2013 ONSC 5555, 2013 ONSC 5555

CITATION : Demasi Contracting Inc. and AMT Group Inc., 2013 ONSC 5555 COURT FILE NO.: 13-57865 MOTION HEARD: 2013/06/14 SUPERIOR COURT OF JUSTICE - ONTARIO RE: In the matter of an intended Construction Lien action between Demasi Contracting Inc. (Lien Claimant) and AMT Group Inc. (Owner) BEFORE: MASTER PIERRE E. ROGER COUNSEL: Brent Pearce, Lawyer for the moving party, AMT Group Inc. (fax: 905 695 8489) Neil L.

Boyko, Lawyer for the responding party, Demasi Contracting Inc (fax: 416 743 5034) REASONS FOR DECISION [ 1 ] This motion is brought by the developer/land owner and proposed Defendant, AMT Group Inc. under subsection 47 (1) of the Construction Lien Act , R.S.O 1990, c.

C-30 (the Act ) for an order discharging the construction lien registered by the proposed Plaintiff, Demasi Contracting Inc, on April 30, 2013, on the basis that the lien was registered out of time. [ 2 ] The property is a residential subdivision in the Township of Beckwith, involving the construction of about 35 homes. [ 3 ] Demasi registered a claim for lien on April 30, 2013, in the amount of $193,218.70.

The claim indicates that services and materials were provided to AMT from October 15, 2011 to March 23, 2013, including concrete foundations, footings and framing. [ 4 ] AMT alleges that the lien was registered out of time. The affidavit of its lawyer indicates that a stop work order was issued by the Ministry of Labour on March 6, 2013. The documents from the Ministry of Labour note a stop work on the project until the structural issues are rectified. They also note that a supervisor is not competent. [ 5 ] Mr.

Testa, the principal of AMT indicates, in his affidavit sworn on June 5, 2013, that AMT is the developer of the residential subdivision at issue located in the Township of Beckwith, involving the construction of some 35 homes. He confirms that a lien was registered on April 30, 2013. He indicates that an important advance has been stopped pending removal of the lien. In his first affidavit, sworn June 5, 2013, he does not provide information about the relationship between the parties, about the nature of the work performed by Demasi nor about the timeframe during which such work was performed.

In a subsequent affidavit, sworn June 13, 2013, he provides some supplementary information. [ 6 ] AMT conducted a cross-examination of Mr. Demasi, the principal of Demasi. During this cross-examination, Mr. Demasi indicates that AMT had a verbal contract directly with Demasi. Mr. Demasi provided timesheets reflecting work completed on the property up to and including March 22, 2013. Mr. Demasi indicated that Demasi employees were paid in cash from his personal savings. He provided copies of receipts signed by him for the work of employees, including for the work of Mr. Issa Dahri.

An undertaking was given to provide the contact information for Mr. Dahri. Mr. Demasi indicated that after March 7, there were only 2 to 3 Demasi

employees working at the site. At question 180 he indicates that this work was for repair of deficiencies. At question 181 he indicates that Mr. Dahri was also working on deficiencies. At question 182 he indicates that Mr. Silva was as well working on deficiencies. At question 183 he was asked to confirm that they were all working on deficiencies during this period post March 7, to which he answered “along with preparing lot 16 for the closing. They were preparing a few other things, as well, and you can ask Mr.

Silva or you can refer to his timesheets as to what they were doing.” He disagreed that all they were doing was repair of deficiencies and indicated that he would have to ask Mr. Silva. He then conferred with Mr. Silva and indicates, at question 186, that “Mr. Silva indicated that he was working on lot 16, making safe lot 13, if that was the lot in question, I believe, along with Issa, Derek, Joe and Issa were all preparing the pads that had to be dug out for the post that needed to be put in place. So if you want to know any more, I think it’d be best if Mr. Silva was brought in.

He can answer those questions directly instead of back and forth.” I find, as a finding of facts, that it is agreed by Mr. Demasi that Mr. Silva’s last day of work on the site was Friday, March 15. At question 200 he indicates that Demasi’s position is that Demasi left the construction site on March 22, based upon the last day of work of Mr. Dahri. He confirms that the last time sheet for Mr. Silva ends on March 15, 2013. Mr. Demasi acknowledged that Mr. Dahri was working alone during the week of March 18 to March 22. [ 7 ] AMT also conducted cross-examination of Mr. Silva.

He is an employee of Demasi, a site supervisor. He acknowledged that despite his removal as site supervisor for Demasi on March 6, as a result of the Field Visit Report of the Ministry of Labour of that same date finding him not to be competent, he remained on-site on a daily basis to oversee the work of the newly appointed supervisor. Mr. Silva indicated that from March 6 onward, the work performed by Demasi was the fixing of deficiencies, cleaning up the site, and picking up materials such as telescopic posts from Rona for lot 14.

He also indicates, at question 127, that: “I went and picked up materials from Rona a couple of times more. I picked up materials for lot 16. We were cleaning up, because the house was to be sold or something. And that’s my job in lot 12. I had Issa (Dahri) clean up the area of whatever is remaining, so clean up everything that’s overhanging materials, and I drove with the zoom boom there.” [ 8 ] I find that any materials picked up by Mr. Silva would have been picked-up and delivered to the site by him at the latest by March 15, 2013, as the evidence of Mr.

Demasi is clear, on cross-examination, that March 15 was Mr. Silva’s last day on the construction site. Later, at question 130 Mr. Silva indicates that effectively they were cleaning up some deficiencies and picking up materials. He confirmed that he was present at the site during this time and that Mr. Demasi was not present. He also confirmed that the employees were paid cash and that he delivered the envelopes, including to Mr. Dahri on or about March 22 for Mr. Dahri’s last two weeks. [ 9 ] The timesheet of Demasi’s employee Dahri dated March 22 is the most relevant timesheet to this motion.

It indicates that he worked on lot 12 from March 18 to March 22, 2013. It makes no reference to working on any other lot during that week. It describes working on the front wall, moving wall, plywood walls, brace basement and on March 22 working on basement and walls. It notes 10 hours on March 18, 10 hours on March 19, 10 hours on March 20, 10 hours on March 21 and 9 hours on March 22. [ 10 ] I find that the content of this timesheet is not properly in evidence as we do not have an affidavit from Mr. Dahri.

Nonetheless, this timesheet is admitted as evidence in support of Demasi’s position that they were still on the project up to March 22 but it is not admitted as evidence of what they were doing. The best evidence in that regard comes from the cross-examinations described above. [ 11 ] Demasi did not deliver an affidavit from Mr. Dahri. Mr. Dahri was the only Demasi employee working on the site during the last and most relevant week of March 18 - 22. Mr. Demasi indicated that Mr. Silva would have more direct knowledge regarding work on site than he would and that Mr. Silva’s last day on the site was March 15. Mr.

Silva indicated that he had Mr. Dahri (the only employee on site during the relevant week of March 18) do clean up and related work. [ 12 ] The motion, initially returnable on June 6, was adjourned to June 14 specifically to allow the Respondent time to file responding materials. Mr. Demasi delivered an affidavit sworn June 10, 2013. In this affidavit he indicates that Demasi entered into a contract with AMT. He states, at paragraph three, that invoices for all work done up to March 15, 2013, were delivered to AMT on or about March 15, 2013.

He does not address, in his affidavit, whether any invoices were delivered for work allegedly completed after March 15. The invoices make reference to work completed or in process but his affidavit does not address which part (

s) is in process rather than completed. The only timesheet post March 15 is for work of Issa Dahri. The content of that time sheet is not properly in evidence, as indicated above. However, I note that, on its face, that time sheet is limited to work on lot 12. At paragraph seven of his affidavit, Mr. Demasi indicates that following the stop work order on March 6, the Ministry of Labour allowed remedial work to start on March 11, 2013, to rectify the work order. He indicates that this work was completed within one week and that additional work was also done on lots 12 and 16.

He also indicates that in addition significant materials were ordered from Rona after March 6 on the credit of AMT. He indicates that Demasi was never told that its contract was terminated. He indicates that the work done on lot 13 after the stop work order was not remedial work. Interestingly, as indicated, I note that the most material timesheet, for work done during the week of March 18, relates to lot 12. In that regard, the invoices dated March 15, 2013, relating to lot 12, indicate that the scope of work is for work completed or in progress.

That invoice refers to work comparable to the work as described on the timesheet dated March 22, 2013. [ 13 ] In a supplementary motion record, dated June 13, 2013, Mr. Testa replies to the affidavit of Mr. Demasi. He indicates that after the attendance by the Ministry of Labour, on March 6, 2013, when Mr. Silva was effectively ordered off site, no further work was done

on the site by either Mr. Demasi or his company, Demasi Contracting Inc., or by any of his subtrades. As well, the lawyer for the owner also delivered an affidavit indicating that the invoices for all work done up to March 15, 2013, found at tab two of the Respondent’s affidavit, total $193,173.50, which is essentially the amount of the claim for lien at $193,218.70. He indicates that no other invoices have been produced or delivered to the owner for work allegedly done by Demasi post March 15, 2013.

As indicated above, I note however that these invoices indicate that they are for work done or in progress. [ 14 ] Saturday, March 16, 2013, is the material date for the supply of materials and services to be within 45 days of the date the lien was registered, Friday, March 15, 2013 is on the 46 th day. [ 15 ] From the evidence presented on this motion, I also find: - A lien in the amount of $193,218.70 was registered on the applicable lots on April 30, 2013; - For the lien of a subcontractor, to be registered in time, the date of last supply of services or materials to the improvement would have to be March 16, 2013 or after. - For the lien of a contractor, to be registered in time, the lien would expire at the conclusion of the forty-five-day period next following the occurrence of the earlier of the date the contract is completed and the date the contract is abandoned. - The lien is for services or materials allegedly supplied from October 15, 2011 to March 23, 2013, apparently including concrete foundations, footings and framing; - On March 6, 2013, a representative of the Ontario Ministry of Labour, Occupational Health & Safety, attended at the premises and issued a stop work order.

This stop work order, on its face, clearly relates to the project, including both lots 12 and 13. - The timesheet most in issue is for work on lot 12. - That timesheet is not signed by the employee but signed by the supervisor. It appears to relate to work on lot 12. As indicated, the content of the timesheet of March 22, 2013, is not properly in evidence and such is not admitted for the truth of its content as no affidavit was filed by the employee and as Mr.

Silva was off site after March 15. - There is no evidence before this court of what work was done during the week of March 18 other than what was indicated by representatives of Demasi during their respective cross-examination and the very brief and general information contained in the affidavits. - No affidavit was filed by the Respondent’s employee on site during the most relevant week. - in his affidavit, sworn June 10, 2013, Mr. Demasi indicates that Demasi’s contract was with the owner, AMT.

This is not disputed in the supplementary motion record filed by the moving party even if the affidavits filed in this supplementary record by AMT are specifically made to reply to the affidavit of Mr. Demasi. [ 16 ] Subsection 47 (1) of the Act provides that on motion the court may order the discharge of a lien upon any proper ground.

A lien will expire unless it is preserved. [1] The lien of a contractor for services or materials supplied to an improvement will expire at the conclusion of the forty-five-day period next following the occurrence of the earlier of the date the contract is completed or abandoned. [2] The lien of other persons will expire at the conclusion of the forty-five-day period next following the occurrence of the earliest of the date on which the person last supplies services or materials to the improvement. [3] [ 17 ] The onus to prove that the lien was registered in time is on the lien claimant, Demasi to prove on a balance of probabilities. [4] [ 18 ] In order to be timely, Demasi’s, as a subcontractor (if it was a subcontractor), must have registered its lien within 45 days of the last supply to the improvement of services or materials which, working backward would be Saturday, March 16, 2013, for the date of last supplies. [ 19 ] I find, on this record, that there is no satisfactory evidence of sufficient services or materials supplied to the improvement after March 15, 2013.

The timesheet of March 22 is not signed by the employee. As such, I find that it is not a properly admissible business record. It would or should have been easy for Demasi (they certainly filed no evidence that they could not reach their employee Dahri), considering that they have the onus, to file an affidavit by the employee working after March 15 outlining precisely what services or materials were supplied to the improvement. This is not always required, depending on the evidence, but here Demasi should have been concerned that the most relevant timesheet is not signed by the employee.

They should also have been concerned by the lack or corroborating evidence (Mr. Demasi was not on site, Mr. Silva was not on site after March 15, employees of Demasi were all paid in cash and no written contract was provided). They failed to present such evidence and failed to meet their onus on this point. They failed to put their best foot forward on this motion.

[18] As a result, I find that there is no genuine issue requiring a trial on the issue of whether the lien of a subcontractor was registered in time. I find that it was not. This is rather clear on the record. The best evidence of Demasi on this point is that the services provided to the improvement after March 15 were in the nature of fixing of deficiencies and clean up. Mr. Silva was no longer on site after March 15 and only one employee was left. The bulk of the evidence clearly indicates that the remaining employee, Mr. Dahri, was doing clean up or correcting deficiencies.

I find the work performed after March 15 to be minor work of a nature that does not extend the time for filing the claim for lien of a subcontractor under subsection 31 (3). [5] This seems clear from the evidence. [19] However, on the materials provided, it is in dispute whether the relationship between the parties was one of contractor or sub- contractor. For reasons unknown, this was not argued before me. Rather, the motion was argued as if the relationship was a subcontract. The affidavits of Mr. Demasi however refer to an owner/contractor relationship.

I pointed this out to counsel in correspondence sent after the motion was argued. There is indeed no agreement between the parties on this point considering the arguments made by counsel for the moving party in his letter of June 17. [ 20 ] On the evidence before the court, I find that the nature of the contractual relationship between the parties appears to be that of owner/contractor. This is certainly the evidence of Demasi and AMT has provided no evidence on the record to the contrary. AMT certainly asserts a contrary position.

For purposes of this motion, I will assume that the nature of the relationship at least raises a genuine issue for trial such that this motion cannot be decided as argued on the basis of a subcontract or on the basis of subsection 31 (3) of the Act . Considering my findings that the nature of the relationship between the parties is either that of owner/contractor or that the nature of their relationship, at least (or at its minimum), raises for purposes of this motion a genuine issue requiring a trial, I find that the moving party cannot succeed on this motion unless subsection 31 (2) of the Act is satisfied.

I will therefore assume an owner/contractor relationship and assess whether the lien was registered in time under that provision of the Act . [ 21 ] Under the Act , contracts are defined to be those made between the owner and contractor, while subcontracts relate to any other contract concerning the improvement.

See subsection 1 (1) for the definition of a contract: “means the contract between the owner and contractor” and for the definition of a subcontract: “means any agreement between the contractor and the subcontractor…” [ 22 ] For “contracts”, as this term is defined in the Act (between owner and contractor), a contract shall be, for purposes of the Act , deemed to be completed and services or materials shall be deemed to be last supplied when the price of completion, correction of a known defect or last supply is not more than the lesser of, (a) 1 per cent of the contact price; and (b) $1,000.00.

These deeming provisions rarely apply given the scale of contracts and current hourly rates in the construction industry.

I find these deeming provisions not applicable as I find the value of the services performed during the week of March 18 – 22 to have, on a balance of probabilities, exceeded $1,000.00. [ 23 ] Under subsection 31 (2) of the Act , the 45 day lien period does not extend if the work done is to repair deficiencies. [6] Generally, under the Act , doing work to rectify defective work, doing minor or trivial work and clean-up work will not be sufficient to extend the time for registering a claim for lien. [ 24 ] I find, from the evidence, that there is no satisfactory evidence before this court of work other than deficiencies, clean up and related work being done by the only employee on site for Demasi during the relevant week of March 18, 2013.

This appears quite obvious when one carefully looks at the evidence. I am surprised that Demasi did not file an affidavit by the only employee working during the relevant week or did not present better evidence of the work done during this the most relevant week for its lien to be registered in a timely manner.

I find that there is no genuine issue requiring a trial on the issue of whether the lien of a contractor was registered in time, it was not. [ 25 ] Consequently, an order may issue, as sought, discharging the construction lien of the proposed Plaintiff, Demasi Contracting Inc, registered on April 30, 2013, on the basis that the lien was registered out of time, pursuant to the provisions of paragraph 47 (1) (

a) of the Act . If a certificate of action has by now been registered, it shall be vacated and the order shall so provide. [ 26 ] If the parties cannot agree on costs for this motion within the next 10 days then brief written submissions with a bill of costs or costs outline is to be emailed to my registrar on the following timeline: a. AMT’s submissions served on Demasi’s counsel and emailed to my registrar by September 30, 2013; b. Demasi’s submissions by October 11, 2013.

___________________________ Master Pierre Roger DATE: September 13, 2013