Executive Summary: Key Legal and Evidentiary Issues

• Appellate jurisdiction turned on whether the proceeding was “under” the Construction Act, thus requiring an appeal to the Divisional Court rather than the Court of Appeal.
• The underlying dispute concerned the validity of a construction lien registered for remediation work following sewage damage to a residential basement.
• Characterization of the remediation work as an “improvement” under ss. 1(1) and 14(1) of the Construction Act was central to the application judge’s decision to uphold the lien.
• The form of the proceeding (application instead of motion) did not override its substance, which was a lien-validity challenge under s. 47(1) of the Construction Act.
• Prior appellate authorities interpreting s. 71(1) of the Construction Act guided the finding that appeals in purely Construction Act matters, including orders, lie to the Divisional Court.
• The Court of Appeal exercised its statutory power under s. 110(1) of the Courts of Justice Act to transfer the appeal and left costs of the aborted appeal to be determined by the Divisional Court.

Background and facts of the dispute

The case arises from a residential property owned by Elena Attin, whose basement suffered damage due to a sewage backup. Her daughter, Alisa Chaly, was in possession of the property and dealt directly with the remediation of the damage. Structured Restoration Inc., the respondent, performed remediation work to address the sewage damage in the basement. After completing the work, the respondent claimed that Ms. Chaly owed payment for the remediation services. When Ms. Chaly refused to pay the full amount claimed, the respondent registered a construction lien against the property owned by Ms. Attin.
In response to the registered lien, Ms. Chaly commenced a proceeding seeking to have the lien removed from title. She framed her proceeding as an application to discharge the lien and brought it in reliance on the Construction Act, identifying that statute as the basis for the relief she sought.

Proceedings before the application judge

Before the Superior Court of Justice, the core issue was whether the remediation work done by Structured Restoration Inc. qualified as an “improvement” within the meaning of the Construction Act. The judge considered the statutory definition of “improvement” in s. 1(1) and the lien-related provision in s. 14(1). Those provisions together govern when work or services give rise to a lien right under the Act.
The application judge concluded that the remediation work undertaken following the sewage backup fell within the statutory concept of an “improvement” to the property. On that basis, the work supported a valid lien in favour of the respondent. The judge therefore dismissed Ms. Chaly’s application to have the lien discharged and left the lien in place.

How the appeal reached the Court of Appeal

Dissatisfied with the dismissal of her application, Ms. Chaly appealed to the Court of Appeal for Ontario. In her materials, she continued to rely on the Construction Act, specifically explaining that she had proceeded under s. 47(1), which empowers the court to discharge a lien “on motion” on any proper ground. Although the section speaks of a motion, she had instead used an application.
Before the scheduled hearing, the Court of Appeal itself raised a preliminary question: whether it had jurisdiction to hear the appeal, or whether the proper appellate court was the Divisional Court under s. 71(1) of the Construction Act. That provision directs that appeals from judgments or orders made in certain Construction Act proceedings are to the Divisional Court.
Initially, Ms. Chaly maintained in writing that the Court of Appeal had jurisdiction. The respondent, however, argued in its factum that, in light of s. 71(1) and the nature of the proceeding, the appeal lay to the Divisional Court. Upon reviewing the respondent’s submissions, Ms. Chaly later advised that she agreed the appeal should have been brought in the Divisional Court.

Legal framework for appellate jurisdiction

Section 71(1) of the Construction Act provides that, except as otherwise specified, an appeal lies to the Divisional Court from a judgment or from an order made on a motion to oppose confirmation of a report under the Act. The Court of Appeal’s prior jurisprudence has interpreted this provision broadly. In earlier cases, it has held that when a matter involves only proceedings under the Construction Lien Act (now the Construction Act), the proper appellate route is to the Divisional Court. This line of authority has also clarified that the Divisional Court’s jurisdiction extends to appeals from orders under the Act, not only formal “judgments.”
The Court contrasted this situation with decisions where the impugned judgment was not made “in reliance on the Construction Act,” such as where the underlying order was grounded in another source of jurisdiction (for example, summary judgment under the Rules of Civil Procedure). In such circumstances, the Construction Act’s special appeal route does not govern.

Why this proceeding was treated as a Construction Act matter

In examining its own jurisdiction, the Court of Appeal focused on the substance of what Ms. Chaly had done. The notice of application expressly stated that it was brought pursuant to and in reliance on the Construction Act. The relief sought was the discharge of a lien registered under that statute, a remedy specifically contemplated by s. 47(1), which authorizes the court to discharge a lien “on any … proper ground.”
The application judge’s decision turned on interpreting provisions of the Construction Act, in particular the definition of “improvement” in s. 1(1) and the lien provision in s. 14(1). The Court of Appeal characterized this as precisely the type of issue that falls squarely within the ambit of the Act. The proceeding’s essence was a challenge to the validity of a lien created and governed by the Construction Act.
Although Ms. Chaly had used an application instead of a motion, the Court refused to allow that procedural choice to dictate appellate jurisdiction. It noted that, arguably, the more appropriate forum for the lien challenge might have been within the existing action the respondent had brought to recover its account and enforce the lien. Nonetheless, that issue had not been raised below, and the Court considered it would be placing “form over substance” to treat the use of an application rather than a motion as determinative. What mattered was that the dispute involved the validity of a lien and required interpretation and application of the Construction Act.

Decision to transfer the appeal to the Divisional Court

Having determined that the proceeding was fundamentally a Construction Act matter governed by s. 71(1), the Court of Appeal concluded that it did not have jurisdiction to determine the merits of the appeal. Instead, the proper appellate forum was the Divisional Court.
To avoid penalizing the parties for having commenced the appeal in the wrong court, the Court of Appeal relied on its statutory authority under s. 110(1) of the Courts of Justice Act. That provision permits it to transfer a proceeding to the court that has jurisdiction to deal with it. The panel held that this case was appropriate for such a transfer and ordered that the appeal be transferred to the Divisional Court.
As both parties had agreed that any question of costs related to the misdirected appeal should be resolved elsewhere, the Court of Appeal directed that the costs of the appeal before it be determined by the Divisional Court. At this stage, there is no final monetary award or quantifiable costs order in favour of either party that can be ascertained from the decision; accordingly, the amount, if any, that may ultimately be granted to the successful party cannot be determined from this judgment.