COURT FILE NO.: DC-18-919

DATE: 2018-05-23

DIVISIONAL COURT

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Stubbe’s Precast Commercial Ltd., Plaintiff/Respondent

A N D:

King & Columbia Inc., Defendant/Appellant

BEFORE: Turnbull J.

COUNSEL: Brendan Bowles, for the Plaintiff/Respondent

Karey Anne Dhirani, for the Defendant/Appellant

HEARD: May 10th, 2018

R U L I N G O N M O T I O N

[1] This is a motion brought by the plaintiff/respondent (hereinafter “Stubbe’s”) for an order quashing the appeal to the Divisional Court brought by the defendant/appellant (hereinafter “King & Columbia”) from the order of Flynn J. dated February 9th, 2018.

Background Facts

[2] The defendant King & Columbia constructed as the registered owner a residential tower in Waterloo Ontario. Stubbe’s supplied precast concrete and when it allegedly was not paid, it filed two separate construction liens against the property in a total of approximately $2,000,000.00.

[3] The lawyer for Stubbe’s (not counsel before this Court) made a mistake when he registered the lien documents. He incorrectly named Stubbe’s Precast Commercial Ltd. as the supplier of the precast on the lien documents and subsequently on the statement of claim instead of Stubbe’s proper name, which was Stubbe’s Precast Commercial Inc.

[4] King & Columbia argued before Flynn J. that the lien was filed and the action was commenced by a legal entity which then did not exist. King & Columbia argued that the liens were invalid ab initio, because Stubbe’s was a non-existent entity unable to initiate or claim for lien under the Construction Lien Act. It asked the court to dismiss the claim for lien, the Certificate of Action and the underlying claim for lien. It also sought return of the security for lien which it had posted to vacate the lien from title.

[5] Flynn J. determined that a misnomer such as this was not a reason to discharge a lien. As a result, he exercised his discretion under the curative provision of s. 6 of the Construction Lien Act and amended the style of cause accordingly.

[6] King & Columbia then appealed that decision to the Divisional Court.

[7] Stubbe’s has brought this motion before this court to quash that appeal. The basis of the motion before this court is that s. 71(3) of the Construction Lien Act prohibits any appeal from an interlocutory order made under the Construction Lien Act. King & Columbia argues that Flynn J.’s order was a final order.

Submissions of Moving Party Stubbe’s

[8] In his able submissions, Mr. Bowles argued that it was settled law that an order dismissing a motion to discharge a lien is interlocutory. Hence he submitted that the very issue on this motion has been determined by the Divisional Court. He cited the case of 570 South Service Road Inc. v. Lawrence-Paine & Associates Limited, 2011 ONSC 3410 in support of that proposition. In that case, the Divisional Court was faced with the issue of whether the dismissal motion for an order discharging a construction lien is a final or interlocutory order. In 570 South Service, the motions judge had not simply declined to find the lien had expired, but at paragraph 11 made a positive ruling that the lien was not expired.

[9] Counsel also relied upon Teperman & Sons Inc. v. Elros Products Ltd., 1994 CarswellOnt 957 (Gen. Div.). In that case, the Divisional Court held that a master’s order dismissing a motion to declare a lien on the grounds that it had expired, was interlocutory.

[10] In 570 South Service, the appellant sought to distinguish Teperman on the basis that the motions judge had determined the lien was not expired. The Divisional Court refused to distinguish Teperman in the 570 South Service case because:

“it was not an order that settled for all time the validity of the Claim for Lien. The Respondent will still have the onus of proving, at trial, two things: first, that it has a valid preserved and perfected lien against the property in question; and second, that monies are owed to it for the supply of services or materials to the improvement. It will not be open to the Respondent to argue it has discharged the onus of proving the validity of the lien merely because the Application was unsuccessful on this motion”.[^1]

[11] Counsel for the moving party argued that the facts of the case at bar are indistinguishable from those in 570 South Service and Teperman. He contends that the order of Flynn J. simply dismissed King & Columbia’s motion to discharge Stubbe’s liens. The issue of the validity of Stubbe’s lien will remain alive at trial where Stubbe’s will have to prove the validity of its lien.

Analysis

[12] The effect of the order of Flynn J. in dismissing King & Columbia’s motion is to preclude it from raising a defence which it wished to assert and which would have ended the lien action and enabled it to return of its posted security. King & Columbia has therefore lost access to a substantive defence and therefore, in my view, the order is final.

[13] In Houle v. St. Jude Medical Inc., 2018 ONCA 88, Nordheimer J.A. writing for the court noted in paragraph 1 that the motion in that case “represents yet another salvo in the seemingly never ending battle over what orders are final and what orders are interlocutory”. I am encouraged to not be the only judge feeling that pressure.

[14] In wrestling with the issues in the Houle case, the Court of Appeal referred[^2] to Hendrickson v. Kallio, 1932 CanLII 123 (ON CA), [1932] OR 675 (Ont. C.A.) in which Middleton J.A. stated at page 678:

The interlocutory order from which there is no appeal is an order which does not determine the real matter in dispute between the parties -- the very subject matter of the litigation, but only some matter collateral. It may be final in the sense that it determines the very question raised by the applications, but it is interlocutory if the merits of the case remain to be determined.

[15] The Court of Appeal again stated in Ball v. Donais, (1993) 1993 CanLII 8613 (ON CA), 13 O.R. (3d) 322 that where a substantive right of a party was determined, even if other aspects of the proceeding remain to be determined, the resulting order was a final order.

[16] In Sun Life Assurance Co. of Canada v. York Ridge Developments Ltd., (1998) 1998 CanLII 4519 (ON CA), 116 O.A.C. 103 (Ont. C.A.) Weiler J.A. wrote at paragraph 13:

As stated in Holmested and Watson on Ontario Civil Procedure at 62-24: “Ball holds that what the Hendrikson test really means is that to be final an order must deal with the substantive merits as opposed to mere procedural rights, no matter how important the procedural rights may be. The test focuses on whether the order under appeal finally disposes of the rights of the parties, in the sense of substantive rights to relief (in the case of a plaintiff) or a substantive defence[^3] (in the case of a defendant).”

[17] In trying to reconcile the various cases, Nordheimer J.A. in Houle St. Jude Medical Inc., (supra), wrote at paragraph 18:

...in order to be a final order, the order “must deal with the substantive merits as opposed to mere procedural rights, no matter how important the procedural rights may be.”

[18] A final order must be characterized by its substance; i.e. what is its legal effect? Where a defendant is precluded from relying on a defence, that defendant is deprived, in my view, of a substantive right.

[19] In Stolantsis v Spirou, 2008 ONCA 553, Epstein J. A. wrote at para. 21:

“Ball extends the reasoning in Hendrickson and establishes that even where an order does not finally dispose of the rights of the parties to the litigation, it will be final for the purposes of appeal if it disposes of an issue raised by way of defence and “thereby deprives the defendant of a substantive right which could be determinative of the entire action”.

[20] In this particular case, if King & Columbia had been successful in its motion, the claim for lien and underlying action would have been dismissed and an order issued permitting the security paid into court to be returned to King & Columbia. .J. In my view, the order is final. The courts have also held that when paragraphs of a statement of defence are struck out, though the order is characterized as final “notwithstanding that the action would continue with the statement of defence as drafted”. 385925 Ontario Ltd. v. American Life Insurance Company Co., (1985), 1985 CanLII 2204 (ON SC), 51 O.R. (2d) 382 (Ont. H.C.).

[21] For these reasons, I would dismiss the motion to quash the appeal.

Costs:

[22] I have received cost summaries from counsel. Counsel for King & Columbia has provided me with a costs outline. In it, she claims partial indemnity costs of $3,766.67 inclusive of disbursements. She estimated the lawyer’s fee for appearance at $315.00. However, this motion was not completed until almost 3:30 in the afternoon and counsel were present at the opening of court at 10:00 a.m. In the circumstances, I allow King & Columbia’s partial indemnity costs of this motion in the amount of $5,000.00 all-inclusive of disbursements and HST. Such costs are payable in the cause. In making this costs order, I have considered the factors under Rule 57.01(1). This was a somewhat complex matter as it involved the eternal difficulty of differentiating between a final and interlocutory order. It involves an important issue for both parties.

[23] I wish to thank counsel for their helpful and thorough submissions in this interesting matter.

Turnbull J.

DATE: May 23, 2018

[^1]: 570 South Service Road Inc. v Lawrence-Paine & Associates, 2011 ONSC 3410 at para13. [^2]: [2] Houle v St. Jude Medical Inc., para 6. [^3]: Underlining emphasis is mine.