Parkland Plumbing and Heating Ltd. v. Minaki Lodge Resort 2002 Inc. et al., 2009 ONCA 256

• Judge: MacPherson, Cronk and Rouleau, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: October 20, 2008
• Jurisdiction: Ontario
• Citations: 2009 ONCA 256;(2009), 250 O.A.C. 232 (CA)

Parkland Plumbing v. Minaki Lodge (2009), 250 O.A.C. 232 (CA)

MLB headnote and full text

Temp. Cite: [2009] O.A.C. TBEd. MR.096

Parkland Plumbing & Heating Ltd. (plaintiff/appellant) v. Minaki Lodge Resort 2002 Inc. and Celestine Mortgage Corporation and Philip David Archer and Carson Painting and Decorating Ltd. and Archer Group of Companies (defendants/respondents)

(C48626; 2009 ONCA 256)

Indexed As: Parkland Plumbing and Heating Ltd. v. Minaki Lodge Resort 2002 Inc. et al.

Ontario Court of Appeal

MacPherson, Cronk and Rouleau, JJ.A.

March 24, 2009.

Summary:

Parkland Plumbing and Heating Ltd. (Parkland) registered a construction lien against Minaki Inc.'s property. Celestine Mortgage Corp. (Celestine) held a mortgage on the property. Parkland sued Minaki Inc. and Celestine. At issue was who had priority.

The Ontario Superior Court, in a decision reported [2006] O.T.C. Uned. 490, held that Parkland had priority. The defendants appealed.

The Ontario Divisional Court, in a decision not reported in this series, allowed the appeal. Parkland appealed.

The Ontario Court of Appeal allowed the appeal.

Company Law - Topic 321

Nature of corporations - Lifting the corporate veil - Conditions - [See Mechanics' Liens - Topic 1305 ].

Mechanics' Liens - Topic 1305

The owner - What constitutes an owner - Conditions precedent - "Request" for work or materials - Philip David Archer owned and controlled Minaki Inc., Celestine Mortgage Corp. (Celestine), Land Development Corp. (LDC) and the Archer Group of Companies (Archer Group) - On April 13, 2002, Minaki Inc. bought a lodge property - Celestine provided financing and obtained a mortgage (the first mortgage) - Mortgage requirements included having the property insured against fire - Minaki Inc. commenced redevelopment work - Celestine, LDC and the Archer Group provided financing - On December 9, 2002, the first mortgage was replaced by a new mortgage in favour of Celestine - Again, the mortgage required that the property be insured against fire - The property was never insured - In December 2002 and January 2003, Minaki Inc. issued a series of promissory notes payable to LDC, Celestine, Archer and the Archer Group in respect of past advances - The financiers continued to make advances - The redevelopment project ran into financial difficulties - On May 8, 2003, Parkland registered a construction lien - On August 20, 2003, Parkland sued Minaki Inc., Celestine and others - At issue was who had priority between Celestine and Parkland - On October 13, 2003, a fire destroyed the main lodge building - The trial judge ruled as follows: (1) Archer had complete control over the redevelopment project; (2) Archer's dealings and those of his companies were not at arm's length; (3) Celestine and Minaki Inc. were indistinguishable; (4) Archer failed to act in a reasonable commercial fashion and, in so doing, he willingly compromised the interests of Parkland and the other lien claimants; and (5) as a result, Celestine's actions were those of an "owner" for the purposes of s. 78 of the Construction Lien Act (Ont.), and for that reason, it had no priority over the lien claimants - The Ontario Divisional Court reversed the trial judge's decision - The Ontario Court of Appeal restored it - The trial judge's finding of Celestine's ownership was linked to the commercial unreasonableness of the overall course of conduct by Archer, and not just to the failure to obtain fire insurance on the property - Celestine had an interest in the property - Celestine and Minaki Inc. being indistinguishable, requests by Minaki Inc. or by Archer on behalf of Minaki Inc. for the provision of services or materials from suppliers constituted requests by Celestine - Celestine benefited directly from the requested improvements - Celestine was not entitled to the "owner's priority" exception found in s. 78(3) - The trial judge did not err by piercing Celestine's corporate veil to ascertain the real nature of its interest in the property - See paragraphs 1 to 84.

Mechanics' Liens - Topic 1306

The owner - What constitutes an owner - Conditions precedent - "Estate or interest" in land - [See Mechanics' Liens - Topic 1305 ].

Mechanics' Liens - Topic 1310

The owner - What constitutes an owner - Conditions precedent - "For whose direct benefit" - [See Mechanics' Liens - Topic 1305 ].

Words and Phrases

Owner - The Ontario Court of Appeal discussed the meaning of the word "owner" found in ss. 1(1) and 78 of the Construction Lien Act, R.S.O. 1990, c. C-30 - See paragraphs 28 to 74.

Cases Noticed:

Bird Construction Co. v. Ownix Developments Ltd. and Phoenix Assurance Co. et al., [1984] 2 S.C.R. 199; 54 N.R. 109; 5 O.A.C. 109, refd to. [para. 32].

Phoenix Assurance Co. of Canada v. Bird Construction Co.; Yarwood v. Ownix Developments Ltd. - see Bird Construction Co. v. Ownix Developments Ltd. and Phoenix Assurance Co. et al.

Big Creek Construction Ltd. v. York-Trillium Development Group Ltd. (1993), 8 C.L.R.(2d) 138 (Ont. Gen. Div.), affd. (1993), 107 D.L.R.(4th) 331 (Ont. Div. Ct.), refd to. [para. 45].

Kosmopoulos et al. v. Constitution Insurance Co. of Canada et al., [1987] 1 S.C.R. 2; 74 N.R. 360; 21 O.A.C. 4, consd. [para. 49].

Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. et al. (1996), 2 O.T.C. 146; 28 O.R.(3d) 423 (Gen. Div.), affd. [1997] O.J. No. 3754 (C.A.), consd. [para. 50].

Gregorio v. Intrans-Corp. and Paccar of Canada Ltd. (1994), 72 O.A.C. 51; 18 O.R.(3d) 527 (C.A.), refd to. [para. 51].

Montreal Trust Co. of Canada et al. v. ScotiaMcLeod Inc. et al. (1995), 87 O.A.C. 129; 26 O.R.(3d) 481 (C.A.), leave to appeal refused (1996), 205 N.R. 314; 95 O.A.C. 399 (S.C.C.), refd to. [para. 51].

ScotiaMcLeod Inc. v. Peoples Jewellers Ltd. - see Montreal Trust Co. of Canada et al. v. ScotiaMcLeod Inc. et al.

ADGA Systems International Ltd. v. Valcom Ltd. et al. (1999), 117 O.A.C. 39; 43 O.R.(3d) 101 (C.A.), leave to appeal refused (2000), 254 N.R. 400; 134 O.A.C. 400 (S.C.C.), refd to. [para. 51].

Downtown Eatery (1993) Ltd. v. Ontario et al. (2001), 147 O.A.C. 275; 54 O.R.(3d) 161 (C.A.), leave to appeal refused (2002), 289 N.R. 196; 163 O.A.C. 397 (S.C.C.), refd to. [para. 51].

642947 Ontario Ltd. v. Fleischer et al. (2001), 152 O.A.C. 313; 56 O.R.(3d) 417 (C.A.), refd to. [para. 51].

Wildman v. Wildman (2006), 215 O.A.C. 239; 82 O.R.(3d) 401 (C.A.), refd to. [para. 51].

Lynch v. Segal et al. (2006), 219 O.A.C. 1; 82 O.R.(3d) 641 (C.A.), leave to appeal refused (2007), 375 N.R. 392; 241 O.A.C. 396 (S.C.C.), refd to. [para. 51].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1, refd to. [para. 53].

Northern Electric Co. v. Manufacturers Life Insurance Co., [1977] 2 S.C.R. 762; 12 N.R. 216; 18 N.S.R.(2d) 32; 20 A.P.R. 32, refd to. [para. 58].

Cipriani v. Hamilton (City), [1977] 1 S.C.R. 169; 9 N.R. 83, refd to. [para. 58].

Muzzo Brothers Ltd. v. Cadillac Fairview Corp. (1981), 34 O.R.(2d) 461 (S.C.), refd to. [para. 64].

Roboak Developments Ltd. v. Lehndorff Corp. (1986), 39 R.P.R. 194 (Ont. H.C.), affd. (1987), 47 R.P.R. 275 (Ont. Div. Ct.), refd to. [para. 64].

Orr v. Robertson (1915), 23 D.L.R. 17 (Ont. C.A.), refd to. [para. 67].

Statutes Noticed:

Construction Lien Act, R.S.O. 1990, c. C-30, sect. 1(1), sect. 14(1), sect. 15, sect. 78(1), sect. 78(3) [para. 2].

Authors and Works Noticed:

Gower, Laurence Cecil Bartlett, Principles of Modern Company Law (4th Ed. 1979), p. 112 [para. 49].

Gower, Laurence Cecil Bartlett, Principles of Modern Company Law (5th Ed. 1992), pp. 132, 133 [para. 51].

McGuinness, Kevin Patrick, Construction Lien Remedies in Ontario (2nd Ed. 1997), paras. 1.8 [para. 28]; 5.55 [para. 78]; 5.56, 5.59 [para. 32]; 5.127, 5.130 [para. 78].

Wiebe, Charles G.T., and Rotterdam, Markus, Construction Remedies: Beyond the Lien, Mortgagees and Lien Claimants (2008), p. 2 [para. 78].

Counsel:

Glenn Grenier, for the appellant;

Roderick W. Johansen, for the respondents.

This appeal was heard on October 20, 2008, by MacPherson, Cronk and Rouleau, JJ.A., of the Ontario Court of Appeal. The following decision of the Court of Appeal was delivered by Cronk, J.A., and released on March 24, 2009.