Tenoes Construction v Pinto: The Importance of Compliance with Timetables in Construction Lien Actions

In Ontario, the Superior Court has repeatedly signaled to construction industry litigants that timetables in a lien action (and court proceedings in general) are not mere suggestions; instead, they are an order of the Court in respect of which parties must make honest and meaningful efforts to comply.[1] While it may appear common sense to counsel who frequently follow such timetables, the Court’s recent ruling in Tenoes Construction v Pinto[2] (“Tenoes”) has reiterated the significance of following such ordered timetables by confirming that any schedule non-compliance with in lien actions can and will likely have severe consequences for lien claimants, including the discharge of a lien and dismissal of a claim.[3]

Below, we review the case and provide our key takeaways.

Factual Background

In Tenoes, Tenoes Construction – the lien claimant, who was a sole proprietorship without legal representation given their lawyer’s “recent” removal from the record – breached a Court-ordered timetable for the delivery of trial affidavits and will-say statements by over three months. Tenoes also failed to provide a reasonable explanation for its non-compliance. As a result, the defendant owners (the “Owners”) brought a motion for – among other things – an order (1) dismissing Tenoes’ claim and its defence to the Owners’ counterclaim, and (2) discharging Tenoes’ lien pursuant to rules 3.04(4) and 60.12(b) of the Rules of Civil Procedure (the “Rules”) and Section 47 of the Construction Act (the “Act”).[4]

The Superior Court’s Decision

After considering certain procedural issues, none of which are the focus of this case comment – including the validation of service of the motion record[5], a proposed adjournment of the motion[6], and variation of the timetable for the Owners to deliver their own evidence[7] – the Court considered whether Tenoes’ breaches of the timetable justified dismissing its claim, striking its defence to the Owners’ counterclaim, and/or discharging Tenoes’ lien.

The Court began by observing that prior case law had developed certain principles for motions brought for non-compliance with timetables pursuant to rules 3.04(4) and 60.12(b) of the Rules and Section 47 of the Act and the remedies sought by the Owners in this particular case. Based on the Court’s analysis, those principles included the following:

• First, striking a pleading is a severe penalty that should only be granted where a failure to comply with obligations and the rules would prevent the orderly and fair hearing of the matter. In lien actions, this must be assessed in the context of the requirements of both the Rules and the Act, the latter of which expressly requires that lien actions proceed summarily[8]; and
• Second, where a party is in breach of procedural orders issued in a court proceeding (including a timetable), the Court will examine the totality of the circumstances, including the severity of the breaches, the conduct of the party in breach of the order, and whether such breaches could be justly and fairly compensable. Less egregious conduct can be given some leeway, but in some cases, the circumstances of the case will dictate that the most just result is the dismissal of a lien action and discharge of a lien.[9]

In applying the above-noted principles to this case, the Court began by examining the seriousness of the alleged breach by Tenoes. As is customary in Toronto lien actions, this action had been referred to an associate judge[10], who was accordingly hearing this motion. The Court noted that Tenoes had failed to comply with several other orders during the course of the lien reference, and in fact, this was not the first motion to dismiss the action and discharge the lien advanced by the Owner.[11] Accordingly, the Court was of the opinion that the failure to deliver the trial affidavits and will-say statements in light of the other breaches demonstrated the severity of the breach.[12]

The Court then proceeded to examine the specific conduct of Tenoes in respect of the present motion. Although there was some room for adjustment of the timetable, Tenos had failed to serve evidence that was required for trial, despite the pending trial having been set down several months earlier. The failure to serve the evidence, as well as the failure to take steps to explain the non-compliance with the timetable, or even express an intention to comply with the timetable, was unacceptable to the Court.[13]

Based on the foregoing failures, and Tenoes’ failure to take any steps to remedy its breach of the timetable, the Court dismissed Tenoes’ lien action while allowing the Owners to proceed with their counterclaim. The Court also concluded that the aforementioned grounds for dismissing Tenoes action justified discharging the lien, which in itself could not survive independently in circumstances where the proceeding that was commenced to enforce it had been dismissed.

Interestingly, the Court remained unconvinced that Tenoes’ defence to the counterclaim should be struck, as in this specific case the evidence indicated that the Owners had also technically breached the procedural timetable. [14]

Importantly however, the Court also indicated that it would stay the operation of its order dismissing the action, discharging the plaintiff’s lien, and returning security until at least the next hearing for trial directions, in order to give Tenoes the opportunity to speak to its various failures. This left the next steps in this case somewhat ambiguous, particularly given that Tenoes’ failure to respond to the motion or attend the hearing might suggest non-attendance at any subsequent hearing as well.

Analysis

The case of Tenoes provides several important takeaways for lien claimants (in particular those without counsel).

First, although somewhat basic, Tenoes highlights the fundamental requirement of compliance with court ordered timetables (whether reached by agreement or by unilateral order of the court). As readers will appreciate, lien actions are meant to proceed summarily, and interlocutory steps that are not provided for under the Act are expressly prohibited without the consent of the Court.[15] Accordingly, the Court (and/or the parties, with the Court’s consent) will often establish timetables in lien actions that are meant to govern the conduct of the action. The failure to comply with these timetables is a breach of a Court order, and can result in severe consequences such as the discharge of a lien and dismissal of a lien action[16], cost consequences [17], the striking of a defence[18], or a bar on utilizing key evidence at trial.[19] This is true even in the case of self-represented litigants, as Tenoes shows, notwithstanding that they are generally afforded somewhat more latitude by courts – or “extended courtesies” as the Court put it in Tenoes – than parties represented by counsel. That latitude is not without limits, although as noted above, the Court did ultimately provide Tenoes one final opportunity to explain its failures and we are uncertain whether any explanations will influence the Court’s decision.

It is, therefore, highly advisable that parties to construction lien proceedings strictly comply with procedural timetables. Where it is not possible to follow a timetable, best practice is to vary the timetable on mutual consent from all of the parties, or where consent is not available, proactively seek the intervention of the Court by way of motion, case conference, or hearing for directions, in order to vary the timetable.[20] Counsel in the Ontario construction bar are generally reasonable when it comes to indulgences on schedule (as they are often mutual) so long as requests for same are made early and reasonably. These authors would suggest that construction industry litigants and counsel continue to be reasonable in this regard generally and to be collaborative as often as possible.

Second, Tenoes provides an important reminder of the highly discretionary nature of costs under the Construction Act, even in circumstances where two cases involve similar fact patterns and/or are brought under the same or similar rules. In Tenoes, the Owners only sought partial indemnity, which – although unopposed – the Court found reasonable and proportionate.[21] By contrast, in Northstone Homes Ltd. v Wu[22] (one of the cases considered by the Court with respect to the principles applicable to these issues), where only the defendant had failed to serve their trial evidence, the Court in that case granted substantial indemnity costs after the plaintiff successfully brought a similar motion to strike a defendant’s counterclaim for breaches of a Court-ordered timetable. [23] Parties would therefore be well advised to consider the precise particulars of their case when assessing the extent of costs they could reasonably expect to recoup on such a motion.

Finally, Tenoes – as well as other cases cited by the Court involving motions brought pursuant to Rules 60.12 and 3.04(4)[24] – confirms that those rules are consistent with the Act, which issue always warrants consideration given the fact that the Act only speaks generally to the relationship between the Act and the Rules (i.e. Rules that are inconsistent with the Act are rendered inapplicable in a lien action).[25]

This restriction can of course limit parties’ recourse in certain cases – for example, the Court has held that Rule 24.01(c) of the Rules is inconsistent with the Act as it relates to lien proceedings, such that parties to a lien action cannot seek dismissal for delay even where pleadings have been closed for more than six months and a party has failed to set an action down for trial.[26] As it relates to motions for the dismissal of an action or discharge of a lien as a result of a breach of a timetable, however, it would appear open for interpretation as to whether it is even necessary to bring a motion pursuant to the Rules, given that section 47 of the Act gives the Court a broad discretion to discharge a lien and dismiss an action on “any proper ground”. However, until the issue receives further judicial consideration, it is still advisable that parties seek all available remedies under the Act and the Rules as appropriate in the circumstances.

[1] Leblon Carpentry Inc v QH Renovation & Construction Corp, 2023 ONSC 3182 at para 14 [Leblon].

[2] 2023 ONSC 3787 [Tenoes].

[3] Ibid at para 37.

[4] Ibid at paras 1, 2 and 20.

[5] Ibid at paras 5-8.

[6] Ibid at paras 9-14.

[7] Ibid at paras 15-19.

[8] Northstone Homes Ltd v Wu, 2021 ONSC 5173 at paras 20-21 [Northstone].

[9] Kamlu Engineering v Cadorin Homes, 2023 ONSC 2940 at paras 14-16 [Kamlu].

[10] The Act, supra note 5 at s. 58.

[11] At the prior dismissal and discharge motion, Tenoes convinced the Owners to proceed with the action rather than purse the motion, and a new timetable was subsequently fixed.

[12] Tenoes, supra note 2 at paras 29-30.

[13] Ibid at para 36.

[14] Ibid at paras 37-38,

[15] O. Reg 302/18 at s. 13.

[16] Tenoes, Supra note 2 at para 37.

[17] Kamlu, supra note 13 at para 36; Northstone supra note 10 at paras 40-42.

[18] Northstone, supra note 10 at para 21.

[19] Leblon, supra note 1 at para 47.

[20] Ibid at para 1.

[21] Tenoes, supra note 2 at para 44.

[22] Northstone, supra note 8.

[23] Ibid at para 2-4; 9-21.

[24] Kamlu, supra note 13.

[25] Pursuant to section 50(2) of the Act.

[26] Smith v Hudson’s Bay Company, 2019 ONSC 2348 at para 19; Bernach v Makepeace, 2021 ONSC 1289 at para 17.

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