Can the Ontario Repair and Storage Liens Act be used to secure unpaid debts in the construction context?

The short answer: Possibly sometimes, maybe.

I recently had a case where this was one of the primary issues.  My client was supplying coated structural steel for a large steel building.  Raw (uncoated) steel was purchased in the US, shipped to Ontario to be coated by a third party subcontractor and, once coated, the steel was then shipped to the project site (located in another Province).  A dispute arose between my client and the subcontractor coating the steel regarding price and claimed extras and the subcontractor asserted a construction lien in relation to the steel already delivered to the project site and a possessory lien under section 3 of the Repair and Storage Liens Act (RSLA) over the steel still in the subcontractor’s possession.

In my view, the subcontractor’s invocation of the RSLA to assert a possessory lien over the steel in its possession (effectively holding my client’s steel hostage until my client posted security with the Court to secure its release) was a twisted and tortured application of legislation ostensibly designed to provide security to an unpaid “repairer” who had fixed a sailboat or a car or a wristwatch or some other widget (you get the idea).  However, the definitions of “article”, “repair”, and “repairer” under the RSLA are so expansive that, at least at first blush, it can be argued to apply to individual items (i.e. steel) in the manufacturing process.  The relevant definitions are:

“article” means an item of tangible personal property other than a fixture;

“repair” means an expenditure of money on, or the application of labour, skill or materials to, an article for the purpose of altering, improving or restoring its properties or maintaining its condition and includes,

(a) the transportation of the article for purpose of making a repair,

(b) the towing of an article,

(c) the salvage of an article;

“repairer” means a person who makes a repair on the understanding that the person will be paid for the repair;

As you can see, these definitions are extremely broad and almost any item is capable of being an “article” and almost anything that someone can do to that item (with the expectation of compensation or profit) can be considered a “repair”.  The real pinch, though, is just how powerful (and some might say draconian) the RSLA is – without getting into the fine legal details, it gives the party asserting the possessory lien the ability to hold the item(s) hostage, name its price, and barring early and expensive court challenge or the posting of security, sell the item(s) without any trial or court Order.  No other statute in Ontario, that I’m aware of, gives a self-declared creditor that kind of power without any kind of pre-execution/pre-sale judicial process.

Realistically, this apparent potential for misapplication of the RSLA in the manufacturing/construction process is not likely to have a frequent or significant effect on the general construction industry – the problem my client ran into with the RSLA can only practically arise when Party A delivers its own material to party B for Party B to “alter” or “improve” that material and then a dispute arises between Party A and Party B while Party B still has Party A’s “articles” in its possession.  This is where Party B can hold Party A’s own material hostage to extract payment (or the posting of security) for Party A to secure its release.  In the more common scenario where Party A is paying Party B money to build or “alter” or “improve” Party B’s own material, the RSLA doesn’t really work because Party B would simply be refusing to release its own material to Party A – doesn’t pack quite the same punch.

If your business (or that of one of your clients if you are a lawyer or professional advisor) involves delivering materials to someone else for them to be altered or improved, beware the RSLA.  Where this is the case, the RSLA permits the parties to contract out of the repairer’s right to a possessory lien (the opening words of section 3) and doing so should be given some very serious consideration.

The Unhelpful Expert

The opinion evidence of experts is not always admissible at the hearing of a motion or a trial.

The Ontario Divisional Court recently handed down its Decision in Mastermeter Products Canada Inc. v. Corporation of the City of North Bay, 2012 ONSC 1887 (CanLII).  The hearing involved an application for judicial review of the City of North Bay’s award of a contract for the supply and installation of water meters.  Mastermeter complained that it had been treated unfairly by the City in the course of its procurement process and lost out on the contract as a result.

While the Decision is primarily concerned with procurement issues, my interest in it is the Court’s ruling to exclude opinion evidence of an “expert” where the supposed expertise of the witness was on matters/issues within the expertise of the Judges hearing the application. The interesting bit for me is at paragraphs 21-23 of the Decision which read:

The Admissibility of an Expert Opinion

[21]          Counsel for the applicant proffered an expert witness statement of Rishi Kumar, M.Sc. Eng, P.Eng. Mr. Kumar was retained to provide an opinion for this application for judicial review on the following question:

Whether or not the bid process under RFP 2009-006 was conducted responsibly and with the requisite degree of fairness, openness and transparency applicable to major competitive procurement process.

[22]          Mr. Stieber, counsel for the City, objected to the admissibility of the proffered opinion on the ground that it does not meet one of the criteria for the admission of expert evidence from R. v. Mohan, 1994 CanLII 80 (SCC), [1994] 2 S.C.R. 9, in that it is not necessary to assist the court.

[23]          We agree that the proffered opinion does not meet the necessity criterion because the Court can form its own conclusion about the fairness of the City’s procedure without the assistance of the proffered expert testimony.   Therefore, the affidavit of Mr. Kumar was struck at the outset of the hearing.

Without getting into details of the rules and jurisprudence around expert evidence, as a general statement, the Court is to exercise a “gatekeeper” function – admitting the opinion evidence of experts where the subject matter of the evidence is outside of the expertise of judges (and provided it meets certain other criteria) and excluding the rest.

Legal theory aside, one of the reasons that this gatekeeper function is so important is that expert evidence can be very expensive and can drive up the cost of litigation substantially.  As such, only that expert opinion evidence which is helpful and necessary to the court to decide the case should be admitted.  This is particularly true of construction litigation where expert opinion evidence is very, very common and the lawsuit often evolves into a “battle of the experts”.

Too often, in my view, courts are prone to allowing parties to introduce “expert” evidence in areas where the judge has sufficient expertise and does not require assistance.  In my view, if litigants can have the confidence that the court will exercise the gatekeeper function properly, as it did in this case, when an opposing party serves an “expert” report that is unhelpful and unnecessary to the court in deciding the issue for which the evidence is introduced, the recipient of that report can more confidently chose to avoid the time and significant expense of responding the the report and simply seek its exclusion at the trial or hearing.

Vidmate | Download Vidmate APK App For Free!

Vidmate: There are many video clip downloading and install software out there for your PC and Mac where you are able to download videos from several prominent video clip internet sites like Youtube, Dailymotion etc. However they are only offered for your computer systems. Vidmate Yet what about the mobile customer? Now the concern occurs is that how can they dowload videos from Youtube or any other websites directly to their phone. So below I am mosting likely to mention you about some application that enables you to download videos directly from YouTube or other sites to your phone.
Vidmate is an internet browser based application that allows you to download videos or audios straight from any media (Video clip or Audio) web sites like YouTube, SoundCloud etc to your phone in high quality. Vidmate Android Vidmate is presently the most effective application offered in market to download videos in any style or resolution you want. The application is totally free of cost which you can easily download from market or from their official website. In addition the size of Vidmate is really reduced i.e just 3-5 megabytes, this means it will certainly not take much of your app/device storage. twitter It has an easy UI that any person could comprehend at first sight.

The best ways to use vidmate?

Vidmate is very simple to use and also has a really straightforward UI. Using vid mate resembles consuming pizza:p.
So here is how you can use vidmate, for the example I am using YouTube as my source.

Step 1: Dowload Vidmate.

Step 2: Mount Vid companion.

Step 3: Open up the Video companion Application on your phone, you will certainly see an internet browser like user interface like Opera Mini.

Step 4: In the address bar kind the video/audio link you intend to download. For example: https://m.youtube.com/watch?v=40H9mpkkaz0.

Why video friend is better compared to other youtube downloader?

Vidmate is surely far better compared to any other youtube downloader offered out there. It offers an extremely straightforward UI that any person could recognize and also utilize. Vid friend apk supplies a lot of functions to its users.Users could download their favorite Videos and films absolutely free of cost from different system such as YouTube, Facebook, Soundcloud as well as many more.

New “Process Enhanced” Performance Bond coming soon. Should owners put on their party hats and break out the Champagne?

Probably not but time will tell.

In December 2011, the Surety Association of Canada (the “SAC”) approved a new form of performance bond that has several new provisions. In its press notice, the SAC says that the objectives of the changed language of the performance bond are:

  1. To bring a greater level of certainty and responsiveness to the claims process; and
  2. To encourage better and more frequent communication between the Surety and the owner (the “Obligee”) in the event of a contractor (the “Principal”) default.

These are, of course, laudable objectives and, to these ends, the new form includes:

  • The availability (at the Obligee’s option) of a “Pre-Demand Conference” to be held between the Obligee, the Principal, and the Surety prior to a Demand being made on the bond;
  • Some requirements regarding the Surety’s time to investigate and respond to a Demand made by the Obligee;
  • Some tightly prescribed rights of the Obligee to take limited steps to protect public safety and preserve and protect the Principal’s work under the contract from deterioration and damage;
  • A Post-Demand Conference to be held between the Obligee, the Principal, and the Surety to discuss what work (if any) under the contract should proceed while the Surety carries out its investigations; and
  • Clearer contact information for any Demand, notice, and other communications between parties to the bond.

Unfortunately, I’m rather underwhelmed by the new language. I can see the potential for modestly better communication through the claims process; however, I can also see the potential for very little practical change and benefit to the Obligee. For example, the new language requires the Surety to investigate and report its position on liability to the Obligee within 21 days of receiving all information from the Obligee and carrying out a site visit (should it decide to do one) following a Demand being made on the bond. However, the new language doesn’t impose a time limit for the Surety’s site visit to trigger the 21 day period and it goes on to say that if the Surety can’t complete its investigation and report its position on liability to the Obligee within 21 days – it can simply write to the Obligee and tell it that it needs more time (and say when it expects to be able to complete its investigation and report). So, the 21 day investigation and reporting requirement sounds OK until one considers that there is no set time within which the Surety must complete its site visit to trigger the commencement of the 21 days and, further, the Surety can, in any case, unilaterally extend the 21 days by simply writing the Obligee a letter stating as much. One can easily imagine this so-called “21 day” period commonly (and without consequence) turning into several months.

It will take some time after the new wording is put into use before its practical benefit (or lack thereof) to Obligees becomes apparent. However, based on my own past experiences representing clients that have made Demand on a performance bond, coupled with the soft language and lack of stated consequence to the Surety, I have my doubts that the new form will translate into a significantly better experience and outcome for Obligees.

Maybe throw the Champagne in the fridge but keep the cork in and the party hats can probably be left in the closet for the time being.

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“I said ¾ of an inch. Look – it’s right there in the contract”

D’Urzo Demolition Inc. v. Damaris Developments Inc., 2012 ONSC 1912 (CanLII), released by the Ontario Superior Court of Justice on March 26, 2012, serves as a good reminder to owners and contractors of the importance of ensuring a mutual understanding of the specifications and other requirements of the work and then properly incorporating those documents and requirements into the construction contract.  For litigation lawyers, it also serves as a good reminder of the importance of ensuring that adequate and flexible evidence of damages (whether Plaintiff’s damages or a Defendant’s claim for set-off) is obtained and brought to trial.

Basic Facts

In a nutshell, D’Urzo Demolition Inc. (“D’Urzo”) was the successful bidder to demolish structures on a property in Toronto and then mechanically reduce the rubble into smaller crush.  The owner, Damaris Developments Inc. (“Damaris”), took the position that the contract required D’Urzo to crush the concrete to ¾ inch and to also demolish curbs and asphalt and remove same from the site. D’Urzo took the position that it only had to reduce the rubble to size of 3 inches (and that a smaller crush would constitute an extra) and that demolishing the asphalt and curbs and removing same from the site was not included in the scope of work and, again, constituted an extra.  At the end of the day, D’Urzo was substantially successful at trial – Damaris succeeded only in achieving a finding that the asphalt and curbs had to be demolished – D’Urzo succeeded in convincing the Court that the contract only required a 3 inch crush, that the asphalt should not have been required to be removed from the site and disposed of, and that Damaris was in breach of the contract for failing to pay.

Take Away Notes

Of note for contractors and owners – the work was put out for tender, there were competitive bids, and the parties used a standard form (CCDC2) contract and they still ended up in protracted litigation (the lien was filed in May, 2007 and trial did not conclude until December, 2011 – almost 5 years!) arising from a failure to clearly and properly set out what work was required by the contract.  If you are going to go to the trouble of putting a job out for tender and then use a detailed and established form of contract, spend the time and money to make sure that the specifications and drawings that establish the scope of work are both clear and properly incorporated by the contract.

Of note for lawyers – Damaris claimed $50,400.00 as its back charge to remove and dispose of the asphalt and curbs and provided evidence that this was what it cost.  But Master Albert found at trial that D’Urzo only had to remove the asphalt, not dispose of it.  Because Damaris’ evidence didn’t breakdown the back charge between removal and disposal, Master Albert had only D’Urzo’s evidence that the cost to remove the asphalt was $2,643.75 and he awarded that amount. This outcome highlights the risk of evidence limited to global amounts that aren’t broken down into component parts in case of divided findings at trial.