construction law reports - thomson reuters canada

CONSTRUCTION LAWREPORTS

Fourth Series/Quatrieme serieRecueil de jurisprudence

en droit de la construction

VOLUME 43(Cited 43 C.L.R. (4th))

EDITOR-IN-CHIEF/REDACTEUR EN CHEFHarvey J. Kirsh, B.A., LL.B., LL.M.

Toronto, Ontario

QUEBEC EDITOR/REDACTEUR POUR LE QUEBECDavid H. Kauffman, B.A., B.C.L.

de Grandpre ChaitMontreal, Quebec

CARSWELL EDITORIAL STAFF/REDACTION DE CARSWELLCheryl L. McPherson, B.A. (HONS.)

Director, Primary Content Operations

Ken Murphy, B.A. (HONS.), LL.B.

Product Development Manager

Nicole Ross, B.A., LL.B. Julia Fischer, B.A. (HONS.), LL.B.

Supervisor, Legal Writing Supervisor, Legal Writing

Andrea Andrulis, B.A., LL.B., LL.M. Madalina Sontrop, B.A. (HONS.), LL.B.,Lead Legal Writer LL.M.

Legal Writer

Martin-Francois Parent, LL.B., LL.M., Jackie BowmanDEA (PARIS II) Senior Content Editor

Bilingual Legal Writer

CONSTRUCTION LAW REPORTS, a national series of topical law reports, Recueil de jurisprudence en droit de la construction, une serie nationale

is published 12 times per year. Subscription rate $470.00 per bound volume de recueils de jurisprudence specialisee, est publie 12 fois par annee.

including parts. Indexed: Carswell’s Index to Canadian Legal Literature. L’abonnement est de 470 $ par volume relie incluant les fascicules. Indexa-

tion: Index a la documentation juridique au Canada de Carswell.

Editorial Offices are also located at the following address: 430 rue St. Pierre, Le bureau de la redaction est situe a Montreal — 430, rue St. Pierre, Mon-

Montreal, Quebec, H2Y 2M5. treal, Quebec, H2Y 2M5.

________ ________

© 2015 Thomson Reuters Canada Limited © 2015 Thomson Reuters Canada Limitee

NOTICE AND DISCLAIMER: All rights reserved. No part of this publica- MISE EN GARDE ET AVIS D’EXONERATION DE RESPON-

tion may be reproduced, stored in a retrieval system, or transmitted, in any SABILITE : Tous droits reserves. Il est interdit de reproduire, memoriser sur

form or by any means, electronic, mechanical, photocopying, recording or un systeme d’extraction de donnees ou de transmettre, sous quelque forme ou

otherwise, without the prior written consent of the publisher (Carswell). par quelque moyen que ce soit, electronique ou mecanique, photocopie, enre-

gistrement ou autre, tout ou partie de la presente publication, a moins d’en

avoir prealablement obtenu l’autorisation ecrite de l’editeur, Carswell.A licence, however, is hereby given by the publisher:

Cependant, l’editeur concede, par le present document, une licence :

(a) to a lawyer to make a copy of any part of this publication to give to a a) a un avocat, pour reproduire quelque partie de cette publication pour

judge or other presiding officer or to other parties in making legal submis- remettre a un juge ou un autre officier-president ou aux autres parties dans

sions in judicial proceedings; une instance judiciaire;

b) a un juge ou un autre officier-president, pour produire quelque partie de

(b) to a judge or other presiding officer to produce any part of this publication cette publication dans une instance judiciaire; ou

in judicial proceedings; orc) a quiconque, pour reproduire quelque partie de cette publication dans le

cadre de deliberations parlementaires.

(c) to anyone to reproduce any part of this publication for the purposes of« Instance judiciaire » comprend une instance devant une cour, un tribunal ou

parliamentary proceedings.une personne ayant l’autorite de decider sur toute chose affectant les droits ou

les responsabilities d’une personne.

“Judicial proceedings” include proceedings before any court, tribunal or per-Ni Carswell ni aucune des autres personnes ayant participe a la realisation et

son having authority to decide any matter affecting a person’s legal rights ora la distribution de la presente publication ne fournissent quelque garantie

liabilities.que ce soit relativement a l’exactitude ou au caractere actuel de celle-ci. Il est

entendu que la presente publication est offerte sous la reserve expresse que ni

Carswell and all persons involved in the preparation and sale of this publica- Carswell, ni le ou les auteurs de cette publication, ni aucune des autres per-

tion disclaim any warranty as to accuracy or currency of the publication. This sonnes ayant participe a son elaboration n’assument quelque responsabilite

publication is provided on the understanding and basis that none of Carswell, que ce soit relativement a l’exactitude ou au caractere actuel de son contenu

the author/s or other persons involved in the creation of this publication shall ou au resultat de toute action prise sur la foi de l’information qu’elle

be responsible for the accuracy or currency of the contents, or for the results renferme, ou ne peuvent etre tenus responsables de toute erreur qui pourrait

of any action taken on the basis of the information contained in this publica- s’y etre glissee ou de toute omission.

tion, or for any errors or omissions contained herein.La participation d’une personne a la presente publication ne peut en aucun

cas etre consideree comme constituant la formulation, par celle-ci, d’un avis

No one involved in this publication is attempting herein to render legal, ac- juridique ou comptable ou de tout autre avis professionnel. Si vous avez

counting, or other professional advice. If legal advice or other expert assis- besoin d’un avis juridique ou d’un autre avis professionnel, vous devez

tance is required, the services of a competent professional should be sought. retenir les services d’un avocat ou d’un autre professionnel. Les analyses

The analysis contained herein should in no way be construed as being either comprises dans les presentes ne doivent etre interpretees d’aucune facon

official or unofficial policy of any governmental body. comme etant des politiques officielles ou non officielles de quelque organ-

isme gouvernemental que ce soit.

8 The paper used in this publication meets the minimum requirements of 8 Le papier utilise dans cette publication satisfait aux exigences minimales

American National Standard for Information Sciences — Permanence of Pa- de l’American National Standard for Information Sciences — Permanence of

per for Printed Library Materials, ANSI Z39.48-1984. Paper for Printed Library Materials, ANSI Z39.48-1984.

ISSN 0383-9494 ISBN 978-0-7798-2962-0

Printed in Canada by Thomson Reuters

CARSWELL, A DIVISION OF THOMSON REUTERS CANADA LIMITED

One Corporate Plaza Customer Relations2075 Kennedy Road Toronto 1-416-609-3800Toronto, Ontario Elsewhere in Canada/U.S. 1-800-387-5164M1T 3V4 Fax 1-416-298-5082

www.carswell.comContact www.carswell.com/contact

O’Dowda v. Halpenny 175

[Indexed as: O’Dowda v. Halpenny]

Robert O’Dowda and Miriam O’Dowda, Plaintiffs (Appellants)and Donald Halpenny, Elizabeth Halpenny, Paul Desalaiz,

Derek Dier, Sutton Group Select Realty Inc., The Corporationof the City of London, Gordon Stanley Morton, 592987 OntarioLimited, G.S. Morton & Associates Ltd., The Estate of the Late

Gordon Dale Maddock, Basil George Tambakis, Harris-TroyDesign Build Limited, London Roof Truss Inc., Thorndale RoofSystems Inc., Universal Forest Products, Inc., Courtney Roofing

Ltd. and Farncomb Kirkpatrick & Stirling Surveying Ltd.,Defendants (Respondents)

Ontario Court of Appeal

Docket: CA C59091

2015 ONCA 22

K.M. Weiler, K. Feldman, M.L. Benotto JJ.A.

Heard: December 11, 2014

Judgment: January 19, 2015

Construction law –––– Contracts — Building contracts — Parties –––– Plain-tiffs O purchased home from defendants H in 2003 and discovered structuralproblems — Plaintiffs retained experts to examine problems and prepare re-port — Phase 1 report was delivered in May 2004, which identified someproblems and recommended further investigation — One problem was withload-bearing ability of roof — Plaintiffs commenced action against vendors ofhouse, their realtor, two real estate agents and City of London — Plaintiffsasked experts to do recommended further investigation — Phase 2 was datedFebruary 2005 and identified further problems and raised safety concerns aboutroof — At examination for discovery in March 2006, defendant H testified thatdefendant M had designed house and prepared working drawing — In Decem-ber 2006, plaintiffs moved to amend claim to add M for negligent design ofhouse causing it to be danger to safety — M moved for summary judgment dis-missing plaintiffs’ action against them on grounds that it was statute barred be-cause they were added more than two years after cause of action arose — Mo-tion judge granted summary judgment finding O knew or should have knownthat negligent design of house created condition of danger to safety upon re-viewing Phase 1 report, as it identified structural deficiencies that could be dan-gerous, even though words ‘danger’ and ‘safety’ were not used and O knew orshould have known that M had designed home when O received plans with M’sname on it shortly after taking possession of home in 2003 — O appealed —Appeal allowed — Order for summary judgment dismissing claim as statute-

CONSTRUCTION LAW REPORTS 43 C.L.R. (4th)176

barred was set aside — Motion judge failed to avert to sworn evidence filed onmotion — There was error of law for motion judge to ignore uncontested swornevidence on central matter in issue without giving any reason for so doing —While judge is entitled to reject such evidence, he would have to give clear rea-sons for making such finding — In this case, because motion judge did not referto evidence, his reasons for rejecting evidence was not apparent — Parties couldhave asked motion judge to conduct further fact-finding procedures to determineissue of when dangerousness of structure was known or could have been known,however, since that was not done, most appropriate order was to leave limitationissue as genuine issue for trial.

Construction law –––– Contracts — Building contracts — Miscellane-ous –––– Plaintiffs O purchased home from defendants H in 2003 and discoveredstructural problems — Plaintiffs retained experts to examine problems and pre-pare report — Phase 1 report was delivered in May 2004, which identified someproblems and recommended further investigation — One problem was withload-bearing ability of roof — Plaintiffs commenced action against vendors ofhouse, their realtor, two real estate agents and City of London — Plaintiffsasked experts to do recommended further investigation — Phase 2 was datedFebruary 2005 and identified further problems and raised safety concerns aboutroof — At examination for discovery in March 2006, defendant H testified thatdefendant M had designed house and prepared working drawing — In Decem-ber 2006, plaintiffs moved to amend claim to add M for negligent design ofhouse causing it to be danger to safety — M moved for summary judgment dis-missing plaintiffs’ action against them on grounds that it was statute barred be-cause they were added more than two years after cause of action arose — Mo-tion judge granted summary judgment finding O knew or should have knownthat negligent design of house created condition of danger to safety upon re-viewing Phase 1 report, as it identified structural deficiencies that could be dan-gerous, even though words ‘danger’ and ‘safety’ were not used and O knew orshould have known that M had designed home when O received plans with M’sname on it shortly after taking possession of home in 2003 — O appealed —Appeal allowed — Order for summary judgment dismissing claim as statute-barred was set aside — Motion judge failed to avert to sworn evidence filed onmotion — There was error of law for motion judge to ignore uncontested swornevidence on central matter in issue without giving any reason for so doing —While judge is entitled to reject such evidence, he would have to give clear rea-sons for making such finding — In this case, because motion judge did not referto evidence, his reasons for rejecting evidence was not apparent — Parties couldhave asked motion judge to conduct further fact-finding procedures to determineissue of when dangerousness of structure was known or could have been known,however, since that was not done, most appropriate order was to leave limitationissue as genuine issue for trial.

O’Dowda v. Halpenny 177

Construction law –––– Contracts — Breach of terms of contract — Negli-gence –––– Plaintiffs O purchased home from defendants H in 2003 and discov-ered structural problems — Plaintiffs retained experts to examine problems andprepare report — Phase 1 report was delivered in May 2004, which identifiedsome problems and recommended further investigation — One problem waswith load-bearing ability of roof — Plaintiffs commenced action against vendorsof house, their realtor, two real estate agents and City of London — Plaintiffsasked experts to do recommended further investigation — Phase 2 was datedFebruary 2005 and identified further problems and raised safety concerns aboutroof — At examination for discovery in March 2006, defendant H testified thatdefendant M had designed house and prepared working drawing — In Decem-ber 2006, plaintiffs moved to amend claim to add M for negligent design ofhouse causing it to be danger to safety — M moved for summary judgment dis-missing plaintiffs’ action against them on grounds that it was statute barred be-cause they were added more than two years after cause of action arose — Mo-tion judge granted summary judgment finding O knew or should have knownthat negligent design of house created condition of danger to safety upon re-viewing Phase 1 report, as it identified structural deficiencies that could be dan-gerous, even though words ‘danger’ and ‘safety’ were not used and O knew orshould have known that M had designed home when O received plans with M’sname on it shortly after taking possession of home in 2003 — O appealed —Appeal allowed — Order for summary judgment dismissing claim as statute-barred was set aside — Motion judge failed to avert to sworn evidence filed onmotion — There was error of law for motion judge to ignore uncontested swornevidence on central matter in issue without giving any reason for so doing —While judge is entitled to reject such evidence, he would have to give clear rea-sons for making such finding — In this case, because motion judge did not referto evidence, his reasons for rejecting evidence was not apparent — Parties couldhave asked motion judge to conduct further fact-finding procedures to determineissue of when dangerousness of structure was known or could have been known,however, since that was not done, most appropriate order was to leave limitationissue as genuine issue for trial.

Cases considered:

Combined Air Mechanical Services Inc. v. Flesch (2014), 2014 CarswellOnt640, 2014 CarswellOnt 641, 2014 SCC 7, 95 E.T.R. (3d) 1, (sub nom.Hryniak v. Mauldin) [2014] 1 S.C.R. 87, 27 C.L.R. (4th) 1, 37 R.P.R. (5th)1, 46 C.P.C. (7th) 217, 2014 CSC 7, (sub nom. Hryniak v. Mauldin) 314O.A.C. 1, (sub nom. Hryniak v. Mauldin) 453 N.R. 51, 12 C.C.E.L. (4th) 1,(sub nom. Hryniak v. Mauldin) 366 D.L.R. (4th) 641, 21 B.L.R. (5th) 248,[2014] S.C.J. No. 7, [2014] A.C.S. No. 7 (S.C.C.) — referred to

Winnipeg Condominium Corp. No. 36 v. Bird Construction Co. (1995), 18C.L.R. (2d) 1, [1995] 1 S.C.R. 85, 23 C.C.L.T. (2d) 1, 43 R.P.R. (2d) 1,[1995] 3 W.W.R. 85, 1995 CarswellMan 19, 176 N.R. 321, 1995 Car-


swellMan 249, 74 B.L.R. 1, 50 Con. L.R. 124, 100 Man. R. (2d) 241, 91W.A.C. 241, 121 D.L.R. (4th) 193, EYB 1995-67138, [1995] S.C.J. No. 2(S.C.C.) — followed

Statutes considered:

Limitations Act, 2002, S.O. 2002, c. 24, Sched. BGenerally — referred to

APPEAL by plaintiffs from dismissal of their claim against defendant companyM on grounds it was barred by two year limitation period under Limitations Act,2002.

Sean Dewart, for AppellantsJennifer Stirton, for Respondents

Per curiam:

1 The issue on this appeal is whether the motion judge erred in grantingsummary judgment dismissing the appellants’ claim against the respon-dents Morton and the numbered company on the basis it was barred bythe 2-year limitation period under the Limitations Act, 2002, S.O. 2002,c. 24, Sched. B.

2 The appellants purchased a house from the Halpennys in 2003 anddiscovered structural problems shortly thereafter. They retained expertsin the fall of 2003 to examine the problems and prepare a report. ThePhase 1 report was delivered in May 2004. It identified some problemsand recommended further investigation. One of the problems was withthe load-bearing ability of the roof.

3 Following the Phase 1 report, the appellants commenced an actionagainst the vendors of the house, their realtor, two real estate agents andthe city of London. They also asked the experts to do the recommendedfurther investigation. The Phase II report is dated February 28, 2005. ThePhase II report identified further problems and raised safety concernsabout the roof.

4 At examinations for discovery held in March 2006, Donald Halpenny,one of the defendants in this litigation, testified that the respondents onthis appeal had designed the house and prepared the working drawings.On December 19, 2006, the appellants moved to amend their claim toadd the respondents as defendants for negligent design of the house caus-ing it to be a danger to safety.

O’Dowda v. Halpenny Per curiam 179

5 The respondents moved for summary judgment dismissing the actionagainst them on the basis that it was statute-barred because they wereadded more than two years after the cause of action arose. The motionjudge granted summary judgment, concluding that 1) the appellants knewor should have known that the negligent design of the house created acondition of danger to safety upon reviewing the Phase 1 report, as itidentified structural deficiencies that could be dangerous, even thoughthe words “danger” and “safety” were not used; and 2) the appellantsknew or should have known that the respondents had designed the homewhen the appellants received the plans stamped with the name “G.S.Morton and Associates” shortly after taking possession of the house inMay 2003.

6 On this appeal, the appellants submit, first, the motion judge erred inhis two findings, and second, based on the record before him, both mat-ters raised genuine issues requiring a trial: see Combined Air MechanicalServices Inc. v. Flesch, 2014 SCC 7, [2014] 1 S.C.R. 87 (S.C.C.). Theappellants also requested that this court substitute its own determinationof discoverability.

7 The first issue turns on the application of the law as set out by theSupreme Court of Canada in Winnipeg Condominium Corp. No. 36 v.Bird Construction Co., [1995] 1 S.C.R. 85 (S.C.C.), at para. 43, as fol-lows:

I conclude that the law in Canada has now progressed to the pointwhere it can be said that contractors (as well as subcontractors, archi-tects and engineers) who take part in the design and construction of abuilding will owe a duty in tort to subsequent purchasers of the build-ing if it can be shown that it was foreseeable that a failure to takereasonable care in constructing the building would create defects thatpose a substantial danger to the health and safety of the occupants.Where negligence is established and such defects manifest them-selves before any damage to persons or property occurs, they should,in my view, be liable for the reasonable cost of repairing the defectsand putting the building back into a non-dangerous state.

8 In other words, a subsequent purchaser of a building has an action intort against the designers and constructors of the building for defects thatpose a substantial danger to health and safety. Because of this require-ment, before the limitation period begins to run, a plaintiff must haveknown or ought to have known that the construction problems or defectswith the building at issue “pose a substantial danger” to health andsafety.


9 The motion judge determined, based on his own reading of the Phase1 Report, that the appellants should have known that the defects identi-fied created such a danger. However, in reaching that conclusion, themotion judge failed to avert to the sworn evidence filed on the motion.The appellants’ lawyer (not appeal counsel) swore an affidavit datedApril 1, 2014. Her affidavit was not challenged and she was not cross-examined. She swore, at para. 22, that the Phase II report was her firstinformation “that the house may be dangerous by design”:

I was aware of the law with respect to negligence in the design andconstruction of the buildings, in general, based on the Supreme Courtof Canada’s decision in Winnipeg Condominium Corporation No. 36v. Bird Construction Co., [1995] 1 [S.C.R.] 85, and I knew that acause of action by a third party owner in negligence with respect toalleged building defects was only complete if the breach of the stan-dard of care left the building in a dangerous condition. There couldbe no recovery for pure economic loss. The Phase II InvestigationReport indicated that the roof was seriously overstressed and that acompetent designer should have recognized the need to considergreater snow accumulations in the valleys than what was used in theoriginal building. This was the first information I had that the housemay be dangerous by design. [Emphasis in original.]

10 It was an error of law for the motion judge to ignore the uncontestedsworn evidence on the central matter in issue without giving any reasonsfor so doing. While the judge is entitled to reject such evidence, hewould have to give clear reasons for making such a finding. In this case,because the motion judge did not refer to the lawyer’s affidavit, his rea-sons for implicitly rejecting the lawyer’s evidence are not apparent.

11 Given this error, the order for summary judgment dismissing theclaim as statute-barred must be set aside. On the record before the mo-tion judge, the parties could have asked him to conduct further fact-find-ing procedures to determine the issue of when the dangerousness of thestructure was known or could have been known. As that was not done,the most appropriate order at this point is to leave the limitation issue asa genuine issue for trial.

12 The appeal is allowed and the summary judgment is set aside.13 Costs were agreed as follows: costs of the appeal fixed at $8500 in-

clusive and costs of the motion fixed at $12,000 inclusive, payablewithin 60 days to the appellants.

Appeal allowed.

Construction L.F.G. c. Maria (Office mun. d’habitation) 181

[Indexed as: Construction L.F.G. inc. c. Maria (Officemunicipal d’habitation)]

Office municipal d’habitation de Maria (Appelante-defenderesse) c. Construction L.F.G. inc. (Intimee-

demanderesse)

Cour d’appel du Quebec

Docket: C.A. Quebec 200-09-007891-127

2014 QCCA 2034

Thibault, St-Pierre, Vauclair, JJ.C.A.

Heard: 25 septembre 2014

Judgment: 4 novembre 2014

Droit de la construction –––– Contrats — Contrats de construction — Exe-cution d’un contrat solennel — Processus d’appel d’offres — Procedure —Conformite –––– Societe d’habitation a lance un processus d’appel d’offres envue de la construction de deux immeubles a logements — Entrepreneur a deposesa soumission, mais la societe d’habitation a conclu qu’elle contenait desvices — En consequence, la soumission de l’entrepreneur a ete rejetee — Entre-preneur a depose une action en dommages-interets visant a obtenir compensa-tion de la part de la societe d’habitation — Juge de premiere instance a estimeque la soumission de l’entrepreneur contenait simplement de petites erreurs etque la societe d’habitation aurait du permettre a l’entrepreneur d’apporter lescorrections necessaires — En faisant defaut de proceder de cette facon, le jugede premiere instance etait d’avis que la societe d’habitation avait commis unefaute — Aussi, le juge de premiere instance a condamne la societe d’habitation apayer 156 665 $ a l’entrepreneur — Societe d’habitation a interjete appel — Ap-pel accueilli — Preuve demontrait que l’entrepreneur n’avait pas les qualifica-tions professionnelles requises dans les documents relatifs a l’appel d’offres etpar la loi — Ceci ne constituait pas une petite difficulte susceptible d’etre cor-rigee — Au contraire, ceci creait un obstacle insurmontable qui empechaitl’entrepreneur d’obtenir le contrat — De plus, ceci empechait l’application duplan de garantie des batiments residentiels neufs requis dans les documents rela-tifs a l’appel d’offres — Par consequent, la societe d’habitation a eu raison derejeter la soumission de l’entrepreneur.

Construction law –––– Contracts — Building contracts — Execution of for-mal contract — Tendering process — Process and procedure — Compli-ance –––– Housing corporation launched tendering process for construction oftwo apartment buildings — Contractor submitted its bid, but housing corpora-tion found that it contained deficiencies — Consequently, contractor’s bid was


rejected — Contractor brought action for damages seeking compensation fromhousing corporation — Trial judge held that contractor’s bid contained merelyminor deficiencies and that housing corporation should have given contractoropportunity to make required corrections — By failing to do so, according totrial judge, housing corporation committed fault — Hence, trial judge orderedhousing corporation to pay $156,665 to contractor — Housing corporation ap-pealed — Appeal allowed — Evidence showed that contractor did not have pro-fessional qualifications required in tender documents and by law — This did notconstitute minor deficiency that could be corrected — On contrary, it createdinsurmountable obstacle which prevented contractor from obtaining contract —Further, it prevented application of guarantee plan for new residential buildingsthat was required in tender documents — Therefore, housing corporation wasright in rejecting contractor’s bid.

Cases considered by Thibault J.C.A., St-Pierre J.C.A., Vauclair J.C.A.:

Bernie Lecompte Inc. c. Verdun (Ville) (2005), 2005 QCCA 127 (C.A. Que.) —referred to

Bernier Lecomte inc. c. Verdun (Ville) (2002), 2002 CarswellQue 1839, REJB2002-33733 (C.S. Que.) — considered

Construction Anor inc. c. Montreal (Communaute urbaine) (1996), 1996 Car-swellQue 1394, EYB 1996-65657 (C.A. Que.) — considered

Construction Be-Con inc. c. Canada (Procureur general) (2013), 2013 QCCA665, EYB 2013-220672, 2013 CarswellQue 3309 (C.A. Que.) — considered

Groupe Benoıt c. Agence metropolitaine de transport (2009), EYB 2009-154216, 2009 QCCS 406, 2009 CarswellQue 1391, [2009] R.D.I. 269 (C.S.Que.) — considered

Meubles du Quebec Inspiration XIXe Ltee c. Chicoutimi (Ville) (1994), 65Q.A.C. 107, [1994] R.J.Q. 2157, 1994 CarswellQue 300 (C.A. Que.) —considered

R.P.M. Tech inc. c. Gaspe (Ville) (2004), 2004 CarswellQue 1014, REJB 2004-60675, [2004] J.Q. No. 3951 (C.A. Que.) — considered

Raby (Excavation Gerard Raby) c. Ste-Euphemie-sur-Riviere-du-Sud(Municipalite) (2008), 2008 QCCA 1830, 2008 CarswellQue 15182 (C.A.Que.) — considered


Batiment, Loi sur le, RLRQ, c. B-1.1en general — referred toart. 46 — referred toart. 50 — referred toart. 77 — referred to

Qualification professionnelle des entrepreneurs de construction, Loi sur la,RLRQ, c. Q-1

en general — referred to

Construction L.F.G. c. Maria (Office mun. d’habitation) La Cour 183

Regulations considered:

Batiment, Loi sur le, RLRQ, c. B-1.1Plan de garantie des batiments residentiels neufs, Reglement sur le, RLRQ,1981, c. B-1.1, r. 8

en general — referred toart. 2 — consideredart. 6 — consideredart. 7 — consideredart. 78 — consideredart. 90 — considered

Qualification professionnelle des entrepreneurs et des constructeurs-proprietaires, Reglement sur la, RLRQ, 1981, c. B-1.1, r. 9

en general — referred toChapitre I, Section IV — referred toart. 1 — referred toart. 3 — referred toart. 4 — referred toart. 6 — consideredart. 9 — referred toannex I, art. 1.1.1 — referred toannex I, art. 1.1.2 — referred toannex I, art. 1.3 — referred to

APPEL interjete par une societe d’habitation a l’encontre d’une decision publieea Construction L.F.G. inc. c. Maria (Office municipal d’habitation) (2012),EYB 2012-214778, 2012 QCCS 6028, 2012 CarswellQue 12739 (C.S. Que.), lacondamnant a payer des dommages-interets a un entrepreneur pour avoir refusesa soumission dans le cadre d’un appel d’offres.

Me Neree Cormier, pour l’appelanteMe Philippe Thibault, pour l’intimee

La Cour:

1 L’appelante se pourvoit contre un jugement rendu le 25 octobre 2012par la Cour superieure du district de Bonaventure (l’honorable JohanneApril), qui l’a condamnee a payer a l’intimee 156 665 $ a titre de dom-mages-interets;

2 Pour les motifs de la juge Thibault auxquels souscrivent les juges St-Pierre et Vauclair;


LA COUR :3 ACCUEILLE l’appel, avec depens;4 INFIRME le jugement de premiere instance;5 REJETTE l’action de l’intimee, avec depens.

Thibault, J.C.A.:

6 L’appelante se pourvoit contre un jugement rendu le 25 octobre 2012par la Cour superieure du district de Bonaventure (l’honorable JohanneApril)1, qui l’a condamnee a payer a l’intimee 156 665 $ a titre de dom-mages-interets.

7 L’appelante a octroye un contrat pour la construction de deux im-meubles comportant 12 logements communautaires au deuxieme plus bassoumissionnaire parce que, selon les avis juridiques sollicites, la soumis-sion de l’intimee etait affectee « d’une irregularite majeure, car en faitsans etre detentrice des licences [pertinentes] elle ne peut legalementconstruire ces deux immeubles de 12 logements sans contrevenir a la Loisur le batiment [. . .] et au Reglement sur le plan de garantie des bati-ments residentiels neufs [. . .] ».

8 La juge de premiere instance a decide que l’appelante avait rejete atort la soumission de l’intimee. Selon elle, cette soumission souffraitd’irregularites mineures dont la correction aurait du etre permise.

9 Avec egards, j’estime que cette conclusion est erronee et que l’appeldoit etre accueilli. Le defaut par l’intimee de detenir la qualificationprofessionnelle exigee tant par les dispositions legislatives pertinentesque par l’avis d’appel d’offres ne constitue pas une anomalie mineuresusceptible de correction, mais il cree un obstacle incontournable al’obtention du contrat de construction. Cet obstacle, de surcroıt, empechel’application d’un plan de garantie rendu obligatoire par le Reglement surle plan de garantie des batiments residentiels neufs2, exige expressementpar l’avis d’appel d’offres.

1Construction L.F.G. inc. c. Maria (Office municipal d’habitation), 2012 QCCS6028 (C.S. Que.).2RLRQ, c. B-1.1, r. 8.

Construction L.F.G. c. Maria (Office mun. d’habitation) Thibault, J.C.A. 185

1– Les faits 10 L’appelante est un organisme a but non lucratif dont le mandat est

d’offrir du logement a prix abordable dans la municipalite de Maria. En2006, elle s’adjoint Mme Jacinthe Cyr, a titre de chargee de projet, pourla construction de deux immeubles de 12 logements. Elle embaucheegalement l’architecte Michel Bernard pour preparer les plans et devis,publier l’avis d’appel d’offres et examiner les soumissions recues. Uncomite de chantier compose de Jacinthe Cyr, de Michel Bernard, d’uningenieur et des representants de la municipalite est forme.

11 Le 1&sup-er; octobre 2008, l’appelante publie un avis d’appeld’offres dans le journal l’Echo de la Baie. Il contient une clause expresseconcernant le Reglement sur le plan de garantie des batiments residen-tiels neufs3 :

PLAN DE GARANTIE DE MAISONS NEUVES: Le projet qui faitl’objet du present appel d’offres doit etre conforme a tous les codes,lois et reglements applicables dont la Loi sur le batiment de laquelledecoule le reglement sur le plan de garantie des batiments residen-tiels neufs. L’entrepreneur devra donc prevoir dans sa soumission laprime requise pour cette garantie, si applicable.

12 Cette clause est inseree a la demande expresse de l’appelante. Celle-cisouhaite profiter de subventions reliees a un programme de la Societed’habitation du Quebec, qui exige notamment que les immeubles con-struits soient couverts par un plan de garantie.

13 L’avis d’appel d’offres indique egalement que les travaux doiventdebuter le 30 octobre 2008 et se terminer le 1&sup-er; avril 2009. Dansles faits, les travaux ont debute vers la mi-novembre 2008.

14 En plus de l’avis d’appel d’offres, les soumissionnaires recoivent desinstructions supplementaires dans le Cahier de charges dont le point 11,intitule « Licence », decrit les exigences de l’appelante reliees auxlicences delivrees en vertu de la Loi sur la qualification professionnelledes entrepreneurs en construction4 :

1. Le soumissionnaire devra inclure avec les documents de sasoumission un duplicata ou une photocopie de la licence de-livree par la Regie des Entrepreneurs en construction en vertudes dispositions de la Loi sur la qualification professionnelle

3Ibid.4Cette loi a ete remplacee par la Loi sur le batiment, RLRQ, c. B-1.1.


des entrepreneurs en construction (LRQ 1977 C.Q.-a.58). Lalicence devra etre en vigueur au moment de sa soumission. Ledefaut de se conformer a cette exigence entraınera le rejet im-mediat de la soumission.

2. De plus, cette licence devra autoriser l’entrepreneur a effec-tuer les travaux pour lesquels il soumissionne.

[Je souligne]

15 L’intimee possede une licence d’entrepreneur general de la sous-cat-egorie 1.3 « batiments de tout genre ». Avant de deposer une soumission,le president de l’intimee telephone a l’architecte Bernard pour verifier sila licence detenue par l’intimee satisfait les exigences du donneurd’ouvrage. Ce dernier le rassure.

16 Le 24 octobre 2008, l’intimee depose sa soumission. Celle-ci contientune copie de sa licence d’entrepreneur de la sous-categorie 1.3. Le memejour, les soumissions sont ouvertes publiquement. La soumission del’intimee est la plus basse (50 000 $ de moins que celle du deuxieme plusbas soumissionnaire).

17 Quelques jours plus tard, l’appelante est informee par le deuxiemeplus bas soumissionnaire que l’intimee ne detient pas les licences dessous-categories 1.1.1 et 1.1.2 qui seraient necessaires a la realisation ducontrat de construction. Le comite consulte l’architecte Bernard. Celui-ciest d’avis que la soumission de l’intimee est conforme puisque celle-ci aentrepris des demarches pour regulariser sa situation dans un avenirproche.

18 Le 28 octobre 2008, l’architecte Bernard ecrit a l’appelante. Il luirecommande d’accepter la soumission de l’intimee. Il precise que celle-cia entrepris des demarches aupres de la Regie du batiment « en vued’obtenir la garantie exigee par celle-ci ». Il joint a sa lettre une copie ducertificat d’accreditation date du 27 octobre 2008 delivre a l’intimee parl’un des administrateurs prives d’un plan de garantie.

19 Vu cette situation, l’appelante demande un avis juridique concernantla conformite de la soumission de l’intimee. L’avis conclut que lasoumission est entachee d’un vice majeur qui la rend irrecevable parceque l’intimee n’etait pas detentrice de la licence pertinente lors du depotde sa soumission. Consequemment, l’appelante decide d’octroyer le con-trat de construction au deuxieme plus bas soumissionnaire. L’intimee enest informee par lettre, le 3 novembre 2008.

20 Le 5 novembre 2008, l’intimee remplit le formulaire « Demande delicence d’entrepreneur » de la Regie du batiment pour obtenir les


licences des sous-categories 1.1.1 et 1.1.2. Ces licences lui sont oc-troyees le 12 fevrier 2009, bien apres la date prevue pour le debut destravaux.

2– Le jugement de premiere instance21 La juge examine les deux irregularites qui ont, a son avis5, entraıne le

rejet de la soumission de l’intimee pour decider s’il s’agit d’irregularitesmineures, susceptibles de correction, ou plutot d’irregularites majeuresemportant un rejet.

22 La premiere – le defaut par l’intimee de detenir les licences des sous-categories 1.1.1 et 1.1.2 necessaires pour construire le type d’immeubledecrit dans l’avis d’appel d’offres – est qualifiee par la juge d’irregularitemineure. Sa conclusion repose sur les trois motifs suivants. Premiere-ment, l’avis d’appel d’offres n’indique pas, avec precision, quelles sontles licences requises pour la construction des deux immeubles, mais il selimite a evoquer la necessite de « detenir la licence requise en vertu de laLoi sur le batiment ». Deuxiemement, l’architecte Bernard a confirmequ’une licence de la sous-categorie 1.3 est suffisante. Troisiemement,l’intimee a rempli le formulaire pour obtenir les licences appropriees, le5 novembre 2008. La juge conclut que l’intimee a remedie a l’irregularitereliee aux licences « avant la signature du contrat ».

23 La deuxieme irregularite soulevee concerne le fait que l’intimee n’apas inclus dans le montant total de sa soumission la prime requise pourenregistrer des unites sous un plan de garantie comme l’exige l’avisd’appel d’offres. La juge conclut que cette omission « ne touche que[l’intimee] qui aura l’obligation de supporter ce montant ». Elle ajouteque le soumissionnaire peut apporter des corrections a sa soumissiondans la mesure ou cela n’affecte pas le cout des travaux.

24 La juge ecrit que l’adjudication du contrat a un autre qu’au plus bassoumissionnaire contrevient a la regle de l’egalite entre les soumission-naires. Selon elle, il est « inconcevable » que des deniers publics soientdilapides et que la soumission retenue depasse de 50 000 $ celle del’intimee.

5Les parties sont d’accord pour dire que la deuxieme irregularite traitee par lajuge n’a pas joue de role dans le rejet de la soumission.


3– Les questions en litige25 L’appelante propose l’etude des trois questions suivantes :

1. La juge de la Cour superieure a-t-elle commis une erreur en con-cluant a la conformite de la soumission de l’intimee?

2. A-t-elle erre dans son appreciation de la preuve des dommages?

3. A-t-elle autorise une preuve inadmissible?

4– L’analyse

La conformite de la soumission de l’intimee26 La juge de premiere instance a conclu que le defaut par l’intimee de

detenir les licences requises par la loi et la reglementation applicablespour effectuer les travaux de construction decrits dans l’avis d’appeld’offres constituait une irregularite mineure, d’une part, et quel’appelante aurait du lui permettre de la corriger, d’autre part.

27 A mon avis et avec egards, les trois motifs qui fondent sa conclusionsont errones. Premierement, tel que je l’expliquerai plus loin, l’appelanten’avait pas l’obligation de preciser dans son avis d’appel d’offres que lessoumissionnaires sont tenus de se conformer a la Loi sur le batiment, quiest une loi d’ordre public destinee a proteger le public. Deuxiemement, lepoint de vue de l’architecte Bernard n’a aucune valeur juridique et il nelie pas l’appelante. Troisiemement, contrairement a ce qu’affirme la jugede premiere instance, l’intimee n’a pas regularise sa situation en tempsutile.

28 Selon la jurisprudence, la determination de la conformite d’unesoumission est une question mixte de fait et de droit. En consequence, amoins d’une erreur manifeste et dominante dans la conclusion attaquee,la Cour d’appel doit s’abstenir d’intervenir6. Or, dans le present appel,l’intervention s’impose.

29 L’examen des dispositions legislatives et reglementaires applicablespermet de determiner si les licences des sous-categories 1.1.1 et 1.1.2sont requises pour construire les immeubles decrits dans l’avis d’appeld’offres. Le cas echeant, il convient de decider ensuite si le fait de ne pasdetenir ces licences au moment de soumissionner constitue une irregu-larite mineure ou majeure.

6Construction Be-Con inc. c. Canada (Procureur general), 2013 QCCA 665(C.A. Que.), paragr. 61.


30 La preuve a etabli que l’intimee possede une licence d’entrepreneurgeneral. Cette licence permet d’« organiser », de « coordonner »,d’« executer » ou de « faire executer » des travaux de construction« compris dans les sous-categories de licence de la categoried’entrepreneur general » et de soumissionner sur de tels projets7.

31 L’intimee detient egalement une licence de la sous-categorie 1.3.L’article 6 du Reglement sur la qualification professionnelle des entre-preneurs et des constructeurs -proprietaires prevoit : « la licence qui et-ablit la qualification professionnelle du titulaire dans une sous-categoriede la categorie d’entrepreneur general (. . .) autorise ce dernier a executerou a faire executer les travaux de construction compris dans cette sous-categorie ».

32 L’annexe I de ce reglement enumere les travaux que peut executer ledetenteur d’une licence des sous-categories 1.1.1 et 1.3. Dans le cas d’unbatiment multifamilial de plus de cinq logements detenu par un organ-isme sans but lucratif, la licence de la sous-categorie 1.1.1 est exigee8.La juge de premiere instance en convient d’ailleurs au paragraphe [26]de son jugement.

33 Il faut donc conclure qu’en vertu du Reglement sur la qualificationprofessionnelle des entrepreneurs et des constructeurs-proprietaires,l’intimee n’etait pas autorisee a construire les batiments vises par l’avisd’appel d’offres. Certes, elle detenait a cette epoque la licence de sous-categorie 1.3 « Entrepreneur en batiments de tout genre », qui l’autorise afaire des travaux sur un « batiment residentiel neuf mais uniquement siles travaux sont executes en sous-traitance pour le compte du titulaired’une licence de la sous-categorie 1.1.1. ou de la sous-categorie 1.1.2 ».Comme les travaux n’etaient pas executes pour le compte du titulaired’une telle licence, l’intimee n’etait pas legalement habilitee a construireles immeubles decrits a l’avis d’appel d’offres.

34 Dans son avis d’appel d’offres, l’appelante exige aussi que les im-meubles construits soient conformes a toutes les lois applicables, particu-

7Reglement sur la qualification professionnelle des entrepreneurs et des con-structeurs-proprietaires, c. B-1.1, r. 9, art. 4.8Voir a l’ANNEXE I les dispositions pertinentes de la loi et du reglement.


lierement a la Loi sur le batiment et au Reglement sur le plan de garantiedes batiments residentiels neufs edicte sous son autorite9.

35 Selon l’article 6 de ce reglement, toute personne qui desire devenirentrepreneur des batiments residentiels neufs enumeres a l’article 2 doitadherer a un plan qui garantit l’execution des obligations legales et con-tractuelles prevues a l’article 7. Dans le cas d’un batiment multifamilialde plus de cinq logements detenu par un organisme sans but lucratif,l’adhesion a un plan de garantie est obligatoire, tel qu’il appert del’article 2 du reglement.

36 Le fait d’etre accredite permet au titulaire de l’accreditation debeneficier d’un plan de garantie. Le reglement prevoit, a son article 78,les conditions exigees pour obtenir l’accreditation. L’une de celles-ci estd’avoir demande une licence d’entrepreneur aupres de la Regie du bati-ment. Je precise cependant que, selon l’article 90 du reglement,l’adhesion ne prend effet qu’a compter de la date de la delivrance de lalicence appropriee. Cela est logique et coherent. L’entrepreneur doit etreautorise a construire pour que les travaux qu’il execute soient assujettis aun plan de garantie. L’adhesion a un plan de garantie est donc subordon-nee a la capacite legale de l’entrepreneur de construire l’immeuble.L’entrepreneur doit posseder les qualifications professionnelles requisespar la loi, ici la licence de la sous-categorie 1.1.1.

37 L’analyse de concert des dispositions legislatives et reglementairespertinentes permet de conclure que l’intimee n’etait pas autorisee a en-treprendre la construction des immeubles d’habitation en cause parcequ’elle n’etait pas detentrice des licences appropriees. Elle ne pouvaitpas, non plus, jouir de l’accreditation a un plan de garantie au moment ouelle a depose sa soumission pour la meme raison.

. . . . .38 Une irregularite dans une soumission peut etre qualifiee de mineure

ou de majeure, lorsqu’elle porte atteinte au principe du traitement equita-ble des soumissionnaires, notamment si l’irregularite constatee a un effetsur le prix de la soumission ou lorsqu’elle affecte une autre exigence defond. Le donneur d’ouvrage possede donc une discretion administrativede ne pas rejeter « une soumission substantiellement conforme dont lesirregularites ne porteraient que sur des points accessoires et secondaires

9La clause en question est reproduite dans la section des faits. Voir al’ANNEXE II les dispositions pertinentes de la loi et du reglement.


facilement remediables »10. La Cour a rappele ce principe a quelquesreprises :

17 Il est generalement reconnu qu’une municipalite n’est pas obligeede rejeter une soumission non conforme qui ne comporte qu’une ir-regularite mineure. Ne pourra toutefois etre qualifiee de mineure uneerreur ou omission qui a un effet sur le prix de la soumission ou portesur une exigence de fond stipulee a l’appel d’offres. La Cour men-tionnait a ce propos dans R.P.M. Tech inc. c. Ville de Gaspe:

28 Pour qualifier une irregularite de mineure ou demajeure, le facteur determinant est celui de l’egalite dessoumissionnaires. L’irregularite ne doit pas avoir d’effetsur le prix de la soumission; elle ne doit pas avoir rompul’equilibre entre les soumissionnaires, l’un des principesdirecteurs en matiere d’adjudication de contrat par voie desoumissions publiques [...].11

[Je souligne]

39 La question precise de savoir si l’absence d’une sous-categorie de li-cence au moment du depot de la soumission constitue une irregularitemineure ou majeure a ete abordee a maintes reprises dans la jurispru-dence. Cette jurisprudence est passee en revue par la Cour superieuredans l’affaire Groupe Benoıt c. Agence metropolitaine de transport12.

40 Aux fins du present appel, il suffit de referer a deux arrets de la Courportant sur l’absence de qualification professionnelle. Dans Meubles duQuebec Inspiration XIXe Ltee c. Chicoutimi (Ville)13, le plus bas soumis-sionnaire avait omis de renouveler sa licence d’entrepreneur en construc-tion de sorte qu’au moment ou il a fait sa soumission, il n’etait pasdetenteur des licences exigees par les dispositions legislatives per-tinentes. Il les a renouvelees quelques semaines plus tard. Malgre la

10Rene Dussault et Louis Borgeat, Traite de droit administratif, t. 1, 2&sup-e;ed., Laval, Presses de l’Universite Laval, 1984, p. 659, cite dans Groupe Benoıtc. Agence metropolitaine de transport, 2009 QCCS 406 (C.S. Que.), paragr. 40[Groupe Benoıt].11Raby (Excavation Gerard Raby) c. Ste-Euphemie-sur-Riviere-du-Sud(Municipalite), 2008 QCCA 1830 (C.A. Que.), paragr. 17. Voir egalementGroupe Benoıt, ibid., paragr. 31 et R.P.M. Tech inc. c. Gaspe (Ville), J.E. 2004-1072 (C.A. Que.) [2004 CarswellQue 1014 (C.A. Que.)], paragr. 28.12Supra, note 10.13[1994] R.J.Q. 2157 (C.A. Que.).


regularisation de son statut, la ville avait rejete sa soumission. La Courd’appel a conclu que celle-ci avait eu raison. Au moment de soumission-ner, l’entrepreneur ne possedait pas la capacite juridique de le faire. Lejuge LeBel explique :

La Loi sur la qualification professionnelle des entrepreneurs de con-struction [aujourd’hui remplacee par la Loi sur le batiment] prevoitque l’acte de presentation des soumissions est une activited’entrepreneur. Elle est reservee a ceux qui se sont conformes a laloi, c’est-a-dire qui ont obtenu un permis d’exercice ou licence dansle secteur d’activites ou la specialite dans laquelle ils entendentœuvrer. Ceci decoule notamment de l’article 1b) de la loi, qui definitl’entrepreneur comme:

1b) « entrepreneur »: toute personne qui, pour autrui, execute ou faitexecuter des travaux de construction ou fait ou presente des soumis-sions, personnellement ou par personne interposee, dans le butd’executer, a son profit, de tels travaux.

L’article 25 de la loi interdit, par ailleurs, d’exercer en cette qualite adefaut de la licence appropriee:

25. Nul ne peut utiliser le titre d’entrepreneur de construction, ni ex-ercer en cette qualite, s’il ne justifie de la possession d’une licence acet effet.

Lorsqu’elle a depose sa soumission, Meubles n’avait pas la capacitejuridique d’exercer comme entrepreneur. Sa soumission etait illegaleet irreguliere. La professeure T. Rousseau-Houle (telle qu’elle etaitalors) a bien situe la nature et la portee de cette loi. Celle-ci cree desobligations aux entrepreneurs, qui sont destinees a proteger le public,y compris les clients comme la Ville de Chicoutimi. Elle comportedes dispositions prohibitives, qui interdisent l’exercice illegal des dif-ferentes specialites d’entreprises de construction. [. . .]14

Dans son appel d’offres, la Ville de Chicoutimi n’avait pasl’obligation d’inserer expressement l’obligation de detenir la licenceappropriee d’entrepreneur en construction, meme s’il eut ete prudentde le faire. Elle n’avait pas cependant a specifier que l’entrepreneurdevait respecter la loi ni qu’elle serait tenue de le faire elle-meme.Elle avait donc raison d’ecarter la soumission, celle-ci etant irregu-liere. L’obtention ulterieure d’une licence d’entrepreneur parMeubles ne bonifiait pas son offre. Le permis d’exercice accorde

14Ibid., paragr. 15.


n’avait pas d’effet retrospectif. Pour ce motif, l’action aurait du etrerejetee.15

[Je souligne]

41 Dans Bernier Lecomte inc. c. Verdun (Ville)16, la ville constate, desl’ouverture des soumissions, que la soumission la plus basse n’est pasaccompagnee d’une preuve de la licence requise. La ville exige alors ledocument, qui est fourni par l’entrepreneur trois jours plus tard, puisquecelui-ci comptait de toute facon faire effectuer les travaux par un sous-traitant qui possedait la licence appropriee. L’entrepreneur a obtenu lecontrat. Se fondant sur l’arret Chicoutimi (Ville de) c. Meubles du Que-bec Inspiration XIXe Limitee, la Cour superieure a ete d’avis quel’entrepreneur n’aurait pas du avoir la chance de corriger le tir parce qu’ilne possedait pas la capacite juridique de soumissionner au moment ou ill’a fait :

57 Les lois qui regissent et encadrent tout le secteur dit de la « con-struction » imposent a ceux qui y œuvrent, des obligations destineesa proteger le public, a l’assurer de la competence technique et de lasolvabilite des entrepreneurs de meme qu’a assurer l’equite entre lessoumissionnaires. Elles comportent aussi des dispositions qui in-terdisent l’exercice illegal de certains metiers.

58 Ces considerations avaient amene la professeure Therese Rous-seau-Houle (telle qu’elle etait alors) a souligner que [on reprend ici lepassage cite par le juge LeBel dans l’arret Chicoutimi (Ville de) c.Meubles du Quebec Inspiration XIXe Limitee] :

Il est essentiel a la formation et a la validite des contrats de construc-tion que les constructeurs repondent aux conditions exigees par leslois et reglements professionnels qui les regissent.

59 Comme les travaux vises par l’appel d’offres etaient de la naturede ceux reserves aux maıtres mecaniciens en tuyauterie, que la deten-tion d’un permis constituait une exigence de fond, et qu’au momentdu depot de sa soumission, Mouvec n’en detenait pas, le Tribunal estd’avis qu’elle n’avait pas la capacite juridique de deposer unesoumission et que la Ville ne pouvait, de ce fait, lui attribuer lecontrat.17

15Ibid., paragr. 17.16J.E. 2002-1551 (C.S. Que.) [2002 CarswellQue 1839 (C.S. Que.)], conf. par laCour d’appel dans 2005 QCCA 127 (C.A. Que.).17Ibid., paragr. 57-59.


[Je souligne]

42 Le raisonnement de la juge de premiere instance selon lequell’intimee pouvait remedier au defaut de detenir les licences approprieesau moment ou elle a soumissionne est contraire aux enseignements de laCour18. L’entrepreneur qui soumissionne sur un projet de constructiondoit satisfaire aux conditions prescrites par les lois et reglements profes-sionnels qui le regissent. Cela est essentiel a la formation et a la validitedes contrats professionnels19. La conclusion de la juge a aussi commeeffet de banaliser l’importance de la qualification professionnelle des en-trepreneurs en construction qui vise la protection du public. De plus, leresultat auquel parvient la juge fait fi des contraintes temporelles qui sontde l’essence d’un contrat de construction et dont depend la rentabilite dumarche commercial.

43 La soumission de l’intimee comporte plus qu’une simple incapacitetechnique. Celle-ci ne pouvait pas remedier au probleme en donnant unepartie des travaux en sous-traitance. L’intimee devait detenir la licencequi l’autorise a effectuer l’ensemble des travaux. Ce processus impliquela verification de la competence professionnelle de la personne qui sollic-ite une licence et la reussite d’examens, sauf si reglement l’en dis-pense20, une etape importante qui assure la qualite des travaux et la pro-tection du public. De plus, le defaut de detenir la licence approprieeempeche l’adhesion d’un entrepreneur a un plan de garantie, comme jel’ai deja explique. Un tel plan garantit l’execution des obligations legaleset contractuelles de l’entrepreneur dans la mesure et de la maniereprevues par la section I du chapitre II du Reglement sur le plan de garan-tie des batiments residentiels neufs et il est obligatoire dans le cas desimmeubles decrits a l’avis d’appel d’offres.

44 Ce que l’on exige du donneur d’ouvrage, c’est qu’il permette au plusbas soumissionnaire de remedier a des irregularites mineures. Dans lepresent dossier, la conclusion de la juge de premiere instance impliqueque le donneur d’ouvrage accepte la soumission d’un entrepreneur qui ne

18Je note que les deux arrets de la Cour ne sont pas cites par la juge de premiereinstance.19Chicoutimi (Ville) c. Meubles du Quebec, supra, note 13, paragr. 15; ThereseRousseau-Houle, Les contrats de construction en droit public et prive, Montreal,Wilson & Lafleur, 1982, p. 70.20Il s’agit de la Section IV du Reglement sur la qualification professionnelle desentrepreneurs et constructeurs-proprietaires.


detient pas une licence valide pour executer les travaux et qu’il repoussede plusieurs mois la date du debut des travaux pour lui donner la chancede se qualifier. Une telle approche cree au surplus une injustice enversles autres soumissionnaires qui ont depense des ressources pour acquerirles competences et les licences appropriees en temps utile.

. . . . .45 Dans notre cas particulier, l’appelante s’est obligee, par une clause

specifique, a rejeter la soumission de l’entrepreneur qui ne detient pas lalicence requise au moment de soumissionner. Meme lorsqu’elles sontmineures, certaines irregularites dans une soumission portant sur des ele-ments rendus obligatoires par une mention specifique a cet effet dansl’appel d’offres peuvent justifier le rejet d’une soumission21. En inserantce type de clause peremptoire dans l’avis d’appel d’offres, le donneurd’ouvrage limite sa propre discretion22. En somme, « (. . .) seules les ir-regularites portant sur les elements obligatoires specifies dans l’appeld’offres et les conditions generales justifieront l’Administration de nepas apprecier une soumission »23.

46 En l’espece, je rappelle que le Cahier des charges prevoit a son point11 que la licence pertinente doit etre en vigueur au moment de la soumis-sion et que le defaut de se conformer a cette exigence entraıne le rejet dela soumission :

1. Le soumissionnaire devra inclure avec les documents de sasoumission un duplicata ou une photocopie de la licence de-livree par la Regie des Entrepreneurs en construction en vertudes dispositions de la Loi sur la qualification professionnelledes entrepreneurs en construction (LRQ 1977 C.Q.-a.58). Lalicence devra etre en vigueur au moment de sa soumission. Ledefaut de se conformer a cette exigence entraınera le rejet im-mediat de la soumission.

[Je souligne]

47 Cette exigence peremptoire prevue au contrat constitue un elementsupplementaire qui milite en faveur du rejet de la soumission de

21Mercier c. Raby, supra, note 11, paragr. 20; Construction Anor inc. c.Montreal (Communaute urbaine) (1996), 68 A.C.W.S. (3d) 75 (C.A. Que.)[1996 CarswellQue 1394 (C.A. Que.)], paragr. 10 a 12.22Ibid.23Mercier c. Raby, supra, note 11, paragr. 20.


l’intimee puisque, faut-il le repeter, celle-ci ne detenait pas la licencepertinente lorsqu’elle a depose sa soumission. Il s’agit d’une clause du« contrat A ». Elle lie toutes les parties et les regles habituelles du droitdes contrats s’appliquent. L’appelante etait donc tenue de rejeter lasoumission de l’intimee.

48 L’appelante avait-elle l’obligation de preciser quelles licences etaientrequises pour executer les travaux? La Cour a donne une reponse nega-tive a cette question : « [d] ans son appel d’offres, la Ville de Chicoutimin’avait pas l’obligation d’inserer expressement l’obligation de detenir lalicence appropriee d’entrepreneur en construction, meme s’il eut ete pru-dent de le faire »24. Cet extrait decide d’un autre argument propose parl’intimee selon lequel l’avis d’appel d’offres est ambigu. L’avis d’appeld’offres n’est pas ambigu en ce sens qu’il n’induit pas les soumission-naires en erreur. Ils ont tous recu la meme information et sont toussoumis a la meme obligation, celle de se conformer a la loi et aux regle-ments applicables.

49 Je conclus que la juge de premiere instance a commis une erreur re-visable en decidant que la soumission de l’intimee etait recevable. Vucette conclusion, il devient inutile de trancher les autres questions enlitige.

50 Pour ces motifs, je propose d’accueillir l’appel, avec depens,d’infirmer le jugement de premiere instance et de rejeter l’action del’intimee, avec depens.

Appel accueilli.

ANNEXE

ANNEXE I — Dispositions legislatives et reglementaires portant sur lesqualifications professionnelles

Loi sur le batiment, RLRQ, c. B-1.1.CHAPITRE IV

QUALIFICATION

SECTION II

LICENCES

§1. — Dispositions generales

24Chicoutimi (Ville) c. Meubles du Quebec, supra, note 13, paragr. 17.


46. Nul ne peut exercer les fonctions d’entrepreneur de construction,en prendre le titre, ni donner lieu de croire qu’il est entrepreneur deconstruction, s’il n’est titulaire d’une licence en vigueur a cette fin.

Aucun entrepreneur ne peut utiliser, pour l’execution de travaux deconstruction, les services d’un autre entrepreneur qui n’est pas titu-laire d’une licence a cette fin.

50. La personne qui n’est pas elle-meme un entrepreneur qui a concluun contrat pour l’execution de travaux de construction avec un entre-preneur qui n’est pas titulaire de la licence appropriee peut en de-mander l’annulation.

CHAPTER IV

QUALIFICATIONS

DIVISION II

LICENCES

§1. — General

46. No person may act as a building contractor, hold himself out tobe such or give cause to believe that he is a building contractor, un-less he holds a current licence for that purpose.

No contractor may use, for the carrying out of construction work, theservices of another contractor who does not hold a licence for thatpurpose.

50. A person not being a contractor who has entered into a contractfor construction work with a contractor not holding the proper li-cence may apply for cancellation of the contract.

Reglement sur la qualification professionnelle des entrepreneurs etdes constructeurs-proprietaires, RLRQ, c. B-1.1, r. 9.

CHAPITRE I

INTERPRETATION

1. Dans le present reglement, on entend par « repondant »une personne physique faisant affaires seule ou un dirige-ant qui, a moins d’en etre exempte en vertu de la Loi surle batiment (L.R.Q., c. B-1.1) ou d’un reglement pris envertu de cette Loi, a demontre, a la suite d’examensprevus par le present reglement ou par tout autre moyend’evaluation juge approprie par la Regie du batiment duQuebec en vertu du paragraphe 1 du premier alinea del’article 58 de cette Loi, qu’il possede les connaissancesou l’experience pertinente dans la gestion d’une entreprisede construction et dans l’execution de travaux de con-


struction ou qu’il possede une reconnaissance ou une at-testation delivree par la Regie en vertu de l’article 58.1 decette Loi.

CHAPITRE II

LICENCES

SECTION I

CATEGORIES DE LICENCES

3. Les categories de licences sont les suivantes :

1° entrepreneur general ;

2° constructeur-proprietaire general ;

3° entrepreneur specialise ;

4° constructeur-proprietaire specialise.

4. La licence d’entrepreneur general est requise de toutentrepreneur dont l’activite principale consiste a or-ganiser, a coordonner, a executer ou a faire executer, entout ou en partie, des travaux de construction comprisdans les sous-categories de licence de la categoried’entrepreneur general, ou a faire ou a presenter dessoumissions, personnellement ou par personne interposee,dans le but d’executer ou de faire executer, en tout ou enpartie, de tels travaux.

6. La licence qui etablit la qualification professionnelle dutitulaire dans une sous-categorie de la categoried’entrepreneur general ou de constructeur-proprietairegeneral autorise ce dernier a executer ou a faire executerles travaux de construction compris dans cette sous-categorie.

Toutefois, une licence d’entrepreneur general ou de con-structeur-proprietaire general n’autorise son titulaire a ex-ecuter des travaux de construction compris dans une sous-categorie de licence prevue a l’annexe II que si cette sous-categorie de licence est mentionnee dans une sous-cat-egorie de la licence dont il est titulaire.

9. Les sous-categories de licences de la categoried’entrepreneur general sont celles prevues a l’annexe I.

Les sous-categories de licences de la categorie de con-structeur-proprietaire general sont celles prevues al’annexe I, a l’exception des sous-categories 1.1.1 et1.1.2, en remplacant respectivement les mots « entrepre-neur general » et « entrepreneur » par les mots « con-


structeur-proprietaire general » et « constructeur-proprietaire », partout ou ils se trouvent et en faisant lesadaptations necessaires.

CHAPTER I

INTERPRETATION

1. In this Regulation, “guarantor” means a natural persondoing business alone or an officer who, following exami-nations under this Regulation or any other method ofevaluation considered appropriate by the Regie du bati-ment du Quebec under subparagraph 1 of the first para-graph of section 58 of the Building Act (R.S.Q., c. B-1.1),unless the person or officer is exempt therefrom under theAct or one of its regulations, has demonstrated having theknowledge or experience relevant to managing a buildingundertaking and carrying out construction work, or hasbeen recognized or holds an attestation issued by theBoard under section 58.1 of the Act.

DIVISION I

LICENCE CLASSES

DIVISION I

LICENCE CLASSES

3. The licence classes are as follows:

(1) general contractor;

(2) general owner-builder;

(3) specialized contractor;

(4) specialized owner-builder.

4. A general contractor’s licence is required of any con-tractor whose main activity consists in organizing, coordi-nating, carrying out or having carried out, in whole or inpart, construction work in the licence subclasses in thegeneral contractor class, or in making or submitting ten-ders personally or through an intermediary for the purposeof carrying out or having such work carried out in wholeor in part.

6. The licence that qualifies the holder in a subclass in thegeneral contractor or general owner-builder class autho-rizes the holder to carry out or have construction workcarried out in that subclass.

Despite the foregoing, a general contractor’s or generalowner-builder’s licence authorizes its holder to carry out


construction work in a licence subclass in Schedule IIonly if that licence subclass is mentioned in a subclass ofthe licence held.

9. The licence subclasses in the general contractor classare those in Schedule I.

The licence subclasses in the general owner-builder classare those in Schedule I, except subclasses 1.1.1 and 1.1.2,with “general contractor” and “contractor” replaced wher-ever they appear and with the necessary modifications by“general owner-builder” and “owner-builder”respectively.

ANNEXE

ANNEXE I

SOUS-CATEGORIES DE LICENCES DE LA CATEGORIE DE LI-CENCE D’ENTREPRENEUR GENERAL MENTIONNEES AL’ARTICLE 9

1.1.1 Entrepreneur en batiments residentiels neufs vises a un plan degarantie, classe I

Cette sous-categorie autorise les travaux de construction qui con-cernent :

– une maison unifamiliale isolee, jumelee ou en rangee detenue ounon en copropriete divise ;

– un batiment multifamilial a partir du duplex jusqu’au quintuplexnon detenu en copropriete divise ;

– un batiment multifamilial de plus de 5 logements detenu par unorganisme sans but lucratif ou une cooperative, non detenu encopropriete divise.

Elle autorise egalement les travaux de construction compris dans lessous-categories 2.6, 3.1, 4.1, 5.1, et 6.1 de l’annexe II, lorsqu’ils con-cernent un batiment residentiel neuf vise a la presente sous-categorie.

1.1.2 Entrepreneur en batiments residentiels neufs vises a un plan degarantie, classe II

Cette sous-categorie autorise les travaux de construction qui con-cernent un batiment multifamilial detenu en copropriete divise, deconstruction combustible ou de construction incombustible, cedernier comprenant au plus 4 parties privatives superposees.


Elle autorise egalement les travaux de construction compris dans lessous-categories 2.6, 3.1, 4.1, 5.1, et 6.1 de l’annexe II lorsqu’ils con-cernent un batiment residentiel neuf vise a la presente sous-categorie.

Dans la presente sous-categorie, on entend par :

« construction combustible » : une construction combustible au sensdu Code national du batiment - Canada 1995 (CNRC 38726F) ycompris les modifications de juillet 1998 et de novembre 1999 pub-lies par la Commission canadienne des codes du batiment et de pre-vention des incendies du Conseil national de recherches du Canada ;

« construction incombustible » : une construction incombustible ausens du Code national du batiment - Canada 1995 (CNRC 38726F) ycompris les modifications de juillet 1998 et de novembre 1999 pub-lies par la Commission canadienne des codes du batiment et de pre-vention des incendies du Conseil national de recherches du Canada.

1.3 Entrepreneur en batiments de tout genre

Cette sous-categorie autorise les travaux de construction de tout bati-ment, y compris ceux de la sous-categorie 1.2, et les travaux de con-struction des structures gonflables visees au paragraphe 2 de l’article3.4 du Reglement d’application de la Loi sur le batiment.

Elle autorise egalement les travaux de construction qui concernent unbatiment residentiel neuf vise a la presente sous-categorie mais uni-quement si les travaux sont executes en sous-traitance pour le comptedu titulaire d’une licence de la sous-categorie 1.1.1 ou de la sous-categorie 1.1.2.

De plus, cette sous-categorie autorise les travaux de constructioncompris dans les sous-categories 2.6, 3.1, 4.1, 5.1 et 6.1 de l’annexeII, lorsqu’ils concernent un batiment ou une structure gonflable vise ala presente sous-categorie.

Enfin, elle autorise les travaux de construction similaires ouconnexes.

SCHEDULE I

LICENCE SUBCLASSES IN THE GENERAL CONTRACTOR’SLICENCE CLASS REFERRED TO IN SECTION 9

1.1.1 Contractor – new residential buildings covered by a guarantyplan, Class I

This subclass authorizes construction work relating to

– a single family dwelling, duplex or town house, whether or not it isheld in divided co-ownership;

– a multifamily building, from a duplex to a quintuplex, that is notheld in divided co-ownership;


– a multifamily building of more than 5 units, held by a non-profitorganization or a cooperative and not held in divided co-ownership.

It also authorizes construction work in subclasses 2.6, 3.1, 4.1, 5.1and 6.1 of Schedule II, relating to a new residential building coveredby this subclass.

1.1.2 Contractor – new residential buildings covered by a guarantyplan, Class “

This subclass authorizes construction work relating to a multifamilybuilding held in divided co-ownership, of combustible constructionor non-combustible construction, the latter comprising no more than4 private portions stacked one above the other.

It also authorizes construction work in subclasses 2.6, 3.1, 4.1, 5.1and 6.1 of Schedule II, relating to a new residential building coveredby this subclass.

In this subclass,

“combustible construction” means a combustible construction withinthe meaning of the National Building Code – Canada 1995 (NRCC38726E) including the revisions of July 1998 and November 1999issued by the Canadian Commission on Building and Fire Codes ofthe National Research Council of Canada;

“non-combustible construction” means a non-combustible construc-tion within the meaning of the National Building Code – Canada1995 (NRCC 38726E) including the revisions of July 1998 and No-vember 1999 issued by the Canadian Commission on Building andFire Codes of the National Research Council of Canada.

1.3 Contractor – all buildings

This subclass authorizes construction work on any building, includ-ing those of subclass 1.2, and construction work on inflatable struc-tures referred to in paragraph 2 of section 3.4 of the Regulation re-specting the application of the Building Act.

It also authorizes construction work relating to a new residentialbuilding in this subclass to the extent that the work is subcontractedon behalf of the holder of a licence in subclass 1.1.1 or 1.1.2.

This subclass authorizes construction work in subclasses 2.6, 3.1,4.1, 5.1 and 6.1 of Schedule II relating to a building or inflatablestructure covered by this subclass.

Lastly, it authorizes similar or related construction work.


ANNEXE

ANNEXE II – Dispositions legislatives et reglementaires portant surl’adhesion a un plan de garantie

Loi sur le batiment, RLRQ, c. B-1.1.CHAPITRE V

GARANTIES FINANCIERES

SECTION I

PLANS DE GARANTIES

77. La Regie peut, par reglement, obliger tout entrepreneur a adherera un plan qui garantit l’execution de ses obligations legales et con-tractuelles, notamment celle de respecter le Code de construction(chapitre B-1.1, r. 2), resultant d’un contrat conclu avec une personnepour la vente ou la construction d’un batiment residentiel neuf.

Le reglement vise au premier alinea determine les cas, les conditionset les modalites de la garantie relies a l’execution des obligationslegales et contractuelles de l’entrepreneur ainsi que la categorie debatiment residentiel neuf a laquelle il s’applique.

CHAPTER V

FINANCIAL GUARANTEES

DIVISION I

GUARANTY PLANS

77. The Board may, by regulation, require every contractor to join aplan guaranteeing the performance of his legal and contractual obli-gations, in particular, his obligation to comply with the BuildingCode, resulting from a contract entered into with a person for the saleor construction of a new residential building.

The regulation contemplated in the first paragraph shall determinethe cases and the terms and conditions of the guaranty related to theperformance of the legal and contractual obligations of the contrac-tor, and the class of new residential buildings to which it applies.

Reglement sur le plan de garantie des batiments residentiels neufs,RLRQ, c. B-1.1, r. 8.

SECTION II

APPLICATION

2. Le present reglement s’applique aux plans de garantie qui garantis-sent l’execution des obligations legales et contractuelles d’un entre-preneur visees au chapitre II et resultant d’un contrat conclu avec unbeneficiaire pour la vente ou la construction:


1° des batiments neufs suivants destines a des fins principalementresidentielles et non detenus en copropriete divise par le beneficiairede la garantie:

a) une maison unifamiliale isolee, jumelee ou en rangee;

b) un batiment multifamilial a partir du duplex jusqu’au quintuplex;

c) un batiment multifamilial de plus de 5 logements detenu par unorganisme sans but lucratif ou une cooperative;

2° des batiments neufs suivants destines a des fins principalementresidentielles et detenus en copropriete divise par le beneficiaire de lagarantie:

a) une maison unifamiliale isolee, jumelee ou en rangee;

b) un batiment multifamilial de construction combustible;

c) un batiment multifamilial de construction incombustible compre-nant au plus 4 parties privatives superposees;

3° des batiments vises aux paragraphes 1 ou 2 et acquis d’un syndic,d’une municipalite ou d’un preteur hypothecaire par un entrepreneur.

Pour l’application du present reglement, les expressions « construc-tion combustible » et « construction incombustible » ont le sens queleur donne le Code national du batiment – Canada 1995 (CNRC38726F) y compris les modifications de juillet 1998 et de novembre1999 publies par la Commission canadienne des codes du batiment etde prevention des incendies du Conseil national de recherches duCanada.

La destination d’un batiment s’etablit a la date de conclusion du con-trat. Cette destination est presumee valoir pendant toute la periode degarantie et la garantie s’applique a l’ensemble du batiment.

CHAPITRE II

GARANTIE MINIMALE

SECTION I

GARANTIE ET ADHESION OBLIGATOIRES

6. Toute personne qui desire devenir un entrepreneur en batimentsresidentiels neufs vises a l’article 2 doit adherer, conformement auxdispositions de la section I du chapitre IV, a un plan qui garantitl’execution des obligations legales et contractuelles prevues al’article 7 et resultant d’un contrat conclu avec un beneficiaire.

CHAPITRE IV

NORMES ET CRITERES DU PLAN DE GARANTIE ET DUCONTRAT DE GARANTIE

SECTION 1


ADHESION D’UN ENTREPRENEUR

78. Pour adherer a un plan de garantie et obtenir un certificatd’accreditation, une personne doit:

1° remplir une demande d’adhesion sur la formule fournie parl’administrateur et la remettre a l’administrateur;

2° satisfaire aux conditions et aux criteres financiers prescrits par lapresente section;

3° signer la convention d’adhesion fournie par l’administrateur etcomportant les engagements enumeres a l’annexe II;

4° detenir un cautionnement de 20 000 $ contre la fraude, la malver-sation et le detournement de fonds;

5° soumettre des etats financiers complets verifies ou accompagnesd’un rapport de mission d’examen, rediges par un comptable. Cesetats devront etre dates et signes par une personne en autorite. Deplus, les etats financiers ne doivent pas etre dates de plus de 4 moissuivant la fin de l’annee financiere de l’entreprise;

6° produire un attestation suivant laquelle les actionnaires detenant20% ou plus des actions avec droit de vote, dirigeants et repondantsont ete liberes de toute faillite personnelle ou qu’ils n’ont pas ete im-pliques dans une faillite d’entreprise de construction depuis au moins3 ans et indiquer si l’un de ses autres actionnaires a ete implique dansune telle faillite depuis moins de 3 ans;

7° produire le bilan personnel dument rempli, date et signe de chacundes dirigeants, actionnaires, repondants et associes;

8° declarer l’ensemble de ses engagements envers des tiers et descompagnies affiliees ou autres tels l’hypotheque legale et le caution-nement envers des tiers;

9° produire une copie certifiee conforme de l’acte constitutif de sonentreprise;

10° verser les frais d’adhesion exiges par l’administrateur;

11° produire une attestation suivant laquelle elle a demande une li-cence d’entrepreneur aupres de la Regie;

12° si cette personne, l’un de ses actionnaires detenant 20% ou plusdes actions avec droit de vote ou l’un de ses dirigeants a ete accrediteau cours des 3 dernieres annees par un autre administrateur, produireune declaration de cet administrateur indiquant si des sommes luisont dues par l’entreprise requerante, l’un de ses actionnaires dete-nant 20% ou plus des actions avec droit de vote ou l’un de sesdirigeants.


L’administrateur delivre un certificat d’accreditation si les conditionsprescrites par le present chapitre sont remplies

90. L’adhesion ne prend effet qu’a compter de la date ou la Regie adelivre a l’entrepreneur la licence appropriee.

DIVISION II

APPLICATION

2. This Regulation applies to guarantee plans guaranteeing the per-formance of the contractor’s legal and contractual obligations pro-vided for in Chapter II and resulting from a contract entered into witha beneficiary for the sale or construction of:

(1) the following new buildings intended mainly for residential pur-poses and not held in divided co-ownership by the beneficiary of theguarantee:

(a) a detached, semi-detached or row-type single-family dwelling;

(b) a multifamily building, from a duplex to a quintuplex;

(c) a multifamily building comprising more than 5 dwelling units andheld by a non-profit organization or a cooperative;

(2) the following new buildings intended mainly for residential pur-poses and held in divided co-ownership by the beneficiary of theguarantee:

(a) a detached, semi-detached or row-type single-family dwelling;

(b) a multifamily building of combustible construction;

(c) a multifamily building of noncombustible construction compris-ing no more than 4 private portions stacked one above the other;

(3) the buildings specified in subparagraphs 1 or 2 and acquired bythe contractor from a syndic, municipality or mortgage lender.

For the purposes of this Regulation, the terms “combustible construc-tion” and “noncombustible construction” have the meaning given tothem in the National Building Code–Canada 1995 (NRCC 38726E)including the revisions of July 1998 and November 1999 issued bythe Canadian Commission on Building and Fire Codes of the Na-tional Research Council of Canada.

The intended use of a building is established on the date of conclu-sion of the contract and is presumed valid for the term of the guaran-tee. The guarantee applies to the entire building.

CHAPTER II

MINIMUM GUARANTEE

DIVISION I

GUARANTEE AND REQUIRED MEMBERSHIP


6. Any person wishing to become a contractor for the new residentialbuildings referred to in section 2 shall, in accordance with Division Iof Chapter IV, join a plan guaranteeing the performance of the legaland contractual obligations provided for in section 7 and resultingfrom a contract entered into with a beneficiary.

CHAPTER IV

STANDARDS AND CRITERIA OF GUARANTEE PLANS ANDOF GUARANTEE CONTRACTS

DIVISION I

MEMBERSHIP OF THE CONTRACTOR

78. To join a guarantee plan and obtain a certificate of accreditation,a person shall

(1) complete an application for membership on the form supplied bythe manager and return the form to the manager;

(2) satisfy the conditions and financial criteria prescribed in thisDivision;

(3) sign the membership agreement supplied by the manager and set-ting forth the obligations listed in Schedule II;

(4) hold security in the amount of $20,000 against fraud, embezzle-ment or misappropriation of funds;

(5) submit complete financial statements audited or accompanied bya review engagement report and drawn up by an accountant. Thosestatements shall be dated and signed by a person in authority. In ad-dition, financial statements shall be dated no later than 4 months afterthe end of the undertaking’s fiscal year;

(6) produce a document certifying that the shareholders holding 20%or more of the voting shares, officers and guarantors have been dis-charged from any personal bankruptcy and have not been involved inthe bankruptcy of a construction firm for at least 3 years and statewhether one of the other shareholders was involved in such a bank-ruptcy in less than 3 years;

(7) produce the personal balance sheet of each officer, shareholder,guarantor and partner, duly completed, dated and signed;

(8) declare all his obligations towards third parties and towards affili-ates or other companies, such as a legal hypothec or security towardsthird parties;

(9) produce a certified true copy of the deed of incorporation of hisundertaking;

(10) pay the membership fees required by the manager; and


(11) produce a document certifying that he has applied to the Boardfor a contractor’s licence;

(12) if that person, one of its shareholders holding 20% or more ofthe voting shares or one of its officers was accredited for the last 3years by another manager, produce a statement of that manager stat-ing whether sums are owed by the applicant undertaking, one of itsshareholders holding 20% or more of the voting shares or one of itsofficers.

90. Membership takes effect only from the date on which the Boardissues the appropriate licence to the contractor.

Talon International Inc. v. Far East Aluminium 209

[Indexed as: Talon International Inc. v. Far East AluminiumWork Canada Corp.]

Talon International Inc., LB 325 Bay Street Inc., and NortonRose Fulbright Canada LLP (formerly Norton Rose Canada

LLP), Appellants and Far East Aluminium Work Canada Corp.,Respondent

Ontario Court of Appeal

Docket: CA C58351

2014 ONCA 539

John Laskin, J. MacFarland, P. Lauwers JJ.A.

Heard: June 24, 2014

Judgment: June 24, 2014

Written reasons: July 9, 2014

Civil practice and procedure –––– Practice on appeal — Appeal book —General principles –––– Application judge was tasked with determiningwhether F Corp. had complied with settlement agreement it had made with TInc. and N LLP — Application judge decided summarily without trial — T Inc.and N LLP appealed — Appeal dismissed — Application judge had confidencethat materials before him were enough to decide case — Fresh evidence that ap-pellants sought to introduce was also irrelevant.

Cases considered:

Combined Air Mechanical Services Inc. v. Flesch (2014), 2014 CarswellOnt640, 2014 CarswellOnt 641, 2014 SCC 7, 95 E.T.R. (3d) 1, 27 C.L.R. (4th)1, 37 R.P.R. (5th) 1, 46 C.P.C. (7th) 217, 2014 CSC 7, (sub nom. Hryniak v.Mauldin) 314 O.A.C. 1, (sub nom. Hryniak v. Mauldin) 453 N.R. 51, 12C.C.E.L. (4th) 1, (sub nom. Hryniak v. Mauldin) 366 D.L.R. (4th) 641,[2014] S.C.J. No. 7 (S.C.C.) — considered

Rules considered:

Rules of Civil Procedure, R.R.O. 1990, Reg. 194R. 2.03 — consideredR. 72.03(2)(c) — consideredR. 72.03(2)(c)(ii) — considered

APPEAL by party to settlement agreement from application judge’s summaryjudgment.


Michael Tamblyn, Ryan Hauk, for AppellantsGlenn Grenier, for Respondent

Per curiam (orally):

1 While the record before the application judge was voluminous, theissues were straightforward. His task was to determine whether or not therespondent had complied with paragraph 6 of the Settlement Agreementbetween the parties dated December, 2012. Paragraph 6 reads:

Prior to the release of the Statutory Holdback, Far East shall provideTalon with all the “close-out” documentation required pursuant to theSubcontract including, without limitation, a complete set of “as-built” drawings, warranty documentation, assignment of manufactur-ers’ warranties and engineering certificates.

2 At paragraph 28 of its factum, the appellant raised three items ofcomplaint: as-built drawings, the engineering certificate and spare parts.In this court the third item was not pursued.

3 The application judge found that none of these items was contractu-ally required but he also found as a fact that each of the items had none-theless been delivered. There was clearly evidence available before theapplication judge to make those factual determinations.

4 In paragraph 1 of his reasons, the application judge noted: Given the extensive record that has been filed, including the affida-vits and exhibits, the cross-examination transcripts and the detailedfactums and reply factums, I am able to interpret the SettlementAgreement and the parties’ respective contractual rights thereunderand resolve any factual disputes without having to send this matter inwhole or in part to trial;

5 The appellant argues that this case should not have been decided sum-marily and should have been sent to trial. We would refer to paragraph50 of the Supreme Court of Canada’s decision in Combined AirMechanical Services Inc. v. Flesch, 2014 SCC 7 (S.C.C.) which reads:

It bears reiterating that the standard for fairness is not whether theprocedure is as exhaustive as the trial, but whether it gives the judgeconfidence that she can find the necessary facts and apply the rele-vant legal principles so as to resolve the dispute.

6 The application judge had that confidence in this case and we agreewith him.

Talon International Inc. v. Far East Aluminium Per curiam 211

7 In relation to the as-built drawings, paragraph 5.1 under the heading“Exclusions” reads: “Preparation of a final survey and/or as builtdrawings”.

8 However, Appendix B, described as supplementary conditions ofcontract amends the subcontract and provides at 3.5 under the heading“Shop Drawings”:

3.5.4 Subcontractor shall continuously keep up-to-date a set of as-built drawings as the job progresses and provide final as-built draw-ings and operation & maintenance manuals and warranties ten (10)calendar days prior to the Subcontract work reaching SubstantiallyCompletion.

9 Appendix “B” provides in its opening preamble: The Stipulated Price Subcontract Agreement Canadian ConstructionDocument CCAI-2001 is hereby amended and superceded asfollows:

[Emphasis added]

10 The evidence, which the trial judge accepted, was that the as-builtdrawings so far as they were available (there was ongoing continuingwork) had been provided to Talon. That finding was supported by theevidence of Mitchell and the transmittal notice from Far East to Brook-field dated May 7, 2013.

11 As to the Engineering Certificate, the appellants’ argument in relationto that item is based on the architectural specifications at 1.4.13 whichreads:

Design curtain wall system in connections to substrate where the bot-tom of the curtain wall system extends to a point below 1070 mmabove finished floor level and separates a floor level from an adja-cent interconnected space to withstand the required guard and hand-rail loads in accordance with the OBC and applicable local regula-tions. When requested by Consultant, provide a letter signed andsealed by a Professional Engineer certifying that the curtain wall inconnection to substrate conforms to the OBC requirements.

12 The appellant relies in particular on last sentence of that provision.This provision is found under the title “Design Criteria”. In our view, theprovision relates to design only and the letter provided by the respon-dent’s engineer BVDA meets the requirement of this section.

13 The currency issue was not pursued in this court.14 As to the motion for fresh evidence, we would dismiss the applica-

tion. The evidence sought to be introduced is, in our opinion, irrelevant


to the holdback issue and meets none of the tests for the admission offresh evidence save perhaps for the fact that the incident occurred afterthe application was heard and decided.

15 We would dismiss the appeal.16 The money at issue in this appeal is a statutory holdback amount.

There is no question that the money is owed. The work has been doneand paid for, except the amount required to be withheld.

17 The notice of substantial performance in relation to this project waspublished in November 2012 and the building has been occupied forsome time, yet the respondent has not been fully paid.

18 The appellant has persistently and continuously as the applicationjudge described them put forward a litany of excuses why this moneyshould not be paid, none of which has any merit at all on the findings ofthe application judge, now upheld by the judgment of this court. Bearingin mind that this litigation relates solely to the statutory holdback and hasnothing to do with deficiencies, which may be the subject of other pro-ceedings, in our view, it is only fair and just that an order be made forimmediate payment out of court of the amounts paid into court and com-pliance with rule 72.03(2)(c) is hereby waived under rule 2.03. The ac-countant of the Superior Court is to immediately pay out of court thefunds standing to the credit of this action in the amount of $3,184,280.13to McMillan LLP, in trust.

19 Costs of the appeal to the respondent are fixed in the sum of$48,000.00 inclusive of disbursements and applicable taxes.

20 At the conclusion of argument counsel advised the court there are ad-ditional holdback-related monies standing in court to the credit of thisapplication which were paid into court as a “hedge” against any fluctua-tion in currency rates.

21 By correspondence received June 27, 2014 counsel have agreed thatthis additional sum in the amount of CDN $96,713.82 is on consent, tobe paid out of court immediately to the order of Norton Rose Fulbright intrust and compliance with Rule 72.03(2)(c)(ii) in respect of this paymentis dispensed with.

22 Further on the consent of counsel an order shall issue requiring theAccountant of the Superior Court to immediately convert the balance ofany and all monies paid into court or held by the Accountant to the creditof this application from Canadian dollars to United States dollars and tocontinue to hold those funds together with any interest accrued thereon in

Talon International Inc. v. Far East Aluminium Per curiam 213

United States dollars pending further Order of the court or the consent ofthe parties.

Appeal dismissed.


[Indexed as: S & K Restoration Inc. v. 1389978 Alberta Ltd.]

S & K Restoration Inc., Plaintiff (Defendant by Counterclaim)and 1389978 Alberta Ltd. Operating As Prime School of Music,

Defendant (Plaintiff by Counterclaim)

Alberta Court of Queen’s Bench

Docket: Edmonton 1103-12488

2015 ABQB 73

Master W.S. Schlosser, In Chambers


Construction law –––– Contracts — Payment of contractors and subcon-tractors — Extras — Fixed price contract –––– Plaintiff builder and defendantproperty owner entered into fixed-price contract, drafted by plaintiff, with re-spect to construction project — Plaintiff completed work and defendant paidfixed price of $110,000 all inclusive — Dispute arose over amount to be paid forextras — Plaintiff filed builder’s lien on property — Plaintiff brought actionagainst defendant; defendant counter-claimed alleging deficiencies in work —Parties each applied for summary judgment on action and counter-claim — Ap-plications allowed in part — Plaintiff’s action allowed in amount of $5,875.94;defendant’s counter-claim allowed in amount of $18,655.06 — Plaintiff’s claimfor cost of granite tiles, that were requested by defendant as upgrade and wereinstalled, was allowed as there was no evidence that price claimed was unrea-sonable — Plaintiff’s claims for main service breaker and transformer were al-lowed as they were expressly approved upgrades — Plaintiff’s claims for ther-mostat and for electrical services for roof-top unit were not allowed as there wasno evidence about why they were extra or what original price would havebeen — Defendant did not agree to ceiling tile upgrade claimed by plaintiff —Plaintiff’s claim for light switch dimmers was allowed as it was requested bydefendant and quoted at claimed price — Plaintiff’s claims for shower tiles andcountertop upgrade were not allowed as there was no evidence defendant agreedto them.

Construction law –––– Contracts — Breach of terms of contract — Breachby contractor — Defective workmanship — Miscellaneous –––– Plaintiffbuilder and defendant property owner entered into contract, drafted by plaintiff,with respect to construction project — Plaintiff completed work — Disputearose over amount to be paid — Plaintiff filed builder’s lien on property —Plaintiff brought action against defendant; defendant counter-claimed allegingdeficiencies in work — Parties each applied for summary judgment on actionand counter-claim — Applications allowed in part — Plaintiff’s action allowed

S & K Restoration Inc. v. 1389978 Alberta Ltd. 215

in amount of $5,875.94; defendant’s counter-claim allowed in amount of$18,655.06 — Defendant’s counterclaim for costs of redesigning and re-install-ing heating system that failed inspection was allowed — Defendant’s counter-claim for costs of hallway seating that plaintiff did not install despite its inclu-sion in estimate was allowed — Defendant’s counterclaim for remedial work onshower and paintings and replacement of hot water tank were allowed — Defen-dant’s claim for replacement of shower tile and flooring and of doors were notallowed, as there was no evidence that replacements were required.

Cases considered by Master W.S. Schlosser, In Chambers:

Chittick v. Taylor (1954), 12 W.W.R. (N.S.) 653, 1954 CarswellAlta 43, [1954]A.J. No. 23 (Alta. S.C.) — followed

Combined Air Mechanical Services Inc. v. Flesch (2014), 2014 CarswellOnt640, 2014 CarswellOnt 641, 2014 SCC 7, 95 E.T.R. (3d) 1, (sub nom.Hryniak v. Mauldin) [2014] 1 S.C.R. 87, 27 C.L.R. (4th) 1, 37 R.P.R. (5th)1, 46 C.P.C. (7th) 217, 2014 CSC 7, (sub nom. Hryniak v. Mauldin) 314O.A.C. 1, (sub nom. Hryniak v. Mauldin) 453 N.R. 51, 12 C.C.E.L. (4th) 1,(sub nom. Hryniak v. Mauldin) 366 D.L.R. (4th) 641, 21 B.L.R. (5th) 248,[2014] S.C.J. No. 7, [2014] A.C.S. No. 7 (S.C.C.) — followed

Terwillegar Towne Residents Assn. v. Brookfield Residential (Alberta) LP(2015), 2015 ABQB 14, 2015 CarswellAlta 27 (Alta. Q.B.) — referred to

1214777 Alberta Ltd. v. 480955 Alberta Ltd. (2014), 2014 CarswellAlta 821,2014 ABQB 301 (Alta. Q.B.) — referred to


Builders’ Lien Act, R.S.A. 2000, c. B-7Generally — referred tos. 53 — referred to

Court of Queen’s Bench Act, R.S.A. 2000, c. C-31s. 9(3)(b) — referred to

Judgment Interest Act, R.S.A. 2000, c. J-1Generally — referred to

Provincial Court Act, R.S.A. 2000, c. P-31s. 57 — referred to

Rules considered:

Alberta Rules of Court, Alta. Reg. 390/68R. 6.11(1)(a) — referred toR. 10.42 — consideredR. 13.18(3) — referred to

APPLICATIONS by plaintiff builder and by defendant property owner for sum-mary judgment on action and counter-claim.


Derrick Hwang, for PlaintiffKari Sejr, for Defendant

Master W.S. Schlosser, In Chambers:

1 This started as a builder’s lien matter and is now just a money dis-pute. At this stage, the parties could transfer the matter to the Civil Divi-sion of the Provincial Court pursuant to section 57 of the ProvincialCourt Act, RSA 2000, c. P-31 and treat it as if it were a debt/damagesaction outside the Builders’ Lien Act. That would leave it squarely withinthat court’s jurisdiction and it is exactly the type of thing the Civil Divi-sion is designed for. After the initial stages, especially after money ispaid into Court and the lien is discharged, there may be no real reason tohave further reference to the Builders’ Lien Act. Since this is an owner-contractor dispute the lien adds little, except mainly leverage.

2 In this court, lien matters are accelerated and streamlined. If they can-not be determined on the basis of the affidavit in response to a Notice toProve Lien, the court can hear oral evidence or send the matter to trial.Cross examination on affidavits is usual, but the questioning, which is anormal part of any other civil action in Queen’s Bench is not permittedwithout leave (Builders Lien Act, section 53). But it is still a Queen’sBench action and that usually means expense or delay.

3 Trials and oral evidence take the matter outside the Master’s jurisdic-tion (Court of Queen’s Bench Act, section 9(3)(b)), as would irreconcila-ble difference in the evidence. Fighting it on paper, in this court, has itscomplications.

4 In this case, the parties have fully embraced the post-Combined AirMechanical Services Inc. v. Flesch [2014 CarswellOnt 640 (S.C.C.)] cul-ture shift. Though the matter originally appeared on the regular chamberslist, they put together ‘extracts of key evidence’ and provided informalwritten briefs. I have treated this as if it were an application and a cross-application for summary judgment on the claim and counterclaim.

5 The result turns on the various burdens that apply to this type of ap-plication as well as the various well established principles of evidencetaken from the current case law (summarized in 1214777 Alberta Ltd. v.480955 Alberta Ltd., 2014 ABQB 301 (Alta. Q.B.), for example, andelsewhere):

S & K Restoration Inc. v. 1389978 Alberta Ltd. Master W.S. Schlosser 217

1. The legal burden is on the applicant throughout; in this case, onthe lien claimant for the claim and on the owner for thedeficiencies;

2. Once the party with the primary burden has discharged her eviden-tiary burden, an evidentiary burden then passes to the respondent.This engages various obligations like the requirement to put yourbest foot forward or to suffer various inferences, and possiblydefeat.

3. In this case, the parties have consented to resolution based on affi-davit evidence that sometimes conflicts (Court of Queen’s BenchAct, section 9(3)(b)).

4. If consent had not been given, the court, can (in addition to thesort of things set out in 121, above):

... assume the relevant facts asserted by the party opposingthe summary judgment application and determine whether thelaw permits judgment on those facts: Peters v Wilson Estate,2011 ABQB 665 at paras 6-7, 528; Goodfellow v Woody’sHardwood Flooring Inc, 2003 ABQB 162 at paras 20-21, 34BLR (3d) 318. Sherwood Steel Ltd v Odyssey ConstructionInc., 2014 ABCA 320, para. 8 (and see WP v Alberta, 2014ABCA 404, at para. 26).

6 By treating the matter this way the parties have defined the conflictand the evidence with which it is to be fought.

7 In addition to the foregoing, there are four Rules of Engagement thatapply specifically to this type of dispute. They are set out by Egbert, J. inChittick v. Taylor (1954), 12 W.W.R. (N.S.) 653 (Alta. S.C.) and are asfollows:

6 Rule 1. An item specifically provided for in the contract is not an“extra.”

7. Rule 2. When the plaintiff supplied material of a better qualitythan the minimum quality necessary for the fulfilment of the con-tract, without any instructions, express or implied, from the defen-dant to do so, he is not entitled to charge the extra cost as an “extra.”

8 Rule 3. When the plaintiff did work or supplied materials not calledfor by the contract (plans or specifications) without instructions, ex-press or implied, from the defendant, or the consent of the defendant,he is not entitled to charge this additional work or materials as an“extra.” (This was admitted by the plaintiff in evidence.)


9 Rule 4. When the Plaintiff did work or supplied materials notcalled for by the contract on the instructions, express or implied, ofthe defendant, he is entitled to charge for additional work or materi-als as an “extra.”

10 What [amounts] to instructions from the defendant is dependenton the circumstances relating to each item. If the defendant, withoutgiving definite instructions, knew the plaintiff was doing extra workor supplying extra materials and stood by and approved of what wasbeing done and encouraged the plaintiff to do it, that, in my opinion,amounts to an implied instruction to the plaintiff, and the defendantis liable.

8 There are also some evidentiary tools that can be brought to bear:

(i) subjective evidence about what the parties thought the contractmeant is not admissible unless the contract is ambiguous, or oneof the exceptions to the general exclusionary rule apply. (See forexample, the summary in Terwillegar Towne Residents Assn. v.Brookfield Residential (Alberta) LP, 2015 ABQB 14 (Alta. Q.B.)at paras 8 and following.) For example, the Defendant’s officerswears that additional work required express written instructions.This may have been his understanding but it is nowhere inevidence.

(ii) Unsworn or unqualified opinion evidence is inadmissible (ie, Rule6.11(1)(a)), or of very limited value. (A list of alleged deficien-cies, for example, falls short of proving them).

(iii) If there is no evidence in response to a particular claim I infer thatthere isn’t any, or any favourable evidence in reply. In some in-stances the failure to address evidence may come close to acced-ing to a particular claim. (See para 5(2) above).

(iv) S & K drafted the contract. The doctrine of contra proferentemapplies against them.

(v) Finally, first-hand evidence is required for the party with the pri-mary burden (Rule 13.18(3)). Hearsay evidence might be admittedin response, but it is certainly risky.

9 The parties have tendered into evidence a long series of e-mails relat-ing to the project some of which have handwritten annotations. Much ofthe contents have not been proved, even as proof that the statement wasmade. I am going to assume, for the purposes of this decision, that theyare jointly tendered as proof of the truth of their contents.


10 A number of invoices have also been tendered into evidence. The rea-sonableness of these expenses (either way) would normally have to beproved by opinion evidence. In the circumstances I am going to simplyaccept them at face value.

11 The matters in dispute and their resolution are:

“Fixed price or Cost-plus?”12 S & K says the cost was $116,121.30 (including GST). Prime says

that it was $110,000.00, all in.13 The two page contract was signed and dated August 10, 2010. It was

a fixed price contract for three progressive payments totalling$110,000.00 and is silent about GST. The scope of work was detailed inan estimate dated: (at the foot of the pages) 2010-07-29. The contract isexpressed to include the estimate and previous e-mail communications.Although the estimate was signed August 26, 2010, it would have had topredate the contract.

14 In an e-mail between the parties, Prime School indicated that theirbudget was $110,000.00 including GST. The Respondent confirmed thatthis was reasonable. (There is also a corroborating post-contract January25, 2011, e-mail from S & K). The signed agreement provides for threepayments totalling $110,000.00.

15 The starting point is a fixed price contract for $110,000.00, all inclu-sive, which was paid.

“Adequacy and Upgrades”

a) Upgrades:

(i) Granite Tiles — $1,404.90 (including GST)16 The owner requested an upgrade to granite tiles in e-mails dated De-

cember 1 and December 29, 2010 but there was no agreement about cost.The tiles were installed. There is no evidence that the price claimed isunreasonable. This item is allowed (pursuant to Chittick Rule 4, citedabove).

(ii) Main Service Breaker - $731.99 (including GST)17 The estimate included ‘electric system circuit breaker box’, and the

contract, all electrical work. The breaker installed appears to be an up-grade or a different configuration from that originally anticipated. Thischange was expressly approved in a January 24, 2011, e-mail. The e-mail


refers to $697.13 plus GST. $697.13 plus GST is $731.99. I do not seeany corresponding credit for the circuit breaker box originally estimatedso I am assuming this is all upgrade cost. This item is allowed.

(iii) 45 KVA Transformer - $3,261.42 plus GST = $3,424.0518 This was expressly accepted in the December 1, 2010 e-mail and is

allowed.

(iv) Electrical Services for Roof-top Unit - $1,824.17 plus GST19 There is evidence about a discussion relating to this item in the De-

cember 1st, 2010 e-mail, but no satisfactory evidence about what it is, orwhy it should be an extra. Here, as well, there is no specific amountproved over what should reasonably have been included in the originalprice. This item is not allowed.

(v) Thermostat Wire and Thermostat - $279.00 plus GST20 The contractor said this was an extra in a January 25, 2011 e-mail.

There is no evidence why this item should not have been included in theoriginal scope of work. It appear that Prime supplied the thermostat. Thisitem is denied.

(vi) Ceiling Tile Upgrade - $1,580.00 plus GST.21 This was discussed in January 25, 2011 e-mails. An upgrade to ‘2 by

2’ ceiling tiles was rejected. Prime wanted standard ‘2 by 4’ tiles, but notgray speckled tiles. It is not clear what was actually installed.

22 An upgrade for the costs of 2 by 2 tiles is denied (pursuant to ChittickRule 2). Prime did not wish to go out of their price range for this item asindicated in the January 25, e-mail from Mark Schwartz.

(vii) Light Switch Dimmers - $300.00 plus GST = $315.00.23 This item was requested in a January 15, e-mail, quoted at the above

price (in a January 25th e-mail) and installed. Prime expected $5.00 to$10.00 per switch. There is no evidence as to how many switches therewere. Retail cost of the dimmers was apparently about $25.00 to $30.00each. This item is allowed.

(viii) Shower Tiles - $180.00 plus GST.24 This item is not proved and is not allowed. It was covered in the July

29, 2010 estimate. There is reference to a revised tile pattern in a January


24, 2011, e-mail. Some extra cost for this appears to be conceded butthere is no evidence about what this refers to.

(ix) Countertop Upgrade - $1,030.00 plus GST and Backsplash Upgrade- $148.00 plus GST

25 S & K says these items were agreed to verbally, which I take to mean‘orally’, or at least not in writing, because there is no written evidence ofthem. Prime denies it and there is no reference to any oral agreement inthe e-mails. There appears to be nothing further to resolve the conflict.This item fails on the onus.

(x) Removal and Reset of Shower, Drain, Cement Floor and WaterSupply Line.

26 This item appears to have been abandoned as it is not dealt with in S& K’s brief.

(b) Adequacy (Cross Claim for Deficiencies):

(i) HVAC - $9,699.90 (including GST)27 S & K’s subcontractor did not complete this installation. Prime ap-

plied for a permit, not S & K’s mechanical contractor. The HVAC wasissued April 11, 2011. (It is not clear how a permit for the improvementscould be issued without HVAC approval or permit.) S & K stopped workin March 2011, and Prime did not allow them back on site.

28 The HVAC, as originally designed, failed inspection September 2011.It had to be redesigned and reinstalled at the price indicated above.

29 This deficiency claim is allowed.

(ii) Built-in Couches30 The estimate is silent about the reception area other than that it was

expressed to include “all interior work”. The estimate included hallwayseating but none was provided.

31 There is discussion about built-in reception area couches in the e-mails but no agreement. Apparently $1,680.00 (which Prime thought washigh) was budgeted for reception room seating and this work was notcompleted. It was purportedly credited to the final invoice (which wasover and above the $110,000.00 plus actually paid). The claimed itemshave been dealt with individually above. Prime is entitled to $1,680.00


for the reception area seating plus $820.00 relating to flooring in the re-ception area, which appears to be directly related to this issue.

32 The hallway seating was not installed by S & K. Prime had it in-stalled at an actual cost of $3,852.30 ($1,161.67 + $1,204.38 +$1,486.25) plus $375 for delivery and installation and GST for a total of$4,438.66 for hallway seating. These items are allowed.

(iii) Replacement of the Hot Water Tank - $1,306.50 (including GST)33 This item had to be replaced. The hot water tank was apparently a

used item without any manufacturer’s warranty to draw upon. S & Kgave a one-year warranty and would have been called upon to cover thisexpense. This item is allowed.

(iv) Shower Repair $210.00 includes GST34 This relates to remedial work (caulking etc.) for the shower installa-

tion and doors. This item is allowed.

(v) Shower Replacement and Related Costs (Tile and Flooring)35 There is no evidence the shower required replacement. These items

are not allowed.

(vi) Deficient Painting and Finish36 Painting and finish are plainly substandard, as indicated by the photo-

graphs exhibited to the Schwartz Affidavit. (I am able to take notice ofthis without recourse to expert opinion by Bryan Baeumler or MikeHolmes). $4,290.00 plus GST for a total of $4,504.50 is claimed (as esti-mated). It is not evidently necessary to repaint the entire premises. In myview, remedial work and touch-up would be satisfactory. $500.00 is al-lowed for this item.

(vii) Door Replacement - $12,050.00 plus GST ($12,625.50)37 The doors were installed as specified. The estimate says “36” solid

core soundproof door units”. The actual door specs were provided in anOctober 25, 2010, email. This claim is an improvement sought with thebenefit of hindsight. It is not allowed.

(viii) Economic Loss for Delay ‘additional work and effort’: $16,500.0038 This item is not proved. The twelve week time-frame expressed in the

agreement was only an estimate. Start time was delayed while Prime got


another estimate and over the course of the contract, there were a numberof changes and extras requested. Most of the work was completed byMarch 2011.

Conclusion39 The parties were hopeful that this construction project would be a

harmonious duet but, as often happens, they started playing long beforethe score was complete. S & K is awarded $5,875.94 plus interest pursu-ant to the Judgment Interest Act, plus Costs on Column 1 for the claim.Rule 10.42 applies. Prime is awarded $18,655.06 plus Judgment InterestAct interest, plus Costs on Column 1 for the counterclaim; including thecosts of two adjournments. Rule 10.42 applies as well. Neither side isentitled to the costs of this write-in application. Procedural set-off shouldbe applied for a single net judgment in favour of Prime.

Plaintiff’s application allowed in part; defendant’s application allowedin part.


[Indexed as: EECOL Electric Corp. v. 101194203Saskatchewan Ltd.]

EECOL Electric Corp., Plaintiff and 101194203 SaskatchewanLtd. operating under the firm name and style of A1 Plumbing,Heating & Electric, Baydo Development Corporation, Birendra

Mohan Behari also known as Bob Behari and Sonja MarieBehari, Defendants

Saskatchewan Court of Queen’s Bench

Docket: Saskatoon QBG 42/14

2015 SKQB 12

R.D. Laing J.

Judgment: January 12, 2015*

Construction law –––– Construction and builders’ liens — Loss or dischargeof lien — Breach of orders –––– Plaintiff was distributor of electrical materialsand equipment and brought action for payment of $142,402 for goods sold anddelivered to defendant contractor — Goods were used by defendant contractorin condominium project owned by defendant development corporation — Plain-tiff filed builders’ lien against property and defendant development corporationpaid into court money to discharge lien — At hearing, defendant contractor con-sented to judgment against it for $142,402.48 — Development corporation paidadditional $28,343.70 to plaintiff in satisfaction of its remaining requirementsunder Builders’ Lien Act (Act), reducing total claim to $114,058.78 — Plaintiffbrought motion for summary judgment on claims of personal liability of one ofcontractor’s directors based on terms in credit application and guarantee signedat time of credit application, and breach of trust against directors based on termsof s. 16 of Act on grounds they assented to breach of trust provisions in s. 7 ofAct — Motion granted — Action against defendant development corporationwas dismissed — Defense consisted solely on defendant’s subjective intentionsand beliefs, which was not supported by solid evidence — Wording of creditapplication unequivocally stated that contractor’s director would be personallyresponsible for payment of full amount of outstanding account — Breach oftrust allegations were dismissed for lack of evidence.

Construction law –––– Construction and builders’ liens — Loss or dischargeof lien — Compliance with requirements –––– Plaintiff was distributor of elec-

*A corrigendum issued by the court on February 4, 2015 has been incorporatedherein.

EECOL Electric Corp. v. 101194203 Saskatchewan Ltd. 225

trical materials and equipment and brought action for payment of $142,402 forgoods sold and delivered to defendant contractor — Goods were used by defen-dant contractor in condominium project owned by defendant development cor-poration — Plaintiff filed builders’ lien against property and defendant develop-ment corporation paid into court money to discharge lien — At hearing,defendant contractor consented to judgment against it for $142,402.48 — Devel-opment corporation paid additional $28,343.70 to plaintiff in satisfaction of itsremaining requirements under Builders’ Lien Act (Act), reducing total claim to$114,058.78 — Plaintiff brought motion for summary judgment on claims ofpersonal liability of one of contractor’s directors based on terms in credit appli-cation and guarantee signed at time of credit application, and breach of trustagainst directors based on terms of s. 16 of Act on grounds they assented tobreach of trust provisions in s. 7 of Act — Motion granted — Action againstdefendant development corporation was dismissed — Defense consisted solelyon defendant’s subjective intentions and beliefs, which was not supported bysolid evidence — Wording of credit application unequivocally stated that con-tractor’s director would be personally responsible for payment of full amount ofoutstanding account — Breach of trust allegations were dismissed for lack ofevidence.

Guarantee and indemnity –––– Guarantee — Contract of guarantee — In-terpretation — Intention of parties — General principles –––– Plaintiff wasdistributor of electrical materials and equipment and brought action for paymentof $142,402 for goods sold and delivered to defendant contractor — Goods wereused by defendant contractor in condominium project owned by defendant de-velopment corporation — Plaintiff filed builders’ lien against property and de-fendant development corporation paid into court money to discharge lien — Athearing, defendant contractor consented to judgment against it for$142,402.48 — Development corporation paid additional $28,343.70 to plaintiffin satisfaction of its remaining requirements under Builders’ Lien Act (Act), re-ducing total claim to $114,058.78 — Plaintiff brought motion for summaryjudgment on claims of personal liability of one of contractor’s directors based onterms in credit application and guarantee signed at time of credit application,and breach of trust against directors based on terms of s. 16 of Act on groundsthey assented to breach of trust provisions in s. 7 of Act — Motion granted —Action against defendant development corporation was dismissed — Defenseconsisted solely on defendant’s subjective intentions and beliefs, which was notsupported by solid evidence — Wording of credit application unequivocallystated that contractor’s director would be personally responsible for payment offull amount of outstanding account — Breach of trust allegations were dis-missed for lack of evidence.


Cases considered by R.D. Laing J.:

E-Z Fiberglass Products Ltd. v. Harris (1994), 97 B.C.L.R. (2d) 378, (sub nom.E-Z Fiberglass Products Ltd. v. Debruyn) 50 B.C.A.C. 53, (sub nom. E-ZFiberglass Products Ltd. v. Debruyn) 82 W.A.C. 53, 1994 CarswellBC 452,[1994] B.C.J. No. 2181 (B.C. C.A.) — distinguished

Eli Lilly & Co. v. Novopharm Ltd. (1998), 227 N.R. 201, 152 F.T.R. 160 (note),1998 CarswellNat 1061, 1998 CarswellNat 1062, 161 D.L.R. (4th) 1, [1998]2 S.C.R. 129, 80 C.P.R. (3d) 321, [1998] S.C.J. No. 59 (S.C.C.) — followed


Builders’ Lien Act, S.S. 1984-85-86, c. B-7.1Generally — referred tos. 7 — considereds. 16 — considered

MOTION by plaintiffs for summary judgment against defendants.

Christopher C. Boychuk, Q.C., for Plaintiff, EECOL Electric Corp.Adam R. Touet, for Defendants, 101194203 Saskatchewan Ltd., Birendra

Mohan Behari and Sonja Marie BehariCollin K. Hirschfeld, for Defendant, Baydo Development Corporation

R.D. Laing J.:

Introduction1 The plaintiff, EECOL Electric Corp. [EECOL], is a distributor of

electrical equipment and materials. Its action against the defendants is forthe payment of $142,402 for goods sold and delivered to the defendant101194203 Saskatchewan Ltd., carrying on business under the name A1Plumbing, Heating & Electric [A1]. This application is for summaryjudgment against the defendants.

2 A1 was the mechanical, electrical and plumbing contractor on a con-dominium project owned by the defendant Baydo Development Corpora-tion [Baydo]. EECOL had filed a builders’ lien against the property.Baydo has paid into court the money to discharge the builders’ lien.

3 The defendants Bob Behari [Mr. Behari] and Sonja Behari [Mrs.Behari] are the sole officers, directors and shareholders of A1.

4 At the hearing, A1 consented to judgment against it for $142,402.48plus interest. Baydo paid an additional $28,343.70 directly to EECOL insatisfaction of its remaining requirements under The Builders’ Lien Act,

EECOL Electric Corp. v. 101194203 Saskatchewan Ltd. R.D. Laing J. 227

SS 1984-85-86, c B-7.1. This reduces the total claim of EECOL to$114,058.78.

5 Of the $114,058.78 remaining owing to EECOL, $74,024.63 is itsclaim against the Baydo project, and the balance relates to other A1projects.

6 The claims left to be determined on this summary judgment applica-tion are:

1. Mr. Behari’s personal liability to EECOL based on the terms of acredit application made to EECOL on behalf of A1;

2. Mr. Behari’s personal liability based on a guarantee he signed atthe time of his credit application to EECOL on behalf of A1; and

3. A breach of trust allegation against Mr. and Mrs. Behari based ons. 16 of The Builders’ Lien Act, alleging they assented or acqui-esced in the breach of the trust provisions in s. 7 of The Builders’Lien Act by A1.

7 The evidence filed by the parties on this application is:

1. An affidavit by the regional credit manager of EECOL in supportof its claim, which attached A1’s credit application, Mr. Behari’spersonal guarantee, correspondence related to the granting ofcredit and an itemized accounting of the invoices rendered to A1,along with the invoices.

2. An affidavit by the vice president of Baydo setting out its dealingswith A1 during construction, including the money paid to A1.

3. An affidavit filed on behalf of A1 by the current accounting man-ager, attached to which is a spreadsheet which reflects that A1 suf-fered a financial loss on the Baydo project.

4. An affidavit by Mr. Behari setting out why he does not considerhimself personally liable.

There was no cross-examination of anyone on the affidavits filed. Theaction has not proceeded past the pleadings stage.

The Credit Application8 On September 12, 2012, Mr. Behari completed EECOL’s form of

credit application. In completing the blanks on the form, he identified A1as the customer, himself as president and CEO, the type of business asplumbing, heating and electric, and in the line which asks “Credit re-


quired”, he entered $60,000. At the end of the information portion of theapplication were six paragraphs of text, which stated in part as follows:

In consideration for establishing a monthly account with you, theCustomer and the undersigned Principals hereby agree to thefollowing:

1. To make payments to you for the goods purchased on thetenth of the month following the month of purchase.

2. That a Service Charge of 2% PER MONTH (26.8% PER AN-NUM) will be added to the account on the last business dayof each month, calculated on the balance of the account thatwas outstanding on the last day of the previous month. Ser-vice charges unpaid shall form part of the previous month’sbalance.

3. That we shall have the right, from time to time, on at least 10days notice in writing to the customer at the above address,make a change in the rate of Service Charge.

4. That the foregoing is subject to the Customer’s right to repaypart or all of the outstanding indebtedness at any time.

. . . . .

6. The undersigned Principals, in consideration for you estab-lishing a monthly account with the Customer hereby jointlyand severally indemnify you in respect of any monies owingto you by the Customer and we agree to be jointly responsiblefor payment of your account in respect of any goods suppliedby you to the Customer or at its direction. We understand andconsent to you obtaining a Consumer Credit Report contain-ing personal and/or credit information.

[Emphasis added]

Mr. Behari signed the application twice, once on the customer’s signa-ture line and once on the principal’s signature line.

9 In a letter dated October 3, 2012, addressed to A1, EECOL stated inpart:

We are sincerely pleased to include you among our valued custom-ers. We have approved your account application with an initial creditlimit of $15,000.00. This limit may vary as determined by our creditdepartment. Please contact us with any concerns or requests that youmay have. In addition please note the following credit policies:


. . . . .

10 The position of EECOL is that paragraphs 1 and 6 of the credit appli-cation bind Mr. Behari, as principal, to pay the full amount of A1’s ac-count outstanding.

11 The position of Mr. Behari is that his obligation to personally payEECOL is limited to the $60,000 that he indicated on the application asthe amount of credit he required. This is the same position that Mr.Behari takes with respect to the personal guarantee form he signed. Insupport of this position, his affidavit states in part:

3. Between September, 2012 and December, 2013, A1 had two dif-ferent general managers who were responsible for the operation andmanagement of the business. Sonja and I have no experience in theplumbing, heating or electrical business and we had no involvementin the day-to-day operations, affairs or management of A1, nor didwe have any involvement in any projects completed by A1. Althoughwe are the directors of A1, we entrusted the operation and manage-ment of the business to the general managers and other representa-tives of A1.

. . . . .

5. The reason I applied for credit with EECOL was to ensure that A1would be able to obtain electrical equipment for projects withouthaving to provide payment at the time of purchase; however, giventhat I was not involved in the day-to-day operation of the businessand would not be involved in accessing the credit from EECOL, Idesired to limit the amount of credit available to A1. I wanted toensure that A1 did not overextend itself and incur debts which itwould be unable to pay. I also desired to limit my personal liabilityunder a personal guarantee which would be provided for the creditextended. I therefore specifically requested a credit limit of$60,000.00.

. . . . .

7. On October 3, 2012, I received a letter from Garth Kuemper, Re-gional Credit Manager for EECOL informing me that EECOL hadapproved the Credit Application with an initial credit limit of$15,000.00. A copy of the letter is attached as Exhibit “A” to theAffidavit of Garth Kuemper sworn September 7, 2014. The letter fur-ther indicated that “This limit may vary as determined by our creditdepartment”. I understood this to mean that the credit limit of$15,000.00 may subsequently be increased by EECOL to the maxi-mum of $60,000 as specified in the Credit Application.


8. The letter from Garth Kuemper further provided that paymentswere due on the 15th day of the following month and stated that “Ac-counts must be maintained on a current basis. Delinquent accountswill be refused further credit unless suitable payment arrangementsare made.” I therefore believed that, if A1 was not maintaining theaccount with EECOL, then EECOL wold refuse to provide A1 withfurther credit.

9. In March, 2013, EECOL increased the credit limit to $40,000.00.EECOL subsequently increased the credit limit to $200,000.00 inJune, 2013. This amount is more than three times the credit limit re-quested in the Credit Application. I was not notified or consulted byEECOL as to the increase of the credit limit nor did I authorize orapprove an increase in the credit limit. If I had been consulted as tothe increase in the credit limit, I would not have authorized or ap-proved it.

[Emphasis in original]

12 EECOL’s regional credit manager’s affidavit states that he tried tocontact Mr. Behari in relation to the increases in credit limits requestedby A1; however, Mr. Behari did not return his calls. EECOL does notdispute that its representatives dealt throughout with management per-sonnel at A1 and had no direct dealings with Mr. Behari after he signedthe credit application.

13 Interpreting the credit application document involves interpreting thewords used in the form document, in the context in which the words ap-pear and the document was signed.

14 The words of paragraphs 1 and 6 of the credit application are notambiguous. Mr. Behari unconditionally agreed that he, as principal,would jointly and severally indemnify EECOL and to be jointly responsi-ble for payment of A1’s account to EECOL. There are no words of limi-tation on the principal’s obligation to pay set out in paragraphs 1 and 6 ofthe application.

15 Mr. Behari, answering the form inquiry as to the amount of credit herequired, had no assurance at the time of his application whether thatamount would be granted or something more or less would be granted byEECOL. In fact, the original credit amount granted was $15,000.00, sub-sequently $40,000.00, and eventually $200,000.00. There is no evidencethat Mr. Behari ever communicated to EECOL that $60,000.00 was themaximum credit he was seeking on behalf of A1. Mr. Behari was advisedat the outset in the letter of October 3, 2012, that the credit limit mayvary “as determined by our credit department” and instructed him to con-


tact it if he had any concerns or requests with respect to the amount ofcredit to be granted. Mr. Behari did not reply he wished credit restrictedto $60,000.00.

16 Mr. Behari’s evidence consists solely of his subjective intentions orbeliefs, none of which were communicated to EECOL. As pointed out inthe text by Geoff R. Hall, Canadian Contractual Interpretation Law, 2ded (Markham, Ont.: LexisNexis Canada, 2012) at paras 2.4.2 and 2.4.3,the author points out the interpretation of the words of a contract is “ob-jective, meaning must therefore be assessed from the perspective of areasonable person” and subjective intentions “are irrelevant, and evi-dence of them is inadmissible”. One of the authorities relied upon for theforegoing law is the Supreme Court of Canada decision in Eli Lilly & Co.v. Novopharm Ltd., [1998] 2 S.C.R. 129 (S.C.C.), per Iacobucci J., atparagraph 54, where he stated:

[54] The trial judge appeared to take Consolidated-Bathurst to standfor the proposition that the ultimate goal of contractual interpretationshould be to ascertain the true intent of the parties at the time of entryinto the contract, and that, in undertaking this inquiry, it is open tothe trier of fact to admit extrinsic evidence as to the subjective inten-tions of the parties at that time. In my view, this approach is not quiteaccurate. The contractual intent of the parties is to be determined byreference to the words they used in drafting the document, possiblyread in light of the surrounding circumstances which were prevalentat the time. Evidence of one party’s subjective intention has no inde-pendent place in this determination.

17 Mr. Behari’s evidence on what he intended and what he believed isinadmissible and, in any event, would not modify the unambiguouswords of indemnification signed by him. Mr. Behari is personally liableto EECOL. EECOL is entitled to judgment against Mr. Behari personallyin the amount of $114,058.78, and it is so ordered.

The Guarantee18 Based on the finding with respect to Mr. Behari’s personal liability to

EECOL for the full amount owing by A1, it is not strictly necessary torule on what his liability might be pursuant to the guarantee which hesigned. However, in the event I am in error on the liability finding, andas the matter was fully argued, it is reasonable to address it.

19 The relevant clause in the guarantee signed by Mr. Behari states asfollows:

TO: EECOL ELECTRIC CORP.


IN CONSIDERATION of your supplying goods from time to timeand upon the order of A1 Plumbing, Heating & Electric (hereinaftercalled “the debtor”), and upon such terms of credit as shall be agreedupon between yourself and the debtor, I, Bob Behari hereby guaran-tee to you the due payment of all monies which are now or whichshall at any time hereafter be due to you from the debtor for the saidgoods, and also due payment of all commercial paper which may atany time hereafter be due to you from the debtor or held by you inrespect of any goods, upon which the debtor shall or may be liable,and also due payment of any administration or interest chargescharged by you on any past due portions of the debtor’s indebtednessto you in accordance with the terms of credit agreed upon betweenyourself and the debtor.

. . . . .

20 Mr. Behari relies on the phrase “in accordance with the terms ofcredit agreed upon between yourself and the debtor” in the last line of theforegoing paragraph for his position that his guarantee should be limitedto the amount of $60,000, as the only amount of credit he ever requested.He relies on the decision in E-Z Fiberglass Products Ltd. v. Harris(1994), 97 B.C.L.R. (2d) 378 (B.C. C.A.) [Fiberglass Products], wherethe Court held that two employees, who had signed the guarantee withthe understanding that it would be for the historical monthly amount ofcredit that had been granted to the corporation up to that point in time,and who subsequently left the employment before the monthly creditlimit was substantially increased, were discharged from their obligationsunder the guarantee.

21 I am not able to agree that the phrase in question modifies the guaran-tee for due payment of all monies owing by A1 to EECOL. The phrasesin the foregoing paragraph are to be read disjunctively as emphasized bythe word “also” at the beginning of each phrase. The guarantee for duepayment of all monies is unqualified, the due payment of all commercialpaper is unqualified, and it is only the last phrase “for due payment ofany administration or interest charges” that is modified by the words “inaccordance with the terms of credit agreed upon between yourself andthe debtor”.

22 As earlier commented on, the credit application did not create agree-ment on the amount of credit that would be granted by EECOL. Thislatter point distinguishes the facts in this matter from the FiberglassProducts decision. In that case, the monthly credit amount had beenagreed to and the company was abiding by this limit at the time the em-


ployees were asked to sign the guarantee. The Court held the employeeswere responsible only for the credit agreed upon when they signed theguarantee, which had in fact been paid down to zero before the creditlimit as a result of a new agreement was substantially increased. In thismatter there was no agreement on the amount of credit that would begranted by EECOL to A1. Mr. Behari remained in control of A1 through-out the periods of increasing credit. He had granted his managers ostensi-ble, if not actual, authority to deal with EECOL on matters of credit. Theguarantee he signed was unqualified. Mr. Behari is also liable to EECOLfor the full amount owing to it by A1 on the basis of his personalguarantee.

Breach of Trust Allegation23 Based on the materials filed, I dismiss this allegation against A1, Mr.

Behari and Mrs. Behari for lack of evidence. Breach of trust cases re-quire some evidence on the accounting or banking records that can formthe basis of a breach of trust allegation, which was not forthcoming in theevidence in this case. This information could have been obtained throughdocument disclosure, examination for discovery or cross-examination onthe affidavits. A judgment should not be based on adverse inferencesalone.

24 The action is dismissed against Baydo Development Corporationwithout costs.

25 EECOL is entitled to one set of taxable costs against A1, Mr. Behariand Mrs. Behari, jointly and severally.

26 Judgment accordingly.

Motion granted.


[Indexed as: DBD Construction Ltd. v. Tenfold ContractingLtd.]

DBD Construction Ltd, Applicant and Tenfold Contracting Ltd,Respondent

Alberta Court of Queen’s Bench

Docket: Calgary 1401-09890

2014 ABQB 773

Master K.R. Laycock, In Chambers

Heard: December 5, 2014

Judgment: December 15, 2014

Construction law –––– Construction and builders’ liens — Loss or dischargeof lien — Invalidity –––– Failure to commence action — Applicant DBD fileds. 48 application under Builders’ Lien Act (Act), for removal of respondent Ten-fold’s building liens, and they were discharged on consent upon payment ofmoney by DBD into court and DBD applied for return of security when Tenfoldfailed to comply with terms of order and 15 day deadline in Act — Tenfold ap-plied for extension of time to file affidavit to prove lien, which had now beensubmitted, and for extension of time to file statement of claim — Tenfold’s ap-plication granted in part — Parties consented to matter continuing to being gov-erned by Act, and order constituted notice to prove lien pursuant to s. 48(4) ofAct — Tenfold provided reasonable explanation that deadline to file affidavitwas missed due to his former lawyer being remiss in filing or advising him ofdeadline, Tenfold filed affidavit as soon as he learned of issue, and there was noevidence of prejudice to applicant, so extension granted to file affidavit — How-ever, s. 43(1)(a) of Act required action to realize on lien be commenced within180 days and it was not — Originating application was not about validity of lienand there had been no waiver or estoppel by DBD — As such, 180-day period tofile statement of claim had expired and lien was thus lost, and could not berevived — Funds held in court released to applicant, and Tenfold’s separate ac-tion could continue in breach of contract.

Construction law –––– Construction and builders’ liens — Loss or dischargeof lien — Time lapse –––– Failure to commence action — Applicant DBD fileds. 48 application under Builders’ Lien Act (Act), for removal of respondent Ten-fold’s building liens, and they were discharged on consent upon payment ofmoney by DBD into court and DBD applied for return of security when Tenfoldfailed to comply with terms of order and 15 day deadline in Act — Tenfold ap-plied for extension of time to file affidavit to prove lien, which had now beensubmitted, and for extension of time to file statement of claim — Tenfold’s ap-

DBD Construction Ltd. v. Tenfold Contracting Ltd. 235

plication granted in part — Parties consented to matter continuing to being gov-erned by Act, and order constituted notice to prove lien pursuant to s. 48(4) ofAct — Tenfold provided reasonable explanation that deadline to file affidavitwas missed due to his former lawyer being remiss in filing or advising him ofdeadline, Tenfold filed affidavit as soon as he learned of issue, and there was noevidence of prejudice to applicant, so extension granted to file affidavit — How-ever, s. 43(1)(a) of Act required action to realize on lien be commenced within180 days and it was not — Originating application was not about validity of lienand there had been no waiver or estoppel by DBD — As such, 180-day period tofile statement of claim had expired and lien was thus lost, and could not berevived — Funds held in court released to applicant, and Tenfold’s separate ac-tion could continue in breach of contract.

Cases considered by Master K.R. Laycock, In Chambers:

Cornelson v. Alliance Pipeline Ltd. (2013), 2013 ABCA 378, 2013 CarswellAlta2180 (Alta. C.A.) — considered

Driden Industries Ltd. v. Sieber (1974), 44 D.L.R. (3d) 629, [1974] 3 W.W.R.368, 1974 CarswellAlta 38 (Alta. C.A.) — considered

Electric Furnace Products Co. v. Quality Rentals (1991), (sub nom. QualityRentals v. Electric Furnace Products Co.) 2 W.A.C. 63, 1991 CarswellAlta97, 46 C.L.R. 24, [1991] 5 W.W.R. 539, 80 Alta. L.R. (2d) 382, (sub nom.Quality Rentals v. Electric Furnace Products Co.) 80 D.L.R. (4th) 572, (subnom. Quality Rentals v. Electric Furnace Products Co.) 117 A.R. 63, 1991ABCA 130, [1991] A.J. No. 429 (Alta. C.A.) — considered

Grinnell Fire Protection Systems Co. v. Electrohome Ltd. (1991), 1991CarswellAlta 417, 45 C.L.R. 165, (sub nom. Grinnell Fire Protection Co. v.Electrohome Ltd.) 121 A.R. 335 (Alta. Master) — considered

Knox v. Stagecoach Homes Inc. (2006), 57 C.L.R. (3d) 299, 406 A.R. 337, 2006CarswellAlta 1131, 2006 ABQB 640, 63 Alta. L.R. (4th) 387 (Alta. Q.B.) —considered

Krause v. Group Builders Inc. (1990), 106 A.R. 29, 1990 CarswellAlta 414(Alta. Master) — considered

TRG Developments Corp. v. Kee Installations Ltd. (2014), 14 C.B.R. (6th) 140,2014 ABQB 287, 2014 CarswellAlta 794, [2014] 12 W.W.R. 385 (Alta.Q.B.) — distinguished

892336 Alberta Ltd. v. Silver Site Construction Ltd. (2006), 56 Alta. L.R. (4th)252, 384 A.R. 120, 367 W.A.C. 120, 51 C.L.R. (3d) 26, 2006 ABCA 67,2006 CarswellAlta 254 (Alta. C.A.) — considered


Builders’ Lien Act, R.S.A. 1970, c. 35s. 32 — considereds. 35 — considered


Builders’ Lien Act, R.S.A. 2000, c. B-7Generally — referred tos. 43 — referred tos. 43(1) — considereds. 43(1)(a) — considereds. 44 — considereds. 48 — considereds. 48(4) — considereds. 48(5) — considereds. 48(5)(b) — pursuant tos. 53 — considered

Rules considered:

Alberta Rules of Court, Alta. Reg. 124/2010Generally — referred toR. 13.5(2) — considered

APPLICATION by respondent for extension of time to file affidavit to provelien and for extension of time to file statement of claim.

Robert M. Schuett, for ApplicantElena Semenova, for Respondent

Master K.R. Laycock, In Chambers:

Issues1 The 2 issues in this application are: (1) can the time be extended to

file and affidavit proving lien under rule 13.5(2) of the Rules of Court orunder the Builders Lien Act s. 48(5)(b); and (2) does the lien cease toexist because proceedings were not commenced the lien claimant within180 days of filing the lien where money is paid into court to replace thelien on the land?

Background2 On September 10, 2014, DBD Construction Ltd. filed an application,

under s. 48 of the Builders Lien Act, for the removal of the respondent’s2 builder’s liens filed on two properties located in the city of Calgary. Byconsent order, dated September 22, 2014, Master Mason directed the dis-charge of the liens upon payment of monies into court. On that date, theapplicant paid the required money into court. The order also provideddirections regarding an affidavit proving lien and the commencement ofan action to enforce the lien claim.

DBD Construction Ltd. v. Tenfold Contracting Ltd. Master K.R. Laycock 237

3 On November 6, 2014, the applicant applied for the return of its se-curity because of the failure of the respondent to comply with terms ofthe order and 15 day time deadline in the Act.

4 On November 7, 2014 the respondent filed the Affidavit to ProveLien. On November 12, 2014, the respondent filed an application for anextension of time to file and serve an Affidavit Proving Lien and for anextension of time to file a statement of claim.

5 The provisions of the court order that must be dealt with in this appli-cation are as follows:

9. Service of a filed copy of this Order on Tenfold Contracting Ltd.shall act as notice to prove lien pursuant to s. 48(4) of the Act, thusproviding it 15 days to file with the Court an affidavit providing de-tailed particulars of their respective liens.

11. The Act, except section 43(1)(b), will continue to apply in allrespects to the Lien.

12. More specifically and notwithstanding s. 44 of the Act, the obli-gations of the lien-holder under section 43(1)(a) wherein the lien thathas been registered ceases to exist unless, within 180 days from thedate it is registered, an action has been commenced under the Act torealize on the lien or, in which the lien may be realized, continues toapply.

6 The relevant provisions of the Builders Lien Act are as follows: 43(1) A lien that has been registered ceases to exist unless, within180 days from the date it is registered,

(a) an action is commenced under this Act

(i) to realize on the lien, or

(ii) in which the lien may be realized,

and

(b) the lien claimant registers a certificate of lis pendens in re-spect of the claimant’s lien in the appropriate land titlesoffice.

44 Notwithstanding section 43, if the court has ordered that a lien beremoved under section 27 or 48(1) the lien, as the charge against themoney paid into court or the security given, does not cease to existby reason that

(a) a certificate of lis pendens is not registered in the appropriateland titles office, or

(b) an action has not been commenced within 180 days from thedate that the lien is registered.


48(4) A registered lien holder served with a notice to prove lien shall,within 15 days from the day of the service of the notice on the lienholder, file with the court in which the proceedings were commencedan affidavit providing detailed particulars of the lienholder’s lien.

(5) A registered lienholder on whom a notice to prove lien is servedand who does not file a lien holder’s affidavit

(a) within 15 days from the date of the service of the notice, or

(b) within any further period that the court may order onapplication,

loses the lienholder’s lien.

7 An affidavit filed by the applicant confirms that the consent order andcertificate of deposit of payment into court was served on the respon-dent’s lawyer on September 23, 2014. The affidavit further confirms thaton November 5, 2014 a search was made of the court house and it wasdetermined that there was no litigation commenced by the respondentagainst the applicant.

Late Filing of Affidavit Proving Lien:8 The applicant argues that as result of the respondent failing to file and

serve an affidavit providing particulars of the lien claim, the respondentloses its lien. (see s. 48(5))

9 The respondent argues that upon the granting of the consent order onSeptember 22, 2014, all procedural steps thereafter are governed by theRules of Court and not by the Builders Lien Act. The respondent thenargues that the court has the authority pursuant to the Rules of Court toextend time limits set out in procedural orders. The respondent reliesupon rule 13.5(2) which states:

The Court may, unless a rule otherwise provides, stay, extend orshorten a time period that is

(a) specified in these rules,

(b) specified in an order or judgment, or

(c) agreed on by the parties.

10 I agree with the submission of the respondent that if the court ordersthe filing of an affidavit proving lien, it would be a procedural order towhich the Rules of Court would apply. If the order was silent as to anotice to prove lien and the applicant serves a notice to prove lien, theBuilders Lien Act would apply and the consequences of not filing an affi-davit would be determined by the Act. However, in this case the question


is, what is the effect of the particular wording of this order with respectto the late filing of an affidavit proving lien.

11 The Court of Appeal decision of Driden Industries Ltd. v. Sieber,[1974] 3 W.W.R. 368 (Alta. C.A.), (followed in 892336 Alberta Ltd. v.Silver Site Construction Ltd., 2006 CarswellAlta 254, 2006 ABCA 67,[2006] A.W.L.D. 1355, 56 Alta. L.R. (4th) 252, 51 C.L.R. (3d) 26, 384A.R. 120, 367 W.A.C. 120 (Alta. C.A.)), examined the effect of s. 35[now s. 48] and s. 32 [now s.43] of the Act. The lien claimant failed tocommence proceedings within 180 days of the registration of the lien.The Court of Appeal determined that s. 32 applies to liens which are stillregistered and not to a lien, the registration of which had been canceledby court order pursuant to s. 35. Although there have been wordingchanges since this decision, the decision still has application to the cur-rent provisions.

12 The Court of Appeal in Driden found that there was nothing in sec-tion 35 that set out a procedure to be followed after money was paid intocourt. Without more, the claim would proceed like any other civil action.They directed that the proper procedure to be followed by an applicantwhen money was paid into court is to ask the court to settle the issue tobe decided and to direct who should be the plaintiff and who should bethe defendant.

13 When applications are being made for the payment of money intocourt under s. 48 [formerly s. 35] counsel will usually, but not always,provide a form of order directing procedural steps that must be taken andidentifying the party responsible for taking the steps and setting timelimits.

14 In this case, the applicant and respondent, through counsel, consentedto this matter continuing to be governed by provisions of the BuildersLien Act, except for the filing of a certificate of lis pendens. The ConsentOrder recognized the effect of the Driden decision and decided to keepthe benefits and burdens of the Act with respect to their dispute ratherthan having the matter dealt with as an ordinary civil action.

15 In paragraph 9 of the court order, the parties agreed that the orderwould constitute a notice to prove lien pursuant to section 48(4) whichwould require an affidavit to be provided and filed in court within 15days. While there was no consequence built into the order for failing tofile the affidavit in time, paragraph 11 of the order directed that the Actwould continue to apply in all respects to the lien, except for filing acertificate of lis pendens. In my view, the parties agreed that the penalties


and provisions of the Act would govern. The procedural provisions of therules, as to time, would not apply to the affidavit proving lien.

16 As an alternative, the respondent argues that section 48(5)(b) allowsthe respondent to apply for a further period of time to file its affidavit.The affidavit was due on or before October 8, 2014 and not filed untilNovember 7, 2014. The explanation for the delay is found in the affidavitparagraph 12, which states that the deponent was unaware of the require-ment to file an affidavit proving that the liens. The deponent suggeststhat his lawyer was remiss in not completing the task and that the appli-cant has not been prejudiced by the delay. Current counsel for the re-spondent was not counsel of record for the respondent in the earliersteps.

17 Master Breitkreuz considered the predecessor of this section inGrinnell Fire Protection Systems Co. v. Electrohome Ltd., 1991CarswellAlta 417, [1991] A.W.L.D. 379, 121 A.R. 335, 26 A.C.W.S.(3d) 639 (Alta. Master). In that case the lien claimant had prepared anaffidavit proving lien but failed to file it. The evidence indicated that itwas an oversight or inadvertence on the part of counsel for not having itserved and it did not come to his attention until an application was filedto have his client’s lien discharged on the ground that no affidavit toprove the lien had been filed. The facts are nearly identical to our case.

18 At paragraph 21 of the decision, Master Breitkreuz referred to an un-reported Court of Appeal decision and concluded that in determininghow to exercise the court’s discretion, the court must consider the issueof delay, an explanation for the delay and prejudice.

19 In Cornelson v. Alliance Pipeline Ltd., 2013 CarswellAlta 2180, 2013ABCA 378, [2013] A.W.L.D. 5268, 234 A.C.W.S. (3d) 125 (Alta. C.A.),in the context of a late filed expert report, the court stated the criteria forexercising a discretion to extend time for filing is: (1) the length of thedelay; (2) the explanation for the delay; and(3) the relative prejudice tothe parties.

20 In our case, the respondent states that he was not informed by hislawyer about the time limit. When it came to his attention the affidavitwas filed immediately. He further deposes that the applicant would notsuffer prejudice by an extension of time. The applicant has provided noevidence with respect to prejudice.

21 I am satisfied with the explanation given by the respondent and thereis no evidence of prejudice suffered by the applicant. I would therefore


grant an extension of time for filing affidavit proving lien to November7, 2014.

Failure to Commence Proceedings in Time:22 Alternatively, the applicant argues that as a result of the respondent

failure to commence an action to realize on its lien within 180 days offiling the lien, the lien ceases to exist. (see s. 43(1)(a)) The liens werefiled on May 7, 2014 and the statement of claim must been issued on orbefore November 4, 2014.

23 In Electric Furnace Products Co. v. Quality Rentals, 1991 ABCA130 (Alta. C.A.), the court confirmed that it cannot use the powers underthe Rules of Court to extend a missed limitation period. In dealing with alien filed on the incorrect property, the court observed that no court canperfect that which has ceased to exist. The right to file a lien on the cor-rect land had lapsed by a passage of time.

24 Master Funduk in Krause v. Group Builders Inc., 1990 CarswellAlta414, [1990] A.W.L.D. 154, 106 A.R. 29, 19 A.C.W.S. (3d) 335 (Alta.Master), determined that even where a court orders a lien claimant to filean affidavit proving lien, and the affidavit is filed, the lien claimant muststill commence its proceeding and file the certificate of lis pendenswithin 180 days of filing of the lien. If the action is not commenced thelien is lost.

25 The parties agreed pursuant to the consent order that the effects of theDriden decision would not apply to this lien dispute. They specificallyagreed that the provisions of the Act would continue to apply, save andexcept for the filing of the certificate of lis pendens.

26 In Knox v. Stagecoach Homes Inc., 2006 ABQB 640, 2006 Carswell-Alta 1131, [2006] A.W.L.D. 2992, [2006] A.W.L.D. 3033 (Alta. Q.B.), alien was filed and the owners served a notice to commence proceedingswithin 30 days. The lien claimant failed to register its certificate of lispendens within the required time. The court determined that the lien hadlapsed. At paragraph 5, Justice Macleod stated in part:

... a strict interpretation of the Builders’ Lien Act must be applied indetermining lien claims and a statutory time period cannot be ex-tended unless the statute specifically allows for it.

27 Counsel for the respondent refers to TRG Developments Corp. v. KeeInstallations Ltd., 2014 ABQB 287, 2014 CarswellAlta 794, [2014]A.W.L.D. 2812, [2014] A.W.L.D. 2813, 14 C.B.R. (6th) 140, 240A.C.W.S. (3d) 813 (Alta. Q.B.), where the court considered the applica-


tion of estoppel and waiver in a builder’s lien matter. In that case, twoclaimants filed liens under the Act in relation to work completed for alandowner. The landowner took out an originating application with re-spect to the liens which was adjourned from time to time as the partiesproceeded with questioning and document production. The lien claimantstook out a section 53 pretrial application seeking a declaration as to thevalidity of the liens. It was adjourned at the landowner’s request. Thelien claimants failed to file a certificate of lis pendans within 180 days asrequired by section 43 of the Act. The landowner requested the Registrarof Land Titles to remove the liens and then refused to participate furtherin the action. The lien claimants brought an application to restore theliens to title pending trial.

28 Master Schlosser stated at paragraph 33: In my view, the question is not one of resurrecting something that nolonger exists, but whether the circumstances permit the landowner toassert the liens nonexistence against the lien holders and rely on it asa defence. In this sense this species of estoppel retains its essentialcharacter of being a ‘shield not a sword’.

29 The Court concluded that the removal of the lien by the landownerwithout notice to the lien claimant was inappropriate. Furthermore theOriginating Application brought into being a proceeding in which the va-lidity and value of the liens could be determined. He concluded that thedate of the issuance of the Originating Application or at the latest, thereturn date of the application was the date to determine the validity of thelien claims.

30 In our matter, the Originating Application taken out by the applicantwas not to determine the validity of the liens. There is no conduct of theapplicant which would give rise to waiver or estoppel. The TRG decisionis therefore distinguishable.

31 Once the 180 day period has expired with no action being com-menced, the lien is lost. It cannot be revived or resurrected. Therefore thefunds being held as security are releasable to the applicant. The respon-dent’s separate action may continue as a breach of contract action againstthe applicant. The applicant will be entitled to its costs of thisapplication.

Application granted in part.

Wolney v. Selkirk Vinyl Ltd. 243

[Indexed as: Wolney v. Selkirk Vinyl Ltd.]

Jennifer Wolney, Appellant and Selkirk Vinyl Ltd. and AnthonyMurray and CertainTeed Corporation, Respondents

British Columbia Supreme Court

Docket: Salmon Arm 15557, 15558

2015 BCSC 1009

H.C. Hyslop J.

Heard: May 27, 2015


Evidence –––– Opinion — Experts — Weight of evidence — Miscellane-ous –––– Home owner entered into contract with contractor S Ltd. to replacevinyl siding on her home — Contractor completed work and was paid in full —Owner brought action for damages for improper workmanship — Trial judgeawarded owner damages of $3,730 — Trial judge preferred evidence of thirdparty’s expert, who was employed by third party — Owner appealed on ground,inter alia, that trial judge erred in his assessment and weight given to variousexperts — Appeal dismissed — Trial judge did not err in law or make any pal-pable or overriding error of fact — Owner did not demonstrate that third party’sexpert’s report or answers to questions posed by owner demonstrated bias orimpartiality — It was open to trial judge to accept third party’s expert’s evi-dence as to certain issues regarding clearance and gaps — Trial judge properlyconsidered evidence of owner’s experts.

Commercial law –––– Sale of goods — Statutory contract — Condition —Implied condition — Fitness for purpose — General principles –––– Homeowner entered into contract with contractor S Ltd. to replace vinyl siding on herhome — Contractor completed work and was paid in full — Owner brought ac-tion for damages for improper workmanship — Trial judge awarded owner dam-ages of $3,730 — Trial judge concluded that contractor’s use of third party’ssiding was successful and majority of pieces of siding installed on owner’s homewere in good condition — Trial judge could not conclude that third party’s sid-ing was not suitable, under s. 18 of Sale of Goods Act, for installation in city —Trial judge found that owner did not follow advice to protect siding — Ownerappealed on ground, inter alia, that trial judge did not consider issue of whethersiding was suitable for purpose intended, in accordance with s. 18 of Act —Appeal dismissed — Trial judge did not err in law or make any palpable oroverriding error of fact — This ground of appeal was dismissed.


Construction law –––– Contracts — Breach of terms of contract — Dam-ages — Calculation and measure of damages –––– Home owner entered intocontract with contractor S Ltd. to replace vinyl siding on her home — Contrac-tor completed work and was paid in full — Owner brought action for damagesfor improper workmanship — Trial judge awarded owner damages of $3,730 —Trial judge concluded that owner did not establish failure of all siding and thatdamage to siding was small number of total number of boards installed —Owner appealed on ground, inter alia, that trial judge erred in failing to awarddamages to correct inadequate clearance of siding of three parts of residence,and sought to introduce new evidence as to cost of repairing two rows ofboards — Appeal dismissed — Trial judge did not err in law or make any palpa-ble or overriding error of fact — Trial judge had no evidence as to cost of fixinginstallation and repair that he identified — It was owner’s responsibility to proveher damages and to provide evidence of cost of repairs — Evidence ownersought to adduce could have been presented at trial and was not allowed to bepresented on appeal.

Cases considered by H.C. Hyslop J.:

Abbott and Haliburton Co. v. White Burgess Langille Inman (2013), 2013NSCA 66, 2013 CarswellNS 360, 36 C.P.C. (7th) 22, (sub nom. Abbott andHaliburton Co. v. WBLI Chartered Accountants) 1046 A.P.R. 301, (subnom. Abbott and Haliburton Co. v. WBLI Chartered Accountants) 330N.S.R. (2d) 301, 361 D.L.R. (4th) 659, [2013] N.S.J. No. 259 (N.S. C.A.) —considered

Conseil scolaire francophone de la Colombie-Britannique v. British Columbia(2014), 2014 BCSC 851, 2014 CarswellBC 1349, 314 C.R.R. (2d) 139 (B.C.S.C.) — considered

Douglas v. Milross (2007), 2007 BCSC 1040, 2007 CarswellBC 1636, 45 C.P.C.(6th) 159 (B.C. S.C.) — followed

Rider v. Shawn Transport Ltd. (2011), 2011 BCSC 756, 2011 CarswellBC 1409(B.C. S.C.) — considered

White Burgess Langille Inman v. Abbott and Haliburton Co. (2015), 2015 SCC23, 2015 CSC 23, 2015 CarswellNS 313, 2015 CarswellNS 314, 383 D.L.R.(4th) 429, 18 C.R. (7th) 308, (sub nom. Abbott and Haliburton Co. v. WBLIChartered Accountants) 470 N.R. 324, 67 C.P.C. (7th) 73, [2015] S.C.J. No.23 (S.C.C.) — considered


Sale of Goods Act, R.S.B.C. 1996, c. 410s. 18 — considered

Small Claims Act, R.S.B.C. 1996, c. 430s. 12 — considereds. 13(1) — considered

Wolney v. Selkirk Vinyl Ltd. H.C. Hyslop J. 245

s. 13(1)(a)-13(1)(d) — considered

APPEAL by home owner from judgment awarding owner damages of $3,730against contractor for improper workmanship in installation of siding on home.

P.J. Maher, for AppellantR.A. Lundberg, for Respondents, Selkirk Vinyl Ltd. and Anthony Murray

H.C. Hyslop J.:

Introduction1 The appellant, Jennifer Wolney, appeals the decision of the learned

provincial court judge dated November 4, 2014. The learned provincialcourt judge awarded the appellant damages of $3,730 against SelkirkVinyl Ltd. (“Selkirk”) for improper workmanship in the installation ofsiding to her two-storey, 100 year old, designated heritage home locatedin Revelstoke, British Columbia. Anthony Murray, the second respon-dent, is the principal of Selkirk.

2 The claims made by the appellant against CertainTeed Corporation(“CertainTeed”) as a respondent in a separate action and third partied bythe respondents is not the subject matter of this appeal. The issues raisedwere whether CertainTeed’s product was defective and whether the ap-pellant could claim on the warranty. Counsel for the appellant advisedthe court that those matters have been resolved.

Facts3 In 2011, the appellant renewed plans to replace the existing vinyl sid-

ing on her home. She obtained three quotes from three different contrac-tors of $27,423 (this was for stucco siding); $27,955; and $20,316; thelatter quotations anticipated replacing the vinyl siding on the house withcement fibre siding. The quote for $27,955 contemplated usingHardiePlank siding, a competitor of CertainTeed.

4 The appellant chose Selkirk’s quote as it was the lowest. Selkirkstarted the job in October 2011 and completed the work on November17, 2011. Selkirk was paid in full for the work.

5 The facts were not seriously in dispute at this trial. The case turned onthe expert evidence proffered by the litigants.

6 The expert evidence came before the court by each expert filing awritten report. Each litigant adverse to the expert posed questions in writ-


ing to each expert who answered each question in writing. No personalappearances were made by the experts.

7 The appellant abandoned some of the grounds of appeal as raised inher written submissions. During the hearing of this appeal, the appellantabandoned pursuing evidence from the class action in both the UnitedStates and Canada relating to alleged product failures of CertainTeed. Iwill address the grounds of appeal addressed by the appellant.

8 Selkirk did not cross-appeal the learned provincial court judge’sdecision.

Standard of Review9 The standard of review of the pure questions of law is correctness. As

to the findings of fact, the standard of review is expressed in Douglas v.Milross, 2007 BCSC 1040 (B.C. S.C.) at para. 20:

[20] The standard of review for palpable and overriding error wasdescribed by the majority in Housen v. Nikolaisen at [paragraph] 12and [paragraph] 22:

[paragraph] 12 The standard of review for findings of factis such that they cannot be reversed unless the trial judgehas made a “palpable and overriding error”. A palpableerror is one that is plainly seen. ... The same degree ofdeference must be paid to inferences of fact, since manyof the reasons for showing deference to the factual find-ings of the trial judge apply equally to all factual conclu-sions. The standard of review for inferences of fact is notto verify that the inference can reasonably be supportedby the findings of fact of the trial judge, but whether thetrial judge made a palpable and overriding error in com-ing to a factual conclusion based on accepted facts, astricter standard. Making a factual conclusion of any kindis inextricably linked with assigning weight to evidence,and thus attracts a deferential standard of review. If thereis no palpable and overriding error with respect to the un-derlying facts that the trial judge relies on to draw the in-ference, then it is only where the inference-drawing pro-cess itself is palpably in error that an appellate court caninterfere with the factual conclusion.

[...]

[paragraph] 22 Although we agree that it is open to anappellate court to find that an inference of fact made bythe trial judge is clearly wrong, we would add the caution


that where evidence exists to support this inference, anappellate court will be hard pressed to find a palpable andoverriding error. As stated above, trial courts are in an ad-vantageous position when it comes to assessing andweighing vast quantities of evidence. In making a factualinference, the trial judge must sift through the relevantfacts, decide on their weight, and draw a factual conclu-sion. Thus, where evidence exists which supports his con-clusion, interference with this conclusion entails interfer-ence with the weight assigned by the trial judge to thepieces of evidence.

10 This court will only intervene if the trial judge was clearly wrong inhis apprehension of the law or facts. I must find a palpable and overrid-ing error plainly seen in the order to change the findings of facts, or thatthe trial judge was clearly wrong in his apprehension of the facts. This issimply stated in s. 12 of the Small Claims Act, R.S.B.C. 1996, c. 420[SCA], which reads:

12 An appeal to the Supreme Court under this Act

(a) may be brought to review the order under appeal on questionsof fact and on questions of law, and

(b) must not be heard as a new trial unless the Supreme Courtorders that the appeal be heard in that court as a new trial.

11 It is only then that this appeal court can engage s. 13(1)(a)-(d) of theSCA:

13 (1) On an appeal, the Supreme Court may do one or more of thefollowing:

(a) make any order that could be made by the Provincial Court;

(b) impose reasonable terms and conditions in an order;

(c) make any additional order that it considers just;

(d) by order award costs to any party to the appeal in accordancewith the Supreme Court Rules.

Grounds of Appeal12 I have expressed each ground of appeal as stated by the appellant in

her argument:


The Trial Judge did not accord the appropriate weight to the report ofCertainTeed’s expert Halliday

13 The trial judge preferred the evidence of Jeffery Halliday when hewrote:

[12] After a review of all of the expert reports, the photographs, andthe testimony of the witnesses, I have concluded that the report of theexpert Jeffery Halliday is the report that ought to be accepted andgiven the greatest weight. Halliday has had an extensive and signifi-cant amount of construction background and experience. He was, inmy view, of all of the witnesses, the most experienced and knowl-edgeable with the CertainTeed product line of siding. I found his re-port to be detailed, balanced, and fair. His findings were carefullyrecorded and supported by the data that he observed on inspection ofthe residence, as well as the photographs.

[13] I am, in accepting the contents of his report, mindful of his rela-tionship with CertainTeed Corporation. I accept the findings of Halli-day, as detailed in his report, based on his inspection of the residenceon December 10, 2013, and I will refer briefly to several passages inhis report.

14 Since 2012, Mr. Halliday has been employed by CertainTeed. This islaid out in Mr. Halliday’s report. Mr. Halliday’s position withCertainTeed is a customer service field representative. On December 10,2013, he visited the appellant’s home in Revelstoke to perform a fieldinspection in response to a warranty claim made by her. As a result of hisemployment relationship with CertainTeed, the appellant claims that Mr.Halliday “has a very significant bias.”

15 The appellant relies on Conseil scolaire francophone de la Colombie-Britannique v. British Columbia, 2014 BCSC 851 (B.C. S.C.), where thecourt reviewed the law relating to the evidence of witnesses of apparentbias. Madam Justice Russell referred to Abbott and Haliburton Co. v.White Burgess Langille Inman, 2013 NSCA 66 (N.S. C.A.), a case underappeal. Since then, the Supreme Court of Canada heard the appeal andissued reasons.

16 In White Burgess Langille Inman v. Abbott and Haliburton Co., 2015SCC 23 (S.C.C.), Mr. Justice Cromwell for a unanimous court stated:

[45] Following what I take to be the dominant view in the Canadiancases, I would hold that an expert’s lack of independence and impar-tiality goes to the admissibility of the evidence in addition to beingconsidered in relation to the weight to be given to the evidence ifadmitted. That approach seems to me to be more in line with the


basic structure of our law relating to expert evidence and with theimportance our jurisprudence has attached to the gatekeeping role oftrial judges. Binnie J. summed up the Canadian approach well in J.-L.J.: “The admissibility of the expert evidence should be scrutinizedat the time it is proffered, and not allowed too easy an entry on thebasis that all of the frailties could go at the end of the day to weightrather than admissibility” (para. 28).

17 The Supreme Court of Canada further held: [46] I have already described the duty owed by an expert witness tothe court: the expert must be fair, objective and non-partisan. As I seeit, the appropriate threshold for admissibility flows from this duty. Iagree with Prof. (now Justice of the Ontario Court of Justice) Paci-occo that “the common law has come to accept ... that expert wit-nesses have a duty to assist the court that overrides their obligation tothe party calling them. If a witness is unable or unwilling to fulfillthat duty, they do not qualify to perform the role of an expert andshould be excluded”: “Taking a ‘Goudge’ out of Bluster and Blarney:an ‘Evidence-Based Approach’ to Expert Testimony” (2009), 13Can. Crim. L. R. 135, at p. 152 (footnote omitted). The expert wit-nesses must, therefore, be aware of this primary duty to the court andable and willing to carry it out.

. . .

[49] This threshold requirement is not particularly onerous and it willlikely be quite rare that a proposed expert’s evidence would be ruledinadmissible for failing to meet it. The trial judge must determine,having regard to both the particular circumstances of the proposedexpert and the substance of the proposed evidence, whether the ex-pert is able and willing to carry out his or her primary duty to thecourt. For example, it is the nature and extent of the interest or con-nection with the litigation or a party thereto which matters, not themere fact of the interest or connection; the existence of some interestor a relationship does not automatically render the evidence of theproposed expert inadmissible. In most cases, a mere employment re-lationship with the party calling the evidence will be insufficient todo so. On the other hand, a direct financial interest in the outcome ofthe litigation will be of more concern. The same can be said in thecase of a very close familial relationship with one of the parties orsituations in which the proposed expert will probably incur profes-sional liability if his or her opinion is not accepted by the court. Simi-larly, an expert who, in his or her proposed evidence or otherwise,assumes the role of an advocate for a party is clearly unwilling and/orunable to carry out the primary duty to the court. I emphasize that


exclusion at the threshold stage of the analysis should occur only invery clear cases in which the proposed expert is unable or unwillingto provide the court with fair, objective and non-partisan evidence.Anything less than clear unwillingness or inability to do so shouldnot lead to exclusion, but be taken into account in the overall weigh-ing of costs and benefits of receiving the evidence.

[My emphasis]

18 The appellant did not object to the admissibility of Mr. Halliday’sreport. All four expert reports were admitted without objection.

19 In the appellant’s submissions to the trial judge, the appellant pointedout to the learned trial judge that Mr. Halliday was an employee ofCertainTeed and that he would not be expected to condemn his em-ployer’s product. However, the appellant conceded in those submissionsto the trial judge that “...I think given his experience and background, hecertainly would be qualified to talk about installation problems.”

20 Shortly after and in her submissions to the trial judge, the appellantmakes the following reference to matters relating to warranty and snowpiling up against the siding:

...under Tab B, page 5 under Tab B, the question he’s being asked iswhat would be viewed as reasonable maintenance under the war-ranty, and the answer he gives, in short, is that that would includeremoving all the snow against the siding on a regular basis.

21 The appellant has not demonstrated that Mr. Halliday’s report or theanswers to the questions posed by the appellant demonstrated bias orimpartiality.

22 I dismiss this ground of appeal.

The Trial Judge failed to take into consideration serious errorscontained in Halliday’s report

23 The errors that the appellant points to are: there was inadequateground clearance on all sides of the house; there were no gaps betweenthe butt ends of the siding in excess of 3/16”, and that Mr. Hallidaystated that the gap between the trim and siding should be 1/4”, contra-dicting CertainTeed’s manual which states 1/8”.

24 Mr. Halliday made it very clear in his response to questions posed bythe appellant (Q & A 4-5), that the clearance (gap between the siding andthe top of the window) dictated by the manual should be 1/4” and the gapbetween the siding and the vertical side and the bottom side of the win-dow was 1/8”. As it relates to the inadequate ground clearance and in


response to questions posed by Selkirk, Mr. Halliday corrected and clari-fied his position by writing:

2. I reviewed the photographs and notes that I took during the fieldvisit. Using the orientation established in my June 2, 2014 report, thesiding on the residence was installed less than 3” from grade on thefront veranda, which also extends to the left and right sides of theresidence. On all walls of this veranda, which is a prominent featureon the subject residence, the siding was installed less than 3” fromgrade, which is not in accordance with the 6” clearance requirementin the applicable installation manual.

25 As to whether the gaps between the butt ends were in excess of 3/16”,Mr. La Fleche’s opinion was that there were some with more than 1/4”gap. He measured only one as representative of his observations.

26 The trial judge accepted Mr. Halliday’s evidence on this point, whichwas open for him to do so. He said at para. 22:

[22] He supports his observations with photographs that are in hisreport. He also, in his report, refers to what was called the butt gapsof the siding; that is where two pieces of horizontal siding meet upagainst each other, and noticed from his observations and measure-ments that the largest of the gaps that he observed between these buttends was no more than three-sixteenths of an inch, which falls withingenerally accepted building practices. The way those cracks are dealtwith or those openings, as they change between seasons, is thatcaulking can be applied to them.


The Trial Judge failed to properly consider evidence of the Experts ofthe Appellant

28 The trial judge was not critical of the appellant’s expert witnesses.The trial judge stated that he reviewed all the expert evidence and photo-graphs. He decided to give Mr. Halliday’s report the most weight:

[12] ... He was, in my view, of all of the witnesses, the most exper-ienced and knowledgeable with the CertainTeed product line of sid-ing. I found his report to be detailed, balanced, and fair. His findingswere carefully recorded and supported by the data that he observedon inspection of the residence, as well as the photographs.

29 The trial judge specifically stated at para. 31 that the expert report ofMr. Brian Hayashi:

...also refers to installation issues that resulted in part in cracking thatis observable in siding in the areas identified.


30 Both Mr. Hayashi and Mr. La Fleche pinpoint the cracking around thewindows as improper installation, which is in agreement with Mr. Halli-day’s report.

31 The trial judge found at para. 32, on the whole of the evidence, that: ...the claimant has failed to establish, on the balance of probabilities,that the CertainTeed siding was defective ...

32 The trial judge found at para. 33: [33] There is no evidence that the siding used on the claimant’s homeis of a lesser or inferior quality, or that it is a defective product. Thereis no analysis of the product that showed it is of inferior quality ascompared to siding used in other similar installations.

33 The trial judge relied on Mr. Murray’s testimony, at para. 34, whenhe testified that he had used this line of siding on a number of othercommercial and residential installations in Revelstoke “without any de-fects observable”.

34 In addition, the trial judge, at para. 35, relied on the fact that the ma-jority of the pieces of siding on the appellant’s home:

...are in good condition. They are not cracked. They do not show theflaking that is primarily existent on the bottom two rows of thesiding.


The Trial Judge did not consider the issue of whether the siding wassuitable for purpose intended, in accordance with s. 18 of the Saleof Goods Act

36 The trial judge did not mention specifically s. 18 of the Sale of GoodsAct, R.S.B.C. 1996, c. 410 [SGA].

37 Under the previous ground of appeal, the trial judge concluded thatMr. Murray’s use of CertainTeed’s siding was successful and the major-ity of the pieces of siding installed on the appellant’s home were in goodcondition. The trial judge could not conclude that CertainTeed’s sidingwas not suitable, under s. 18 of the SGA, for installation in Revelstoke.

38 The trial judge found that Mr. Murray advised the appellant to takesteps to protect the siding particularly around the veranda area from thesevere ice and snow typical of Revelstoke winters. The trial judge found,at para. 46, that the appellant did not cover those particular parts of herresidence with plywood because “it did not look good”.



The Trial Judge failed to properly assess damages40 Contrary to the appellant’s statements in her submissions, the experts,

Halliday, La Fleche, and Hayashi state that the inadequate clearance ofthe siding was on the northeast, north, and northwest sides. The appellantstates that the trial judge failed to award any sum to correct the inade-quate clearance of these three parts of the residence.

41 The trial judge described the deficiencies in the siding at para. 11: ...they involve one cracked and broken piece of siding; areas of paintflaking and damage to the bottom two rows of siding in certain areasat the bottom rows of siding around the residence; cracking aroundwindows and doorways, that is to say cracking in the siding wherethe siding meets with windows and doorways; and, as well, severalloose pieces of siding.

42 The trial judge was well aware the bottom two rows of siding in cer-tain areas of the residence were damaged as stated in para. 11 of hisreasons.

43 Referring to Mr. Halliday’s report, the trial judge stated at para. 17: ...He observed, firstly with respect to the front wall of the residence,69 pieces of siding installed on it. He noted that paint is flaking offthe bottom two rows of the siding.

44 In all these areas, the siding was installed less than three inches abovegrade.

45 In assessing the damages, the trial judge concluded that the appellantdid not establish the failure of all of the siding. He concluded that thedamage to the siding (boards) is a small number of the total number ofboards installed.

46 The trial judge concluded at para. 40: The claimant, in my view, is entitled to receive and be awarded thecost of removing and replacing the affected boards as detailed in thereport of Mr. Halliday.

47 He accepted Mr. Murray’s testimony who stated that the boards couldeasily be replaced with a new piece of siding.

48 However, the trial judge had no evidence as to the cost of fixing theinstallation and repair that he identified.

49 He was well aware of the bottom two rows that had to be removed asa result of lack of clearance by six inches. There was no evidence beforehim as to the number of boards that were required to be replaced, nor thecost of replacing them; this included the areas where the boards were


cracked around the windows. The trial judge knew, as a result of Mr.Halliday’s report, how many pieces of siding were on each side of thehouse. However, none of the experts estimated the cost of materials andlabour to repair the appellant’s siding.

50 The only evidence that the trial judge had before him was the cost ofreplacing all of the siding with a different manufactured product. He av-eraged the three quotations for re-siding the appellant’s home that sheinitially received and determined that 10% of the average would lookafter labour and materials, and allowed $1,000 for painting in arriving atthe total amount of the damage award.

51 It is the responsibility of the appellant to prove her damages and toprovide evidence of the cost of repairs.

New evidence not available at the trial52 The appellant seeks to introduce new evidence. The appellant wishes

to present new evidence as to the cost of repairing the two rows of boardsthat had been identified on this house that needed to be removed and/orrepaired.

53 In Rider v. Shawn Transport Ltd., 2011 BCSC 756 (B.C. S.C.),Madam Justice Gerow stated:

[17] In order to adduce new evidence on appeal an appellant mustestablish that the evidence was not available or discoverable beforethe end of trial, is credible, and would have affected the result of thetrial if accepted: Palmer v. The Queen, [1980] 1 S.C.R. 759 at 775-776; Jens v. Jens, 2008 BCCA 392 at para. 28.

54 The evidence the appellant seeks to adduce could have been presen-ted at trial. The appellant, prior to trial, had all the expert reports, in par-ticular Mr. Halliday’s and, to the same extent, as did the other experts,identified the areas where the siding was damaged. This evidence wasknown in advance of the trial. Whether it was poor workmanship or de-fective product, the appellant had the burden to prove her damages. Shecould have provided evidence as to the cost of repair. I am not preparedto hear new evidence.

55 Selkirk did not file a cross-appeal. It agreed with the appellant as tothe errors in Mr. Halliday’s report as reviewable and clearly wrong. De-spite this, Selkirk claims that only nine out of 350 boards failed and thatthe appellant had failed to quantify the damages for the boards and thecracks around the windows.


56 Selkirk claims that much of the damage was due to the defects in thesiding, which is not the subject matter of this appeal. Selkirk opposes thecourt ordering the introduction of new evidence as Selkirk states that thatevidence was available at the time of trial. I am not prepared to permitthe appellant to adduce new evidence.

57 I am not persuaded that the trial judge erred in law or made any pal-pable or overriding error of fact. The appeal is dismissed.

58 I award $750 costs of this appeal to the respondent, Selkirk.

Appeal dismissed.


[Indexed as: Ashburner v. Adjala-Tosorontio (Township)]

Peter Ashburner, Phyllis Ashburner and Thomas Ashburner,Applicants and The Corporation of the Township of Adjala-Tosorontio, Karl Korpela in His Capacity as Chief Building

Official for the Corporation of the Township of Adjala-Tosorontio, Karl Korpela and Tuire Pickering and Paul

Pickering, Respondents

Ontario Superior Court of Justice

Docket: Barrie 11-0844

2015 ONSC 3662

Quinlan J.

Heard: April 2, 2015

Judgment: June 8, 2015*

Municipal law –––– Zoning — Enforcement of zoning by-laws — Miscella-neous –––– Revocation of building permit — Neighbours owned farm propertyacross road from respondent P — P applied to respondent township to constructriding arena in front of her property — Township’s planner was satisfied ridingarena complied with zoning by-law and issued building permit — Riding arenawas constructed and was used at all hours and cast light into neighbourhood —Neighbours brought application order declaring that township’s chief buildingofficial (CBO) erred in his decision to grant building permit — Neighboursbrought application for order to have decision rescinded and permit revoked anddeclared invalid — Application granted — Definition of “agricultural uses” inzoning by-law did not provide permission for any form of recreational equineuse, but only permitted raising of livestock and other animals for food and fur —Riding arena was not permitted use — As such, building permit was issued incontravention of Building Code Act, 1992 — CBO’s decision to issue buildingpermit was rescinded and building permit revoked.

Cases considered by Quinlan J.:

Aon Inc. v. Peterborough (City) (1999), 1999 CarswellOnt 924, 1 M.P.L.R. (3d)225, [1999] O.J. No. 1225, 96 O.T.C. 34 (Ont. Gen. Div.) — considered

*Additional reasons at Ashburner v. Adjala-Tosorontio (Township) (2015), 2015ONSC 4482, 2015 CarswellOnt 10644, 43 C.L.R. (4th) 271 (Ont. S.C.J.).

Ashburner v. Adjala-Tosorontio (Township) 257

Loblaws Inc. v. Ancaster (Town) Chief Building Official (1992), 13 M.P.L.R.(2d) 73, 1992 CarswellOnt 508, [1992] O.J. No. 2290 (Ont. Gen. Div.) —referred to

Quay West v. Toronto (City) (1989), 47 M.P.L.R. 109, 1989 CarswellOnt 516,[1989] O.J. No. 3072 (Ont. Div. Ct.) — referred to

Ross v. Muskoka Lakes (Township) (2004), 2004 CarswellOnt 19, 46 M.P.L.R.(3d) 119, 32 C.L.R. (3d) 241, [2004] O.J. No. 24, [2004] O.T.C. 7 (Ont.S.C.J.) — referred to

Rotstein v. Oro-Medonte (Township) (2002), 2002 CarswellOnt 4411, 34M.P.L.R. (3d) 266, [2002] O.J. No. 4990 (Ont. S.C.J.) — followed

Runnymede Development Corp. v. 1201262 Ontario Inc. (2000), 2000 Carswell-Ont 934, 47 O.R. (3d) 374, 10 M.P.L.R. (3d) 204, [2000] O.J. No. 981 (Ont.S.C.J.) — referred to

St. Mary’s Cement Inc. v. Clarington (Municipality) (2012), 2012 ONCA 884,2012 CarswellOnt 15841, 5 M.P.L.R. (5th) 89, 72 C.E.L.R. (3d) 1, 299O.A.C. 357, 356 D.L.R. (4th) 448 (Ont. C.A.) — referred to

Toronto District School Board v. Toronto (City) (2014), 2014 ONSC 3605, 2014CarswellOnt 8016, 25 M.P.L.R. (5th) 140, [2014] O.J. No. 2831 (Ont.S.C.J.) — followed


Building Code Act, 1992, S.O. 1992, c. 23Generally — referred tos. 8(2) — considereds. 8(10) — considereds. 25(4) — considered

Planning Act, R.S.O. 1990, c. P.13s. 24(1) — considereds. 34(1) — considereds. 41 — considered

Rules considered:

Rules of Civil Procedure, R.R.O. 1990, Reg. 194Generally — referred toR. 14.05(3)(d) — considered

APPLICATION by neighbours for order declaring that township’s chief build-ing official erred in decision to grant building permit, and for revocation ofpermit.

E.M. Green, B. Ogunmefun, for ApplicantsJ.J. Feehely, for Respondents, Corporation of the Township of Adjala-Tosoron-

tio, Karl Korpela in his capacity as Chief Building Official, for the Corpora-tion of the Township of Adjala-Tosorontio, and Karl Korpela


R.K. Brown, for Respondents, Tuire Pickering and Paul Pickering

Quinlan J.:

Nature of the Application1 The applicants seek an Order declaring that the Township’s Chief

Building Official (CBO) erred in his decision to grant a building permit.They seek to have the decision rescinded and the permit revoked anddeclared invalid.

2 For reasons that follow, the application is granted.

Overview3 The applicants own a farm property across the road from the respon-

dent, Tuire Pickering1 (Ms. Pickering). Ms. Pickering applied to the re-spondent Township (the Township) to construct a riding arena in thefront of her property (the subject property). The Township issued a build-ing permit and the riding arena was constructed. It is used at all hoursand casts light into the neighbourhood.

4 The applicants contend that the building permit was issued to Ms.Pickering in contravention of the Building Code Act,2 the Township’sOfficial Plan (OP) and its Zoning By-Law.

Issues5 The issues are:

(a) Is a riding arena a permitted use on the subject property, takinginto account the policies in the OP, the provisions of By-Law 03-56 and the provisions relating to major development in OPA No.3?

(b) Was the building permit issued in contravention of the BuildingCode Act? If yes, should the CBO’s decision to issue the buildingpermit be rescinded and the building permit revoked?

Background6 The facts are not in dispute.

1Paul Pickering died in the course of these proceedings and Tuire Pickering isnow the sole owner of the subject property.2S.O. 1992, c.23.

Ashburner v. Adjala-Tosorontio (Township) Quinlan J. 259

The Township7 The Corporation of the Township consists of two former municipal

townships within the County of Simcoe: the Township of Adjala and theTownship of Tosorontio. Both of the amalgamated townships were andcontinue to be primarily agricultural and rural in nature. Horses are bred,raised and maintained within the Township. There are several riding are-nas in the Township, with the majority located in the area of the OakRidges Moraine.

8 The Township’s OP contains policies that are designed to encourage,promote and preserve the agricultural and rural nature of the Township.These policies recognize that the preservation of agricultural land contin-ues to be of primary importance and they emphasize the need to protectand enhance the rural character of the Township.

9 The Oak Ridges Moraine Plan (Moraine Plan) is designed to preservea significant geological feature in the Province of Ontario. Once in place,it required municipalities to bring their planning documents into con-formity its provisions. The Township completed its conformity exerciseby way of Official Plan Amendment No. 3, Oak Ridges Moraine Conser-vation Plan (OPA No. 3). OPA No. 3 did not alter the agricultural/ruralpolicies in the OP.

10 In addition, the Township passed the Oak Ridges Moraine Conserva-tion Plan zoning by-law as Zoning By-Law 03-56 (By-Law 03-56) inorder to implement OPA No. 3. There are two zones within By-Law 03-56 that deal with lands within the Moraine Plan: the Oak Ridges MoraineLinkage (ORML) Zone and the Oak Ridges Moraine Agricultural(ORMA) Zone.

11 The ORML Zone represents the areas that form part of a central corri-dor system located within the Moraine that support or have the potentialto support the movement of plants and animals among areas includingthe Natural Linkage Areas. The uses permitted in the ORML Zone in-clude agricultural uses but do not include riding arenas. The ORMAZone represents lands located on the Moraine that are prime agriculturallands. The uses permitted in the ORMA Zone include agricultural usesand riding arenas.

The Property12 The applicants’ property is a 100-acre parcel consisting of a house

and a garage, along with a bank barn and equipment shed, which are bothlocated behind the house. Beef cattle are raised on the property, which is


part of a quiet, rural area within the largely rural and agriculturaltownship.

13 The subject property is located across the road from the applicants’property. It is approximately 22 acres and consists of a house and a horsebarn in which a number of horses are boarded, together with the ridingarena in front of the house, which was constructed pursuant to the build-ing permit in issue. No other active farming is carried out on the subjectproperty. The riding arena was constructed for recreational use and it islocated 30 metres from the front lot line. It is a very large structure: 60feet by 120 feet (7,200 square feet/669.78 m2). The distance between theapplicants’ residence and the riding arena is approximately 122 metres.

14 The subject property is located within the Natural Linkage Area des-ignation of the OP. Since the lands are within the Oak Ridges MoraineArea, OPA No. 3 also applies. The subject property is zoned Oak RidgesMoraine Linkage (ORML) Zone under By-Law 03-56. As noted, agricul-tural uses are listed as a permitted use within the ORML Zone. Ridingarenas are not.

The Pickerings’ Applications to the Township15 In 2010, Ms. Pickering decided she wanted to construct a riding arena

to train her horses for competition in various equestrian events. She in-tended to use the building for her personal recreational use and she hasalso permitted a friend to use the riding arena at no cost.

16 Ms. Pickering submitted three applications to the Township related tothe building of the riding arena:

(i) for a minor variance to reduce the front yard setback for the ridingarena from 30 metres to 23 metres;

(ii) for a building permit to the CBO to allow construction of the rid-ing arena in front of the house on the subject property; and

(iii) for a site plan review to regulate the riding arena site.17 The applicants and other neighbours objected to the application for

the minor variance. The applicants contended that the riding arena couldbe built behind the house as required of accessory buildings in By-Law03-56. The applicants attended the Committee of Adjustment meeting onMay 4, 2011, and submitted annotated maps outlining alternate locationsfor the proposed riding arena that would not offend their view or castlight out into the neighbourhood.


18 On May 10, 2011 the Committee of Adjustment issued a Notice ofDecision deferring the request for a minor variance to allow Ms. Picker-ing to consider alternate locations for the proposed riding arena. Ms.Pickering subsequently reoriented the building 90 degrees so that a vari-ance to the front yard setback would not be required, and withdrew herapplication for a minor variance.

19 The applicants maintained their objection to the proposed riding arenaand retained a Registered Professional Planner, Robert Lehman, to pro-vide an opinion regarding the proposed riding arena’s compliance withBy-Law 03-56 and OPA No. 3.

20 Mr. Lehman’s opinion was that the proposed riding arena did notconform to the OP or OPA No. 3 because the definition of “agriculturaluse” does not permit any form of equestrian use, but only refers to rais-ing animals for food and fur. Mr. Lehman also concluded that the ridingarena was not a permitted use in the ORML Zone under By-Law 03-56.

21 Ms. Pickering’s application for a minor variance triggered a review ofthe Township planning and zoning documents. Jacquie Tschekalin, aRegistered Professional Planner employed by the Township as its Direc-tor of Planning (Township Planner), identified a number of inconsisten-cies in the by-laws with respect to riding arenas. She presented a Plan-ning Report in which she outlined the significant opposition that arose inresponse to Ms. Pickering’s minor variance application.

22 On August 25, 2011, the CBO for the Township issued a buildingpermit to Ms. Pickering for the construction of a riding arena in front ofher home on the basis that the Township’s Planner was satisfied that pro-posed riding arena complied with By-Law 03-56.

23 Construction of the riding arena was within the Oak Ridges Moraine;the Township therefore required a site plan control agreement under theprovisions of s.41 of the Planning Act3 in order to minimize the impactof the riding arena and ensure protection of the environmentally sensitivefeatures identified in the Moraine Plan.

24 Ms. Pickering retained the firm of Michalski Nielsen, specialists inenvironmental planning, to complete a Natural Heritage Evaluation thatconsiders the requirements of OPA No. 3 and to make recommendationsthat ensure conformity with the Moraine Plan. Michalski Nielsen pre-pared reports that were peer-reviewed by the Township’s engineering

3R.S.O. 1990, c.P.13.


firm, R.J. Burnside & Associates Limited. The consultants concludedthat the riding arena proposal was consistent with the natural heritagepolicies of the Moraine Plan.

25 A Site Plan Agreement (Agreement) was executed by the parties andincorporated the Michalski Nielsen reports.

26 On the recommendation of the Township Planner, Council made aresolution to amend By-Law 03-56 to create a new section setting out therequirement for riding arenas in all zones. On October 3, 2011, Councilfor the Township adopted By-Law 11-30, which inserted the definitionof riding arena in By-Law 03-56. By-Law 11-30 further clarified the set-back provisions for agricultural structures, imposing a minimum setbackof 100 metres from the front lot line or behind the dwelling unit, which-ever is most restrictive, and 30 metres from any lot line.

Relevant Definitions

The Official Plan27 As noted above, the subject property is located within the Natural

Linkage Area designation of the OP. This designation permits “agricul-tural uses”.

Zoning By-Law 03-5628 The subject property is zoned ORML under By-Law 03-56. The uses

permitted in the ORML Zone under By-Law 03-56 include agriculturaluses, which are defined as:

. . .

(b) raising livestock and other animals, including poultry and fish, forfood and fur;

. . .

29 Riding arenas are not a permitted use in the ORML Zone.30 “Livestock” is defined in By-Law 03-56 as:

...chickens, turkeys, cattle, hogs, horses, mink, rabbits, sheep, goats,fur bearing animals, ratites, or other domestic or game animals raisedfor the purpose of human consumption for food, fur and/or leather.

31 By-Law 03-56 also has the following definitions: Accessory use: a use of lands, buildings, or structures which is nor-mally incidental or subordinate to the principal use of lands, build-ings, or structures located on the same lot.


Building, principal: a building and/or residential dwelling in the caseof an agricultural use in which the main use on the lot is conducted.

Accessory building or structure: a building that is secondary or inci-dental to and is exclusively devoted to the principal buildings, and/orstructure and/or use and is located on the same lot therewith.

Positions of the Parties32 The applicants’ position is that:

(a) the only reference to animals under the definition of “agriculturaluse” in By-Law 03-56 is in respect of “raising livestock and otheranimals, including poultry and fish, for food and fur”. Accord-ingly, livestock and other animals may be raised for food and furonly;

(b) the definition of “agricultural uses” does not permit any form ofequestrian use, such as the riding arena constructed on the subjectproperty;

(c) the activities conducted in a riding arena are not essential or inte-gral to the principal use of the property, but are properly consid-ered accessory uses;

(d) a building housing an accessory use should be considered an ac-cessory building; and

(e) the building permit should not have been issued because the majordevelopment policy in OPA No. 3 was not complied with; siteplan approval is “other applicable law” that the CBO was requiredto be taken into account.

33 The Township’s position, supported by Ms. Pickering, is that:

(a) “raising livestock” must be read disjunctively from “other ani-mals, including poultry and fish, for food and fur”, otherwise asignificant sector of the agricultural livestock uses existing in theTownship would be non-conforming. The words “for food andfur” must also be interpreted disjunctively in that it is not possibleto get food and fur from poultry and fish; it must be one or theother. By-Law 03-56 specifically defines horses as “livestock”,but they are not commonly used for food, fur and/or leather, andany equestrian uses in the Township for raising horses would nolonger be permitted. Such an interpretation of By-Law 03-56would be unduly restrictive and contrary to the expansive policies


in the OP and any common sense understanding of agriculturalactivity in the Township;

(b) the riding arena is another principal building in an overall live-stock operation, and there are no restrictions in By-Law 03-56 onthe number of principal buildings available to a farm operator en-gaged in an agricultural use. The building would be a permitteduse as a principal agricultural building, although housing what iseffectively an accessory use. In the agricultural context, agricul-tural buildings can be an accessory use, but are not limited to theaccessory building size of 100 square metres. They can be princi-pal buildings that contain an accessory use; and

(c) a watershed plan did not apply to the present application and theNatural Heritage Evaluation undertaken by Michalski Nielsentook into account all other matters specifically required underOPA No. 3; it is inappropriate that there can be no developmentbecause a County policy has not been put in place. The require-ment for a watershed plan is an OP policy and not a requirementof any zoning by-law. An OP policy does not constitute “otherapplicable law”. As such, the CBO need not take it into account.

Is a Riding Arena a Permitted Use?

The Law34 Section 34(1) of the Planning Act authorizes councils of municipali-

ties to pass zoning by-laws “for prohibiting the use of land, for or exceptfor such purposes as may be set out in the by-law within themunicipality...”

35 Zoning by-laws are the means by which the OP is implemented. Ac-cordingly, By-Law 03-56 is deemed to comply with and implement theOP and OPA No. 3.4

36 Howden J. (as he then was) considered the interpretation of zoningby-laws in Aon Inc. v. Peterborough (City)5:

Thus, while certainly normal rules of statutory construction are prop-erly held to apply to zoning by-laws, they are a somewhat unusualtype of law in their statutorily required inter-relationship with an Of-

4St. Mary’s Cement Inc. v. Clarington (Municipality), 2012 ONCA 884 (Ont.C.A.) at para. 21.51999 CarswellOnt 924 (Ont. Gen. Div.) at para. 18.


ficial Plan. A proper contextual approach to their interpretation re-quires that zoning by-laws should be interpreted in their ordinary andplain meaning in light of the by-law as a whole and its policy deriva-tion and basis within the Official Plan. However, it must be borne inmind that it is the zoning by-law which is the applicable law to beapplied. Both Official Plans and zoning by-laws rely for their crea-tion and life on the provisions of the Planning Act, and it clearlyprovides the power to municipalities to enact zoning by-laws as theeffective law governing land usage, and buildings, and structures. Itis therefore a zoning by-law which must implement or convert theOfficial Plan to a body of law regulating the use of land and it doesso only to the extent that it actually sets forth in its provisions, inter-preted in their ordinary sense in light of the policy framework of theofficial plan and the context of the by-law as a whole.

37 In Aon, Howden J. determined that the appropriate manner in whichto interpret zoning by-laws where some ambiguity or uncertainty of lan-guage occurs is to neither interpret the by-law strictly or liberally in theface of two conflicting values: the landowner’s ability to use his propertyas he deems fit and the interests of the community.6

Analysis38 The Township’s OP policies encourage agriculture and there are no

policies that limit agricultural operations. The policies recognize that thepreservation of agricultural land continues to be of primary importance tothe Township.

39 The definition of “agricultural uses” in By-Law 03-56 does not pro-vide permission for any form of recreational equine use, but only permitsthe raising of livestock and other animals for food and fur. The phrase“for food and fur” qualifies and sets out the purpose for which livestockand other animals can be raised. The definition does not permit the rais-ing of livestock and other animals without a stated reason. The definitionof “livestock” requires that they are to be “raised for the purpose ofhuman consumption for food, fur and/or leather”.

40 I find that a riding arena is not a permitted use: it is not an “agricul-tural use” as defined in By-Law 03-56. In addition, unlike in the ORMAZone, a riding arena is not listed as a permitted use within the ORMLZone. I recognize that my interpretation of By-Law 03-56 does not per-

6Aon, supra at para. 19.


mit the raising of horses for a recreational use and that horses are notgenerally raised for food and fur. However, although I have consideredthe by-law’s “policy derivation and basis within the OP”, to interpret By-Law 03-56 as argued by the respondents would require me to ignore theby-law’s ordinary and plain meaning.

41 Given my finding, it is not necessary for me to decide whether theriding arena is an “accessory building” or a “principal building”. How-ever, considering the definitions of accessory and principal building inBy-Law 03-56, I would have found that the riding arena is an accessorybuilding. The main use on the lot is not conducted in Ms. Pickering’sriding arena. Rather, the riding arena is secondary or incidental to theprincipal buildings. I would have decided that the activities conducted ina riding arena are accessory uses: they are not essential or integral to theprincipal use of the subject property, which is to board horses. As such,the building would be subject to provisions setting out its location: be-hind the existing barn at approximately 100 metres from the front lotline, and provisions that restrict its size to 100 square metres.

42 For the foregoing reasons, I find that the construction of the ridingarena did not comply with the applicable sections of By-Law 03-56 as itwas not a permitted use.

Was the CBO Required to Consider OPA No. 3 and the “MajorDevelopment” Policy?

Requirements for Major Development43 The Township acknowledged that the construction of the riding arena

constituted “major development” as set out in OPA No. 3. That policyprohibits major development in the Natural Linkage Area, where the sub-ject property is located, unless:

(a) a watershed plan, prepared by the County of Simcoe, has beencompleted;

(b) the major development conforms with the watershed plan; and

(c) a water budget and conservation plan, prepared by the County ofSimcoe, has been completed.

44 It is not disputed that the above noted plans were not prepared and theproposed riding arena was not reviewed in accordance with the require-ments of OPA No. 3. Rather, a Natural Heritage Evaluation wascompleted.


The Law45 Section 24(1) of the Planning Act requires that no by-law shall be

passed for any purpose that does not conform with an Official Plan.46 Site Plan approval is required before a building permit is to be issued

because site plan approval is “other applicable law”.7

Analysis47 The riding arena constituted major development in the Natural

Linkage Area. I find that the Natural Heritage Evaluation peer-reviewedby the Township’s engineering firm did not obviate the mandatory re-quirement of a watershed plan, water budget and water conservationplan. As a result, the construction of the riding arena did not comply withthe major development policy in OPA No. 3.

48 Site plan approval is “other applicable law”. The CBO was requiredto take into account the fact that the Site Plan Agreement did not con-form to OPA No. 3; he should have found the Agreement deficient andshould not have issued the building permit.

Was the building permit issued in contravention of section 8(2) of theBuilding Code Act, 1992?

49 Section 8(2) of the Building Code Act provides that the CBO shallissue a permit unless the proposed building will contravene the BuildingCode Act, the building code, or any other applicable law. “Other applica-ble law” includes a zoning by-law.8

50 I find that the riding arena did not comply with Zoning By-Law 03-56. As such, the building permit was issued in contravention of theBuilding Code Act.

Should the CBO’s decision to issue the building permit be rescinded?51 Section 25(4) of the Building Code Act gives the right to a judge on

appeal to rescind the order or decision and take any other action that the

7Ross v. Muskoka Lakes (Township), 2004 CarswellOnt 19 (Ont. S.C.J.) at para.29; Quay West v. Toronto (City), 1989 CarswellOnt 516 (Ont. Div. Ct.) at para.8.8Loblaws Inc. v. Ancaster (Town) Chief Building Official, 1992 CarswellOnt508 (Ont. Gen. Div.) at para. 47.


judge considers the CBO ought to take. For those purposes, the judgemay substitute his or her opinion for that of the CBO.

52 The standard of review of a CBO’s decision depends on the nature ofthe decision. As noted in Toronto District School Board v. Toronto(City)9:

[Q]uestions of law are reviewed on a standard of correctness. Ques-tions of fact are entitled to deference. Questions of mixed fact andlaw are reviewed on a standard reflecting the degree to which thedecision is a question of law or a question of fact.

53 The standard of review finds itself on a continuum between correct-ness and patent unreasonableness. As noted in Rotstein v. Oro-Medonte(Township)10:

The standard of review of any decision is understood to be a productof several factors on a continuum between correctness at the leastdeferential end and patent unreasonableness at the most deferential.In regard to a decision of a CBO, Molloy, J. held that, generally,decisions based on law or jurisdiction should attract a correctnessstandard and those arising from a factual base within the expertise ofthe Chief Building Official would be reviewed on a standard ofreasonableness.11

54 As the court noted in Toronto District School Board v. Toronto(City)12:

...Municipal planning and zoning are specialized areas which fallwithin the expertise of the CBO. Most of the determinations made byCBOs in the context of by-law interpretation are mixed questions offact and law. This requires a significant degree of deference for allbut purely legal questions. For most issues, the standard of reviewwill be reasonableness...[T]o be upheld on a reasonableness standard,the decision must fall within a range of possible, acceptable out-comes which are defensible in respect of both the facts and the law.

55 In this case, the CBO’s decision related to a question of law, namely:whether or not the riding arena was a permitted use under By-Law 03-56.This question turns on the interpretation of the uses permitted under the

92014 ONSC 3605 (Ont. S.C.J.) at para. 18.102002 CarswellOnt 4411 (Ont. S.C.J.).11Runnymede Development Corp. v. 1201262 Ontario Inc. (2000), 47 O.R. (3d)374 (Ont. S.C.J.).12Supra at para. 18.


ORML Zone of By-Law 03-56 and on the need for compliance with themandatory provisions of OPA No. 3. Accordingly, I find that the stan-dard of review of the CBO’s decision is one of correctness.

56 Even if the question is one of mixed fact and law and the standard ofreview is reasonableness, to be upheld on a reasonableness standard, thedecision must fall within a range of possible, acceptable outcomes, whichare defensible in respect of both the facts and the law.13 I find that thedecision of the CBO does not fall within the range of possible, accept-able outcomes defensible in respect of both the facts and the law, and isnot entitled to a significant degree of deference. There were interpreta-tion issues raised during the minor variance application process and therewas a lack of compliance with the major development provisions of OPANo. 3 which had been put in place to preserve a significant geologicalfeature in this province.

57 Accordingly, the CBO’s decision to issue the building permit ishereby rescinded.

Should the building permit be revoked?58 Section 8(10) of the Building Code Act provides that the CBO may

revoke a building permit if it was issued on incorrect information or if itwas issued in error.

59 I find that the building permit was issued in error based on incorrectinformation because the riding arena did not conform to By-Law 03-56.Accordingly, the building permit should be revoked.

Additional Issues Raised by the Respondents60 I do not accept the Township’s position that the applicants have failed

to utilize their administrative remedy and should not be permitted to seekrelief from this court because they did not appeal amending By-Law 11-30 and have its interpretation put before the Ontario Municipal Board.The applicants are entitled to a determination of their rights that dependon the interpretation of a by-law.14 In addition, amending By-Law 11-30assists the applicants: it establishes a minimum setback of 100 metresfrom the front lot line or behind the dwelling unit, whichever is morerestrictive.

13Ibid.14Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 14.05 (3)(d).


61 The respondents raised a concern regarding delay in having this mat-ter heard. The application was issued in a timely manner, on September12, 2011, before the riding arena was constructed and just over twoweeks after the building permit was issued. The respondents did not takeissue with the applicants’ reply submission that any delay in having thismatter determined was occasioned in large part by the inability to sched-ule the necessary cross-examinations and full-day hearing date.

Conclusion62 For the foregoing reasons, this Court declares that:

(i) the decision of the Chief Building Official for the Township ofAdjala-Tosorontio, dated the 25th day of August, 2011, to grantPermit No. 042-11 was made in error because the application forthe building permit did not comply with all applicable law as re-quired by the Building Code Act, 1992;

(ii) the decision of the Chief Building Official to issue the buildingpermit is hereby rescinded;

(iii) the building permit is declared to be invalid; and

(iv) the building permit is hereby revoked, pursuant to section 8(10) ofthe Building Code Act, 1992.

Costs63 If the parties cannot agree on costs, I will receive written submis-

sions, not to exceed three pages in length, plus a costs outline and anyrelevant offers. Submissions from the applicants are to be provided byJune 23, 2015, with responding materials from the respondents to followby July 3, 2015. Any reply by the applicants should be filed by July 13,2015. Costs Submissions shall be no more than three pages in length,exclusive of any Costs Outline or Offers to Settle. If no submissions arereceived by July 13, 2015, the issue of costs will be deemed to have beensettled as between the parties.

Application granted.

Ashburner v. Adjala-Tosorontio (Township) 271

[Indexed as: Ashburner v. Adjala-Tosorontio (Township)]

Peter Ashburner, Phyllis Ashburner and Thomas Ashburner,Applicants and The Corporation of the Township of Adjala-Tosorontio, Karl Korpela in His Capacity as Chief Building

Official for the Corporation of the Township of Adjala-Tosorontio, Karl Korpela and Tuire Pickering and Paul

Pickering, Respondents


Docket: Barrie 11-0844

2015 ONSC 4482

Quinlan J.

Judgment: July 13, 2015

Civil practice and procedure –––– Costs — Offers to settle or payment intocourt — Offers to settle — General principles –––– Applicants were success-ful in overturning decision of Chief Building Official issuing building permit asnot complying with all applicable law as required by Building Code Act — Ap-plicants sought full indemnity costs on basis of offer to settle — Partial indem-nity costs awarded — Offer to settle that included terms that could not be en-forced under Planning Act was not valid R. 49 offer under Rules of CivilProcedure and not relevant consideration.

Civil practice and procedure –––– Costs — Persons entitled to or liable forcosts — Multiple parties — Apportionment of costs –––– Applicants suc-ceeded in having decision of Chief Building Official issuing building permit forriding arena overturned — Applicants sought costs from township and partieswho sought permit — Applicants awarded partial indemnity costs against bothtownship and other parties — Given reliance placed by township on consultantretained by other party and her active participation, applicant’s costs should beborne on joint and several basis — As other party did not request costs againsttownship in material filed, not reasonable or fair for township to pay her costs.

Cases considered by Quinlan J.:

Basdeo (Litigation Guardian of) v. University Health Network (2002), 2002CarswellOnt 544, (sub nom. Basedo v. University Health Network) [2002]O.J. No. 597 (Ont. S.C.J.) — referred to

Boucher v. Public Accountants Council (Ontario) (2004), 2004 CarswellOnt2521, [2004] O.J. No. 2634, 48 C.P.C. (5th) 56, 188 O.A.C. 201, 71 O.R.(3d) 291 (Ont. C.A.) — considered


Gratton-Masuy Environmental Technologies Inc. v. Ontario (Building MaterialsEvaluation Commission) (2003), 2003 CarswellOnt 1564, 170 O.A.C. 388,[2003] O.J. No. 1658 (Ont. Div. Ct.) — referred to

Moon v. Sher (2004), 2004 CarswellOnt 4702, [2004] O.J. No. 4651, 246 D.L.R.(4th) 440, 192 O.A.C. 222 (Ont. C.A.) — referred to

Zander Sod Co. v. Solmar Development Corp. (2011), 2011 ONSC 3874, 2011CarswellOnt 6817 (Ont. S.C.J.) — referred to


Building Code Act, R.S.O. 1990, c. B.13Generally — referred to

Courts of Justice Act, R.S.O. 1990, c. C.43s. 131 — considered

Planning Act, R.S.O. 1990, c. P.13Generally — referred tos. 49 — referred to

Rules considered:

Rules of Civil Procedure, R.R.O. 1990, Reg. 194R. 49 — referred toR. 57.01 — consideredR. 57.01(1) — considered

ADDITIONAL REASONS as to costs to a decision reported at Ashburner v.Adjala-Tosorontio (Township) (2015), 2015 ONSC 3662, 2015 CarswellOnt8893, 39 M.P.L.R. (5th) 142, 43 C.L.R. (4th) 256 (Ont. S.C.J.).

E.M. Green, B. Ogunmefun, for ApplicantsJ.J. Feehely, for Respondents, Corporation of the Township of Adjala-Tosoron-

tio, Karl Korpela in his capacity as Chief Building Official, for the Corpora-tion of the Township of Adjala-Tosorontio, and Karl Korpela

R.K. Brown, for Respondents, Tuire Pickering and Paul Pickering

Quinlan J.:

1 Despite objections raised by the applicants, the respondent Townshipissued a building permit to the respondent Tuire Pickering to build a rid-ing arena. After a one day hearing, I declared that the decision of theChief Building Official for the Township of Adjala-Tosorontio was madein error because the application for the building permit did not complywith all applicable law as required by the Building Code Act. The partieshave provided written submissions on the issue of costs.


Positions of the Parties

Position of the Applicant2 The applicant seeks costs in the amount of $60,572.91 inclusive of

disbursements and HST. Although the Bill of Costs does not set out thescale, considering the hourly rates charged and the submission with re-spect to an Offer to Settle, I assume the amount sought is on a full in-demnity basis. The applicants argue that they were completely success-ful, the interpretation issues were complex and the issues were importantto them. Before the building permit was issued, the applicants provided aplanning opinion from an experienced land use planner that supportedtheir position on the application. Despite a resolution passed by Town-ship council that would have had an impact on the building permit, a stopwork order was not issued, forcing the applicants to commence thewithin application. The applicants served a reasonable Offer to Settle thatwould have obviated the need for the application, requiring the Ms. Pick-ering to enter into a Site Plan Agreement or other Development Agree-ment with the Township. The Township could have worked out a form ofagreement which would have been enforceable and would not have of-fended the Planning Act. Ms. Pickering’s costs are necessarily lower inview of her limited role in responding to the application. The applicantsraised their objections to the building permit in a timely manner and anydelays in scheduling discoveries and the hearing of the applicationshould not have a bearing on a costs award.

Position of the Respondent Township3 The respondent Township disputes the amount set out in the appli-

cants’ Bill of Costs. It submits that the amount sought is excessive, in-cluding the rates sought for the junior lawyer and clerks, and is not pro-portionate to the length of the hearing on the matter. The issues werereasonably straightforward and took less than one day to argue. TheChief Building Official acted in good faith. If the Township had deniedthe application for the building permit, it could have been faced with anapplication by Ms. Pickering because the refusal would have been incon-sistent with the Township’s historical interpretation of its zoning bylaw.The Offer to Settle was not a valid Rule 49 Offer in that the requirementsset out therein could not be enforced under s. 49 of the Planning Act.

4 Insofar as Ms. Pickering’s request for costs from the Township, nocosts should be awarded. Ms. Pickering was an active participant in theprocess and the application. The Township relied on reports and findings


of the environmental consultant retained by Ms. Pickering; the consultantwas responsible for ensuring compliance with the Oak Ridges Morainepolicies. Ms. Pickering did not assert any claim for costs against theTownship in any materials filed. Any costs awarded to the applicantsshould be shared equally by the respondents.

Position of the Respondent Tuire Pickering5 The respondent Ms. Pickering argues that the costs sought are exces-

sive considering the time expended, the relief sought and granted and thepublic nature of the main issue in the application. Although the issueswere relatively complex, the amount sought by the applicant exceedswhat a successful party could expect to recover on the principle of pro-portionality. Ms. Pickering relied on the Township in its issuance of thebuilding permit and complied with all procedures and requests. The issueof the riding arena was important to her. The legal dispute was betweenthe applicants and the Township. Ms. Pickering has been prejudiced bythe passage of time and may be prejudiced by the piecemeal approachtaken by the applicants if the applicants seek to have the riding arenademolished. The Offer to Settle does not trigger Rule 49 costs conse-quences in that its terms were not in compliance with or enforceableunder the Planning Act. The applicants should bear their own costs, or inthe alternative, the Township should pay any award of costs to the appli-cants as assessed on a partial indemnity scale.

6 Ms. Pickering is seeking her costs from the Township on a substantialindemnity basis in the amount of $25,915.60, inclusive of disbursementsand HST.

The Legal Principles7 The award of costs is governed by s. 131 of the Courts of Justice Act,

R.S.O. 1990 c. C. 43 and by Rule 57.01 of the Rules of Civil Procedure.Section 131 clothes the court with its general discretion to fix costs. Rule57.01 provides a measure of guidance in the exercise of that discretionby enumerating certain factors that the court may consider when assess-ing costs.1

1Zander Sod Co. v. Solmar Development Corp., 2011 ONSC 3874 (Ont. S.C.J.)at para. 11


8 In particular, the court may consider any of the following factors: (0.a) the principle of indemnity, including, where applicable, the

experience of the lawyer for the party entitled to the costs aswell as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasona-bly expect to pay in relation to the step in the proceeding forwhich costs are being fixed;

(a) the amount claimed and the amount recovered in theproceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthenunnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessivecaution;

(g) a party’s denial of or refusal to admit anything that shouldhave been admitted;

(h) whether it is appropriate to award any costs or more than oneset of costs where a party,

(i) commenced separate proceedings for claims thatshould have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarilyfrom another party in the same interest or defended bya different lawyer; and

(i) any other matter relevant to the question of costs. R.R.O.1990, Reg. 194, r. 57.01 (1); O. Reg. 627/98, s. 6; O. Reg.42/05, s. 4 (1); O. Reg. 575/07, s. 1.

9 Ultimately, in fixing an amount for costs, the overriding principlesare fairness and reasonableness.2

2Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291(Ont. C.A.); Moon v. Sher (2004), 246 D.L.R. (4th) 440 (Ont. C.A.)


Analysis10 The applicants were completely successful in obtaining the relief

sought. The interpretation issues were relatively complex and the issueswere important to the applicants. The applicants were reasonable in at-tempting to resolve the matter by providing a planning opinion before thebuilding permit was issued. Proportionality is a difficult concept to applyin this case where declaratory relief was sought and there was no mone-tary award. What the parties could have expected to pay is aided by Ms.Pickering’s Bill of Costs: Ms. Pickering seeks costs against the Town-ship of approximately $22,000, exclusive of HST and disbursements, ona substantial indemnity basis or $20,125 on a partial indemnity basis ascompared to the applicants’ request for costs, exclusive of HST and dis-bursements, of approximately $45,500 on a full indemnity basis. The ap-plicants’ role in the proceedings would necessarily result in the greaterexpenditure of fees.

11 I am not satisfied that the Offer to Settle that included terms thatcould not be enforced under the Planning Act was a valid Rule 49 offerand, as such, I find it is not a relevant consideration on the issue of costs.

12 I have reviewed the applicants’ Bill of Costs and Time Entry Detail.Generally, the court ought not to second guess the time spent by counsel.As the court held in Basdeo (Litigation Guardian of) v. University HealthNetwork3:

It is not the role of the court to second guess the time spent by coun-sel unless it is manifestly unreasonable in the sense that the total timespent is clearly excessive or the matter has been overly lawyered.

13 It is important to recognize that the assessment process is ultimatelynot a mechanical exercise.4 Instead, the court must take a contextual ap-proach applying the principles and factors enumerated above, to deter-mine a figure that is fair and reasonable in all the circumstances.

14 I find there was some duplication of effort by having two counsel andthat the amount sought for the junior lawyer and the clerks is high. As aresult, there will be a reduction from the amount sought in the amount of$7,000.

3[2002] O.J. No. 597 (Ont. S.C.J.)4Gratton-Masuy Environmental Technologies Inc. v. Ontario (BuildingMaterials Evaluation Commission), [2003] O.J. No. 1658 (Ont. Div. Ct.) at para.17


15 I find that costs should be awarded on a partial indemnity basis. Theamounts sought on that basis are what a party could reasonably expect topay and are reasonable and fair. They are proportionate, as much as canbe determined, to the one day hearing and the issues. Accordingly, costswill be ordered payable on a rate of 67% of $38,489 ($45,489 minus$7,000) in the amount of $25,787.63 plus HST of $3,352.39 and dis-bursements of $9,170.34 for a total award of costs of $38,310.36.

16 In view of the reliance placed by the Township on the consultant re-tained by Ms. Pickering and Ms. Pickering’s active participation in boththe process and the application, I am satisfied that the applicant’s costsshould be borne on a joint and several basis as between the respondents.Considering these factors and the fact that Ms. Pickering did not seekcosts against the Township in her motion materials, I find that it is notreasonable or fair that the Township should pay Ms. Pickering’s costs.

17 Accordingly, the respondents shall pay to the applicants their costs inthe amount of $38,310.36.

Order accordingly.


[Indexed as: Roni Excavating Ltd. v. Sedona DevelopmentGroup (Lorne Park) Inc.]

In the Matter of the Construction Lien Act, R.S.O. 1990, c. C.30

Roni Excavating Limited, Plaintiff and Sedona DevelopmentGroup (Lorne Park) Inc., Casaco Developments Inc. and

Casimiro Holdings Inc., Defendants


Docket: CV-12-3238-00

2015 ONSC 389

Ricchetti J.

Heard: December 11, 12, 2014


Construction law –––– Construction and builders’ liens — Owner — Deter-mining who is owner –––– Defendants C acquired land for development — Pro-ject proceeded to point where pre-sales could be commenced — C agreed to sellland to defendant S — Agreement provided that S had positive obligations tocomplete development and sell residential units — Agreement provided that Calso had positive obligations including permitting financing on land — S contin-ued with completion of project — Construction was substantially completewhen S ran into financial difficulties — Construction liens were registered ontitle to land and litigation ensued — Money was paid into court — Issue waswhether C were statutory owners as defined in Construction Lien Act — Partiesagreed to bring motion for determination of issues by way of summary judg-ment — Motion granted — It was appropriate to grant summary judgment as itwas determined that there was no genuine issue requiring trial for fair and justdetermination of issues — C had interest in land on which improvement tookplace — At minimum, improvement was made with C’s knowledge and con-sent — C implicitly requested work done by lien claimants — C were “entrepre-neur” in project based on clear and unambiguous terms of agreement and par-ties’ actions taken in furtherance of agreement — C still had significant role incompletion, construction and sale of project — C would benefit from improve-ment — Substance of agreement was not just mere financing of balance ofpurchase price — Substance of transaction was joint venture — There was im-plied request by C for provision of supplies and services for improvement onland — C were statutory owners — S was also statutory owner for improve-ment — Money in court were trust funds for contractors who contracted withdefendants.

Roni Excavating Ltd. v. Sedona Development Group 279

Construction law –––– Contracts — Payment of contractors and subcon-tractors — Miscellaneous –––– Defendants C acquired land for development —Project proceeded to point where pre-sales could be commenced — C agreed tosell land to defendant S — Agreement provided that S had positive obligationsto complete development and sell residential units — Agreement provided thatC also had positive obligations including permitting financing on land — S con-tinued with completion of project — Construction was substantially completewhen S ran into financial difficulties — Construction liens were registered ontitle to land and litigation ensued — Money was paid into court — Issue waswhether C were statutory owners as defined in Construction Lien Act — Partiesagreed to bring motion for determination of issues by way of summary judg-ment — Motion granted — It was appropriate to grant summary judgment as itwas determined that there was no genuine issue requiring trial for fair and justdetermination of issues — C had interest in land on which improvement tookplace — At minimum, improvement was made with C’s knowledge and con-sent — C implicitly requested work done by lien claimants — C were “entrepre-neur” in project based on clear and unambiguous terms of agreement and par-ties’ actions taken in furtherance of agreement — C still had significant role incompletion, construction and sale of project — C would benefit from improve-ment — Substance of agreement was not just mere financing of balance ofpurchase price — Substance of transaction was joint venture — There was im-plied request by C for provision of supplies and services for improvement onland — C were statutory owners — S was also statutory owner for improve-ment — Money in court were trust funds for contractors who contracted withdefendants.

Construction law –––– Construction and builders’ liens — Practice on en-forcement of lien — Miscellaneous –––– Defendants C acquired land for devel-opment — Project proceeded to point where pre-sales could be commenced —C agreed to sell land to defendant S — Agreement provided that S had positiveobligations to complete development and sell residential units — Agreementprovided that C also had positive obligations including permitting financing onland — S continued with completion of project — Construction was substan-tially complete when S ran into financial difficulties — Construction liens wereregistered on title to land and litigation ensued — Money was paid into court —Issue was whether C were statutory owners as defined in Construction LienAct — Parties agreed to bring motion for determination of issues by way ofsummary judgment — Motion granted — It was appropriate to grant summaryjudgment as it was determined that there was no genuine issue requiring trial forfair and just determination of issues — C had interest in land on which improve-ment took place — At minimum, improvement was made with C’s knowledgeand consent — C implicitly requested work done by lien claimants — C were“entrepreneur” in project based on clear and unambiguous terms of agreementand parties’ actions taken in furtherance of agreement — C still had significant


role in completion, construction and sale of project — C would benefit from im-provement — Substance of agreement was not just mere financing of balance ofpurchase price — Substance of transaction was joint venture — There was im-plied request by C for provision of supplies and services for improvement onland — C were statutory owners — S was also statutory owner for improve-ment — Money in court were trust funds for contractors who contracted withdefendants.

Construction law –––– Construction and builders’ liens — Practice on en-forcement of lien — Entitlement to summary and default judgment — Mis-cellaneous –––– Defendants C acquired land for development — Project pro-ceeded to point where pre-sales could be commenced — C agreed to sell land todefendant S — Agreement provided that S had positive obligations to completedevelopment and sell residential units — Agreement provided that C also hadpositive obligations including permitting financing on land — S continued withcompletion of project — Construction was substantially complete when S raninto financial difficulties — Construction liens were registered on title to landand litigation ensued — Money was paid into court — Issue was whether Cwere statutory owners as defined in Construction Lien Act — Parties agreed tobring motion for determination of issues by way of summary judgment — Mo-tion granted — It was appropriate to grant summary judgment as it was deter-mined that there was no genuine issue requiring trial for fair and just determina-tion of issues — C had interest in land on which improvement took place — Atminimum, improvement was made with C’s knowledge and consent — C im-plicitly requested work done by lien claimants — C were “entrepreneur” in pro-ject based on clear and unambiguous terms of agreement and parties’ actionstaken in furtherance of agreement — C still had significant role in completion,construction and sale of project — C would benefit from improvement — Sub-stance of agreement was not just mere financing of balance of purchase price —Substance of transaction was joint venture — There was implied request by Cfor provision of supplies and services for improvement on land — C were statu-tory owners — S was also statutory owner for improvement — Money in courtwere trust funds for contractors who contracted with defendants.

Cases considered by Ricchetti J.:

Advanced Construction Techniques Ltd. v. OHL Construction Canada (2013),2013 CarswellOnt 18456, 2013 ONSC 7505, 27 C.L.R. (4th) 213, [2013]O.J. No. 6013 (Ont. S.C.J.) — considered

Bird Construction Co. v. Ownix Developments Ltd. (1981), 20 R.P.R. 196, 125D.L.R. (3d) 680, 5 O.A.C. 145, 1981 CarswellOnt 526, 54 N.R. 145, 33 O.R.(2d) 807 (Ont. C.A.) — considered

Bird Construction Co. v. Ownix Developments Ltd. (1984), 54 N.R. 109, (subnom. Phoenix Assurance Co. of Canada v. Bird Construction Ltd.) 8 C.L.R.242, 33 R.P.R. 221, [1984] 2 S.C.R. 199, 11 D.L.R. (4th) 1, 5 O.A.C. 109,

Roni Excavating Ltd. v. Sedona Development Group 281

1984 CarswellOnt 592, 1984 CarswellOnt 805, [1984] S.C.J. No. 39, [1984]A.C.S. No. 39 (S.C.C.) — considered

Celebrity Flooring Systems Ltd. v. One Shaftesbury Community Assn. (2006),2006 CarswellOnt 5995, 55 C.L.R. (3d) 184 (Ont. Master) — referred to

Cipriani v. Hamilton (City) (1976), [1977] 1 S.C.R. 169, 1976 CarswellOnt 409,1976 CarswellOnt 409F, 9 N.R. 83, (sub nom. Hamilton (City) v. Cipriani)67 D.L.R. (3d) 1 (S.C.C.) — considered

Combined Air Mechanical Services Inc. v. Flesch (2014), 2014 CarswellOnt640, 2014 CarswellOnt 641, 2014 SCC 7, 95 E.T.R. (3d) 1, (sub nom.Hryniak v. Mauldin) [2014] 1 S.C.R. 87, 27 C.L.R. (4th) 1, 37 R.P.R. (5th)1, 46 C.P.C. (7th) 217, 2014 CSC 7, (sub nom. Hryniak v. Mauldin) 314O.A.C. 1, (sub nom. Hryniak v. Mauldin) 453 N.R. 51, 12 C.C.E.L. (4th) 1,(sub nom. Hryniak v. Mauldin) 366 D.L.R. (4th) 641, 21 B.L.R. (5th) 248,[2014] S.C.J. No. 7, [2014] A.C.S. No. 7 (S.C.C.) — followed

Exteriors By Design v. Traversy (2012), 18 C.L.R. (4th) 158, 2012 CarswellOnt6727, 2012 ONSC 3164 (Ont. Master) — referred to

Geocor Engineering Inc. v. Kingston 2000 Developments Ltd. (2003), 30 C.L.R.(3d) 107, 2003 CarswellOnt 4996, [2003] O.J. No. 5101 (Ont. S.C.J.) —considered

JDM Developments Inc. v. J. Stollar Construction Ltd. (2005), 2005 Carswell-Ont 6486, 48 C.L.R. (3d) 296, [2005] O.J. No. 4817 (Ont. S.C.J.) —considered

Ken Gordon Excavating Ltd. v. Edstan Construction Ltd. (1984), [1984] 2S.C.R. 280, 12 D.L.R. (4th) 481, 53 N.R. 352, 5 O.A.C. 208, 9 C.L.R. 12,1984 CarswellOnt 734, 1984 CarswellOnt 806 (S.C.C.) — considered

Kieswetter Demolition (1992) Inc. v. Traugott Building Contractors Inc. (2014),30 C.L.R. (4th) 59, 2014 CarswellOnt 2647, 2014 ONSC 1397 (Ont.S.C.J.) — referred to

Muzzo Brothers Ltd. v. Cadillac Fairview Corp. (1981), 1981 CarswellOnt 529,34 O.R. (2d) 461, 21 R.P.R. 23 (Ont. H.C.) — considered

Northern Electric Co. v. Manufacturers Life Insurance Co. (1976), 1976 Car-swellNS 32, [1977] 2 S.C.R. 762, 18 N.S.R. (2d) 32, 12 N.R. 216, 79 D.L.R.(3d) 336, 20 A.P.R. 32, 1976 CarswellNS 32F (S.C.C.) — considered

Orr v. Robertson (1915), 1915 CarswellOnt 136, 34 O.L.R. 147, 23 D.L.R. 17,[1915] O.J. No. 54 (Ont. C.A.) — considered

Parkland Plumbing & Heating Ltd. v. Minaki Lodge Resort 2002 Inc. (2009),2009 CarswellOnt 1522, 2009 ONCA 256, 305 D.L.R. (4th) 577, 78 C.L.R.(3d) 1, 250 O.A.C. 232, 77 R.P.R. (4th) 159, [2009] O.J. No. 1195 (Ont.C.A.) — considered


Construction Lien Act, R.S.O. 1990, c. C.30Generally — referred tos. 1(1) “contractor” — considered


s. 1(1) “owner” — considereds. 4 — referred tos. 9 — considereds. 67(1) — considereds. 67(2) — considereds. 67(3) — considereds. 78(1) — considered

Mechanics’ Lien Act, R.S.O. 1980, c. 261s. 1(1)(f) “owner” — considered

Rules considered:

Rules of Civil Procedure, R.R.O. 1990, Reg. 194R. 20.04(2) — consideredR. 20.04(2)(b) — referred toR. 20.04(2.1) [en. O. Reg. 438/08] — consideredR. 20.04(2.2) [en. O. Reg. 438/08] — considered

Words and phrases considered:

Entrepreneur

Two definitions of entrepreneur are as follows:

Merriam-Webster: “one who organizes, manages and assumes therisks of a business or enterprise”

Dictionary.com: “a person who organizes and manages any enter-prise, especially a business, usually with considerable initiative andrisk”

MOTION by parties for summary judgment.

R. Kennaley, for PlaintiffC. Reed, for Defendants

Ricchetti J.:

The Summary Judgment Motion1 This is a summary judgment motion.2 There are a number of agreements which need to be noted:

a) all lien claimants agreed to be bound by the decision on thismotion;

b) all parties agreed leave should be granted under the ConstructionLien Act for this motion to be heard;

Roni Excavating Ltd. v. Sedona Development Group Ricchetti J. 283

c) all parties agreed that this matter can and should be heard by wayof summary judgment motion on the affidavit evidence and crossexaminations.

3 The primary issue is whether Casaco Developments Inc. andCasimiro Holdings Inc. (“Casaco/Casimiro”) are statutory owners as de-fined in the Construction Lien Act for the improvement which forms thebasis of the liens, namely the construction of the residential homes on theLorne Park Project, as defined below:

a) If Casaco/Casimiro are statutory owners under the ConstructionLien Act, s. 9 of the Construction Lien Act makes the proceeds ofsale of the subject lands (presently in court) trust funds; or

b) If Casaco/Casimiro are not statutory owners under the Construc-tion Lien Act, subject to holdback liability, Casaco/Casimirowould have priority to those funds in court for the unpaidpurchase price.

4 The Lien Claimants are the trades who supplied materials or servicesto the construction of the Lorne Park Project as described below. TheLien Claimants submit that Casaco/Casimiro are statutory owners underthe Construction Lien Act. As a result, the monies in court are trust fundsfor the “contractor”, which they say are the Lien Claimants.

5 Casaco/Casimiro submit that they are not statutory owners under theConstruction Lien Act as they made no “request” for the improvementbeing the construction of the residential homes in the Lorne Park Project.Casaco/Casimiro submit that the development work and the constructionwork are two different improvements for the Lorne Park Project.Casaco/Casimiro submit that the development improvement was com-plete by early 2009 and their sole interest, after 2010 during the construc-tion, was to receive the balance of the purchase price under its agreementto sell the subject lands. Casaco/Casimiro submit that the entire benefitof the construction/sale of the residential homes was for Sedona.Casaco/Casimiro submit that, after 2010, Sedona was the sole equitableowner of all interest in the Lorne Park Project, except for the payment ofthe balance of the purchase price.

6 Casaco/Casimiro submit that, if they are owners, then Sedona is thecontractor and the proceeds in court are trust funds for Sedona’s benefit.Entitlement and priority to those trust funds would have to be subse-quently determined.

7 Sedona has not defended these proceedings.


Background Facts8 Claudio Posocco (“Posocco”) is the principal of Sedona Development

Group (Lorne Park) Inc. (“Sedona”).9 Jose Casimiro (“Casimiro”) is the principal of Casaco/Casimiro.

10 Posocco and Casimiro have, in the past, cooperated in certain residen-tial land projects.

11 In 2006, their first project, near Southdown and Lakeshore, Casimiropurchased the lands, Posocco and Casimiro developed the lands and theysold the lands prior to any residential construction. They divided theprofits.

12 In 2006, their second project was the subject lands located at 1191 -1203 Lorne Park Road (“Lands”). The Lands were purchased byCasimiro through Casaco/Casimiro. Posocco and Casimiro proceeded todevelop these lands from 2006 until approximately 2009, eventually, intoa nine townhome development (the “Lorne Park Project”). I will describethe Lorne Park Project in more detail below.

13 In 2008, Posocco and Casimiro purchased lands on Dixie Road, Mis-sissauga. Through corporations, Posocco acquired title to the lands andCasimiro provided the financing by way of a mortgage. Posocco andCasimiro entered into a written joint venture agreement dated October17, 2008. The joint venture proceeded to develop these lands. The subse-quent construction of the residential homes would require both partners’agreement.

The Lorne Park Project14 As set out above, the Lands were acquired in December 2006 by

Casimiro through Casaco/Casimiro for approximately $1,225,000.15 There is a disagreement between the Posocco evidence and the

Casimiro evidence as to the initial intention for the Lands — to developor develop and construct. For the reasons which will become evident,whatever the intention was, when the Lands were acquired in 2006, it isthe roles of their respective companies after April 2010 that is relevant toand determinative of this motion.

16 From 2006 until approximately 2009, Casimiro funded the expenses(approximately $450,000) to develop the Lorne Park Project. This in-cluded costs for architects, planners, consultants and others for suchthings as legal expenses, architectural design, soil drilling and testing,geotechnical and environmental services, and planning reports.


17 By the end of 2008 or early 2009, the Lorne Park Project had pro-ceeded to the point where pre-sales could be commenced.

18 Casimiro’s evidence was that he didn’t want to be involved in theconstruction phase of the Lorne Park Project and that by 2009 he waslooking to sell the Lands to a builder while Posocco remained interestedin proceeding with the construction of the residential homes.

19 Casimiro remained involved in the Lorne Park Project in 2009. Mar-keting and pre-sales of the nine residential townhomes was started by orthrough Sedona. Casimiro directly funded some of the marketing costs(approximately $100,000). After some point in time, Posocco started tofund the marketing costs. During this time, Posocco was also speakingwith trades, construction financiers and making preliminary arrange-ments for construction of the residential units.

20 At least 4 and perhaps as many as 7 townhomes were pre-sold by theend of 2009.

21 During 2009, draft joint venture agreements were exchanged betweenPosocco and Casimiro but no agreement was concluded.

22 In April 2009, Casimiro advised Posocco he would sell to him theLands for $2,350,000 ($1,000,000 on closing and $1,350,000 as a 2ndmortgage at 12% with partial discharges available at $150,000 for eachof the lots). No agreement materialized.

23 On December 3, 2009, Casimiro received an offer from a third partyfor the Lands for $2,500,000. The offer was not accepted byCasaco/Casimiro. It should be noted that this offer was entirely condi-tional on the purchaser being satisfied with the Lands and the develop-ment potential of the Lorne Park Project. In many ways, this offer was inessence an option by the purchaser. Casimiro submits that this offer isindicative of the fair market value of the Lands. I am not persuaded thatCasaco/Casimiro have established that either the April 2009 offer toPosocco or the December 2009 offer is proof of the fair market value ofthe Lands at the time.

24 Finally, on April 19, 2010 Posocco and Casimiro, through their com-panies, entered into an Agreement of Purchase and Sale (“Agreement”)for the Lands. It is the substance of this Agreement, the relationship be-tween the parties created by this Agreement and their subsequent actionswhich are critical to and determinative of this summary judgmentmotion.


The Agreement25 The relevant portions of the Agreement provide as follows:

The Purchaser agrees to purchase from the Vendor, and the Vendoragrees to sell all and singular that certain parcel or tract of land andpremises, situate, lying and being in the City of Mississauga being aparcel of land of approximately two (2) acres known municipally as1195 - 1197 Lorne Park Road and 1203 Lorne Park Road (the “Pro-perty”), for the price and on the terms and conditions hereinafter setout:

Purchase Price

1. The purchase price (the “Purchase Price”) shall be the total of thefollowing amounts:

(a) Two Million Five Hundred Thousand ($2,500,000.00) Dol-lars; and

(b) Interest at 12% per annum calculated monthly on One MillionFive Hundred Thousand ($1,500,000.00) Dollars from thedate that the Vendor receives One Million ($1,000,000.00)Dollars in partial payment of the Purchase Price in accor-dance with the terms of this agreement.

Purchaser’s Obligations

2. The Purchaser shall forthwith proceed with the development andsubdivision of the Property into lots to permit the construction of five(5) bungalows and four (4) semi-detached residential units (the “Res-idential Units”) and to sell and build such Residential Units and inthis regard shall at its sole cost and expense:

(a) complete all re-zoning, site and development plan approvalsand requirements and all other governmental requirements topermit the development of the property for the construction ofthe Residential Units;

(b) install and complete all services in accordance with the re-quirements of the municipality and other duly constituted au-thorities, being those services provided for in the all agree-ments entered into, or to be entered into between the Vendorand the Municipality, Region, or Public Utility (the “Devel-opment Agreements”) which shall include but not be re-stricted to:

(i) storm and sanitary sewers to service each lot and toconnect the same to municipal trunk sewers, and toprovide lateral connections to the lot line in front ofeach building site;


(ii) water service to each lot and connected to the munici-pal service;

(iii) functioning gas service;

(iv) hydro service and as required by the Municipality,street signs and a lighting system along the road;

(v) paved roads in accordance with municipalrequirements;

(vi) as required by the Municipality, gutters, curbs, publicsidewalks and walkways;

(vii) all fencing, berming, landscaping and screening re-quired to be installed pursuant to the provisions of theDevelopment Agreements;

(viii) compliance with all requirements external to the lotline of the lots as may be required by the Develop-ment Agreements;

(ix) all those obligations and responsibilities normally as-sumed by a builder of similar dwellings to includewithout limitation:

(I) a replacement of topsoil, suppression ofweeds, survey bars and water boxes and ad-justment thereof;

(II) maintaining subdivision services, utility ease-ments, other lots and access roadways, and ac-cess by utilities unimpeded, free of deposits ofsoil or mud, free of building materials, debrisor other obstructions, including conformitywith all municipal requirements with respect topreservation of trees, disposition of earth, pro-tection of ravine slopes, planting of trees andlandscaping;

(III) installation of or payment for all services andinstallations;

(IV) conformity with municipal by-laws and regu-lations and the provisions of the DevelopmentAgreements;

(V) trenching, back-filling, grading, sodding andplanting;

(VI) preventing any occupancy of the land exceptin conformity with the Development Agree-ments and municipal requirements.


(c) the sale of the Residential Units and their construction in ac-cordance with the sale requirements. The parties acknowledgethat at the date herein seven (7) of the Residential Units havebeen sold.

Vendor’s Obligations

3. The Vendor acknowledges that the development of the Propertymay require:

(a) The granting of rights of way and/or easements to utilityproviders for the construction and installation of utility ser-vices; and

(b) The execution of site plan/development agreements or agree-ments for the development and servicing of the Property;

and the Vendor agrees to without delay or cost provide such agree-ments, right of way and/or easements and conveyances as may berequired to complete the development of the Property in accordancewith the design of the Tenant.

4. The Vendor acknowledges that the Purchaser has received fromthe Laurentian Bank of Canada a letter of interest dated the 16th dayof March, 2010, a copy of which is attached hereto as Schedule “A”to provide financing for to the Purchaser for the purposes of complet-ing the development of the Property and the construction of the Resi-dential Units (the “Laurentian Letter”).

5. The Vendor agrees that to provide the mortgage security referredto in the Laurentian Letter on the following terms:

. . . . .

6. The Vendor acknowledges that the sale of the Residential Unitsrequires the Purchaser to provide mortgage security to secure a bondto The Guarantee Company of North America in the principalamount of One Hundred and Eighty ($180,000.00) Dollars andagrees to execute such mortgage security.

7. The Vendor shall not otherwise mortgage or encumber theProperty.

Payment of Purchase Price

11. The Purchase Price shall be paid to the Vendor from proceeds ofthe sale of the Residential Units providing that the proceeds fromsales, subject to maintaining an amount reasonably required for thecompletion of the development of the Property and the ResidentialUnits which is not to exceed One Hundred Thousand ($100,000.00)Dollars shall be paid, applied and distributed as follows:


(a) Firstly, to the payment of all the Corporation’s indebtednesswhich may be due and payable to third parties in accordancewith the “Budget” attached as Schedule “B”.

(b) Secondly, to the payment all indebtedness to the LaurentianBank of Canada;

(c) Thirdly, payment to the Vendor of amount or amounts not toexceed One Million Five Hundred Thousand ($1,500,000.00)Dollars in partial payment of the Purchase Price;

(d) Fourthly payment to the Vendor of interest as provided for inparagraph 1(b) in payment of the Purchase Price.

Construction Liens

13. Without limiting the generality of the foregoing, and notwith-standing any notices which the Vendor may receive from the Pur-chaser’s contractors or subcontractors, the Vendor shall not be liable,and no lien or other encumbrance shall attach to the Vendor’s interestin the Property pursuant to the Construction Lien Act (Ontario) orany other Laws, in respect of materials supplied or work done byPurchaser or on behalf of the Purchaser and the Purchaser shall sonotify or cause to be notified all its contractors and subcontractors.

14. The Purchaser shall promptly pay all of its contractors and sup-pliers and shall do any and all things necessary so as to minimize thepossibility of a lien attaching to the Property and should any suchlien be made or filed, the Purchaser shall discharge it within 5 daysfollowing the date of the registration of such lien, provided howeverthat the Purchaser may contest the validity of any such lien and in sodoing shall obtain an order of a court of competent jurisdiction dis-charging the lien from the title to the Property by payment into Courtor by furnishing to the Vendor security satisfactory to the Vendor innature and amount against all loss or damage

16. If and whenever an Event of Default occurs then:

(a) the Vendor has the immediate right of entry upon theProperty;

(b) at the Vendor’s option the Laurentian Letter and all furtheragreements resulting therefrom shall be automatically as-signed to the Vendor;

(c) at the Vendor’ option all contracts for the supply of labourand material shall automatically be assigned to the Vendor;

(d) at the Vendor’s option all agreements for the purchase andsale of the Residential Units shall automatically be assignedto the Vendor; and


(e) the balance of the Purchase Price shall become due andpayable.

26 The most significant terms of the Agreement, for the purpose of thismotion, can be summarized as follows:

a) Casaco/Casimiro agreed to sell the Lands to Sedona for$2,500,000;

b) Sedona had a positive contractual obligation to proceed to com-plete the development and construction of the Lorne Park Project:“Sedona “shall forthwith proceed with the development and sub-division of the Property into lots... and to sell and build suchResidential Units” at Sedona’s expense (emphasis added);

c) Sedona had a positive contractual obligation to sell the “Residen-tial Units and their construction in accordance with the sale re-quirements. The parties acknowledge that at the date herein seven(7) of the Residential Units have been sold”;

d) Sedona had a positive contractual obligation to exercise “all thoseobligations and responsibilities normally assumed by a builder ofsimilar dwellings”;

e) Casaco/Casimiro had a positive contractual obligation to grant, atno cost, any easements, rights of way and agreements for the de-velopment and servicing of the Lands;

f) Casaco/Casimiro had a positive contractual obligation to permitfinancing on the Lands, for an existing financing Letter of Intentfrom the Laurentian Bank, “for the purposes of completing the de-velopment of the Property and the construction of the ResidentialUnits”. In essence this was construction financing and would be-come a first charge on the Lands. Casaco/Casimiro would nothave personal liability for this construction financing but Lauren-tian Bank would have full recourse to Casaco/Casimiro’s Lands assecurity in the event of default;

g) Casaco/Casimiro had a positive obligation to permit a furthermortgage security on the Lands to The Guarantee Company ofNorth America in the amount of $180,000. This appears to be theTarion registration security by a builder for each new home to besold at $20,000 per home;

h) $1,000,000 of the first advance from Laurentian Bank was to bepaid to Casaco/Casimiro as part of the purchase price;


i) The balance of the purchase price was to be paid from the pro-ceeds of sale of the residential units (after $100,000 to be reservedor set aside “for the completion of the development of the Pro-perty and the Residential Units”) in the following order:

i. first, to pay Sedona’s indebtedness to third parties in accor-dance with a “budget”. Neither Casaco/Casimiro norSedona produced a copy of the “budget” but there was nodispute this was or would include contracts for the supplyof materials and services which Sedona would enter into tocomplete the Lorne Park Project — the residentialconstruction;

ii. secondly, to repay the construction financing to LaurentianBank;

iii. thirdly, the balance of the purchase price principal; and

iv. fourthly, interest on the balance of the purchase price at12%.

The order of payment meant that Casaco/Casimiro would only bepaid after the costs to construct and the construction financing waspaid from the proceeds of sale of the townhomes. In other words,the remaining $1,500,000 would only be paid to Casaco/Casimirofrom any net profits, if any, upon completion of the Lorne ParkProject;

j) Title would pass directly from Casaco/Casimiro to the third partyhome buyer.

k) Casaco/Casimiro were not to be responsible for construction liens.No one suggested that this provision was enforceable to deny theLien Claimants rights under the Construction Lien Act. See s. 4 ofthe Construction Lien Act; and

l) In the event of default, Casaco/Casimiro had the right to take anassignment of the construction financing, the agreements ofpurchase and sale of the townhomes, and all contracts for the sup-ply of labour and materials;

27 In June 2010 Laurentian Bank advised it would not finance the LornePark Project if the land was valued at $2,500,000. Posocco proposed toCasimiro a revised Agreement for $1,800,000 plus a $700,000 bonus —for a total of $2,500,000 - the same price as set out in the Agreement.Posocco submits that an amending agreement was signed to this effect.Casimiro submits that no such executed amending agreement exists and


that the copy produced contains his forged signature. However, nothingturns on this as both the Agreement and the alleged amending agreementcontain the same terms described above except for how the purchaseprice was to be allocated. For simplicity I will continue to refer to the“Agreement”.

28 The construction financing with Laurentian Bank was completed inDecember 2010. Casaco/Casimiro received $800,000 of the purchaseprice instead of the $1,000,000 set out in the Agreement. Despite thebreach of the Agreement Casimiro took no steps to enforce his rightsunder the Agreement. Instead, he considered the balance of the purchaseprice owed to Casaco/Casimiro under the Agreement to be $1,700,000.The fact the result was an even greater balance to be paid from any netprofits from the construction and sale of the townhomes, was not ad-dressed by Casimiro.

29 Casimiro submits that the $2,500,000 purchase price under the Agree-ment was the fair market value of the Lands. However, during oral sub-missions Defence counsel was asked, if this was accurate, why wouldCasaco/Casimiro sell the Lands for that price but subordinate being paidfor the Lands until after the construction trades were paid and the con-struction financing was repaid? In other words, why risk payment of thepurchase price on the success of the construction and sale of the LornePark Project? In my view, there was no reasonable answer to thisquestion.

30 Similarly, Defence counsel was asked why Casaco/Casimiro didn’ttransfer the Lands and assume a Vendor Take Back mortgage, whichcould have been postponed to the construction financing. This proposalhad been discussed as early as April 2009. The response was that thiswould avoid land transfer tax being paid twice since the individual lotsand homes would be transferred directly from Casaco/Casimiro to thethird party home buyers. The problem with this answer is that, even at ahigh 2% land transfer tax rate on the $2,500,000 price, this would onlybe approximately $50,000 and this cost is usually payable by the pur-chaser. This amount appears nominal compared with the risks to a ven-dor of subordinating and risking the payment of the substantial balanceof the purchase price to the net profits of a hopefully successful construc-tion project.

31 After the Agreement was executed, Sedona continued with the com-pletion of the Lorne Park Project. Sedona dealt with the municipality.Sedona proceeded with the sale, the necessary steps to arrange for and


the construction of the townhomes. Sedona was the only party who con-tracted with the suppliers and trades for the construction of thetownhomes. Sedona was the only party who contracted with the thirdparty home buyers of the townhomes.

32 The construction contracts between Sedona and, at least some of theLien Claimants, contained a provision that the contractor’s rights andremedies were limited to Sedona and no other third party. No one at-tempted to suggest that this provision was enforceable at law to deny theLien Claimants their statutory lien rights and trust claims under the Con-struction Lien Act.

33 Sedona paid the trades for the construction of the Lorne Park Project.There is no doubt that many of the payments to the trades were madeusing the construction financing.

34 All the townhomes were sold by Sedona.35 Construction was substantially completed when Sedona ran into fi-

nancial difficulties.36 Construction liens were registered on title to the Lands. Laurentian

Bank’s construction financing went into arrears. The third party homebuyers were concerned about their deposits and their rights to purchasethe townhomes.

37 Title to the Lands continued to remain in the name ofCasaco/Casimiro.

38 Litigation ensued.39 The various judicial proceedings relating to the Lorne Park Project

were case managed. The agreements of purchase and sale to the thirdparty home buyers were completed through vesting orders upon the buy-ers paying the balance owed under their agreements of purchase and saleinto court.

40 All parties agreed that Laurentian Bank had priority to a portion ofthe monies in court. As a result, Laurentian Bank was repaid its construc-tion financing.

41 After payment out to Laurentian Bank, there remain substantial mon-ies in court. However, there are not sufficient monies to pay bothCasaco/Casimiro and the Lien Claimants. There will be a considerableshortfall to whichever party does not have priority to the funds in court.


Analysis

Leave and Summary Judgment42 The Construction Lien Act provides:

67. (1) The procedure in an action shall be as far as possible of asummary character, having regard to the amount and nature of theliens in question.

(2) Interlocutory steps, other than those provided for in this Act, shallnot be taken without the consent of the court obtained upon proofthat the steps are necessary or would expedite the resolution of theissues in dispute.

(3) Except where inconsistent with this Act, and subject to subsection(2), the Courts of Justice Act and the rules of court apply to pleadingsand proceedings under this Act.

43 Summary judgment is available in Construction Lien actions. SeeExteriors By Design v. Traversy, 2012 ONSC 3164 (Ont. Master) andKieswetter Demolition (1992) Inc. v. Traugott Building Contractors Inc.,2014 ONSC 1397 (Ont. S.C.J.).

44 I am satisfied that this is a proper case to grant leave to bring a sum-mary judgment motion. Clearly, the determination of which of the twoparties, Casaco/Casimiro or the Lien Claimants, has priority to the fundsin court will expedite the resolution of the remaining issues in theseproceedings.

45 Rule 20.04 of the Rules of Civil Procedure provides: (2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring atrial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim determined bya summary judgment and the court is satisfied that it is appro-priate to grant summary judgment

(2.1) In determining under clause (2) (a) whether there is a genuineissue requiring a trial, the court shall consider the evidence submittedby the parties and, if the determination is being made by a judge, thejudge may exercise any of the following powers for the purpose, un-less it is in the interest of justice for such powers to be exercised onlyat a trial:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent

3. Drawing any reasonable inference from the evidence


(2.2) A judge may, for the purposes of exercising any of the powersset out in subrule (2.1), order that oral evidence be presented by oneor more parties, with or without time limits on its presentation.

46 In Combined Air Mechanical Services Inc. v. Flesch, 2014 SCC 7(S.C.C.), the Supreme Court set out an approach to summary judgmentmotions where it is claimed there is “no genuine issue requiring a trial”.

[49] There will be no genuine issue requiring trial when the judge isable to reach a fair and just determination on the merits on a motionfor summary judgment. This will be the case when the process (1)allows the judge to make the necessary findings of fact, (2) allowsthe judge to apply the law to the facts, and (3) is a proportionate,more expeditious and less expensive means to achieve a just result.

47 In this case, the parties agreed to have the issues determined by wayof summary judgment. See R. 20.04(2) (b). In any event, I am satisfied itis appropriate to grant summary judgment in this case as I have deter-mined there is no genuine issue requiring a trial for a fair and just deter-mination of the issues set out above.

48 While Casimiro takes issue with the credibility of Sedona, I am notpersuaded that there are any credibility issues which require further evi-dence or viva voce evidence. As I stated above, the primary issue iswhether Casaco/Casimiro are statutory owners under the ConstructionLien Act and this can be determined based on the terms of the Agreementand the respective roles of the parties after the Agreement was executed.

49 In the same manner, it is not necessary to determine whether therewas in 2006 through 2009 a joint venture agreement between Sedona andCasaco/Casimiro with respect to the construction of the townhomes orthat such an intention existed in 2006.

What constitutes a Statutory Owner?50 The Construction Lien Act defines “owner” as follows:

“owner” means any person, including the Crown, having an interestin a premises at whose request and,

(a) upon whose credit, or

(b) on whose behalf, or

(c) with whose privity or consent, or

(d) for whose direct benefit,

an improvement is made to the premises but does not include a homebuyer;


51 This is referred to as a “statutory owner”. There may or may not bemore than one statutory owner for Construction Lien Act purposes..

52 There is a three part test for a party to be a statutory owner under theConstruction Lien Act:

a) The party must have an interest in the premises;

b) The party must have requested the improvement in the premises;and

c) The improvement on the premises must have been made upon thatparty’s credit or behalf or with that party’s privity or consent orfor that party’s direct benefit.

53 As stated in Advanced Construction Techniques Ltd. v. OHLConstruction Canada, 2013 ONSC 7505 (Ont. S.C.J.) at para. 151,[2013] O.J. No. 6013 (Ont. S.C.J.) whether or not a party is a statutoryowner is dependent on the circumstances of each case.

54 The registered owner of property may or may not be a statutoryowner under the Construction Lien Act. In Bird Construction Co. v.Ownix Developments Ltd., [1984] 2 S.C.R. 199 (S.C.C.) [hereinafterPhoenix Assurance] at p. 213, 1984 Canlii 79 the Supreme Court com-mented on the definition of “owner” under Ontario’s Mechanics Lien Actand stated:

In applying these provisions of the Act, it must be remembered that“owner” under the statute is not necessarily the registered or legalowner of the fee. The security afforded by the Act is a claim againstthe interest of the person requesting the work and whose interest is tobe thereby enhanced.

55 In Bird Construction Co. v. Ownix Developments Ltd. (1981), 33O.R. (2d) 807, 125 D.L.R. (3d) 680 (Ont. C.A.) Wheatherson J.A. stated:

Although the statutory definition of “owner” in s. 1(1)(d) of the Act“includes any person”, etc., it is not, in my opinion, an extended, butrather a comprehensive definition of an owner against whose estateor interest a lien may attach under s. 5 [now s. 6] of the Act. In San-derson Pearcy & Co. Ltd. v. Foster (1923), 53 O.L.R. 519, Middle-ton J. said at p. 521:

But this definition was only intended as a definition, andnot as a means of fixing upon the owner some liability fora kind of lien not given by the statute. There are manycases in which several “own” land. The case of landlordand tenant is specially provided for, but joint ownership,tenancy in common, life-estates, etc., are not. The inten-


tion of the statute clearly is to prevent any one who has anestate or interest in lands upon which a lien may beclaimed under secs. 6 and 8 [now ss. 5 and 7] from havingliability imposed upon his estate unless there is on hispart, first, a request, and, secondly, one or more of thealternative requirements mentioned.

How does the Court determine whether a party requested theImprovement?

56 In Cipriani v. Hamilton (City) (1976), [1977] 1 S.C.R. 169 (S.C.C.) atp. 173, (1976), 67 D.L.R. (3d) 1 (S.C.C.), Chief Justice Laskin held that“direct dealing” was not a necessary requirement in finding that a requestis made.

57 In Orr v. Robertson (1915), 34 O.L.R. 147, 23 D.L.R. 17 (Ont. C.A.),the Court of Appeal held that work “can be found to have been per-formed at the request of a person” so as to make him an “owner” underthe lien legislation even though the request was not made directly by thatperson but instead someone acting on the person’s behalf.

58 In Geocor Engineering Inc. v. Kingston 2000 Developments Ltd.(2003), 30 C.L.R. (3d) 107, [2003] O.J. No. 5101 (Ont. S.C.J.) at paras.16-18 and in Advanced Construction Techniques Ltd. v. OHLConstruction Canada, 2013 ONSC 7505 (Ont. S.C.J.) at para 148, [2013]O.J. No. 6013 (Ont. S.C.J.), the court concluded that a request for thepurposes of determining whether a party was a statutory owner under theConstruction Lien Act could be implied or inferred from all the surround-ing circumstances even if there was no direct dealing between the“owner” and the “lien holders”.

59 In considering the “totality of the circumstances”, one must considerthe relationship between the parties. Where there is an agreement be-tween the parties, it is the substance of the transaction and not the formof the agreement between the parties that must be considered. InParkland Plumbing & Heating Ltd. v. Minaki Lodge Resort 2002 Inc.,2009 ONCA 256, 305 D.L.R. (4th) 577 (Ont. C.A.), the Court of Appealobserved at paras. 67 - 68 that:

The absence of direct dealings between the person said to be anowner under the Act and construction suppliers is only one factor toconsider in examining the relationship between the parties. It is notdeterminative. Were it otherwise, a developer could easily escape itsobligations to suppliers by the simple device of arranging for an as-sociated or related company to directly engage suppliers for the pro-


vision of services or materials. This would defeat the intended pro-tection provided to lien holders under the Act. For this reason, thecourts have recognized that a ‘request’ for work to be done may beinferred from the totality of the circumstances, viewed in light of thesubstance of the relationship between the parties: Phoenix, [1984] 2S.C.R. 199, at pp. 215-18; Cipriani, [1977] 1 S.C.R. 169, at p. 173;Northern Electric, at p. 769; Roboak, [1986] O.J. No. 2681, at pp.203-04; Muzzo, at pp. 469-71; Orr v. Robertson (1915), 23 D.L.R. 17(Ont. C.A.), at p. 18.

Nor was the trial judge’s reliance on Muzzo misplaced. In that case,the court was concerned with the meaning of ‘owner’ under s. 1(1)(d)of the Mechanics’ Lien Act, R.S.O. 1970, c. 267, a predecessor stat-ute to the current Act. The court considered Phoenix, Northern Elec-tric and Cipriani and, consistent with these authorities, concludedthat a request by a person to have work performed could be inferredfrom all the circumstances of the case. Thus, in Muzzo, a vendor ofsubdivision land was held to be an owner for the purpose of a lienclaim where, following the sale transaction, the vendor remained theregistered owner of the land and retained the rights to approve build-ing plans and to repurchase the land on certain events.

60 In Muzzo Brothers Ltd. v. Cadillac Fairview Corp. (1981), 34 O.R.(2d) 461 (Ont. H.C.), Justice West had the following to say:

These cases support two general principles; that the substance, andnot merely the form, of the relationship between the parties must beconsidered and that a request to have work performed may be in-ferred from a consideration of all the circumstances even in the ab-sence of direct dealings between the parties.

61 The Defence submits that the authorities suggest that for a registeredowner to be a statutory owner, the court should find the owner to be an“entrepreneur”. The authorities relied on by the Defence do not definewhat constitutes an entrepreneur. I should add that “entrepreneur” is nota requirement of the Construction Lien Act’s definition of “owner”.

62 Two definitions of entrepreneur are as follows:

• Merriam-Webster: “one who organizes, manages and assumes therisks of a business or enterprise.”

• Dictionary.com: “a person who organizes and manages any enter-prise, especially a business, usually with considerable initiativeand risk.”


63 In Ken Gordon supra, the Supreme Court used the following analysisto determine whether the party in that case was an “entrepreneur”:

It is clear that OHC, as a Crown corporation, can qualify as an ownerunder the Act (s. 1(1)(d)). OHC has an interest or estate in theselands. By its arrangements and relationship with E, OHC has a veryextensive interest, in the broader sense of the word, but over andabove all these considerations is the similarity of the relationship be-tween OHC and E to those relationships examined by this Court inNorthern Electric Co. v. Manufacturers Life Insurance Co., [1977] 2S.C.R. 762, Hamilton (City of) v. Cipriani, [1977] 1 S.C.R. 169, andPhoenix, supra. In each case the entrepreneur of the project, thoughwith varying final positions or interests, was found to be an ownerunder the Act. OHC, on these authorities, clearly falls within the stat-utory definition of an owner, and in this, I am in respectful agreementwith all the others below.

64 Obviously, a party who organizes, manages a project and assumes arisk of the project is an entrepreneur. An entrepreneur’s role will varyfrom project to project. The degree of organization, management and riskwill also vary from project to project. An entrepreneur need not carry outall three roles and could still be an entrepreneur.

65 Whether a party might or might not be an “entrepreneur” is not defin-itive as to whether the court should imply a request for the improvement.I am not persuaded there is any “magic” to the word “entrepreneur”. If aparty is an entrepreneur, namely the party has a role and interest in theproject, depending on the role and interest of that party, the court couldand should consider that as a factor in determining whether the party im-plicitly requested the improvement.

66 All the circumstances relating to the party, including the party’s inter-est in the lands, the role of the party before, during and after the improve-ment, the party’s interest in the financial aspects of the improvement,must all be considered as factors in the court’s determination.

67 Once all the relevant circumstances are considered, the court mustproceed to determine whether, in those circumstances, it is reasonable forthe court to imply a request by that party for the supply or services pro-vided to the improvement.

The Position of the Parties on Statutory Owner68 It is common ground that Casaco/Casimiro have an interest in the

Lands on which the improvement took place. It is also common ground


that the improvement was made with, at a minimum, theCasaco/Casimiro’s knowledge and consent.

69 The issue which separates the parties is whether there was a “request”by Casaco/Casimiro for the improvement in the Lands.

70 The Lien Claimants submit that they have established thatCasaco/Casimiro made a “request”:

a) There was only one improvement - the Lorne Park Project - com-mencing from 2006. The Lien Claimants submit Casaco/Casimirocontracted and paid for expenses relating to the development andthe subsequent construction phase of the Lorne Park Project; or

b) The work done by the Lien Claimants, even if restricted to theimprovement being the construction of the townhomes, while di-rectly at the request of Sedona, was also implicitly at the requestof Casaco/Casimiro.

71 Casaco/Casimiro submit that there was no request by them for thesupply of materials or services to the improvement for which the LienClaimants liens arose:

a) There were two separate improvements. Casaco/Casimiro wereonly involved in the development improvement and not the con-struction improvement of the Lorne Park Project; and

b) The construction improvement was done solely at the request ofSedona.

72 The Lien Claimants rely heavily on Bird Construction Co. v. OwnixDevelopments Ltd., [1984] 2 S.C.R. 199 (S.C.C.) as having direct appli-cation to the present case. In Phoenix Assurance, in order to establish ahead office building in Toronto, Phoenix entered into an arrangementwith Ownix. Ownix lacked adequate financing to develop the propertythat would become the head office for Phoenix. Phoenix assisted with thefinancing. The actual construction was undertaken under a contract be-tween Ownix and the General Contractor, Bird. The Court held thatPhoenix made a request for work from the contractor Bird despite “in astrict factual sense” Ownix entered into the construction contract withBird. The Supreme Court stated:

I do not think that the interposition of Ownix and the separation ofthe guarantor and the mortgagor roles, as compared to Northern Elec-tric where the four roles were played by only two parties, is a differ-ence with legal consequences under the Act. Consequently, I con-clude, as did the Divisional Court and the Court of Appeal below,


that Phoenix did make “the request” that the work for which the lienclaim (other than third party space tenants’ improvements) was madebe done by Bird. The request was made in a strict factual sense byOwnix who, of course, entered into the construction contract withBird in the performance of its role under the development contractbetween Ownix and Phoenix. That agreement stipulated that:

The building shall be constructed by the Developer at itsexpense in accordance with detailed drawings, elevationsand specifications (including materials to be used) whichmust first be approved by Phoenix Canada and such ap-proval shall not be unreasonably withheld or delayed.

While the construction contract was signed before the developmentcontract, the latter had long negotiation roots as the parties to theproject organized finances, plans, specifications, permits and all theparaphernalia of modern urban building projects. The sequence of theexecution of these contracts is unimportant to the determination ofthe position of the parties under The Mechanics’ Lien Act, supra.

In Hamilton (City of) v. Cipriani, [1977] 1 S.C.R. 169, the City, withthe provincial agency, The Ontario Water Resources Commission, asits banker, entered into an agreement to cause a works to be built oncity land. The Commission was found to have become the generalcontractor, though actual construction was carried out under a con-struction contract entered into by the City and not the Commission.Laskin C.J., speaking for a unanimous Court, stated at p. 173:

Schroeder J.A. in the Ontario Court of Appeal, looking tothe substance of the transactions between the City, theCommission and McDougall, construed the interrelation-ship as one where the Commission became the generalcontractor for the City and, as such, proceeded to carryout its contract through another general contractor. In myopinion, this is a proper analysis, recognizing the fact thatthe Commission was being the City’s banker. The Citywas and remained the “owner” within s. 1(d) so as tomake its land lienable under s. 5, and it is idle formalismto contend that the work was not done at its request.

Ownix was in much the same position as the Commission, and Phoe-nix, like the City, was the legal owner throughout.

73 Casaco/Casimiro heavily rely on JDM Developments Inc. v. J. StollarConstruction Ltd., [2005] O.J. No. 4817 (Ont. S.C.J.) as being on “allfours” with the present case. J. Stollar Construction Limited (JSCL) wasthe owner of a number of lots in a subdivision it was developing. It was


alleged that the owner of JSCL, prior to his death, had agreed to allowJDM Developments Inc. (JDM) to build on two lots and from the sale ofthe proceeds, pay to JSCL the sum of $60,000 for each lot. JDM startedto build on the two lots. A dispute arose when JSCL refused to advancemortgage funds for the buyers. JDM liened the two lots. JDM admittedthat it was its own decision as to whether to build on a lot, the type ofhome, the price and all other terms of the sale. The Court found at para53 that JDM did not have a valid claim for lien and that his claim was inreality a claim for the sale of the building lots. The Court at para 61found that JSCL was not a statutory owner. The court went on to makethe following findings of fact and determinations at paras 63-64, 67 and69:

It is clear on the evidence that the improvements were not done uponJSCL’s request, or upon any of the required elements within the stat-utory definition of “owner”. In my view, there neither an express re-quest or a request by implication on the part of JSCL derived fromthe circumstances in order to give rise to lien rights against JSCL’sinterests sought to be charged. The evidence clearly establishes thatJDM, on its own version of the alleged oral agreement, had completecontrol over how the houses were built, designed, constructed orsold. There was no privity or consent between JDM and JSCL in thisregard. The houses were not constructed upon JSCL’s credit and cer-tainly not on JSCL’s behalf.

In order to have a valid and enforceable lien, a lien claimant mustshow that the person sought to be charged as “owner” requested di-rectly or impliedly, the work, service or material to be supplied, so asto enhance his estate or interest in the property. This requirement hasnot been met as JDM in this case intends to solely retain the benefitof the improvement. See: Constructions Builders’ and Mechanics’Liens in Canada, Macklem and Bristow, Vol. 1, p. 2-4.

I agree with JSCL’s submission that JDM seeks to lien its own im-provement. ...

I further find that the quantification of JDM’s liens have nothing todo with the price or cost of improvements to Lots 167 and 175...

Application to this case

Were there two improvements?74 It is not necessary to decide whether there were two improvements as

submitted by Casaco/Casimiro or one improvement as submitted by theLien Claimants.


75 As set out below, I am satisfied that Casaco/Casimiro are statutoryowners even if the construction phase of the Lorne Park Project wastreated as a separate improvement from the development prior to theearly part of 2009.

What is the substance of the transaction between Casaco/Casimiro andSedona?

76 The Defence submits that Casaco/Casimiro’ sole interest was to bepaid for the balance of the purchase price being the fair market value ofthe Lands at the time. I cannot agree with the Defence that the substanceof the transaction was that Sedona was building the homes solely for itsown account.

77 I conclude that Casaco/Casimiro implicitly “requested” the workdone by the Lien Claimants. Casaco/Casimiro was an “entrepreneur” inthe Lorne Park Project based on the clear and unambiguous terms of theAgreement and the actions by the parties taken in furtherance of thatAgreement. There are a number of reasons for coming to this conclusion(in no particular order):

a) The transaction set out in the Agreement is not a simple sale ofproperty as suggested by the Defence. Mr. Casimiro was a sophis-ticated investor. He had lawyers representing him. Lawyers wereinvolved in the preparation of the Agreement. Even by his ownevidence, Casimiro clearly knew the difference between develop-ment and construction. Casimiro chose to execute the Agreementand was bound by its terms. It is clear from the terms of theAgreement that Casimiro required Sedona to construct the resi-dential homes and needed the construction to take place and theLorne Park Project to be successful for Casaco/Casimiro to bepaid the balance of his purchase price. As a result, Casimiroclearly had a significant interest in the construction and sale of theresidential homes on the Lands;

b) As a sale of property for $2,500,000, if that was the fair marketvalue of the Lands as submitted by the Defence, the Agreementmakes little sense. Clearly, if the Lands were worth less than$2,500,000 then Casaco/Casimiro would have had “skin in thegame” and the balance of the terms in the Agreement would makemuch more sense in that Casimiro would be sharing in the profitsof a successful completion of the Lorne Park Project. However, itis not necessary to decide whether the Lands were worth


$2,500,000 in 2010. Assuming the Lands were worth $2,500,000in 2010, structuring the transaction to require Sedona to build thetownhomes, subordinate Casaco/Casimiro’s payment of the bal-ance of the purchase price until after payment of all the suppliersand trades contracted by Sedona and repayment of the construc-tion financing, puts the balance of the purchase price entirely atrisk and contingent on a successful construction and sale of thetownhomes by Sedona - the Lorne Park Project. This is entirelyinconsistent with Casmiro’s evidence that he did not want to beinvolved or take the risk of the construction of the townhomes. Bystructuring the transaction as he did: he required the construction,assisted in the construction by agreeing to and permitting the useof his Lands for this purpose and assumed the risk of the success-ful construction and sale of the townhomes in order to be paid thesubstantial balance of the purchase price;

c) Casaco/Casimiro could easily have taken a VTB (Vendor takeback) mortgage. Casimiro stated that he was surprised when hereturned from his trip that the Lands remained in the name of hiscompanies. He knew what a VTB was from the first offer he madeto Posocco in April 2009. He did nothing to fix the manner inwhich the Agreement was structured and allowed the Lands to re-main in the name of Casaco/Casimiro. Casimiro suggested that hislawyer provided him advice that the delayed closing was the“same practical effect as an immediate sale”. No affidavit wassubmitted by Casimiro’s lawyer. It is hard to imagine that anylawyer could have advised the Agreement had the same practicaleffect as an immediate sale and transfer of title to the Lands, whenit is clear that the balance of the Casaco/Casimiro’s purchase priceis subordinated to all lien claimants and construction financingand dependent on net profits for payout. Casaco/Casimiro had nosecurity for the balance of the purchase price. Casaco/Casimirowould only get paid if and to the extent there were net proceeds ofsale of the newly constructed homes. Even if the Defence is cor-rect that Casimiro received bad legal advice, this doesn’t alter theclear terms and conditions Casimiro agreed to in writing and thesubsequent role he played in the construction of the residentiallands through the respective obligations carried out by the “ven-dor” under the Agreement;

d) Unlike a typical agreement for the sale of property, the Agreementrequired the purchaser to construct homes on the property. The


Agreement uses the words “shall”. Sedona had no choice but toproceed to construct the residential homes or be in breach of theAgreement. In many ways, this is similar to the facts in Hamilton,where the court found that, in essence, the City used the Commis-sion to act essentially as its general contractor for theimprovement;

e) Despite the outstanding balance of the purchase price, the Agree-ment permits the Lands to be encumbered for financing, grantingof easements, rights of way and so forth. Clearly, Casimiro agreedto and accepted this role in the construction and sale of the LornePark Project and proceeded on this basis for a number of years.Casimiro agreed he would transfer title directly to the third partyhome buyers. While Casimiro’s role is a very different role thanSedona’s role in the completion and construction of the LornePark Project, it is still a significant role in the completion, con-struction and sale of the Lorne Park Project;

e. The payment of the balance of the purchase price clearly demon-strates the role and interest of Casimiro in the construction andsale of the Lorne Park Project. Casaco/Casimiro specificallyagreed to be paid the balance of the purchase price from the “pro-ceeds of sale of Residential Units” but only AFTER:

i. Deduction of $100,000 as “reasonably required for thecompletion of the development”;

ii. Payment of Sedona’s suppliers and trades; and

iii. Payment of the construction financing to Laurentian Bank;

If the Lien Claimants are successful in this motion (i.e.Casaco/Casimiro are statutory owners) then the priority of pay-ment from the funds in court is exactly in the same order asCasaco/Casimiro had agreed to pursuant to the terms in the Agree-ment. On the other hand, if Casaco/Casimiro are successful in thismotion (i.e. Casaco/Casimiro are not statutory owners)Casaco/Casimiro would be paid in priority to Sedona’s third partyobligations (i.e. the suppliers and trades), entirely contrary to theorder of payments set out in the Agreement;

f. Casaco/Casimiro had a significant role in financing the construc-tion and sale of the Lorne Park Project. Casaco/Casimiro activelyfinanced the construction by postponing payment of the balance ofthe purchase price and allowing the construction finance to be a


first charge on their Lands. Casaco/Casimiro actively participatedin the construction by permitting various agreements, rights ofway, easements etc. to encumber the Lands. Casaco/Casimiro del-egated to Sedona the detailed requirements regarding the construc-tion and sale of the townhomes as set out in paragraph 2 of theAgreement. Casaco/Casimiro would be the transferor of the land(with the newly constructed home) directly to the third party homebuyer. Casaco/Casimiro and Sedona were jointly dependent on asuccessful construction project to be paid — they both had “skinin the game”;

g. To use the language in Phoenix, Northern Electric Co. v.Manufacturers Life Insurance Co. [1976 CarswellNS 32 (S.C.C.)]and Hamilton and repeated in Ken Gordon Excavating Ltd. v.Edstan Construction Ltd., [1984] 2 S.C.R. 280 (S.C.C.), at 289,Casaco/Casimiro were “entrepreneurs” in the Lorne Park Project.To use the language of Casaco/Casimiro in their factum — “If theowners plan to benefit from the improvements being constructed...they are owners for the purposes of the Construction Lien Act.”Without any question, Casaco/Casimiro would benefit from theimprovement — the payment of the balance of the purchase pricefrom the net profits of the Lorne Park Project. The Defence sub-mits that the purchase price did not include a premium or sharingof the profits of the Lorne Park Project. Even if that was so,Casaco/Casimiro had a $1,700,000 interest or benefit in the im-provements to be constructed. I fail to see how Casaco/Casimirowould not benefit from the construction and sale of the residentialhomes;

h. Despite the submissions of the Defence, the substance of theAgreement was not just the mere financing of the balance of thepurchase price. The provisions in the Agreement which permitCasaco/Casimiro to take over the construction contracts, the con-struction financing and the third party purchase agreements wouldnot normally, by themselves, attract an implied request for thesupply or services to the improvement. Project lenders who lendmoney for construction typically have such provisions but are notstatutory owners. Such provisions are simply security interests ofthe lender until and if/when the lender chooses to exercise its rem-edies to step into the shoes of the borrower. In this case, an abilityto take over all aspects of the construction, financing and sales,when coupled with the provisions directing Sedona to build and


sell the townhomes, along with consents and agreements byCasaco/Casimiro to assist Sedona with the construction and saleof the townhomes, creates a significant involvement ofCasaco/Casimiro in the improvement;

i. Casimiro had the ability to structure the transaction in any mannerhe chose. In April 2010, Casimiro chose to do it in the mannerdescribed above whereby Casaco/Casimiro actively participated inthe Lorne Park Project and had an interest in the Lorne Park Pro-ject being financially successful; and

j. By analogy, Casaco/Casimiro’s unpaid balance is akin to an unre-gistered mortgage for the unpaid purchase price. S. 78(1) of theConstruction Lien Act provides that liens arising from an improve-ment have priority over all conveyances, mortgages or otheragreements, affecting the owner’s interest in the premises. It isimportant to note that this section refers to all “mortgages” and“other agreements”. The balance of the section in the ConstructionLien Act goes on to give “registered mortgages” priority over liensin certain circumstances and limited to certain amounts. To accedeto the Defence submissions would create a new priority in favourof an owner for unpaid purchase price which is even better thansome registered mortgages.

78 I conclude that the substance of the transaction betweenCasaco/Casimiro and Sedona was a joint venture, with respective rolesand interests, for the successful construction and sale of the Lorne ParkProject. Casaco/Casimiro was an entrepreneur in the Lorne Park Project.

Was there an implied request by Casaco/Casimiro?79 I find that, in this case, there was an implied request by

Casaco/Casimiro for the provision of supplies and services for the im-provement on the Lands. Given the role of Casaco/Casimiro in the LornePark Project set out above, which I will not repeat, it is reasonable toimply a request for the improvement made to the Lands and I do so im-ply such a request.

80 In fact, had it been necessary, in my view, an express request for theimprovement might have arisen from the fact that Casaco/Casimiro spe-cifically required Sedona to proceed with the construction and sale of thetownhomes and provided Sedona with the financial and other criticalsupport relating to the construction which was to occur on the Lands.


81 The Defence submits that the Lien Claimants have a lien solelyagainst Sedona’s interest in the Lorne Park Project. This makes littlesense as, Sedona’s only interest under the Agreement, where title re-mained with Casaco/Casimiro, was to net profits if any from the LornePark Project. This would be a “hollow” interest for the Lien Claimants toattach to despite that it was their materials and services who added to thevalue of the Lands.

Conclusion on Casaco/Casimiro as a Statutory Owner82 As a result of finding that Casaco/Casimiro made a request for the

supply of materials and services to the improvement, being the construc-tion of the residential homes, Casaco/Casimiro are statutory ownersunder the Construction Lien Act.

Is Sedona a statutory owner under the Construction Lien Act?83 Casaco/Casimiro submitted that Sedona was the owner on the basis it

had an equitable interest created by the Agreement, despite the fact theAgreement had not closed. See para 38 of the Defence factum: “Asowner in equity, Lorne Park Sedona has an interest in the Lorne Parklands.”

84 I agree. By virtue of the Agreement, Sedona had an equitable interestin the Lorne Park Project lands through the Agreement whether or notyou characterize the Agreement as a joint venture agreement.

85 Having determined that Sedona has an equitable interest, there is noissue that the supply of materials and services to the improvement wasdone at the request of and with the consent, knowledge and benefit ofSedona.

86 There is nothing in the Construction Lien Act prohibiting there fromhaving more than one statutory owner for an improvement. See CelebrityFlooring Systems Ltd. v. One Shaftesbury Community Assn. (2006), 55C.L.R. (3d) 184 (Ont. Master).

87 As a result, I find that Sedona is also a statutory owner for this im-provement. Sedona as a statutory owner has its interest in the Lands alsosubject to any construction liens.

Do Casaco/Casimiro owe a trust to the construction trades?88 If Casaco/Casimiro are statutory owners, the Defence submits the

monies in court are trust funds for the benefit of the contractor.


89 I do not accept the Defence’s alternative submission, that, ifCasaco/Casimiro is a statutory owner, Sedona was the “contractor”.

90 Contractor is defined in the Construction Lien Act as follows: “contractor” means a person contracting with or employed directlyby the owner or an agent of the owner to supply services or materialsto an improvement; (“entrepreneur”)

91 The Defence submits that, since no one contracted directly withCasaco/Casimiro, Sedona must be the contractor and the monies are trustmonies for Sedona.

92 I have determined that BOTH Casaco/Casimiro and Sedona were stat-utory owners for this improvement. Therefore, their respective interestsin the Lands are subject to the statutory trust in favour of those con-tracting with either or both of them.

93 In this case, all the suppliers and trades had contracted with Sedona.The monies in court are in trust for the Lien Claimants.

94 I make no finding whether Sedona was or was not the agent ofCasaco/Casimiro in these circumstances. This issue was not fully ad-dressed by counsel in submissions.

Conclusion95 I find that:

a) Casaco/Casimiro are statutory owners with respect to the residen-tial construction improvement on the Lorne Park Project;

b) Sedona is also a statutory owner of the residential construction im-provement on the Lorne Park Project; and

c) the monies in court are trust funds for the “contractors” who con-tracted with either Casaco/Casimiro and/or Sedona.

Costs96 Unless the parties can settle the issue of costs or both parties can

agree on making written submissions on costs, either party may arrangefor an attendance before me to make oral submissions on costs.

Motion granted.


[Indexed as: Concrete Shoring Technologies Inc. v. CivilTech Construction Ltd.]

Concrete Shoring Technologies Inc., Plaintiff v. Civil TechConstruction Ltd., Defendant

Nova Scotia Supreme Court

Docket: Hfx 409794

2014 NSSC 459

Patrick J. Murray J.

Heard: April 16, 2014


Written reasons: March 10, 2015

Civil practice and procedure –––– Summary judgment — Requirement toshow no triable issue –––– Plaintiff rented shoring equipment to defendant foruse at construction site pursuant to written contract — Under contract, defendantwas responsible to pay for equipment that was damaged or not returned, andprice list in contract specified amount to be paid for each piece of equipment —Contract also contained clause that “materials are to be counted and checked atsite at the time of delivery” (“inspection clause”) — Plaintiff commenced actionagainst defendant claiming damages for equipment that was allegedly damagedor not returned — Plaintiff brought motion for summary judgment — Motiondismissed — Plaintiff did not meet its evidentiary burden of proving that therewere no material facts in dispute — There was dispute between parties overamount of damaged and missing equipment — Price list mandated what wouldbe paid once it was established what materials were damaged or missing — Oth-erwise, it appeared that terms of contract did not automatically determine liabil-ity separate and apart from whether there was dispute about those matters —With respect to inspection clause, contract did not say what would happen ifinspection, which appeared by implication at least to be mandated, was not per-formed — There was issue as to what inspections were completed, and defen-dant stated in its affidavit evidence that it was impractical to complete inspec-tion — At this point, it could not be said that materials would be deemedsatisfactory under terms of contract with or without inspection — This was notforum to resolve matters of credibility or disagreement surrounding interpreta-tion of contract.

Cases considered by Patrick J. Murray J.:

AGC Flat Glass North America Ltd. v. CCP Atlantic Specialty Products Inc.(2010), 289 N.S.R. (2d) 290, 916 A.P.R. 290, 95 C.P.C. (6th) 250, 2010

Concrete Shoring Technologies Inc. v. Civil Tech Patrick J. Murray J. 311

CarswellNS 166, 2010 NSSC 108, [2010] N.S.J. No. 140 (N.S. S.C. [InChambers]) — followed

Coady v. Burton Canada Co. (2013), 2013 CarswellNS 619, 2013 NSCA 95,365 D.L.R. (4th) 172, 44 C.P.C. (7th) 1, 1055 A.P.R. 348, 333 N.S.R. (2d)348, [2013] N.S.J. No. 425 (N.S. C.A.) — followed

Rules considered:

Nova Scotia Civil Procedure Rules, N.S. Civ. Pro. Rules 2009R. 1.01 — consideredR. 13.04 — consideredR. 13.07 — considered

Words and phrases considered:

shoring

“Shoring” means the process of providing support to buildings while they arebeing built. In particular, it involves forms to support the concrete while it hard-ens, after which the equipment is removed.

MOTION by lessee of construction equipment for summary judgment in actionfor damages against lessor.

Gary Richard, for Concrete ShoringJohn Kulik, Q.C., for Civil Tech

Patrick J. Murray J. (orally):

Introduction1 Concrete Shoring, the Plaintiff, rents and sells shoring equipment and

products used in the “shoring process”. “Shoring” means the process ofproviding support to buildings while they are being built. In particular, itinvolves forms to support the concrete while it hardens, after which theequipment is removed. The following are examples of the types of equip-ment used; beams, frames, trusses, jacks, clamps, and vertical (forms) orshores.

2 In 2011, the Defendant, Civil Tech, was in the process of constructingseveral large apartment complexes in the Halifax Regional Municipality.There were two sites as it relates to this matter, the “Windmill Rd. Site”,and the “Larry Utech Blvd. Site”.

3 Concrete Shoring and Civil Tech entered into a contract on or aboutSeptember 21, 2011, for the rental of shoring equipment to be used at theWindmill Rd. apartment site.


4 Concrete submits that the contract stipulates that Civil Tech would beresponsible for any damaged items and any items of equipment not re-turned. The evidence submitted by Concrete is that there were both;items that were damaged and items that were not returned. Concrete isrequesting this Court to issue Summary Judgment in its favour on theissue of liability. It submits there is no genuine issue of material fact asto liability that would require a trial.

5 Concrete submits the only issue for trial on the evidence is damages.This would require an assessment and calculation of the numerous itemswhich Concrete says were damaged and not returned.

6 Concrete issued two invoices for the damaged and missing items asalleged:

1) August 2, 2012 (Inv. # 2012201A) - $61,354.80; and

2) October 9, 2012 (Inv. # 2012200 revised) - $49,548.24.7 Concrete summarized its position by stating that procedures and sys-

tems were put in place under the contract with Civil Tech. However,Civil Tech did not take advantage of those procedures. As a result, liabil-ity should fall to Civil Tech automatically.

8 A key provision in the contract therefore involves the equipment be-ing counted and inspected upon delivery.

9 Civil Tech argues that a summary judgment motion is not the time todecide the merits of the case. The weighing of evidence to determineliability should be reserved for trial.

10 Rule 13.04 of the Nova Scotia Civil Procedure Rules is designed todetermine, on the evidence, if there is a genuine issue of material factand if so, the onus shifts to the Defendant, to show that the Defence has areasonable chance of success. Just to clarify, the onus is on the mover toclarify there is no issue of material fact in dispute and then the onuswould shift to the Defendant.

11 Civil Tech states that this case is all about liability. Once liability isdetermined the issue of damages will be easily determined, says CivilTech, because the price list attached to the agreement will dictate thequantum of damages. Civil Tech says damages will be a straight forwardcalculation, but first it must be determined what equipment, if any, CivilTech is liable for, for the damaged or lost materials.

12 Civil Tech submits that what is needed to grant summary judgmenton liability is undisputed evidence as to the following facts: 1) whatequipment was damaged; and 2) what equipment was not returned, (if


any). Civil Tech argues both of these are in dispute. Civil Tech has pro-vided affidavit evidence as to damaged and missing equipment. It is dif-ferent than the affidavit evidence provide by Concrete.

13 Civil Tech is disputing these key facts and submits there is evidenceto the contrary, on every point. Civil Tech submits the court cannot sum-marily determine liability, when in order to do so the Court must firstdetermine: 1) what equipment was damaged; and 2) what equipment waslost. Civil Tech submits there is a dispute on the evidence about both, inaddition to any parts that were missing from the equipment. The “miss-ing parts” claim is an additional allegation of the Plaintiff.

The Affidavit Evidence14 Civil Tech, points to several specific paragraphs in its affidavit evi-

dence in support of its position.15 At paragraph 33 of his affidavit, Mr. Nikkhah states that as of Octo-

ber, 2012, the only pieces of equipment still in Civil Tech’s possessionwere 137 jacks. Mr. Nikkhah, who is president of the company, furtherstates that these were returned to Concrete in early October, 2012. Fur-ther, at paragraph 34, the President states:

34. As of that date, Civil Tech had returned each and every item ithad received from Concrete Shoring. Civil Tech has none of Con-crete Shoring’s equipment left in its possession.

16 The October 9, 2012 invoice submitted by Concrete for $49,948.24 issolely for items not returned. As far as Civil Tech is concerned that num-ber should be zero. Its position on the evidence is that it returned allequipment.

17 In regard to damaged material, Mr. Nikkhah states at paragraph 59 ofhis affidavit, there was only one instance when materials were damagedby them.

59. Other than the 18 shores, for which Concrete Shoring was paid,at no time did I ever agree that any materials were damaged by CivilTech. I have continued to dispute this with Mr. Verri to this day.

18 Mr. Real Rossignol filed an affidavit, as the former site supervisor forCivil Tech. He was employed by Civil Tech in 2011 and 2012 andceased employment with them in August of 2012.

19 At paragraph 14, Mr. Rossignol disputes receiving the equipment in“rental ready condition”, stating that over 50% of the panel system wasdamaged or in poor condition. Further, he stated that over 25% of the


“flyer system” was in “poor condition, and was also missing manypieces”.

20 Further at paragraphs 57 and 59 Mr. Rossignol stated as follows: 57. As I stated above, we received damaged and incomplete itemsfrom Concrete Shoring, and worked with them as best we could.

59. I personally also had a number of discussions with Alberto Verriin which I complained to him about the damaged and unusablematerials. I do not remember the exact dates of the conversations butthey took place before August 2012, when I left Civil Tech.

21 Furthermore, in addition to disputing that there were damaged andmissing items, Civil Tech argues there is very clearly a dispute as to theterms of the contract.

22 I turn now to discuss the contract which is attached to the affidavit ofMr. Verri, President of Concrete, as Exhibit “C”.

The Rental Agreement23 The terms and conditions of the contract, as “agreed to and accepted”,

by Mr. Verri and Mr. Nikkhah on behalf of the respective companies areset out in the agreement as follows:

Terms and Conditions

All materials used in rental ready condition.

Rental Rates based on a 30 day month. Invoicing to start when equip-ment leaves our yard...

Shortages and damaged materials will be charged as per out latestprice list (see attached).

Materials to be counted and checked at site at time of delivery.

Tracker will supply engineering layout, if required.

All above agreed to and accepted.

24 For the “invoicing to start when it leaves our yard”, (presumablyConcrete’s yard), then the materials would have to be counted andchecked there first.

25 The contract further states that the “materials are to be counted andchecked at site at the time of delivery”. The site would presumably bethe construction site at which Civil Tech needed the shoring. The con-tract stipulates that to be:

Re: Windmill Road Apartment Building, Lot # 1898AB, Dartmouth.


26 The evidence of Concrete is that the materials were, in fact, countedand checked at time of delivery.

27 Civil Tech states in evidence that “it was not realistic for them tocount and check the equipment at time of delivery, because until all theequipment is “laid out” on site any damage or missing material cannot bereasonably inspected.”

28 The evidence of Concrete goes further, stating that Civil Tech in fact,signed for each delivery. By doing so Concrete states that Civil Techacknowledged receiving the materials as listed, and in a “rental readycondition”.

29 The terms of the contract are, to some extent supported by the evi-dence. The “system” discussed by Concrete, which was open to be uti-lized by Civil Tech, was to conduct a count and inspection to verify thequantity and quality of the items delivered.

30 The contract is otherwise silent as to the effect of a non-inspection byCivil Tech. The implication, since invoicing starts when it leave the yardof Concrete, is that a conscious decision by Civil Tech not to inspect,could lead to Civil Tech being responsible for the condition of the equip-ment and the quantity delivered, even if there was equipment that wasdamaged or not all there.

31 Concrete argues that liability arises as a result of their system of“checks and balances”, in effect.

32 Concrete also relies on their Rental Forms. These forms have a placeat the bottom to state whether the “systems” had damage, as well as thecount for the equipment.

33 Concrete argues it has the better evidence. For the most part, it says,the equipment lists and terms of rental have been reduced to writing.Concrete states that Civil Tech on the other hand, has been more relaxedand is now forced to rely on memory and recollection, as to these mate-rial facts.

34 Concrete submits that Civil Tech is required to put its best foot for-ward. Concrete argues Civil Tech’s evidence does not seriously chal-lenge Concrete’s entitlement to summary judgment on liability.

35 Concrete submits the competing evidence, does not give rise to anissue of material fact in determining liability.

36 Concrete therefore, urges the Court to take a “robust approach” to thissummary judgment motion. This is in keeping with Rule 1.01, which re-quires, a “just speedy and efficient” approach to every proceeding.


Granting summary judgment on liability and moving matters along isjustified on these facts, says Concrete.

Mr. Verri’s Affidavit37 At paragraph 22 of President Verri’s affidavit on behalf of Concrete

he indicates that on 27 different dates, rental equipment was provided byConcrete to Civil Tech for use at their Windmill Road site. In paragraph23, he affirms that on each occasion, “at the time of delivery (as applica-ble), and in accordance with the contract, an employee of Civil Techinspected the rental equipment upon delivery or pick-up”.

38 At paragraphs 20 and 21, Mr. Verri states the same thing with respectto equipment delivered to the Larry Utech Boulevard Site, except therewere deliveries on 21 dates (instead of the 27 for Windmill Road). Likethe deliveries to Windmill Road, the evidence of Mr. Verri at paragraph21 is that:

...at the time of delivery or pick up (as applicable) and in accordancewith the contract, an Employee of Civil Tech inspected the rentalequipment, upon delivery or pick-up.

39 Mr. Verri states this was verified by Concrete’s employee Mr. Riley,who also filed an affidavit, with respect to the Utech site, Mr. Verristated at paragraph 21:

No equipment sent to the Larry Utech Blvd. Site was refused or re-turned as a result of being delivered damaged.

40 Mr. Verri states further, with respect to the Windmill Road deliveriesand/or pick up, that on one occasion only there was an issue with dam-aged equipment.

41 At paragraph 24 of his affidavit, Mr. Verri states: On one occasion, being in or around October 2011, an employee ofCivil Tech observed minor damage on material being delivered andrefused delivery. The damaged materials were removed from theWindmill Road Site and were replaced with undamaged items.

42 The total amount claimed by Concrete of $111,303.04, consisting ofthe two invoices, is for materials delivered to both sites, as shown on theinvoices. The Contract, (Exhibit “C” Verri affidavit) references only theWindmill Road Site.

43 Concrete, in its submission, states the following has been establishedby undisputable evidence:

1) Concrete Shoring delivered the goods to the Defendant;


2) The equipment was delivered in the course of a commercialrelationship;

3) The parties agreed in essence to a form of bailment;

4) As a result the equipment was at the risk of Civil Tech, while inits possession;

5) Any damaged equipment or equipment not returned would bemeasured in accordance with the price list which is in evidence.

44 In essence, the Plaintiff, Concrete, argues the Defendant, Civil Tech,failed to be precise, failed to take due diligence, and failed to keep trackof its paperwork. Consequently, Civil Tech is forced to challenge the in-tentions of the parties, under the contract, in an ex post facto manner.

45 Concrete submits on the contrary that its evidence is compelling, andis not ex post facto. It has demonstrated that Civil Tech failed to takeadvantage of the system under the terms of the contract.

46 It is clear on the evidence that Concrete rented equipment to CivilTech and that Civil Tech took delivery of that equipment. It is also clearthat Civil Tech is responsible to pay Concrete for any damaged equip-ment or equipment not returned at the prices set out in the contract.

47 There is, on the evidence, a dispute as to whether there was damagedequipment, the extent of the damage, and who caused the damage. CivilTech says they are unsure as to whether the damages was caused beforeor after delivery.

48 Some but not all of the return forms were signed by an Employee ofCivil Tech. These forms noted some of the damage.

49 Without evidence of an inspection at the time of delivery, it cannot beassumed that there was no damage before it was delivered. The contractcalls for those inspections to have taken place. There is a dispute as towhether there was any equipment which was not returned. There is also adispute as to whether the inspections took place, in accordance with thecontract.

50 Concrete states the documentation confirms the inspections. CivilTech states it was not practical to do so. The contract stated that thematerials were to be counted and checked at site at the time of delivery.On the evidence before me, Concrete did not ensure this was done. Theyleft it to Civil Tech to decide.

51 There is also a dispute as to what terms and conditions, constitutedthe contract. The lease “terms and conditions” attached to the rental


forms, did not form part of the September 12, 2011 contract (Exhibit“C”). Even so they are relied upon by Concrete in paragraph 6 of theStatement of Claim dealing with “damage beyond reasonable wear andtear”.

52 There is on its face, a further contradiction in terms between theequipment being in “rental ready condition” and clause 7 of the leaseterms and conditions, which states that the “Lessee acknowledges thatthere are no warranties of any kind...”

53 In Clause 13 of the Defence, Civil Tech, states “some” of the equip-ment was already damaged prior to its receipt and use by them.

54 To summarize there is on the evidence a dispute about the followingfacts:

1) The lease terms;

2) Whether the equipment was inspected at the time of delivery;

3) Whether the equipment was delivered in a rental ready conditions,and

4) Whether all of the equipment was returned, and if not, what equip-ment was not returned. (see letters contained as Exhibits “Q” and“S” of Mr. Nikkhah’s affidavit).

55 On this motion Concrete submits a trial is not required to establishthat some of its equipment was damaged while in the possession of theDefendant, or that in some cases was not returned at all.

Decision56 The only way in which summary judgement could be granted on lia-

bility, is if these disputed facts are not material to the question of liabil-ity. Would the law, if properly applied, permit summary judgment onthese disputed facts.

57 In Coady v. Burton Canada Co., 2013 NSCA 95 (N.S. C.A.), Saun-ders, JA, discussed the meaning of “material facts” in one of the twelveguiding principles. He stated this word takes on its ordinary meaning, “Amaterial fact, he said, is a fact that is essential to a claim or defence.”

58 On the evidence before me, I have considered the exchange of lettersbetween Mr. Verri of Concrete and Mr. Nikkhah of Civil Tech dated Au-gust 7 - 9, 2012. From these, it is evident this dispute arose almost imme-diately after the first invoice dated August 2, 2012, in the amount of$61,354.80 was issued. Within a week in fact. It is apparent the disputeover the amount of damaged and missing equipment has been an issue


for some time and perhaps from the very beginning. In order for thisCourt to grant summary judgment, the contract or agreement in questionwould have to call for a form of strict liability, under the system put inplace, as alleged by the Plaintiff. That is, liability would arise simplywithin the four (4) corners of the document.

59 The price list mandates what will be paid, once it is established whatmaterials are damaged or missing. Otherwise, it appears the terms of thethe contract signed by both parties does not automatically determine lia-bility separate and apart from whether there is a dispute about those mat-ters, which it clearly appears there is. A pertinent clause is one related toinspection, which states:

Materials to be counted and checked at the time of delivery.

60 The contract does not say however, what will happen if an inspection,which appears by implication at least to be mandated, is not performed.There is an issue as to what inspections were completed. Civil Techstated in its affidavit evidence that it was impractical to do to. This re-lates closely to another issue in dispute, whether the materials were inrental ready condition, which in turn, relates to a third issue of whetherthe equipment was damaged or merely subject to normal wear and tear.These are some of the facts, clearly in dispute from my reading of theaffidavits. Another principle from the Coady decision which is applica-ble, is that the Chamber Judge’s assessment be based on all the evidence,regardless of the source.

61 At this point, it cannot be said that the materials will be deemed satis-factory under the terms of the contract with or without an inspection.This goes to whether there was, as the Plaintiff argues, an agreed form ofbailment. While some assessment of the evidence is required under theCivil Procedure Rule 13.04, unless it is clear that there are no materialfacts in dispute, summary judgment ought not to be granted.

62 A further guiding principle in Coady at # 10 states: Summary judgement applications are not the appropriate form to re-solve disputed questions of fact or mixed law and fact, or the appro-priate inferences to be drawn from dispute facts.

63 I find the facts in dispute here to be material, in that those I havementioned and others, can or will affect the outcome of this matter andare essential to the claim or to the defence. I further find there are morefacts in dispute than merely quantum.


64 Finally, it is not the forum to resolve matters of credibility nor disa-greement surrounding the interpretation of the contract or contracts inquestion.

65 In AGC Flat Glass North America Ltd. v. CCP Atlantic SpecialtyProducts Inc., [2010] N.S.J. No. 140 (N.S. S.C. [In Chambers]), JusticeBryson described the principles to be applied when a Plaintiff is movingfor summary judgment at paragraph 13 which I adopt. These were es-poused upon by Justice Saunders in Coady when he said:

1. Summary judgment engages a two stage analysis;

2. The first stage is only concerned with the facts.

66 The judge decides whether the moving party has satisfied the eviden-tiary burden of proving there are no material facts in dispute. If there arematerial facts in dispute the moving party fails and the summary judg-ment motion is dismissed.

67 I am not satisfied that the Plaintiff, Concrete Construction, has met itsevidentiary burden of proving there are no material facts in dispute.

68 In the result, the motion for summary judgment is dismissed1.69 Order accordingly.

Motion dismissed.

1A chambers date of August 18, 2014 was set for directions to be given pursuantto Rule 13.07. Prior to the hearing date the parties waived same.

Thyssenkrupp Elevator (Canada) Inc. v. 1147335 321

[Indexed as: Thyssenkrupp Elevator (Canada) Inc. v.1147335 Ontario Inc.]

Thyssenkrupp Elevator (Canada) Inc., Plaintiff and 1147335Ontario Inc., Defendant


Docket: CV-04-280219

2015 ONSC 503

Carole J. Brown J.

Heard: January 30, 2015

Judgment: February 20, 2015

Construction law –––– Construction and builders’ liens — Practice on en-forcement of lien — Appeal and judicial review — Practice and proce-dure –––– Plaintiff was elevator manufacturer, while defendant was maintenancecompany — Parties entered into maintenance contract — Manufacturer broughtactions against company, for unpaid services and materials — Master confirmedthese lien claims — Company appealed on basis that defence of equitable set-offwas not properly considered — Appeal dismissed — Error in principle was nec-essary to overturn master’s decision — Issue of set-off was not properly raisedbefore master — Company could not raise this defence now, as they were notprevented from doing so before master — Master properly evaluated evidenceand defences pled before her — Master’s findings that there was no breach ortermination of contract by manufacturer were correct — Master’s report wasconfirmed.

Cases considered by Carole J. Brown J.:

Heyday Homes Ltd. v. Gunraj (2005), [2005] O.J. No. 2986, [2005] O.T.C. 605,44 C.L.R. (3d) 169, 2005 CarswellOnt 3061 (Ont. S.C.J.) — referred to

Housen v. Nikolaisen (2002), 10 C.C.L.T. (3d) 157, 211 D.L.R. (4th) 577, 286N.R. 1, [2002] 7 W.W.R. 1, 2002 CarswellSask 178, 2002 CarswellSask179, 2002 SCC 33, 30 M.P.L.R. (3d) 1, 219 Sask. R. 1, 272 W.A.C. 1,[2002] 2 S.C.R. 235, 2002 CSC 33, [2002] S.C.J. No. 31, REJB 2002-29758(S.C.C.) — referred to

Jordan v. McKenzie (1987), 1987 CarswellOnt 573, 26 C.P.C. (2d) 193, [1987]O.J. No. 1193 (Ont. H.C.) — referred to

Telford v. Holt (1987), 1987 CarswellAlta 188, 1987 CarswellAlta 583, 21C.P.C. (2d) 1, [1987] 2 S.C.R. 193, 41 D.L.R. (4th) 385, 78 N.R. 321, (subnom. Holt v. Telford) [1987] 6 W.W.R. 385, 54 Alta. L.R. (2d) 193, 81 A.R.385, 37 B.L.R. 241, 46 R.P.R. 234, EYB 1987-66910, [1987] S.C.J. No. 53(S.C.C.) — referred to


Zeitoun v. Economical Insurance Group (2008), 236 O.A.C. 76, 64 C.C.L.I.(4th) 52, 2008 CarswellOnt 2576, 53 C.P.C. (6th) 308, 292 D.L.R. (4th) 313,91 O.R. (3d) 131, [2008] O.J. No. 1771 (Ont. Div. Ct.) — referred to

Zeitoun v. Economical Insurance Group (2009), 73 C.C.L.I. (4th) 255, 257O.A.C. 29, 2009 ONCA 415, 73 C.P.C. (6th) 8, 307 D.L.R. (4th) 218, 2009CarswellOnt 2665, 96 O.R. (3d) 639, [2009] O.J. No. 2003 (Ont. C.A.) —referred to


Construction Lien Act, R.S.O. 1990, c. C.30Generally — referred to

Courts of Justice Act, R.S.O. 1990, c. C.43s. 111 — considered

Rules considered:

Rules of Civil Procedure, R.R.O. 1990, Reg. 194R. 54.09(3) — pursuant toR. 59.04 — referred to

APPEAL by defendant company from order of master reported at ThyssenkruppElevator (Canada) Ltd. v. 1147335 Ontario Inc. (2013), 2013 CarswellOnt 549,2013 ONSC 485, 23 C.L.R. (4th) 13 (Ont. S.C.J.), confirming lien actions byplaintiff manufacturer.

Robert Drake, for PlaintiffTanya Pagliaroli, Andrea Bolieiro, for Defendant

Carole J. Brown J.:

1 The defendant/appellant, 1147335 Ontario Inc. (“the defendant” or“the appellant”), appeals from the decision of Master Albert pursuant toRule 54.09(3) to oppose confirmation of the Master’s Report issued May10, 2013, regarding ten lien claim actions tried together by referenceunder the Construction Lien Act, RSO 1990, c. C 34 for unpaid servicesand materials under the elevator maintenance contract concluded be-tween the parties. The defendant originally opposed confirmation of theReport on numerous grounds including, inter alia, an allegation of biasagainst Master Albert and a challenge to the quantum due and owing toThyssenkrupp. The defendant has now abandoned those grounds of ap-peal and appeals only on the Master’s decision regarding equitable set-off. The Master determined that the defendant’s defence of equitable set-off had not been proven on the evidence before the Master.

Thyssenkrupp Elevator (Canada) Inc. v. 1147335 Carole J. Brown J. 323

2 The defendant/appellant submits that the Master, in dismissing its de-fence of equitable set-off in the amount of $75,000, ignored broader prin-ciples of equity and fairness governing the defence, relying instead on astrict contractual interpretation; misinterpreted the contractual provisionsgoverning the suspension of services and termination; and in requiringthe defendant to prove that the payment it made in order to secure a newmaintenance contractor flowed directly from a strict breach of the con-tract by Thyssenkrupp Elevator (Canada) Inc. (“Thyssenkrupp ”or “theplaintiff/respondent”).

3 The defendant/appellant submits that the Master confined herself toanalyzing the parties’ strict rights and obligations under the contract andoverlooked Thyssenkrupp’s breaches of the parties’ long-standing courseof conduct in its obligation to perform the contract in good faith. Theappellant argues that, in this way, the Master ignored the broader princi-ples of equity and fairness, and estoppel and good faith that support thedefence of equitable set-off. As a result, they submit that the Masterfailed to properly address the Owners’ defence of equitable set-off. Fur-ther, the defendant/appellant argues that the Master misinterpreted thecontract provisions governing the suspension of service and terminationand, without any basis in evidence, concluded that Thyssenkrupp hadmerely suspended service and not terminated it. They maintain that by sodoing, she ignored the defendant’s/appellant’s unchallenged evidencethat Thyssenkrupp had terminated the contract.

4 Finally, they argue that the Master erred in requiring the Owners toprove that the payment they made in order to secure a new maintenancecontractor flowed directly from a strict breach of the contract byThyssenkrupp.

5 The plaintiff maintains that the defendant’s ground of appeal is ad-vanced for the first time on this appeal: namely that Thyssenkrupp oughtto have been estopped from suspending maintenance services as a resultof any flood at one of the defendant’s five buildings and relates toamounts incurred following the plaintiff’s suspension of services due tothe long outstanding arrears of $122,810.30, and after notice of the sus-pension was sent. It points out that the set-off claim is tied to alleged“inadequate maintenance” performed by Thyssenkrupp as set forth in theamended statement of defence and counterclaim. It argues that the set-offrelates to a flood which occurred at one of the defendant’s five buildingsafter the plaintiff had suspended maintenance services and sent notice tothe defendant of the suspension, which was, however, received after the


flood. The plaintiff maintains that the evidence establishes that the own-ers retained a new elevator maintenance contractor, Schindler ElevatorCorporation, and, subsequently, replaced them with Quality Allied Ele-vator, which negotiated the pre-maintenance charge sought as set-off asan upfront lump sum payment to reduce monthly maintenance charges. Itis the position of the plaintiff that the defendant chose not to raise this atthe time of the trial, that as this promissory estoppel argument was notraised at trial, it is not certain that there is a full evidentiary record in thisregard, that the record before the Master is the only record that can beconsidered by this Court and, accordingly, that this does not raise a re-viewable error in Master Albert’s reasons that would warrant interven-tion by this Court.

6 It is the position of the plaintiff that the Master, in carefully consid-ered reasons of 64 pages, found that Thyssenkrupp was entitled to collecton its unpaid accounts, and was entitled to suspend services due to thenon-payment, as it did. She further found that the claim of equitable set-off had not been established. She dismissed the set-off claim finding, in-ter alia, that the owners had failed to prove “that upgrades of $5,000 perelevator were needed because Thyss failed to properly perform mainte-nance services required by the elevator contracts.”

7 As the Master heard these lien claim trials by way of reference, shewas required to provide pretrial direction necessary to prepare the refer-ence for trial. In this case, twelve such pretrial hearings were required,such that she gained familiarity with the cases, evidence and witnesses,and conducted, in essence, case management of the actions.

The Law

The Standard of Review8 A motion or cross-motion brought pursuant to Rule 59.04 is to be

dealt with substantially as an appeal from the Report. The matter is not tobe retried. The Master’s Report will not be interfered with unless therehad been some error of principle demonstrated by the Master’s reasons,some absence or excess of jurisdiction or some patent misapprehensionof the evidence. The award should not be disturbed unless it appears tobe unsatisfactory on all of the evidence: Jordan v. McKenzie, [1987] O.J.No. 1193, 26 C.P.C. (2d) 193 (Ont. H.C.); Zeitoun v. EconomicalInsurance Group (2008), 91 O.R. (3d) 131 (Ont. Div. Ct.), aff’d 2009ONCA 415 (Ont. C.A.); Heyday Homes Ltd. v. Gunraj, [2005] O.J. No.2986 (Ont. S.C.J.).


Equitable set-off9 Section 111 of the Courts of Justice Act recognizes the right to a set-

off. In an action for payment of a debt, the defendant may, by way ofdefence, claim the right to set-off against the plaintiff’s claim of a debtowed. The test for legal set-off requires that the claimant meet two con-ditions: (1) the claims must be for “debts” or for “liquidated” damages;and (2) both debts or claims for liquidated damages must be mutualcross-obligations. Mutual debts are those due from each party to theother for liquidated claims, or money demands which can be ascertainedwith certainty at the time of pleading. An assignment of the debt willdestroy the mutuality. A winding up order will also destroy the mutualityrequired for set-off at law. Therefore, the claim of the party must be en-forceable at the commencement of the winding up proceedings beforelegal set-off can be claimed.

10 Equitable set-off is available whether the defendant’s claim is liqui-dated or unliquidated and whether or not it arises out of the same con-tract. There is no requirement for mutuality. The constituent elements ofset-off, which must be established are as follows:

1. There must be some equitable basis to resist the plaintiff’sclaim;

2. The equitable ground must go to the essence of the plaintiff’sclaim; and

3. A cross-claim must be so clearly connected with the demandof the plaintiff that it would be manifestly unjust to enforcethe plaintiff’s claim without taking into consideration the de-fendant’s claim.

See: Courts of Justice Act, R.S.O. 1990, c. C 43, as amended, s.111;Telford v. Holt, [1987] 2 S.C.R. 193 (S.C.C.).

11 At trial, the defendant relied on equitable set-off.

Analysis

Was This Issue before the Master12 As regards equitable set-off, the issue as set forth in the amended

statement of defence and counterclaim and as argued before the Masterwas whether the amount sought as a set-off was required to be paid bythe defendant to Quality, a contractor retained after the defendant termi-nated the contract on December 23, 2004, to “put the elevators intoworking condition so that a successor elevator maintenance providerwould be prepared to become contractually obligated to continue the


maintenance”. Thus the set-off claim was tied to Thyssenkrupp’s allegedinadequate maintenance of the elevators. It was argued and determined infavour of the plaintiff at the trial of the lien actions.

13 On this motion, the defendant founds their set-off claim on Thyssen-krupp’s abrupt denial of service during an emergency, namely the floodin one building, in breach of the parties’ long-standing conduct to acceptlate payment and Thyssenkrupp’s good faith performance of the contract.In this regard, the plaintiff argues that this ground of appeal is new, wasnot advanced in the actions nor argued at trial, that had an argument ofestoppel been raised during the proceeding below, the plaintiff wouldhave developed a more fulsome record as regards this issue, which wasnot done, as the argument was not raised and, accordingly, there is not afull record of evidence in this regard. Further, as regards the argument ofestoppel, it is the position of the plaintiff that the defendant seeks to useestoppel as a sword rather than the shield. The plaintiff/respondent ar-gues that the defendant seeks to use this “sword” in order to claim dam-ages and equitable set-off.

14 The defendant argues that the Master overlooked the parties’ long-standing course of conduct and their continued provision of servicesthroughout the duration of the contract despite late payments and over-due amounts outstanding. They argue that the Master overlooked thisconduct on the part of Thyssenkrupp and its obligation to perform thecontract in good faith.

15 The plaintiff argues further that, based on the evidence before thecourt, the defendant’s attempts to found an argument that there shouldnot have been a denial, suspension or termination of service in the face ofan emergency cannot be supported by the evidence which indicates thatsuspension of the contract occurred prior to the flood.

16 In this regard, the defendant argues that the Master concluded thatThyssenkrupp had merely suspended service, without any basis on theevidence, and ignored the defendant’s uncontroverted evidence thatThyssenkrupp had actually terminated the contract, which required thedefendant to find another contractor to provide regular maintenance.

17 For the reasons stated below, I find that the issue raised on appealwas a new issue which was not argued before the Master.

Was There Some Error in Principle in the Decision of the Master18 The defendant maintains that the Master committed an error in princi-

ple in determining the issue of set-off by confining herself to analyzing


the parties’ strict rights and obligations under the contract and overlook-ing breaches of the its long-standing course of conduct and its obligationto perform the contract in good faith, thus ignoring broader principles ofequity and fairness that support the issue of equitable set-off.

19 The evidence, however, indicates that while the defendant was con-sistently late in payments under the service contract, which would, pursu-ant to the contract, permit Thyssenkrupp to suspend services, Thyssen-krupp continued to accept late payment through October of 2003, when,due to the accumulation of overdue amounts, it registered constructionliens on the five apartment buildings. On October 21, 2004, it registeredfurther construction liens due to a continued accumulation of late pay-ments. From September 2004, the new credit manager of the plaintiffpursued collection efforts, communicated frequently with the principalsof the defendant to demand payment of the overdue amounts and contin-ued to push for payment. Amounts continued to be outstanding and onDecember 21, 2004, the plaintiff suspended elevator maintenance andnotified the defendant by a letter, as required by the contract. On Decem-ber 23, 2004, the defendant’s vice president advised the plaintiff in writ-ing that that “we will now find a replacement maintenance contractor andhereby ask Thyssenkrupp to return any parts or elevator component [sic]they have taken from our properties.” Thus, upon receiving word of sus-pension of service, which could have been restored by the defendant pay-ing the outstanding amounts owing, the defendant instead terminated thecontract.

20 Having read the Master’s decision, I am in agreement with the sum-mary of the Master’s findings set forth at paragraph 51 of the plaintiff’sfactum.

21 As regards the issue argued by the owner that due to the fact thatThyssenkrupp breached the contracts, the doctrine of equitable set-offprecludes Thyssenkrupp from recovering its unpaid accounts, the Masterstated “the Owner relies on equitable set-off asserting that Thyssbreached the contracts by (1) failing to provide maintenance services asrequired and (2) terminating service in December 2004.

22 In this regard, she held as follows: [104] As to the first alleged breach, for reasons already stated, I findthat the owner has not proven that Thyss failed to provide mainte-nance services required under the contracts. To the contrary, the evi-dence proves that the elevators were maintained in 2004 at an accept-able level.


[105] As to the second alleged breach, the issue is whether Thysssuspended or terminated the contracts and if so whether Thyss com-plied with the terms of the contract in doing so. If not, the issue iswhether Thyss is precluded from recovering its unpaid accounts forservices and materials supplied prior to the breach.

23 Based on the evidence before her, Master Albert held, in part, as fol-lows:

[114] I find that Thyss suspended the contract for non-payment inaccordance with the terms of the contract and gave written noticesubsequent to the suspension. Had the Owner paid the arrears Thysswould have been required to resume its role as elevator maintenancecontractor. However, instead of paying up the arrears, the Owner ter-minated the contract with its letter of December 23, 2004. TheOwner did not pay the arrears and the contracts were neverreinstated.

. . .

[116] In conclusion I find that the Owner breached the contracts byfailing to pay for materials and services supplied by Thyss to repairand maintain fifteen elevators in five buildings.

[117] The Owner argues that Thyss breached the contracts by wrong-fully terminating them. Having found that Thyss gave notice effec-tive December 21, 2004 as required under the contracts, the contractswere not wrongfully terminated and the Owner fails on this point.

24 The Master found there to be no evidence to support a finding that theelevator maintenance was unacceptable. She found at paragraphs 101 and102 of her decision that “The onus of proof rests with the Owner to proveits set-off claim. The Owner has not proven that the manner in whichThyssenkrupp maintained the elevators under the contracts caused theOwner to spend $5,000 per elevator for upgrades. I find that the Ownerhas not proven its claim for set-off of $75,000”.

25 While the basis of the claim for set-off was that Thyssenkrupp’s per-formance of the maintenance was so deficient that the defendant had topay a fee of $5,000 per elevator to Quality to take the job after it termi-nated Thyssenkrupp, and after the contract with Schindler had also en-ded, on the basis of the evidence presented, and the testimony of the wit-nesses, Master Albert held that the $5,000 per elevator was just a downpayment on the monthly maintenance fees. She held that “Mr. Sokoloff[the principal of Quality] merely required an upfront lump sum paymentto reduce monthly maintenance charges, much like a larger down pay-ment on a car lease reduces monthly car lease payments”. While the de-


fendant argued that the Master’s findings as regards the amounts paid tothe contractor which are sought as set-off were contradictory, I am notpersuaded by that argument, having read the Master’ decision.

26 The appellant argues that the Master failed to consider the equitableprinciple of promissory estoppel. The appellant argues that all facts nec-essary to consider it are in evidence. It argues that while it was not pled,the court should have considered it and erred in not doing so.

27 As regards whether the ground of appeal is advanced for the first timeon this motion, namely that Thyssenkrupp ought to have been estoppedfrom suspending maintenance services as a result of the flood at one ofthe five buildings and relate to amounts incurred following the plaintiff’ssuspension of services, the Master framed the issue before her as follows:

[103] The Owner argues that because Thyss breached the contractsthe doctrine of equitable set-off precludes Thyss from recovering itsunpaid accounts.... the Owner relies on equitable set-off assertingthat Thyss breached the contracts by (1) failing to provide mainte-nance services as required and (2) terminating service in December2004.

28 In fact, the issue before the Master was whether, due to the allegedbreach of contract as regards provision of maintenance services and/ortermination of services, Thyssenkrupp was precluded from recoveringthe unpaid accounts, not whether Thyssenkrupp ought to have been es-topped from suspending maintenance services as a result of the flood orwhether, as a result, the defendant is entitled to amounts incurred aftersuspension of services. As this was not pled, raised at trial or argued inclosing submissions and was, therefore, a new issue not previously raisedbefore the Master, I do not intend, on the record for me, to embark uponsuch an issue at this juncture and am not prepared to find that she erredin not considering it.

29 In any event, based on the facts, I am of the view that there was achange in conduct as regards late payment, that the new credit managerfor Thyssenkrupp was and had been pressing the defendant for payment,which at that time was over $100,000 in arrears. In that regard, theMaster based her decision on the evidence of the witnesses and her as-sessment of credibility. As regards her assessment of credibility, she isowed deference, as she was in a position to watch, listen and analyze thewitnesses’ evidence and demeanors.

30 As regards the issue before the Master, she found that Thyssenkrupphad not breached the contracts, by failing to provide maintenance ser-


vices or by providing inadequate services, and she found that Thyssen-krupp did not terminate the services, but rather suspended the service.Based on the evidence before the Master, her conclusions in this regardare not made in error.

Conclusion31 Based on all of the foregoing, the record before me, which was also

before Master Albert, and the submissions of counsel, I find that therewas no error in principle. There is no legal error which the Master hascommitted. Nor was there any absence or excess of jurisdiction on thepart of the Master. Finally, I am satisfied on all of the record before methat there was no patent misapprehension of the evidence on the part ofthe Master which would permit this Court to interfere with the decisionof the Master. I have considered the Master’s complete, thorough andconsidered reasons and am of the view that she considered all of the evi-dence presented over the six-day trial and did not misapprehend the evi-dence. At the trial, she weighed the evidence, assessed credibility andmade her findings of fact. She gave a thorough summary of the viva voceevidence in her decision. Indeed, having seen the witnesses and heard theevidence, she was in the best position to make such findings and to drawfactual conclusions therefrom. This Court should not interfere with fac-tual conclusions based on a difference of opinion over the weight to beassigned to underlying facts, nor to differently assess the credibility ofwitnesses: Housen v. Nikolaisen, 2002 SCC 33 (S.C.C.).

32 Based on all the foregoing, I uphold the decision of the Master andconfirm her Report of May 10, 2013.

Costs33 I would urge the parties to agree upon costs, failing which I would

invite the parties to provide any costs submissions in writing, to be lim-ited to three pages, including the costs outline. The submissions may beforwarded to my attention, through Judges’ Administration at 361 Uni-versity Avenue, within thirty days of the release of this Endorsement.

Appeal dismissed.

Glen White Industries Ltd. v. 1544951 Ontario Inc. 331

[Indexed as: Glen White Industries Ltd. v. 1544951 OntarioInc.]

Glen White Industries Ltd. o/a Steel Way Building Systems,(Plaintiff) and 1544951 Ontario Inc. o/a Piroli Construction,

(Defendant)


Docket: Windsor 2469/10, 14-21191

2015 ONSC 601

H.A. Rady J.

Heard: January 23, 2015


Construction law –––– Contracts — Breach of terms of contract — Practiceand procedure –––– In October 2010, plaintiff, GW, commenced action forbreach of contract arising from construction of twin pad arena — GW suppliedsteel building components and materials and related services — Statement of de-fence was filed on behalf of company operating as PC — Statement of defenceadmitted that PC hired GW — GW discovered that proper defendant wasRPCI — GW brought motion to amend its statement of claim to add RPCI asdefendant saying there was triable issue respecting when GW knew or ought tohave known identity of proper defendant; RPCI opposed motion saying that ac-tion was statute barred — Motion granted — There was clear and unequivocaladmission in statement of defence that correct party had been named — Media-tion brief filed by defendant did not clearly identify RPCI as contractingparty — Moreover, payment of some of plaintiff’s invoices were made by num-bered company — Triable issue existed about what plaintiff reasonably knew orought to have known about identity of correct defendant during two years priorto motion — Amendments were permitted on basis of misnomer.

Civil practice and procedure –––– Pleadings — Amendment — Applicationto amend — General principles –––– In October 2010, plaintiff, GW, com-menced action for breach of contract arising from construction of twin padarena — GW supplied steel building components and materials and related ser-vices — Statement of defence was filed on behalf of company operating asPC — Statement of defence admitted that PC hired GW — GW discovered thatproper defendant was RPCI — GW brought motion to amend its statement ofclaim to add RPCI as defendant saying there was triable issue respecting whenGW knew or ought to have known identity of proper defendant; RPCI opposedmotion saying that action was statute barred — Motion granted — There wasclear and unequivocal admission in statement of defence that correct party had


been named — Mediation brief filed by defendant did not clearly identify RPCIas contracting party — Moreover, payment of some of plaintiff’s invoices weremade by numbered company — Triable issue existed about what plaintiff rea-sonably knew or ought to have known about identity of correct defendant duringtwo years prior to motion — Amendments were permitted on basis of misnomer.

Cases considered by H.A. Rady J.:

Demarti v. Benefit Plan Administrators Ltd. (2014), 2014 ONSC 1847, 2014CarswellOnt 3485 (Ont. S.C.J.) — followed

Ismail v. Nitty’s Food Services Ltd. (2014), 2014 CarswellOnt 10148, 2014ONSC 4140 (Ont. S.C.J.) — followed

Joseph v. Paramount Canada’s Wonderland (2008), 2008 CarswellOnt 3495,2008 ONCA 469, 90 O.R. (3d) 401, 294 D.L.R. (4th) 141, 56 C.P.C. (6th)14, 241 O.A.C. 29, [2008] O.J. No. 2339 (Ont. C.A.) — referred to

Lima v. Moya (2015), 2015 ONSC 324, 2015 CarswellOnt 361 (Ont. S.C.J.) —followed

Pepper v. Zellers Inc. (2006), 2006 CarswellOnt 7985, 39 C.P.C. (6th) 81, 278D.L.R. (4th) 175, 83 O.R. (3d) 648, [2006] O.J. No. 5042 (Ont. C.A.) —considered

Wakelin v. Gourley (2005), 76 O.R. (3d) 272, 2005 CarswellOnt 2808, 19C.P.C. (6th) 13, [2005] O.J. No. 2746 (Ont. Master) — considered

Wong v. Adler (2004), 2004 CarswellOnt 1522, 70 O.R. (3d) 460, 2 C.P.C. (6th)175, [2004] O.T.C. 336, 5 M.V.R. (5th) 142, [2004] O.J. No. 1575 (Ont.Master) — followed

Wong v. Adler (2005), 76 O.R. (3d) 237, 2005 CarswellOnt 4221, 17 C.P.C.(6th) 65, 28 M.V.R. (5th) 38, [2005] O.J. No. 1400 (Ont. Div. Ct.) — re-ferred to


Limitations Act, 2002, S.O. 2002, c. 24, Sched. BGenerally — referred tos. 4 — considereds. 5(1) — considereds. 5(2) — considereds. 21(1) — considereds. 21(2) — considered

Rules considered:

Rules of Civil Procedure, R.R.O. 1990, Reg. 194Generally — referred toR. 5.04 — consideredR. 5.04(1) — consideredR. 5.04(2) — consideredR. 26 — considered

Glen White Industries Ltd. v. 1544951 Ontario Inc. H.A. Rady J. 333

R. 26.01 — considered

MOTION by plaintiff to amend statement of claim by adding defendant.

Michael Polvere, for PlaintiffAngelo C. D’Ascanio, for Defendant and Rob Piroli Construction Inc.

H.A. Rady J.:

Introduction1 The plaintiff moves to amend its statement of claim to add Rob Piroli

Construction Inc. (RPCI) as a defendant together with appropriate associ-ated allegations. The defendant opposes the motion for several reasons,which will be detailed below.

The Facts2 This is a breach of contract claim arising from the construction of a

twin pad arena in Essex, Ontario. The plaintiff supplied steel buildingcomponents and materials and related services. The claim was com-menced by notice of action dated October 15, 2010 followed by state-ment of claim on October 28, 2010. The plaintiff seeks payment of$127,000 (in round terms) pursuant to an agreement dated April 30,2008.

3 The agreement identifies “Piroli Construction” at 3850 Dougall Ave-nue, Windsor as the customer. From time to time, invoices were sent toPiroli Construction Inc. at the Dougall Avenue address.

4 A payment for three invoices was sent to the plaintiff by cheque datedOctober 9, 2008, which identified the payor as 1544951 Ontario Inc., o/aMario Piroli Co.

5 Following default in payment, the plaintiff had two corporation pro-file reports undertaken. Piroli Construction Inc. is shown as cancelled asof November 26, 1990. The numbered company is shown as active. Itsregistered office address is 3850 Dougall Ave. and Mario Piroli is listedas president. The notice of action and statement of claim followed.

6 A statement of defence was filed on behalf of 1544951 Ontario Inc.o/a Piroli Construction by the defendant’s former solicitor. At paragraph3, it states:

The Defendant admits that the Plaintiff at all material times was asupplier of steel buildings and steel building products and that it con-tracted with the Plaintiff for the supply of steel building components,


materials and accessories for an improvement known as the EssexTwin Pad Arena, in the County of Essex, Province of Ontario (“thearena”).

7 Ultimately, on August 5, 2014, this action was ordered to be triedtogether, or one following the other, with three other actions started inWindsor arising from the same arena project.

8 Examinations for discovery were conducted in the Windsor actionsbut not in this one. Plaintiff’s counsel in this action, Mr. Sarasin, did notparticipate in the Windsor examinations for discovery. He has since re-ceived copies of the transcripts.

9 Prior to the August 5, 2014 order being made, all of the parties partic-ipated in a mediation and mediation briefs were filed on behalf of theparties. Unfortunately, the parties were unable to resolve the disputes.The mediation briefs are of importance to the defendant’s position andwill be discussed below.

The Parties’ Positions10 The plaintiff says that given the particular facts in this case, at a mini-

mum there is a triable issue respecting when the plaintiff knew or oughtto have known the identity of the proper defendant. It submits that anorder adding RPCI is the appropriate correction of a misnomer.

11 The defendant submits the following:

1. there is no genuine issue requiring trial that the claim againstRPCI ought reasonably to have been discovered on October 22,2012 (the date of the failed mediation);

2. this motion was brought on December 15, 2014 more than twoyears after the plaintiff ought reasonably to have discovered itsclaim against RPCI;

3. section 21(1) of the Limitations Act precludes a plaintiff from ad-ding a party as a defendant where the two year limitation period inrespect of the proposed claim has expired;

4. a proposed amendment to add a party as a defendant where thelimitation period has expired is considered to be an amendmentwhich is untenable at law and will not be permitted under theRules of Civil Procedure.


The Evidence12 In support of the motion, the plaintiff submitted affidavits sworn by a

lawyer with the plaintiff’s law firm, Ms. VanBunderen.13 The defendant filed an affidavit from Ms. Wood, a law clerk at its

lawyer’s office. Included is an exchange of email correspondence be-tween Mr. D’Ascanio and the defendant’s former solicitor, Mr. MacDon-ald. Mr. MacDonald writes that he told the Mr. Sarasin at the mediationthat he had named the wrong defendant.

14 This is denied in a supplementary affidavit from Ms. VanBunderen.15 In particular, the deponent sets out what Mr. Sarasin recalls:

6. I have been advised by Mr. Sarasin that, contrary to Ms. Wood’sbelief, Mr. MacDonald did not raise the issue of the Defendant possi-bly being the wrong party at the mediation and Mr. Sarasin was notaware of the issue at that time.

7. According to Mr. Sarasin, the only issue raised by Mr. MacDonaldat the mediation relating to the Defendant was the solvency of theDefendant. Near the end of the mediation Mr. MacDonald enteredthe break out room Mr. Sarasin was in with the three representativesof the Plaintiff and advised that the Defendant had no assets and wasnot operating. Accordingly, even if successful, the Plaintiff would getnothing.

8. Mr. Sarasin responded to Mr. MacDonald advising that as long asthe Defendant was pursuing litigation for payment in relation to thesame construction project, which Mr. MacDonald confirmed it was,there were potential assets which could be used to pay the Plaintiffand which would be impressed with a trust under the ConstructionLien Act to ensure such payment. Mr. MacDonald then left the roomand the mediation ended shortly thereafter.

16 Obviously, there is contradictory evidence about what discussionsmay have occurred between Mr. MacDonald and Mr. Sarasin at the me-diation. It is impossible to resolve that evidentiary conflict at thisjuncture.

17 The defendant relies on the mediation briefs filed and in particular,that of the general contractor for the project, Loaring Construction. Inthat brief, the following information is disclosed:

Loaring retained Rob Piroli Construction Inc. (Piroli) to provide la-bour and material to erect the pre-fabricated steel building system forArenas A and B. Piroli in return retained Steelway.


. . . . .

Piroli retained Steelway as its subcontractor.

18 The defendant submits that when the plaintiff or its solicitor read this,they should have realized that there was an issue respecting the identityof the proper defendants and the failure to investigate demonstrates alack of due diligence.

The Law19 Rule 5.04(1) and (2) provide as follows:

(1) Proceeding not to be defeated — No proceeding shall be de-feated by reason of the misjoinder or non-joinder of any partyand the court may, in a proceeding, determine the issues indispute so far as they affect the rights of the parties to theproceeding and pronounce judgment without prejudice to therights of all persons who are not parties.

(2) Adding, deleting or substituting parties — At any stage of aproceeding the court may by order add, delete or substitute aparty or correct the name of a party incorrectly named, onsuch terms as are just, unless prejudice would result thatcould not be compensated for by costs or an adjournment.

20 Rule 26.01 provides: On motion at any stage of an action the court shall grant leave toamend a pleading on such terms as are just, unless prejudice wouldresult that could not be compensated for by costs or an adjournment.

21 The relevant provisions of the Limitations Act, 2002 are the follow-ing:

Basic limitation period

4. Unless this Act provides otherwise, a proceeding shall not be com-menced in respect of a claim after the second anniversary of the dayon which the claim was discovered. 2002, c. 24, Sched. B, s. 4.

Discovery

5.(1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or con-tributed to by an act or omission,

(iii) that the act or omission was that of the person againstwhom the claim is made, and


(iv) that, having regard to the nature of the injury, loss ordamage, a proceeding would be an appropriate meansto seek to remedy it; and

(b) the day on which a reasonable person with the abilities and inthe circumstances of the person with the claim first ought tohave known of the matters referred to in clause (a). 2002, c.24, Sched. B, s. 5 (1).

Presumption

(2) A person with a claim shall be presumed to have known of thematters referred to in clause (1)(a) on the day the act or omission onwhich the claim is based took place, unless the contrary is proved.2002, c. 24, Sched. B, s. 5 (2).

Adding party

21. (1) If a limitation period in respect of a claim against a person hasexpired, the claim shall not be pursued by adding the person as aparty to any existing proceeding. 2002, c. 24, Sched. B, s. 21 (1).

Misdescription

(2) Subsection (1) does not prevent the correction of a misnaming ormisdescription of a party. 2002, c. 24, Sched. B, s. 21 (2).

Analysis22 For the reasons that follow, I have concluded that the proposed

amendments should be permitted.23 First, it must be kept in mind that this is a pleadings motion and not a

motion for summary judgment. The evidentiary threshold is lower as willbe discussed below. Amendments to pleadings are governed by Rule5.04 and 26 of the Rules of Civil Procedure.

24 Rule 26 is mandatory and provides that an amendment shall begranted absent non-compensable prejudice. An intervening limitation pe-riod may be cause to refuse an amendment. Rule 5.04 is discretionary butthe test remains the same — is there non-compensable prejudice?

25 Rule 5.04 and 26.01 must be interpreted in light of the LimitationsAct, 2002, which does not permit the extension of a limitation period byvirtue of special circumstances: Joseph v. Paramount Canada’s Wonder-land (2008), 90 O.R. (3d) 401 (Ont. C.A.). However, the concept of dis-coverability is preserved in the Act.


26 In Pepper v. Zellers Inc. (2006), 83 O.R. (3d) 648 (Ont. C.A.), JusticeLang commented on the discretionary nature of an order under Rule5.04(2) as follows:

[A] rule 5.04(2) motion to add parties and, in this case, to add partiesafter the apparent expiration of a limitation period, is discretionary.While the threshold on such a motion is low, the motion judge isentitled to consider the evidentiary record to determine whether thereis a live issue of fact or credibility about the commencement date ofthe limitation period.

27 She quoted with approval from the well-known and often cited deci-sion of Master Dash in Wong v. Adler (2004), 70 O.R. (3d) 460 (Ont.Master); aff’d [2005] O.J. No. 1400 (Ont. Div. Ct.):

What is the approach a judge or master should taken on a motion toadd a defendant where the plaintiff wishes to plead that the limitationperiod has not yet expired because she could not know of and couldnot, with due diligence, have discovered the existence of that defen-dant? In my view, as is clearly applied in Zapfe [v. Barnes (2003), 66O.R. (3d) 397 (C.A.)], the motions court must examine the eviden-tiary record before it to determine if there is an issue of act or credi-bility on the discoverability allegation, which is a constituent elementof the claim. If the court determines that there is such issue, the de-fendants should be added with leave to plead the limitations defence.If there is no such issue, as for example, the evidence before the mo-tions court clearly indicates that the name of the tortfeasor and theessential facts that make up the cause of action against suchtortfeasor, were actually known to the plaintiff of [sic] her solicitormore than two years before the motion to amend, the motion shouldbe refused. If the issue is due diligence rather than actual knowledge,this is much more likely to involve issues of credibility requiring atrial or summary judgment motion, provided of course that the plain-tiff gives a reasonable explanation on proper evidence as to why suchinformation was not obtainable with due diligence. That is not to saythat such motion could never be denied if the evidence is clear anduncontradicted that the plaintiff could have obtained the requisite in-formation with due diligence such that there is no issue of fact orcredibility.

28 In Wakelin v. Gourley (2005), 76 O.R. (3d) 272 (Ont. Master), MasterDash referred to his earlier decision. He noted that “it will be rare thatthe applicability of the discoverability principle based on due diligencewill be determined on a motion to add a party.” As to the amount of


evidence required by a plaintiff on such a motion, Master Dash observed:The question is how much evidence must the plaintiff put in at thepleadings amendment stage to establish that the proposed defendantscould not have been identified with due diligence within the limita-tion period? The short answer is: not very much. As stated by theCourt of Appeal in Zapfe: In most cases, one would expect to find, aspart of a solicitor’s affidavit, a list of the attempts made by the solici-tor to obtain information to substantiate the assertion that the partywas reasonably ‘diligent’ and to provide ‘an explanation for why shewas unable to determine the facts’.

29 Master Haberman provides a useful review of the law respecting dis-coverability and due diligence in Lima v. Moya, 2015 ONSC 324 (Ont.S.C.J.). She makes the point that “...as long as the identity of a potentialtortfeasor is known and there is some information on which a court couldmake a finding of liability, there is no room for discoverability to delaythe starting point of the limitation period.”

Disposition30 The evidence here is not clear and uncontradicted. I cannot say that

there is no issue of fact or credibility that would support a denial of therelief sought.

31 First, there is a clear and unequivocal admission in the statement ofdefence that the correct party has been named. Mr. D’Ascanio advisedthat he does not seek to withdraw the admission. Second, the mediationbrief filed by the defendant does not clearly identify RPCI as the con-tracting party. Rather, it identifies Rob Piroli, Piroli Construction Inc.(“Piroli”) as the contracting party. On the other hand, in the title of pro-ceedings, RPCI is listed as the defendant in the Steelway action. How-ever, in that part of the brief dealing specifically with the plaintiff’sclaim, there is no suggestion the wrong defendant has been named.

32 Moreover, payment of some of the plaintiff’s invoices were made bythe numbered company from an address disclosed in the profile report tobe the company’s address.

33 Even the excerpts from the examinations for discovery of Mr.Caruana on October 19, 2010 and April 7, 2011 do not assist in resolvingthe issue. Portions of his testimony are reproduced below:

October 19, 2010

Q. All right. And your relationship with the plaintiff, Rob PiroliConstruction Inc.?


A. I work for one of the other companies in the Piroli Group ofcompanies.

Q. Who do you work for?

A. It’s the numbered company, 1544951.

Q. Do you do any work for... I’m going to call it Piroli Construc-tion. It’s just easier.

A. Yeah.

Q. Do you do any work for Piroli Construction?

A. I do.

Q. All right. What do you do for Piroli Construction?

A. Right now I’m acting as general manager. I also act as a sitesupervisor and project manager.

Q. I take it you’re subbed out from the company that employsyou to do work for Piroli Construction.

A. Yes.

. . .

April 7, 2011

Q. And where are you employed?

A. Piroli Construction.

Q. Is that Rob Piroli Construction Inc.?

A. Yes.

Q. And how long have you been employed by Rob Piroli Con-struction Inc.?

A. Six years.

Q. And what is your position presently?

A. General Manager.

Q. And how long have you been the general manager?

A. Four years.

34 Mr. Caruana seems unclear about the correct identity of his corporateemployer.

35 In the particular circumstances of this case, given the unequivocal ad-mission in the statement of defence (and which will not be withdrawn),the payment made by the numbered company, and the seemingly casualway in which the defendant is referred to or has used its corporate iden-tity, a triable issue exists about what the plaintiff reasonably knew orought to have known about the identity of the correct defendant duringthe two years prior to this motion being brought.


36 On this basis alone, I would permit the amendments sought, withleave to the added defendant to plead the limitation period. There is noevidence of prejudice to either of the defendants.

37 I would also permit the amendments on the basis of misnomer al-though I note that the added defendant is not being substituted for theexisting defendant or for a fictitious name. I had occasion to considermisnomer in Ismail v. Nitty’s Food Services Ltd., 2014 ONSC 4140 (Ont.S.C.J.). I referred to Master Muir’s decision in Demarti v. Benefit PlanAdministrators Ltd., 2014 ONSC 1847 (Ont. S.C.J.). She wrote:

The applicable law regarding misnomer is summarized in my deci-sion in Spribille v. Rockcliffe Nursing Home, ONSC 5408 (S.C.J. —Master). Paragraphs 7 and 8 of that decision read as follows:

7. The law relating to misnomer has been thoroughly re-viewed in recent years by the Court of Appeal. SeeOrmerod v. Strathroy Middlesex General Hospital, [2009]ONCA 697; Spirito Estate v. Trillium Health Centre,[2008] ONCA 762 and Lloyd v. Clark, [2008] ONCA343. Misnomer requires a finding that the litigation fingerbe clearly pointed at the intended defendant. Would a rea-sonable person receiving and reviewing the statement ofclaim, in all the circumstances of the case, and looking atit as a whole, say to himself or herself ‘of course it mustmean me, but they have got my name wrong’? The Courtof Appeal adopts this test at paragraph 12 of Spirito,where the court states as follows:

12. In Dukoff et al v. Toronto General Hospi-tal et al (1986), 54 O.R. (2d) 58 (H.C.J.),Saunders J. noted the practice, adopted in thiscase, of using fictitious names where the iden-tity of the parties are unknown. If it was a caseof misnomer, the statement or claim could becorrected by replacing the fictitious name(John Doe in that case) for the correct name,even though the correction was sought afterexpiry of the limitation period. He adopted thefollowing test from Davies v. Elsby Brothers,Ltd., [1960] 3 All E.R. 672 (C.A.), at p. 676:

The test must be: How would a rea-sonable person receiving the docu-ment take it? If, in all the circum-stances of the case and looking at


the document as a whole, he wouldsay to himself: ‘Of course it mustmean me, but they have got myname wrong’. Then there is a caseof mere misnomer. If, on the otherhand, he would say: ‘I cannot tellfrom the document itself whetherthey mean me or not and I shallhave to make inquiries’, then itseems to me that one is getting be-yond the realm of misnomer.

8. Where fictitious names, such as John Doe, are used inthe statement of claim the assessment of whether the pro-posed defendant knew that he or she was the intended de-fendant becomes seminal in the analysis. See Urie v. Pe-terborough Regional Health Centre, 2010 ONSC 4226 atparagraph 107. Vague and non-specific allegations in astatement of claim will weigh heavily, if not definitely,against a finding that a misnomer is present. See Urie atparagraph 108.

38 In the Ismail case, the addition of a proposed defendant was deniedbecause the plaintiff failed to lead evidence that he took reasonable stepsto ascertain the proposed defendant’s identity.

39 That is not the case here, largely for the same reasons outlined above.In this case, the litigation finger was clearly pointed at the proposed de-fendant or the party actually named. As between the two, they wouldcertainly know which of them contracted with the plaintiff.

40 Nor do I agree that the plaintiff is raising new causes of action againstthe proposed defendant. Rather, the proposed allegations simply reflectwhat appears to have been what I have termed the casual way in whichthe defendants have used their corporate identity.

41 The relief is granted. If the parties cannot agree, I will receive briefwritten submissions on costs from the plaintiff by February 13, 2015 andthe defendant by February 23, 2015.

Motion granted.

construction law reports - thomson reuters canada

Documents