Camino Construction v Graham Construction: Three Routes To A Stay Of Lien Proceedings

Stays of proceedings are relatively unremarkable in the context of construction litigation, given the prevalence of arbitration clauses in construction contracts. This is equally true of lien proceedings, where a lien action will be commenced in order to perfect a claimant's security interest and then stayed so that the underlying dispute may be referred to arbitration. Frequently, such a stay is either uncontroversial between the parties or resolved simply by reference to the Arbitration Act, 1991.

However, Camino Construction 2016 Inc v Graham Construction and Engineering LP, 2025 ONSC 6591 ("Camino Construction"), presents an interesting instance of the Ontario Superior Court reviewing the criteria for a stay of lien proceedings under three different schemes: (1) the Arbitration Act, 1991; (2) the Rules of Civil Procedure (the "Rules"); and (3) the Courts of Justice Act (the "CJA"). Below, we discuss the case and its takeaways.

Background

In January 2018, the City of Toronto entered into a contract with Graham Construction and Engineering LP ("Graham"), whereby Graham was to improve a disinfection system at a wastewater treatment plant (the "Prime Contract"). The Prime Contract specified that either party could unilaterally refer a given dispute to arbitration at their election (i.e. rather than requiring the other party to consent).

In May 2018, Graham entered into a subcontract with Camino Construction 2016 Inc ("Camino"). The subcontract also allowed either party to trigger arbitration in the same manner. Also, section 27(g) of the subcontract gave Graham the authority to, "at any time", give notice to suspend any dispute between the parties until substantial completion of the project, whereupon such dispute "shall be deemed stayed". Finally, and although not explicitly stated in the Court's judgment in this case, the subcontract also appears to have contained a provision allowing Graham to unilaterally refer any given dispute to litigation, even if arbitration had already been initiated.

Camino was scheduled to commence its work on October 2018. However, prior to Camino starting its scope of work, Graham discovered an unknown subterranean seawall. Graham accordingly revised the schedule such that Camino would start in May 2019, even though Camino had mobilized before that date.

In November 2020, Camino submitted a claim for a subcontract price increase because of alleged delays due to the seawall. One part of Camino's delay claim involved labour standby costs resulting from Camino's mobilization before the work began.

In June 2021, Graham submitted a claim to Toronto for a schedule extension and price increase due to the seawall. Graham's claim included claims from its subcontractors, including Camino. Toronto disputed certain parts of Graham's claim, including Camino's labour standby costs claim; Graham in turn adopted Toronto's position on Camino's claim. Toronto paid only what it did not dispute, and Graham in turn distributed payment to subcontractors (including Camino).

In September 2022, Camino preserved a lien. Graham vacated the lien, and defended the claim while counterclaiming against Camino and crossclaiming against Toronto. Graham subsequently gave Camino written notice to arbitrate Camino's claims in November 2022, and gave notice to suspend dispute resolution until substantial completion of the project pursuant to section 27(g) of the subcontract. The parties initially agreed to the arbitration. However, in February 2024, Graham advised Camino that Graham wanted the claims resolved by litigation, and – as a result of its contractual right to unilaterally refer the matter to litigation – the arbitration was abandoned.

In December 2023, Camino preserved a second lien, which was again vacated by Graham. Graham again defended the claim while advancing both a counterclaim and crossclaim. Graham served Camino with a notice to arbitrate Camino's labour standby claim in July 2025, but Camino purported to reject this notice.

The Superior Court's Decision

At issue was whether the Court should stay Camino's lien actions based on either section 7(1) of the Arbitration Act, rule 6.01 of the Rules, or section 106 of the CJA. While the Court determined that the lien action should not be stayed based on the Arbitration Act or the Rules, Graham successfully obtained a stay based on the CJA.

Stay Based on the Arbitration Act

Section 7(1) of the Arbitration Act requires a stay where an action is commenced regarding matters that an arbitration agreement provides must be referenced to arbitration. The Court provided the test to provide such a stay. In relevant part, the applicant had to prove an arguable case that four technical elements were met:

• an arbitration agreement exists;
• court proceedings were commenced by a party to the arbitration agreement;
• these court proceedings were in respect of an issue that the parties agreed to be submitted to arbitration; and
• the applicant applied for a stay before taking any step in the Court proceeding.

Camino successfully argued that Graham had failed to prove that the lien actions were in respect of an issue that the parties agreed to be submitted to arbitration. As previously noted, in February 2024, Graham provided written notice to have the dispute resolved by litigation. While there was a separate arbitration claim ongoing between Graham and Toronto, there was no evidence that Camino's lien actions related to said arbitration. Thus, the Court did not grant a stay based on the Arbitration Act.

Stay Based on the Rules

Rule 6.01(1) of the Rules provides that if there are two or more proceedings pending in the Court and it appears to the Court that: (1) there is a question of law or fact in common; (2) the relief claimed arises out of the same transaction, occurrence, or series of transactions or occurrences; or (3) for any reason, an order ought to be made under this rule, then the Court may stay any of the proceedings until the determination of any other part of the proceedings.

Graham argued that there were significant overlapping issues between Camino's lien actions and the actions between Graham and Toronto. Graham claimed that the Court had an obligation to avoid inconsistent findings due to a multiplicity, and that it was possible for an earlier trial in one action to narrow the issues in the other, or to increase the likelihood of settlement.

After reviewing Graham's pleadings in its action against Toronto, the Court disagreed. The Court noted that Graham's statement of claim was not detailed, with no particulars regarding Camino's lien claim. Without this detail, the Court instead referred to Camino's pleadings in the lien actions, and found that there was no comprehensive overlapping of issues justifying a stay based on the Rules.

Stay based on CJA

Section 106 of the CJA allows a Court to stay proceedings on "such terms as are considered just". On this point, Graham argued that it invoked section 27(g) of the subcontract, which suspended dispute resolution until substantial completion of the project.

The Court agreed in part because Camino agreed to this term in its subcontract. As well, Graham invoked this term properly in November 2022. This was also a sensible term in the Court's view, as substantial performance was the point when all back-charges for deficiencies could be finally reconciled (and deficiencies in Camino's work on the Project had already been discovered, meaning this issue was not academic).

Finally, the stay was sensible from a practical perspective, as other subtrades with claims would preserve their liens upon substantial performance. Graham would also likely preserve its own liens, which could further implicate Camino, and result in Camino becoming involved with these other actions. The Court concluded that it would be better to organize all the actions at that point.

Commentary

This case is helpful from a practical perspective. Other cases may provide commentary on one of these routes for pursuing a stay, but in Camino Construction, the Court provided the factors required for multiple routes to obtaining a stay of a lien action in a consolidated place.

In that regard, it may serve as a useful starting point when a stay for a lien action is being contemplated, or when a party is attempting to defend against any of these routes for obtaining a stay.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.