Facts
In August of 2020, Master Robinson released his decision in GTA Restoration Group v. Baillie (“Baillie”). The dispute concerned the decontamination of a property. Following the unfortunate passing of Baillie’s sister, Baillie contracted with GTA to decontaminate her sister’s house. GTA invoiced Baillie for the completed work, and Baillie agreed to pay.
The issue arose when Baillie notified GTA that Baillie was insured. In response to the notice that an insurance company was involved, GTA increased their bill by almost $40,000. Subsequently, Baillie’s insurance conducted their own audit of GTA’s work and informed GTA that they felt GTA exaggerated their costs and refused to pay the higher fee.
GTA, which remained unpaid, registered a lien for the unpaid invoice, and commenced proceedings against Baillie.
Baillie countered that, among other things, GTA’s lien was willfully exaggerated. Baillie asked the Master to discharge the lien under sections 35 and 47 of the new Construction Act (the “Act”).
Issues Raised
Master Robinson in Baillie was faced with several distinct issues, two of which this article draws attention to. First, Baillie is the first case to deal with the newly worded section 47 and if willful exaggeration can qualify as grounds for discharging a lien. Second, Master Robinson weighed in on the case law developing the procedural differences between a section 47 motion and a motion for summary judgment.
Can a Lien be Vacated for Willful Exaggeration?
Baillie argued that sections 35 and 47, when read together, allow the court to discharge a lien which is willfully exaggerated. Baillie’s argument rested on the new addition to the wording of section 47 following the amendment of the old Act, in particular that willful exaggeration qualified as an abuse of process. GTA took the position that section 47 could not apply to an exaggerated lien, and that only section 35 applied. Essentially, GTA argued that section 35 was a complete code for willful exaggeration claims and, therefore, that dismissal of the lien under section 47 was not possible.
This was the first case to interpret the new wording of section 47, and what it meant for a lien to be “frivolous, vexatious, or an abuse of process.” In looking at the meaning, Master Robinson relied upon the expert report prepared by Bruce Reynolds and Sharon Vogel. After doing so, Master Robinson found that willful exaggeration could ground an abuse of process claim under section 47 of the Act.
I do not accept GTA’s position that willful exaggeration cannot be a basis for determining that a lien is an abuse of process under s. 47. The nature, extent, and knowledge (or reasonable knowledge) of exaggeration are factors that, in my view, are properly considered by a court. Whether they are sufficient to warrant discharge will turn on the facts and circumstances of each case.[1]
As the Master noted, this was the first case where a court acknowledged that full discharge of the lien could be a remedy for willful exaggeration. However, Master Robinson went on to conclude that there were not enough facts before the court to determine if the lien in question was, in fact, willfully exaggerated. Instead, the lien in question was declared exaggerated and reduced pursuant to section 35(2) of the Act.
It is hard to say what type of facts could lead a court to discharge a willfully exaggerated lien under section 47. Naturally, the finding that a lien is willfully exaggerated means that there is in fact an actual value underlaying the lien claim, albeit a lower value. Master Robinson himself acknowledged that it would be inconsistent with the Act to deny an entirely unpaid contractor the ability to prove entitlement to a lien at trial. Thus, in order to feel that discharge under section 47 is justified, a court would likely require facts that prove serious bad faith on the part of the lien claimant on clear evidence. What that evidence would look like is less clear.
Regardless, Master Robinson’s conclusion that section 35 is not a self-contained regime for willful exaggeration opens up the scope for discharges under section 47 of the Act.
Difference Between a Motion for Summary Judgment and a Section 47 Motion
Given Master Robinson’s finding that he lacked sufficient evidence to rule on willful exaggeration, the question of evidentiary onus was an important one. To determine the evidentiary onus of each party in a section 47 motion, Master Robinson needed to weigh in on the current jurisprudence differentiating a section 47 motion from a summary judgment motion.
Master Robinson followed the approached taken by the Court in M. Fuda Contracting Inc. v. 1291609 Ontario Ltd., 2018 ONSC 4663, concluding that a motion for summery judgment was a type of motion that fell under the umbrella of section 47, but that there were important distinctions in procedure between the two.
This distinction between section 47 motions and a motion for summary judgment under R. 20 is important for establishing the parties’ evidentiary burdens. On a motion for summary judgment there is a burden on both parties to put their “best foot forward”, meaning each side must lead their best evidence. Whether that burden exists under a section 47 motion is less clear. For example, in R&V Construction v. Baradaran, 2020 ONSC 3111, the Court looked at the wording of section 47 and concluded that “there is no requirement for parties to ’put their best foot forward.’”
Master Robinson softened the position that there is no “best foot forward” approach, stating that in a situation like in R&V Construction it made sense no such evidentiary onus would apply, but that would not be true in other cases like the one before him. As Master Robinson identified, in R&V Construction the unrepresented defendant had moved under section 47 to discharge the lien, but had instead had summary judgment issued against him for his failure to lead appropriate evidence of triable issues. In such a situation, it seems hardly fair to fault the unrepresented defendant. Especially when the plaintiff is not the moving party.
However, the facts of Baillie show why a “best foot forward” requirement is necessary in many section 47 motions. In Baillie, the majority of the evidence was in the hands of GTA who refused to put its “best foot forward” on the section 47 motion.
Given the decision in Baillie, and the somewhat murky caselaw on this issue, it is incumbent upon the parties to determine on the facts of a case whether a “best foot forward” approach is required. Counsel may need to consider showing the best evidence of triable issue regardless, given the uncertainty. While Baillie’s measured approach might mean that the parties cannot be certain what the evidentiary burden in a given case will be in advance, lawyers can take some solace in Master Robinson’s view that R&V Construction and another recent case, Maplequest Developments Inc. v. 2603774 Ontario Ltd., 2020 ONSC 4308, did not alter prior caselaw.
Conclusion
Baillie stands for the proposition that it is possible to discharge a lien for willful exaggeration under section 47 of the new Act. In tandem, Master Robinson affirms the “best food forward” evidentiary onus in certain section 47 motions, affording the court more evidence to assess a willful exaggeration claim. As the case law continues to develop under the amended Act, it remains to be seen what facts will, or would, allow a court to confidently discharge a lien for willful exaggeration. Although this uncertainty may prove difficult for lawyers to navigate in the present, over time the courts will hopefully develop concrete circumstances defining the burden for each party.
[1] GTA Restoration Group Inc v. Baillie, [2020] ONSC 5190 at para 62.