



COURT OF APPEAL FOR ONTARIO

CITATION: 2441472 Ontario Inc. v. Collicutt Energy Services,
    2017 ONCA 452

DATE: 20170605

DOCKET:
C61735

Juriansz, Lauwers and Hourigan JJ.A.

BETWEEN

2441472 Ontario Inc.

Appellant

and

Collicutt Energy Services Corp.

Respondent

K. William McKenzie, for the appellant

Howard D. Krupat and Brendan Clancy, for the respondent

Heard: March 31, 2017

On appeal
from the decision of the
    Honorable Justice Robert MacKinnon J. of the Superior Court of Justice dated
    January 22, 2016 with reasons reported at 2016 ONSC 566
.

Lauwers J.A.:

[1]

The respondent Collicutt Energy Services Corp
    sold a piece of equipment known as a heat and power package and chiller HVAC to
    the appellant 2441472 Ontario Inc. (244) for about $520,000. The full amount
    of the purchase price was not paid.

[2]

The appellants failure to pay spawned a number
    of actions which led to five motions before the motion judge. In one of them,
    the appellant challenged Collicutts assertion that it had a valid purchase
    money security interest in the equipment registered under the
Personal
    Property Security Act,
R.S.O. 1990, c. P.10 (PPSA). It moved for an
    order to strike out and declare void the PPSA registration
. The
    appellant appeals the motion judges order dismissing the appellants motion.

[3]

244 is the plaintiff and Collicutt is the defendant in the action in
    which Collicutts motion was brought.  In the action 244 claims damages in the
    amount of $2,500,000, punitive damages in the amount of $1,000,000 and
    injunctive relief restraining Collicutt from interfering with 244s business
    relations. The statement of claim asserts that the equipment Collicutt
    delivered to 244 was late and inadequate. The claim for damages relates to
    delay and unforeseen costs. The claim for punitive damages is based on alleged
    interference with 244s business relations. Collicutt counterclaims for damages
    because 244 did not pay for the equipment in full.

A.

The Order under Appeal

[4]

The appellant argued on the motion below that since
    the alleged security agreement was never signed by Collicutt, it is not a valid
    security agreement, and therefore it is not effective to create a security
    interest under the PPSA.

[5]

On this issue, the motion judge gave the
    following reasons, at paras. 5-9:

Collicutt registered a Financing Statement on the
PPSA
system on June 15, 2015, recording the agreement between itself, 244, and
    2363265 Ontario Inc. (herein "236"). A Financing Change Statement was
    registered June 29, 2015.

Plaintiff's counsel argues that, since there was never any
    produced signed security agreement between his client and Collicutt, both
    financing statements were improper and both should be vacated. He points to s.
    11(2)(a) of the
PPSA
which in its material parts provides that the
    debtor must have signed a security agreement. He argues there was none. I
    disagree.

On April 9, 2014, Mr. Kocken, a principal of both 244 and 236,
    executed a Credit Application and Terms and Conditions of Sale which provided
    that title to, property in and ownership of the parts sold remain with
    Collicutt until all amounts were paid. Mr. Kocken signed on behalf of MCS
    Energy as that company's "VP" operations. MCS Energy is a business
    name of 236 and is a named defendant in Collicutt's Toronto trust action.

By December 12, 2014, Collicutt was issuing invoices to MCS Energy
    ("236") relating to its supply of the Heat and Power Package. Those
    invoices reserved title to the vendor. On that date Mr. Clydesdale, a principal
    of both MCS Energy and 244, directed Collicutt to re-issue its invoices to 244,
    rather than to 236. In addition, on June 5, 2015, Mr. Kocken on behalf of 244,
    signed an Equipment Purchase Agreement relating to that Heat and Power Package.
    It provided that title in the collateral at all times remained exclusively with
    Collicutt until its customer's payment in full of all amounts due was made. The
    security interest granted was a purchase money security interest (PMSI).

When considered as a whole these three documents satisfy me
    both that 236 and 244 intended to grant and did grant in writing to Collicutt a
    security interest in the Heat and Power Package. Accordingly, the plaintiff's
    motion for a discharge of Collicutt's security interest in that package is
    dismissed.

[6]

The appellant submits that the motion judge
    erred in law because under the PPSA there must be a security agreement signed
    by the appellant in favour of the respondent before notice may be registered
    under the PPSA security registration system.

[7]

The respondent disputes that submission on the
    merits, but also raises a procedural issue, arguing that this court has no
    jurisdiction over the appeal because the motion judges decision is
    interlocutory and the appeal should have been brought to the Divisional Court
    under s.19(1) of the
Courts of Justice Act,
R.S.O. 1990, c.
    C.43
.

B.

The Issues

[8]

The appeal raises two issues. The first is
    whether the order under appeal is final, giving this court jurisdiction to hear
    the appeal, or whether it is interlocutory and falls within the Divisional
    Courts jurisdiction under the
Courts of Justice Act
. The second issue is whether the motion judges order was correct.
    In view of my determination that the order is interlocutory, I do not reach the
    second issue.

C.

Is the Order under appeal interlocutory or
    final?

(1)

The Governing Principles

[9]

An interlocutory order is one that does not determine the real matter in
    dispute between the parties. It does not determine the very subject matter of
    the litigation, but rather only a collateral matter:
Hendrickson v. Kallio
,
    [1932] O.R. 675, at p. 678. The classic test is whether the order finally
    disposes of the rights of parties:
Hendrickson
, at p. 680.
    Furthermore, an order that disposes of an issue raised by the defence, thereby
    depriving the defendant of a substantive right that could be determinative of
    the entire action, is final:
Ball v. Donais
(1993), 13 O.R. (3d) 322
    (C.A.).

(2)

The Arguments on Appeal

[10]

The appellant argues that the order was final because the judge
    said there was a security agreement, decision that will bind the appellant in
    the lawsuit. The order finally
disposes of a substantive issue
    in the case, which is whether the respondent has a valid security interest in
    the equipment.
The order is therefore final unless this court reverses
    it.

[11]

The
    respondent argues the order was interlocutory for four reasons. First, the
    order did not determine any real matter in dispute between the parties. Second,
    the order did not terminate the action. Third, the order determined only a
    collateral issue because the PPSA registration is not referred to in any of the
    pleadings but only arose on the motion. Fourth, the order does not determine a
    claim or defence. The respondent asserts that the PPSA registration only
    determines what remedy might be available to the appellant if it is successful
    in the lawsuit. It is no more final than an order for security for costs or a
    preservation order.

(3)

The Principles Applied

[12]

I
    conclude that the order below was interlocutory for the following reasons.

[13]

The
    notice of motion giving rise to the decision below sought, an order striking
    out, vacating, or declaring void all PPSA registrations which were registered
    by the Defendant against the Plaintiff. The ground offered in the support of
    this request asserted that [t]he Defendant has no security interest in the equipment
    which is listed in the PPSA registration and does not have a security agreement
    for any equipment.

[14]

The
    jurisdictional basis for this aspect of the motion, nor any other aspect of it,
    was not pleaded. In particular, no sections of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194, nor the PPSA were mentioned. The motion was not framed
    as a motion for summary judgment or the determination of an issue before trial.

[15]

The
    motion judge dismissed the PPSA aspect of the motion. The provision in the
    formal order relating to it simply reads:

THIS COURT ORDERS THAT the Plaintiffs motion for a discharge
    of the Defendants security interest in the Heat and Power Package is
    dismissed.

[16]

As
    this court noted in
Ashak v. Ontario (Family Responsibility Office)
,
    2013 ONCA 375, 115 O.R. (3d) 401, at para. 13, in most instances, the content
    of the formal order is integral to determining what has been decided against a
    party in a fashion that is binding. It is well-established that an appeal lies
    from the order, not from the reasons given by the judge making it:
Ashak
,
    at para. 13;
Grand River Enterprises v. Burnham
(2005), 197
    O.A.C. 168 (C.A.), at para. 10.

[17]

In
    the summary judgement context, this court has said that purported findings of
    fact or law by a motion judge who dismisses a summary judgment motion do not
    have binding effect in the subsequent proceeding unless the judge invokes the
    power to make such findings under rr. 20.04 or 20.05:
Skunk v. Ketash
,
    2016 ONCA 841, 94 C.P.C. (7th) 141, at paras. 35-36. A motion judge who intends
    to make such findings should specifically say so, and the order should refer to
    the relevant rule:
Skunk
, at paras. 35-36.

[18]

In
    his reasons for dismissing the motion for discharge of the respondents PPSA
    registrations, the motion judge engaged in an analysis of whether or not a
    valid security interest existed. He considered whether an agreement between the
    parties gave rise to a security interest. He purported to find that there was a
    valid security agreement between the parties, and dismissed the motion.

[19]

However,
    in the absence of explicit language from the motion judge finally determining
    the enforceability of any agreement between the parties, I am not persuaded
    that the motion judge did so. While he referred to documents passing between
    the parties, he only did so in support of his conclusion that there was no
    basis to discharge the PPSA registration. The motion judge simply expressed his
    reasoning for dismissing the motion. The formal order does not contain any
    final determinations, nor is there a disposition section in the reasons which
    purports to do so. The formal order simply dismisses the motion.

[20]

Moreover,
    the validity of the PPSA registration is not the real issue in dispute between
    the parties. The real issue is who owes what to whom in relation to the
    equipment and its alleged deficiencies. The existence of, or basis for, a
    security interest in the equipment is not addressed in the statement of claim
    or in the statement of defence and counterclaim. Collicutts counterclaim
    claims, amongst other relief, damages for breach of contract. The issue of the
    enforcement of the net debt, if any, owed to Collicutt is derivative to, and not
    determinative of, the real issue.

[21]

The
    order is interlocutory. This court has no jurisdiction over the appeal and it
    is quashed with costs payable by the appellant to the respondent in the amount
    of $5,000 inclusive of disbursements and taxes. However, the appellant is free
    to pursue an appeal to the Divisional Court.

Released: RGJ JUN 05 2017

P. Lauwers J.A.

I agree. R. G.
    Juriansz J.A.

I agree. C.W.
    Hourigan J.A.


