Join The Party! Ontario Superior Court Clarifies The Construction Act's Joinder Provisions

• Published date: 01 May 2023
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Real Estate and Construction, Employee Benefits & Compensation, Employee Rights/ Labour Relations, Construction & Planning, Civil Law
• Law Firm: McCarthy Tétrault LLP
• Author: The Lay Of The Land, Ivan Merrow, Bonnie Greenaway, Dan Schechner and Andrew West
• topic: Business of Law,Construction Law,Contracts,Civil Procedure

The Ontario Superior Court of Justice recently shone light on the appropriate use of joinder motions and third party claims under the Construction Act, R.S.O. 1990, c. C.30 (the "Construction Act"). In Magil Construction Canada v. JBelli Holdings, 2023 ONSC 1837,¹ the Court was faced with a number of intertwined procedural issues in connection with a claim for contribution and indemnity in a lien action. The court's decision provides helpful guidance for parties seeking to navigate these claims - not just what should be done, but also what should be avoided.

Key Takeaways

• Third party claims should only be issued after being granted leave; failing to comply with this procedural requirement of the Construction Lien Act may prejudice the ability of the claimant to prosecute their third party claim;
• When a party to a third party action (or most other actions) undergoes an amalgamation, the resulting amalgamated entity is automatically engaged in the civil action and bound by its outcome and
• A limitations defence may not defeat a motion for joinder if the evidence on the motion does not demonstrate the action is clearly out of time and would cause undue prejudice or delay.

Background

Magil Construction Canada Inc. ("Magil"), a general contractor, commenced a lien action against Freshouse Foods Ltd. ("Freshouse") and JBelli Holdings Inc. ("JBelli") arising out of its contract with Freshouse to renovate a food processing facility which was owned by J Belli. In turn, Freshouse brought a counterclaim against Magil for breach of contract, negligence, and delay2

A procedural irregularity followed. Magil filed a consent motion for leave to join Tri-Con Haid Concrete Finishing Ltd. ("Tri-Con") as a third party, seeking to claim contribution and indemnity in respect of Freshouse's counterclaim. However, only ten days later - and approximately two months before the Court even granted leave - Magil also brought a third party claim against Tri-Con.³ To complicate matters, by the time the Court granted Magil leave to join Tri-Con, the company had amalgamated with others to form an entity named B-N-E Concrete Floors & Coatings Inc. ("BNE").⁴

Some months later, Magil brought a further motion to join four additional companies as third parties: Mattina Mechanical Limited ("Mattina"), Sola Engineering Inc. ("Sola"), IFAB Engineering Partners Ltd. ("IFAB") and Innocon Inc. ("Innocon"). While three of the proposed third parties did not oppose this motion, Innocon contested it.

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