A judge hearing an application for discharge of a lien pursuant to section 47 of the Construction Act does not have the enhanced fact-finding powers now granted to judges hearing summary judgment applications via Rule 20 of the Rules of Civil Procedure.
To the extent an application judge might be convinced by mutual consent of the parties to apply Rule 20 fact-finding powers in the course of a lien discharge application, viva voce evidence and cross-examination would likely be required.
Coronation Medical Plaza Inc. is the owner and landlord of commercially-zoned land in Cambridge, Ontario, one of three cities that along with Kitchener and Waterloo make up the Regional Municipality of Waterloo. In 2015, Coronation contracted with Built By Engineers Construction Inc. for the construction of commercial buildings on Coronation’s land.
A generally successful construction project ensued that led to payment of 16 of BBE’s invoices in amounts totalling more than $5 million, and to BBE issuing a certificate of substantial completion at the end of 2016.
However, for reasons that remain hotly disputed, BBE filed a lien in February 2019 for nearly a million dollars, which Coronation claims it received no notice of and only discovered when they next performed a title search.
Coronation brought an application to have the lien discharged, claiming it was not registered in time pursuant to the old Construction Lien Act, which remains in force for all contracts signed prior to July 2018.
A lien expires 45 days after contract completion, argued Coronation, and a contract is deemed completed when the price of completion has fallen under the lesser of 1% of the contract price or $1,000, which Coronation suggested had occurred by January 2019. BBE denied that assertion, and conflicting affidavit evidence was filed in the course of the application on the subjects of (i) amendments to BBE’s contracted scope of work, (ii) whether Coronation had tactically threatened bankruptcy, and (iii) whether work performed by BBE after January 2019 was correction of its own defects related to the Coronation contract or whether it was entirely new work related to a different contract with the tenants of the newly constructed buildings.
The Court recognized that these factual disputes would need to be resolved in order to rule on discharge of the lien, and that resolving them would require weighing evidence and making findings about the credibility of witnesses.
The Court noted that a motion to discharge a lien is analogous to a summary judgment motion: the test is whether a triable issue exists.
However, the procedure differs from an actual summary judgment motion, which pursuant to Rule 20 of the Rules of Civil Procedure grants a presiding judge enhanced powers to weigh evidence, evaluate credibility, and draw inferences from evidence during a summary judgment motion if it is in the interest of justice to do so. That procedural evolution has not yet filtered down to the Construction Act, much less its predecessor the Construction Lien Act, and counsel for both parties admitted that contrary to their initial expectations, the application judge was not in a statutory position to make findings of fact.
Coronation argued, however, that there would be no procedural unfairness involved in converting the lien discharge application into a summary judgment application, since the materials filed and arguments made by both parties had implicitly assumed the Court would have summary judgment powers.
The Court declined to do so, concluding that it would have had to hear viva voce evidence tested by cross-examination, not merely reviewed competing affidavits, in order to make findings of credibility, and dismissed the application: a trial would be required.