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.

Damages (Real Estate)

Baldwin v. Williams 2025 Ont SCJ

Purchasers breached an agreement of purchase and sale because they could not get financing after the property had fallen in value. The vendors resold the property for a loss. The court noted that the duty to mitigate only requires the plaintiff to take reasonable steps, not all possible steps, to reduce its loss. The court ordered damages for the difference in the two sale prices and extra costs that the vendor’s incurred as a result of owning the property from the date of the original closing to the date of the final closing of the resale.

Encroachment

Bachli v. McLeod 2025 Ont SCJ

Defendant’s retaining wall encroached on his neighbour’s property. Predecessors in title had entered into an encroachment agreement that allowed the encroachment for 21 years. The agreement had expired and the new neighbour wanted the encroachment gone. The court noted that the parties had not negotiated an extension or a new agreement and granted a declaration that the retaining wall was encroaching on the neighbour’s land.

Krystyne Rusek Recognized by Best Lawyers 2026

Speigel Nichols Fox LLP is delighted to have Krystyne Rusek recognized for a second year in a row by Best Lawyers 2026 in the area of Trusts and Estates in Canada.

Ultimate Limitation

We expect that everybody now knows about the basic limitation period: two years from the date that an aggrieved party (plaintiff) knew or ought to have known about a claim. Because the discovery or deemed discovery may not take place for many years, the basic limitation period, depending upon the circumstances, can be almost unlimited.

The discovery principle arises from the law’s reluctance to remove a right of action from a plaintiff before that plaintiff even knows that a right of action exists. For example, if a negligent motorist causes an accident that puts a pedestrian into a coma for two years, it would hardly be fair for the limitation period to eliminate the pedestrian’s right of action before the pedestrian even awakened.

CPL (2)

A certificate of pending litigation (CPL) is a notice registered against title to property informing the world that title to this property is in issue. Any purchaser or mortgagee who then deals with the property does so at its peril. An action to set aside a mortgage or a transfer of land under the Fraudulent Conveyances Act (Act) is often joined with a motion for the issuance of a certificate of pending litigation. After all, what good will it do to bring an action to set aside a transfer if, just before trial, the fraudsters simply re-transfer the property to another person complicit in the fraud or, worse yet, sell or mortgage the property to arm’s length third parties.

A CPL may be obtained on motion without notice (Rule 42.01 of the Rules of Civil Procedure) and, if there is an apparent claim for an interest in land, it is not overly difficult to obtain a CPL. The real fight ensues when the property owner is notified, as required by the Rules, that the land has now been bound by the CPL. Such was the case in Nedaneg Financial Corporation v. Talebzadeh, a 2025 decision of the Ontario Superior Court of Justice. In Nedaneg, however, the plaintiff brought its motion on notice to the defendants.