Case: 1579959 Ontario Inc. v. Sheikh, 2025 ONCA 688
Keywords: proceeding in wrong forum; jurisdiction; Construction Act, RSO 1990, c C.30; Courts of Justice Act, R.S.O. 1990. C. C.43
Synopsis:
This case is about the jurisdiction of the Court of Appeal vs. the Divisional Court with respect to orders made pursuant to the Ontario Construction Act, here in relation to a lien action.
By way of background, the moving parties retain the responding party to undertake home renovations. The total contract price is $232,020.86 plus HST. (See para. 3). The moving parties make partial payments totalling $91,598.08 but ultimately decline the final invoice alleging the responding party abandoned unfinished work. (See para. 4).
The responding party then brings a lien action under the Construction Act; the trial judge awards damages of $105,804.92 plus prejudgment interest of $5,642.93 and costs of approximately $98,000. (See para. 5).
The moving parties’ former counsel thereafter serves and files a notice of appeal at the Court of Appeal for Ontario. However, pursuant to s. 71(1) of the Construction Act, the appeal “properly lies” with Divisional Court. (See para. 8). The responding party advises the moving parties that they are proceeding in the wrong jurisdiction, and, outside the 15-day period for filing. (See para. 8).
To address the jurisdictional quandary, the moving parties’ new counsel seek an order under s. 110 of the Courts of Justice Act, R.S.O. 1990. C. C.43, transferring their appeal to Divisional Court and extending time to serve and file their notice of appeal in that forum. (See para. 1). The responding parties do not consent to the transfer. (See para. 11). Monahan J.A. hears the parties’ contested motion to transfer, orders that the matter be transferred to Divisional Court, and orders that the time for serving and filing the notice of appeal be extended. (See para. 23).
Importance:
Section 110(1) of the Courts of Justice Act is titled “Proceeding in wrong forum”. It provides discretion to transfer a proceeding to another court – in this case, it provides Monahan J.A. discretion to transfer the moving parties’ appeal to the Divisional Court and to do so “as if it had been commenced in that court”. (See Courts of Justice Act, RSO 1990, c C.43, ss. 110(1) and (2)). As noted by Monahan J.A., there are three factors that should be taken into consideration when exercising this discretion:
- the merits of the proposed appeal;
- whether the respondent will suffer undue prejudice as a result of further delay while the appeal is waiting to be heard; and
- whether the appellant has moved expeditiously once it became aware that jurisdiction was in dispute. (See para. 13; Bernard v. Fuhgeh, 2020 ONCA 529 (CanLII), at para. 15).
As described by Monahan J.A., the merits threshold is not high: “[t]he court considers the merits of the appeal merely in its role as gatekeeper, ensuring that further judicial resources are not wasted on a frivolous appeal that obviously has little or no prospect of success.” (See para. 14). Monahan J.A. cautioned that the court’s consideration of this factor should not turn the proceeding into a “mini-appeal” – the judge considering the transfer request should not determine the appeal. (See para. 15). In this case, Monahan J.A. declined the invitation to engage in a “detailed consideration of the evidence, arguments or conclusions in the court below, and thus express no opinion on the likely outcome of the appeal.” (See para. 20).
Regarding the issue of prejudice, Monahan J.A. found that the moving parties “have a right of appeal” and that the transfer ensures they will not be “deprived of that right due to an error by their [former] counsel in filing the appeal in the wrong court”. (See para. 21). Finally, with respect to the third factor, Monahan J.A. found the moving parties “acted expeditiously”. (See para. 22).
Based on the foregoing, Monahan J.A. ordered that the appeal be transferred to the Divisional Court and extended the moving parties’ time for service and filing of their notice of appeal. However, Monahan J.A. reserved costs of the motion to the Divisional Court panel deciding the appeal to reflect the fact that “the motion was made necessary by their [former] counsel’s error in filing the notice of appeal in the wrong court”. (See para. 24).
Counsel for the Moving Parties: Joan Kasozi and Fatma Uyuklu (Cambridge LLP, Toronto)
Counsel for the Responding Party: Calvin Zhang and Helen Lu (Starkman Lawyers, Markham)