the Third Party Claim that was set down for trial and not the Lien Action.

[14] The plaintiff contends that incorporating the Third Party file number into the amended trial record constitutes an irregularity that should be rectified under rule 2.01. The plaintiff maintains that the action was set down within the required two-year period, with the defendant, Lundy, fully aware of this fact. Consequently, there was no violation of section 37(1) of the Construction Act, as the action was properly set down in compliance with its provisions. Any irregularity arising from the use of the Third Party file number falls within the corrective scope of rule 2.01.

[15] The central issue in this motion is whether filing the trial record, pretrial certification, request form, and requisition for trial under the court file number and style of cause of the Third Party Action amounts to an irregularity that can be remedied under Rule 2 of the Rules of Civil Procedure, RRO 1990, Reg 194 such that the court should grant relief from the strict operation of s. 37(1) of the Construction Act.

The Law

[16] Section 37(1) of the Construction Act provides as follows:

37 (1) A perfected lien expires immediately after the second anniversary of the commencement of the action that perfected the lien, unless one of the following occurs on or before that anniversary:

1. An order is made for the trial of an action in which the lien may be enforced.
2. An action in which the lien may be enforced is set down for trial.

[17] Pursuant to s. 46 of the Construction Act, once the Court is satisfied that a perfected lien has expired, under s. 37, the court shall:

• declare that the lien has expired.
• make an order dismissing the action to enforce that lien and vacating the registration of a claim for lien and the certificate of action in respect of that action.
• order the return and cancellation of security posted to vacate the expired lien.

[18] Rule 2.01(1) of the Rules of Civil Procedure provides:

A failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court,

(a) may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute; or

(b) only where and as necessary in the interest of justice, may set aside the proceeding or a step, document or order in the proceeding in whole or in part.

[19] Rule 48.01 provides that after the close of pleadings, any party not in default may set an action down for trial by serving and filing a trial record. Rule 48.02(1) and 48.02(3) describe how a defended action and a defended third party claim are set down for trial. Rule 48.03 prescribes the content of the trial record. Rule 48.02(1) and 48.02(3) read as follows:

48.02 (1) Where an action is defended, a party who wishes to set it down for trial may do so by serving a trial record prepared in accordance with rule 48.03 on every party to the action or to a counterclaim or crossclaim in the action and on any third or subsequent party and forthwith filing the trial record with proof of service.

48.02 (3) Where an action is a defended third party claim, a party who wishes to set it down for trial shall, in addition to complying with subrule (1), serve the trial record in the third party claim on the plaintiff in the main action within the time for service on the parties to the third party claim and shall forthwith file proof of service.

[20] When read together, sections 37 and 46 of the Construction Act mandate that an action to enforce a lien must either be set down for trial or have a trial date fixed within two years. If neither of these steps is taken, the court must declare the lien expired, dismiss the action to enforce the lien, and order the return of any posted security.

[21] It is clear from the caselaw that the provisions of sections 37 and 46 are strictly mandatory, leaving no discretion for the court to suspend or modify their operation (see QH Renovation & Construction Corp. v. 2460500 Ontario Ltd., 2019 ONSC 3237 at paras 15 and 16).

[22] While the provisions of sections 37 and 46 are mandatory, the Court of Appeal in 1475707 Ontario Inc. v. Foran, 2014 ONCA 830 (“Foran”) examined the interplay between the Construction Lien Act and the Rules of Civil Procedure and found that Rule 2.01 of the Rules may apply to relieve a party from the effects of non-compliance with Rule 48.01 in the context of a construction lien action. In other words, Rule 2 may apply to correct irregularities in setting an action down for trial in a construction lien action (paras 17, 18 and 36).

[23] In Foran, the plaintiff was pursuing a lien claim and filed a trial record to set the action down for trial before pleadings had closed. This deviated from the requirements of Rule 48, which contemplates setting an action down for trial after the close of pleadings. The trial record was nonetheless accepted by the court. The defendant moved to discharge and vacate the claim for lien and certificate of action on the basis that the lien had expired under s. 37(1) of the Construction Lien Act. The motion judge determined that setting the matter down for trial while pleadings were still open was not just an irregularity and that to resort to rule 2.01 to excuse the non-compliance with rule 48.01 would in effect extend the time limits under s. 37(1) of the Construction Lien Act. The motion was granted. The Divisional Court allowed the plaintiff’s appeal. The defendant appealed.

[24] The Court of Appeal held that allowing the respondent to amend the trial record and file its defence to the counterclaim after the action had been set down does not have the effect of extending the mandatory two-year deadline for setting the construction lien action down for trial under section 37(1) of the CLA. The respondent set the matter down for trial within the two-year period, though “irregularly”; an irregularity that is curable under rule 2.01. As observed by MacFarland J.A. in his reasons at para 23:

“In my view, the important fact here is that the respondent did set the action down within the two years and the appellant knew it. There was no “non-compliance” with s. 37(1) as has been argued. The action was set down as the section requires. The fact that the record was irregular for want of a pleading was, in my view, a matter for rule 2.01”.

Discussion

[25] The defendant argues that this motion does not concern a technical procedural issue but rather the negligence of the plaintiff's counsel in setting the wrong action down for trial. The Third Party Claim was set down for trial and not the Lien Action. Such errors and oversights are not what Rule 2.01 was intended to address.

[26] KE maintains that rule 2.01 is designed to relieve parties from the consequences of failing to meet the strict procedural requirements of the Rules. This case does not concern the plaintiff's failure to strictly adhere to the Rules. Rather, it involves a clear violation of the mandatory requirements set forth in section 37 of the Construction Act, as the lien action was not set down for trial within the required two-year period. Rule 2.01 cannot be invoked to rectify non-compliance with statutory provisions of other legislation.

[27] Moreover, according to the defendant, there has been no irregular compliance with the Rules. On the contrary, the October 2, 2023, Trial Record fully meets the requirements of Rule 48.03 and properly sets the Third Party Action down for trial.

[28] The defendant contends that filing the trial record, pre-trial certification and request form, and requisition for trial under the Third-Party Action's court file number and style of cause does not constitute an irregularity curable under Rule 2 of the Rules of Civil Procedure.

[29] Based on the circumstances of this case, I do not agree.

[30] As in Foran, the plaintiff here attempted to file the trial record within two years of the statement of claim being issued; an effort the defendant was aware of. By the Section 37 deadline of October 26, 2023, the plaintiff had submitted three versions of a trial record in an attempt to set the action down for trial. Furthermore, the defendant acknowledges that it believed the Lien Action had been set down for trial until the Case Management Coordinator stated that only the Third-Party Claim was set down.

[31] It is clear from the record that Mr. Debenham was concerned about the looming deadline to set the Lien Action down for trial. At the time, Mr. Debenham was ill and in hospital. When the trial records were rejected by the court, Mr. Debenham engaged a lawyer from another law firm, Karina Labelle, to assist him to ensure that the action is properly set down for trial.

[32] Ms. Labelle filed an affidavit in response to the motion. According to Ms. Labelle, she was retained by Mr. Debenham on September 27, 2023, to provide an opinion as to whether the lien action of KE was properly set down for trial, and if not, what steps remained to be completed.

[33] The trial record provided to Ms. Labelle contained documents related to both the main action and the Third Party Action. As she explained, her approach to reviewing the trial record for setting the main action down for trial was to make as few changes as possible, ensuring acceptance by the court filing office. In her view, while missing pleadings result in an incomplete trial record, additional pleadings do not.

[34] Ms. Labelle’s uncontested evidence is that she did not pay close attention to the court file number on the cover page of the trial record as she was looking for substantive errors related to the documents that comprised the trial record. The intention was to set the main action down for trial, and to ensure that the necessary documents to set the main action down for trial were included in the trial record.

[35] Accordingly, neither Ms. Labelle nor any of the parties noticed the use of the Third Party action file number and style of cause in the trial record; all were under the impression that the Lien Action had been set down for trial until the April 30, 2024 email from the Trial Management Coordinator. After the error was discovered, the parties continued to discuss potential trial dates until counsel for the defendant indicated on August 19, 2024, that she had instructions to bring a motion to declare that KE’s lien had expired.

[36] Had the plaintiff used the correct court file number, specifically, that of the Lien Action and the style of cause of the Third Party Action in its trial record, the Lien Action would have been set down for trial. Instead, by using the court file number of the Third Party Action, it was the Third Party Action that was mistakenly set down for trial.

[37] Based on the facts of this case, I do not find that granting leave to amend the trial record by correcting the court file number constitutes an extension of the time limit under s. 37 of the Construction Act. In my view, the plaintiff set the matter down for trial within the two-year period, though irregularly, by mistakenly using the court file number of the Third Party Claim. Given the circumstances, I find that Rule 2 applies to rectify this irregularity in setting the action down for trial.

[38] In my opinion, the reasoning of the Court of Appeal in Foran is applicable to the facts of this case. As MacFarland J.A. stated in Foran at para. 41:

[41] In the present case, the lien claimant took steps which it thought were sufficient to set the lien action down for trial within the time requirements of s. 37(1) of the CLA. The fact that it did so imperfectly is a matter that can be regularized by the application of rule 2.01. This does not, as the appellant claims, "effectively extend the two-year limitation" under s. 37. That deadline was met on the facts of this case when the respondent set the matter down for trial, albeit imperfectly. To hold otherwise would, in my view, be to ignore the clear language of rule 2.01.

Disposition

[39] For the foregoing reasons, the defendant Lundy’s motion is dismissed.

[40] The plaintiff’s cross-motion is granted. There will be an order amending the court file number of the Amended Trial Record from CV-21-00087734-00A1 to CV-21-00087734-0000, nunc pro tunc to the date that the Amended Trial Record was originally filed on October 2, 2023.

[41] The plaintiff shall file the Amended Trial Record with the Trial Management Coordinator at Ottawa.associatejudges@ontario.ca within 10 days of the release of this decision, along with a copy of this endorsement.

[42] If the parties cannot agree on the costs of the motion and cross motion, they may file written submissions not exceeding three pages, exclusive of their respective bills of costs. The plaintiff’s cost submission shall be filed within 20 days of the release of this decision. The cost submissions of the defendant shall be filed within 10 days thereafter.

M. Fortier
Date: June 5, 2025