In TRS Components Ltd. v. Devlan Construction Ltd., released April 29, 2015, the Ontario Court of Appeal held that the judgment on a counterclaim brought in a claim commenced under the Construction Lien Act is a judgment “under the [Construction Lien] Act” even when the lien itself was discharged, and the claim for lien dismissed, before trial. This is important as the appeal of such a judgment will proceed to the Divisional Court instead of the Court of Appeal.

Background

The decision emerged from an unusual procedural history. The plaintiff’s claim for a lien was struck out, and the lien was discharged, due to failure to answer undertakings and refusals. However, the defendant’s counterclaim proceeded to trial and the defendant obtained judgment for nearly $70,000. The plaintiff appealed the judgment on the counterclaim to the Court of Appeal.

In Ontario, the Courts of Justice Act provides that an appeal lies to the Court of Appeal from a final order of the Superior Court, unless the appeal lies to the Divisional Court under another Act. Section 71(1) of the Construction Lien Act provides that “an appeal lies to the Divisional Court from a judgment […] under this Act”. Accordingly, the Court of Appeal had to consider whether the judgment on the counterclaim was a judgment under the Construction Lien Act.

Analysis

The Court of Appeal held that the Construction Lien Act should be interpreted broadly to provide a summary proceeding for the trial of claims brought under it, including counterclaims, crossclaims and third party claims. This accords with the language and purpose of the Construction Lien Act.

While the discharge of a lien may lead to an order that the remainder of an action proceed on the “ordinary” track, the Court held “unless such an order is made, the trial of the action or any part of the action commenced under the Act will proceed under the Act, and will result in a ‘judgment…under [the] Act’ within the meaning of s. 71(1)” (para. 20). The Court further held:

  • “The dismissal of the lien claim did not automatically remove the counterclaim from the construction lien proceeding; to the contrary, the counterclaim continued in the original construction lien action, with the same title of proceedings” (para. 24).
  • “the failure to take certain procedural steps typically required before a construction lien trial does not take the matter outside of the construction lien procedure” (para. 25).

Disposition

Normally, when an appeal is brought to the wrong court in Ontario, the appeal is quashed and the appellant must seek an extension of time to appeal to the correct court (or seek leave to do so). However, in this case, “where there was an arguable question on the issue of jurisdiction”, the Court of Appeal exercised its discretion to transfer the appeal to the Divisional Court. It would seem likely that the Court of Appeal felt the plaintiff had made an understandable mistake and wanted to eliminate an additional procedural hurdle for the parties.