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To Join or Not to Join: That is the Question

To Join or Not to Join: That is the Question

By:

Mann Lawyers

Posted July 18, 2023

Does Ontario’s Construction Act allow a trust claim to be joined with a lien claim? Until recently in Ontario the answer has not been clear. In recent years there have been a series of legislative changes to the laws that govern construction in Ontario. There has also been a series of cases that have come to different conclusions.

Legislative Changes

In December 2017, the Ontario legislature passed an Act changing the Construction Lien Act to the Construction Act. In addition to the name, one of the most significant changes to the Act was removing section 50 (2), which provided that a trust claim could not be joined with a lien claim. Generally, this change was well received. Ontario was the only common law province (and possibly still is – more on that in a moment) to prohibit joining construction and trust claims. Allowing the claims to be joined would remove duplicate proceedings, simplify the process, and help prevent court backlogs.

However, in May 2019, over a year and a half since the prohibition had been removed, the Ontario legislature introduced language via a regulation provision, which stated that “a plaintiff may, in action, join a lien claim and a claim for breach of a contract or subcontract.” This provision, which does not include trust claims in the list of claims that are allowed to be joined, essentially reintroduced the “old” section 55(1) of the Construction Lien Act.

Conflicting Case Law

The issue of whether this regulation re- instated the joinder prohibition was addressed in 2022 by Justice Wiebe in 6628842 Canada Inc. v. Topyurek, 2022 ONSC 253.  Justice Wiebe found that, while the prohibition from the original Construction Lien Act was indeed removed, he argued that the introduction of the provision in the regulation was the legislature changing its mind and re-instating the prohibition. Thus, trust claims and lien claims could not be joined in law.

In January 2022, the plot thickened. The same issue was brought before Justice Harper in SRK Woodworking Inc. v. Devlan Construction Ltd. Et al., 2022 ONSC 1038. Justice Harper disagreed with Justice Wiebe’s approach and found upon review of the legislative intent and a survey of the principles of statutory interpretation that the regulation should not be interpreted to prevent prohibitions on joinder applications. He concluded, “I find that there is no reason why the trust and lien claims cannot be part of the same action in this case.”

Divisional Court Response

While it is not uncommon for Judges to come to different conclusions, the varying results are noteworthy. However, Justice Harper’s decision was appealed to the Divisional Court, which gave leave to the appeal on May 6, 2022.

In May, 2023 the Divisional Court released its decision, which allowed the appeal – overturning Justice Harper’s decision. Thus, despite the judicial back-and-forth on the issue, for the time being trust claims cannot be joined with lien claims under the Construction Act in Ontario.

This blog post was written by Brett Hodgins, a member of the Commercial Litigation team.  He can be reached at 613-369-0379 or at brett.hodgins@mannlawyers.com.

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Brett Hodgins

Brett Hodgins

I practice primarily in corporate and commercial litigation, although I have represented clients on matters as diverse as employment issues, wrongful dismissals, estate disputes, landlord tenant matters, and real estate disputes. I have appeared on behalf of clients in the Ontario Superior Court and the Small Claims Court, the Federal Court of Canada, the Federal Court of Appeal, and before various tribunals including the Human Rights Tribunal of Ontario, the Landlord and Tenant Board, and the Parole Board of Canada. I have represented a wide variety of businesses and individuals in my practice, and I am keenly aware of the stress and costs faced by clients engaging in any kind of litigation. My guiding principle in every matter is to achieve the best possible result as efficiently and expeditiously as possible so that clients can get on with their lives. Prior to joining Mann Lawyers I completed my articles and... Read More

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