Ag Plus Mechanical Ltd v DB Martin Consulting Ltd, 2016 ABQB 282

Court of Queen ’ s Bench of Alberta Citation: Ag Plus Mechanical Ltd v DB Martin Consulting Ltd, 2016 ABQB 282 Date: 20160518 Docket: 1608 00010 Registry: Medicine Hat Between: Ag Plus Mechanical Ltd. Applicant - and - DB Martin Consulting Ltd. Respondent _______________________________________________________ Memorandum of Decision of J.

Farrington , Master in Chambers _______________________________________________________ The Background [ 1 ] This is an application for a declaration that a garage keeper’s lien is valid and for an order that a certain 2007 Peterbilt truck serial no. 1XP5DB 9XX7D651613 (the “Truck”) be sold under the lien notwithstanding an objection. The matter originally came before me on March 2, 2016. At that time there were evidentiary gaps on certain key points and I adjourned it to May 4, 2016 with a direction that the parties had leave to file further affidavit material.

The further material that was filed was helpful. [ 2 ] Over the course of a period of approximately eight months the Applicant Ag Plus Mechanical Ltd. (“Ag Plus”) performed mechanical work on the Truck which is owned by the Respondent DB Martin Consulting Ltd. (“DB Martin”).

[ 3 ] I will start at the end rather than at the beginning. A garage keeper’s lien was filed on January 13, 2015 by Ag Plus against the Truck. The lien amount was stated to be $44,966.79, although the amount for which seizure was purportedly effected was $36,318.61, and the amount in the warrant instructing seizure was $28,295.88. The latter number corresponds to the amount of one of the invoices in dispute.

It is curious as to how seizure could be effected for an amount greater than the amount in the warrant but I will not consider that issue because it was not argued. [ 4 ] The lien is slightly deficient in that it does not reference the proper corporate names in relation to either the vehicle owner, or the lien claimant, because it omits “Ltd.” from the description in both, but neither party argued that the omission had any effect on this application, and given the general case law with respect to garage keeper’s liens that substance should prevail over form when possible, I am satisfied that nothing turns on that omission for the purposes of this application. [ 5 ] There are many invoices regarding the work done on the Truck.

Some of them were paid and some of them were not paid. The invoices that were not paid are described in sub-paragraphs 3.1, 3.2, 3.3 and 3.4 of the affidavit of Bruce Johnson filed on behalf of Ag Plus sworn January 6, 2016. Mr. Johnson’s affidavit was supplemented by a further affidavit sworn April 20, 2016. Donavon Martin on behalf of DB Martin swore two affidavits as well.

The first was a brief affidavit sworn January 18, 2016, and the second was a rather lengthy and detailed affidavit sworn April 18, 2016. [ 6 ] While the corporate respondent DB Martin was not represented by counsel, I did fully consider the materials which it submitted. The Applicable Law [ 7 ] Sections 2 and 3 of the Garage Keepers' Lien Act , RSA 2000, c. G-2 are important on this application. They provide: Lien of garage keeper 2(1) In addition to every other remedy that a garage keeper has for the recovery of money owing to the garage keeper for (

a) the storage, repair or maintenance of a motor vehicle or a farm vehicle or of any part of a motor vehicle or farm vehicle, or (

b) the price of accessories or parts furnished for a motor vehicle, farm vehicle or part of a motor vehicle or farm vehicle, a garage keeper who is entitled to payment of a sum for the storage, repair or maintenance or the price of accessories or parts furnished, has a lien on the motor vehicle or part of it or the farm vehicle or part of it for the sum to which the garage keeper is entitled.

(2) No garage keeper is entitled to a lien under this Act for the price of fuel, oil or grease furnished for a motor vehicle or farm vehicle.

(3) No garage keeper is entitled to a lien under this Act unless the garage keeper retains possession of the motor vehicle or farm vehicle or the garage keeper obtains from (

a) the person who authorized the storage, repair or maintenance or the person’s authorized agent, or (

b) the person who ordered that accessories or parts be furnished for the motor vehicle or farm vehicle or the person’s authorized agent, an acknowledgment of indebtedness by requiring that person or that person’s agent to sign an invoice or other statement of account. Termination of lien 3(1) A lien referred to in

section 2 terminates on the 21st day after the day (

a) on which possession of the motor vehicle or farm vehicle is surrendered to the owner or the owner’s agent, (

b) on which repairs were completed to the motor vehicle or farm vehicle or any part of the motor vehicle or farm vehicle if the vehicle was not at the time of repair in the possession of the garage keeper, or (

c) on which the accessories or parts for the motor vehicle or farm vehicle were furnished, as the case may be, unless on or before the 21st day the garage keeper registers in the Registry a financing statement indicating a claim of lien on the motor vehicle or farm vehicle.

(2) A financing statement referred to in subsection (1) must be signed by the garage keeper or by a person authorized by the garage keeper. [ 8 ] One of the issues is whether the lien was filed within 21 days of surrender of possession of the Truck by Ag Plus as required by

section 3 of the Act . Possession was surrendered multiple times, so the answer may not be the same for all of the repairs. The other significant issue is whether appropriate acknowledgements of indebtedness were signed when possession was surrendered. The Invoices [ 9 ] I will deal with the unpaid invoices in the sequence described in paragraph 3 of the affidavit of Mr. Johnson sworn January 6, 2016 using the same numbering system. [ 10 ] Paragraph 3.1 -this invoice was for $196.88. The date of the work is unclear, although it appears that the work was done on

June 16, 2014. A form of acknowledgement of indebtedness is endorsed on a document dated June 16, 2014. It is unclear whether the form of acknowledgement was done before the work was done, or after the work was done. There is no direct evidence on that point, but even if the evidence was clear that a proper acknowledgement of indebtedness was signed after the work was done, the lien was filed many months later.

Accordingly, the invoice is not properly the subject of an enforceable garage keepers’ lien because it was filed out of time, even if all other requirements were met. [ 11 ] Paragraph 3.2 -this invoice is for $28,295.88 and its details are contained at Exhibit H to Mr. Johnson’s first affidavit. The document that is argued to contain an acknowledgement of indebtedness is a document called a “preview invoice” which was dated January 8, 2015. Paragraph 3.2 of Mr. Johnson’s affidavit says that the vehicle was returned to DB Martin on December 28, 2014.

If the acknowledgement is a valid one, the lien was filed in time in relation to that invoice because it was filed on January 13, 2015. [ 12 ] Mr. Martin’s signature on the “preview invoice” is on a printed form below words which read: TERMS: COD. A service charge of 2% per month (24% per annum) may be charged on any past due amount beyond invoice date. 15% restocking fee on all returned parts. No returns on electrical parts or special ordered parts. No refund without this invoice. No returns after 30 days.

All items subject to GST. [ 13 ] There is no specific wording acknowledging indebtedness or a lien. [ 14 ] Mr. Martin says at paragraphs 22 and 23 of his affidavit of April 18, 2016: 22. In response to paragraph 3.2(

c) of Affidavit of Bruce Johnson, the initial work order generated at the start of the repair was not signed. The preview invoice dated January 8, 2015 and invoice 17161A, dated December 2, 2014 were not signed until January 9, 2015, when Mr. Johnson said the invoices needed signatures in order for his accountant to close out their year end accounting and would not be able to do any other work on the 2007 Peterbilt 379 if needed. 23. In response to paragraph 3.2(

c) of Affidavit of Bruce Johnson, on January 9, 2015, I signed both invoice 17161A, dated December 2, 2014 and invoice preview dated January 8, 2015. I signed below the Terms of Interest box to acknowledge the work had been completed for Mr. Johnson’s accountant’s year end purposes. I did not sign in the Terms box to acknowledge the Terms of Interest, set out in the signature box nor did I sign to agree to the amount of indebtedness in the work order in the box next to the Terms signature box. [ 15 ] In his supplemental affidavit sworn April 20, 2016 Mr. Johnson denies having any conversation with Mr.

Martin about his accountant, and he states that Ag Plus’ year end is in October, presumably to suggest that the requirement for signing had nothing to do with year end. [ 16 ] There is an evidentiary conflict on an important point. [ 17 ] In Union Tractor Ltd. v. Horseshoe Contracting Ltd. 2002 ABCA 259 the Court of Appeal held at paragraph 6: In our opinion, compliance with the Act is achieved where it is determinable on accepted evidence that the signature provided relates to and was furnished for the purpose of acknowledging indebtedness in the specified amount.

Failure to affix one’s signature on the specified line does not result in automatic invalidation of the lien. The relevant inquiry will always be whether the signature represents an acknowledgment of indebtedness within the meaning of the Act. There are cases where substance must override form. This is one of them. (Emphasis added) [ 18 ] The conclusions of the Court regarding the purpose for affixing the signature are important.

Sometimes that purpose can be clearly determined or inferred based upon the circumstances, and based upon the wording of the acknowledgement. [ 19 ] In Octane Energy Services Ltd. (Companies' Creditors Arrangement Act) 2006 ABQB 65 the wording of the acknowledgement was not express, but it was relatively clear, and Romaine, J. concluded that there was a sufficient acknowledgement for the purposes of the Act . The wording in that case was : I hereby authorize the above work to be done along with the use of necessary materials.

You and your employees may operate above machine for purposes of testing, inspection or delivery at my risk. I agree to pay cash on delivery of machine or on terms satisfactory with you and until paid in full, an express mechanics lien is acknowledged on above machine to secure the amount of repairs thereto. It is understood that the company assumes no responsibility for loss, damage by theft or fire to machine placed with them for signage, sale, repair or while being tested.

Estimates are for labor only, materials additional. [ 20 ] The wording of the acknowledgement in the present case is much weaker than that in Octane Energy Services Ltd ., but it may nevertheless suffice depending on what the Court finds the circumstances to be in relation to the signature on the preview invoice, given that the cases suggest that often substance prevails over form in garage keepers’ lien cases. Even though the wording of the acknowledgement is weak, it does seem to be linked to the accountant, which suggests financial matters, and to the prospect of any further work being done on the Truck.

The question is whether that evidence is strong enough to amount to an acknowledgement of indebtedness. [ 21 ] DB Martin also raises set-off arguments. In a garage keepers’ lien setting in Union Tractor Ltd. the Court of Appeal further held at paragraphs 8 and 9: As to equitable set-off, an unliquidated claim can be set-off against the liquidated claim but only where an equitable ground exists and

the connection between the two claims is established. Holt v. Telford, (SCC), [1987] 2 S.C.R.193 confirms that thefollowing principles, among others, are required to establish equitable set-off: · the equitable ground must go to the varying root of the plaintiff’s claim before set-off would be allowed, and · a cross-claim must be so clearly connected with the demand of the plaintiff that it would be manifestly unjust to allow theplaintiff to enforce payment without taking into consideration the cross-claim.

In this case, we are all agreed that the cross-claim by Horseshoe Contracting Ltd. fails to meet these criteria. As to enforcement, wewould not disturb the disposition below to require payment by Horseshoe of the amounts found to be owed. [22] In the present case, DB Martin argues that there were deficiencies in the work and it claims that certain of the repairs ought tohave been covered under warranty. It also claims that the work exceeded quoted amounts. A cursory examination of Mr.

Johnson’sAffidavit of January 6, 2016 shows total billings relating to the Truck of $75,388.76 over the course of the eight month period. On itsface, and without in any way deciding the issue, there appears to at least be an arguable case with respect to set-off. [23] The Court of Appeal in Union Tractor made reference to “accepted evidence” and I am faced with a conflict in the evidencepertaining to the acknowledgment of indebtedness. Given the lack of any clear wording acknowledging indebtedness in the printed form,and the conflict between the evidence of Mr. Johnson and Mr.

Martin regarding the purpose of the endorsement on the preview invoice,as well as the arguable set-off issue, I find that I cannot summarily determine the validity of this invoice in favour of either party as partof the garage keepers’ lien. [24] Accordingly, it is necessary that I direct a trial of an issue as to whether the items described in paragraph 3.2 of Mr.

Johnson’saffidavit of January 6, 2016 are properly the subject of an enforceable garage keepers’ lien. [25] Item 3.3-this item has no signed acknowledgement of indebtedness after surrender of possession and it is therefore notproperly a garage keepers’ lien matter. [26] Item 3.4-this item appears to be for work after the lien was registered and there is no signed acknowledgement ofindebtedness. As a result it is not properly the subject of a valid garage keepers’ lien. [27] Finally, I note that Mr. Martin’s affidavit alleges at paragraph 2 that all of the invoices were for one entire body of work.

Forgarage keepers’ lien purposes I reject that argument. First, it would extend the lien filing periods indefinitely with respect to work whenthe vehicle was consistently in and out of the Ag Plus shop. Second, the Act is clear that the period for filing a lien runs from thesurrender of possession. The various matters were invoiced separately and released from the possession of Ag Plus separately. In fact, the“one body of work” argument would actually seem to be an argument that, if accepted, would seem to benefit Ag Plus even though DBMartin raised the argument.

In any event, I find that with the separate issuing of invoices, and the separate surrender of possession inrelation to each invoice, that the lien period would run from the surrender of possession on each occasion. Conclusions [28] By way of

summary, the application for a declaration as to the validity of the garage keepers’ lien and sale of the Truck isdismissed with respect to all invoices except for those matters described in paragraph 3.2 of the affidavit of Mr. Johnson. In relation tothose matters, I have directed a trial of an issue with respect to the validity of the garage keepers’ lien and the applicability of a set offclaim by DB Martin.

That claim to set-off may be determined in these or in other proceedings which DB Martin has already commencedwhich may ultimately be consolidated with these proceedings as I understand that other proceedings have been commenced. The partiesmay wish to consider consolidation. With respect to the lien claim, Ag Plus shall be the plaintiff and bear the primary burden of proof,except with respect to any claim of set-off.

If the parties require any procedural directions they may seek them from me when I amscheduled to be in Medicine Hat, or by telephone application booked through the Masters office. [29] My decision does not affect any unsecured claims and remedies between the parties. The only matter before me, and thatwhich I have dealt with, is the lien relief sought. [30] The Truck is currently under seizure and it is presently earning no income.

The parties are at liberty to make an applicationbefore any Master to set appropriate conditions and consider security for release of the Truck pending determination of the issue that Ihave directed. [31] Costs of this application shall be in the cause of the lien issue. Heard on the 2nd day of March and the 4th day of May, 2016. Dated at the City of Medicine Hat, Alberta this 17th day of May, 2016.

J. Farrington M.C.C.Q.B.A. Appearances: Robert K. Fischer of Allan G. Leis Professional Corporation for the Applicant No counsel for the Respondent