Legal Blog:

Construction Owner

Demasi Contracting Inc. v. Farahmand 2025 Ont SCJ

A lien claimant obtained default judgment against the landowner. The claimant sought to establish priority over the existing 1^st mortgagee, arguing that the mortgagee was an “owner” under the Construction Act. The judge dismissed the motion. The judge found that the mortgagee knew about the work being conducted, but the work was not conducted at its request. More importantly, the judge found that s. 78 did not grant priority to the lien claimant over the mortgage.

Adjudication

Integricon Construction Inc. v. Stevens 2025 Ont SCJ

Construction contract called for draws to be made at various milestones. The 2^nd draw was to be made when the foundations were completed and backfilled. The owners refused to pay the full 2^nd draw because their mortgagee had determined that the 2^nd draw resulted in a 25% payment whereas the project was only 15% completed. The contractor left the job, filed a lien, and initiated adjudication. After the adjudicator found in favour of the contractor, the contractor garnished the owners. The owners dredged up the same submissions to the judge that the adjudicator rejected. The judge refused to allow a backdoor attack on the adjudication result and allowed the garnishment to continue.

House Inspection

Miller Desjardins v JF Lajoie Construction Inc. 2025 Ont SCJ

A house inspector missed obvious patent defects, resulting in the purchasers having problematic foundation, roof, and some windows and doors. The judge held that there was no breach of contract because the purchasers’ real estate agent retained the inspector and paid his $425 fee. Although we do not agree with this finding, it does not matter; the judge held that the inspector breached his duty of care in tort to the purchasers and awarded damages of approximately $68,000.

Breach of Contract (Real Estate)

Major Weston Homes Ltd v. Li 2025 Ont SCJ

Developer’s standard form agreement included a clause that stated that the purchaser had to retain a lawyer at least 30 days before closing and, if the purchaser did not, the purchaser waived tender and was in breach of the contract. The judge enforced this provision and held that the purchaser was in breach of contract. The judge refused to allow interest on the damages at 20% per year, even though it was set out in the agreement. The judge relied on a previous decision that stated that a “surprisingly onerous interest rate” had to be brought to the purchaser’s attention.

Conflict

Several remedies come into play in determining the outcome of construction disputes. Normally these remedies play nicely with each other, but sometimes they conflict. One such conflict, between the adjudication remedies under the Construction Act and remedies under a bond indemnification agreement, was dealt with in Westport Insurance v. BDA, a 2024 Ontario Superior Court of Justice decision. The losing party in the decision moved for leave to appeal to the Divisional Court, which was refused in 2025.

Bond Stream

A general contractor retained a subcontractor to provide electrical supply and installation for a project. As part of the subcontract, the sub was obliged to, and did, deliver a performance bond and a labour and material payment bond. Under the bonds, the general was the obligee and the sub was the principal.