V. Gibbons Contracting Limited v. Losani Homes (1998) Ltd., 2008 CanLII 49580 (ON SCDC)

COURT FILE NO.: DC 08-037

DATE: 20081002

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: V. GIBBONS CONTRACTING LIMITED

v.

LOSANI HOMES (1998) LTD.

BEFORE: HARRIS J.

COUNSEL: R.C. Harason, counsel on behalf of the Plaintiff

D.A. Schmuck, counsel on behalf of the Defendant

HEARD: September 19, 2008

ENDORSEMENT

I. Overview

1This is a motion by the plaintiff, V. Gibbons Contracting Limited (“Gibbons”) seeking to quash an appeal by the defendant Losani Homes (1998) Ltd. (“Losani”) of the motion judge’s May 14, 2008 order.

2The motions judge denied leave for Losani to bring a motion seeking answers to outstanding undertakings and refusals, permission to amend the statement of defence and counterclaim, and costs.

II. Background Facts

3Gibbons was retained in 2005 by Losani to perform work in two subdivisions. A dispute arose as to payment for work, the quality of the work and completion of the work. Gibbons registered a lien claim which was subsequently vacated as Losani paid $108,506.54 into court.

4Gibbons issued a claim for lien April 3, 2006. Losani delivered Statements of Defence and Counterclaims May 1, 2006.

5Despite proceeding under the summary procedure provided for in the Construction Lien Act (“CLA”), the parties consented to an order by Reilly, J. on August 3, 2006 requiring examinations for discovery in accordance with Rule 31 of the rules of civil procedure.

6Examinations for discovery of Fred Losani took place between December 2006 and January 2007 for a period of four days.

7On consent, Gibbons amended its Statement of Claim June 14, 2007.

8Examinations for discovery of Vaughn Gibbons took place October 25-26, 2007. Losani adjourned its discovery after two days to bring the May 14, 2008 motion due to the number of refusals.

9On February 25, 2008 Losani delivered a draft amended statement of defence and counterclaim. Gibbons refused to consent, citing an expired limitation period.

III. 14 May 2008 Decision

10The court denied leave to bring a motion seeking answers to outstanding undertakings and refusals, and permission for Losani to amend its statement of defence and counterclaim. The order also prohibited any further examinations for discovery and awarded costs of $18,000 to the plaintiff, Gibbons.

11In his oral reasons for judgment, the motions judge determined leave was required for the motion and denied said leave because he found the motion was not necessary, it would not expedite resolution and because the plaintiff was within his rights to refuse to answer the questions.

12In regard to the statement of defence, the motions judge found some of the claims to be barred by Section 4 of the Limitations Act (CITE), and declared others were barred because of prejudice to the plaintiff.

IV. Position of the Parties

Gibbons

13The only issue according to Gibbons is whether the May 14, 2008 order was interlocutory or final. If the order was interlocutory, no appeal lies to Divisional Court as per s.71(3) of the CLA. The appropriate test to determine finality is whether or not there has been disposition of the parties rights in litigation and not arising in the course thereof, Roblin v Drake, [1938] 4 D.L.R. 758 (C.A.). Or, termed another way, if the matter disposed of is collateral to the merits of the case, that decision is interlocutory, Hendrickson v Kallio, [1932] 4 D.L.R. 580 (C.A.).

14The CLA provides for a specialized and expedited process to deal with liens and only “necessary” interlocutory proceedings are permitted. The provisions of the CLA take precedence or govern those more general provisions such as those contained in the rules of civil procedure, or the Courts of Justice Act. This motion was neither necessary nor expeditious, one of which must be proven in order for leave to be granted.

Losani

15If this motion is resolved on the basis of final versus interlocutory characteristics, the motions judge’s order was final. A final order is characterized by its substance (Bird Construction v CS Yachts Ltd. (1990) 37 C.L.R. 225 (C.A.), and where a defendant is precluded from relying on a defence, that defendant is deprived of a substantive right (Ball v Donais (1993), 13 O.R. (3d) 322 (C.A.).

16However the scope of the issue is not so narrow and includes whether or not leave was actually required and whether relief should have been granted.

17More broadly, the discovery process should fall under 67(3) of the CLA as one governed by the rules of the court as per the order of Justice Reilly, 3 August 2008, and therefore leave was not required. If the court denied leave to a party attempting to enforce the courts own prior order (i.e. for examinations for discovery), the party seeking enforcement is left without a remedy.

18The motion should be heard on its merits before the Divisional Court.

V. Analysis

19In terms of whether or not leave was required for the May 14, 2008 motion, the merits of that decision are not in issue here – the motion to quash is based on the proposition that the order is interlocutory and cannot be appealed as per 71(3) of the CLA (see Interhaven Development Corp. v Slovak Village Non-Profit Housing Inc. [1998] O.J. No. 2378 (Div. Ct.) at para. 3).

20In this case there were two main grounds upon which the motion was based: (1) obtaining answers to refusals and undertakings, and (2) amending the statement of defence and counterclaim.

21Each party has provided several cases showing how courts have classified various orders as either final or interlocutory. I accept Gibbons’ submission that Hendrickson, supra, outlines the basic principle:

The interlocutory order from which there is no appeal is an order which does not determine the real matter in dispute between the parties – the very subject matter of the litigation, but only some matter collateral.

22In terms of (1) obtaining answers to refusals and undertakings, I have been referred to Brine Lake Products Ltd. v Schenker of Canada Ltd et al. [2004] O.J. No. 1342, a case which cites a number of Masters’ decisions regarding examinations for discovery generally, and all of which were labeled interlocutory. Though some of those decisions could be distinguished based on the facts, I do not believe that is necessary for the purposes of this motion.

23In terms of (2), the amendments to the statement of defence and counterclaim, I return to Hendrickson, supra. That case is highly relevant to the case at bar; however, it was decided in 1932 and has seen a number of modifications and extensions since that time.

24For example, in Ball v Donais, [1994] O.J. No. 1592 the court found an order to be final where “it disposes of an issue raised by way of defence and ‘thereby deprive[s] the defendant of a substantive right which could be determinative of the entire action,’” (as cited in Stoiantsis v Spirou 2008 ONCA 553, [2008] O.J. No. 2736 (C.A.) at paras. 20-21).

25Sun Life Assurance Co. v York Ridge Developments Ltd. [1998] O.J. No 4899 emphasizes that the final order must deal with “substantive merits as opposed to mere procedural rights, no matter how important the procedural rights may be.” The quotation continues, noting that the focus should be on “whether the order under appeal finally disposes of the rights of the parties, in the sense of … a substantive defence (in the case of a defendant).”

26Other cases use different language to characterize final orders. For example, an order that “forever bars the defendants from putting basic defences forward” is final, Canadian Imperial Bank of Commerce v Lido Drywall Inc. [1995] O.J. No. 3740.

27If the defendant is precluded from raising “any defence it may wish to assert,” McGowan Construction of Ravenna Ltd. v Cedar Highland Ski Club [2004] O.J. No. 5480 (Div. Ct.) the defendant loses access to a substantive right. In such a case, the order is final.

28Or, where paragraphs of a statement of defence are struck out, the order “though in form intermediary’” is characterized as final “notwithstanding that the action would continue with the statement of defence as drafted” 385925 Ontario Ltd. v American Life Insurance Co. et al. (1985), 51 O.R. (2d) 382 (H.C.J.), Bouchard v Parkland Division No. 63 [2001] S.J. No. 729 (C.A.).

29The facts in the case at bar are similar to those in American Life, supra in that although Losani may continue with its statement of defence as originally drafted, it has been effectively barred from addressing the issues proposed in the amendment, such as deficiencies and incomplete work.

30The denial of leave effectively precluded Losani from raising any defence it may wish to assert. Its substantive rights have been deprived and therefore the order is final.

VI. Conclusion

31For these reasons I would dismiss the motion to quash the appeal. Costs for this motion will be in the cause on appeal to Divisional Court.