Decisions of the Court of Appeal

COURT OF APPEAL FOR ONTARIO

CITATION: 9806881 Canada Corp. v. Swan, 2024 ONCA 35

DATE: 20240118

DOCKET: COA-23-CV-0807 & M54681[1]

van Rensburg, Roberts and Favreau JJ.A.

BETWEEN

9806881 Canada Corp.

Applicant (Respondent)

and

Glen Swan, Toronto Aircraft Inc. and Toronto Aircraft Maintenance Inc.

Respondents (Appellants)

James M. Wortzman and Jared C. Wortzman, for the appellants

Patricia Virc and Robert Karrass, for the respondent

Heard: November 21, 2023

On appeal from the order of Justice Jill C. Cameron of the Superior Court of Justice, dated July 19, 2023, with reasons at 2023 ONSC 4200.

REASONS FOR DECISION

[1]          The appellants appeal the application judge’s order declaring that they do not have a possessory lien over the respondent’s aircraft under the Repair and Storage Liens Act, R.S.O. 1990, c. R.25 (“RLSA”). We agree with the appellants’ submission that the application judge erred in vacating the lien given her direction that the parties could litigate whether there were any amounts owing to the appellants for repairs carried out on the respondent’s aircraft.

[2]          Section 3 of the RSLA prescribes when a lien arises for repairs to an “article”, defined under s. 1 as “an item of tangible personal property other than a fixture”. For the purposes of this appeal, the following provisions are relevant:

3 (1) In the absence of a written agreement to the contrary, a repairer has a lien against an article that the repairer has repaired for an amount equal to one of the following, and the repairer may retain possession of the article until the amount is paid:

1.  The amount that the person who requested the repair agreed to pay.

2.  Where no such amount has been agreed upon, the fair value of the repair, determined in accordance with any applicable regulations.

3.  Where only part of a repair is completed, the fair value of the part completed, determined in accordance with any applicable regulations.

(2) A repairer’s lien arises and takes effect when the repair is commenced, except that no repairer’s lien arises if the repairer was required to comply with sections 56 and 57, subsection 58 (1) and section 59 of the Consumer Protection Act, 2002, if applicable, and the repairer has not done so.[2]

[3]          The appellants assert a possessory lien over the respondent’s aircraft arising out of unpaid repairs. The trial judge found that the parties entered into two written agreements with respect to the scope of work to be carried out on the respondent’s aircraft, and the scope of work particularized in the first agreement was superseded and expanded by the second agreement dated September 9, 2020. She also determined that the scope of work was not limited to the work itemized in the second agreement as the second agreement provided that it was based on the current work scope and that “[a]ny additional items added or found will be presented to [the respondent] for review/approval”. Moreover, the application judge also accepted that further authorized work had been completed beyond the scope of work prescribed by the first and second agreements. There is no dispute that to-date the respondent has paid the appellants $1,066,097.16 for repairs to the respondent’s aircraft.

[4]          The dispute between the parties focusses on the unpaid work outlined in the appellants’ April 19, 2023 invoice, which was delivered following the commencement of the respondent’s application.

[5]          The appellants submit that the work outlined in their April 19, 2023 invoice represents additional and authorized repairs, in compliance with the parties’ second agreement, and supports their possessory lien. They rely on the evidence given by affidavit and on cross-examination by Glen Swan (the principal of the appellant corporations), Gabriel Willmott and Thomas Paulovits (employees of the appellant Toronto Aircraft Maintenance Inc.), as well as the cross-examination of William Nezami, the respondent’s CEO and owner, who denied only that he gave any approval “in writing”, and the written communications between the parties that suggest the work was requested and authorized by the respondent. There is no challenge to the expert evidence given by Martin Proulx that the amount in the April 19, 2023 invoice reflects the fair value of the work described.

[6]          The respondent maintains that this work should have been completed within the scope of work contemplated in the two agreements or that it was additional work that was unauthorized. In either event, the respondent submits that it owes nothing further to the appellants, the appellants have no basis for a possessory lien, and its aircraft should be returned.

[7]          The application judge accepted that the appellants had carried out additional work on the aircraft but found it was not authorized in writing. However, in her analysis leading to that finding, she did not engage with the provisions of the RSLA, in particular, s. 3, reproduced above, nor with the parties’ evidence concerning their oral and written communications about the additional scope of work to be carried out on the respondent’s aircraft and the respondent’s authorization of the work.

[8]          For example, she did not address the import of Mr. Nezami’s September 15, 2022 email to Mr. Swan, which, on its face, could support the appellants’ position that the additional work was authorized and the parties would sort out the amount owing:

-      I am absolutely fine to cover any cost that was not covered as per the fixed cost agreement and that I have agreed and approved to cover.

-      As my very last olive branch to extend, I suggest to you to fully complete the work on the aircraft in a fly away condition as was promised and once aircraft reaches that stage we will sit down and examine all costs that need any review or discussion and as I have said I have no issue to cover anything that falls within my responsibility. [Emphasis added.]

[9]          Without indicating if or why she rejected the parties’ evidence ostensibly supporting the respondent’s oral and written authorization of the additional work, she determined that there was no “written” authorization of the additional work. She therefore concluded that there was no right to a possessory lien.

[10]       In order to conclude definitively that the appellants had no possessory lien for repairs to the respondent’s aircraft, the application judge had to determine, first, whether the work was authorized and, second, whether there were any monies owing to the appellants by the respondent.

[11]       The application judge’s findings are problematic. She did not explain why she rejected the evidence supporting the respondent’s oral and written authorization of the additional repairs. Moreover, there was no requirement in the parties’ agreement that the authorization of any repairs had to be in writing and the respondent admitted that he had orally authorized repairs, albeit allegedly minor ones. Finally, despite her finding that the additional repairs were not authorized, she nevertheless acknowledged that there could still be monies owing to the appellants for those repairs, without indicating the basis for the potential liability, and directed that the parties litigate the issue.

[12]       In our view, the application judge failed to make the necessary findings to support her conclusion that the appellants did not have a possessory lien over the respondent’s aircraft. There are triable issues with respect to whether the work was authorized by the respondent and whether there are any monies owing by the respondent to the appellants for repairs. In accordance with s. 3 of the RSLA, given the application judge’s finding and the appellants’ evidence that additional repairs were carried out, until the issues of whether the repairs were authorized and whether monies are owing to the appellants are determined, the appellants have a right to assert a possessory lien over the aircraft.

Disposition

[13]       Accordingly, we allow the appeal. The application judge’s order is set aside. We declare that the appellants have a possessory lien under the RSLA until further court order. The following issues are remitted to trial in the Superior Court of Justice:

1.    Whether the work described in the appellants’ April 19, 2023 invoice should have been completed under the scope of work contemplated by the parties’ first and second written agreements;

2.    If the work was additional to the two written agreements, whether it was authorized by the respondent, in writing or orally; and

3.    If the work was authorized, what amounts, if any, are owing by the respondent to the appellants.

[14]       If the parties cannot agree on the issue of costs of the appeal, the motion before this court and the application below, they may deliver brief written submissions of no more than three pages, plus a costs outline, within 10 days of the release of these reasons.

“K. van Rensburg J.A.”

“L.B. Roberts J.A.”

“L. Favreau J.A.”