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Jan
02
2020

Assignment

Posted in Construction

Pursuant to section 73 of the Construction Act, lien rights may be assigned to another (an “assignee”). One would think that the rights of that assignee, received by virtue of the assignment, would be identical regardless of who the assignee is. Well, “it ain’t necessarily so.” The decision in Great Northern Installation Services Ltd. v. King Road Paving and Landscaping Inc., a 2019 decision of the Ontario Divisional Court, is a case in point.

Box Score

We have an owner, a general, the general’s lawyers, and two subs (SC1 and SC2).

A race track with lanes labeled one to five.

After trial, and before any allocation of costs of the trial, the trial judge held that the following amounts, which we have rounded liberally, were due:

  • The owner owed the general $79,000 after being credited for $106,000 already paid to the general.
  • The owner had holdback obligations to the subs of $97,000 ($18,000 by way of the basic holdback and $79,000 by way of the holdback arising from a written notice of lien).
  • SC1 had a lien for $52,000 and SC2 had a lien for $54,000. Remember, there is no lien for interest.
  • Since the aggregate of the liens of the two subs was more than the owner’s holdback, the subs had to share the holdback money pro rata: $48,000 to SC1 and $49,000 to SC2.
  • The general owed SC1 $104,000, comprised of $52,000 for actual goods and services plus contractual interest (not lienable, but still due from the general) of $52,000. The interest amount was extraordinarily high because the general and SC1 had agreed upon interest at 2% per month, which was the equivalent of approximately 26% per year based on the compounding factor.
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Jan
02
2020

Damages Mitigation

Arista Homes (Boxgrove Village) Inc. v. Lakhany 2019 Ont SCJ

Purchaser repudiated a house sale. The developer vendor did not attempt to re-sell the house aggressively because it might have caused difficulties with other buyers in the development whose purchases had not yet closed. After an appraisal obtained by the vendor, the parties agreed that the value of the house on the closing date was $800,000 rather than the sale price of $1,204,000. The vendor claimed the difference of $404,000 in damages and, in addition, forfeiture of the purchaser’s $100,000 deposit. The vendor made no claim for the house’s carrying charges after the closing date. The court held that the damages were $404,000 and that, given that the value of the property as at the date of closing was agreed, there was no necessity to mitigate. Indeed, the defendant had the onus to show that the plaintiff’s mitigation would have resulted in the sale of the property at a price greater than its value on closing and had supplied no evidence in that regard. The vendor tried to retain the deposit, in addition to the damages, relying on a clause that noted that the deposit monies were deemed not to be partial payments. The judge refused to do so; merely because the deposit was not a partial payment did not mean that it was not be credited towards the purchase price or the damages.

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Jan
02
2020

Tender – Fair

LaPrairie Works Inc. v. Ledcor Alberta Limited 2019 Alberta QB

An unsuccessful bidder sued, not the owner, but the successful bidder of a project. The bad sport claimed that there was a contract among the bidders to treat each other fairly during the bid preparation and that the successful bidder breached that contract. The motions judge dismissed the action. All of the various indicia of an alleged contract were merely indicia that the bidders knew that there were rules to the bidding process with which they had to comply or would not be successful. There was never a contract between the bidders.

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