Beaufort Realties et al. v. Chomedey Aluminum

By a written Contract dated April 19th, 1974 (“the contract”), entered into between the Respondent and the Defendant Belcourt Construction (Ottawa) Limited (hereinafter referred to as “Belcourt”), the Respondent agreed to supply and install, and generally to complete, the aluminum windows and glass and glazing work contract for the apartment building project known as The Lord Mountbatten Apartments then being constructed by the Defendant Belcourt for and on behalf of the Appellant.

The contract included the following clause:

“ARTICLE 6. The Subcontractor hereby waives, releases and renounces all privileges or rights or privilege, and all lien or rights of lien now existing or that may hereinafter exist for work done or materials furnished under this Contract, upon the premises and upon the land on which the same is situated, and upon any money or monies due or to become due from any person or persons to Contractor, and agrees to furnish a good and sufficient waiver of the privilege and lien on said building, lands and monies from every person or corporation furnishing labour or material under the Subcontractor.

In addition to the requirements as set forth hereinabove, the Subcontractor agrees to waive to the extent of one hundred percent (100%) of the final contract amount, any privilege, lien and right of preference which he may have or which he hereafter may have upon the aforesaid building and/or the land upon which it is constructed as a result of or in connection with work to be done or materials to be supplied by him, and moreover that he holds and will hold the Owner and Contractor harmless and indemnified from and against a registration against the said property of any privilege, lien or right of preference by or on behalf of any person, firm or corporation perform-

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ing work or supplying materials under authority derived from him, and, if and when so required by the Contractor, he will obtain and deliver to the said Contractor, releases from any such privileges, liens or rights of preference signed by such persons, firms or corporations.

Subcontractor also agrees to waive all liens and to execute any waiver of liens that may be required by the mortgage company or mortgagee.”

By reason of the failure of Belcourt to pay the advances due under the contract, the Respondent filed a Mechanics’ Lien against the title to the property owned by the Appellant in December of 1974. The subsequent action was tried before His Honour Judge Fogarty at Ottawa on the 17th, 18th and 19th days of December, 1975 and on the 15th, 16th and 17th days of March, 1976.

The learned Trial Judge held in his reasons for Judgment dated the 12th day of October, 1976, that Belcourt, by its refusal to make the progress payments as they fell due, committed a fundamental breach of the contract which justified the Respondent in treating it as at an end. The learned Trial Judge further held that Article 6. constituted an exclusionary clause and Belcourt, by reason of the fundamental breach, was precluded from relying on it. Accordingly, the Respondent was granted personal Judgment as well as a lien upon the property in the amount of the Judgment plus costs.

The Judgment of the learned Trial Judge was appealed to the Divisional Court by the Appellant herein and Belcourt, which Court, by Judgment dated March 16th, 1978, allowed the appeal in part and held that the Respondent was not entitled to a lien against the lands and premises of the Appellant herein by reason of Article 6. of the said contract. The Divisional Court upheld the personal Judgment in favour of the Respondent against Belcourt and affirmed the learned Trial Judge’s finding that the said Defendant had fundamentally breached its contract with the Appellant (Dupont J. dissenting on the latter issue).

The Judgment of the Divisional Court was appealed by the Respondent to the Court of Appeal of Ontario on the issue of whether a waiver of lien rights (Article 6.) could be later invalidated by Belcourt’s fundamental breach of contract. The Court of Appeal, by Judgment dated the 14th day of March, 1979, allowed the Appeal and affirmed the Judgment of the learned Trial Judge on this point. Madam Justice Wilson, speaking for the Court, held that Article 6. of the contract is an exclu-

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sionary clause to which the Suisse Atlantique line of authorities applies, that this is so notwithstanding the provisions of Section 5(1) of The Mechanics’ Lien Act, and further that as a matter of construction the waiver clause (Article 6.) ceased to bind the Respondent upon the communication by the Respondent to the Appellant herein and Belcourt of its election to treat the contract as at an end.

The Appellant herein was granted leave to Appeal to this Honourable Court, by Order dated the 18th day of June, 1979.