



COURT OF APPEAL FOR ONTARIO

CITATION: Environmental Waterproofing Inc.
    v. Huron Tract Holdings Inc., 2021 ONCA 835

DATE: 20211124

DOCKET: C69086

Gillese, Trotter and Nordheimer
    JJ.A.

BETWEEN

Environmental
    Waterproofing Inc. and Randy Wilson c.o.b. Maple Hill Electric

Plaintiffs (Respondents)

and

Huron
    Tract Holdings Inc., John D. Marshall, The Estate of Richard Lehnen,
Jake Bulk and
United Communities Credit Union

Defendants (
Appellant
)

Sean N. Zeitz, for the appellant

Martha Cook, for the respondents

Heard: November 19, 2021

On appeal from the order
    of Justice Maria V. Carroccia of the Superior Court of Justice, dated January
    12, 2021, with reasons reported at 2021 ONSC 278.

REASONS FOR DECISION

[1]

Libro Credit Union
    Limited (formerly United Communities Credit Union)
appeals
    from the order made by the motion judge in which she dismissed the appellants motion
    for a declaration that it had priority to certain funds held by the Sheriff in
    response to garnishment proceedings.

[2]

The issues between the parties arise out of
    steps that the respondents took to garnish monies that Jokey Plastics North
    America Inc. (Jokey) owed to Huron Tract Holdings Inc. (Huron). Huron
    operated a commercial real estate management company. It was placed into
    receivership. The respondents were owed monies by Huron. It discovered that
    Jokey owed monies to Huron. The respondents took garnishment steps against
    those funds pursuant to a default judgment they had obtained against Huron.

[3]

Initially, Jokey refused to pay the monies
    covered by the garnishment. About a month later, the appellant became aware of
    the garnishment steps. The appellant is a secured creditor of Huron. The
    appellant advised the respondents of its security interest and of its priority
    claim to the monies owed by Jokey.

[4]

The respondents brought a motion to require
    Jokey to pay the monies to the Sheriff pursuant to the garnishment. The motion
    came on before Gorman J., who ordered Jokey to pay certain monies to the
    Sheriff. The monies ordered to be paid to the Sheriff were the monies over
    which the appellant and the respondents had the priority dispute. Other monies
    that Jokey owed Huron were paid directly by Jokey to the appellant pursuant to
    its security interest.

[5]

The appellant then brought a motion for an order
    determining that it had the right to receive the monies that had been paid to
    the Sheriff. That motion initially came on before Garson J., who, on consent,
    adjourned it to a special hearing date and also set a schedule for the delivery
    of materials.

[6]

The appellants motion came on for hearing
    before the motion judge. At the hearing, the respondents took the position that
    the issue of priority had been determined by Gorman J. and that the appellants
    motion amounted to a collateral attack on that order. The motion judge accepted
    the respondents position and dismissed the appellants motion.

[7]

With respect, the motion judges conclusion that
    Gorman J. had determined the priority issue is simply wrong. There was no such
    determination made by Gorman J. in her endorsement, and no such determination
    appears in her order  realities that counsel for the respondents was compelled
    to acknowledge before us. Indeed, in her endorsement, Gorman J. said, in
    relation to the priority dispute, [t]his may indeed be an issue for another
    day. While the motion judge refers to this portion of the endorsement, she
    found that it does not necessarily assist in answering that question.

[8]

The simple fact is that there was never any
    determination of the priority dispute. The motion judge erred in concluding
    otherwise.

[9]

The appeal is allowed, the order of the motion
    judge is set aside, and the matter is returned to the Superior Court of Justice
    for a hearing of the priority dispute on its merits before a different judge.
    The appellant is entitled to its costs of the appeal which are fixed in the
    agreed amount of $
20,000
,
    inclusive of disbursements and HST. The appellant is entitled to its costs of
    the motion below, which were fixed by the motion judge also in the amount of $
20,000
, inclusive of disbursements and HST.

E.E. Gillese J.A.

Gary Trotter J.A.

I.V.B. Nordheimer J.A.


