CITATION: Rosedale Kitchens Inc. v. 2114281, Merlin Restoration Ltd. and Banana Moon Inc., 2014 ONSC 7143
DIVISIONAL COURT FILE NO.: 267/13
DATE: 20141209
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
SACHS, HORKINS AND D. M. BROWN JJ.
BETWEEN:
ROSEDALE KITCHENS INC.
Plaintiff
(Respondent)
– and –
2114281 ONTARIO INC. and MERLIN RESTORATION LTD. and BANANA MOON INC.
Defendants
(Appellant)
Jesse Nathan Rosenberg, for the Plaintiff (Respondent)
Mark A. Wiffen, for the Appellant, Banana Moon Inc.
HEARD at Toronto: December 9, 2014
D. M. BROWN J. (orally)
[1] On June 5, 2012, following a trial under the Construction Lien Act, Master Albert issued a report, for which she had given reasons on June 1, 2012. The building mortgagee, Banana Moon Inc., moved to oppose confirmation of that report. By order dated June 3, 2013, Pollak J. dismissed that motion and confirmed the report, save in respect of the amount of the deficiency in holdback obligations in respect of which the parties had reached an agreement.
[2] Banana Moon Inc. appeals to this Court from the confirmation order made by Pollak J.
[3] The sole issue on appeal involved a priority dispute between Banana Moon, as building mortgagee, and Rosedale Kitchens Inc., as the supplier and installer of cabinets and millwork to the improvement in question, a residential property in Toronto owned by the defendant, 2114281 Ontario Inc. (“211 Ontario”). At issue was the determination of when Banana Moon had made a $25,000 building mortgage advance for the purposes of section 78(1)(b)(i) of the Construction Lien Act. In her June 3, 2013 reasons Pollak J. framed the issue as whether Banana Moon had advanced $25,000 of the mortgage funds on November 12, 2009, in which case the advance would not be available to lien claimants, or on November 19, 2009, in which case Rosedale Kitchens’ lien claim would have priority over Banana Moon’s mortgagee to the extent of the $25,000 advanced.
[4] In her construction lien trial reasons Master Albert gave two reasons in support of her finding that Banana Moon had advanced the $25,000 on November 19, 2009 – (i) an admission made by Banana Moon in response to a Request to Admit that the funds had been advanced on November 19, 2009; and, (ii) the effect of the certification of the cheque on the issue of when the funds were advanced to 211 Ontario.
[5] At the start of the construction lien trial Banana Moon moved for leave to withdraw the admission. Master Albert concluded that she should not give Banana Moon leave to bring the motion under the Construction Lien Act and, even if such leave were granted, she would not grant leave to Banana Moon to withdraw its admission about the date of the mortgage advance. In extensive reasons she found that the admission had not been made inadvertently.
[6] On the motion to confirm the motions judge characterized the analysis undertaken by Master Albert on the second basis for her conclusion about the date of the advance of the $25,000 as obiter. The motions judge concluded that Master Albert had rested her decision about the date of advancement on the formal admission of fact which she had refused Banana Moon leave to withdraw. The motions judge observed that Banana Moon had not appealed Master Albert’s decision refusing leave to withdraw the admission, and she concluded that there was no legal basis to grant the relief requested by Banana Moon on the priorities issue.
[7] The standard of review on a contested confirmation of a report from a reference is that on a true appeal and not on the basis of a hearing de novo. The result should not be interfered with unless there has been some error in principle demonstrated by the master's reasons, some absence or excess of jurisdiction, or some patent misapprehension of the evidence: International Wall Systems Ltd. v. English Lane Residential Developments Ltd. On this appeal, we are to review the motion judge’s order to ensure she applied the proper standard of review to the order of the Master.
[8] The admission made by Banana Moon resulted from the Request to Admit of Rosedale Kitchens dated December 21, 2011. Rosedale Kitchens requested the defendants to admit the following fact:
- On November 19, 2009, Banana Moon advanced the sum of $25,000 to 211 in respect of the property.
[9] On January 19, 2012, a few days after the prescribed 20-day response period, counsel for Banana Moon had written to counsel for Rosedale Kitchens stating:
I did get the request to admit in December and reviewed it. I determined I had, and I have, no problems with respect to the facts stated in the request to admit. However, I wish to clarify the following matters.
Neither of the matters concerned Item No. 29 in respect of which Rosedale Kitchens had sought an admission. Further, the counsel who authored the letter was very alive to the distinction between admissions of fact and admissions of law because in the subsequent paragraph in his letter he made that distinction with respect to two other matters on which Rosedale Kitchens had sought admissions.
[10] In its Notice of Motion to Oppose Confirmation of Report Banana Moon did not take issue with that conclusion reached by Master Albert. However, in its Notice of Appeal from the order of Pollak J., Banana Moon contended that it had not admitted a “fact”, but a “legal conclusion”, and therefore Master Albert had erred in relying upon Item 29 in the Request to Admit.
[11] We do not give effect to this argument. As noted, it is clear from the January 19, 2012 letter from Banana Moon’s counsel that he had treated the matter in Item No. 29 for which an admission was sought as a matter of fact. He later sought to withdraw the admission because of what he characterized as an inadvertent error of fact, namely that the defendant, Banana Moon, had not seen the actual cheque at the time it had made the admission. Once Banana Moon saw the actual cheque shortly before the start of the trial, it realized that the advance had been made on November 12, 2009. In saying that she would have refused Banana Moon leave to withdraw the admission, Master Albert found that it was within Banana Moon’s “power and control to order the cheque at any time” and in failing to do so Banana Moon had failed to meet a disclosure obligation and that Rosedale Kitchens would be prejudiced if she were to grant leave to withdraw the admission. As Master Albert stated in her motion reasons, “The plaintiff would have based its trial preparation and litigation strategy on the case as it was,” which would have included the facts Rosedale Kitchens had asked Banana Moon to admit. Thus, in refusing Banana Moon leave to withdraw the admission, Master Albert clearly treated the admission in this case as one of fact. Given the language in the letter from Banana Moon’s counsel and the position taken on the withdrawal motion, it was certainly open to Master Albert to reach that conclusion.
[12] Pollak J., in paragraph 10 of her Reasons, stated that “Master Albert’s reasons clearly indicate that her decision on priority is based on the admission of fact that the cheque was advanced on November 19, 2009”. That was a reasonable reading of Master Albert’s reasons, particularly paragraph 58 thereof. The jurisprudence regards formal admissions of fact as conclusive of the matters admitted, unless leave is given to withdraw the admission, which in this case Master Albert did not grant. Banana Moon’s admission, in response to Rosedale Kitchens’ Request to Admit, that the $25,000 under the building mortgage was “advanced” on November 19, 2009 was a sufficient basis upon which the Master could determine the priority issue, so we see no error in the conclusion of the motions judge that “there is, in my view, no legal basis to grant the relief requested on this motion…”
[13] For those reasons, we dismiss the appeal.
[14] In so doing we should emphasize, however, that we are not approving the principle employed by Master Albert in the second part of her reasons, which Pollak J. described as obiter, that the owner, 211 Ontario, did not have control over the building mortgage funds until it had certified the cheque delivered by Banana Moon. Absent a demonstrated concern about whether sufficient funds existed to cover the cheque, such a principle would place control over the priority of those funds in the hands of the owner/mortgagor, thereby exposing such funds to subsequently filed lien claims, a result which seems contrary to the policy of s.78 of the Construction Lien Act, that “when [a mortgagee] makes an advance with a clear title it retains its priority for that advance”: Boehmers v. 794561 Ontario Inc. (1995), 1995 660 (ON CA), 21 O.R. (3d) 771 (C.A.).
SACHS J.
COSTS
[15] I have endorsed the back of the Appeal Book, “This appeal is dismissed for reasons given orally by D. M. Brown J. As agreed by the parties, the respondent Rosedale Kitchens is entitled to its costs, fixed in the amount of $5,000. The respondent seeks an order from us that the costs ordered by us be paid out from the funds held in Court. The appellant opposes this aspect of the order. Both parties agree that there is conflicting authority on this issue. The Master has made an order as to what funds are to be paid out of Court. This appeal concerns whether that order should be confirmed. As a result of the fact that the order has been confirmed, there is now a surplus of funds in Court. In our view, the parties should either agree what is to happen to that surplus or, if they cannot agree, they should go back to the Master for a determination of that issue.”
D. M. BROWN J.
SACHS J.
HORKINS J.
Date of Reasons for Judgment: December 9, 2014
Date of Release: December 11, 2014
CITATION: Rosedale Kitchens Inc. v. 2114281, Merlin Restoration Ltd. and Banana Moon Inc., 2014 ONSC 7143
DIVISIONAL COURT FILE NO.: 267/13
DATE: 20141209
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
SACHS, HORKINS AND D. M. BROWN JJ.
BETWEEN:
ROSEDALE KITCHENS INC.
Plaintiff
(Respondent)
– and –
2114281 ONTARIO INC. and MERLIN RESTORATION LTD. and BANANA MOON INC.
Defendants
(Appellant)
ORAL REASONS FOR JUDGMENT
D. M. BROWN J.
Date of Reasons for Judgment: December 9, 2014
Date of Release: December 11, 2014