La Rive Developments Inc. v. Metro Glass Products Ltd., 2010 ABQB 308

Court of Queen ’ s Bench of Alberta Citation: La Rive Developments Inc. v. Metro Glass Products Ltd., 2010 ABQB 308 Date: 20100505 Docket: 0901 15468 Registry: Calgary Between: La Rive Developments Inc. Applicant - and - Metro Glass Products Ltd. Respondent And Between Metro Glass Products Ltd. Plaintiff La Rive Developments Inc., the City of Calgary , River Park Tower Investments Limited, MCAP Financial Corp. and Bancorp Mortgage Growth Fund Ltd . Defendants _______________________________________________________ Memorandum of Decision

of K.R. Laycock, Master in Chambers _______________________________________________________ [ 1 ] La Rive Development Ltd. ( La Rive) filing an Originating Notice of Motion requesting relief pursuant to the Builders Lien Act section 48 (1) (a). On October 15, 2009 Master Prowse granted a consent order allowing La Rive to pay $132,110.00 into court to stand in place of Metro Glass Products Ltd.’s (Metro) builders lien. On payment of the funds into court, the lien was to be discharged from La Rive’s land.

The order further provided that Metro must file a statement of its claim in this proceeding within 30 days of the order. Any statement of defence was to be filed within 15 days thereafter. [ 2 ] The full amount of the fund was paid into court the same day. On October 23, 2009 Metro filed it’s statement of claim. On November 6, 2009 La Rive filed a statement defence and counterclaim. Rule 187 would require affidavits of records to be filed and served by the parties on a before February 4, 2010. A statement of defence to counterclaim and joinder of issue was filed November 17, 2009.

On December 23, 2009 the plaintiff filed and served a notice to prove lien upon the defendant. On January 6, 2010 the defendant filed its affidavit proving lien. [ 3 ] On January 28, 2010 the plaintiff filed its affidavit of records. By motion, it asked the court to grant an order a setting time for filing further affidavits, conducting cross examination on affidavits, providing answers to any undertakings, and to make further orders for the expeditious determination of this matter.

On February 4, 2010 an order was granted giving leave to the parties to proceed to examinations for discovery and allowing further application to the court for directions with respect to scheduling. No order was made directing the defendant to file an affidavit of records. [ 4 ] On March 3, 2010 the plaintiff filed an application requesting an order that the defendant pay a penalty of costs pursuant to rule 190 and 190.1 on the basis that the defendant failed to file its affidavit of records within time.

Rules 190 and 190.1 provide penalties for party failing to file its affidavit of records within the time-limited by rule 187. The evidence establishes that the plaintiff filed and served its affidavit of records within the time limit. The defendant has failed to file its affidavit records within the time limit but argues that there is sufficient cause for its failure. My decision in this matter was given orally and I promised written reasons.

This is therefore the formal reasons for my decision. [ 5 ] If the defendant can satisfy the court that there is a sufficient cause for its failure to file its affidavit of records, it may avoid any of the penalties prescribed by rules 190 and 190.1. The defendant argues that by virtue of the Builders Lien Act R.S.A. 2000 c. B-7,

section 53 , parties to a builders lien action are not required to file an affidavit of records because the issue of what steps in the proceeding are necessary is to be dealt with at the pretrial application.

Section 53 states:

(1) At any time following the expiry of the time limited for defence, the plaintiff may, and before setting the action down for trial the plaintiff shall, make a pretrial application.

(2) The plaintiff shall serve notice of the pre-trial application on all other parties to the proceedings, at least 10 days before the date of the application. (3) on the hearing of the pre-trial application,..... (

b) if defence has been filed, the court may give judgment declaring valid any liens in respect of which no notice to prove lien has been filed, (

c) the court may consider the affidavits filed on service of notice to prove lien and the transcript of any examination on them, and may (

i) determines summarily the validity of the liens concerned,

(ii) hear oral evidence, and (iii) direct that at the trial of the action any particular issue or issues arising on the application be determined, (

d) the court may make any further order or direction that it considers necessary or desirable including, among other things, an order that the property be sold pursuant to this Act and an order that the action be entered for trial,.... (

f) the court may order that examinations for discovery be held, but no examinations for discovery may be held without an order of the court. [ 6 ] Other sections of the Act have a bearing on this application. Section 52 (3) allows any party to serve on any lien holder a notice to prove lien. Subsection 4 requires that a lien holder, served with a notice to prove lien, has 15 days to file an affidavit providing detailed particulars of the lien. The lien holder who fails to file his affidavit within 15 days, or such further time as the court may allow, loses the lien. [ 7 ]

Section 64 of the act states: The Alberta Rules of Court apply to all actions brought under this Act except where and to the extent that they are inconsistent with this Act or the rules prescribed under this Act. [ 8 ] Section 49 (6) states: The procedure in adjudicating on the claims shall be of a

summary character, so far as is possible, having regard to the amount and nature of the liens in question and the enforcement of them at the least expense. [ 9 ] In Integrated Roof Services Ltd. v. Decoking, Descaling Technology Inc. [2002] A.J. No. 1292 , 2002 ABQB 942 , 20 C.L.R. (3d) 277 , 117 A.C.W.S. (3d) 872 , I reviewed the interrelationship of the Builders Lien Act ,

part 48 of the Rules (Streamline Procedure) and rule 190.

Part 48 provides that if the streamlined procedure applies, a party’s affidavit of records must be filed within 30 days. In that case no issue arose with respect to noncompliance with rule 190, because the 90 day time limit had not yet expired. [ 10 ] It was determined that the Builders Lien Act provided for special streamlined procedures to deal with lien claims and therefore

Part 48 did not apply. This recognized the fact that at any time following the issuance of the statement of claim, a party may resort to section 52(3) and require a lien holder to file an affidavit proving its lien. This process is designed for the speedy determination of the validity and amount of the lien. On simple lien actions this may be very effective. Matters at issue may be resolved quickly without the requirement to file an affidavit of records or proceeding to an examination for discovery.

If the parties cannot resolve the issues after the filing of an affidavit proving lien, section 53 (2) allows the court, at the pretrial application, to determine the matter summarily. If matters are complex or there are serious factual issues in dispute, the court will direct discovery and trial.

In this case, the defendant argues that this direction is meant to include document discovery as well as examination for discovery. [ 11 ] The defendant argues that these various sections of the Builders Lien Act show a clear intent to have lien issues dealt with summarily, and if they cannot be dealt with summarily then, the court, on application is to direct the pace of proceedings. The whole purpose of the act is to allow for an early resolution of lien issues, failing which the action is to proceed at a rapid pace.

This can be seen in Section 46(2) which states: Notwithstanding section (1), if no trial has been held within two years from the date of the registration of the certificate of lis pendens, and any interested party may apply on notice to the court to have the certificate of lis pendens vacated and the lien to which it relates discharged.

[ 12 ] In Integrated Roof Services Ltd. the court stated at paragraph 15: In this action after filing an affidavit to prove lien, the defendant has a right to cross examine on the affidavit. Following the examination on the affidavit proving lien the plaintiff should bring a pretrial application under

section 53 . If the matter cannot be dealt with summarily, the court can authorize an examination for discovery and set time limits for filing affidavits of records if they are necessary. [ 13 ] The Court of Appeal of Alberta in Anthony M. McWilliams Design Ltd. v. Paul Adrian Fowler and Patricia Marie Fowler 2004 ABCA 370 referred to Integrated Roof Services Ltd. in concluding that a rule is inconsistent with the Builders Lien Act when its application would yield a result contrary to the intent of the Builders Lien Act .

In such a circumstance the rule must yield to provisions of the act. [ 14 ] The plaintiff argues that the requirement to file an affidavit of records is governed solely by the Alberta Rules of Court , since there is no provision in the A ct which deals with filing an affidavit of records. It argues that the Act requires a pretrial application to deal with all steps in the proceeding at the examination for discovery stage. It argues that any steps allowed or required to be taken in the action prior to examination for discovery are governed solely by the rules.

There are sections in the Act which may impact procedure in a builders’ lien action, namely: s.49 enforcement of lien, s.50 deemed parties to proceedings, s. 51 service of the statement of claim, s. 52 time for filing defence, s. 53 pretrial application, and s. 56 consolidation of actions. None of these sections explicitly touch on the need to file an affidavit of records. [ 15 ] At the pretrial application heard on February 4, 2010, the plaintiff wished to have the matter dealt with summarily by having the defendant file an affidavit in response to the plaintiff’s affidavit proving lien.

He proposed that the parties cross examine on the affidavits and return to court for a

summary determination of the validity and amount of the lien. If the issues could be resolved on a

summary application there would be no need for a trial. Similarly there would be no need for an affidavit of records. [ 16 ] The defendant opposed the

summary determination of the lien issues, arguing that the statement of claim alleged an oral variation of the written contract, and claimed punitive and exemplary damages. The defendant argued that these issues could not be determined summarily, but rather should proceed to a full trial. Counsel argued that he was prepared to have the matter proceed expeditiously. [ 17 ] The Master agreed with the defendant and directed the matter proceed to examinations for discovery and granted the parties leave to reapply for any further scheduling.

Unfortunately nobody addressed the time for filing an affidavit of records by the defendant. Ideally some direction should have been granted on February 4, 2010. [ 18 ] In my view, the defendant, in the face of an application for

summary determination of the lien issues, was justified in not filing an affidavit of records. Sufficient cause has been shown for the failure to file the defendant’s affidavit of records prior to the deadline of February 4, 2010. Following the Master’s decision on February 4, 2010, it is clear that an affidavit of records was required to be filed. An affidavit of records is required to be filed prior to examination for discovery (rule 189). So although the Master did not fix a time for the filing of the affidavit of records, it is implicit that one must be filed prior to the examination for discovery.

Discovery was scheduled for March 16 & 17, 2010. Counsel for the defendant represented to the court that he would undertook to proceed expeditiously. Counsel for the plaintiff waited a reasonable period of time for the defendant’s affidavit of records and then proceeded with his motion. The affidavit of records was filed immediately after the motion was served. [ 19 ] In reaching this decision I do not state as a general proposition that an affidavit of records need not be filed in a lien action until the required pretrial application is heard.

For example, in a complex action where a notice to prove lien has not been served, there can be no contemplation of a

summary disposition of the lien action. In such circumstances the rules for filing an affidavit of records must apply. [ 20 ] While I have concluded that the defendant had sufficient cause for his failure to file the affidavit of records within 90 days of the filing of the statement defence and thus avoid the penalty of costs pursuant to rule 190, I have also concluded that the defendant has not filed an affidavit of records in a timely fashion. The plaintiff will therefore be entitled to costs of bringing this application under column 2,

schedule C item 7(1) in the amount of $750.00 payable forthwith.

Heard on the 11 th day of March, 2010. Dated at the City of Calgary, Alberta this 5 th day of May, 2010. K.R. Laycock M.C.C.Q.B.A. Appearances: Bruce James Halliday Professional Corporation for Metro Glass Products Michael D. Assen Miller Thomsom LLP for La Rive Developments Inc.,