In the recent decision of MGW-Homes Design Inc. v Pasqualino, the Court of Appeal for Ontario was presented with the novel question of the appropriate appeal route for orders vacating a writ of enforcement issued in connection with an adjudicator’s determination under the Construction Act.

In keeping with the relevant case law, the Court adopted a broad interpretation of the term “judgement” under s. 71 of the Construction Act in concluding that the appeal properly lay before the Divisional Court.

Below, we review the decision and consider its implications.      

Background

MGW-Homes Design Inc. (“MGW“) supplied labour and materials for Mr. Pasqualino’s home renovation, after which a dispute arose.[1] MGW consequently registered a lien and issued a statement of claim, which Mr. Pasqualino then vacated, followed by the delivery of a statement of defence and counterclaim.[2]

MGW initiate statutory adjudication under the Construction Act[3], which ultimately resulted in a determination that Mr. Pasqualino was required to pay MGW.[4] He did not pay, but instead sought leave for judicial review of the determination, which the Superior Court denied.[5]

As readers will appreciate, under section 13.15 of the Construction Act, the adjudicator’s decision is binding on the parties until a court, an arbitrator, or a written agreement between the parties confirms or changes the adjudicator’s determination. MGW accordingly obtained a writ of enforcement for the determination, by filing the determination with the court within the statutory deadline, but in doing so, MGW failed to give notice of the filing to Mr. Pasqualino as required under section 13.20(3) of the Construction Act.[6]

On the basis that MGW failed to provide notice, Mr. Pasqualino brought a motion to vacate the writ.[7] Mr. Pasqualino was successful on the motion, as the motion judge found that the “failure to give notice of filing the adjudicator’s determination with the court was fatal to the writ”.[8] The writ was ordered to be set aside, and the motion judge barred MGW from taking any steps to enforce the adjudicator’s order, including re-filing any writs of execution, MGW was also ordered to pay costs to Mr. Pasqualino.[9]

MGW appealed the orders given by the motion judge. Given that the parties had identified a preliminary issue as to the proper appeal route, MGW perfected its appeal in both the Divisional Court and the Court of Appeal.

This case comment addresses the Court of Appeal decision.

The Court of Appeal’s Decision

On appeal to the Court of Appeal, and although MGW raised substantive arguments, the Court addressed only the preliminary issue related to the proper route of appeal given that it was, in the view of the Court, dispositive of the entire appeal.

In brief, the issue was whether the order vacating the writ of enforcement fell within the definition of a “judgement” under section 71 of the Construction Act; as if it did, then the appeal was properly before the Divisional Court rather than the Court of Appeal.

Mr. Pasqualino raised several arguments in support of the proposition that the Court of Appeal was the correct venue, including: (1) that the motion judge’s order was a “final order” because it extinguished a substantive right, thus bringing it within the scope of 6(1)(b) of the Courts of Justice Act; and (2) that section 71(1) of the Construction Act is an exception to the normal appeal process under the Courts of Justice Act, and that it should therefore be interpreted narrowly.[10]

Regarding the first point, the Court concluded (by reference to prior case law) that the Construction Act’s appeal provision was “a provision under a special act dealing with construction liens, [and therefore] takes precedence over the appeal provisions in the Courts of Justice Act, which is a general act dealing with appeals from the final order of a superior court judge”. Although not explicitly stated, this appears to have also implicitly referred to s. 6(1)(b)(ii) of the Courts of Justice Act, which creates an exception for “an order from which an appeal lies to the Divisional Court under another Act” such as the Construction Act.

Regarding the latter point, the Court disagreed, finding that a narrow interpretation would “undermine the purpose of efficiency and would be contrary to case law interpreting appeal provisions”.[11] Instead, the Court referred to a line of case law interpreting the term “judgement” broadly; in both Bird Construction Co. v. C.S. Yachts Ltd. and Villa Verde L.M. Masonry Ltd. v Pier One Masonry Inc., the Court confirmed that “provisions under a special act dealing with construction liens, takes precedence over the appeal provisions in the Courts of Justice Act“.[12]

Furthermore, those cases interpreted “judgment” under s. 71 broadly, without limiting the scope of that interpretation to lien claims.[13] Rather, that case law established (among other things) that “judgment” could include trust claims, and that an order dismissing an action after the plaintiff’s claim for a lien had expired constituted a “judgment” notwithstanding the fact that it was referred to as an order, and notwithstanding the fact that it was made without a trial having taken place.

This was best encapsulated in TRS Components Ltd. v. Devlan Construction Ltd., where the Court of Appeal confirmed a broad definition of “judgement” under the Construction Lien Act:

In our view, “judgment … under this Act” in s. 71 includes a judgment granted in an action commenced and continued under Part VIII of the Act, including any counterclaim, crossclaim or third party claim, unless the action or any part of the action is removed from the construction lien proceeding, and directed to proceed under the Rules.[14]

Thus, given the Construction Act’s underlying objective of efficiency, along with the trend of interpreting “judgement” broadly, the Court of Appeal concluded that there was no clear reason for deviating from the norm established by prior case law.

The Court of Appeal therefore held that “adjudication under part II.1 of the Construction Act is a ‘proceeding under the Act’ and the motion judge’s order on the enforceability of the adjudicator’s determination is a ‘judgement…under [the] Act’”[15], such that the appeal properly lay before the Divisional Court.

Commentary

Given the relative youth of statutory adjudication in Ontario, court decisions on the subject remain relatively rare, and the relevant body of case law therefore remains somewhat sparse.

Consequently, court decisions addressing adjudication are highly valuable; MGW is no different in that regard (as was the case with the Superior Court’s decision when it was released in 2022[16]).

It is perhaps unsurprising, and made good sense, for the Court to continue the trend of interpreting the term “judgement” broadly with respect to procedures available under the Construction Act, in that it avoids the confusion that might arise from different appeal routes for different procedures in under the Construction Act.  This is equally true of the underlying goal of efficiency shared by statutory adjudication and the Construction Act more broadly.

That being said, it is perhaps understandable to some extent why parties might, at first blush, view the proper interpretation of “judgment” under the Construction Act differently. Specifically, the term “judgment” is undefined in the Construction Act, as a result of which the Court turned to the existing case law interpreting that term. However, Part VII of the Construction Act – which as the Court observed, applies to lien claims – stipulates at s. 50(2) that the Courts of Justice Act and the Rules of Civil Procedure apply to lien actions, except to the extent those former two are inconsistent with the Construction Act.

Given that the Construction Act does not define “judgment”, it may very well be normal for parties to in turn refer to the Courts of Justice Act for the definition of “judgment”, which that legislation defines as “a decision that finally disposes of an application or action on its merits and includes a judgment entered in consequence of the default of a party” (emphasis added). Arguably, this may have been an alternative means of distinguishing the case law interpreting “judgment” in the context of lien actions, although it is debatable whether the Courts of Justice Act being “inconsistent with” the Construction Act includes the case law under the Construction Act.

In any event, as the Court of Appeal and MGW rightly observed, this would not apply to breach of trust claims (among other things), making this point somewhat academic.

Accordingly, on balance, the decision in MGW is a welcome one. We look forward to seeing how the case law on statutory adjudication continues to develop.

Samantha Spagnol, summer student, assisted with the preparation of this article.

 

[1] MGW-Homes Design Inc v Pasqualino, 2024 ONCA 422, at para 5 [MGW].

[2] Ibid.

[3] Ibid at para 6.

[4] Ibid at para 9.

[5] Pasqualino v. MGW-Homes Design Inc, 2022 ONSC 5632 [Pasqualino].

[6] MGW, supra note 1 at para 10.

[7] Ibid at para 11.

[8] Ibid at para 12.

[9] Ibid.

[10] Ibid at para 24.

[11] Ibid.

[12] Bird Construction Co Ltd v CS Yachts Ltd and Tennyson, 38 OAC 147 at para 9 [Bird Construction]; Villa Verde LM Masonry Ltd v Pier One Masonry Inc, 2001 CanLII 7060 (ONCA) at para 9 [Villa Verde].

[13] Supra note 1 at 26.

[14] TRS Components Ltd v Devlan Construction Ltd, 2015 ONCA 294 at para 18 [TRS].

[15] Ibid at para 36.

[16] Pasqualino, supra note 5.

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