Executive Summary: Key Legal and Evidentiary Issues

• Motion sought full discharge of a construction lien under ss. 35 and 47 of Ontario’s Construction Act; court opted to reduce, not discharge

• Lien amount corrected from $1,612,303.43 to $1,043,282.55 after acknowledged errors; reduction reflected excluded steel order and added generator/labour items

• Competing characterizations of contract: owners say at-cost management for $125,000; contractor says fixed-price/markup arrangement for development and construction phases

• Allegations of invoice manipulation and overcharging met by contractor’s denial and claim of good-faith miscalculation; court left merits for trial

• Court applied GTA Restoration to prefer reduction over discharge and cautioned (per XPL) against lightly depriving lien remedies

• Costs left in the cause; motion to discharge dismissed

Facts and background
The owners, Mian Danish Shakil and Haris Shakeel, retained Serena Homes Construction Limited in 2021 for a luxury home project in King, Ontario. According to Serena, the engagement had two phases: (1) development approvals and drawings (quoted at $125,000) and (2) construction services with Serena acting as contractor and engaging subcontractors at fixed, competitive prices. The owners allegedly expanded the home’s size to over 21,000 sq. ft., and Serena performed significant site work (dewatering, grading, excavation, footings, ICF walls, etc.). The owners contend instead that the arrangement was an unwritten “management agreement” for a flat $125,000 fee, with all trades and materials passed through at cost, no profit. By mid-August 2024 the relationship broke down; the owners terminated Serena on August 14, 2024, and Serena registered a lien the next day for just over $1.6 million (instrument YR3709164). Authentic Construction Ltd., Serena’s ICF subcontractor, separately registered a lien for $507,583.02, which is included within Serena’s claimed amount.

Procedural posture and issues
The owners moved to discharge the lien in full under s. 47 (frivolous, vexatious, abuse of process) and s. 35 (wilfully exaggerated claims). Serena conceded its lien was overstated and, months earlier, had proposed a consent motion to reduce it. The court framed the issue as whether to discharge the lien entirely or reduce it by the exaggerated portion.

Parties’ positions and evidentiary disputes
The owners alleged fabricated or manipulated invoices, pointing to a Rotberg Steel quote allegedly converted into an inflated invoice and an expert report (Alpha) estimating construction costs at $583,700 plus HST for work performed. Serena denied wilful exaggeration, characterizing the overstatement as an inadvertent miscalculation it had already sought to correct, and asserting that any invoice alterations were at the owners’ request. Serena’s accounting showed $2,746,480.68 billed, $1,696,388.87 paid, and $286,966.90 in markups to subcontractor charges. The owners disputed any entitlement to markups, insisting on an at-cost arrangement.

Legal framework under the Construction Act
Section 47 empowers the court to discharge a lien on proper grounds, including if it is frivolous, vexatious, or an abuse of process. Section 35 addresses exaggerated or false claims and permits the court, where there is good faith, to reduce a lien by the exaggerated portion rather than discharge it. The court referenced GTA Restoration Group Inc. v. Baillie (2020 ONSC 5190) to emphasize that s. 47 motions are not summary judgment per se and that reduction—not discharge—can be appropriate where exaggeration issues are entwined with triable merits. It also cited XPL Construction Solutions Inc. v. North Bay Capital Investments Ltd. (2023 ONSC 238) cautioning against lightly depriving claimants of lien remedies.

Court’s analysis
The court found substantial sums remained outstanding for services provided by Serena and its subs, even on the owners’ view of the contract. Given the conflicts over the nature of the agreement (fixed price/markup vs. at-cost management), the propriety of markups, and the credibility of invoice alterations, the exact quantum and entitlement to markups were matters for trial, not for discharge on motion. The court accepted that Serena had acted to correct its own error and sought a reduction at its expense, weighing against a finding of wilful exaggeration warranting discharge.

Outcome and adjustments to the lien
The court refused to discharge the lien and reduced it to $1,043,282.55 from the $1,612,303.43 registered amount. Key adjustments included subtracting $333,350 for the Rotberg Steel materials (not ordered before termination) and adding $20,250 for 4.5 months of generator use and $4,290 for 78 hours of Lalji’s labour; the Authentic lien of $507,583.02 remained encompassed within the reduced lien. The motion to discharge was dismissed, and costs were left to the cause. Judgment was released August 5, 2025 by Justice C.F. de Sa.