Legal Blog: Construction
MGL Construction Inc. v. IBuild Corporation 2017 Ont SCJ
Appeal from Small Claims Court decision. Subcontractor rendered invoices on 2 projects more than 2 years before the action was commenced. The action was for breach of contract and breach of trust. The Divisional Court held that the action could continue for the following reasons: (1) the general allegedly had promised to pay the subcontractor, thereby “delaying me”; this promise to pay could be construed as an extension of the limitation period because the subcontractor continued to perform services in accordance with the forbearance. (2) As to the breach of trust claim, the subcontractor had requested an order for financial information as to the state of accounts between the owner and the contractor and these productions might have demonstrated that the contractor did not receive funds from the owner within the limitation period; a trust does not exist until the monies have been received by the contractor. Reason #2 relating to the trust claim is quite valid. Reason #1 relating to the breach of contract claim is not correct; the Limitations Act requires a written acknowledgment of a debt.Continue Reading >
Limitations cases, under the Limitations Act, 2002, just keep coming. Limitations issues abound: when did the period start, how long was the period, was it reasonable to commence an action, when was the cause of action discovered, etc.? Consequently, we have written about limitations issues in the construction context many times. Three of our newsletters have had the word “limitations” in the heading; hence, we entitle this newsletter, Limitations (4).
We now have two more cases to discuss: Weinbaum v. Weidberg, a 2017 decision of the Ontario Divisional Court and Employment Professionals Canada Inc. v. Steel Design and Fabricators (SDF) Ltd., a 2016 decision of the Ontario Superior Court of Justice.
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This was a priority fight between the surety and subs of a general against CRA. The owner had held back $463,000 from the general and wanted to pay that amount into court. Before the owner’s application, CRA issued a third party demand against the owner for payment of $712,000 relating to the general’s payroll source deduction arrears. GCNA and the subs attempted to argue that the owner had a duty to pay them directly, rather than the general, so that the third party demand was irrelevant. The judge held that (i) there was no obligation of the owner to mitigate the losses of GCNA and the unpaid subcontractors, (ii) the prime contract and the bonds created no legal obligation on the part of the owner to pay subcontractors; it merely had a right to do so; (iii) even if there were something in the contract that said this, the contract could not displace the rights of CRA. Accordingly, since the owner had no obligation to pay the funds to the surety or the subcontractors, the funds had to be paid to the general and, pursuant to the third party demand, were to be paid to CRA. Although those funds were subject to the liens and trust claims of the subs, they ranked behind CRA’s claim in priority and the subs and GCNA got nothing.Continue Reading >
Trenchline Construction Inc. v. Unimac-United Mgmt Corp. 2017 Ont SCJ (MC)
Subcontractor claimed for standby charges for delay. There were 3 types: arrival at site without work to do; told not to attend site because there was no work to do; and working after the original substantial performance date. The subcontract documents were barebones but stated “Standard CCDC Contract applies.” This was enough for the Master to incorporate by reference the provisions in the CCDC documents dealing with delays. The Master refused to award the standby costs for a number of reasons, including (i) there was no evidence that the general promised in the subcontract to make the site available on every day of the subcontractor’s schedule for completing the work, (ii) there was no corroboration of payment of the claimed standby charges: no cheques, pay stubs, timesheets, or affidavits from the sub’s workers, and (iii) the claim for standby charges while the subcontractor was still working was, in reality, damages for lost revenue on other projects and nothing was proven in that regard.Continue Reading >
The judge awarded costs of $45,000 to the defendant on an unsuccessful construction lien action for payment of $59,000. He dismissed arguments of proportionality because, he stated, it was the plaintiff who made the decision to use the Construction Lien Act process rather than sue in Small Claims Court or use the Simplified Rules.Continue Reading >
Developer was held to have agreed, in a 1973 subdivision agreement, to transfer land to the Town for a park. The developer did so, but the Town failed to register, and then lost, the transfer. In the meantime, the Town used the land as a park. Over 40 years later, the new, and related to the old, owner of the land and the Town each moved for a declaration of ownership of the land. The Court held that the Real Property Limitations Act governed. The words “to recover any land” was held to mean “to obtain any land by judgment of the Court.” This encompassed claims for a declaration in respect of land and claims to the ownership of land advanced by way of resulting or constructive trust. The Court, however, held that the limitation period did not start running because, pursuant to section 5 (1) of the Act, the Town had never been dispossessed from its possession of the land. The Court agreed that the land was that of the Town.Continue Reading >
Ekum-Sekum Inc. v. Bel-Air Excavating & Grading Ltd. 2017 Ont SCJ
Specifications stated that paving could not take place unless the road surface was at least 2°C and could not be done after November 30 without permission. Through no fault of the paving contractor, the construction was delayed. The general wanted the paving done before winter. The paving contractor insisted that, if the work were not postponed until the spring, then it could not perform the paving unless the general released it from liability for a possible faulty product. The general signed the release, the work was done, the temperature was too cold, and, ultimately, the paving had to be redone. The paving contractor relied on the release. The general alleged that the release was given under duress. The court held in favour of the paving contractor. Alternative courses were open to the general, the general was independently advised that it should not sign the release, and the general did nothing to ensure that the paving did not take place when the temperature was too cold. In addition, the pressure that the paving contractor exerted was for a legitimate reason (i.e. to be absolved from non-compliance with specifications about which the general was warned).Continue Reading >
Spoke v. Delinia Ltd. 2017 Ont (Div Ct)
Principal was held liable for corporation’s breach of construction contract. Although the owner knew of the existence of the corporation, the principal did not make it clear that the only entity with whom the owner was dealing was the limited liability corporation.Continue Reading >