Airex Inc. v. Ben Air Systems Inc., 2016 ONSC 6450

CITATION: Airex Inc. v. Ben Air Systems Inc., 2016 ONSC 6450

DIVISIONAL COURT FILE NO.: 404/15

DATE: 20161017

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

LEITCH, SACHS & NORDHEIMER JJ.

BETWEEN:

AIREX INC. Plaintiff (Respondent)

– and –

BEN AIR SYSTEM INC. also known as BEN-AIR SYTEMS INC., BENY QUATTROCIOCCHI and JUAN CUMMING Defendants (Appellants)

J. LoFaso & D. Morawetz, for the respondent

C. Holland, for the appellants

HEARD at Toronto: October 13, 2016

REASONS FOR JUDGMENT

NORDHEIMER J.:

[1] This is an appeal from the summary judgment granted by Belobaba J. on February 20, 2015 which awarded two amounts, one for $216,662.84 and the other for $30,000 and also made a declaration that the defendants were in breach of the trust provisions of the Construction Lien Act, R.S.O. 1990, c. C.30.

[2] Prior to the hearing of the appeal, the court raised with counsel a concern over this court’s jurisdiction to hear the appeal. We asked counsel to address that issue. Having heard counsel’s submissions, we ruled that this court did not have jurisdiction to hear the appeal. Consequently, we granted an order transferring the appeal to the Court of Appeal with reasons to follow. I now provide those reasons.

[3] The ground asserted for our jurisdiction is s. 71 of the Construction Lien Act which reads:

… an appeal lies to the Divisional Court from a judgment or an order on a motion to oppose confirmation of a report under this Act.

[4] In my view, s. 71 does not extend to cover the circumstances of this case. This proceeding is not a proceeding under the Construction Lien Act and cannot reasonably be held to have led to a judgment under that Act. This action involves a claim for monies owed on unpaid invoices for goods sold and delivered, along with monies due under a guarantee, commenced in the normal course in the Superior Court of Justice. No lien is claimed, nor is one at issue, in the proceeding. As is clear under s. 50 of the Construction Lien Act, a trust claim is not a special proceeding under the Act, unlike a lien claim which is.

[5] The respondent’s submission that this entire proceeding is governed by the Construction Lien Act because the unpaid invoices relate to a construction project is simply untenable. There is nothing in the Construction Lien Act that would sustain that submission nor did counsel point to a single authority that has so held.

[6] Rather, this proceeding is governed by the general appeal routes that are found in s. 6 of the Courts of Justice Act, R.S.O. 1990, c. C.43. Section 6 provides for an appeal to the Court of Appeal from a final order of a judge of the Superior Court of Justice. The only exception to that appeal route is found in s. 6(b) and that is where an appeal lies to the Divisional Court under another Act. As I have already said, the Construction Lien Act does not govern this proceeding, given the nature of the claims advanced, so that exception is not applicable.

[7] Counsel have jointly referred us to the decision of the Court of Appeal in Villa Verde L.M. Masonry Ltd. v. Pier One Masonry Inc. (2001), 54 O.R. (3d) 76 in support of their contention that the appeal, in this case, lies to this court. In Villa Verde, the court was faced with appeals in four proceedings where there was a dispute among the parties as to whether some of the appeals lay to the Court of Appeal, rather than to the Divisional Court, because they involved claims for breach of trust under the Construction Lien Act. The Court of Appeal concluded that the word “judgment” in s. 71 of the Construction Lien Act was to be interpreted broadly and thus would catch a trust claim under Part II of the Act.

[8] In my view, the decision in Villa Verde is distinguishable from the case here for two reasons. One is that the main proceeding in that case involved a claim regarding the validity of a lien under Part III of the Construction Lien Act. Indeed, it appears that all of the claims being advanced fell entirely within the ambit of the statute. That is the foundation of the decision, a fact that is made clear in the subsequent decision in TRS Components Ltd. v. Devlan Construction Ltd. (2015), 2015 ONCA 294, 125 O.R. (3d) 161 (C.A.) where the court observed, at para. 17:

We do not agree that Villa Verde should be interpreted in this narrow fashion. The only issue in that case was the route of appeal of a judgment in a proceeding involving a trust claim brought under Part II of the Act, which was tried at the same time as a lien claim brought under Part III. Because the judgment involved substantive claims under the Act, it resulted from a proceeding under the Act. [emphasis added]

In this case, the breach of trust claim is very much ancillary to the main claims which, as I earlier noted, are straightforward claims for monies owed for goods sold and delivered as well as under a guarantee.

[9] The other reason is that the court in Villa Verde noted that breach of trust claims under the Construction Lien Act were traditionally appealed to the Court of Appeal. The court observed that this was likely because those claims were “often joined with non-statutory causes of actions”, which, of course, is precisely the situation here. Under s. 6(2) of the Courts of Justice Act, the Court of Appeal has jurisdiction to deal with those situations where non-statutory and statutory claims are joined together. However, in Villa Verde, counsel had agreed, and the Court of Appeal did not question, that s. 6(2) had no application to their case. Whatever the reason for that agreement, it is not the situation here. Even assuming that the breach of trust claim would be properly appealable to this court if it stood alone, which is a question that I need not answer, the principal causes of action, with which it is joined in this case, are not encompassed within the Construction Lien Act and are all properly appealable to the Court of Appeal. The Court of Appeal can deal with the trust claim as part of the appeal regarding the non-statutory claims, by virtue of s. 6(2). There is no corresponding provision in the Courts of Justice Act that would give this court jurisdiction to deal with matters that are properly appealable to the Court of Appeal just because another part of the same proceeding is properly appealable to this court.

[10] I should note that this matter is slightly complicated by the fact that the appellants initially commenced their appeal in the Court of Appeal. Apparently they were then convinced by the respondent that the appeal should be to this court and an order was taken out, on consent, transferring the appeal to this court. That order, granted by MacFarland J.A., does not constitute a ruling on the issue of jurisdiction and, therefore, is not an impediment to my conclusion that the appeal is properly taken to the Court of Appeal. It is clear that the jurisdiction issue was not argued before MacFarland J.A. nor did she purport to make any ruling on it. She simply granted what the parties had agreed upon and requested of her. I would also note, on this point, that parties cannot confer jurisdiction on this court by agreement. Jurisdiction must be found in the applicable statute.

[11] Having concluded that this court did not have jurisdiction to hear this appeal, we granted an order, under s. 110 of the Courts of Justice Act, transferring the appeal to the Court of Appeal. In the circumstances, we also ordered that there be no costs.

NORDHEIMER J.

I agree

LEITCH J.

I agree

SACHS J.

Date of Release: October 17, 2016

CITATION: Airex Inc. v. Ben Air Systems Inc., 2016 ONSC 6450

DIVISIONAL COURT FILE NO.: 404/15

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

LEITCH, SACHS & NORDHEIMER JJ.

BETWEEN:

AIREX INC. Plaintiff (Respondent)

– and –

BEN AIR SYSTEM INC. and others Defendants (Appellants)

REASONS FOR JUDGMENT

NORDHEIMER J.

Date of Release: