) ) DOLVIN MECHANICAL CONTRACTORS LTD. Plaintiff/Appellant – v. –, 2017 ONSC 783

CITATION : Dolvin Mechanical Contractors Ltd. v. Edge on Triangle Park Inc., 2017 ONSC 783 DIVISIONAL COURT FILE NO.: 429/16 DATE: 20170201 ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT BETWEEN: ) ) DOLVIN MECHANICAL CONTRACTORS LTD.

Plaintiff/Appellant – and – EDGE ON TRIANGLE PARK INC., EDGE RESIDENTIAL INC., TORONTO STANDARD CONDOMINIUM CORPORATION 2448, URBANCORP EQUITY INC., AVIVA INSURANCE COMPANY OF CANADA, TERRA FIRMA CAPITAL CORPORATION Defendants ) ) ) ) ) ) ) ) )))))))))) Kevin Sherkin and Jeremy Sacks , for the Plaintiff/Appellant Joseph Ryan, for Toronto Standard Condominium Corporation 2448 ) – and – PACIFIC HARDWOOD LIMITED Moving Party/Respondent )))))))) Catherine Francis, for the Moving Party/Respondent HEARD at Toronto: January 12, 2017 Swinton J.: Overview [ 1 ] Dolvin Mechanical Contractors Ltd. (“Dolvin”) appeals the order of Master Albert dated August 30, 2016, in which she granted the motion of Pacific Hardwood Limited (“Pacific”) to discharge a claim for lien and certificate of action registered against title to two residential units and two parking units owned by Pacific in a condominium building in Toronto.

Dolvin also seeks to appeal the order of substantial indemnity costs dated November 10, 2016. [ 2 ] For the reasons that follow, I would dismiss the appeal. Background [ 3 ] Edge on Triangle Park Inc. was the developer of the condominium project. Both Dolvin and Pacific were supplier of goods and services to the project. Toronto Standard Condominium 2448 (“TSCC 2448”) is the condominium corporation created for the project. The Condominium Declaration was registered on April 29, 2015.

[ 4 ] At the time of registration, Edge on Triangle owed Pacific $459,594.83. Edge on Triangle did not have funds to pay what was owed, and Pacific’s lien rights had expired. In July, 2015, Edge on Triangle transferred a number of units to Edge Residential. Pacific entered an agreement of purchase and sale to buy two units that closed on November 27, 2015 in satisfaction of the debt with Edge on Triangle.

At the time of closing, Pacific had no knowledge or notice of Dolvin’s lien claim. [ 5 ] On January 8, 2016, Dolvin registered a claim for lien against 162 of the units in the building, including those owned by Pacific. The claim for lien said that the last day of supply of services and materials was December 21, 2015. The amount claimed in the lien was $2,313,335.03 and was in respect of work performed under a contract with the developer Edge on Triangle. [ 6 ] On March 15, 2016, Dolvin issued a statement of claim, but did not list Pacific as a defendant in the action.

On March 17, 2016, Dolvin also registered a certificate of action against title to Pacific’s two units, although Pacific was not listed as an owner in the certificate of action. [ 7 ] The Master granted Pacific’s motion to discharge the claim for lien and certificate of action against its units for several reasons. First, she found that Dolvin did not have lien rights against Pacific. Second, if Dolvin had lien rights, she found that it did not properly preserve its lien claim.

Third, she found that Dolvin did not properly perfect its lien claim. [ 8 ] The Master subsequently awarded costs against Dolvin on a substantial indemnity scale, largely because of its conduct in the proceedings. The Standard of Review [ 9 ] The standard of review on an appeal from a Master is correctness with respect to errors of law and palpable and overriding errors with respect to questions of fact. The Statutory Scheme [ 10 ] Owner is defined in the Construction Lien Act, R.S.O. 1990, c.

C.30 (“the Act”) as “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 privity or consent, or (

d) for whose direct benefit, an improvement is made to the premises but does not include a home buyer… [ 11 ] Subsection 14(1) of the Act provides for the creation of a lien: A person who supplies services or materials to an improvement for an owner, contractor or subcontractor, has a lien upon the interest of the owner in the premises improved for the price of those services or materials. [ 12 ]

Section 31 provides that liens arising from the supply of services or materials to an improvement expire as provided in this section, unless preserved under s. 34. Subsection 34(1) provides for the preservation of a lien: A lien may be preserved during the supplying of services or materials or at any time before it expires, (

a) where the lien attaches to the premises, by the registration in the proper land registry office of a claim for lien on the title of the premises in accordance with this Part… [ 13 ] Subsection 34(5) sets out the contents of a claim for lien, requiring that the claim for lien shall set out the name and address of the owner of the premises and of the person for whom the services and materials were supplied and the time in which they were supplied. [ 14 ]

Section 36 deals with the perfection of a preserved lien. As the Master correctly stated, a claim for lien is perfected by commencing an action to enforce the lien and registering a certificate of action against the owner’s title within the specified time. The decision to discharge the lien claim [ 15 ] The Master found that Pacific was not an “owner” because it did not contract with Dolvin for the supply of goods and services to its units (see para. 10 of her reasons). Nor were improvements made to the premises on Pacific’s credit, with its privity or consent, or for its direct benefit.

Dolvin’s contract was with Edge on Triangle, and it entered that contract before Pacific became an owner of the units and before the condominium was registered. The Master also observed that Pacific was not named as an owner in Dolvin’s claim for lien. Accordingly, Dolvin had no lien rights as against Pacific, as Pacific was not an owner within the meaning of the Act . I see no error in this conclusion. [ 16 ] Dolvin now argues that the failure to name Pacific as an owner in the claim for lien is an irregularity that is not fatal to the claim for lien. Apparently, this argument was not made to the Master.

In any event, the total failure to name Pacific is not a mere irregularity. [ 17 ] Dolvin also argues that it supplied work to the common elements of the condominium, and that it properly preserved and

protected its lien by naming TSCC 2448, Edge on Triangle and Edge Residential as owners of the common elements. However, the amount of the lien claimed was for work supplied by Dolvin to the developer, Edge on Triangle. There is no evidence that TSCC 2448 retained Dolvin to perform work on the common elements. [ 18 ] In the alternative, if Dolvin had lien rights against Pacific, the Master found that Dolvin failed to preserve and perfect its lien in accordance with the Act . As she correctly stated, s. 34 provides that a claim for lien is preserved by registering a claim for lien in accordance with

Part V. In accordance with s. 34(5), the claim for lien must set out the name and address of the owner of the premises against which the lien claim is preserved and the name and address of the person for whom the services and materials were supplied. Dolvin failed to name Pacific as an owner of its two suites, or to name it as a person for whom services or materials were supplied. This was fatal to the lien claim. The Master correctly held that the lien claim was not properly preserved. [ 19 ] The Master also held that the lien claim was not properly perfected.

A claim for lien is perfected by registering a certificate of action against the owner’s title within a specified time ( s. 36(3) of the Act ). Dolvin issued the statement of claim and registered a certificate of action, but did not name Pacific as a defendant in the action. Therefore, any lien rights against Pacific expired 45 days after registration as a result of the failure to perfect the lien. Again, I see no error on the part of the Master. [ 20 ] The Master went on to determine whether the conveyance from Edge Residential to Pacific was void as contrary to s. 80(2) of the Act .

That provision deals with priorities as between lien claimants. In my view, it is not necessary to address this argument, as the

section has no application in a motion brought by Pacific to discharge the lien claims. The Master correctly held that Dolvin had no valid claim for liens against Pacific’s two units. [ 21 ] Accordingly, the appeal on the merits shall be dismissed. The costs appeal [ 22 ] The appellant also seeks to appeal the order of costs on a substantial indemnity basis in the amount of $23,493.50.

An appellate court will interfere with a costs order only if there has been an error in principle or the amount awarded is clearly wrong. [ 23 ] The amount awarded was substantially less than Pacific sought on a substantial indemnity basis. Indeed, it was less than the partial indemnity costs that it sought. [ 24 ] The Master gave detailed reasons for her costs decision, reviewing the applicable principles. In her view, Dolvin’s conduct of the motion unnecessarily lengthened the proceeding.

She correctly observed that s. 86 of the Act confers a discretion to award costs as a sanction where a party knowingly participated in the preservation or perfection of a lien, when it is clear that the claim is without foundation or is for a grossly excessive amount or the lien is expired. She also considered the principle of proportionality. [ 25 ] Dolvin argues that the Master mistakenly stated that it caused delay in seeking an adjournment to cross-examine and then not doing so.

Apparently, there were cross-examinations, but Dolvin did not file the transcript. [ 26 ] Even if the Master erred factually on this point, it is clear from her reasons that she based her decision on her findings of bad conduct by Dolvin throughout (see paras. 28-31). The improper registration of the lien claim resulted in Pacific being unable to close sales of the units. In my view, Dolvin has failed to show any error in principle. The Master’s costs award was clearly explained and a reasonable exercise of her discretion in the circumstances. I would grant leave to appeal costs, but dismiss the costs appeal.

Conclusion [ 27 ] In conclusion, the appeal is dismissed. Costs to Pacific are fixed at $8,000.00, an amount agreed upon by the parties. ___________________________ Swinton J. Released: February , 2017 CITATION : Dolvin Mechanical Contractors Ltd. v. Edge on Triangle Park Inc., 2017 ONSC 783 DIVISIONAL COURT FILE NO.: 429/16 DATE: 20170201

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT BETWEEN: DOLVIN MECHANICAL CONTRACTORS LTD. Plaintiff/Appellant – and – EDGE ON TRIANGLE PARK INC., EDGE RESIDENTIAL INC., TORONTO STANDARD CONDOMINIUM CORPORATION 2448, URBANCORP EQUITY INC., AVIVA INSURANCE COMPANY OF CANADA, TERRA FIRMA CAPITAL CORPORATION Defendants - and – PACIFIC HARDWOOD LIMITED Moving Party/Respondent REASONS FOR JUDGMENT Swinton J. Released: February 1, 2017