Legal Blog: Construction

Oct
05
2017

Super Priority to CRA

Manitoba Housing and Renewal Corp. v. Able Eavestroughing Ltd. 2017 Man QB

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.

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Oct
05
2017

Incorporation by Reference

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.

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Oct
05
2017

Costs Construction

2283624 Ontario Limited v. Performance Heating & Floor Coating Ltd. 2017 Ont SCJ

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.

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Oct
05
2017

Limitations

Waterstone Properties Corporation v. Caledon (Town) 2017 Ont CA

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.

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Sep
28
2017

Duress & Practical Compulsion

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).

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Sep
28
2017

Personal Liability

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.

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Sep
26
2017

Construction

King Road Paving and Landscaping Inc. v. Plati 2017 Ont SCJ

Owner, general, and subcontractors contested just about everything. Findings:

  • Owner was given credit for some payment in cash even though there were no receipts because general admitted paying his payroll in cash and it made no sense that the general would have continued to work without having received additional money in excess of the cheques.
  • When a contract is silent about payment of HST, HST is payable in addition to the contractual amount.
  • There was an alleged increase in price between the 2nd and 3rd contracts, but there was no new consideration for the increase.
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Sep
12
2017

Bald

Posted in Construction

No, we are not talking about the surface of a man’s head; rather, we are talking about “bald allegations” of fact in affidavits and whether they are effective to achieve their purpose. We have often stated that lawsuits should really be called factsuits because, in most cases, the real fight is not about the law; the real fight is about the facts to which the law is applied. This differentiation was front and centre in Airex Inc. v. Ben Air System Inc., a 2017 decision of the Ontario Court of Appeal.

Motion

This was a run-of-the-mill $217,000 summary judgment motion that a subsub brought against a sub and its two directors arising out of monies due on contract and breach of trust.

The Court gave a short summary of the trust provisions in the Construction Lien Act:

“Section 8 of the Act provides that monies received on account of a contract for an improvement constitute a trust fund for the benefit of subsubcontractors and other persons who supply services or material for the improvement (collectively “subsubcontractors”) and prohibits use of any such funds for a purpose inconsistent with the trust until all such persons have been paid in full.

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