CITATION: Gandhi v. Mayfield Arcadeium Holdings Ltd., 2024 ONSC 1001
COURT FILE NO.: DC-23-72
DATE: 2024 02 15
SUPERIOR COURT OF JUSTICE (DIVISIONAL COURT) - ONTARIO
RE: Harsimrat Gandhi, Moving Party (Lien Claimant)
AND:
Mayfield Arcadeium Holdings Ltd., Respondent (Owner)
BEFORE: M.T. Doi J.
COUNSEL: Neal Altman, for the Moving Party
Mark H. Arnold, for the Respondent
HEARD: January 19, 2024
Endorsement
Overview
[1] The Moving Party, Harsimrat Gandhi, moves under ss. 71(2) of the Construction Act, RSO 1990, c. C.30 (the “Act”) to extend the time for delivering a notice of appeal from the Judgment of Justice Bloom dated October 5, 2023 (the “Judgment”).
[2] The Judgment declared that Mr. Gandhi’s lien claim for the subject property on Mayfield Road in Brampton (the “Project”) had expired, cancelled a $1.212 million construction lien bond (the “Lien Bond”) which the Respondent owner, Mayfield Arcadeium Holdings Ltd. (“Mayfield”), had posted with the Accountant of the Superior Court, and vacated registration of the lien claim.
[3] Due to inadvertence by his former counsel, Mr. Gandhi missed the 15-day deadline under ss. 71(2) of the Act for delivering a notice of appeal from the Judgment.
[4] Mayfield opposes this motion by Mr. Gandhi to extend the time for delivering the notice of appeal on the basis that his purported appeal has no real chance of success as he did not have a contract to support any construction lien rights.
[5] As set out below, I am persuaded that Mr. Gandhi’s appeal has arguable merit and should proceed to a full panel of the Divisional Court for a determination on the merits. Accordingly, this motion to extend the time to appeal is granted.
Background
[6] Mr. Gandhi claims that he supplied project management services for the construction of the Project which Mayfield owns. He also claims that he was not paid in full for these services.
[7] On April 11, 2023, Mr. Gandhi registered his claim for lien against title to the Project lands. He concedes that the lien claim gave erroneous dates for the first and last supply of his services to the Project, but asserts that all other information in the claim is accurate.
[8] On April 27, 2023, LeMay J. ordered that the registration of the lien claim be vacated from title to the Project lands upon Mayfield posting the Lien Bond with the Accountant of the Superior Court. Pursuant to ss. 44(6) of the Act, LeMay J.’s order converted the lien claim from a charge against the Project lands to a charge against the Lien Bond.
[9] On or about May 11, 2023 (i.e., after the Lien Bond was posted and before the lien action was started), Mayfield moved to cancel the Lien Bond and obtain summary judgment in the impending lien action with corollary relief. In bringing the motion, Mayfield asserted that there was no basis for the lien claim and no genuine issue for trial in the lien action.
[10] On July 10, 2023, Mr. Gandhi brought an action in the Ontario Superior Court bearing Court File No. CV-23-2371 (the “Construction Lien Action”) to enforce and perfect the lien claim.
[11] On or about July 11, 2023, Mayfield delivered an amended notice of motion which raised new grounds for cancelling the Lien Bond and for seeking summary judgment in the Construction Lien Action. The new grounds asserted that Mr. Gandhi’s lien claim had expired due to his failure to perfect the lien claim as required under the former version of the Act, and that Mr. Gandhi was an “Owner” as defined under the Act who did not have lien rights in respect of the Project.
[12] On September 13, 2023, Bloom J. heard Mayfield’s motion.
[13] On October 5, 2023, Bloom J. released his decision on the motion. Finding that the lien claim had expired as Mr. Gandhi had not perfected the claim within the timelines prescribed under the former version of the Act, the court granted Judgment to Mayfield by declaring the claim to have expired, by cancelling the Lien Bond, and by awarding Mayfield costs for the motion fixed at $40,000.00 all-inclusively. In arriving at this decision, the court did not find that Mr. Gandhi had no contract with Mayfield to support the lien claim or otherwise find him to be an owner of the Project who was precluded from registering the claim for lien.
The Proposed Appeal
[14] As set out below, Mr. Gandhi failed to exercise his statutory right to appeal the Judgment within the 15-day period as prescribed by the Act.
[15] In submissions, both sides acknowledged that an appeal from the Judgment lies to the Divisional Court pursuant to ss. 71(1) of the Act, which provides:
Appeal to Divisional Court
71 (1) Except as otherwise provided in this section, 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.
[16] The term “judgment” as set out in ss. 71(1) applies to any decision by which a party’s rights are finally disposed of: Villa Verde L.M. Masonry Ltd. v. Pier One Masonry Inc. at para 8; Heinrichs v. 374427 Ontario Ltd., 2018 ONSC 78 (Div Ct) at para 19.
[17] A declaration that a lien has expired pursuant to s. 45 of the Act is a final order, as the declaration is irrevocable and an expired lien cannot be revived: Mobilinx Hurontario Contractor v. Edge 1 Equipment Rentals Inc., 2023 ONSC 5885 at para 12. In addition, an order releasing funds held in counsel’s trust account as an alternative form of security in lieu of a claim for lien is a final order: Heinrichs at paras 12 and 18-20.
[18] In this case, the Judgment declared that the claim for lien had expired, cancelled the Lien Bond, and ordered its return to Mayfield. Having regard to the above-noted authorities, I accept that the Judgment is final and may be appealed to the Divisional Court under ss. 71(1) of the Act.
[19] Although Mr. Gandhi had a statutory right to appeal the Judgment released on October 5, 2023, he was required to deliver his notice of appeal by October 20, 2023 (i.e., within fifteen days from the date of the Judgment) pursuant to ss. 71(2) of the Act, which provides:
Notice of Appeal
(2) A party wishing to appeal shall file and serve a notice of appeal within fifteen days of the date of the judgment or order, but the time for filing or serving the notice of appeal may be extended by the written consent of all parties, or by a single judge of the Divisional Court where an appropriate case is made out for doing so.
[20] Due to inadvertence by his former counsel, Mr. Gandhi did not deliver a notice of appeal until November 6, 2023. When Mr. Gandhi asked Mayfield to consent to an extension of time to deliver the notice of appeal by November 6, 2023, Mayfield declined to agree to the indulgence. As a result, Mr. Gandhi brought this motion for an extension of time to deliver his notice of appeal.
Legal Principles for Extending Time to Deliver a Notice of Appeal
[21] The test on a motion to extend the time for filing a notice of appeal is well established, and is described as follows:
[A]ny time limit prescribed by the Rules may be extended on such terms as are just. The factors to be considered in deciding whether to extend time to appeal are: (1) whether the proposed appellant had a bona fide intention to appeal within the prescribed period; (2) the length of and explanation for the appellant’s delay; (3) any prejudice to the respondent from the granting of an extension of time; (4) the merits of the proposed appeal; and (5) whether the justice of the case requires an extension of time. At the stage of considering the justice of the case, the court must consider all of the preceding factors as well as any others that may be relevant, and balance those factors.
690 King Street Corp. v. Desco Plumbing and Heating Supply Inc., 2021 ONSC 1050 (Div Ct) at para 3; 40 Park Lane Circle v. Aiello, 2019 ONCA 451 at para 2.
[22] The merit of the proposed appeal is the most important factor to consider: Robson v. Law Society of Ontario, 2023 ONCA 709 at para 5; Paulsson v. University of Illinois, 2010 ONCA 21 at para 2. Even where it is difficult to see the merits of the proposed appeal, a party should not be deprived of their right of appeal when there is no real prejudice to the other side: Correct Building Corporation v. Lehman, 2022 ONCA 723 at para 15, citing 40 Park Lane at para 8; Attorney General of Ontario v. Hazout, 2023 ONSC 1961 (Div Ct) at para 7.
Intention to Appeal, Length of Delay and Explanation
[23] I am satisfied that Mr. Gandhi had a good faith intention to appeal the Judgment within the prescribed period. I also find that he gave a compelling explanation for the delay in bringing the appeal, being the inadvertence of his former counsel.
[24] After Bloom J.’s decision was released on October 5, 2023, Mr. Gandhi spoke with his former counsel by phone that day about whether and when to appeal. During the call, Mr. Gandhi informed his former counsel that he wanted to appeal the decision.
[25] In response, Mr. Gandhi’s former counsel incorrectly advised that an appeal would lie to the Court of Appeal with a 30-day period for delivering a notice of appeal under Rule 61.04 of the Rules of Civil Procedure. In fact, the appeal was governed by ss. 71(2) of the Act which provides for an appeal to Divisional Court after a notice of appeal is served within 15 days. Mr. Gandhi was not entitled to wait 30 days to deliver his notice of appeal.
[26] On October 24, 2023, Mr. Gandhi’s former counsel reported this matter to the Lawyers Professional Indemnity Company (“LawPRO”) as his retainer predated the deadline to perfect the lien as the court found in the October 5, 2023 decision. On October 26, 2023, LawPRO retained repair counsel to pursue an appeal of the Judgment. Around this time, Mr. Gandhi learned that the time for delivering the notice of appeal was 15 days which had expired on October 25, 2023.
[27] On October 26, 2023, Mr. Gandhi wrote to Mayfield through counsel to seek its consent to an extension of time for delivering the notice of appeal to November 6, 2023 (i.e., being 30 days from the date of the court’s decision, and 12 days after the appeal period had expired). Mayfield declined to consent to a late filing. On November 6, 2023, Mr. Gandhi served Mayfield with the notice of appeal which the Divisional Court rejected for filing due to its late service.
[28] After Mayfield refused to consent to the late filing, Mr. Gandhi promptly took steps to schedule this motion to extend the time for delivering the notice of appeal.
[29] Mayfield took issue with the quality of Mr. Gandhi’s evidence about his intention to appeal by asserting that the affidavit sworn by his former counsel was self-serving and did not satisfy the best evidence rule. However, the content in the affidavit was based on former counsel’s direct conversations with Mr. Gandhi. In light of this, I accept that this affidavit evidence is reliable. To find otherwise would, in my view, result in an overly technical and strained approach that would not serve the interests of justice on this motion.
[30] I am satisfied that Mr. Gandhi had a good faith intention to appeal the Judgment and gave a compelling explanation for the relatively modest delay in serving the notice of appeal due to inadvertence by his former counsel. In principle, Mr. Gandhi should not suffer the consequences of his former lawyer’s oversight or inattention: Jewish Foundation of Greater Toronto (Re), 2022 ONCA 581 at para 25.
Prejudice
[31] In my view, Mr. Gandhi’s delay in serving the notice of appeal did not prejudice Mayfield in the sense contemplated under the analysis for an extension of time.
[32] In considering the issue of prejudice, the relevant consideration is not prejudice from the progress of the appeal itself which Mr. Gandhi was otherwise entitled to pursue after complying with the 15-day period for serving the notice of appeal. Instead, the relevant consideration is prejudice from the delay in delivering the notice of appeal: 40 Park Lane at para 6; 690 King Street at para 7. In this case, his delay in delivering the notice was 12 days.
[33] Mr. Gandhi had a general right of appeal under ss. 71(1) of the Act. As a result, the issue of whether Mayfield was prejudiced by its inability to enforce the Judgment is not relevant under this branch of the analysis to extend time. In any event, Mayfield could not enforce the Judgment until it was issued and entered on November 17, 2023. By then, Mayfield had been in receipt of Mr. Gandhi’s notice of appeal for 11 days. Taking this into account, I find no prejudice to Mayfield from Mr. Gandhi’s delay in delivering the notice of appeal.
Merits
[34] In my view, Mr. Gandhi’s proposed appeal is not so completely devoid of merit as to justify denying his important right of appeal in this case.
[35] The merits of a proposed appeal can be decisive on a motion to extend the time for filing a notice of appeal, regardless of how the other considerations are factored: Howard v. Martin, 2014 ONCA 309 at para 36. In cases involving a right of appeal, the focus of the merits analysis is on whether there is “so little merit in the proposed appeal that the appellant should be denied [his] important right of appeal”: Duca Community Credit Union Ltd. v. Giovannoli at para 14; 40 Park Lane at para 8; 690 King Street at para 9. Where there is no real prejudice to the other side, a party should not be deprived of their right to appeal even when it is difficult to see the merits of the appeal: Correct Building at para 15; Denomme v. McArthur, 2013 ONCA 694 at para 10; 40 Park Lane at para 8; Hazout at para 7; 690 King Street at para 9.
[36] In responding to the motion, Mayfield strongly opposed the 12-day extension by vigorously arguing the merits of the proposed appeal and the litigation as a whole. In turn, the parties spent considerable time on the motion arguing the merits of the proposed appeal and the underlying litigation, particularly on the issue of whether Mr. Gandhi had a contract with Mayfield to ground his lien claim. As the court had not specifically decided this point, Mayfield invited me to find that no such contract had existed and that Mr. Gandhi had no lien rights which left his purported appeal with no real chance of success: see Torty v. Gilina at paras 59 and 64. However, Van Rensburg J.A. strongly cautioned in 40 Park Lane at para 9 that although a case may have compelling merits that tip the balance for or against an extension of time to appeal, a judge on a motion to extend time should not consider the merits of an appeal that only a panel of the court is properly authorized to decide:
In general, however, motions to extend time to appeal to this court should not devolve into a full argument on the merits of the appeal or the litigation as a whole. It is not the place of a single judge on a motion to extend time, to consider the full merits of an appeal that only a panel of the court would have the authority to determine. It is sufficient to say in this case that even a cursory review of the notice of appeal and reasons for judgment make it clear that the proposed appeal is not so completely devoid of merit that the appellant should be denied his important right of appeal. [Emphasis added]
See also: 690 King Street at para 9, and Javid Estate v. Watson, 2023 ONCA 665 at para 14.
[37] Mr. Gandhi submits that the Judgment reflects an incorrect finding that the lien claim had expired by relying on incorrect dates for his first and last supply of services to the Project in the lien despite evidence that these dates were wrong. More specifically, he submits that the court held that the contents of the lien claim were an admission without considering ss. 6(1) of the Act which provides that an error in a claim for lien regarding the date of supply shall not invalidate the claim unless the error prejudiced another party. Mr. Gandhi asserts that Mayfield led no evidence to contradict his position that the dates of supply in the lien claim were wrong, or to show that it suffered prejudice from the incorrect information. For its part, Mayfield submits that Mr. Gandhi led no evidence to refute the date of last supply as being April 2, 2023 as set out in the lien claim. In addition, Mayfield submits that ss. 6(1) of the Act cannot cure Mr. Gandhi’s invalid claim for lien because he had no lien rights on the date of registration.
[38] According to Mayfield, there is no evidence that it ever contracted with Mr. Gandhi for the services that he allegedly supplied to the Project. In turn, Mayfield submits that he cannot assert any lien rights. As a result, Mayfield submits that Mr. Gandhi’s lien claim should be dismissed, although his contract claim would be unaffected: Brock Contracting v. Kozikowski, 2018 ONSC 7618 at paras 31, 33, 44 and 47. When cross-examined in the lien action, Mr. Gandhi testified that he had entered into a personal services agreement with a third party, not with Mayfield. But further comments from the examination suggest that his lien claim may be supported by records.
[39] Ultimately, the court granted Judgment on lien perfection dates based on last supply and ownership grounds without deciding whether Mr. Gandhi and Mayfield had a contract that gave rise to valid lien claim. Given the underlying nature of Mayfield’s position that Mr. Gandhi had no contract to implicate any lien rights, I find that this issue should properly be considered by a panel of the Divisional Court which, unlike a single judge on a motion to extend time, has the authority to fully consider the merits of the appeal and decide the issue: 40 Park Lane at para 9. In my view, this motion to extend time is not the proper occasion for doing the sort of deep dive into the merits which Mayfield invited me to undertake: Javid Estate at para 14.
[40] Taking everything into account, I find that Mr. Gandhi has arguably shown a meritorious ground of appeal that is not so devoid of merit to justify removing his important right to appeal due to lateness. In making this finding, I am guided by the following recent emphasis by the Court of Appeal in Correct Building at para 11 that some potential merit to an appeal will favour the granting of an extension of time to appeal if there is no real prejudice to the other side:
Traditionally, the merits factor will be used to support granting an extension when the other factors do not favour the applicant, but because there may be some potential merit to the case, it is still in the interests of justice that the applicant's right of appeal not be removed, just because of lateness: see e.g., Howard v. Martin, 2014 ONCA 309, 42 R.F.L. (7th) 47, at para. 36; Derakhshan v. Narula, 2018 ONCA 658, 142 O.R. (3d) 535, at para. 22. More recently, in 40 Park Lane Circle v. Aiello, 2019 ONCA 451, at para. 8, van Rensburg J.A, sitting as a motion 2022 ONCA 723 judge, stated:
Turning to the merits of the proposed appeal, the question is only whether there is "so little merit in the proposed appeal that the appellant should be denied [his] important right of appeal": Duca Community Credit Union Ltd. v. Giovannoli (2001), 142 O.A.C. 146 (C.A.), at para. 14. Even where it is difficult to see the merits of a proposed appeal, a party is entitled to appeal and should not be deprived of that entitlement where there is no real prejudice to the other side: Denomme, at para. 10; Auciello v. Mahadeo, 2016 ONCA 414, at para. 14. [Emphasis added]
Justice of the Case
[41] In view of the foregoing, I am satisfied that the interests of justice would be served by extending the time to deliver the notice of appeal.
[42] Mr. Gandhi’s delay was minimal and reasonably explained. Absent any real prejudice to Mayfield from the delay with the notice of appeal, and given the arguable merit to his potential appeal, I do not see this as being one of those clear-cut cases where an extension of time should be denied due to a lack of merit, despite some difficulty with the merits of the proposed appeal: Hill v. Cambridge (City), 2023 ONCA 164 at para 13; Sabatino v. Posta Ital Bar Inc., 2022 ONCA 208 at para 21; Correct Building at para 15; 40 Park Lane at para 8, Hazout at para 7. In my view, Mr. Gandhi’s proposed appeal should proceed to a panel of the Divisional Court where the merits of the appeal may be fully considered in the context of the litigation as a whole, in the interests of justice: 40 Park Lane at para 9.
Outcome
[43] Accordingly, the motion is granted. An order shall issue as I have signed.
[44] Should the parties be unable resolve the issue of costs for this motion, Mr. Gandhi may deliver written submissions on costs of up to 2 pages (excluding any costs outline or offer to settle)
within 15 days, and Mayfield may deliver responding costs submissions on the same terms within a further 15 days. Reply submissions shall not be delivered without leave.
Date: February 15, 2024 M.T. Doi J.
CITATION: Gandhi v. Mayfield Arcadeium Holdings Ltd., 2024 ONSC 1001
COURT FILE NO.: DC-23-72
DATE: 2024 02 15
SUPERIOR COURT OF JUSTICE (DIVISIONAL COURT)
ONTARIO
RE: Harsimrat Gandhi, Moving Party (Lien Claimant)
AND:
Mayfield Arcadeium Holdings Ltd., Respondent (Owner)
BEFORE: M.T. Doi J.
COUNSEL: Neal Altman, for the Moving Party
Mark H. Arnold, for the Respondent
ENDORSEMENT
M.T. Doi J.
DATE: February 15, 2024