In TRS Components Ltd. v. Devlan Construction
Ltd., released April 29, 2015, the Ontario Court of Appeal
held that the judgment on a counterclaim brought in a claim
commenced under the Construction Lien Act
is a judgment "under the
[Construction Lien] Act" even when the lien itself
was discharged, and the claim for lien dismissed, before trial.
This is important as the appeal of such a judgment will proceed to
the Divisional Court instead of the Court of Appeal.
The decision emerged from an unusual procedural history. The
plaintiff's claim for a lien was struck out, and the lien was
discharged, due to failure to answer undertakings and refusals.
However, the defendant's counterclaim proceeded to trial and
the defendant obtained judgment for nearly $70,000. The plaintiff
appealed the judgment on the counterclaim to the Court of
In Ontario, the Courts of Justice Act provides that an
appeal lies to the Court of Appeal from a final order of the
Superior Court, unless the appeal lies to the Divisional Court
under another Act. Section 71(1) of the Construction Lien
Act provides that "an appeal lies to the Divisional Court
from a judgment [...] under this Act". Accordingly, the Court
of Appeal had to consider whether the judgment on the counterclaim
was a judgment under the Construction Lien Act.
The Court of Appeal held that the Construction Lien Act
should be interpreted broadly to provide a summary proceeding for
the trial of claims brought under it, including counterclaims,
crossclaims and third party claims. This accords with the language
and purpose of the Construction Lien Act.
While the discharge of a lien may lead to an order that
the remainder of an action proceed on the "ordinary"
track, the Court held "unless such an order is made, the trial
of the action or any part of the action commenced under the Act
will proceed under the Act, and will result in a
'judgment...under [the] Act' within the meaning of s.
71(1)" (para. 20). The Court further held:
"The dismissal of the lien claim did not automatically
remove the counterclaim from the construction lien proceeding; to
the contrary, the counterclaim continued in the original
construction lien action, with the same title of proceedings"
"the failure to take certain procedural steps typically
required before a construction lien trial does not take the matter
outside of the construction lien procedure" (para. 25).
Normally, when an appeal is brought to the wrong court in
Ontario, the appeal is quashed and the appellant must seek an
extension of time to appeal to the correct court (or seek leave to
do so). However, in this case, "where there was an arguable
question on the issue of jurisdiction", the Court of Appeal
exercised its discretion to transfer the appeal to the Divisional
Court. It would seem likely that the Court of Appeal felt the
plaintiff had made an understandable mistake and wanted to
eliminate an additional procedural hurdle for the parties.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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