Executive Summary: Key Legal and Evidentiary Issues

• Con-Form sought costs from the plaintiffs after the construction lien action was discontinued.

• The lien was challenged as untimely and exaggerated, but never adjudicated due to settlement.

• Nexgen, the contractor, had failed to pay the plaintiffs despite receiving full payment from Con-Form.

• The plaintiffs maintained their claim was valid and necessary to secure payment owed from Nexgen.

• The court held Con-Form should seek costs from Nexgen, not the plaintiffs.

• Con-Form’s request for costs was dismissed, and it was ordered to pay the plaintiffs $1,000 for their response to the cost submissions.

Facts of the Case

This case arises from a construction lien dispute related to repair work carried out on a property at 187 Johnson Avenue, Thunder Bay, owned by Con-Form Holdings Limited. In May 2021, Con-Form contracted 1876048 Ontario Inc., operating as Nexgen Contracting, to perform the work. Nexgen supplied labour and materials to the project from May 31 to August 30, 2021, and Con-Form paid Nexgen’s invoices in full and on time.

Despite being paid by Con-Form, Nexgen failed to pay its subcontractors, who were members of the United Brotherhood of Carpenters and Joiners of America, including Local 1669. As a result, on December 8, 2021, the plaintiffs, represented by Tom Cardinal, registered a construction lien in the amount of $45,000 against the property. They initiated legal proceedings on January 17, 2022, naming both Nexgen and Con-Form as defendants.

Although Nexgen made payments to the plaintiffs totaling $45,534.25 in March and April 2022, the matter continued to proceed and was even scheduled for trial in late 2024. Eventually, the action settled when Nexgen paid an additional $29,067.96 to the plaintiffs.

Dispute Over Costs

After the plaintiffs discontinued the action in January 2025, Con-Form sought costs against the plaintiffs under Rule 23.05(1), claiming the lien was:

• Not preserved in accordance with the Construction Lien Act, and

• Exaggerated in amount.

Con-Form argued that it should not have been dragged into prolonged litigation since it had fully paid Nexgen and alleged that the lien continued to burden its title unnecessarily.

The plaintiffs opposed the request, asserting:

• They were entitled to pursue the lien under the Construction Lien Act due to non-payment by Nexgen.

• Con-Form was not their target; rather, the lien was a mechanism necessitated by Nexgen’s default.

• The lien’s validity and alleged exaggeration were never ruled upon by the court.

• The entire amount claimed was ultimately paid by Nexgen as a result of the lien action.

• They should be awarded $2,500 in costs for preparing a response to Con-Form’s submissions.

Court’s Analysis and Decision

Justice Fregeau accepted the plaintiffs’ position and found:

• The validity and accuracy of the lien were never judicially determined, as the matter was settled.

• The plaintiffs had a statutory right to lien the property due to Nexgen’s failure to pay.

• Con-Form was not the party in default; hence, its costs claim should be directed at Nexgen, not the plaintiffs.

• The plaintiffs would not have named Con-Form in the lawsuit had Nexgen fulfilled its payment obligations.

Therefore, the court:

• Dismissed Con-Form’s costs claim against the plaintiffs.

• Awarded $1,000 in costs to the plaintiffs for addressing the costs issue.

Conclusion

This decision clarifies that property owners who are fully compliant in paying their contractors may still become entangled in lien litigation if the contractor defaults in paying subcontractors. However, unless there's a finding of wrongdoing or exaggeration, courts are unlikely to penalize the lien claimants with costs. In this case, the lien served its purpose, and the plaintiffs recovered the full value of their claim from Nexgen.