Ontario Court of Appeal clarifies the route of appeal of an order on the enforceability of adjudication determination

7 minute read
28 May 2024

In MGW-Homes Design Inc. v. Pasqualino, 2024 ONCA 422, the Ontario Court of Appeal clarified that the route of appeal of an order on the enforceability of an adjudicator's determination is to the Ontario Divisional Court.

The Court found that an order to vacate a writ of enforcement related to an adjudicator's determination is a "judgment" as per s. 71 of the Construction Act, and the appeal of judgments under s. 71 of the Act lies to the Ontario Divisional Court.



Background

MGW is a contractor who supplied materials to Mr. Pasqualino's home. After a dispute between MGW and Pasqualino, MGW registered a construction lien, issued a statement of claim and commenced an interim adjudication.

Adjudication is a new procedure in Ontario that came into effect, with other amendments to Ontario's Construction Act, on October 1, 2019 to resolve construction disputes on an expedited basis outside of the court process. An adjudicator's determinations are binding and, upon filing a certified copy of the determination with the court, can be enforceable as if it were an order of the court. The adjudicator determined that Mr. Pasqualino had to pay MGW $119,314, inclusive of HST, which Mr. Pasqualino did not pay. MGW filed the determination with the court, but failed to provide notice to Mr. Pasqualino as required by s. 13.20(3) of the Act. MGW also obtained a writ of enforcement from the court.

Pasqualino brought a motion to vacate the writ on account of the failure to provide notice. The motion judge found that the failure to give notice of the filing of the adjudicator's determination with the court was fatal to the writ. The motion judge also ordered that the writ be vacated and that MGW be barred from re-filing any writs or taking any other enforcement steps in connection with the adjudicator's order.

MGW appealed this order to the Court of Appeal. The appeal was dismissed.

MGW raised the issue of whether the Court of Appeal has jurisdiction to hear the appeal. The answer turned on whether the order constitutes a "judgment" under s. 71(1) of the Act. The Court found that it did not have the jurisdiction to hear the appeal as the order did constitute a "judgment" and therefore the appeal lies to the Divisional Court.

The Ontario Court of Appeal's Analysis

Given that adjudication is relatively new to the Act, the jurisdictional issue is novel. MGW perfected its appeal in both the Divisional Court and with the Ontario Court of Appeal.

MGW relied on Villa Verde and TRS for the proposition that the Court has interpreted "judgment" broadly, including decisions that were neither a lien nor a trust action. Therefore, "judgment" should be interpreted broadly, and as a result, the appeal should be heard by the Divisional Court.

The Court rejected Mr. Pasqualino's submission that s. 71(1) of the Act provides an exception to the normal appeal route under s. 6(1) Courts of Justice Act, which states that an appeal lies to the Court of Appeal from a final order of a judge of the Superior Court of Justice. This interpretation would undermine the purpose of efficiency – which was the goal of the new adjudication process – as well as contrary to case law interpreting s. 71(1) of the Act.

The Court referred to Bird Construction Co. v. C.S. Yachts Ltd. (1990), 38 O.A.C. 147 (C.A.) and Villa Verde L.M. Masonry Ltd. v. Pier One Masonry Inc. (2001), which commented that s. 71(1) of the Act is a special provision that takes precedent over the appeal provisions in the Courts of Justice Act.

The Courts in Villa Verde, 2001 CanLII 7060 ON CA, 54 O.R. (3d) 76 (C.A.) and TRS Components Ltd. v. Devlan Construction Ltd., 2015 ONCA 294, 125 o.r. (3D) 161 have also interpreted s. 71(1) broadly. The Court in Villa Verde held that the interpretation of "judgment" should not be limited to lien claims, but that it should include judgments arising from trust claims. This persuaded the Court of Appeal in Pasqualino, as orders relating to adjudication claims, like trust claims, do not fall under the same part of the Act as lien claims. The Court in Villa Verde relied on Bird Construction Co. v. C.S. Yachts Ltd. (1990), 38 O.A.C. 147 (C.A.), which held that an order dismissing an action after the plaintiff's claim for a lien had expired constituted a "judgment" for the purposes of the appeal provision.

The Court also relied on Durall Construction Ltd. v. W.A. McDougall Ltd. (1979), 1979 CanLII 1700 (ON CA), which held that "judgment" in the appeal provision could apply to any decision wherein the party's lien rights are finally disposed of. In TRS, the Court provided an unrestrictive definition of "judgment". It stated that Villa Verde did not address whether a judgment on a counterclaim in a lien action is a "judgment" per s. 71. Therefore, TRS held that "judgment" included a judgment granted in an action commenced and continued under Part VII of the Act, including any counterclaim, crossclaim or third party claim, unless otherwise directed to proceed under the Rules of Civil Procedure.

Pasqualino at paragraph 34 notes that s. 71 of the Act, the appeals provision, is an important part of the efficient adjudication procedure. In light of this, the Court was not persuaded as to why an appeal from an order seeking enforcement of an adjudicator's determination would not fall under this appeal provision.

Ultimately, the order constituted a "judgment" under s. 71 of the Act, and the appeal was dismissed. The appeal route lies to the Divisional Court.

Takeaways

As more adjudication cases occur year over year, it becomes increasingly important to understand the Court's interpretation of the enforceability of an adjudicator's determination.

When a party decides to file an adjudicator's determination with the court so as to obtain enforceability as if it were a court order, caution must be taken such that notice is provided to all other parties to the adjudication in advance of filing the determination with the court, as per s. 13.20 of the Act. The path of appeal of an order on the enforceability of an adjudicator's determination lies to the Divisional Court. Pasqualino may stand for the proposition that any court order related to an adjudication determination, even beyond enforceability, lies to the Divisional Court.

This is a reminder that adjudication determinations themselves cannot be appealed. An application for judicial review of a determination of an adjudicator may only be made with leave of the Divisional Court: see section 13.18(1) of the Act. No appeal lies from an order on a motion for leave to bring an application for judicial review: see section 13.18(4) of the Act.


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