For those of you who keep up with our Breaking Ground newsletter, you may recall a recent edition in which we highlighted a 2023 summary judgment decision arising from a lien claim. In Arcamm v. Avison et al., 2023 ONSC 1151, the moving electrical contractor, Arcamm Electrical Services Ltd. (“Arcamm”), which provided emergency services following a power outage at property owned by the owner, 4342 Queen St. Niagara Holdings Inc. (“Queen”), was granted summary judgment in respect of its unpaid invoices.
Our recent article entitled, Hey contractors: Are your invoices for construction services and/or materials supplied to an improvement “proper”? Lessons learned from Arcamm v. Avision, on this initial decision related to the sufficiency of invoices as they relate to Ontario’s Construction Act. Rest assured: that portion of the summary judgment decision was not interfered with on appeal.
Instead, in Arcamm Electrical Services Ltd. v. Avison Young Real Estate Management Services LP, 2024 ONCA 925, the Court of Appeal disagreed with a more critical portion of the motion judge’s decision, and set aside the summary judgment.
It is important to note from the appellate decision the existence of a key companion action, which had not yet been ordered to be tried together with the underlying action, (we note the Court of Appeal did direct the parties to undertake such a motion immediately following the release of its decision).
The companion action was a subrogated claim brought by Queen’s insurer alleging, among other things, that Arcamm was responsible for a large portion of the damages, arising from its handling and storage of the property’s transformers, (the failure of which caused the power outage). This argument, naturally, overlapped with Queen’s defence in Arcamm’s action – specifically, Queen’s allegation of contributory negligence.
The motion judge distinguished the central issues between the two actions, holding that Arcamm’s action centred simply on unpaid invoices, while the subrogated action centred on the causes and failures giving rise to the power outage.
The Court of Appeal disagreed with this framing. After a lengthy review of cases grounding the principle that damages in contract cases can be apportioned based on fault, the court held that the issue of Arcamm’s contributory fault, (or negligence), was a genuine issue requiring trial, and summary judgment should not have been granted. The court further found that the risk of inconsistent findings as between the two actions precluded the motion judge from being able to hold definitively that Arcamm was entitled to full payment of its invoices.
Ultimately, let this case serve as a reminder to Ontario lien claimants that, while there may be a tenable lien claim arising from unpaid invoices, the quantum of the claim is always disputable; it could be subject to a number of defences, including, in certain circumstances, contributory fault.
Should you have any questions, do not hesitate to reach out to a member of Miller Thomson’s Construction and Infrastructure group.
