Heritage Station Inc. v. Professional Stucco Inc., 2011 ABQB 18

Court of Queen ’ s Bench of Alberta Citation: Heritage Station Inc. v. Professional Stucco Inc., 2011 ABQB 18 Date: 20110118 Docket: 0901 02695 Registry: Calgary Between: Heritage Station Inc. Respondent on Appeal (Applicant) - and - Professional Stucco Inc. and Life Time Stucco & Plastering Inc. Et ., Al. Appellant (Respondent) _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice E.C. Wilson _______________________________________________________ Introduction [ 1 ] This is an appeal from a decision of the Master regarding certain builder’s liens.

Heritage Station Inc. (Heritage), retained Westcorp Construction Inc. (Westcorp) as a general contractor to build a condo development. In turn Westcorp retained Life Time

Stucco & Plastering Inc. (Life Time) to perform stucco and siding work on the project. Life Time, in turn retained a number of labourers, subcontractors and suppliers. [ 2 ] Life Time commenced work on the project in the spring of 2008.

It ceased working on the project on November 16, 2008. [ 3 ] Life Time employees filed the first of the builders liens November 12, 2008 followed by further lien filings by other employees, subcontractors and suppliers in the following month and a half. [ 4 ] In late December, 2008, Life Time filed a lien in the amount of $1,064,466.55. [ 5 ] Various resulting actions were consolidated and after monies were paid into court each of the lien claimants were served Notices to Prove Lien. [ 6 ] Thereafter the parties applied before Master K. R. Laycock to have him determine certain issues.

He did so by way of an Order dated March 30, 2010, which was subsequently explained in his detailed Memorandum of Decision dated June 15, 2010. [ 7 ] Life Time appeals only those portions of Master Laycock’s Order and Memorandum of Decision which related to his determination of the liability of the lien fund. [ 8 ] Life Time contends that there were two issues of fact or mixed law and fact, germane to the Master’s decision. Those issues were:

i) Was Life Time entitled to cease work when it did under the sub-contract with Westcorp due to a breach of contract by Westcorp? ii) What was the total value of labour and materials supplied by Life Time? [ 9 ] Heritage’s evidence on these two issues was found in the affidavit of Ryan Dyck, Project Manager for Westcorp, sworn February 10, 2010, and in the affidavit of Ian Kermack, Vice President of Construction for Westcorp, sworn January 8, 2009. [ 10 ] Life Time’s evidence on these two issues was found in the “Affidavit of Proof of Lien” sworn to by Suha Manzak, an employee of Life Time, on February 13, 2009. [ 11 ] Life Time argued before the learned Master, as it does before me, that the evidence in the parties’ affidavits clashed; that they were in direct conflict.

Accordingly, Life Time argued before the learned Master, as it does before me, that in such a circumstance there must be a trial of those issues. [ 12 ] In support of that proposition, Life Time relies upon Bird v. Bird , 2004 CarswellAlta 195 (CA) where the following statement was expressed at paragraph 5: “Second, the defendant has filed an affidavit denying most of the key allegations of the plaintiff, and a chambers judge cannot give

summary judgment in the face of such a clash of evidence.”

[13] By rendering

summary judgment in the face of this alleged clash of evidence, Life Time argues that the learned Master erredin law. Standard of Review [14] Life Time submits that the appropriate standard of review to be applied when alleging an error of law is correctness. I agree. See Housen v. Nikolaisen 2002 SCC 33 , [2002] 2 S.C.R. 235 and Janvier et al v. 834474 Alberta Ltd., et al, 2010 ABQB 800per Macklin J. Nature of Appeal [15] An appeal from a Master’s judgment or order is governed by the Rules of Court. [16] Effective November 1, 2010 the new Alberta Rules of Court make the appeal process much different than it had beenpreviously. Among the new provisions are the following : 6.14

(3) An appeal from a master’s judgment or order is an appeal on the record of proceedings before the master and, if the judgepermits, may also be based on new evidence that is significant enough that it could have affected the master’s decision.

(4) The record of proceedings is (

a) the application before the master, (

b) affidavits and other evidence filed by the parties respecting the application before the master, (

c) any transcript of proceedings before the master, unless the Court dispenses with this requirement, and (

d) the master’s judgment or order and any written reasons given for the decision. [17] As earlier noted, the appellant argues that a review of the record i.e., the “clashing affidavits” reveals that the learned Mastererred in law. [18] Secondly, the appellant argues that if some new evidence is admitted by me, the Master’s error will become even moremanifest. [19] I will first determine if, based on the record, the Master committed reviewable error. I will then determine the admissibility ofthe new evidence. A. Did the Master err in summarily disposing of the issues before him?

[ 20 ] As earlier indicated, the evidence before the Master consisted of three affidavits and the cross-examination of two of the deponents. [ 21 ] The Master correctly interpreted s.18(3)(a) & (

b) of the Builders Lien Act when he held as follows at paragraph 25 of his decision. Accordingly, the maximum liability of the lien fund for which the owner is liable is; i) 10% of the value of work actually done or materials actually furnished by Life Time, plus ii) any additional sum due and owing but unpaid to Life Time. [ 22 ] The Master’s reasons in calculating the first step is set out at paragraphs 26 - 28.

The affidavits offered by Heritage were found to have fully and clearly established Heritage’s position and, further, were found to have followed appellate direction in the proper determination of the work actually done (see paragraph 26). [ 23 ] By contrast, the Master found that Life Time’s affidavit provided no evidence that factually challenged the Heritage affidavits (see paragraph 27). I must also observe that Life Time’s affidavit was sworn after those of Heritage. [ 24 ] The Master’s reasons in calculating the second step is set out at paragraphs 29 to 37. Again the Heritage affidavits carried the day.

They were found to be fully consonant with precedent. [ 25 ] By contrast, the Master found that the Life Time affidavit left the cross-examination of Mr. Dyck “uncontradicted” (paragraph 34).

The Master further concluded “There is simply no evidence to contradict the evidence of Heritage about the cost to complete.” (paragraph 34). [ 26 ] The deficiencies in what was presented as “proof” by Life Time, prompted the following remark from the Master at paragraph 37 of his decision: I find that the lack of evidence from Life Time shows that there are no triable issues with respect to fixing the lien fund in the amount of $120,236.45.

The evidence filed by Life Time is only their affidavit proving lien, which provides evidence of invoices submitted to Westcorp, but this is not helpful in establishing the lien fund. The total of the invoices is largely immaterial for this purpose. I agree with the method used by Heritage in calculating the lien fund.

This application is only about fixing the amount of the lien fund for which the owner is liable, and does not deal with the amount ultimately due to Life Time under their contract with Westcorp, or the amount due from Life Time to the subtrades and employees. [ 27 ] The learned Master was well aware that the setting of the lien fund was not simply an interlocutory matter but rather a determination of substantive rights – see paragraphs 9 and 16.

He was equally well aware that if there were triable issues, he could not determine the matter summarily – see paragraph 16. [ 28 ] But at the end of the day, faced with uncontradicted evidence and an overwhelming case for set-off favouring Heritage which far exceeded any alleged claim for funds due and payable made by Life Time, the Master really had little choice but to decide the matters as he did. [ 29 ] It bears repeating that Life Time carried the onus to prove its lien. See Vinterra Properties Inc. v. Calabria Interiors Ltd. , 2005 ABQB 130 at paragraph 39 . The Master found that it had failed.

[30] In my view there was ample evidence to support all of the Master’s conclusions. [31] Like the Master, I too find from the record that there was no “clash of evidence”; no basis to find that a triable issue waspresent. Accordingly, he was legally correct in proceeding to his

summary determination B.

Is the new evidence admissible? [32] The evidence proffered as new evidence by Life Time are two affidavits - one from Suha Manzak, now described as a formeremployee of Life Time, sworn July 15, 2010, and the second from Mehmet Onayli, President of Life Time, sworn July 13, 2010. [33] The Respondent objects to the admission of this evidence. ( I should note that neither counsel raised any issue or concern withthe presentation of the “new” evidence by way of affidavits without any cross-examination on same). [34] Before considering the new Rules, it is appropriate to consider how “new” evidence proffered on an appeal from a Masterwas handled under the old Rules. [35] Under the old Rules of Court an appeal from the Master was a hearing de novo.

While the record of proceedings before theMaster may have offered a good start point for the appeal hearing, the nature of a de novo hearing made the appeal process somewhatloose or lacking in any real rigour. As an example, drawing upon an historical analysis of appeals from Masters, Langston J. offered the following observations in Magnus v. Canada Finance Corp., (2008) 2008 ABQB 315 , 93 Alta L.R. (4th) 111 (Q.B.) atparagraph 25: An appeal from a Master is unique in that either party has the right, no application required, to introduce new evidence at the appellatelevel.

The evidence does not even have to be recently discovered, nor meet any other criteria. Simply for the purpose of rebutting orbolstering the Master’s decision new evidence can be introduced. [36] The new Rule brings some needed order to such appeals. [37] For ease of reference the new Rule 6.14(3) is repeated: 6.14

(3) An appeal from a master’s judgment or order is an appeal on the record of proceedings before the master and, if the judgepermits, may also be based on new evidence that is significant enough that it could have affected the master’s decision. [38] It seems clear that the new Rule was implemented to prevent such a loose practice whereby a losing party received,essentially, a second unrestricted opportunity to prove what he should have on the first occasion. Wasted time, effort and money shouldnot be condoned, let alone encouraged by the courts.

But that was often the effect of the practice under the old Rule. [39] Both parties agree that the admission of new evidence is discretionary. But they differ on the requirements to determineadmissibility, and thus how my discretion ought to be exercised. [40] Heritage argues that the test for admissibility of new evidence is that which governs the admissibility of new evidence beforethe Court of Appeal under Rule 516.2. I therefore turn to consider the test employed by the Court of Appeal. That test emerged from theseminal decision of R. v. Palmer, (1979) (SCC), 50 CCC (2d) 193 (SCC) at p. 205:

(1) the evidence should generally not be admitted if, by due diligence, it could have been adduced at trial, (2) the evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial; (3) the evidence must be credible in the sense that it is reasonably capable of belief; (4) it must be such that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected to haveaffected the result. See also Stoddard v. Montague et al, (2006) 2006 ABCA 28 , 380 A.R. 340, per Ritter J.A.; Langan v.

Watson, (2007) 2007 ABCA 94 , 74 Alta L.R. (4th) 201, per Slatter J.A. and R. v. Knight 2010 ABCA 2 at paragraph 8. [41] It should be noted that when restating the entire test, the fourth step has been, on occasion, cast in slightly different language. [42] Consider, for example, Metropolitan Life Insurance Co. v. Hover, 1999 ABCA 123 , [1999] A.J. No 419 whereFruman J.A. at paragraph 17 expressed the fourth step in the Palmer test as being this: (

a) the evidence if believed, taken with the other evidence, would reasonably be expected to have affected the result. (emphasismine) [43] Fruman J.A.’s language was expressly adopted in Dechant v. the Law Society of Alberta (2000) 2000 ABCA 265 ,266 A.R. 249 (C.A.). [44] But while the application of Rule 516.2 may require the Court of Appeal to determine if the fourth criterion of the Palmer testinvolves the use of the word “could” as opposed to the word “would”, no such difficulty arises when considering Rule 6.14(3).

Instraightforward language, the rule describes the issue as follows: “... new evidence that is significant enough that it could have affected the master’s decision” (my emphasis) [45] While Heritage argues that the test for admissibility of new evidence under Rule 6.14(3) is as described in R. v. Palmer, LifeTime strongly disagrees. [46] In its written argument Life Time submits the following: 8. Rule 6.14(3) of the new Alberta Rules of Court (the “New Rules”) provides that an appeal from a master’s judgment or order isan appeal on the record of proceedings before the master.

However, if the judge permits, the appeal may also be based on new evidencethat is significant enough that it could have affected the master’s decision. 9. The New Rules do not impose a fresh evidence rule as would apply in an appeal from a Provincial Court Judge or from a Judge ofthe Court of Queen’s Bench. In particular, there is no requirement to show that the evidence the party seeks to adduce could not havebeen put before the master had the party exercised due diligence. Rather, the only test is whether the evidence could have affected the

master’s decision. [47] Life Time submits that the legislature did not simply cast Rule 6.14(3) in the language of Rule 516.2 or of R. v. Palmer as itcould have done. Instead the Legislature chose to adopt only the fourth part of the Palmer test and specifically chose not to adopt the firstcriterion of Palmer relating to the requirement of due diligence. [48] After some reflection, I must respectfully disagree with Life Time’s submission.

I conclude that the Legislature’s descriptionof the nature or quality of the new evidence as being “significant enough that it could have affected the master’s decision” simplyreflects or restates three of the four Palmer criteria which were briefly described by the majority of the Supreme Court in the decision ofMay et al v.

Warden of Ferndale Institution et al, (2005) 2005 SCC 82 , 204 CCC (3d) 1 at pp. 38 - 39 (para. 107) as being“relevance, credibility and decisiveness.” In other words, only relevant and credible evidence that is decisive enough that it could havelikely affected the result will qualify for admission. [49] I further conclude that the Legislature’s use of the adjective “new” was a clear signal that the proffered material must truly be“new evidence” in the sense that it could not, by due diligence, have been adduced at the chambers application i.e., that it was recentlydiscovered evidence. [50] If it were otherwise, I have difficulty understanding why the Legislature would have expressed the requirement that theevidence be “new” evidence.

What other meaning but “recently discovered” or “recently made available” could be ascribed to thatadjective? That “new” doesn’t mean “new”? Surely not. The Appellant’s submission is that “new evidence” is meant to describe newlydiscovered evidence as well as evidence that is not recently discovered. But if that

interpretation is correct, one might reasonably wonderwhy the Legislature did not simply describe the situation as one involving “additional evidence” i.e., evidence that is in addition to therecord, rather than choosing the misleading description of “new evidence”. Principles of statutory

interpretation do not support a notionthat the Legislature enacts legislation for whimsical purposes. The

Interpretation Act provisions run counter to any suggestion thatlegislatures enact laws with hidden meanings. [51] In finding that the test for the admissibility of new evidence in Rule 6.14(3) is essentially the same as R. v. Palmer, I alsopoint to an additional benefit to litigants who will know that, regardless of the nature of the appeal, the standard for admissibility of newevidence will remain the same. Surely such uniformity promotes a less complicated access to justice.

I should also point out that myconclusion regarding the test for the admissibility of new evidence coincides with the finding of Manderscheid J. in Royal Bank ofCanada v. Place, 2010 ABQB 733 at paras. 52 and 53. [52] In my view, Life Time’s

interpretation of Rule 6.14(3) would result in a return to the “free for all” permitted by the old Rule,as described by Langston J., and notwithstanding that the Rule otherwise seeks to distance itself from the previous practice by requiringthat the appeal be on the record. [53] Life Time’s

interpretation, if correct, also has undesirable ramifications upon the practice before the Masters. This is howHeritage expressed it in its written argument at paragraph 42: ...one of the purposes of this new rule is to prevent parties from proceeding with an application before a Master without putting all theirevidence before the court with the knowledge that they can simply lead that evidence on appeal if they lose. The test proposed by theappellant does not impose any obligation on the litigants to ensure they exercise due diligence to put the necessary evidence forward onthe initial application.

I agree. [54] An examination of both the record and of proceedings before me also bears comment, not for the purpose of embarrassingcounsel, but to underscore the Court’s concern that the appellant’s

interpretation of the new Rule, if correct would countenance, if notencourage, litigation “on the instalment plan.” [55] For example, in proceedings before the Master, the deponent on behalf of Life Time (whose affidavit was the last to be filed)

never took issue with the assertion in the Heritage deponent’s affidavit that employees of Life Time had agreed to the percentage of work completed to the date Life Time left the site. [ 56 ] As Master Laycock noted, the first time that Life Time raised any issue whether the Life Time employees had the authority to bind Life Time was when Life Time’s counsel raised it during oral argument. (see paragraph 27 of the Master’s decision). [ 57 ] Having lost before the Master, the alleged lack of authority is now found amongst the “new evidence” contained in the affidavit of the owner of Life Time. [ 58 ] When asked why this evidence was not put before the Master, counsel candidly admitted he could give no explanation.

No suggestion of inadvertent oversight was raised. Counsel admitted that his client could not meet the “new evidence” requirement of due diligence, if I concluded that such was a criterion governing admissibility. [ 59 ] In oral argument before me, appellant’s counsel attempted to raise new arguments to support his position which were not even hinted at in his written brief. I ruled that he would not be allowed to do so. Later, he attempted to raise a further complaint with the learned Master’s decision on the basis, essentially, of inadequate reasons being provided.

Again, this was a complaint not found in his brief. Counsel admitted he could not fully develop this complaint without providing further written argument. Counsel recognized that would necessitate an adjournment to do so. He made no application for an adjournment because this appeal, adjourned before, had been ordered to proceed on a peremptory basis before me. [ 60 ] I point to these developments before me as a further indication that counsel may not have been as fully prepared as he might have wished to be before the Master or before me.

Counsel must know that when litigation is scheduled to be conducted, the courts expect counsel to be prepared. If circumstances prevent that from occurring then an adjournment may be sought and may be granted. Otherwise, litigation must proceed. Litigation in instalments is to be avoided if not eschewed for a host of obvious reasons.

Appeals premised on the proffering of “new” evidence which was, in fact, “old” evidence, i.e., known to the litigant or not recently discovered should not be permitted if efficiency in court proceedings, finality in achieving results and fairness to the other litigants are to count for anything. [ 61 ] I am satisfied that all of what has been presented as “new” evidence before me was information fully known to the appellant prior to the hearing before the Master. The appellant has significantly failed to meet the criteria of due diligence.

Further, there is no basis upon which I could properly “relax” the due diligence criteria. See for example Manderscheid J.’s decision in Royal Bank of Canada , at para. 56 . [ 62 ] I find that the decision not to adduce any of the “new” evidence before Master Laycock was a decision consciously arrived at, for reasons unknown to me. The appellant would like to have the court conduct, essentially, a de novo hearing with this additional evidence that should have been presented to the Master. I will not do so. [ 63 ] The “new evidence” is inadmissible. [ 64 ] In the result the appeal is dismissed.

The decision of the Master is confirmed. Heard on the 23rd day of November, 2010. Dated at the City of Calgary, Alberta this 18 th day of January, 2011.

E.C. Wilson J.C.Q.B.A. Appearances: Rod Wasylyshyn for the Respondent on Appeal/Applicant Michael G. James for the Appellant/Respondent