MGW-Homes Design Inc. v Pasqualino: Ontario Court of Appeal clarifies appeal route from an adjudicator’s determination.

In the recent case of MGW-Homes Design Inc. v Pasqualino, 2024 ONSC 422, the Ontario Court of Appeal confirmed that appeals from an adjudicator’s determination under the Construction Act should be directed to the Divisional Court.

Facts:

The Appellant, MGW-Homes Design Inc. (“MGW”), supplied labour and materials to the Respondent, Mr. Pasqualino, for his home renovation. Following a dispute between the parties, MGW registered a Claim for Lien in the amount of $168,184.94 and subsequently issued a statement of claim. Mr. Pasqualino vacated the lien and delivered a statement of defence and counterclaim.

At the same time, MGW filed the adjudicator’s determination with the court, but it failed to give Mr. Pasqualino notice as required under the Construction Act. Mr. Pasqualino brought a motion to vacate the writ in response, which the motion judge allowed.

MGW initiated a “construction dispute interim adjudication,” a relatively new procedure under the Construction Act that allows parties to seek an interim adjudication on designated issues. It was determined that Mr. Pasqualino pay MGW. Mr. Pasqualino did not pay this amount, but instead sought leave to judicially review the determination, which he was denied.

The motion judge found that MGW’s failure to give notice was fatal to the writ. She ordered the writ to be vacated, MGW be barred from taking any other enforcement steps in connection with the adjudicator’s order, and costs payable to Mr. Pasqualino. MGW sought to appeal the orders.

Issues:

As a preliminary matter, MGW raised the issue of jurisdiction and whether the appeal was correctly before the Court of Appeal or whether it should be heard by the Divisional Court. The main issue was whether the order vacating the writ of enforcement fell within the definition of a “judgment” under section 71 of the Construction Act, which states that an appeal should be heard by the Divisional Court.

MGW relied on the cases of Villa Verde L.M. Masonry Ltd v Pier One Masonry Inc1 and TRS Components Ltd v Devlan Construction Ltd2 to argue that the term “judgment” should be interpreted broadly and that the appeal should be heard in the Divisional Court.

Mr Pasqualino disagreed and argued, among many other things, that s. 71(1) of the Construction Act is an exception to the normal appeal route under s. 6(1)(b) of the Courts of Justice Act and should be interpreted narrowly. Further, the cases of Villa Verde and TRS are distinguishable as they relate to liens and have their own processes under the Construction Act.

Analysis:

The court rejected Mr. Pasqualino’s submission that s. 71(1) of the Construction Act provides an exception to the normal appeal route on two grounds:

the broad purpose of the Construction Act is to provide “an efficient means of dealing with trade claimants that would otherwise be left behind without security if unpaid on a building project where payments typically flow from above and follow performance.” A narrow interpretation of s. 71(1) of the Construction Act would undermine the efficiency of this purpose.
a narrow interpretation of s. 71 of the Construction Act would be contrary to the case law on appeal provisions. In both Villa Verde and TRS, the courts applied a broad interpretation of the term “judgment”. It is clear that courts are increasingly favoring a broader interpretation of the term "judgment".

The Court of Appeal held that “adjudication under part II.1 of the Construction Act is a ‘proceeding under the Act’ and the motion judge’s order on the enforceability of the adjudicator’s determination is a ‘judgement…under [the] Act’”, such that the appeal properly lay before the Divisional Court.

Take-Aways:

Appeals from “judgments” flowing from adjudication decision lie with the Divisional Court and not the Court of Appeal
Courts have upheld the trend towards applying a broad interpretation of the term “judgment” under s. 71(1) of the Construction Act.

1 Villa Verde L.M. Masonry Ltd v Pier One Masonry Inc, [2001] O.J. No. 1605
2 TRS Components Ltd v Devlan Construction Ltd, 2015 ONCA 294