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MGW-Homes Design Inc v. Pasqualino, 2024 ONCA 422; MGW Homes Design Inc v. Pasqualino, 2024 ONSC 2852

Overview & Facts

The Ontario Court of Appeal and the Ontario Superior Court of Justice, Divisional Court each recently released a decision on MGW-Homes Design Inc v. Pasqualino. The decisions stemmed from the same appeal from an order vacating a writ of enforcement pursuant to an adjudication decision.

In brief, Pasqualino and MGW-Homes Design Inc. sought to resolve a construction contract dispute through the adjudication process. The adjudicator’s decision resulted in an award of $119,314 to be paid to MGW Homes. MGW Homes filed the adjudicator’s decision with the court, but failed to give notice to Pasqualino that they did so as required by s 13.20(3) of the Construction Act. MGW Homes subsequently obtained a writ of enforcement, which Pasqualino disputed. The motion judge found that MGW Homes’ violation of s 13.20(3) was fatal not only to MGW Homes’ writ of enforcement, but also to any future attempts to enforce the adjudicator’s order.

MGW Homes appealed the order vacating the writ of enforcement to both the Ontario Court of Appeal and the Divisional Court.

(i) Jurisdiction of the Court

The Ontario Court of Appeal considered whether it had jurisdiction to hear the appeal. The issue was resolved through the interpretation of the term “judgment” in s 71(1) of the Construction Act.

Relying on the precedents from Villa Verde LM Masonry Ltd v. Pier One Masonry Inc., [2001] OJ No 1605 and TRS Components Ltd v. Devlan Construction Ltd., 2015 ONCA 294, the Court of Appeal held that the term “judgment” should be construed broadly. Accordingly, an order to vacate a writ of enforcement is a “judgment” under the Construction Act, and any right of appeal would fall within the jurisdiction of the Divisional Court.

(ii) Judicial Discretion to Grant Remedies Where the Construction Act is Silent

The Divisional Court went on to decide whether MGW Homes’ failure to give notice pursuant to s 13.20(3) of the Construction Act was fatal to any future enforcement of the adjudicator’s decision. The parties did not dispute that the order vacating the writ itself was an appropriate remedy for MGW Homes’ failure to give notice.

The Divisional Court made three key findings in holding that the court may exercise judicial discretion in granting remedies for non-compliance with the adjudication provisions. First, the Construction Act is silent on the consequence for non-compliance with s 13.20(3). In light of this, as well as the Construction Act’s central goal of expediency, judicial discretion in granting a remedy where the adjudication provisions do not provide for one is appropriate.

Second, adjudication determinations are not analogous to lien claims. Whereas lien claims affect rights and obligations under the Construction Act and require strict compliance, adjudications are part of the prompt payment regime. Rather, to achieve expediency, “[t]he notice requirement is more properly seen as a statutorily required courtesy...”, allowing for some forgiveness for non-compliance.

Finally, the writ is not completely void for non-compliance with the notice provision. Accordingly, the remedy is subject to judicial discretion. While some consequence is clearly required, its extent is highly circumstantial.

Given that MGW Homes agreed that the order vacating the writ was appropriate for their failure to give notice, the court declined to exercise its discretion to grant a different remedy. The Divisional Court, however, provided a list of factors to be considered in similar cases going forward: 1) the severity of the non-compliance; 2) an explanation for the non-compliance; and 3) prejudice to the payor. Ultimately, the Court’s exercise of discretion requires consideration of all the circumstances.

The related decisions from the Ontario Court of Appeal and the Divisional Court shed insight on the court’s jurisdiction with respect to adjudication determinations. First, appeals from “judgments” flowing from adjudication decisions lie with the Divisional Court, not with the Court of Appeal. Second, non-compliance with s 13.20(3) is not necessarily fatal to a writ of enforcement. Underlying both decisions is the overarching goal of expediency within the prompt payment regime of the Construction Act. These cases represent a push for actual cash flow within construction hierarchies and eliminating legal barriers to the completion of construction projects.