Executive Summary: Key Legal and Evidentiary Issues

• Dispute over the contract price under a verbal fixed-price construction contract, with conflicting figures of $435,544 plus HST and $507,203 plus HST, creating a clear triable issue on the agreed price.
• Serious factual contest on the state of completion of Mana’s renovation work, with circumstantial evidence (termination and move-in dates, payments and claimed contract price) suggesting substantial performance or completion that must be tried.
• Alleged deficiencies and back-charges by Siteline are undermined by an unexplained jump from approximately $49,161.37 to $111,352.40 in claimed deficiency costs and by the absence of evidence that Mana was given notice and an opportunity to cure.
• Questions about the proper quantum of Mana’s lien and its alleged exaggeration cannot be resolved summarily on Siteline’s motion material alone, as those materials themselves disclose multiple triable issues on entitlement and amount.
• Evidence on invoicing and billing practices, including five invoices totaling $388,254.08 and possible entitlement to payment for unbilled work under a verbal contract, requires a full trial to determine what work was done with Siteline’s knowledge and approval.
• Costs were awarded to Mana as the successful party on the failed section 47 motion, but only in the agreed lump sum of $6,000 due to the absence of a costs outline from its counsel.

Facts of the case

Mana Home Design Inc. (“Mana”) was retained by Siteline Property Management Inc. and The Siteline Group Inc. (together, “Siteline”) to perform an interior renovation of an office space. The arrangement was a verbal fixed-price construction contract, with no formal written agreement to document the exact terms. Siteline was the tenant owner of the premises, and Mana was the contractor tasked with completing the tenant fit-out work. A key factual dispute arises over the actual agreed contract price. Siteline, through an officer’s affidavit, asserted that the contract price was $435,544 plus HST. Mana, however, relied on its own quotation for the work, which showed a figure of $507,203 plus HST, and its registered claim for lien set out a total contract price of $571,851.99 (inclusive of HST), almost exactly matching the quoted amount with HST. This disagreement on the basic financial terms lies at the heart of the parties’ broader controversy over the amount owing. The timing and sequence of events surrounding the end of Mana’s work are also central to the factual matrix. Mana’s claim for lien stated that it worked on the project until January 15, 2023. Siteline’s evidence indicated that it terminated Mana’s contract two days later, on January 17, 2023, and that Siteline moved into the improved premises on January 27, 2023. This narrow timeline between the alleged end of Mana’s work, the termination, and the move-in date became important circumstantial evidence concerning the degree of completion of the project and the extent of Mana’s performance at the time of termination. Siteline paid Mana $268,241.71 on account of the project before the relationship broke down. Against a claimed contract price of $571,851.99, this left a very substantial balance outstanding if Mana’s version of the contract price and its assertion of completion are ultimately accepted. Mana’s claim for lien was registered in the amount of $303,610.28, which is the exact mathematical difference between the claimed total contract price of $571,851.99 and the payments received of $268,241.71. In addition, there were undisputed extras amounting to $35,821, which may further affect the parties’ financial entitlements once the full accounting is performed at trial.

The motion under section 47 of the Construction Act

The dispute came before Associate Justice Wiebe at a trial management conference, where Siteline sought permission to bring a summary motion under section 47 of the Construction Act, R.S.O. 1990, c. 30. Section 47 allows the court to discharge a claim for lien that is frivolous, vexatious, an abuse of process, or wilfully exaggerated, and to dismiss the related action, often with costs. Siteline’s motion was framed squarely under this provision. It asked the court to declare the quantum of Mana’s claim for lien to be frivolous, vexatious and an abuse of process or, alternatively, wilfully exaggerated. Siteline further sought an order discharging the lien, dismissing the action, and awarding substantial indemnity costs against Mana. The court approached the motion by relying on principles it had previously articulated in 2708320 Ontario Ltd. cob Viceroy Homes v. Jia Development Inc., 2023 ONSC 2301. In that earlier decision, Associate Justice Wiebe summarized the section 47 framework as requiring the moving party to prove that there is no triable issue as to the basis on which the lien is to be discharged. Both parties are expected to put their “best foot forward” on the evidentiary record, and the lien claimant generally bears the onus because it is in the best position to provide detailed project evidence. However, the judge also emphasized an important qualification in this case: if the moving party’s own motion material reveals sufficient issues justifying a trial on the core question in dispute—in this instance, the quantum of the lien—then the lien claimant does not need to file responding evidence. That is precisely what occurred on this motion; the court found that Siteline’s own affidavits and exhibits demonstrated multiple, genuine triable issues.

Evidence on contract price and completion

A fundamental evidentiary problem for Siteline’s motion was the conflict within its own materials and between its evidence and the documents filed. On contract price, Siteline relied on a bare statement from one of its officers that the fixed price was $435,544 plus HST, but provided no corroborating documentation. The Mana quotation in the record showed a materially higher figure of $507,203 plus HST, and Mana’s lien documentation adopted a contract price figure that closely tracked that quotation once HST was included. That alone gave rise to a genuine issue of fact regarding what the parties actually agreed upon as the contract price. The completion issue was equally fraught. Siteline criticized Mana for allegedly failing to produce supporting materials for its claim, such as subtrade invoices and labour time sheets. The court noted, however, that in a fixed-price contract, the primary issue is not the contractor’s internal costs, but the state of completion of the contract work. Siteline had no payment certifier, consultant, or other independent professional tasked with assessing the status of the project. Instead, its evidence consisted only of self-serving and uncorroborated statements from two corporate officers. By contrast, Mana’s claim for lien squarely asserted that it had finished all of its work. That assertion found some circumstantial support in the project chronology. Mana claimed to have worked up to January 15, 2023. Siteline then terminated Mana on January 17, 2023 and moved into the premises on January 27, 2023. This tight ten-day window between the end of Mana’s work and occupancy suggested that the project had reached substantial performance, if not full completion, by the time the contract was brought to an end. Given the amount already paid and the contract price claimed, the lien amount of $303,610.28 was mathematically consistent with full performance on Mana’s version of events, further reinforcing that this was not an obviously exaggerated or abusive lien that could be struck summarily.

Alleged deficiencies and back-charges

Siteline also relied on allegations of deficiencies in Mana’s work as a basis to challenge the lien and reduce or negate any amount owing. It pointed to costs supposedly incurred to correct deficiencies and sought to use these as back-charges against Mana. Here again, the evidentiary record filed by Siteline undercut its own motion. First, there was a stark discrepancy in the amounts claimed for deficiencies. Earlier, Siteline had back-charged $49,161.37 from Mana’s billings in relation to deficiencies. Later, it asserted that it had incurred $111,352.40 in costs paid to Stay-Brite in February and March 2023 to remedy Mana’s alleged deficiencies. The doubling of the deficiency claim was not explained in the record. Second, and more importantly, there was no evidence that Siteline had provided Mana with a clear, detailed notice of the alleged deficiencies coupled with an opportunity to correct them. Under common law principles of construction and contract law, an owner generally must give the contractor notice of deficiencies and a reasonable chance to cure before relying on third-party repair costs as a back-charge. The absence of any proof that this occurred created a serious legal and evidentiary obstacle for Siteline’s back-charge claim. If Siteline failed to give Mana the requisite notice and opportunity to correct its work, its ability to rely on substantial deficiency costs as a set-off may be significantly impaired or entirely defeated at trial. Both the quantum of the alleged deficiency back-charges and Siteline’s legal entitlement to claim them were therefore triable issues unsuitable for determination on a section 47 motion.

Invoices, billing practices and unbilled work

The motion record showed that Mana had rendered five invoices to Siteline totaling $388,254.08. Siteline did not dispute the first four invoices and only contested less than half of the final invoice. While this might appear to support Siteline’s position on quantum at first glance, the analysis could not end there. The court emphasized that the governing contract was verbal and that its precise terms were not fully clear on the evidence. A trial would be required to determine whether the parties’ verbal arrangement and course of dealing gave rise to an entitlement for Mana to be paid for additional unbilled work that it nonetheless performed. If Mana carried out extra work, or completed work beyond what had been invoiced, with Siteline’s knowledge and approval, the law may entitle it to payment for that work even if formal invoices had not yet been issued at the time of termination or lien registration. These uncertainties about the scope of the verbal contract, the extent of approved work, and the proper billing and quantum all required a full evidentiary hearing. They could not be resolved on affidavits, especially where Siteline’s own materials had already demonstrated inconsistencies and gaps.

Ruling and overall outcome

Associate Justice Wiebe ultimately dismissed Siteline’s motion under section 47 of the Construction Act without even calling on Mana to respond. The court held that Siteline had failed to establish that there was no triable issue regarding the basis on which it sought to have the lien discharged. On the contrary, Siteline’s own evidence revealed multiple genuine issues for trial: the true contract price, the state of completion of the project, the legitimacy and quantum of alleged deficiency back-charges, compliance with common law notice and cure requirements, and Mana’s entitlement to payment for work done, billed and unbilled. In light of these unresolved factual and legal questions, the court refused to declare Mana’s lien frivolous, vexatious, an abuse of process, or wilfully exaggerated, and declined to discharge the lien or dismiss the action at this preliminary stage. On the matter of costs, Mana was the successful party on the motion and was therefore entitled to its costs. However, its counsel, Mr. Osuji, had not filed the required costs outline, explaining that he was suffering from an illness. The court invited a reasonable suggestion from him, and he proposed a lump-sum award of $6,000, which opposing counsel, Ms. Gorys for Siteline, did not dispute given the size of her own client’s costs outline. The court therefore ordered Siteline to pay Mana $6,000 in costs within 30 days of the decision. No other damages or monetary awards were determined at this stage; the underlying lien claim and all substantive issues on quantum and liability remain to be decided at trial, and apart from this costs order of $6,000 in Mana’s favour, no further total amount can yet be ascertained from this decision alone.