Q & A with Lois Metcalfe

Q&A with

Lois Metcalfe

By Harland Lindsay

ecently, I had the pleasure of having lunch with Lois Metcalfe. I would like to share some of our conversation shortly after the CIQS 2016 Congress, and the retirement dinner held in her honour.

Harland: Although you and I do not really see much of one another, we have been good friends for a long time. Where does time go? Lois: Yes, it was 40 years ago that you joined Olympia and York Developments, where I was one of two people working in the executive administration area. You and I shared the same boss, Keith Roberts.

Harland: When did you start working with the CIQS? Lois: 1978, just after you left O&Y to join Parkin Architects. At the time, you were President of the CIQS and you stole me from O&Y.

Harland: What made you leave O&Y? Lois: Basically, I was kind of bored. I did not have enough to do. I needed a new challenge.

Harland: I guess you got more than you bargained for! Do you remember the CIQS office address, at that time? Lois: Yes. It was 43 Eglinton Avenue West. What a tiny little office that was – I think it was 388 SF. It is amazing when I think of how much got done there in that little space.

Harland: That was quite a change from the 1,000 SF O&Y executive administration area. How busy were you, when you started? Lois: Very busy. I worked 50% for the CIQS and 50% for the OIQS (now CIQS – Ontario)

Harland: I recall that you worked from home for a while. Lois: Yes. The CIQS was very short of funding, so we closed the office in the early 80s and moved all the file cabinets and equipment to my home, as a ‘temporary’ measure. Can you believe that situation lasted for 25 years?!

Harland: How does the membership count compare between 1978 and 2016? Lois: We had 750 members, back then. Now, we are at almost 2,000. Harland: And how do our budgets compare? Lois: $40,000, in 1978 vs. almost $700,000, today. Looking back, I really do not know how we managed.

Harland: How did you handle all that increased membership and responsibility? Lois: It was tough for quite a while but, in addition to my working full-time, I now have two full-time and two part-time assistants. I also have great support from a number of volunteer members. In retrospect, we should have staffed up earlier; it has made such a difference. In fact, it is only in the last year that I can go home at a reasonable time of day – and I can actually relax when I get there, knowing that everything is in good hands!

Harland: How many CIQS annual general meetings have you arranged and attended? Lois: Thirty-eight. I did miss attending one, in 1986 when my Dad died.

Harland: I guess you must have suffered under many CIQS presidents? Lois: Yes, 35. And it is not always easy when having to work with a different president every year.

Harland: What was your most exciting AGM, when and why? Lois: For me. It was the AGM of 1984, the CIQS 25th anniversary, held at the Delta Chelsea. It was our first big-time AGM, with a band, dancing, etc. It marked an important milestone for the CIQS. Mind you, the CIQS 50th anniversary in 2009 certainly matched the excitement of 1984.

Harland: Can you list what you consider to be the greatest improvements made at the CIQS, since 1978? Lois: Technological advances, like our first computer, getting rid of onion skins, white-out, etc. Of course, there is the advent of emails and the Internet. I’m in two minds as to whether emails truly are an improvement; they are too often misinterpreted, resulting in the need for timeconsuming damage control.

Harland: Are you going to miss taking minutes? Lois: Absolutely not! When I started in 1978, the CIQS was at Minutes #291. Now, we are at #595. 304 sets of minutes are enough for me – and that does not include all the Ontario minutes.

Harland: Do you have any one, outstanding, warm and fuzzy memory from your 38 years at the CIQS? Lois: Yes, when I received the Gordon Pattison award in 2003 in recognition of extraordinary service to the Institute. It was my 25th anniversary with the CIQS. That was a very special moment. Another ‘warm-and-fuzzy’ was this year’s renaming of the CIQS Fellowship award to the Lois Metcalfe Fellowship award.

Harland: What would you say was your greatest worry about the Institute? Lois: I had several, but the worst was the launch of our new website, a few years ago. I thought I was going to have a heart attack! I have always been concerned and disappointed that Quebec decided to disassociate from the national body; however, that situation is beginning to resolve. Income and expenditures were a constant worry, but these, too, have become less worrisome. I also used to worry about Boards and Board members that occasionally became overly argumentative, not always remembering that their duty was to promote the interests of the Institute, not their personal agendas. It is my hope that our improved maturity will continue and grow.

Harland: What do you consider to be some of the successes the CIQS has enjoyed? Lois: First, finally having been able to build enough revenue to properly staff its office. That has made a major difference, as it allows us to properly serve our membership. Anyone now calling the office is assured of being able to speak directly with a staff member. It has made for a much more satisfied membership experience. Second, the PQS designation has slowly but surely gained broader recognition. For example, it is now recognised by the federal government and is now written into government RFPs as a requirement. Third, membership growth, alongside broader domestic and international recognition. Harland: How about any words of advice you would like to pass along to the CIQS, perhaps something you have always wanted to say but felt you could not as an employee? Lois: There is nothing I have been bursting to say, but I would encourage the Institute to push hard for professional recognition; it needs that in order to achieve an enhanced level of recognition. Also, now that the CIQS has finally been reconstituted, I urge it to maintain its independence.

Harland: What words of advice would you offer to your successor? Lois: Be patient. Be prepared to bite your tongue, sometimes. Be forgiving. Always act in the best interest of the Institute.

Harland: I was honoured to receive the CIQS Fellowship Award in 1982. I hear there has been a name change? Lois: At the Board meeting in February, 2016, it was changed to the Lois Metcalfe Fellowship award, in recognition of service to the CIQS. I feel very honoured.

Harland: Do you have any special plans for retirement? Lois: No – I just want to get to retirement. I have not had time to think beyond that.

Harland: How is Gord feeling about the prospect of having you at home all week? Lois: I’m worried about that! Gord and I are quite different: he has no problem sitting back and relaxing, whereas I need to be constantly active. We do love camping, though, so I hope we can do more of that. Also, I want to spend more time with my grandchildren, Mya (5) and Kai (2), and be more available to help their parents, Ryan and Lindsay, from time to time.

Harland: Will you miss working at the CIQS? Lois: Of course I will! I have dealt with and overcome so many challenges. I have met and worked alongside so many fine people over the years. I will miss all of that; however, I will not be totally disengaged, as I will be available to help out from time to time on a part-time, as-needed basis.

Harland: You and I have shared some really hilarious stories, sometimes. Do you have a new one for me? Lois: None that we can publish. Sorry!

Advances in the face of liens

RSG Mechanical Inc.’s Guide to Owners and Lenders

Paul Hancock

The Ontario Construction Lien Act (CLA) attempts to strike a balance between the interests of those at the top of the construction ladder (i.e., owners) to have the necessary funds flow to complete a project and the interest of those at the bottom of the construction ladder (i.e., suppliers and small subtrades), with limited bargaining power, that require the protection afforded by the ability to possibly halt a project by registering a construction lien against title to the project to ensure that they receive a portion of the pool of funds held back for their benefit.

In theory, the scheme is fairly simple. Pursuant to section 24 of the CLA, upon notice of a lien, anyone paying down the construction ladder has to withhold not only the statutorily required minimum of 10% of the value of the services and materials provided, but also the entire value of the claim for lien. Similarly, under section 78 of the CLA, a mortgagee, whether a prior mortgagee making a subsequent advance or a mortgagee that registered its interest after work commenced, is discouraged from making an advance after a lien is registered against title and/or it receives notice of the lien by having the lien, as well as any subsequent liens that are registered against title, take priority over said advance.

In order to permit funds to continue to flow once a lien is registered against title, the parties either have to settle or the face value of the lien, plus the statutorily calculated security for costs, have to be paid into court pursuant to section 44 of the CLA, whereby the lien ceases to attach to the land and becomes a charge against the amount paid into court. By paying said funds into court and vacating the lien, the party posting said security is put in the same position as if the lien had not been preserved or written notice had not been given and payments may continue to be made. Typically, the party on the rung above the lien claimant will vacate the lien.

Unfortunately, when someone on a rung of the construction ladder between the owner and the subtrades which registered liens becomes insolvent, the number of liens that are registered may be significant and the amount of money that needs to be posted may require the mortgagee to step in. In such circumstances, financers and developers need to ensure that the subsequent flow of funds strictly complies with the provisions of the CLA, failing which, said parties may needlessly increase their exposure.

The Divisional Court’s decision in R.S.G. Mechanical Inc. v. 1398796 Ontario Inc. (R.S.G. Mechanical), highlights, amongst other things, this particular issue and provides guidance as to how a mortgagee or owner can vacate liens without increasing their exposure beyond their statutory holdback obligations under the CLA. In R.S.G. Mechanical, the developer, Bloorwood, purchased a parcel of land in 1999 with the intention to build 61 townhouses and potentially thereafter develop a high-rise condominium.

Not having the necessary funds to purchase the lands, post Tarion new home warranty security, and/or finance the construction itself, Bloorwood obtained funds from investors, financers, and its own shareholders, which secured their respective interests by way of registering mortgages against title to the land. By May 2004, Bloorwood, which acted as its own general contractor and contracted directly with each trade, had constructed and sold 49 of the 61 planned townhomes and had ran out of money. As a result, 14 claims for lien by 11 lien claimants, totaling $804,226.27, were registered against title to the lands.

By June 4, 2004, Bloorwood’s registration with Tarion had expired and construction had effectively halted in the summer of 2004. At that time, there were still 12 more townhomes to be finished and sold, as well as the proposed high-rise development, and the first/fourth mortgagee retained a general contractor, Maystar General Contractors Inc. (Maystar), as the mortgagees wanted to complete the remaining townhomes in order to mitigate their losses and maximize their recovery. In order to have the sales close, the 14 liens needed to be vacated and, although the 10% statutory holdback was found to be $424,537.00, a total of $978,588.74, being the full value of the liens plus security for costs, had to be posted to vacate the liens.

Accordingly, the first/fourth mortgagee provided $424,533.00 in funds to counsel for the third mortgagee to vacate the liens and on December 30, 2004, the liens were vacated.

After the liens were vacated, the mortgagees paid Maystar $309,465.00 for work that it had commenced on November 1, 2004, and Maystar completed six of the townhouses. Thereafter, the mortgagees made a further payment to Maystar of $339,671.50 to complete the remaining six townhouses. The lien actions were consolidated and referred to Master Polika, who found that by posting security and obtaining an order vacating the liens the mortgagees had made an advance under section 78 of the CLA and the lien claimants were entitled to not only the value of the deficiency in

the holdback, being $424,537.00, but also had priority over the mortgagees with respect to the balance of the funds used to vacate the liens and should be paid in full from the security.

Master Polika also found that the lien claimants had priority over the mortgagees with respect to the amounts paid to Maystar to complete the 12 remaining townhomes. On the motion to confirm Master Polika’s Report, Justice Meyers found that the monies used to complete the 12 townhomes and funds used to post security were not advances under the CLA, the lien claimants were only entitled to deficiency in holdback, being $424,537.00, and Master Polika’s report should be amended accordingly.

In affirming Justice Meyers’ decision, the Divisional Court held that in order for funds delivered by a mortgagee to be deemed an ‘advance,’ an owner or owner’s delegate needs to acquire actual control of the money. Funds delivered in escrow to counsel for the sole purpose of vacating liens are not an advance that would increase a party’s liability under the CLA. Furthermore, the fact that the funds held in escrow are not eventually posted and a bond was used to vacate the liens is immaterial, provided no funds were released from escrow until after the liens were vacated.

With respect to Master Polika’s finding that the lien claimants would have priority over funds paid to Maystar, the Divisional Court held that, provided a trade does not receive payment when the liability was incurred (i.e., the work was done) on the understanding that it will not be paid prior to liens being vacated, subsequent payments to a trade for work done prior to the liens being vacated would not increase a party’s liability under the CLA.

Although it would be preferable to vacate liens without relying on the mortgagee to do so, R.S.G. Mechanical sets out how to have a mortgagee provide funds to vacate liens and have replacement trades commence work prior to vacating liens, without increasing its liability to lien claimants.

These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.

About the author

Paul Hancock is an Associate with Goldman Sloan Nash & Haber LLP. Paul assists and advises businesses and entrepreneurs in the area of construction law with a focus on litigation and contractual interpretation. He is adept at handling disputes before the courts, particularly, construction lien and breach of trust actions. Paul is a pragmatic problem solver who provides his clients with timely solutions.

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