The former Construction Lien Act contained a provision prohibiting the joinder of trust claims with lien claims. Section 50(2) provided that “a trust claim shall not be joined with a lien claim but may be brought in any court of competent jurisdiction”.
However, nothing in the Act stated that a lien action and trust action could not be heard at the same time or one immediately after the other. As a result, parties often requested and obtained a “connecting order” from a master or judge to procedurally connect lien and trust actions, with common discoveries, pre-trial conferences and settlement meetings.
As pointed out in Conduct of Lien, Trust and Adjudication Proceedings, the trust action could be referred to a master under Rule 54 and heard by the same master as on-going referred lien actions; or the lien actions could be “un-referred”, by order of a judge, and the two actions heard at the same time, or one after the other, by the same judge. In Toronto, masters used the jurisdiction granted by s. 67(3) of the former Construction Lien Act and Rule 6.01 of the Rules of Civil Procedure to fashion connecting orders.
Since all of that seemed somewhat contrived and counterproductive, Bruce Reynolds and Sharon Vogel, in their Expert Review of Ontario’s Construction Lien Act (the “Report”), recommended the repeal of section 50(2):
The removal of the prohibition against joinder of lien and trust claims would make the Act consistent with legislation from the other provinces, where such a prohibition does not exist. It is particularly concerning because the prohibition of joinder can be circumvented by a court order for a trial together or one after another, resulting in unnecessary costs and delays. The very problem this provision seeks to address is exacerbated by the duplication of proceedings it can cause, contributing to the courts’ backlog and costs to the parties. The provision has been heavily criticized by stakeholders, most of whom have suggested its removal, and none of whom proposed its retention. In keeping with the summary procedure provisions of the Act, parties should be able to join lien and trust claims without leave of the court, subject to a motion by any party that opposes the joinder on grounds that the joinder would cause undue prejudice to other lien claimants or parties.
That recommendation was followed by the legislature and section 50(2) was not carried forward into the Construction Act, so that many commenters, including the author of Conduct of Lien, Trust and Adjudication Proceedings were of the view that there was nothing preventing parties from bringing forward claims under Part II of the Act in a lien action under the new Act.
However, it has now been held that subsequent legislative developments effectively reinstated the prohibition.
Associate Justice Wiebe, in 6628842 Canada Inc. v. Topyurek, 2022 ONSC 253, pointed out that the old Act also provided in s. 55(1) that “a plaintiff in an action may join with a lien claim a claim for breach of contract or subcontract.” That provision was originally also omitted from the new Act, but was added again verbatim later, in 2019, to O. Reg. 302/18 as s. 3(2). That, according to the Associate Justice, indicated that the Legislature appeared to have had a change of mind and decided to resurrect the joinder limitation on trust claims by reintroducing the old section 55(1). The decision not to carry forward the old s. 50(2) did not change that result in His Honour’s analysis.
The intention of former section 55(1) was generally held to be precluding a personal injury or unrelated tort claim from being advanced in a lien claim, since lien proceedings were intended to be summary in nature: see, for example, Master Albert’s decision in Juddav Designs Inc. v. Cosgriffe, 2010 ONSC 6597. There seems to be no case in which section 55(1) was held to have precluded a joinder of a trust claim, which in light of the express prohibition in s. 50(2) is not surprising.
More importantly, it is respectfully submitted that if the effect of s. 3(2) of O. Reg. 302/18 on its own were to prohibit the joinder of trust claims, then the former s. 50(2) would have been superfluous, and a legislative interpretation which renders any provision of an Act meaningless or superfluous is to be avoided: see Wormell v. Insurance Corp. of British Columbia, 2011 BCCA 166; R. Sullivan, Driedger on the Construction of Statutes, 3d ed. (Toronto: Butterworths, 1994) at 159 and 162.
It is not entirely clear whether notwithstanding the recommendations in the Report, the legislature indeed intended to reinstate the restriction on trust claims by reintroducing section 55(1) into the regulations, or whether the reintroduction of former s. 55(1) without addressing former s. 50(2) was on oversight on the part of the legislature.
For the time being, however, joining a trust claim with a lien claim will be subject to challenge based on this decision.
Addressing this issue and carrying out the intention of the Report, if this was indeed the intention of the legislature, will require either analysis of this issue by a higher court or further act of the legislature.