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Construction - Appeals (2). Castle Homes Design Inc. v. McKenzie [appeal route]
In Castle Homes Design Inc. v. McKenzie (Ont CA, 2026) the Ontario Court of Appeal considered a motion to transfer an appeal between courts [CJA 110] - and another, in the alternative, to extend time to commence an appeal.
The court considers (but does not yet decide) a confusing Construction Act appeal route issue:[2] Castle Homes is a construction company which contracted with the responding party, Deborah White (“Ms. White”), to build and install an outdoor swimming pool and deck on her property. A dispute arose between the parties regarding the work performed under the contract, as a result of which Castle Homes registered a lien against Ms. White’s property and brought a lien action in the Superior Court (the “Lien Action”) pursuant to s. 50 of the Construction Act, R.S.O. 1990 c. C.30 (the “Act”).
[3] Castle Homes missed several deadlines prescribed by the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and two court-ordered timetables set in case management conferences. In addition, several costs orders were made against Castle Homes, most of which were not paid.
[4] On March 17, 2025, Ms. White brought a notice of motion pursuant to various provisions of the Rules, seeking dismissal of the Lien Action due to Castle Homes’ failure to comply with timetables and court orders. The motion was heard on July 16, 2025.
[5] On August 21, 2025, the motion judge dismissed the Lien Action, discharged the lien, and awarded costs to Ms. White on a substantial indemnity basis against both Castle Homes and Mr. Hussaini personally in the amount of $26,556.87 (the “Dismissal Order”).
[6] Castle Homes submitted a notice of appeal of the Dismissal Order to this court on September 22, 2025. On November 17, 2025, counsel for Ms. White advised counsel for Castle Homes that the appeal should have been filed in the Divisional Court due to the statutory appeal route in s. 71 of the Act. After reviewing the matter, counsel for Castle Homes agreed and sought consent to an extension of time to file an appeal in the Divisional Court, but that consent was refused.
[7] In the meantime, on November 26, 2025, Castle Homes was warned by the Registrar that the appeal would be dismissed for delay if it was not perfected by December 17, 2025. The appeal was not perfected by that date. Instead, on December 17, 2025, Castle Homes brought the present motion seeking to transfer the appeal to the Divisional Court or extend the time to perfect the appeal in this court.
Motion to Transfer Appeal
[8] Section 71 of the Act sets out a statutory appeal route:(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.
(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.
(3) No appeal lies from an interlocutory order made by the court, except with leave of the Divisional Court. [9] Both parties proceeded on the assumption that the Dismissal Order is a “judgement… under this Act [the Construction Act]” and, therefore, should have been appealed to the Divisional Court rather than this court, pursuant to s. 71(1) of the Act.
[10] The difficulty is that it is not entirely clear that this is the case.
[11] On the one hand there is a long line of cases under the Act as well as the predecessor legislation, the Construction Lien Act, giving a liberal interpretation to s. 71, such that jurisdiction to hear appeals from proceedings commenced under the Act generally lies with the Divisional Court. This liberal interpretation of s. 71 is consistent with the purpose of the Act, which is to provide a summary procedure for the determination of construction lien proceedings: TRS Components Ltd. v. Devlan Construction Ltd., 2015 ONCA 294, 125 O.R. (3d) 161, at para. 11. This purpose would be frustrated if the proper appeal route in construction cases is unclear since, rather than resolving disputes on the merits in a timely way, parties will be diverted into time-consuming, costly, and improvident litigation over whether an appeal has been commenced in the proper court.
[12] In recognition of the fact that all parties in such disputes benefit from clarity over the correct route of appeal, in TRS Components this court held that an appeal from a judgment on a counterclaim obtained in construction lien proceedings lay to the Divisional Court, even though the counterclaim was based on a breach of contract rather than a provision of the Act. The court expressly rejected the argument that the route of appeal should be determined based on the substantive claim in the action (in that case a claim in contract), as opposed to the fact that the proceeding was commenced under the Act. The panel held the following at para. 18:In our view, “judgment…under this Act” in s. 71 includes a judgment granted in an action commenced and continued under Part VIII of the Act, including any counterclaim, cross-claim or third party claim, unless the action or any part of the action is removed from the construction lien proceeding, and directed to proceed under the Rules. [13] This interpretation is also supported by this court’s more recent decision in MGW-Homes Design Inc. v. Pasqualino, 2024 ONCA 422, 172 O.R. (3d) 770, where appellate jurisdiction was at issue after a Superior Court judge made orders related to the enforcement of private adjudication which occurred under the new “construction dispute interim adjudication” provisions in the Act. In that decision, the panel reviewed TRS Components and Villa Verde L.M. Masonry Ltd. v. Pier One Masonry Inc. (2001), 2001 CanLII 7060 (ON CA), 54 O.R. (3d) 76 (C.A.), and concluded “neither case limits this broad interpretation to the specific procedure for lien claims”: MGW-Homes, at para. 26.
[14] MGW-Homes also cited with approval (at para. 30) this court’s decision in Durall Construction Ltd. v. W.A. McDougall Ltd. (1979), 1979 CanLII 1700 (ON CA), 25 O.R. (2d) 371, which made the following statement about a similar provision in the Mechanics’ Lien Act, R.S.O. 1970, c. 267, at p. 373:In our view the word “judgment” in s. 43(1) of the Mechanics' Lien Act applies to any decision by the appropriate Judge or Master by which the rights of a party to the mechanics' lien proceedings are finally disposed of, and that the matter is not to be tested by the name which is given to that disposition nor by the terminology within it. [15] In contrast, in Arcamm Electrical Services Ltd. v. Avison Young Real Estate Management Services LP, 2024 ONCA 251, this court held that the appeal from a judgment in a proceeding commenced under the Act could only be determined by examining the “substance of the order made”: at para. 14. On this basis, the court in Arcamm held that an appeal from an order for summary judgment in a proceeding commenced under the Act lay to this court rather than the Divisional Court, since the motion judge granted summary judgement on the basis of r. 20, a rule promulgated under the CJA.
[16] If TRS Components is the controlling precedent, then the appeal in this case would lie to the Divisional Court rather than this court, since the order was obtained in a proceeding brought under the Act. However, if Arcamm is controlling, the appeal would appear to lie to this court rather than the Divisional Court. This is because the motion judge’s endorsement states that “…, the action is dismissed under rules 3.04(4) and 60.12 of the Rules of Civil Procedure and the construction lien and the certificate of action are ordered to be discharged under s. 47 of the Construction Lien Act” (emphasis added). Although the motion judge relied on s. 47 of the Act to discharge the lien and the certificate of action, these orders were ancillary to the order dismissing the Lien Action, which was based on a violation of various provisions of the Rules. Thus, because the “substance of the order made” was based on the Rules rather than a provision of the Act, Arcamm suggests that the appeal is properly before this court.
[17] A condition precedent to transferring an appeal to another court under s. 110 of the CJA is a finding that the appeal has been brought in the wrong court. I am unable to come to that conclusion in this case since, depending on which of these conflicting precedents governs, the appeal may well have been properly brought to this court.
[18] The interests of justice also favour the appeal remaining in this court. There is a strong public interest in clarifying the appeal route in construction disputes, consistent with the purpose of the Act to provide an efficient and cost-effective method for resolving such matters. Unlike the Divisional Court, this court can resolve apparent conflicts between its own precedents and provide the needed clarity, if necessary through a five-judge panel. See “Practice Direction Concerning Civil Appeals at the Court of Appeal for Ontario”, (March 1, 2017), at 13.
[19] I therefore decline to exercise my discretion to transfer the appeal to the Divisional Court and dismiss the motion to transfer the appeal. . Chaly v. Structured Restoration Inc.
In Chaly v. Structured Restoration Inc. (Ont CA, 2025) the Ontario Court of Appeal considered the appeal route from "an application to remove a lien registered on a property" under s.71(1) of the Construction Act:[2] In advance of the hearing, this court raised the issue of whether it has jurisdiction over the appeal or whether the appeal lies to the Divisional Court pursuant to s. 71(1) of the Construction Act. Ms. Chaly initially made written submissions on the issue taking the position that this court has jurisdiction. The respondent took the position in its factum that the appeal should have been brought to the Divisional Court. In advance of the hearing, after reviewing the respondent’s submissions on jurisdiction, Ms. Chaly advised that she now agreed that the appeal should have been brought to the Divisional Court.
[3] The parties attended before us to address the issue of whether the appeal should be transferred to the Divisional Court and the issue of costs. They both advised that they agreed that the appeal should be transferred to the Divisional Court and that the issue of costs should be addressed by the Divisional Court.
[4] We agree that this court does not have jurisdiction over the appeal and that the appeal should be transferred to the Divisional Court. We briefly explain the basis for reaching this conclusion.
[5] Section 71(1) of the Construction Act provides that: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. [6] This court has interpreted s. 71(1) broadly to mean that an “appeal involving only proceedings under the Construction Lien Act, R.S.O. 1990, c. C.3”, now the Construction Act, is to be brought in the Divisional Court: Villa Verde L.M. Masonry Ltd. v. Pier One Masonry Inc. (2001), 2001 CanLII 7060 (ON CA), 54 O.R. (3d) 76 (C.A.), at para. 1. While s. 71(1) refers to “judgments” made under the Act, the Divisional Court’s jurisdiction extends to “orders” made under the Act: Villa Verde, at paras. 7-8; MGW-Homes Design Inc. v. Pasqualino, 2024 ONCA 422, 172 O.R. (3d) 770, at para. 3.
[7] In contrast to cases where an appeal lies to the Divisional Court, in Arcamm Electrical Services Ltd. v. Avison Young Real Estate Management Services LP, 2024 ONCA 251, at para. 17, this court found that the judgment appealed from in that case was “not made in reliance on the Construction Act” because the source of the court’s jurisdiction below was r. 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (emphasis added).
[8] In this case, Ms. Chaly brought an application to discharge the lien registered by the respondent. The notice of application, with which Ms. Chaly initiated the application, explicitly states that the application is brought pursuant to and in reliance on the Construction Act. In concluding that the lien was valid, the application judge interpreted s. 14(1) and the definition of “improvement” in s. 1(1) of the Construction Act. This is precisely the type of issue that falls within the ambit of the Construction Act. It was a decision made in reliance on the Construction Act.
[9] In her written submissions on the issue of jurisdiction, Ms. Chaly explained that she brought the application under s. 47(1) of the Construction Act, which gives the court the power to discharge a lien “on motion”, including “on any … proper ground”. In this case, Ms. Chaly brought an application rather than a motion. It may be that the proper route for challenging the lien was within the action brought by the respondent to seek payment for the work it had done and pursuant to which the lien was registered. However, this issue was not raised below. Moreover, it would put form over substance to decide the issue of jurisdiction on the basis of whether Ms. Chaly attempted to discharge the lien by way of an application rather than a motion. Given that the substance of Ms. Chaly’s proceeding was to challenge the validity of the lien, an issue that falls squarely within the ambit of the Construction Act pursuant to s. 47(1) and that required interpretation of provisions of the Act, we are satisfied that s. 71(1) applies in this case and that the proper route of appeal is to the Divisional Court.
[10] Pursuant to s. 110(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, this court has the power to transfer the appeal to the Divisional Court. We are satisfied that this in an appropriate case for transfer to the Divisional Court.
[11] We order that the appeal be transferred to the Divisional Court. As agreed between the parties, the costs of the appeal before this court are to be decided by the Divisional Court. . Invoice Payment Systems Corp. v. The Block Inc.
In Invoice Payment Systems Corp. v. The Block Inc. (Ont Div Ct, 2025) the Ontario Divisional Court partly allowed an appeal, here brought against a finding that the defendant (plaintiff by counterclaim) "was entitled to a set-off for damages ... in an amount that was greater than the amount of the underlying lien claims. The judgment meant the plaintiffs, IPSC and Nikom Construction, were jointly and severally liable to pay the Block $325,824.41.".
Here the court considers appeals under the Construction Act [s.71(1) 'Appeal to Divisional Court']:[30] Section 71(1) of the Construction Act provides the Divisional Court with jurisdiction to hear an appeal of any judgment in a construction lien proceeding, including counterclaims and cross-claims, where there is no order directing the proceeding continue as an ordinary action: TRS Components Ltd. v. Devlan Construction Ltd., 2015 ONCA 294, 125 O.R. (3d) 161, at para. 26; MGW-Homes Design Inc. v. Pasqualino, 2024 ONCA 422. . Demikon Construction Ltd. v. Oakleigh Holdings Inc.
In Demikon Construction Ltd. v. Oakleigh Holdings Inc. (Div Court, 2024) the Ontario Divisional Court allowed a Construction Act appeal, here against an order which reduced the required amount of posted lien bond in order to vacate "a claim for a construction lien on the title of the project land".
Here the court states a Construction Act appeal route:[29] The Divisional Court has jurisdiction to hear this appeal. An appeal from a judgment under the Construction Act lies to the Divisional Court as of right, but leave is required to appeal an interlocutory order: Construction Act, ss. 71(1), 71(3). An order that “reduces a portion of the claim [for lien] from being secured to unsecured determines a substantive issue and deprives the lien claimant of certain legal rights. Such an order is a final order and can be appealed” to the Divisional Court under s. 71(1) without leave: see H.I.R.A Ltd. v. Middlesex Standard Condominium Corp. No. 823, 2018 ONSC 3661, 61 C.B.R (6th) 59 (Div. Ct), at para. 22. . JIA Development Inc. v. 2708320 Ontario Ltd. (Viceroy Homes)
In JIA Development Inc. v. 2708320 Ontario Ltd. (Viceroy Homes) (Div Court, 2024) the Ontario Divisional Court considered whether leave to appeal was required under CJA s.133(b) ['costs'], here in a Construction Act context (which has it's own costs provisions):[1] The appellants seek to appeal a decision of Associate Justice Wiebe dated March 18, 2024 in which he declined to award costs against Fogler Rubinoff LLP under s. 86(1)(b)(i) of the Construction Act, R.S.O. 1990 c. C.30. Pursuant to that provision, the court may exercise its discretion to order costs against a person who represented a party to an action where the person “knowingly participated in the preservation or perfection of a lien, or represented a party at the trial of an action, where it is clear that the claim for a lien is without foundation, is frivolous, vexatious or an abuse of process, or is for a willfully exaggerated amount, or that the lien has expired.”
[2] There is a preliminary question as to whether leave is required for the appellants to bring the appeal. During the case management process and at today’s hearing, the appellants took the position that leave was not required. They submit s. 86 of the Construction Act makes entitlement to costs of an improperly brought lien action a substantive issue for which there should be a substantive right of appeal. They rely on s. 71 of the Construction Act, which provides that an appeal lies to the Divisional Court from a judgment under the Construction Act. In their submission, the provisions of the Construction Act supersede more general costs provisions of the Courts of Justice Act, R.S.O. 1990 c. C. 43 and Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[3] In case management directions, Justice Davies directed the issue of whether leave was required to be raised before the panel. This would allow the panel at the hearing to deal with all issues, including if leave was not required, and was more efficient than scheduling a preliminary motion to strike the notice of appeal.
[4] In our view, the appellants are required to obtain leave to bring their appeal. Section 133(b) of the Courts of Justice Act provides that “No appeal lies without leave of the court to which the appeal is to be taken where the appeal is only as to costs that are in the discretion of the court that made the order for costs.” The decision the appellants seek to appeal is only as to the claim for costs against Fogler Rubinoff, which were in the discretion of the court.
[5] Nothing in the Construction Act is inconsistent with this provision. Section 71 provides an appeal to the Divisional Court from a “judgment.” Subsection 50(2) of the Construction Act provides that the Courts of Justice Act and the rules of court apply to actions under Part VIII of the Act except to the extent of any inconsistency.
[6] The Construction Act does not define “judgment,” but the Rules of Civil Procedure do. Rule 1.03 defines a judgment to mean in relevant part “a decision that finally disposes of an application or an action on its merits.” We do not accept the appellants’ submission that the costs order in this case constitutes a judgment. It was an order that followed the result in the lien proceeding and not a separate action or application.
[7] Furthermore, s. 71 of the Construction Act does not address costs, whereas the Courts of Justice Act expressly requires that leave be obtained from an order only as to costs that are in the discretion of the court. Subsection 86(1) of the Construction Act states that costs under that provision are in the discretion of the court.
[8] We conclude that leave to appeal from this costs order is required.
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