For those who wonder why the construction law bar has expressed concern about a potential looming lack of judicial expertise to handle construction lien matters, they only need to look at a late June Superior Court decision that took a master to task for his decision in the case.
“While the master said that he was interpreting the act in accordance with its purpose, he manifestly failed to do so,” wrote Justice Frederick Myers of a retired master’s report dealing with a reference under the Construction Lien Act in
RSG Mechanical Inc. v. 1398796 Ontario Inc.In his June 27 endorsement, Myers revised the master’s report on a legal dispute arising from the financial troubles plaguing a townhouse construction project. Among other things, he criticized the master for suggesting that in order for mortgagees to maintain their priority over liens beyond the limitation to holdbacks, they must put a failing project into receivership or liquidate it under a power of sale.
“The master interpreted the statute to give a key player a skewed incentive favouring the failure of the developer — or at least limiting efforts to save the project in the best interests of all,” Myers wrote in his endorsement.
“His interpretation incentivizes the mortgagees to cause the failure of the debtor and increase the risk of non-payment of the trades — the very social ills the statute is designed to avoid.”
Myers also took the master to task for reserving his decision for almost 4-1/2 years after trial. “He has unfairly dealt a setback [to] those who are working assiduously to make the civil justice system more timely, responsive, fair, and affordable,” he wrote.
The endorsement follows recent concerns raised by Master David Sandler and some members of the construction law bar about a looming judicial gap in the handling of construction law matters.
As Law Times reported in June, Sandler will no longer be able to do that work on a part-time basis after he fully retires next year. In a submission to the current commission considering masters’ pay, he expressed fears of a “crisis” if the court doesn’t replace him and leaves the remaining construction masters to deal with a burgeoning caseload.
While it’s unclear what the court will do when Sandler retires,
RSG Mechanical highlights the need to maintain judicial expertise in construction lien matters. They’re obviously very complex cases and with development continuing at a rapid pace in Toronto and its suburbs, it’s an area that needs a solid roster of informed judges and masters.
—
Glenn Kauth
