Infinite Construction Development Ltd. v. Chen (Divisional Court)

Decision 1: Defend the framework that won below — do not seek expanded relief

The conventional respondent’s temptation on a successful s. 47 appeal is to ask the appellate court to go further: endorse the bad-faith / abuse-of-process argument that did not carry the day below, broaden the doctrinal holdings, expand the costs award. We did not. Asking for more on appeal opens additional fronts on which the appeal panel might disagree, and any disagreement on a peripheral issue gives Infinite a foothold to argue Robinson AJ’s reasoning was over-broad.

We held the line on what we had won. The framework: Maplequest (Vaughan) Developments Inc. v. 2603774 Ontario Inc., 2020 ONSC 4308 (Div Ct) and R&V Construction Management Inc. v. Baradaran, 2020 ONSC 3111 (Div Ct) govern s. 47 motions, with both parties bearing a “best foot forward” obligation. The doctrinal point: “contractor” status is doctrinal, not factual. The disposition: lien discharged, contract and trust claims dismissed, unjust enrichment claim continues as regular Rules action. Each pillar was anchored in the framework Robinson AJ had already applied. Corbett J. accepted the framework substantially as Robinson AJ had set it out (paras. 12–14): “The Associate Justice correctly evaluated the authorities binding upon him on this issue. R&V Construction and Maplequest are panel decisions of the Divisional Court. To the extent that any dicta in GTA General Contractors is inconsistent with these cases, R&V Construction and Maplequest govern.”

Decision 2: Frame the assignment failure as multi-pillar — so any single pillar can fall without taking the result

Robinson AJ’s reasoning on the assignment failure rested on multiple findings: pleadings did not allege assignment; characterizations alternated between “agency”, “representation”, and “assignment”; the Contractor continued to invoice Mr. Chen and receive payments through February 2021 (well after the alleged July 2019 oral assignment); the written “Representation Agreement” was only signed in September 2021, after the liens were registered and after Mr. Chen’s formal demand for the agreement; no notice of the assignment was given to Mr. Chen until September 2021; and no evidence was led from the Contractor’s principal.

Corbett J. agreed with Infinite at para. 16 that one of those findings — the inference from the lack of notice that the Contractor had agreed to assignment — was not as cleanly supported as Robinson AJ had suggested. But the Court of Appeal also held: “Findings (a) to (d) were sufficient to ground the Associate Justice’s decision…. However, this does not mean that there was a triable issue as to whether there was an effective assignment of the contract.” Because we had built the assignment-failure conclusion on multiple independent pillars rather than on a single decisive finding, the loss of one pillar did not take the result with it. The appellate finding that finding (e) was unsupported is captured candidly in our companion page; on this appeal, it cost us nothing.

Honest acknowledgment: this was a partial win on the reasoning below. Corbett J. did agree with Infinite that Robinson AJ’s conclusion on finding (e) was over-stated. Had the assignment-failure analysis rested on finding (e) alone, the appeal would likely have succeeded. The reasoning below survived on appeal because of its multi-pillar structure, not because every pillar was unimpeachable.

Decision 3: Anchor the “contractor” status defence on the doctrinal-not-factual line — Centrum cannot displace the statutory text

Infinite’s alternative argument was that, even without an assignment, its factual role as the entity actually performing all the work and dealing with the owner’s representatives qualified it as a “contractor” under the s. 1(1) Construction Act definition. Infinite leaned on Centrum Renovations & Repair Inc. v. Ditta, 2006 CanLII 39082 (Ont SCJ).

We anchored on the statutory text of s. 1(1): “contractor” means “a person contracting with or employed directly by the owner or an agent of the owner.” The functional indicia of role — running the site, dealing with Mr. Zhang and Mr. Cai, performing all the labour — cannot displace the requirement of a direct contractual relationship with the owner. Corbett J. adopted Robinson AJ’s analysis at paras. 20–21 and quoted directly: “Nothing in the Construction Act prevents a general contractor, who has been contracted by the owner, from subcontracting with a second general contractor to perform the full scope of the first general contractor’s work…. Legally, though, absent a contract with the owner (or an agent of the owner), the second general contractor would still fall within the definition of a ‘subcontractor’ under the Construction Act.” Centrum was distinguished. Infinite was a subcontractor; s. 31(3)(b) applied; the lien was out of time.

Decision 4: Carry the Statute of Frauds and Conveyancing Act alternative arguments forward without making them load-bearing

We had advanced two alternative arguments below that Robinson AJ did not need to decide: (a) that the alleged assignment was void as contrary to s. 4 of the Statute of Frauds (agreements relating to interest in land must be in writing); and (b) that the assignment was ineffective in any event by reason of failure to give notice to Mr. Chen and the operation of s. 53(1) of the Conveyancing and Law of Property Act. We carried both arguments forward into the appeal record as alternative grounds. Corbett J. noted at para. 17: “Both arguments are tenable, but I do not find it necessary to decide them in light of my conclusion that the basis for decision grounding the judgment of the Associate Justice discloses no reversible error.” The arguments served their purpose — alternative grounds available if the primary analysis were rejected — without becoming load-bearing or inviting unfavourable doctrinal precedent.

1. Build multi-pillar reasoning at first instance to make the result appeal-resistant. The reasoning below survived on appeal not because every pillar was unimpeachable but because findings (a) through (d) were independently sufficient. When defending a s. 47 motion, do not rely on a single dispositive finding; build the analysis on multiple independent grounds so the loss of any one ground on appeal does not take the result with it.

2. The Maplequest / R&V Construction framework for s. 47 motions is now firmly affirmed at the Divisional Court appellate level. Corbett J. expressly accepted Robinson AJ’s analysis that those panel decisions govern over the dicta in GTA General Contractors, and that proportionality under s. 50(3) of the Construction Act guides the application of s. 47. Practitioners should treat both parties as having a “best foot forward” obligation on s. 47 motions in a manner analogous to Rule 20 summary judgment, subject to the proportionality lens.

3. The contractor / subcontractor distinction in s. 1(1) is doctrinal at the appellate level — Centrum-style functional analysis cannot displace it. The Divisional Court adopted the proposition that absent a direct contract with the owner (or the owner’s agent), no amount of factual indicia of “general contractor role” can establish “contractor” status under the Construction Act. For a subcontractor that has performed all the labour but lacks a direct contract, lien rights expire under s. 31(3)(b) (60 days from last supply), not s. 31(2)(b) (60 days from contract completion).