DBD Construction Ltd v Tenfold Contracting Ltd, 2014 ABQB 773

Court of Queen ’ s Bench of Alberta Citation: DBD Construction Ltd v Tenfold Contracting Ltd, 2014 ABQB 773 Date: 20141215 Docket: 1401 09890 Registry: Calgary Between: DBD Construction Ltd Applicant - and - Tenfold Contracting Ltd Respondent _______________________________________________________ Reasons for Judgment of K.R.

Laycock , Master in Chambers _______________________________________________________ Issues [ 1 ] The 2 issues in this application are: (1) can the time be extended to file and affidavit proving lien under rule 13.5(2) of the Rules of Court or under the Builders Lien Act s. 48(5)(b); and (2) does the lien cease to exist because proceedings were not commenced the lien claimant within 180 days of filing the lien where money is paid into court to replace the lien on the land? Background

[ 2 ] On September 10, 2014, DBD Construction Ltd. filed an application, under s. 48 of the Builders Lien Act, for the removal of the respondent’s 2 builder’s liens filed on two properties located in the city of Calgary. By consent order, dated September 22, 2014, Master Mason directed the discharge of the liens upon payment of monies into court. On that date, the applicant paid the required money into court.

The order also provided directions regarding an affidavit proving lien and the commencement of an action to enforce the lien claim. [ 3 ] On November 6, 2014, the applicant applied for the return of its security because of the failure of the respondent to comply with terms of the order and 15 day time deadline in the Act . [ 4 ] On November 7, 2014 the respondent filed the Affidavit to Prove Lien.

On November 12, 2014, the respondent filed an application for an extension of time to file and serve an Affidavit Proving Lien and for an extension of time to file a statement of claim. [ 5 ] The provisions of the court order that must be dealt with in this application are as follows: 9. Service of a filed copy of this Order on Tenfold Contracting Ltd. shall act as notice to prove lien pursuant to s. 48(4) of the Act, thus providing it 15 days to file with the Court an affidavit providing detailed particulars of their respective liens. 11.

The Act, except section 43(1)(b), will continue to apply in all respects to the Lien. 12. More specifically and notwithstanding s. 44 of the Act, the obligations of the lien-holder under section 43(1)(

a) wherein the lien that has been registered ceases to exist unless, within 180 days from the date it is registered, an action has been commenced under the Act to realize on the lien or, in which the lien may be realized, continues to apply. [ 6 ] The relevant provisions of the Builders Lien Act are as follows: 43(1) A lien that has been registered ceases to exist unless, within 180 days from the date it is registered, (

a) an action is commenced under this Act (

i) to realize on the lien, or (ii) in which the lien may be realized, and (

b) the lien claimant registers a certificate of lis pendens in respect of the claimant’s lien in the appropriate land titles office. 44 Notwithstanding

section 43, if the court has ordered that a lien be removed under

section 27 or 48(1) the lien, as the charge against the money paid into court or the security given, does not cease to exist by reason that (

a) a certificate of lis pendens is not registered in the appropriate land titles office, or (

b) an action has not been commenced within 180 days from the date that the lien is registered. 48(4) A registered lien holder served with a notice to prove lien shall, within 15 days from the day of the service of the notice on the lien holder, file with the court in which the proceedings were commenced an affidavit providing detailed particulars of the lienholder’s lien.

(5) A registered lienholder on whom a notice to prove lien is served and who does not file a lien holder’s affidavit (

a) within 15 days from the date of the service of the notice, or (

b) within any further period that the court may order on application, loses the lienholder’s lien. [ 7 ] An affidavit filed by the applicant confirms that the consent order and certificate of deposit of payment into court was served on the respondent’s lawyer on September 23, 2014. The affidavit further confirms that on November 5, 2014 a search was made of the court house and it was determined that there was no litigation commenced by the respondent against the applicant.

Late Filing of Affidavit Proving Lien: [ 8 ] The applicant argues that as result of the respondent failing to file and serve an affidavit providing particulars of the lien claim, the respondent loses its lien. (see s. 48(5)) [ 9 ] The respondent argues that upon the granting of the consent order on September 22, 2014, all procedural steps thereafter are governed by the Rules of Court and not by the Builders Lien Act . The respondent then argues that the court has the authority pursuant to the Rules of Court to extend time limits set out in procedural orders.

The respondent relies upon rule 13.5(2) which states: The Court may, unless a rule otherwise provides, stay, extend or shorten a time period that is (

a) specified in these rules, (

b) specified in an order or judgment, or (

c) agreed on by the parties.

[10] I agree with the submission of the respondent that if the court orders the filing of an affidavit proving lien, it would be aprocedural order to which the Rules of Court would apply.

If the order was silent as to a notice to prove lien and the applicant serves anotice to prove lien, the Builders Lien Act would apply and the consequences of not filing an affidavit would be determined by the Act.However, in this case the question is, what is the effect of the particular wording of this order with respect to the late filing of an affidavitproving lien. [11] The Court of Appeal decision of Driden Industries Ltd. v. Sieber and Willemcen, 1974 ALTASCAD 14 , [1974] 3W.W.R. 368, (followed in 892336 Alberta Ltd. v.

Silver Site Construction Ltd. 2006 CarswellAlta 254, 2006 ABCA 67, [2006] A.W.L.D. 1355, 56 Alta. L.R. (4th) 252, 51 C.L.R. (3rd) 26, 384 A.R. 120, 367 W.A.C. 120), examined the effect of s. 35 [now s. 48] ands. 32 [now s.43] of the Act. The lien claimant failed to commence proceedings within 180 days of the registration of the lien. TheCourt of Appeal determined that s. 32 applies to liens which are still registered and not to a lien, the registration of which had beencanceled by court order pursuant to s. 35.

Although there have been wording changes since this decision, the decision still has applicationto the current provisions. [12] The Court of Appeal in Driden found that there was nothing in

section 35 that set out a procedure to be followed after moneywas paid into court. Without more, the claim would proceed like any other civil action.

They directed that the proper procedure to befollowed by an applicant when money was paid into court is to ask the court to settle the issue to be decided and to direct who should bethe plaintiff and who should be the defendant. [13] When applications are being made for the payment of money into court under s. 48 [formerly s. 35] counsel will usually, butnot always, provide a form of order directing procedural steps that must be taken and identifying the party responsible for taking thesteps and setting time limits. [14] In this case, the applicant and respondent, through counsel, consented to this matter continuing to be governed by provisionsof the Builders Lien Act, except for the filing of a certificate of lis pendens.

The Consent Order recognized the effect of the Dridendecision and decided to keep the benefits and burdens of the Act with respect to their dispute rather than having the matter dealt with asan ordinary civil action. [15] In paragraph 9 of the court order, the parties agreed that the order would constitute a notice to prove lien pursuant to section48(4) which would require an affidavit to be provided and filed in court within 15 days.

While there was no consequence built into theorder for failing to file the affidavit in time, paragraph 11 of the order directed that the Act would continue to apply in all respects to thelien, except for filing a certificate of lis pendens. In my view, the parties agreed that the penalties and provisions of the Act wouldgovern. The procedural provisions of the rules, as to time, would not apply to the affidavit proving lien. [16] As an alternative, the respondent argues that section 48(5)(

b) allows the respondent to apply for a further period of time to fileits affidavit. The affidavit was due on or before October 8, 2014 and not filed until November 7, 2014. The explanation for the delay isfound in the affidavit paragraph 12, which states that the deponent was unaware of the requirement to file an affidavit proving that theliens. The deponent suggests that his lawyer was remiss in not completing the task and that the applicant has not been prejudiced by thedelay. Current counsel for the respondent was not counsel of record for the respondent in the earlier steps. [17] Master Breitkreuz considered the predecessor of this

section in Grinnell Fire Protection Systems Co. v. Electrohome Ltd., (AB KB), 1991 CarswellAlta 417, [1991] A.W.L.D. 379, 121 A.R. 335, 26 A.C.W.S. (3d) 639. In that case the lienclaimant had prepared an affidavit proving lien but failed to file it. The evidence indicated that it was an oversight or inadvertence on thepart of counsel for not having it served and it did not come to his attention until an application was filed to have his client’s liendischarged on the ground that no affidavit to prove the lien had been filed.

The facts are nearly identical to our case. [18] At paragraph 21 of the decision, Master Breitkreuz referred to an unreported Court of Appeal decision and concluded that indetermining how to exercise the court’s discretion, the court must consider the issue of delay, an explanation for the delay and prejudice. [19] In Cornelson v.

Alliance Pipeling Ltd. 2013 CarsewellAlta 2180, 2013 ABCA 378, [2013] A.W.L.D. 5268, 234 A.C.W.S.(3d) 125, in the context of a late filed expert report, the court stated the criteria for exercising a discretion to extend time for filing is: (1)the length of the delay; (2) the explanation for the delay; and(3) the relative prejudice to the parties. [20] In our case, the respondent states that he was not informed by his lawyer about the time limit. When it came to his attentionthe affidavit was filed immediately. He further deposes that the applicant would not suffer prejudice by an extension of time.

Theapplicant has provided no evidence with respect to prejudice. [21] I am satisfied with the explanation given by the respondent and there is no evidence of prejudice suffered by the applicant. Iwould therefore grant an extension of time for filing affidavit proving lien to November 7, 2014.

Failure to Commence Proceedings in Time: [22] Alternatively, the applicant argues that as a result of the respondent failure to commence an action to realize on its lien within180 days of filing the lien, the lien ceases to exist. (see s. 43(1)(a)) The liens were filed on May 7, 2014 and the statement of claim mustbeen issued on or before November 4, 2014. [23] In Electric Furnace Products Company Limited v. Quality Rentals, 1991 ABCA 130, the court confirmed that it cannot usethe powers under the Rules of Court to extend a missed limitation period.

In dealing with a lien filed on the incorrect property, the courtobserved that no court can perfect that which has ceased to exist. The right to file a lien on the correct land had lapsed by a passage oftime. [24] Master Funduk in Krause v. Group Builders Inc., (AB KB), 1990 CarswellAlta 414, [1990] A.W.L.D.154, 106 A.R. 29. 19 A.C.W.S. (3d) 335, determined that even where a court orders a lien claimant to file an affidavit proving lien, andthe affidavit is filed, the lien claimant must still commence its proceeding and file the certificate of lis pendens within 180 days of filing

of the lien. If the action is not commenced the lien is lost. [25] The parties agreed pursuant to the consent order that the effects of the Driden decision would not apply to this lien dispute. They specifically agreed that the provisions of the Act would continue to apply, save and except for the filing of the certificate of lispendens. [26] In Knox v. Stagecoach Homes Inc., 2006 ABQB, 2006 CarswellAlta 1131, [2006] A.W.L.D. 2992, [2006] A.W.L.D. 3003, alien was filed and the owners served a notice to commence proceedings within 30 days.

The lien claimant failed to register its certificateof lis pendens within the required time. The court determined that the lien had lapsed. At paragraph 5, Justice Macleod stated in part: .. a strict

interpretation of the Builders’ Lien Act must be applied in determining lien claims and a statutory time period cannot beextended unless the statute specifically allows for it. [27] Counsel for the respondent refers to TRG Developments Corp. v. Kee Installations Ltd. 2014 ABQB 287 , 2014 ABQD 287, 2014 CarswellAlta 794, [2014] A.W.L.D. 2812, [2014] A.W.L.D. 2813, 14 C.B.R. (6th) 140, 240 A.C.W.S. (3d) 813, wherethe court considered the application of estoppel and waiver in a builder’s lien matter. In that case, two claimants filed liens under the Actin relation to work completed for a landowner.

The landowner took out an originating application with respect to the liens which wasadjourned from time to time as the parties proceeded with questioning and document production. The lien claimants took out a section53 pretrial application seeking a declaration as to the validity of the liens. It was adjourned at the landowner’s request. The lienclaimants failed to file a certificate of lis pendans within 180 days as required by

section 43 of the Act. The landowner requested theRegistrar of Land Titles to remove the liens and then refused to participate further in the action. The lien claimants brought anapplication to restore the liens to title pending trial. [28] Master Schlosser stated at paragraph 33: In my view, the question is not one of resurrecting something that no longer exists, but whether the circumstances permit the landownerto assert the liens nonexistence against the lien holders and rely on it as a defence.

In this sense this species of estoppel retains itsessential character of being a ‘shield not a sword’. [29] The Court concluded that the removal of the lien by the landowner without notice to the lien claimant was inappropriate. Furthermore the Originating Application brought into being a proceeding in which the validity and value of the liens could bedetermined.

He concluded that the date of the issuance of the Originating Application or at the latest, the return date of the applicationwas the date to determine the validity of the lien claims. [30] In our matter, the Originating Application taken out by the applicant was not to determine the validity of the liens. There isno conduct of the applicant which would give rise to waiver or estoppel. The TRG decision is therefore distinguishable. [31] Once the 180 day period has expired with no action being commenced, the lien is lost. It cannot be revived or resurrected.

Therefore the funds being held as security are releasable to the applicant. The respondent’s separate action may continue as a breach ofcontract action against the applicant. The applicant will be entitled to its costs of this application. Heard on the 05th day of December, 2014. Dated at the City of Calgary, Alberta this 15th day of December, 2014. K.R. Laycock M.C.C.Q.B.A. Appearances: Robert M. Schuett Robert Schuett Professional Corporation for the Applicant

Elena Semenova Peacock Linder Halt & Mack LLP for the Respondent