Nova Concrete Inc. v. 2035211 Ontario Inc., 2022 ONSC 2391: ONSC's Latest Guidance On Joined Construction Lien And Breach Of Contract Claims

• Law Firm: McCarthy Tétrault LLP
• Subject Matter: Real Estate and Construction, Construction & Planning
• Author: The Lay Of The Land, Andrew West and Ivan Merrow
• Published date: 16 March 2023

The Ontario Superior Court of Justice ("ONSC") recently highlighted the importance of the summary nature of construction lien proceedings and confirmed that delay can constitute a "proper ground" for dismissal of an action under section 47 of the Construction Lien Act ("CLA"). Nova Concrete Inc. v. 2035211 Ontario Inc., 2022 ONSC 2391 provides important guidance for parties to construction lien actions in Ontario, as well as insight into the inter-related nature of construction lien actions and breach of contract actions and the "intertwining threads" between the procedural rules governing construction lien actions and those governing ordinary civil actions in the province.

Facts

In late 2015, the Defendant, owner 2035211 Ontario Inc. ("203 Ont") contracted with the Plaintiff contractor Nova Construction Inc. ("Nova") to supply and install a concrete foundation and basement slab for a seniors residence project in Toronto, Ontario. A dispute arose between the parties regarding the amount owed to Nova, and Nova ultimately registered a lien claim against 203 Ont for $250,000 on February 8, 2017 (the "Action").

Despite being served with the statement of claim, 203 Ont never filed a defence.

Neither party took any further steps until November 2018, when Nova moved to have 203 Ont noted in default, and the Court set the action down for trial. After this, the litigation became dormant again and in late 2019, the Court struck the action from the trial list.

The litigation between Nova and 203 Ont was reignited in May 2021, when 203 Ont was amalgamated into 5048942 Ontario Inc. ("504 Ont"). 504 Ont moved to vacate Nova's lien against 203 Ont upon payment of security into the Court under section 44 of the CLA.¹ At the same time, 504 Ont brought a motion seeking several forms of relief, including an order declaring the lien expired, returning the security posted by 504 Ont, and dismissing the action for long delay.

In response, Nova brought a cross-motion asking the Court to restore the action to the trial list.

Issues

The Court referred to the various procedural issues as akin to "unravelling a Gordian knot".² The decision presented three key issues:

1. Could the Action continue without the lien remedy?
2. Should the Action be dismissed for delay on account of Nova's failure to prosecute its claim diligently?
3. Should the Action be restored to the trial list, and if so should the noting in default of 203 Ont be set aside?

Analysis

The Court found that Nova did not...