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Legal Blog: Construction

Oct
13
2020

Contract Termination – Significant Deficiencies

Mastracci v. 1882877 Ontario Inc. 2019 Ont SCJ

While roofing work was ongoing, leaks became apparent. The owner retained an expert whose report savaged the contractor’s work. Rather than allow the contractor to fix the deficiencies, the owner retained another roofing contractor to apply the appropriate fix. The judge held that the deficient work was a fundamental breach of the contract and therefore the owner did not have to give the contractor a reasonable opportunity to correct the deficiencies. The court allowed the owner to set off its cost to complete the work against any amount otherwise owed to the contractor.

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Oct
13
2020

Extra Labour Cost – Excessive Lien

McLarty v. 2210961 Ontario Limited 2020 Ont SCJ

A contractor charged extra labour based on a “shop rate” of $60 an hour (a rate that it applied to all customers) rather than the actual rate plus burden. The judge held that the rate was standard in the industry and that, because the contractor included in his quote, an estimate for labour at the same rate, he had a right to that rate. The court analogized the claim to an auto repair shop charging the same rate to every customer, regardless of the wage cost of the individual actually performing the work. Using the same logic, the court held that the plaintiff was not allowed to claim an enhanced rate for overtime work. The amount awarded was $124,000 but the lien claim was $203,000. The judge concluded that the lien claim was exaggerated. However, because the defendant filed no evidence to prove it suffered damages, the judge gave nothing as compensation.

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Sep
25
2020

Master – Summary Judgment Jurisdiction

R&V Construction Management Inc. v. Baradaran 2020 Ont SCJ (Div Ct)

Although, on a motion for summary judgment in the normal course, Masters do not have the enhanced powers given to judges, they do have jurisdiction to use the enhanced powers in their capacity as referees under the Construction Act. The motion judge was overruled on this issue. However, the court set aside the Master’s dismissal of the action because of a lack of natural justice. The defendant, who was not represented, had brought a motion to discharge the plaintiff’s lien or reduce lien security. Instead, the Master granted summary judgment against him for a motion that neither he nor the plaintiff had brought.

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Sep
01
2020

Notice

Posted in Construction

The concept of notice seems to be continually in issue. Construction contracts, particularly prime contracts with their omnipresent supplementary conditions, have become more and more onerous requiring contractors to give notice of claims. Although the time in which the notice must be given and the degree of detail to be contained in the notice vary from contract to contract, the provisions usually have one thing in common: without the requisite notice, the claim is gone. We first discussed this way back when in 1996 (see July 1996 newsletter) and updated it in our discussion of Technicore Underground Inc. v. City of Toronto (see July 2012 newsletter). Cases come and cases go, but, unfortunately, notice controversies never go away – because contractors are loath to rock the boat and therefore do not give the appropriate notice. One of these controversies was resolved in Newton Mechanical/Electrical Inc. v. NDL Construction Ltd., a 2019 decision of the Manitoba Court of Queen’s Bench.

A sports referee making a gesture with his arm.

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Jul
27
2020

Negligent Construction

Wesley v. Geneau 2020 Ont SCJ

Purchaser sued the vendor, who built the house, for negligent construction and negligent misrepresentation contained in a Seller Property Information Statement. The property was built contrary to the provisions of the Ontario Building Code, resulting in foundation walls failing. The judge had no difficulty in holding that the failure was a safety issue and that the vendor did not give proper information in the SPIS. The judge awarded the full costs to repair the deficiencies and to compensate the purchaser for repair costs that were consequential to the failure. The judge also awarded $5,000 in general damages.

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Jul
27
2020

Security for Costs

Lancaster Group Inc. v. Kenaidan Contracting Ltd. 2020 Ont SCJ (MC)

General contractor moved for security for costs against its sub. The Master set out the tests for security in a construction context. She held that the regular rule (i.e. good reason to believe the plaintiff had insufficient assets in Ontario to pay for an adverse cost award) was made more onerous in a construction action (i.e. demonstrate indicia of insolvency or corporate instability). Based on the Equifax reports, she held that the general had met its onus.

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Jul
27
2020

Tarion

Yildirim v. Tarion Warranty Corporation 2019 Ont SCJ (Div Ct)

Tarion provides statutory warranties of fitness for new homes regardless whether a builder registers under the program or not. In this case, the vendor, who should have registered, did not. The vendor was convicted of a breach of the Ontario New Homes Warranties Act. Tarion ultimately paid the homeowner $17,000 as compensation for constructions deficiencies. After Tarion paid the homeowner, it commenced an action against the vendor for reimbursement of the $17,000. The vendor asserted, as his only defence, that he should have been given notice of Tarion’s decision to pay and been allowed to appeal that decision to the Licence Appeal Tribunal. The Small Claims Court judge, and on appeal the Divisional Court, disagreed with that position.

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Jul
07
2020

Security for Costs

Canadian Metal Buildings Inc. v. 1467344 Ontario Limited 2019 Ont SCJ

In a construction dispute, the Master set out rules for security for costs and found that security was appropriate. The Master ordered the security by stages in the litigation process. The first stage took the litigation up to and including examinations for discovery.

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Jul
02
2020

Discovery

Posted in Construction

Aside from the 15-year absolute limitation period, which, for the most part, applies regardless whether the aggrieved party even knows of its loss, discovery is the key to the running of a (standard 2-year) limitation period. The claimant must, or ought to, know that (i) the loss has occurred, (ii) it was caused by an act or omission of a specified person, and (iii) having regard to its nature, a proceeding would be an “appropriate means” to seek to remedy it. Invariably, the facts of the case drive the result. Such was the situation in Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., a 2019 Ontario Court of Appeal decision.

A magnifying glass.

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Jun
09
2020

Security for Costs

Prasher Steel v. Gateman-Milloy Inc. 2020 Ont SCJ

In a construction case, with a bond, the defendant moved for security for costs. The defendant demonstrated that the plaintiff had insufficient assets to pay costs. The shareholders of the plaintiffs did have equity in their house, but were unable to obtain financing to unlock any of that equity. The judge ruled that the plaintiff had a real possibility of success against the defendant and that the plaintiff was impecunious. The judge refused the order for security, holding that such an order would preclude the impecunious plaintiff from pursuing what appeared to be a meritorious claim.

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