2010 ONSC 6978, 2010 ONSC 6978

CITATION : 570 South Service Road Inc. v. Lawrence-Paine & Associates Limited, 2010 ONSC 6978 COURT FILE NO: 10-23864 DATE: 2010/12/16 ONTARIO SUPERIOR COURT OF JUSTICE IN THE MATTER OF THE CONSTRUCTION LIEN ACT , R.S.O., 1990 c.C.30 as amended B E T W E E N: ) ) 570 SOUTH SERVICE ROAD INC. Applicant – and – LAWRENCE-PAINE & ASSOCIATES LIMITED Respondent ) )) )) )) )) ) DEREK COLLINS, for the Applicant RICHARD J. MAZAR for the Respondent ) HEARD: December 9, 2010 cavarzan j.

REASONS FOR DECISION [ 1 ] 570 South Service Road Inc. (“570”) asks the court to declare the lien registered by Lawrence-Paine & Associates Limited (“LPA”) expired. It is alleged that the lien was registered more than forty-five days following the date of last supply of services or materials, contrary to s.31 of the Construction Lien Act . [ 2 ] The issue is whether the work performed between mid-June, 2010 and September 27, 2010 was contract work or repair work and, if it was repair work, whether the 45 day period within which to register a lien runs from the latter date.

Background [ 3 ] 570 was in the process of completing construction of a vast indoor sports complex with a maximum ceiling height of 54 feet. The work which generated this dispute was the installation of a series of vinyl mesh curtains designed to be lowered from the ceiling for the purpose of dividing the interior space into as many as three separate playing fields. [ 4 ] A company called Draper Inc. (“Draper”) is the supplier of such curtains. LPA is the exclusive distributor for Draper in Ontario.

After initial talks with Draper, 507 entered into a contract with LPA to supply and install the curtains for the contract price of $133,000.00. The payment terms specified in the January 2010 contract are: “50% deposit, 25% after project commencement, 25% due 30 days after project completion, 2% per month charged on overdue accounts.” [ 5 ] An invoice dated March 25, 2010 in the amount of $66,500.00 purported to be for the 50% deposit.

The total including tax amount to $69,825.00. 570 paid $62,842.50 on this invoice, leaving a balance due of $6,982.50. [ 6 ] A second invoice dated April 12, 2010 for the “supply and installation of Draper Fold Up Curtain” was also in the amount of $66,500.00. The total including tax amounted to $69,825.00. 570 paid $40,000.00 on this second invoice, leaving a balance due of $29,825.00. The total amount withheld by 507 is $36,807.50 i.e. the amount claimed in the registered lien.

[ 7 ] The above recital of facts is not disputed. LPA maintains that the installation work commenced on April 5, 2010. 570 maintains that the work was completed on April 12, 2010 as evidenced by the issuing of its final invoice on that date. [ 8 ] 570 does not dispute that LPA returned to the property, but asserts that it was for the purpose of “fixes” only. Mr. Collins cited extracts from email messages from LPA, e.g.

May 11, 2010 agreeing to attend to look “at some deficiencies”; July 8, 2010 concerning attending to do “the necessary repairs”, “the adjustments”, and completing the “repairs”; and August 11, 2010 about making “the corrections” to the curtain. [ 9 ] The applicant cites case law for the proposition that work to repair deficiencies does not have the effect of extending the 45 day period following completion of the work within which a lien must be registered. For example, in Applewood Glass and Mirror Inc. v.

Baun Construction Inc. 2009 CarswellOnt. 7122 , 85 C.L.R.(3 rd ) 307 , it was held that returning to the job site to replace a hinge amounted to a trivial amount of work, performed after the completion of a subcontract, to rectify improper work and, accordingly, did not extend time. [ 10 ] Vaughan-Scape Landscape Contractors Inc. v. Watermark Developments Ltd , 2010 CarswellOnt 1219 , 2010 ONSC 1365 , and Nortown Electrical Contractors Associates v. 161975 Ontario Inc . stand for the bald proposition that doing work to rectify defective or improper work does not extend the time for registering a claim for lien.

As stated in paragraph 7 in the Vaughn-Scape case, however: The Construction Lien Act is technical legislation designed to give priority and security to contractors who supply work and services to real property. To avail oneself of the benefits of the legislation the contractor must comply strictly with its requirements. [ 11 ] Mr. Mazar, for the respondent, submitted that LPA has complied strictly with the requirements of the Act .

He invoked those sections of the Act dealing with “completion” of the contract. 507, it appears, invokes provisions of the Act dealing with “substantial performance” of the contract. [ 12 ] 507 has included in its motion materials what purports to be a Certificate of Publication published in the Daily Commercial News on April 20, 2010, certifying that “construction of a new indoor sports facility” was substantially performed on March 26, 2010. [ 13 ] LPA’s position is that 507 has not complied with the requirements of the Act concerning certification or declaration of substantial performance.

In particular, it notes that 507 cannot claim, as it has in the certificate filed, to be at once “owner” and “contractor”. This issue is addressed later in these reasons. “Completion” vs. “Substantial Performance” [ 14 ] The following are the relevant provisions of the Construction Lien Act (the Act): 1.

(1) In this Act, “contactor” means a person contracting with or employed directly by the owner or an agent of the owner to supply services or materials to an improvement; “owner” means any person, including the Crown, having an interest in a premises at whose request and,

a) upon whose credit, or

b) on whose behalf, or

c) with whose priority or consent, or

d) for whose direct benefit, an improvement is made to the premises but does not include a home buyer; “payment certifier” means an architect, engineer or any other person upon whose certificate payments are made under a contract or subcontract; 31.

(1) Unless preserved under

section 34, the liens arising from the supply of services or materials to an improvement expire as provided in this section.

(2) Subject to subsection (4), the lien of a contractor, (

a) for services or materials supplied to an improvement on or before the date certified or declared to be the date of the substantial performance of the contract, expires at the conclusion of the forty-five day period next following the occurrence of the earlier of, (

i) the date on which a copy of the certificate or declaration of the substantial performance of the contract is published as provided in

section 32, and (ii) the date the contract is completed or abandoned; and (

b) for services or materials supplied to the improvement where there is no certification or declaration of the substantial performance of the contract, or for services or materials supplied to the improvement after the date certified or declared to be the date of substantial performance, expires at the conclusion of the forty-five day period next following the occurrence of the earlier of, (

i) the date the contract is completed, and (ii) the date the contract is abandoned.

[ 15 ] Anthony Falasca, the vice-president of 507, was the affiant for 507 on the motion. Jeff Paine, the president of LPA supplied the responding affidavit. There was no cross-examination of the affiants. [ 16 ] Mr. Falasca deposed that a Certificate of Publication was published in the Daily Commercial News on April 20, 2010, certifying substantial performance of the contract on March 26, 2010. He deposed further that the official opening of the complex occurred on April 18, 2010 and that the dividers were operational at the time.

He added, however, that he thereafter contacted LPA to return to the facility to effect some repairs to the dividers. [ 17 ] In his affidavit, Mr. Paine explained that the installation of such curtains is completed in two stages. The first is the installation of the physical parts on the job site, and the second is the proper commissioning of the curtains for alignment and function. The commissioning stage commenced in mid-June, 2010 and continued over the next three months. [ 18 ] Mr. Paine deposed that errors in the original specifications provided by 507 to Draper necessitated the changes during commissioning.

Additional tooling and materials were needed to complete the installation. Draper sent the requisite guide rollers to complete the installation on September 21, 2010. LPA installed them on September 27, 2010, at which time the commissioning stage was completed. [ 19 ] LPA’s last day on the job site was September 27, 2010 as evidenced, in part, by invoices for rental of a scissors lift for the period September 24-27, 2010, totalling $3,241.97. [ 20 ] The above details are uncontradicted. [ 21 ] LPA invokes section 2(3) of the Act:

(3) For the purposes of this Act, a contract shall be deemed to be completed and services or materials shall be deemed to be last supplied to the improvement when the price of completion, correction of a known defect or last supply is not more than the lesser of, a) 1 percent of the contract price; and b) $1,000. [ 22 ] One percent of the contract price amounts to $1,330.

LPA paid more than $3,000 for the rental of the machinery needed to complete the installations. [ 23 ] Based upon the terms of s.2(3) of the Act, it is open to conclude that the contact was not completed until September 27, 2010; however, 507 relies on the effect of the April 20, 2010 Certificate of Publication. [ 24 ] In my view certification or declaration of substantial performance of the contract in this case was not effected in accordance with the requirements of the Act .

Section 32 spells out the governing rules. The full text of

section 32 and a copy of Form 6, the prescribed form of Certificate of Substantial Performance pursuant to

section 88 of the Act , are annexed to these reasons as Schedules A and B respectively. The certificate relied on by 507 is attached as

Schedule C. [ 25 ] Suffice it to say that 507 cannot be at once the owner, the contractor, and the payment certifier. Section 32(1) paragraph 1 specifies, for example, that “on the application of the contractor, the payment certifier shall determine whether the contact has been substantially performed.” [ 26 ] Section 32(1) paragraph 2 specifies that: 2. The payment certifier or the owner and the contractor jointly, as the case may be, shall set out in the certificate the date on which the contract was substantially performed.

Conclusion [ 27 ] The claim for lien registered on behalf of LPA on October 20, 2010 has not expired. The motion by 570 is dismissed. [ 28 ] If the parties are unable to agree as to the disposition of the costs of the motion, they may exchange and send brief written submissions to me within the next 30 days. CAVARZAN J. Released: December 16, 2010

CITATION : 570 SOUTH SERVICE ROAD INC. V. LAWRENCE-PAINE & ASSOCIATES LIMITED, 2010 ONSC 6978 COURT FILE NO: 10-23864 DATE: 2010/12/16

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: 570 SOUTH SERVICE ROAD INC. – and – LAWRENCE-PAINE & ASSOCIATES LIMITED REASONS FOR DECISION CAVARZAN J. Released: December 16, 2010