Pollard Windows Inc. v 1736106 Ontario Inc., 2019 ONSC 4859

CITATION: Pollard Windows Inc. v 1736106 Ontario Inc., 2019 ONSC 4859

DIVISIONAL COURT FILE NO.: DC-18-930, DC-18-937, DC-18-944, DC-18-989, DC-19-993, DC-19-004

DATE: 20190819

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

In the matter of the Construction Lien Act

D.L. CORBETT, F.B. FITZPATRICK, and F.L. MYERS JJ.

B E T W E E N:

POLLARD WINDOWS INC.

Plaintiff / Responding Party

Santiago H. Costa, for the Respondent

• and -

1736106 ONTARIO INC., ANDREW

FERRI, NIAGARA HOME BUILDERS

INC. carrying on business as

NIAGARA HERITAGE HOMES and

STEVECO ENTERPRISES INC.

Defendants

Kris Hutton, for the Appellant 1746878

Ontario Inc.

Heard at Hamilton: June 3, 2019

REASONS FOR DECISION

F.L. MYERS J.:

[1] All this over $10,000.

Background

Pollard Windows has a $10,000 Lien

[2] In 2008, the defendant 1736106 Ontario Inc. was building a house as part of a subdivision development. The defendant Andrew Ferri is the principal of the numbered company builder. Pollard Windows supplied windows to the builder for installation into the house. The agreed purchase price of the windows was $12,813.61. A different company controlled by Mr. Ferri paid Pollard Windows $2,500, leaving $10,313.61 due and owing. When the builder failed to pay the rest of its account, Pollard Windows sued to obtain judgment for the price of goods sold and delivered. It also sought to obtain security for the judgment debt by claiming a lien against the property on which the windows had been installed under the Construction Lien Act, RSO 1990, c C.30 (“CLA”).[^1]

[3] On September 16, 2010, Tucker J. granted judgment to Pollard Windows for $10,313.61 plus interest and costs. The judgment also declared that Pollard Windows had a valid lien against the property.

[4] Rather than paying $10,000 for the windows used to enhance the value of the house that his company was building, Mr. Ferri embarked on a decade long effort to defeat the rights of the supplier. As a result, Pollard Windows now has costs awards approaching $200,000 enforceable against the property under its lien in addition to its $10,000 judgment.

1746878 Ontario Inc.

[5] The appellant in this court is 1746878 Ontario Inc. It too is a company controlled by Mr. Ferri. It is the assignee of a mortgage that was originally taken out near the time when the undeveloped property was purchased in 2000 by another company associated with Mr. Ferri and his colleagues. Although it is not listed in the title of proceedings above, 1746878 Ontario Inc. was made a statutory party under s.57 of the CLA.

[6] 1746878 Ontario Inc. has been on notice of these proceedings and has participated throughout the enforcement of Pollard Window’s judgment and lien rights.

The Lien Enforcement Proceedings

[7] On April 10, 2014, Tucker J. ordered a judicial sale of the property and directed a referee to supervise the sale. Mr. Ferri represented the mortgagee before Tucker J. at that hearing.

[8] The sale has occurred and approximately $358,000 in proceeds are being held for distribution.

[9] The appellant 1746878 Ontario Inc. claims that it is entitled to enforce its mortgage and to be paid the proceeds of sale in priority to the lien security of Pollard Windows. It purported to take steps to sell the property under its mortgage despite the judicial sale that was then underway. As a result, on March 21, 2018, Ramsay J. found 1746878 Ontario Inc. in contempt of court. He fined it $10,000 by order dated May 23, 2018.

[10] A priority hearing was then held under s.84 of the CLA to determine whether the lien held by Pollard Windows or the mortgage held by 1746878 Ontario Inc. was entitled to be paid first from the proceeds of sale.

[11] By order dated December 19, 2018, Ramsay J. held that Pollard Window’s lien takes priority ahead of the mortgage because Mr. Ferri and his company had failed to prove that any amounts were ever advanced under the mortgage. In addition, the judge held that the mortgage was a sham to defeat creditors’ interests and was void against creditors, or at least Pollard Windows, under the Fraudulent Conveyances Act, RSO 1990, c F.29.

The Appeals and Motions before this Court

[12] In all, 1746878 Ontario Inc. appeals from six decisions. Five appeals were heard by this panel on June 3, 2019. The sixth appeal remains outstanding and is addressed below.

[13] Prior to argument of the appeals on June 3, 2019, the parties argued two motions: 1746878 Ontario Inc. moved to admit fresh evidence on its appeals. Pollard Windows moved to review an order made by Broad J. dated January 23, 2019 in which the judge refused to dismiss three of the appeals for delay.

[14] Finally, when the panel advised counsel that it would remain seized of the sixth appeal that has yet to be heard, counsel for 1746878 Ontario Inc. withdrew a request to vary the scheduling of the appeals that had been brought with the motion to admit fresh evidence.

[15] The facts are set out compendiously in multiple decisions of Ramsay J. that are the subject matter of the appeals. I will set out below only the facts needed to deal with each of the appeals and motions.

[16] For the reasons that follow, all of the appeals and motions heard June 3, 2019 are dismissed. In addition, as a result of the dismissal of the appeal from the order made by Ramsay J. on December 19, 2018 granting Pollard Windows’ lien priority over the mortgage of 1746878 Ontario Inc., the remaining appeal, bearing Divisional Court File No. DC-19-004, in which 1746878 Ontario Inc. appeals from the costs award made by Ramsay J. dated January 30, 2019 in relation to the priorities hearing, appears to require leave, which has been neither sought nor granted. I give directions about the future of this appeal at the end of this decision.

Motion for Fresh Evidence

[17] 1746878 Ontario Inc. moves to admit as fresh evidence its lawyers’ invoices from and after 2017, calculations of the cost of improvements said to have been made to the property by tenants who resided there prior to the judicial sale, and a calculation of a $50 per day penalty purportedly accruing under the mortgage for each day it remained in default.

[18] In a brief handwritten endorsement, the court declined to admit the evidence as all but a very few docket entries were available to 1746878 Ontario Inc. through the exercise of reasonable diligence prior to the proceedings that are under appeal. See: Palmer v. The Queen, 1979 8 (SCC), [1980] 1 SCR 759.

[19] The appellant wants to adduce evidence of costs that it says it incurred under its mortgage despite the fact that it did not prove any advances or that it was owed anything under the mortgage. It argues that under s.27 of the Mortgages Act, RSO 1990, c M.40, its legal costs, tenant’s improvement expenses, and its penalty amounts are to be paid prior to the claims of the lien claimants. As will be discussed below, s.27 of the Mortgages Act does not apply in these proceedings. Therefore, the proposed evidence is not relevant in any event.

Motion to Review the Order of Broad J.

[20] Pollard Windows moved before Broad J. to dismiss three of the outstanding appeals brought by 1746878 Ontario Inc. At the time that Pollard Windows served its motion, the appellant had not yet perfected its appeals although the thirty day deadline for perfecting the appeals had passed months earlier.

[21] While the motion to dismiss was pending, 1746878 Ontario Inc. perfected the appeals.

[22] By order dated January 23, 2019, Broad J. found that the appeals had been validly perfected prior to the hearing of the motion before him. In addition, he found that he would have exercised his discretion to relieve the appellant of the time limits for perfecting the appeals if necessary. He had undoubted discretion to relieve the appellants from time limits under the curative provisions of Rules 2.01(1)(a), 2.03, and 61.09(4) of the Rules of Civil Procedure, RRO 1990, O. Reg. 194. Pollard Windows argues however, that Broad J., made an error in principle in holding that the appellant was entitled to perfect its appeals by simply filing materials late without first obtaining an order from a judge extending the deadline for perfecting the appeals.

[23] The panel dismissed this motion at the hearing with a brief endorsement:

We agree with Broad J. that the appellant was entitled to perfect its appeals so long as the appeals had not been dismissed, in the absence of a prior order to the contrary. The costs below are high but the quantum was agreed, and we agree with Broad J. that this was not an indulgence. We will address costs on a global basis at the conclusion of all matters today. Motion dismissed. We reserve the possibility of delivering supplementary written reasons.

The following reasons supplement that endorsement.

The Dismissal for Delay Regime of Rules 61.09 – 61.13

[24] Rule 61.09(1)(a) provides that where an appellant is not required to obtain transcripts of evidence heard in the court from which an appeal is taken, the appellant shall perfect its appeal by filing its appeal record and factum within thirty days of the date that it filed its notice of appeal with the registrar of the court. Under Rule 61.09(4) a judge may vary the filing requirements.

[25] Rule 61.13 provides a process to deal with issues that arise when an appellant does not perfect an appeal within the 30 day period provided by Rule 61.09. The rule provides, in essence, that where an appellant does not perfect the appeal within 30 days, the respondent may bring a motion before the registrar on ten days’ notice to dismiss the appeal for delay. In addition, if an appellant does not perfect its appeal and the respondent does not move for dismissal for delay, then after one year passes from the filing of a notice of appeal, the registrar is required to deliver to counsel for the appellant a notice advising that the registrar will dismiss the appeal for delay unless it is perfected within ten days.

[26] Rule 61.13(3) then requires the registrar to dismiss the appeal if it has not been perfected before the hearing of the respondent’s motion or within ten days of a registrar’s notice as the case may be. It provides:

Where the appellant does not cure the default,

(a) in the case of a motion under subrule (1), before the hearing of the motion; or

(b) in the case of a notice under subrule (2) or (2.1), within ten days after service of the notice,

or within such longer period as a judge of the appellate court allows, the Registrar shall make an order in (Form 61I) dismissing the appeal for delay, with costs fixed at $750, despite rule 58.13 and shall serve the order on the parties.

The Appellant does not need an Extension of Time to cure its Failure to Perfect

[27] Pollard Windows argues, correctly, that under Rule 61.13, the registrar has no authority to extend the time for the appellant to perfect its appeal. The registrar simply looks to see if the appeal has been perfected or not before he or she hears a motion to dismiss for delay or within ten days of delivery of a ten-day notice. Pollard Windows argues that once the registrar delivers a ten day notice, or the respondent delivers a motion to dismiss for delay, the appellant cannot simply file its appeal material to perfect its appeal. Rather, if an appellant wants to file its late material to cure its default, it needs to bring a motion to a judge to obtain an extension of time to perfect the appeal before the registrar deals with dismissal for delay. If that is correct, then in every case when an appeal is not perfected within 30 days of the filing of the notice of appeal, the appellant will bear a burden to establish before a judge that it is entitled to an extension of time and this may require some assessment of the merits of the proposed appeal. Pollard Windows argues that this must be the correct approach because the alternative would allow frivolous appeals to obtain a free year-long extension virtually as of right. If the appellant is not required to move for an extension of time, it obtains a “free pass” from the 30 day filing deadline set out in Rule 61.09 without a judge granting an extension.

[28] I do not agree with this argument. No rule provides that an appellant needs leave to perfect an appeal after the initial 30 day period has passed. Rule 61.13 allows the appellant to cure its default. It says nothing about any requirement for an order.

[29] In my view, Rule 61.09 does not set a hard deadline for perfecting appeals. Rather, the passing of the 30 days simply entitles the respondent to move for dismissal for delay if it is so inclined. Requiring a motion to establish grounds for an extension of time in every case where the 30 day period is missed would lead to a plethora of motions with attendant costs for no useful purpose. In the vast majority of cases, the appellant’s “delay” is readily explicable and the respondent suffers no harm by the delay. The interests of justice in allowing the appeal to be heard almost invariably dictate that an extension of time be granted.

[30] By contrast, a respondent who is prejudiced by delay in the perfection of an appeal has tools available to address its concerns such as: a motion for security for costs, a motion to lift the stay pending appeal, a motion for directions, a timetable, or in an appropriate case, a case management chambers appointment, or, in the worst case, a motion to dismiss the appeal for delay.

[31] Counsel for Pollard Windows advanced no beneficent purpose to support a reading of the rules to require the appellant to move for an extension of time to perfect the appeal in every single late appeal rather than allowing a respondent who is suffering actual prejudice to seek tailored relief if and when it needs to do so.

[32] Rule 61.13 provides an express opportunity to the appellant to cure its default of the 30 day time limit by perfecting the appeal before the hearing of the motion to dismiss for delay or before the running of the ten days’ notice provided by the registrar. If the appellant is unable to perfect in time, then the rule provides it with the option of seeking a further period of time to perfect from a judge. But the “free pass” of perfecting without a judge’s order before the cure period expires is provided in the rule itself. Moreover, this has been the practice for the past several decades at least.

[33] Pollard Windows relies upon the decision of Morden JA (as he then was) in Langer v Yorkton Securities Inc., 1986 2612 (ON CA). In that case, an appellant (actually a cross-appellant) responded to a motion to the registrar to dismiss its cross-appeal for delay. The cross-appellant asked the registrar to extend the time available to perfect the cross-appeal. The registrar ruled that he had no authority to extend the time and dismissed the appeal accordingly. On a review of the registrar’s order, the successful party argued that Morden JA lacked authority to reverse the dismissal or to extend the time for perfection of the cross-appeal. Morden JA disagreed and wrote:

I am satisfied that I do have jurisdiction under rule 61.15(5) to review the registrar's order. Clearly, while the words "forthwith after the order or decision comes to the person's attention" provide for the case where an order or decision may have been made without notice to the person affected, they do not go so far as to confine the jurisdiction conferred by the subrule to cases of this kind. Also, while it is to be expected that a party responding to a motion under rule 61.12(4) will avail itself of the right to obtain an extension order from a judge of the Court of Appeal before the registrar hears the motion, I think that it is too rigid an interpretation of these rules to conclude that if this is not done the party's rights are at an end. [Emphasis added.]

[34] Pollard Windows argues that the highlighted words support its argument that an appellant requires an extension of time to perfect its appeal before the expiry of the cure period available under the registrar’s notice or before the hearing of a motion for dismissal for delay by the registrar. That is not what Morden JA held. In that case, the cross-appellant was not able to perfect the cross-appeal during the cure period leading up to the hearing before the registrar. As I have already noted above, if an appellant cannot perfect within the cure period, it will require an extension of time that is only available from a judge. However, Morden JA was not asked to hold and he did not hold that an appellant who wishes to perfect the appeal during the cure period provided in a registrar’s notice or leading up to the hearing of a motion for dismissal for delay requires leave in order to perfect the appeal. The Langer case does not assist Pollard Windows.

[35] Moreover, even if Pollard Windows had been correct in its interpretation of the scheme of the rules, the Langer case, upon which it relies, confirms that a judge retains the discretionary authority to extend the time for perfection in the interests of justice. Justice Broad made it clear that, while he read the rules as I do, he would also exercise his discretion to extend the time in any event. He made no error in principle in doing so. The motion to review the orders of Justice Broad is dismissed.

Jurisdiction and Standard of Review

[36] All of the appeals that follow are properly brought to this court under s.71(1) of the CLA and s.19(1)(a) of the Court of Justice Act.

[37] The court will intervene on an appeal from an order of a judge only where the judge made an error of law or a palpable and overriding error of fact or mixed fact and law: Housen v. Nikolaisen, 2002 SCC 33. Where a judge has made an order in the exercise of judicial discretion, the court will intervene only if the exercise of the judge’s discretion was based on a wrong principle, a failure to consider a relevant principle, or a misapprehension of the evidence: Aldo Group Inc. v. Moneris Solutions Corporation, 2013 ONCA 725, 118 O.R. (3d) 81, at para. 30.

Three Appeals from the Contempt Proceeding

[38] By order dated March 21, 2018, Ramsay J. granted a number of heads of relief including holding 1746878 Ontario Inc. in contempt of court. By order dated April 9, 2018, Ramsay J. ordered 1746878 Ontario Inc. to pay costs fixed in the amount of $9,171.05 in relation to the March 21, 2018 order. By order dated May 23, 2018, Ramsay J. sentenced 1746878 Ontario Inc. to a fine of $10,000 and ordered it to pay costs of the sentencing hearing fixed at $9,000.

[39] 1746878 Ontario Inc. has brought a separate appeal from each order. Broad J. held that, to the extent that the order of April 9, 2018 dealt with costs of the contempt proceeding, that portion of the costs award was appealable with the contempt finding as of right. Similarly, the costs order from May 23, 2018 is appealable as of right with the appeal of the contempt finding and sentence. However, no leave to appeal has been sought or granted from the costs orders otherwise. In the absence of leave to appeal having been sought and granted under s. 133 (b) of the Courts of Justice Act, RSO 1990, c. C.43, there is no appeal from the costs orders properly before this court independent of the appeals of the merits of the contempt finding and sentence. See: Hobbs v Hobbs, 2008 ONCA 5037, at para. 30. Therefore, the appeals in relation to the costs orders are limited to dealing with the orders as incidents of the findings on the merits that are under appeal.

[40] Moreover, there should not be three separate appeals. If the first two appeals were brought to preserve time limits, the appeals ought to have been consolidated once the sentence was pronounced. The filing of three separate sets of material was duplicative, costly, and unnecessary.

The Facts of the Contempt

[41] Justice Ramsay set out the background facts in relation to the contempt proceeding as follows. His recitation commences with the first hearing before the referee dealing with the judicial sale that had been ordered by Tucker J.

[4] On September 11, 2014 the referee, Mr Thomas, held a hearing. By then a couple identifying themselves as the Creightons had moved into the residence. They claimed to have bought the home. No transfer of title or new mortgage appeared on title. The mortgagee (1746878 Ontario Inc.) was proceeding with a sale under power of sale and the Creightons were the prospective buyers. The referee gave the Creightons seven days after service of notice to produce evidence of their right of possession, failing which the plaintiff would be granted possession.

[5] On October 29, 2014 a further hearing was held. The Creightons had responded that the agreement of purchase and sale is for $290,000, with $100 as a deposit and the rest in the form of a promissory note, and a completion date of June 9, 2014. The current mortgage, which covers six other lots in the subdivision, had a balance of $959,566. The property was never appraised and no advertising was done. No salesperson was involved. The referee found that the answer was insufficient. No power of sale, mortgage statement, orders for possession or proof of insurance were provided. He found that the home had not been sold under power or sale, and the mortgagee had not complied with its duties to subsequent encumbrancers such as the plaintiff. Finally, he had serious concerns about the alleged sale being improvident. He ordered that no further steps be taken to sell the property under power of sale without court order and he gave vacant possession to the plaintiff.

[6] On November 12, 2014 another hearing was held. Counsel for the mortgagee advised that the Creightons had been living in the property and paying rent to the mortgagee for six years, Kevin Creighton had a personal relationship with one of the officers of the mortgagee and the sale under power of sale was close to closing. Counsel also questioned the jurisdiction of the referee to interfere with the power of sale. The referee then ordered further submissions and stayed removal of the Creightons on conditions.

[7] Settlement discussions ensued unsuccessfully. On June 8, 2016 the hearing reconvened. The mortgagee had failed to make basic disclosure of the documentary basis of the mortgage and facts related to the power of sale. The referee referred the matter back to the Superior Court and ordered costs of $1,500 against 1736106 Ontario Inc. [the judgment debtor builder]. He ordered the sheriff to proceed with providing vacant possession to the plaintiff. The cost order has never been paid. Counsel has not been appointed by 1736106 and it has never appeared on this motion. According to Mr Ferri, who says that he is a consultant for the company, it has no money to pay the costs.

[8] On January 13, 2017 sale proceedings returned before me. Mr Ferri appeared. No one appeared for 1746878 but Mr Ferri said, “I’m with 174 the first mortgagee and we just want to complete the sale.” No issue was taken at that time with 1746878’s representation by a non-lawyer. I again gave vacant possession to the plaintiff and enjoined the exercise of any power of sale without court order.

[9] On December 6, 2017 the plaintiff got vacant possession and changed the locks. Mr Ferri wrote to all concerned maintaining his position that writ of possession was invalid. Counsel for the Creightons asked on December 8, 2017 if they could move back in. Counsel for the plaintiffs advised that they could not, and that so doing would be a trespass.

[10] The mortgagee has disclosed the agreement of purchase and sale and a promissory note from Kevin Creighton that is not signed by him. It has also provided two amendments to the agreement of purchase and sale. One calls for a closing date of May 18, 2017. It purports to have been signed by Kevin Creighton for the purchaser and Andrew Ferri on behalf of 1746878 on May 18, 2017. The second one agrees on a closing date of March 30, 2018. The amendment is not signed by Mr Creighton. It is signed by Andrew Ferri on behalf of 1746878.

[11] On January 24, 2018 counsel for 1746878 notified counsel for the plaintiff that it had registered a caution on title with respect to a notice of sale dated March 10, 2010 for a debt from Steveco Enterprises Inc. to Northguard Capital Corp. This constitutes a step taken to sell the property under power of sale. It was a flagrant and deliberate contempt of the order of Mr Thomas of October 29, 2014 and my order of January 13, 2017…

[42] Justice Ramsay referred to his order dated January 13, 2017. It is this order that he found to have been breached by 1746878 Ontario Inc. The key terms of the January 13, 2017 order are:

3. THIS COURT ORDERS that the Order of Referee Thomas is confirmed, to wit,

(a) No further steps shall be taken to sell the property under power of sale without a Court Order;

(b) The Sheriff shall attend at [the property] and remove the Creightons from the property; and

(c) Possession of the property be granted to Pollard.

The Grounds of Appeal raised by 1746878 Ontario Inc.

[43] Despite repeated findings by the court below, 1746878 Ontario Inc. continues to rely on a notice of sale that it says was validly delivered under its mortgage in 2010. In addition to other frailties, the notice of sale was mailed to an outdated address for the lawyers for Pollard Windows. So Pollard Windows never received it. Before Ramsay J., 1746878 Ontario Inc. argued that the notice of sale was valid and that it was entitled to proceed with its proposed sale to the Creightons despite the terms of the order dated January 13, 2017 that prohibited that very conduct.

[44] 1746878 Ontario Inc. argued that it was not a named party listed in the Title of Proceedings so it was not bound by the January 13, 2017 order. Ramsay J. dealt with that issue very quickly given that Mr. Ferri had appeared before him and the referee variously as a “consultant” to the builder and then to the mortgagee. Ramsay J. found:

[14] …The mortgagee need not have been a defendant in the original proceedings. After all, it did not owe the plaintiff any money. It has, however, been given notice of the lien, the judgment and every step involved in executing on the property. It appeared before the referee and was made the subject of orders by the referee and notified of them. It is a proper respondent to these proceedings as a person who is affected by the lien and is bound by court orders made against it.

[45] This was the correct process under s.57 of the CLA. See: Hubert v Shinder et al., 1952 CarswellOnt 197 (CA) at para. 6.

[46] The main argument advanced on behalf of 1746878 Ontario Inc. on this appeal from the finding of contempt against it is that Ramsay J. made a factual error in para. 11 of his reasons cited above. In that paragraph, Ramsay J. correctly found that on January 24, 2018, Mr. Hutton, counsel for 1746878 Ontario Inc., gave notice to counsel for Pollard Windows that a caution concerning the notice of sale had been registered on title to the property. However, Ramsay J. incorrectly attributed to counsel for the mortgagee a statement that the notice had been registered “by it”. In fact, the caution appears to have been registered by the lawyer for the Creightons – the buyers or tenants or friends of Mr. Ferri and the mortgagee.

[47] In the sentencing hearing on May 23, 2018, 1746878 Ontario Inc. raised this issue in its evidence and argument. Justice Ramsay dealt with it in his oral sentencing endorsement as follows:

Having acted through Andrew Ferri throughout this affair, the contemnors’ one registered officer has now surfaced and deposes, one, the corporation apologizes for any and all actions that were found and perceived to be contemptuous, and two, points out at paragraph 6 of her affidavit that contrary to what I said at paragraph 11 of my endorsement, counsel for 174 did not notify counsel for the plaintiff that it had registered a caution of title with respect to the notice of sale. The affidavit or Ryan Wettik (ph) of March 2nd, 2018 contains, at Exhibit 21, the correspondence in question, where Mr, Hutton for 174 sends counsel for the plaintiff the notice of caution that has been filed by Brian Lambie, purporting to act for Kevin Creighton, the trespasser. So, the, the way I put it is not particularly important. I did find, for example, at paragraph 17 of my endorsement that Ferri and Creighton were all acting together.

I note that on May 10th Lambie lifted the notice of caution on Mr. Creighton’s instructions, and at Mr. Hutton’s request, so 174 had no difficulty getting the caution lifted, just as it engineered it being placed in the first place. The director admits guilt of contempt, so perhaps this is not all that important.

1746878 Ontario Inc. is bound by its Admission of Liability

[48] Pollard Windows raises a preliminary issue on the appeal and, as alluded to by Ramsay J., submits that the full admission of wrongdoing offered by 1746878 Ontario Inc. to Ramsay J. on sentencing precludes it from now contesting its liability. The question arose below, because Ramsay J. expressed concern about the evidence submitted on behalf of 1746878 Ontario Inc. that asserted that Ramsay J. had made a mistake in attributing registration of the caution on title to 1746878 Ontario Inc. The affiant for 1746878 Ontario Inc. was Ms. Connie Northdurft who is Mr. Ferri’s spouse.

[49] The following exchange occurred at the sentencing hearing between Ramsay J. and Mr. Hutton for 1746878 Ontario Inc.:

MR. HUTTON: …As I’d mentioned before, my client, on behalf of 174, is here. She’s taken the day off from her employment as an elementary school teacher in Niagara Falls to show the court her full and open apology to the finding of contempt made by yourself in your endorsement dated March 21, 2018. There are no if, ands or buts about it, we are not here to re-open the case in any form whatsoever. I would like…

THE COURT: Well, are you not?

MR. HUTTON: No.

THE COURT: Well, then what’s paragraph 6 of her, of her affidavit all about?

MR. HUTTON: Paragraph 6 is her understanding, or our understanding…

THE COURT: Okay.

MR. HUTTON: …of what the material – the facts were that were found to be in contempt by 174.

THE COURT: so she’s a…

MR. Hutton: You’re reciting it so we are just apologizing for essentially stating the contempt of registering the caution on title…

THE COURT: I see.

MR. HUTTON: …and then also your finding, and we will get to that of – I guess once a…

THE COURT: And she’s admitting that, she’s admitting that the company committed…

MR. HUTTON: Correct.

THE COURT: …contempt?

MR. HUTTON: Correct. We are.

THE COURT: Oh, Okay.

MR. HUTTON: Yes, we are.

THE COURT: All right.

MR. HUTTON: This is just…

THE COURT: Okay.

MR. HUTTON: Pointing for the record that…

THE COURT: Okay.

MR. HUTTON: …this is what we found in contempt. We are opening [offering?] a full apology…

THE COURT: Yeah.

MR. HUTTON: …for the finding of contempt. What her affidavit goes on to provide a narrative of is our steps to purge the contempt, which was the registration of the caution on title…

[Emphasis added.]

[50] While Ms. Northdurft said in her affidavit that the court had mistakenly attributed the acts of the Creightons and their lawyer to 1746878 Ontario Inc., her counsel left no doubt that 1746878 Ontario Inc. admitted liability for the acts in breach of Justice Ramsay’s order and gave a full and unreserved apology to the court. The apology was made as part of the sentencing submission to support the argument that 1746878 Ontario Inc. had purged its contempt. 1746878 Ontario Inc. relied on its admission and apology as mitigating factors to reduce the severity of any sentence to be imposed.

[51] In my view, having admitted liability formally, including admitting the facts on which liability was based, it is not open to 1746878 Ontario Inc. to withdraw its admission before this court without leave to now argue that the judge erred in finding it liable for contempt. Mr. Hutton argued that there was no way for his client to apologize to the court for its contempt without an admission of liability. So, he argues, the admission should not be held against the client now. That argument denudes the admission and apology of any content. An admission of liability is not required to make an apology. It could have been worded with a reservation. That might well have limited its utility in mitigation of sentence. But one cannot admit liability and take responsibility for acts while the next day asserting that the acts were committed by others and were not the responsibility of the speaker.

[52] In addition, the apology and admission were made to the court by counsel on behalf of the client. Case law is replete with recognition of the solemnity with which counsel’s word is received by the court. In Boyadijian v Durham (Regional Municipality), 2016 ONSC 6477, at para. 44, C. Gilmore J. wrote, “[i]f the ostensible authority of counsel cannot be accepted by the court or by other lawyers, the result would be absurd”. See also: Szabo v Adelson, 2007 CarswellOnt 1721 (ON SC) at para. 12. Mr. Hutton was dealing with the very finding of fact before Ramsay J. that he now purports to challenge before this court. Yet before Ramsay J. while acknowledging that the client pointed out the factual error, he made it abundantly clear that the client was not challenging the finding of contempt. It admitted responsibility, admitted liability, and apologized for the purpose of sentencing. Counsel’s admissions are binding on the client. Absent leave to withdraw the admission or an argument of incompetent representation (to the extent that such a ground lies in civil cases), in my view, the facts and liability admitted by counsel cannot be challenged on appeal.

The Apology Act does not apply

[53] 1746878 Ontario Inc. argues that the Apology Act, SO 2009, c 3, precludes the use of an apology for the purpose of establishing liability. Therefore it cannot be used by this court to deny its right to an appeal. The relevant provisions of the Apology Act are:

Definition

1. In this Act,

“apology” means an expression of sympathy or regret, a statement that a person is sorry or any other words or actions indicating contrition or commiseration, whether or not the words or actions admit fault or liability or imply an admission of fault or liability in connection with the matter to which the words or actions relate.

Effect of apology on liability

2. (1) An apology made by or on behalf of a person in connection with any matter,

(a) does not, in law, constitute an express or implied admission of fault or liability by the person in connection with that matter;

(b) does not, despite any wording to the contrary in any contract of insurance or indemnity and despite any other Act or law, void, impair or otherwise affect any insurance or indemnity coverage for any person in connection with that matter; and

(c) shall not be taken into account in any determination of fault or liability in connection with that matter.

Exception

(2) Clauses (1) (a) and (c) do not apply for the purposes of proceedings under the Provincial Offences Act.

Evidence of apology not admissible

(3) Despite any other Act or law, evidence of an apology made by or on behalf of a person in connection with any matter is not admissible in any civil proceeding, administrative proceeding or arbitration as evidence of the fault or liability of any person in connection with that matter.

Exception

(4) However, if a person makes an apology while testifying at a civil proceeding, including while testifying at an out of court examination in the context of the civil proceeding, at an administrative proceeding or at an arbitration, this section does not apply to the apology for the purposes of that proceeding or arbitration.

[54] The Apology Act provides that non-testimonial apologies cannot be used to imply liability or as a ground to terminate a person’s insurance coverage. The statute is designed to encourage apologies by those whose conduct causes harm whether by negligence or otherwise. Anecdotally, the lack of apology by professionals in particular, may have led to litigation where a well-timed and heartfelt apology might otherwise have been accepted by the victim. Yet people who cause harm, whether, for example, in motor vehicle accidents or in professional relationships, have been precluded from apologizing for fear that doing so would be seen either as an admission of liability or guilt and thereby provide a basis for an insurer to decline insurance coverage in a subsequent lawsuit. One can readily envisage people in car accidents or professionals whose clients suffered an adverse outcome, being sincerely sorry even though they resolutely believe that they committed no negligence or wrongdoing. A person whose car is hit by another, a lawyer who loses a trial, a doctor whose very best efforts could not cure the patient’s condition, may all be sympathetic, empathetic, and truly sorry for the suffering of the other. An apology might be helpful for the giver and the receiver. Yet, prior to the enactment of the Apology Act, apologies could not be made without fear of adverse legal consequences.

[55] Case law under the statute is still sparse. It seems apparent from the definition in s.1 of the statute that an apology is not be the same thing as an admission of liability. The section makes clear that a statement of regret remains an apology even if it contains or implies an admission of liability. The section therefore contemplates that some apologies may not imply any admission of fault, but says that even where they admit or imply fault, the words remain protected apologies.

[56] Perell J. has discussed the need for a nuanced or contextual analysis of whether words used are an apology or an admission of liability that might be distinct and remain admissible under the statute. Coles v Takata Corp., 2016 ONSC 4885, at para. 21. I do not need to undertake a contextual analysis however, because in my view, the statute does not apply to the admission of liability and apology in this case in any event. I say this principally due to the exception in s. 2(4) of the statute which exempts from the statute apologies made under oath in legal proceedings. In my view, counsel’s admission before the court is a proxy or a substitute for his client’s evidence under oath. All admissions are a proxy for other evidence. Just as courts frequently receive clients’ undertakings in damages from counsel, when they are properly the subject of evidence, so too in this case, counsel’s apology and admission was offered in place of his client’s testimony. Frankly, it is probably a better practice to have the client offer the apology and any related admission from the witness box or in an affidavit under oath rather than muting the client’s very personal expression of sincerity by offering the evidence through counsel. However, the exemption from the statute cannot be avoided by giving an apology through counsel rather than through the client’s evidence.

[57] In any event, nothing in the statute relates to the use of apologies made before the court for the purpose of mitigating sentence in a contempt proceeding. Subsection 2(1)(c) prohibits the use of an apology to establish fault or liability. Here, an accused who had already been found liable, proffered the admission and apology for the purpose of mitigating sentence. That is not a prohibited purpose under the statute. Moreover, to the extent that contempt is recognized as a quasi-criminal proceeding, I note that the statute also does not apply to such proceedings under the Provincial Offences Act, RSO 1990, c P.33. As a matter of constitutional law, the statute cannot apply to proceedings under the federal Criminal Code, RSC 1985, c C-46. The admission of liability made by 1746878 Ontario Inc. was not a simple expression of sympathy or regret regardless of fault. Rather, it was formally and advisedly made to the court to mitigate the contempt already found and to try to ameliorate sentencing. The admission and apology were given solemnly, intending the court to act upon them. And the court did so. They cannot be withdrawn now.[^2]

[58] In any event, there were ample bases to hold that 1746878 Ontario Inc. committed contempt by continuing to act under its notice of sale knowing that doing so had been enjoined. As discussed by Ramsay J. on May 23, 2018, Mr. Ferri was “in cahoots” with the Creightons. He signed two amendments to the purported agreement of purchase and sale and assisted the Creightons to re-take possession of the property after they had been evicted pursuant to the court’s order, all purportedly under the mortgage and notice of sale of 1746878 Ontario Inc. The acts are not denied. Rather, it was Mr. Ferri’s view that the order made by Ramsay J. did not apply to 1746878 Ontario Inc. because it was not named in the Title of Proceedings in the order. In this, he was sadly mistaken.

[59] Finally, I note that, but for the clear admission of liability, I might have had some technical concerns with the processes utilized in the contempt proceedings. While there is no question that 1746878 Ontario Inc. was served and knew of the motion, whether there was personal service or a clear validation of a different form of service is less clear. Similarly, while the notice of motion contained the factual particulars relied upon, the grounds of the motion were ambiguous. This manifested at the outset of the first hearing at which time Mr. Hutton indicated that he believed that a contempt finding was being sought against him personally in addition to 1746878 Ontario Inc. On reading the transcript of that hearing, the discussion that ensued did not seem to resolve the ambiguities. Yet, the parties launched into the contempt hearing with seeming clarity of what was at stake and on the issues at play. I also have some concern with the lack of clarity as to whether 1746878 Ontario Inc. understood that it had the option to call live evidence in court and to cross-examine witnesses before the court. Ramsay J. denied an adjournment request at the outset of the first hearing. However the adjournment was not sought for the purposes of cross-examination.

[60] In all, in view of the special solicitude afforded to contempt proceedings, I might have been inclined to find procedural errors. However, several facts weigh against doing so. First, the clear admission of liability precludes 1746878 Ontario Inc. from contesting liability now. Second, the facts that amounted to the contempt were not in issue. Most are proven by unassailable documents. On the record, the contempt is clearly established.

[61] Given the clear bases for the finding of contempt, there is no serious basis to contest the fine imposed in this case. Moreover, with the dismissal of the appeal on the contempt finding, there is no basis to question the costs decision. All three related appeals are therefore dismissed.

The Appeal from the Motion to Stay the Contempt Finding

[62] After the contempt proceedings were completed, the parties commenced final preparation for the priority hearing that would determine which of them would have first priority over the sale proceeds. As 1746878 Ontario Inc. appealed the contempt proceedings, its fine was stayed automatically. Nevertheless, it brought a motion to stay the contempt holding as distinct from the fine. It argued that it needed to have a stay imposed on the finding that it had committed contempt to avoid any stigma from that finding being held against it in the priority hearing.

[63] By order dated January 4, 2019, Maddalena J. denied the stay pending appeal. She held that a stay of execution is not available against a bare finding of contempt. With the fine automatically stayed, there was nothing left for her to stay. Maddalena J. also relied upon the admission of contempt made by 1746878 Ontario Inc. to conclude that the mortgagee could not show that it had a serious issue to be tried on its appeal to underpin a stay in any event.

[64] At the hearing on June 3, 2019, the panel ruled that the decision to deny a stay the bare holding of contempt was an interlocutory order. Nothing was finally determined by Justice Maddalena. 1746878 Ontario Inc. argues that everything decided in a proceeding after judgment has been granted is final for the purposes of appeal. No case supports that argument and I reject it.

[65] 1746878 Ontario Inc. did not seek leave to appeal from the denial of a stay ordered by Maddalena J. and therefore it has no right to appeal the order to this court. Further and in any event, Maddalena J.’s decision was correct.

The Priority Decision

The Role of Mr. Ferri

[66] In deciding the contempt and other issues that were before him in March, 2018, Ramsay J. also dealt with the role of Mr. Ferri in the proceedings. By that time, Mr. Hutton was lawyer of record for 1746878 Ontario Inc. In his Endorsement dated March 21, 2018, Justice Ramsay discussed Mr. Ferri’s role as follows:

[15] I digress at this point to deal with a curious but important issue. Mr Ferri is a named defendant in the action. He is not, however, a judgment debtor. Judgment was never obtained against him. While Mr Hutton was obviously under the impression at the outset of the hearing that the developer and the mortgagee are “Mr Ferri’s companies” Mr Ferri maintains that he is only a consultant. He says that he is “working for them” with respect to the issues in these proceedings. What he says is supported by the corporate documents, which do not mention him as a director, officer or shareholder. That does not give him a right to represent the corporations without leave of the court, and he should not have done so in January of 2017. I do not understand why he should be here. To be fair to him, he was served with notice, so I do not criticize him for coming. I just think that his presence is a distraction. The case should proceed with the parties who do have an interest, namely the plaintiff, the developer and the mortgagee. I direct that Mr Ferri shall take no further part in these proceedings.

[67] As a result, paragraph 3 of the order made by Ramsay J. dated March 21, 2018 provides:

THIS COURT FURTHER ORDERS that Andrew Ferri has no standing in these proceedings and shall take no further part.

[68] After Mr. Ferri was denied status to continue appearing as a “consultant” in the proceedings, Mr. Ferri’s spouse appeared before Ramsay J. in May as the sole director of the mortgagee. As discussed above, she ostensibly made the admission of liability and apology for the corporation that were recited by Mr. Hutton.

[69] The hearing before Maddalena J. on the motion to stay the contempt finding was held on December 11, 2018. Mr. Ferri emerged for that motion as the sole director of 1746878 Ontario Inc. He swore an affidavit before Maddalena J to support the request for a stay. In his affidavit, Mr. Ferri testified that he had become director, president, and secretary of the corporation on May 10, 2018, replacing his spouse Connie Northdurft as the sole director. Mr. Hutton later characterized Mr. Ferri’s spouse as having testified as a “bare representative” of Mr. Ferri or the corporation.

[70] During the hearing before Maddalena J., counsel for Pollard Windows referred to the prohibition against Mr. Ferri taking part in the proceeding contained in para. 3 of the March 21, 2018 order. During oral argument, Mr. Costa alleged that by delivering an affidavit on the stay motion, Mr. Ferri was in contempt of the March 21, 2018 order.

[71] In her decision dated January 4, 2019, Maddalena J. found that Mr. Ferri had not committed contempt of the March 21, 2018 order. She found that the order did not preclude Mr. Ferri from acting as a director of the mortgagee and participating in that capacity. However, before Maddalena J. released her decision early in the New Year, the parties appeared before Ramsay J on December 17, 2018 for the hearing of the motion to determine who had the better priority claim to the proceeds of sale.

Ramsay J. Refuses an Adjournment Request

[72] At the commencement of the priorities hearing, Mr. Hutton sought an adjournment of the motion pending the release of Justice Maddalena’s decision concerning the allegation of contempt that had been levelled against Mr. Ferri. As he had argued before Maddalena J., Mr. Hutton argued that unless the bare contempt holding was stayed, his client would suffer decreased credibility before the court while the contempt motion remained under appeal. He also argued that until there was clarity as to whether Mr. Ferri was entitled to adduce evidence in the proceeding, he was unwilling to take the risk of compounding a contempt by filing an affidavit on the priorities motion. Instead, 1746878 Ontario Inc. filed a further affidavit from Mr. Ferri’s spouse Ms. Northdurft. That affidavit was almost entirely based on evidence provided to Ms. Northdurft by Mr. Ferri that she repeated in her affidavit on information and belief as provided by the Rules of Civil Procedure.

[73] In his endorsement dated December 19, 2018, Ramsay J. reports that he resolved the motion for an adjournment “séance tenante” (from the bench). The transcript of the hearing on December 17, 2018 records that Ramsay J. found that whatever Maddalena J. may decide on the stay request, his view on the credibility of Mr. Ferri will not be affected. He said that he had made findings of fact that remain in place unless reversed on appeal. Moreover, he did not see how Mr. Ferri could be in contempt of the March 21, 2018 order that was made before he had proper status for his company. He did not accept that Mr. Ferri reasonably believed that he would be in contempt either. Moreover, Ramsay J. found that the affidavit of Ms. Northdurft contained Mr. Ferri’s evidence and protected him from cross-examination. While Ramsay J. acknowledged that he had issues with Mr. Ferri’s credibility, they were not related to the fact that his evidence on this motion was provided through his spouse. Accordingly, he denied the adjournment request.

[74] The mortgagee argues that it was denied procedural fairness by being denied the opportunity to deliver the best evidence, being that of Mr. Ferri, for the priorities motion. It is worth noting in passing that when Mr. Ferri initially appeared as consultant, or when he put forward his spouse to make the formal admission that the his corporation had committed contempt of court, Mr. Ferri felt no compulsion to admit his true role and provide his evidence to the court. After a decade of shadowboxing, it hardly lies in his mouth to claim that there is a lack of procedural fairness in the absence of his sworn evidence.

[75] The decision to grant or refuse an adjournment is a discretionary decision that is accorded significant deference on appeal. Justice Ramsay considered the arguments made by 1746878 Ontario Inc. and found that they lacked merit. The interests of justice did not require an adjournment in the circumstances. I see no error in principle in the decision to refuse the adjournment request.

Pollard Window’s Lien has Priority over a Mortgage with no Proven Advances

[76] Section 84 of the CLA provides that after a judicial sale is held under the statute, the proceeds “shall be distributed in accordance with the priorities set out in this Part”.

[77] As mentioned at the outset of these Reasons, Mr. Hutton argues that the priority of the mortgage held by 1746878 Ontario Inc. is to be assessed under s. 27 of the Mortgages Act. Section 24 of the Mortgages Act provides mortgagees with an implied power of sale. Section 26 of the statute requires that prior to exercising a power of sale, the mortgagee must serve a notice of sale. Section 27, that is relied upon by 1746878 Ontario Inc., provides that the “money arising from the sale shall be applied by the person receiving the same as follows”. [Emphasis added.] In my view, the section applies to the distribution of proceeds of sale realized on the exercise of a power of sale by a mortgagee under its mortgage. The costs and expenses recognized under that section are premised upon a mortgagee having properly exercised its power of sale. Implicitly, this includes proving that there was a loan advanced and repayment had come due. Despite the repeated arguments of 1746878 Ontario Inc. to the contrary, that is not what happened in this case. As discussed at the outset of these reasons, the referee and then Ramsay J. rejected the efforts of 1746878 Ontario Inc. to sell the property under its notice of sale, enjoined all steps aimed at doing so, and ordered that a judicially supervised sale proceed under the construction lien regime.

[78] Accordingly, Ramsay J. correctly looked to s. 78 of the Construction Act (which is identical to the same section in the CLA) to assess priorities in accordance with the mandatory process set out in s.84 cited above. Subsections 78(1) and (3) provide:

78 (1) Except as provided in this section, the liens arising from an improvement have priority over all conveyances, mortgages or other agreements affecting the owner’s interest in the premises.

(3) Subject to subsection (2), and without limiting the effect of subsection (4), all conveyances, mortgages or other agreements affecting the owner’s interest in the premises that were registered prior to the time when the first lien arose in respect of an improvement have priority over the liens arising from the improvement to the extent of the lesser of,

(a) the actual value of the premises at the time when the first lien arose; and

(b) the total of all amounts that prior to that time were,

(i) advanced in the case of a mortgage, and

(ii) advanced or secured in the case of a conveyance or other agreement.

(4) Subject to subsection (2), a conveyance, mortgage or other agreement affecting the owner’s interest in the premises that was registered prior to the time when the first lien arose in respect of an improvement, has priority, in addition to the priority to which it is entitled under subsection (3), over the liens arising from the improvement, to the extent of any advance made in respect of that conveyance, mortgage or other agreement after the time when the first lien arose, unless,

(a) at the time when the advance was made, there was a preserved or perfected lien against the premises; or

(b) prior to the time when the advance was made, the person making the advance had received written notice of a lien.

[79] The mortgage relied upon by 1746878 Ontario Inc. was first registered long before Pollard Window’s lien rights arose. Therefore, the claims of 1746878 Ontario Inc. under the mortgage are entitled to priority payment of the proceeds of sale to the extent provided in subsections 78(3) and (4). Both subsections limit the priority however, to the amount advanced under the mortgage prior to the lien arising. Justice Ramsay found that 1746878 Ontario Inc. had not proven on the balance of probabilities that any amounts had ever been advanced under the mortgage prior to Pollard Window’s lien arising in 2008. Therefore, he found that under the applicable priority regime, the lien rights of Pollard Windows have priority to the proceeds of sale of the property.[^3]

[80] Mr. Hutton argues that Ramsay J. made a palpable and overriding error of fact in holding that there were no advances made under the mortgage being enforced by 1746878 Ontario Inc. Lawrence Beam, who was a principal of the original buyer of the land swore that there was an advance of $400,000 under the mortgage. Ramsay J. did not believe Mr. Beam’s evidence.

[81] Mr. Beam testified that when the initial buyer of the land ran into financial problems in 2000, he had another of his companies buy the land under power of sale. He gave the mortgage that is the subject of this proceeding to one of Mr. Ferri’s companies on that transaction. Ramsay J. found this explanation to lack common sense. He found that Messrs. Beam and Ferri had been working together for years to defeat creditors. If Beam’s company had financial problems, there was no legitimate reason given for him to enforce a mortgage against himself and then grant a new mortgage to a related company. If he was putting fresh money into the project, one would expect a simple refinancing of the existing mortgage to preserve its priority.

[82] Ramsay J. also noted that there was no documentation disclosed to support Mr. Beam’s bald assertion that there had been an advance. Mr. Hutton points to a claim that the Ferris had lost all documentation in a fire. But the lawyers for the companies testified. They produced no relevant documents from their files to support an advance. There was no trust statement showing an advance. There was no reporting letter on the mortgage transaction. There were no bank records produced. There was just a bald statement by Mr. Beam about a transaction that did not appear to be consistent with common sense. The lawyers who testified confirmed that they had no firsthand knowledge of any advance and were relying on information provided to them by Mr. Ferri.

[83] There was substantial evidence before Ramsay J. that the mortgage was not an arm’s length transaction and that Messrs. Beam and Ferri and their assorted corporations acted in concert to defeat creditors. Paragraphs 43 to 46 of the factum of Pollard Windows on this appeal and the references in the related footnotes list evidence that was properly before the court that supports the findings made by the judge. There was ample evidence for him to make the credibility findings that he made and to support the finding of fact that 1746878 Ontario Inc. had not proven that there were any advances made under the mortgage on which it relies. As such, no palpable and overriding error can be found and there is therefore no basis for this court to intervene.

[84] Whether the holding that the mortgage was also void as against creditors under the Fraudulent Conveyances Act was available on a priorities hearing under the CLA or whether the holding was just meant as support for the findings among these parties ultimately makes no difference. Absent proof of advances under the mortgage held by 1746878 Ontario Inc., it has no priority ahead of the lien of Pollard Windows.

Should the Remaining Appeal of the Costs Order date January 30, 2019 be quashed?

[85] 1746878 Ontario Inc. appealed the costs order made by Ramsay J. on January 30, 2019 in relation to the priorities hearing. As 1746878 Ontario Inc. did not seek leave to appeal under s.133(b) of the Courts of Justice Act, it is not entitled to appeal the costs order independent of the merits. With the dismissal of the appeal from the priorities order above, there is no proper appeal of the costs order remaining, it appears that the appeal ought to be quashed. 1746878 Ontario Inc. may deliver no more than three pages of submissions within ten days of the release of these reasons if it opposes the quashing of the last appeal. If 1746878 Ontario Inc. delivers submissions, Pollard Windows may respond within a further ten days with no more than three pages of submissions.

Outcome

[86] All of the appeals and motions are dismissed.

[87] Pollard Windows may deliver no more than five pages of costs submissions within ten days of the release of these Reasons taking into account its success on all of the appeals and motions other than its efforts to review the order of Justice Broad. 1746878 Ontario Inc. may deliver five pages of costs submissions within ten days of receipt of the submissions of Pollard Windows. Both parties shall also file Costs Outlines. Both may also file copies of any offers to settle on which they rely.

F.L. Myers J.

I agree _______________________________

D.L. Corbett J.

I agree _______________________________

F.B. Fitzpatrick J.

Release Date: August 19, 2019

CITATION: Pollard Windows Inc. v 1736106 Ontario Inc., 2019 ONSC 4859

DIVISIONAL COURT FILE NO.: DC-18-930, DC-18-937, DC-18-944, DC-18-989, DC-19-993, DC-19-004

DATE: 20190819

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

BETWEEN:

POLLARD WINDOWS INC.

Plaintiff (Respondent)

– and –

1736106 ONTARIO INC., ANDREW FERRI, NIAGARA HOME BUILDERS INC. carrying on business as NIAGARA HERITAGE HOMES and STEVECO ENTERPRISES INC.

Defendants

REASONS FOR DECISION

F.L. Myers J.

Released: August 19, 2019

[^1]: All the relevant agreements in this case were entered into prior to the recent amendments to the CLA. This court held, in Great Northern Insulation v. King Road Paving, 2019 ONSC 3671, para. 9:

> The CLA was substantially amended in 2017 by the Construction Lien Amendment Act, which changed the name of the CLA to the Construction Act. Material amendments came into force on July 1, 2018. Transitional provisions provide that the CLA continues to apply if “a contract for the improvement was entered into” before July 1, 2018. The contracts in this case were entered into around 2012 and all events in issue were completed long before July 1, 2018: the CLA governs as it existed before the Construction Lien Amending Act.

Therefore, the [CLA](https://www.canlii.org/en/on/laws/stat/rso-1990-c-c30/latest/rso-1990-c-c30.html) also continues to apply in this case.

[^2]: In my view, the facts of this case are analogous to those in Kapaniak v MacLellan, 2002 CarswellOnt 1309 (ON CA) and the discussion at para. 33 of that case is apt.

[^3]: This also explains the holding at the outset of these Reasons that the fresh evidence regarding costs allegedly incurred under the mortgage many years later were simply not relevant to the assessment of the parties’ relative priorities under the Construction Act. In any event, I would not recognize as reasonable or enforceable claims for legal fees or penalties in respect of a mortgage with no proven amounts advanced or outstanding. Nor did the mortgagee establish any basis to claim for amounts allegedly expended by tenants on the premises.