Lessons Learned
Canadian courts and legislative bodies continue to promote efficient lien claims and protect them from the gravitational pull of pre-trial litigation sprawl, and this case represents another such milestone in that effort: in Ontario, breach of trust claims may not be joined with lien claims.
Construction
In March 2019, Devlan Construction Ltd. contracted SRK Woodworking Inc. to supply and install millwork at a middle school in the historical town of Ancaster, now part of the city of Hamilton, Ontario. By September 2019 the business relationship between Devlan and SRK was in ashes, with Devlan claiming substantial deficiencies and that SRK had abandoned the work, and SRK alleging that it had been locked out and that it had even been prevented from collecting its tools from the site.
Litigation
SRK filed a lien, and in January 2020 additionally filed a statement of claim naming Devlan and Devlan’s only known officer and director, Thomas Anderson, alleging among other things a breach of trust by Devlan and Anderson. To SRK’s surprise, Anderson had died two weeks before the statement of claim was filed, and had been replaced at Devlan by four new directors.
SRK applied to amend its statement of claim to name the four new directors, and in the same motion asked that its lien claim and trust claim be joined into one action.
The difficult question facing the motion judge was whether Ontario’s 2017 Construction Act permitted the joinder of a lien claim and a trust claim. Its predecessor, the 1983 Construction Lien Act, certainly did not, but the 2017 Act and its regulations had repealed the section explicitly barring them without inserting any new statutory language expressly permitting them, as it had in fact done for breaches of contract.
In February 2022, the request for joinder was allowed by the motion judge, conflicting with two decisions in December 2021 and January 2022 by a justice of the same court that joinder of trust claims remained prohibited.
Consternation ensued, and that interlocutory decision became the subject of the present appeal before a three-judge panel of the Ontario Superior Court.
Analysis
The Court acknowledged that the Construction Act and its regulations “could be clearer” on the point in question, and that there are reasonable policy arguments to be made for both positions: on the one hand, not permitting joinder creates a duplicity of actions, but on the other, it undermines the goal of expedited lien proceedings to roll them into litigation involving an expanded range of parties and legal issues, and a proportionately extensive pre-trial process.
The Court observed, though, that its purpose was not ultimately to decide a question of policy but a question of law, that question being what the Construction Act requires.
While the Construction Act does not directly prohibit joinder of claims in a construction lien proceeding, it provides special processes for liens, which the Court concluded would have required – at a minimum – that any supposedly implicit discretion to order joinder would be subject to the overriding objective of maintaining the integrity of the explicitly legislated special process designated for liens.
Even more decisively, however, the Court returned to the fact that the Act’s regulations specifically permit joinder of lien claims with claims for breach of contract, which the Court interpreted to mean that all other types of claim not specifically named are ineligible for joinder, including trust claims: there is no judicial discretion for such a joinder at all, and any such claims contained within a lien action are obliged to be struck.