Reserve Judgment Does Not Suspend the Operation of Sections 37 and 46 of the Construction Lien Act
310 Waste Ltd. v. Casboro Industries Limited
Ontario Court of Appeal, September 26, 2006

The owner of the land, Casboro, brought a motion to discharge the lien on the basis that the work done was not lienable. The motion judge held that it was. Casboro appealed and the Divisional Court reserved. While the decision remained under reserve, the lien expired.
The Court of Appeal held that the provisions of sections 37 and 46 were mandatory, and that there was no indication of legislative intent that a reserve judgment on the issue of lienability would suspend the operation of these sections.

Shortcut to: http://www.ontariocourts.on.ca/decisions/2006/september/C45904.pdf

Disclosure of Expert Evidence
Conceicao Farms Inc. v. Seneca Corp.
Ontario Court of Appeal, September 20, 2006

On July 26, 2006, Gillese J.A., sitting as a single judge of the Court of Appeal, held that all information forming the foundation of an expert's report had to be disclosed on an examination for discovery. In Conceicao Farms Inc. v. Seneca Corp., Her Honour held that Rule 31.06(3) of the Ontario Rules of Civil Procedure had to be interpreted bearing in mind the role of the expert and the recent jurisprudence of the Supreme Court of Canada and the Ontario Court of Appeal. As such, she held, a broad approach was warranted, one that would enable opposing counsel to have access to the "foundation" of the expert's opinions. This approach required disclosure of all foundational information for the expert's report, whether or not the final findings, opinions or conclusions expressly reflect that information.

The appellants’ action was dismissed with costs at trial, with the trial judge relying in part on the expert evidence. When the respondents provided material to the appellants in support of their costs claim, the existence of the underlying memorandum came to light through the dockets of the respondents’ original counsel. The appellants moved before the trial judge to request production of that memorandum. The trial judge dismissed their request, but Gillese J.A. ordered it produced to the appellants.

A full panel of the Court of Appeal set aside Justice Gillese's order on September 20, 2006. While the Court accepted her finding about the contents of the memorandum and agreed that the rule entitled the appellant to obtain on discovery the foundational information contained in the memorandum, the Court disagreed with Gillese J.A. on whether the appellants were entitled to obtain that information at this stage, i.e. after trial. The Court held that they were not.

Shortcut to: http://www.ontariocourts.on.ca/decisions/2006/september/M34061.pdf

Alberta Court on Lienability and Kennedy Electric
Rahco International Inc. v. Laird Electric Ltd.
Alberta Master, July 28, 2006

A lien claimant who designed, manufactured, constructed and delivered a massive mobile conveyor system consisting of a mobile mining conveyor, a hopper and a transfer conveyor to a tar sands mining project was held not to have a lien. As in Kennedy Electric, the system was assembled in one place, then disassembled, shipped on numerous trucks and reassembled. Even though the system covered the length of three football fields, it rested on the land under its own weight. It required a source of power, and a power cable was the only way the equipment was attached to the land. The court held that the system was not sufficiently affixed to the land, and that even if it had been affixed, it was never intended to become part of the land. The court relied on the decisions in Evergreen Irrigation Ltd. v. Belgium Farms Ltd., [1976] A.J. No. 388 (S.C.) and Gauntlet Energy Corp. (Re), [2004] A.J. No. 31 (C.A.), in which liens had failed for lack of permanence of attachment to the land.

Shortcut to: http://www.canlii.org/ab/cas/abqb/2006/2006abqb592.html

Federal Court of Appeal Tendering Decision
Design Services Ltd. v. Canada
[2006] F.C.J. No. 1141 (C.A.)
July 21, 2006

The Federal Court of Appeal has held that an owner who wrongfully awards a tender to a bidder does not owe a duty in contract or in tort to the architect, consultants and subcontractors of the bidder who should have been awarded the contract.

Public Works and Government Services Canada invited bids for the construction of a naval base in Newfoundland. The contract should have been awarded to Olympic, a general contractor, but was awarded to another contractor. In preparing its bid, Olympic relied on the expertise, knowledge and work of six other companies, i.e. the architect, consultant and subcontractors. While those parties considered themselves a team, the bid was submitted by Olympic alone. The Court held that the parties were not joint venturers and that there was consequently no contract between them and the owner, not were the companies third party beneficiaries to the contract.

While the trial judge had held that it was reasonably foreseeable that the Crown's negligence in issuing the contract to the wrong bidder would result in damages to the six companies, and therefore found sufficient proximity between the companies and the Crown, the Court of Appeal reversed the finding of tort liablity. All negotiations took place between the Crown and Olympic and did not involve the six companies. As such, the relationship between the six companies and the Crown did not have sufficient proximity to attract tort liability.

Shortcut to: http://www.canlii.org/ca/cas/fca/2006/2006fca260.html

Documents Underlying Experts' Reports Must be Disclosed on Examination for Discovery
Ontario Court of Appeal, July 26, 2006

The Ontario Court of Appeal has held that all information forming the foundation of an expert's report has to be disclosed on an examination for discovery. In Conceicao Farms Inc. v. Seneca Corp., the Court held that Rule 31.06(3) of the Ontario Rules of Civil Procedure has to be interpreted bearing in mind the role of the expert and the recent jurisprudence of the Supreme Court of Canada and the Ontario Court of Appeal. As such, the Court held, a broad approach is warranted, one that would enable opposing counsel to have access to the "foundation" of the expert's opinions. This approach requires disclosure of all foundational information for the expert's report, whether or not the final findings, opinions or conclusions expressly reflect that information.

Shortcut to: http://www.ontariocourts.on.ca/decisions/2006/july/M33980.pdf

Notice to Landlord under s. 19(1) of the Construction Lien Act
Ontario Divisional Court, May 26, 2006

The Divisional Court has released its decision in 1276761 Ontario Ltd. v. 2748355 Canada Inc., dealing with the notice requirement under s. 19(1) of the Construction Lien Act. The Court disapproved of the test set forth by Master Sandler in Venneri Engineering Ltd. v. Zonenward Leasex Management Inc., [1994] O.J. No. 1649, which held that while the use of Form 2 was not required to give valid notice, at the very minimum the notice had to contain all the basic elements of that form. The Divisional Court in 1276761 held that this test was too stringent and held that the proper test was that set out in Pinehurst Woodworking Co. v. Rocco, [1986] O.J. No. 41 (Div. Ct.), which merely required that the notice had to be sufficiently distinct and memorable to allow the landlord to know when the 15-day period in which it could deny liability began.

The Divisional Court emphasized that so-called “notice events” such as the landlord’s attendance at meetings, its review of plans or its awareness of the work being done, in and of themselves are not enough to constitute sufficient notice under s. 19(1). The Court held that any notice must clearly signal a potential liability to the landlord.

Effect of Insolvency of one Party to Settlement on Other Parties
Ontario Superior Court of Justice, May 23, 2006

In Budning v. Vinokurov, the plaintiffs sued their homebuilder, the city inspector and their lawyer for damages arising out of the improper construction, inspection and provision of legal services in the building and purchase of their new home. The action was settled at mediation for $340,000. The settlement agreement provided that the lawyer’s insurer was to pay $110,000, the City $90,000 and the builder $140,000. While the insurer and the City paid, the builder became insolvent. The plaintiffs argued that the other two defendants should be held jointly and severally liable for the builder’s portion of the settlement.

The court disagreed, holding that the defendants’ promise of a global payment was followed by a specific itemization of who would contribute what amount by what date. Justice Belobaba took from this a clear intention that each of the defendants would be liable to make its allocated payment and nothing more. The liability on each of the defendants was to be several, not joint and several. Had the settlement agreement provided that the defendants would pay a total of $340,000 with no further or specific allocation, the court would have presumed joint liability.

Shortcut to: http://www.canlii.org/on/cas/onsc/2006/2006onsc13149.html

Validity of Lien for Financial Consulting Services Question for Trial
April 2006

In 1353025 Ontario Inc. v. Walden Group Canada Ltd., a lien claimant provided financial consulting services for the owner for the purpose of preparation, presentation and liaison with brokers and lenders in order to obtain a construction loan. The owner moved under s. 47 for an order vacating the claim for lien. The court dismissed the motion, holding that "though on the facts of this case I tend towards a view that the type of services rendered by the Respondent should not be entitled to lien, the appropriate place for decision is at Trial where the truth and reliability of the allegations can be tested for trustworthiness and the witnesses’ credibility may be properly evaluated."

Shortcut to: http://www.canlii.org/on/cas/onsc/2006/2006onsc10925.html

Registered Owner not Necessarily “Owner” under Construction Lien Act
April 2006

In Coldstream Concrete Inc. v. Dacosta Realty Inc., 2006 CanLII 13560, a lien and certificate of action were vacated because the registered owner of the property was not an “owner” within the meaning of s. 1 of the Construction Lien Act, since it did not request from the plaintiff or anyone else that there be any improvement to the premises.

Shortcut to: http://www.canlii.org/on/cas/onsc/2006/2006onsc10928.html

Building Code Approvals Do not Create Duty of Care
February 2006

In Holtslag v. Alberta, 2006 ABCA 51, the Alberta Court of Appeal held that Building Code approvals do not create a Crown duty of care toward ultimate consumers. The Director of Building Standards approved the use of “untreated pine shakes” as roofing material. The shakes suffered damage due to fungal infection, allegedly resulting in damage to realty owned by plaintiff home purchasers. The plaintiffs brought an action for damages allegedly occasioned by defendant’s negligent approval of the shakes. The action was dismissed for want of a duty of care. The Court of Appeal held that while the plaintiffs’ losses from the Director’s negligence were foreseeable, the motions judge properly held that the plaintiffs were unable to point to any known duty of care between persons in a relationship of like proximity to the plaintiffs and the Director. Accordingly, a non-suit was properly granted as the plaintiffs failed to prove the existence of a duty of care.

Shortcut to: http://www.canlii.org/ab/cas/abca/2006/2006abca51.html

Veltri: The End of Construction Trusts?
CCAA and Construction Trusts

For the past 50 years, provincial trust legislation has relied upon the concept of “deemed receipt” to ensure that the statutory construction trust could not be defeated by the simple expedient of a general assignment of book debts. It is upon this foundation that the statutory construction trust rests. Without it, the statutory construction trust is meaningless.
Click here to read more...(Adobe PDF Document)

The Adjudication Option: Time for Uniform Security of Payment Legislation in Canada
Proposal for Adjudication of Construction Disputes in Canada

This paper will try to prove, by the example of three other jurisdictions, that if the fundamental issue of timing is addressed, issues of payment and performance tend to be minimized or eliminated entirely. The way in which these three jurisdictions have addressed the issue of timing of payment and performance in the construction industry is by enacting uniform national adjudication legislation, which this paper recommends for Canada.
Click to read more... (Adobe PDF Document)

General Contractor’s Promise of Payment Makes it Directly Liable to Sub-Subcontractor
1379691 Ontario Ltd. v. Appugliesi

On September 28, 2005, the Ontario Superior Court of Justice released its decision in 1379691 Ontario Ltd. v. Appugliesi.

The plaintiff was a sub-subcontractor who did masonry work on a school project. When the plaintiff was not paid by the subcontractor on time, it complained to the general contractor and threatened to walk off the job if it was not paid.
Click to read more...

New Ontario Court of Appeal Decision on “Contract A”
Toronto Transit Commission v. Gottardo Construction Ltd.

On September 7, 2005, the Ontario Court of Appeal released its decision in Toronto Transit Commission v. Gottardo Construction Ltd.

When the TTC opened tenders it had received for a major project, Gottardo was the lowest bidder. Shortly after the tenders were made public, Gottardo advised the TTC that it had made a $557,000 error in the tender amount. Gottardo maintained that, because of the error it was not obligated to honour the tender price of $4,811,000.
Click to read more...

Consumer Protection Act, 2002, S.O. 2002, c. 30 in force July 30, 2005

On July 20, 2005, the Consumer Protection Act, 2002 was proclaimed in force. With limited exceptions, the Act applies to all consumer transactions if the consumer or the person engaging in the transaction with the consumer is located in Ontario at the time the transaction takes place.
Click to read more...

General Contractor Cannot Drop Pre-Qualified Subcontractor for Unreasonable Objections
Schaible Electric Ltd. v. Melloul-Blamey Construction Inc.

On July 29, 2005, the Ontario Court of Appeal upheld a lower court decision awarding damages to a subcontractor after it was dropped by a general contractor that had carried the subcontractor’s bid.

General contractors submitting tenders for a school project were required to carry electrical and mechanical bids from companies that had been pre-qualified by the school board. The plaintiff, one of the pre-qualified electrical subcontractors, submitted the lowest bid for the electrical work for the project.
Click to read more...

Contract Award to Second Lowest Bidder Results in Damage Award
Southside Construction (London) Ltd. v. 734133 Ontario Ltd

On July 15, 2005, the Ontario Superior Court of Justice released its decision in Southside Construction (London) Ltd. v. 734133 Ontario Ltd. The plaintiff was the low bidder on a project that was ultimately awarded to the second lowest bidder. The plaintiff argued that the defendant had acted upon criteria that were not disclosed in the tender documents when it awarded the contract to the second lowest bidder and that in doing so had breached its duty to treat all bidders fairly. The defendant relied on the privilege clause in the tender document which reserved the right to reject any bid without giving reasons and specifically provided that the lowest bid would not necessarily be accepted.
Click to read more...

New Decision on Liening Work Done for Tenants – Use the Form!
1276761 Ontario Ltd. v. 2748355 Canada Inc., 2005 CanLII 24749 (Ont. S.C.J.)

In Ontario, when work is done for tenants, there are two ways to lien the freehold. One is easy, one is exceedingly difficult. The easy way is for the contractor to notify the landlord according to s. 19 of the Construction Lien Act, in advance, that work is going to take place and that it is intended to look to lien rights against the freehold interest in the event of non-payment. If the landlord receives the notice and does not respond in writing by disclaiming liability within 15 days, the contractor can attach its liens to the underlying fee simple. The almost impossibly hard way is to plead the landlord into the lien action as an “owner”.
Click to read more...

Bank’s Misrepresentation to Contractor Results in Damage Award:
Matrix Contractors & Building Services Inc. v. National Bank of Canada

On July 13, 2005 the Ontario Court of Appeal reversed a trial judge’s decision to dismiss an action brought against a chartered bank for misrepresentation. On appeal, the Court found that the bank had knowingly misled the contractor with respect to the availability of the owner’s financing, and that the contractor had relied on that misrepresentation to its detriment. Matrix did the work, did not get paid for it, and now the Court of Appeal has said the Bank must pay.
Click to read more...

New Construction Lien Decision on “Lands Enjoyed Therewith”:
Beaver Materials Handling Co. Ltd. v. Hejna

On June 30, 2005, the Ontario Superior Court of Justice ruled that the section of the Construction Lien Act allowing a lien claimant to register a lien against not just the land directly improved by the lien claimant, but land “enjoyed therewith”, includes real property held by a separate, but related, corporate entity.
Click to read more...