|
Construction - Improvements. 1499545 Ontario Inc. (Northern Bulk Logistics) v. Pattern Development
In 1499545 Ontario Inc. (Northern Bulk Logistics) v. Pattern Development (Ont Div Ct, 2026) the Ontario Divisional Court dismissed a Construction Act appeal, this brought against a motion order that found that a "claim for lien has expired for failing to set the action down for trial or obtain an order for trial within two years of issuance of the statement of claim as required by s. 37 of the Construction Act".
Here the court considered whether the existence of another (unexpired and set down for trial) "preserved and perfected" claim for lien respecting the "same improvement" saves the subject lien from expiry under CA s.37:[2] The appellant contends that the motion judge erred in law in his interpretation of “improvement” and “premises” under the Act. Hence, its claim for lien (the “NBL lien”) has not expired because there is another preserved and perfected claim for lien for the same “improvement” which saves the appellant’s expired claim for lien.
....
[12] The motion judge reviewed the scheme and purpose of the Act and correctly stated:[23] Insofar as this proceeding is concerned, the scheme of the Act is to create a lien in favour of a person who supplies services or materials to an improvement made in respect of land, and provide a strict regimen that must be followed to maintain and enforce that lien. The Act recognizes that where more than one person asserts a lien against the same improvement, it is appropriate to have the rights and obligations of all such parties determined in a single proceeding as they will have a common interest in, among other things, the premises which may ultimately be ordered sold ....
The Act
[19] Section 14 of the Act creates a lien in favour of a person when a person commences to supply services or materials to the improvement.
[20] Section 1(1) of the Act defines the following:“improvement” means, in respect of any land,
(a) any alteration, addition or capital repair to the land,
(b) any construction, erection or installation on the land, including the installation of industrial, mechanical, electrical or other equipment on the land or on any building, structure or works on the land that is essential to the normal or intended use of the land, building, structure or works, or
(c) the complete or partial demolition or removal of any building, structure or works on the land“
“owner” means any person, including the Crown, having an interest in 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 home buyer;
“land” includes any building, structure or works affixed to the land, or an appurtenance to any of them, but does not include the improvement;
“premises” includes,
(a) the improvement,
(b) all materials supplied to the improvement, and
(c) the land occupied by the improvement, or enjoyed therewith, or the land upon or in respect of which the improvement was done or made; (emphasis added)
“contractor” means a person contracting with or employed directly by the owner or an agent of the owner to supply services or materials to an improvement and includes a joint venture entered into for the purposes of an improvement or improvements;
“subcontractor” means a person not contracting with or employed directly by the owner or an agent of the owner but who supplies services or materials to the improvement under an agreement with the contractor or under the contractor with another subcontractor and includes a joint venture entered into for the purposes of an improvement or improvements; Section 37 reads:Expiry of perfected lien
37 (1) A perfected lien expires immediately after the second anniversary of the commencement of the action that perfected the lien, unless one of the following occurs on or before that anniversary:
1. An order is made for the trial of an action in which the lien may be enforced.
2. An action in which the lien may be enforced is set down for trial.
Motion under s. 46
(2) Where a lien has expired under subsection (1), a motion may be made under section 46. ....
[24] At its simplest, the issue is whether NBL’s lien can be “enforced” in the Corbiere lien action and thereby avoid the 2-year limitation period by virtue of s. 37 of the Act. In order to decide this issue, the motion judge considered the statutory definitions of improvement, land and premises.
[25] There is one approach to statutory interpretation and that is the modern approach.[4] The modern approach is that the court should consider the works of the legislation in their entire context and in their grammatical and ordinary sense, harmoniously with the scheme, objects of the Act and the intention of the legislature, always keeping in mind that it is the text of the legislative provisions at issue that must be the “anchor” of the interpretive exercise.[5]
[26] From the clear reading of the Act, the purpose of the Act is providing a means of security for the payment for labour and materials supplied for the improvement on lands. In the Act, there are obligations for holdback and trust for monies paid or received for the improvement on lands.
[27] Accordingly, utilizing the principle of internal consistency, the meaning of the same words of improvement, land and premises must be consistent throughout out the Act, whether dealing with the preservation or perfection of a lien, determination of substantial completion and the holdback or trust obligations mandated in the Act.[6]
[28] This Court in Caledon (Town) v. 2220742 Ont. Ltd o/a Bronte Construction[7] found that the concept of “improvement” is tied to the land. The Court stated in paragraph 33:The next question is whether the WSP works and the Bronte works in respect to Pond #7 were in respect to the same “alteration, addition or capital repair to the land” (subpara. (a)) or were in respect to the same “construction, erection or installation on the land” (subpara. (b)). “Improvement” is not co-extensive with “contract”. This is a trite statement in construction law, but it bears stating since, obviously, the Act contemplates that different persons will undertake different work under different contracts on the same “improvement”. Contracts are not in respect to distinct improvements because the works described in the contracts are distinct – the question is whether the works are in respect to the same improvement to the same lands. [29] Master Wiebe, in determining the meaning of same improvement, stated:This leaves the question of how to determine the “same improvement.” The only case that gave me any guidance on this question was the statement of Justice Salhany in the case of Tri-Haven Homes Inc. v. O’Neil 1995 CanLII 7191 (ON SC), [1995] O. J. No. 1221 at para. 17 where he said that the “same improvement” means “the same building or the same aspect of construction within a building.” The question of “same improvement” appears to be largely a fact finding exercise with the governing principle being the establishment of some nexus between the work done by the lien claimants in question that makes it a common effort. The same improvement can have one “contract” or many “contracts,” but what makes it an improvement is the coordination of the contract work toward a common purpose or goal.[8] [30] Master Albert in Vestacon Limited v. ARC Production Ltd.[9] was tasked to determine, among other things, if Vestcon’s lien had expired. To make that determination Master Albert concluded that it is a fact-finding exercise to ascertain whether or not the adjoining lands are “lands enjoyed therewith” with relevant factors of commonality of officers or directors, separate legal owners are related, a visible separation or property line and if there is an integrated or common purpose.[10]
[31] I agree with both Associate Justices Wiebe and Albert that the determination of whether services and materials have been provided to the same improvement is a fact-finding exercise.
[32] It is not contested that there may be multiple improvements on the same land or that a single improvement may be made to multiple parcels of land.
[33] However, even where an improvement includes multiple parcels of land, a lien claimant cannot enforce its lien against lands which it chose not to and did not include in its claim for lien: a lien claimant may choose to register its lien against only a portion of the improvement, for strategic or financial reasons or by mistake.
[34] I agree with the motions judge that the description of land in the claim for lien determines the land on which the improvement was made against which the claimant seeks to enforce its lien. (para 30-32 and 36 of the motion judge’s Reasons)
[35] It ought to be noted that the ultimate remedy in a lien action, if successful, is that the lien claimant can enforce the lien by selling the lands to pay its judgment.
[36] That leads to a fundamental issue: how could NBL enforce its lien remedy against lands against which it did not register a lien but against which Corbiere did register a lien? In my view, it cannot.
[37] There is another fundamental issue: how could parties with an interest in the lands against which Corbiere registered a lien know of the priorities or liabilities associated with that land without any registration of a claim for lien against those lands. For example, if the Corbiere lien had been bonded off, the lenders would continue to advance funds; project funds would continue to flow down the pyramid (including trust funds and holdback funds), without taking account of NBL’s lien claim. In my view, the scheme of the Act is clear on this point: NBL cannot enforce its lien in the Corbiere lien proceedings because NBL did not lien any of the lands liened by Corbiere.
[38] Let me deal with some of the legal authorities raised in this appeal.
[39] Justice Goodearle in Phoenix Drywall v. Mississauga Rest Home Two Inc. was dealing with a situation where the lien claimant registered a lien on vacant property adjacent to the actual lienable property. The Court found that the two properties were adjacent to each other and that the management and directorship of the two corporations that owned the two properties were uniform. The purpose of the construction – the building of a rest home – was the same. Ownership of the two parcels of land had some overlapping uniformity but lacked total uniformity. Justice Goodearle determined that, though the properties were different, it was the same improvement. Justice Goodearle described as follows:26. The parcels in question were acquired on the same date and severed on the same date for nominal consideration. The specific use for each parcel, as stated in the material (ie. as a parking lot and driveway on the one hand and a rest home building on the other) demonstrates an obvious and vital integration of uses for a common purpose to achieve the general goal which is the satisfactory serving of the needs of the inhabitants or patients in a rest home. [40] Thus, Justice Goodearle found that the claim for lien attached to lands that were not described in the registered claim for lien.
[41] Regional Senior Justice Shaughnessy in Beaver Material Handling Company Ltd. v. Ronald Christoph Hejna et al considered a motion to discharge/or vacate a claim for lien and a certificate of action. The construction was the building of a marina. The claim for lien in question was registered on land across a highway. The lands were two separate lands with the marina located on both sides of the highway. The lands were owned by separate companies that had the same officer and director. The companies were related. Regional Senior Justice Shaughnessy concluded:[23] I find in the present case, that the lands on the east side of Highway 169 and those on the west side of the highway, have a common usage.
Together they form the lands upon which the Marina is operated. Based on the material filed on this motion, I find that these two parcels of land have an integrated and common function. More particularly, the lands on the west side of the highway provides parking for the Marina and storage for the boats of the Marin patrons. Therefore, the lands on both sides of the highway together constitute the Marina and as such, are lands enjoyed each with the other as provided in the statute. [42] On this basis, Regional Justice Shaughnessy found that the registered claim for lien attached to both parcels of land even though only one parcel was registered with the claim for lien.
[43] With respect, I disagree with the reasoning in both decisions.
[44] “Improvement” does not determine the lands against which the lien claimant can enforce its lien. The description of the lands in the claim for lien does.
[45] NBL submits that the phrase “enjoyed therewith” in the claim for lien expands the lands to more than was described in the claim for lien. I disagree.
[46] The Oxford dictionary defines “therewith” as meaning with or in the thing mentioned[11] which I interpret as meaning within the improvement on the lands for which the improvement was made. It is the lands that the lien claimant has certified in its claim for lien that is “enjoyed therewith” with the improvement of labour and materials provided by the lien claimant.
[47] I come to this conclusion given the extraordinary relief the Act provides to lien claimants to security in the lands for payment of the labour and materials supplied. The land which is subject to the claim for lien must be clear and certain.
Conclusion
[48] Owners of land, as well as mortgagees with security in the land, need to know whether the lands have been encumbered by a lien. To hold otherwise would lead to too much uncertainty.
[49] The NBL lien and Corbiere lien were registered against different lands. On that basis alone, I agree with the motions judge, that NBL cannot enforce its lien claim in the Corbiere action and therefor cannot avail itself of the Corbiere lien to save its claim for lien for not being set down for trial within the two-year period. . Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction
In Caledon (Town) v. 2220742 Ont. Ltd. o/a Bronte Construction (Div Court, 2024) the Divisional Court considered a JR of a Construction Act (CA) adjudication, here regarding transitional provisions.
Here the court considered 'improvements', and their role in the CA concept of 'contract':[31] An “improvement” is defined in the Act as follows:in respect of any land,
(a) any alteration, addition or capital repair to the land,
(b) any construction, erection or installation on the land, including the installation of industrial, mechanical, electrical or other equipment on the land or on any building, structure or works on the land that is essential to the normal or intended use of the land, building, structure or works, or
(c) the complete or partial demolition or removal of any building, structure or works on the land; (emphasis added) [32] First, it should be noted that the concept of an “improvement” is tied to land. The definition is “in respect of any land.” ...
....
[43] Caledon argues that, as a matter of first principles, the default assumption is that a contract is in respect to the same improvement – unless the contract expressly provides otherwise. In making this argument, Caledon does not once refer to the statutory definition of “improvement”. Instead, Caledon relies on s. 2(4) of the Act for the proposition that “[w]here there is no express contractual provision stating that there are multiple improvements, the default assumption of a single improvement applies.” This statement is wrong in law and finds no support in the language of s. 2 of the Act, which reads as follows:Contracts, substantial performance of a contract
When contract substantially performed
(1) For the purposes of this Act, a contract is substantially performed,
(a) when the improvement to be made under that contract or a substantial part thereof is ready for use or is being used for the purposes intended; and
(b) when the improvement to be made under that contract is capable of completion or, where there is a known defect, correction, at a cost of not more than,
(i) 3 per cent of the first $1,000,000 of the contract price,
(ii) 2 per cent of the next $1,000,000 of the contract price, and
(iii) 1 per cent of the balance of the contract price.
Same
(2) For the purposes of this Act, where the improvement or a substantial part thereof is ready for use or is being used for the purposes intended and the owner and the contractor agree not to complete the improvement expeditiously, the price of the services or materials remaining to be supplied and required to complete the improvement shall be deducted from the contract price in determining substantial performance.
Adjudication Amounts
(2.1) For the purposes of this Act, if an adjudicator makes a determination under Part II.1 in relation to a contract before the certification or declaration of the substantial performance of the contract under section 32,
(a) any amount determined by the adjudicator to be payable by a party to the contract shall be added to the contract price in determining substantial performance; and
(b) any amount determined by the adjudicator to have been overpaid by a party to the contract shall be deducted from the contract price in determining substantial performance.
Same
(2.2) Subsection (2.1) ceases to apply if,
(a) the adjudicator’s determination ceases to be binding on the parties to the adjudication under section 3.15; or
(b) the determination of the adjudicator is set aside on judicial review.
When contract deemed completed
(3) For the purposes of this Act, a contract shall be deemed to be completed and services or materials shall be deemed to be last supplied to the improvement when the price of completion, correction of a known defect or last supply is not more than the lesser of,
(a) 1 per cent of the contract price; and
(b) $5,000.
Multiple improvements under a contract
(4) If more than one improvement is to be made under a contract and each of the improvements is to lands that are not contiguous, then, if the contract so provides, each improvement is deemed for the purposes of this section to be under a separate contract. Subsection 2(4) presupposes that more than one improvement may be the subject matter of a contract. It does not state, or imply, that a contract is presumed to be in respect to a single improvement. Nor does it state, or imply, that there is such a presumption unless it is displaced by contract. Unlike all the other subsections of this provision, it does not apply “for the purposes of this Act” but rather “for the purposes of this section” and addresses a particular problem that arises where a contract is in respect to more than one improvement: establishing the date of substantial completion of the contract. In this subsection, the Legislature has provided that substantial completion will arise on an improvement-by-improvement basis if the parties to the contract have so agreed by their contract – and by necessary implication, substantial completion of the contract will be determined by reference to all improvements that are the subject of the contract if the parties have not agreed to the contrary in the contract. The provision does not change or modify the nature of what an “improvement” is under the Act, and it does not provide that “improvement” is co-extensive with “contract”.
|
