Legal Blog:

Construction Act – Part 1 – An Overview

We have been witness to, and of necessity students of, two major revamps of construction legislation in Ontario. We started our practice while the Mechanics’ Lien Act was in force, and had been in force for many years. In 1983, after a major study, the Construction Lien Act emerged. Many concepts were similar to those in the Mechanics’ Lien Act, but there were major differences. Since 1983, the Construction Lien Act has been tweaked many times, but with no major changes – until now. In December 2017, after another significant report and wide consultation, the Construction Lien Act was extensively amended. Most of the changes have been proclaimed into force as of July 1, 2018. These changes include a change to the name of the legislation; it will now be the Construction Act. Other changes, which introduce two innovative concepts, have been proclaimed into force as of October 1, 2019.

For the next issues of our newsletter, we will not report on current jurisprudence; rather, we will review the changes to the Construction Lien Act. To differentiate between the old and the new, we will refer to the existing legislation as the CLA and the new legislation as the Act.

Real Estate Remedies

Benlezrah v. Dietz 2017 Ont SCJ

The purchaser in a real estate transaction wanted to close the transaction, but pay $210,000 into court for a determination later of whether he was entitled to an abatement on grounds that the property was 14% smaller in size than represented. The judge refused to do so. In effect, it would be the equivalent of a Mareva injunction, tying up the vendor’s sale funds without proper evidence to support a Mareva injunction. The judge held that the purchaser’s only options were as follows: rescind the transaction and refuse to close; close the transaction and sue for breach of contract, if available; or sue for specific performance with an abatement or, in the alternative, for damages and obtain a certificate of pending litigation.

Negligence & Vicarious Liability

Sataur v. Starbucks Coffee Canada 2017 Ont CA

The plaintiff sued 2 employees and Starbucks arising out of damages incurred from a coffee spill. The motions judge dismissed the action against the employees, holding that, as a general rule, employees are not liable for what they do within the scope of their employment on behalf of their employer corporation. The Court of Appeal reversed, holding that the rule was just the opposite: a plaintiff has the right to sue a negligent person, regardless whether that person was working for someone else. The employer might also be vicariously liable for the acts of its employees, but the employees are still liable if negligent. Further, it was not an abuse of process to join the employees for the purposes of discovery.

Release

Brager v. Ontario (Minister of Natural Resources) 2017 Ont SCJ

The parties entered into an agreement regarding a dispute over title to land. They entered into minutes of settlement that resulted in the plaintiff agreeing to provide a release. The defendant’s release could have handed the usual “no claims over” clause (i.e. no claims against 3^rd parties who might claim over against the defendant), but instead merely indicated that, if such a claim was made, the plaintiff had to indemnify the defendant for all damages incurred as a result of that claim. The plaintiff then mentioned, for the first time, that it had commenced an action against the surveyor and wanted to exclude that action from the no claims over clause. The judge held that there was a settlement and that the plaintiff had to execute the defendant’s form of release without amendment. The judge held that the no claims over clause was standard in virtually every release entered into by parties engaged in litigation and, without such a clause, the release would not be a full and final release.

Bankruptcy – Fraudulent Conveyance

Esfahani v. Samimi

The creditor had obtained an order that a discharged bankrupt had fraudulently conveyed property to transferees. The creditor then brought an action against the transferees for its damages. The judge dismissed the action, stating that, once the bankrupt was discharged, his debt was expunged. The only remedy the creditor had was to move, through the bankruptcy, against the property in the bankrupt’s hands. The creditor had no remedy for damages against the transferees.

Trust Limitation

Drakoulakos v. Stirpe 2017 Ont CA

“… the correct law applicable to the facts found by the motion judge is that no limitation period applies to the appellant’s claim for property still in the possession of a trustee of a resulting trust.”

Jonathan Speigel Receives Lifetime Achievement Award from the Peel Law Association

We are thrilled to announce that on February 22, 2018 at the Annual General Meeting of the Peel Law Association, Jonathan Speigel, a founding partner of Speigel Nichols Fox LLP, was presented with the PLA Lifetime Achievement Award.