Legal Blog

Flotsam and Jetsam

It is a new year. We thought it appropriate to give some snappy summaries of 2024 runner-up cases that caught our attention but were not the subject of our 2025 newsletters.

Mascia v. Tristar

This is a 2024 decision of the Divisional Court, Ontario Superior Court of Justice.

Dispute

Homeowners retained a contractor to repair their cottage that had severe flood damage. The owners gave a work commencement order to the contractor before the parties ever agreed on a price. Although the contractor gave estimates after the date of the work order, they were just that, estimates. After the contractor had completed much of the remediation work, the owners became upset with the rising cost of the project and fired the contractor. The contractor sued for the value of the work it had completed, including windows that it had paid for and stored and for which the owners had ultimately refused delivery to the project site.

The owners clamed that (i) there was a fixed price contract, which the contractor had exceeded, and (ii) because they never used the windows, they did not have to pay for them.

Decision

The trial judge held that, because the parties agreed that the contractor was to perform the work but never agreed on the price, the owners had to pay the contractor for the value of its work on a quantum meruit basis. On appeal, the Divisional Court noted that:

“The judge correctly held that quantum meruit is available when work is performed at the request, or with the encouragement or acquiescence, of the opposing party in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services.”

As to the windows, the owners argued that since they had not received the windows, they gained no benefit from them. The court disagreed. The contactor offered to deliver the windows to them, but the owners decided to buy new windows rather than trust the windows that the contractor had purchased for them. Because the windows were customized, they were worthless to the contractor. The court held that the owners received a benefit in that they authorised the initial purchase of the windows and the contractor suffered a detriment because it paid for windows that were, in essence, ultimately valueless.

The court dismissed all aspects of the owners’ appeal. The upshot of that dismissal was that the owners had to pay $160,000 for the contractor’s unpaid work plus interest, substantial indemnity costs of $256,000 that the trial judge had awarded, and costs of the appeal of $25,000.

Gandhi v. Mayfield

This is also a 2024 decision of the Divisional Court, Ontario Superior Court of Justice.

Dispute

Shareholders of a developer were engaged in a shareholders’ dispute. As part of the dispute, one shareholder registered a claim for lien on a project that the developer had undertaken. The developer moved to strike the lien, arguing that the claimant had not preserved (i.e. registered) it in time. The outcome of that argument would be determined by the date the claimant had performed his last work on the project site.

In his claim for lien, the claimant declared that he performed his last work on April 2, but in his subsequent cross-examination as to the date, he claimed he performed the last work on April 11. If April 2 was correct, the claimant registered out of time; if April 11 was correct, the lien was in time.

The motion judge held that the statement in the claim or lien was a judicial admission that only compelling evidence could overturn and that the subsequent statement in cross-examination was not sufficient; the judge therefore discharged the lien.

Decision

The Divisional Court, on appeal, disagreed for two reasons. First, the judge’s finding of fact was based on a palpable and overriding error; the developer adduced no evidence to challenge the claimant’s evidence given in the cross-examination. Second, the parties never directed the motion judge to s. 6(1) of the Construction Act, which states that a lien is not invalidated by reason of a failure to comply strictly with requirements of the Act regarding information in the lien – unless the owner has been prejudiced. Accordingly, the claimant’s lien was not defeated merely because it did not strictly comply with the requirement to insert the correct dates of the supply of the services. Because the owner suffered no prejudice from the error, the lien was valid.

Adapt For Any Situation Ltd. v. Giles

This is a 2023 decision of the Ontario Superior Court of Justice.

Dispute

A contractor renovated a house for the owner. Its initial estimate for the renovation was $184,000 but, at the end of the job, the contractor claimed an additional $201,000. The owner paid nothing. He claimed that the contractor’s work was deficient and that he had to complete significant portions of the renovation. The owner listed the house for sale and entered into an agreement of purchase and sale for a sale price of $315,000.

The contractor, whose lien rights were long gone, brought an urgent motion before the closing for a certificate of pending litigation (CPL). If the certificate were granted, the sale would not have gone through and the contractor would have security for its claim.

Decision

A court will grant a CPL against land if an interest in the land is in question. For example, the courts regularly grant a CPL when there is a claim that a conveyance of land is a debtor’s fraudulent attempt to put the land out of reach of his creditors.

The motion judge noted that:

“The plaintiff has a claim for money damages. It contracted to be paid money in return for the provision of construction services. That is the extent of their claim. They did not bargain for an interest in land. There was no expectation they would obtain a title interest in the land in return for providing construction materials and services. This is not an occasion where the parties were in some kind of joint venture.”

He accurately summed up the situation as follows:

“At its highest, in respect of the House, the plaintiff had a statutory claim to a construction lien when it completed its work in November 2022. It failed to properly protect its lien rights in time. It cannot convert its claim for money damages into a claim for a title interest in the land.”

The contractor then claimed that there was some sort of constructive trust for the land (i.e. it was deprived of any payment for its work, the owner benefitted, and there was no juridical reason for the deprivation and the benefit.)

The judge held that this was not a fiduciary relationship; it was merely a commercial arrangement. There was therefore no constructive trust. We would go further. There is a juridical reason to eliminate a trust, the Construction Act. The Act allows for a lien on land if the claimant follows its rules. In this case, the contractor did not register a lien and lost any interest it had to the land.

In effect, you cannot get through the back door what you cannot get through the front.

 

Image courtesy of AbsolutVision.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.