Lessons Learned
- When a client’s case is strong, attempting summary judgment is tempting, but the bar to clear is formidable and even a strong case isn’t certain to be enough.
- The odds are not improved by presenting anything less than airtight affidavit evidence, or by failing to demolish whatever evidence the opposition has presented beyond the very shadow of reliability.
- Know your rules of evidence. “Hearsay” is a painful description of a helpful affidavit, as is “inadmissible”.
- Be wary of a disorganized respondent’s case improving sharply just before an application is heard.
Construction
In 2019, a numbered Ontario company purchased land and began construction on a four-storey medical building in a Markham industrial park, near the Canadian Pacific railyard.
That October, the general contractor Hari Kaush Developments Inc. hired Sun Steel Fabricators Ltd. to supply and install structural steel.
The first problem: “Sun Steel Fabricators Ltd.” didn’t exist.
5031991 Ontario Inc. was incorporated in April 2020 and belatedly acquired the registered name “Sun Steel Fabricators”, but the factual ambiguities continued to pile up. When was their work finished? Possibly November of 2021, or possibly March of 2022. Were there any chargeable extras? Perhaps eight of them totalling nearly $300,000, perhaps not. Had the general contractor Hari Kaush paid a mere $403,000 toward final settlement of the bill, or had it paid more? Undetermined.
Litigation
What is known for certain is that on May 26, 2022, the two numbered companies eventually associated with the trade name “Sun Steel Fabricators” filed a lien for over half a million dollars.
In June, Hari Kaush obtained an order vacating the lien in exchange for posting a cash security, and both sides traded pleadings.
In October, counsel for Hari Kaush conducted a cross-examination of Balwinder Dhensa, principal for both of the numbered companies. 18 undertakings were given, but several demands later, none had been answered.
In February 2023, counsel for Dhensa’s numbered companies applied to be removed as lawyer of record, and later that month Hari Kaush applied for an order pursuant to sections 47 and 44(5) of the Ontario Construction Act striking the statement of claim, discharging the lien, and returning the deposited cash security.
A week before the June application date for the striking of the claim, Dhensa’s new counsel for his numbered companies sent Hari Kaush a letter purporting to answer 16 of the 18 undertakings, and on the eve of the hearing sent a second letter purporting to answer the final two.
Analysis
The Court summarized the process for a s. 47 application according to the most recent case law: (i) the moving party must prove that there is no triable issue as to the basis on which the lien is sought to be discharged, (ii) the court is entitled to assume that both parties have provided their best evidence relevant to the issue, and (iii) competing evidence will not be weighed, nor will credibility be assessed or inferences made from the evidence presented, as a court lacks those powers in a s. 47 application.
The Court then determined that there were two issues to be resolved: the timeliness of the lien and the question of whether the lien was frivolous, vexatious, or an abuse of process.
Timeliness
The new Construction Act requires that subcontractors file a lien no later than 60 days after the last date on which services or materials were supplied: Dhensa’s lien filing would have been just in time.
The old Construction Act stipulates a 45-day deadline: Dhensa’s lien filing would have been clearly late.
Hari Kaush argued that the inception of the project predated July 1, 2018, when the new Act came into force, and that the old deadline therefore applied. The Court found, however, that there was no clear evidence in the motion materials to confirm when the project and its procurement actually began – the Court was reduced to squinting at ambiguously-marked drawings in the affidavits, and had unkind words for the state of the “best foot” Hari Kaush had put forward.
That Hari Kaush’s other supporting evidence came in the form of hearsay – affiants with no direct knowledge of the contents of the exhibits attached to their affidavits, none of which had even been attempted to be qualified via the “business records” hearsay exception – did not improve the Court’s mood.
At best, the Court concluded, the evidence raised a suspicion that the lien had been filed late, and a suspicion simply wasn’t good enough, especially when balanced against straightforward affidavits from two of Dhensa’s corporate employees, unsubjected to cross-examination, who swore to personal knowledge of work performed in the relevant time frame.
Frivolous, Vexatious, Abuse of Process
Per the Court’s helpful summary, “frivolous” is used to describe an action that is so highly unlikely to succeed that it is apparently devoid of practical merit; “vexatious” includes actions that obviously cannot succeed and that are brought for an improper purpose; and “abuse of process” is a flexible doctrine that gives the court the inherent power to prevent the misuse of its process.
These are strong claims. These claims require powerful evidence in support and anemic-to-zero evidence in opposition. As it eventuated, Dhensa and his new counsel made a spirited accounting of their case, with invoices that supported the allegations in the statement of claim and a detailed explanation of the relationship between handwritten calculations in evidence and the eight claimed extras.
Dhensa’s evidence was far from perfect, but perfection was not in the rules of engagement for that day’s battle: the Court was convinced that there were real factual issues requiring a trial, and the application failed.
Costs
The silver lining? Hari Kaush escaped without paying costs, since the application had been primarily initiated as a result of Dhensa’s “egregious” failure to respond to the undertakings from cross-examination in a timely way.