MJ Limited (MJ Trucking) v Prairie Mountain Construction, 2016 ABQB 395

Court of Queen ’ s Bench of Alberta Citation: MJ Limited (MJ Trucking) v Prairie Mountain Construction

(2010) Inc, 2016 ABQB 395 Date: 20160713 Docket: 1401 12549 Registry: Calgary Between: MJ Limited operating as MJ Trucking Plaintiff - and - Prairie Mountain Construction

(2010) Inc., Govan Brown Ltd., The City of Calgary and Ken Almer Defendants _______________________________________________________ Reasons for Judgment of J.T. Prowse , Master in Chambers _______________________________________________________ [ 1 ] The issue in this case is the validity of a builders’ lien mistakenly filed against the wrong parcel of land. [ 2 ] MJ Trucking entered into a subcontract with Prairie Mountain Construction

(2010) Inc.(“Prairie Mountain”) to provide earthmoving services and to supply gravel to a construction site at the East Calgary Landfill, on land owned by the City of Calgary. The project involved the construction of an administration building for the City. [ 3 ] MJ Trucking was not paid by Prairie Mountain and it filed a builders’ lien to collect what it was owed. The City land which MJ Trucking liened is evidenced by three certificates of title. Unfortunately for MJ Trucking, these three parcels are not the land upon

which MJ Trucking provided services, but rather adjacent land. [4] Prior case law indicates that a lien can be valid even if it is not registered against the land where the work was done,provided that the liened land and the land where the work was done are part of a project having a common purpose, the logic being thatall components of a common project are improved when any portion of the common project is improved. [5] For the reasons which follow, I have concluded that MJ Trucking has not provided sufficient evidence that the land lienedand the land upon which the work was done formed part of a common project.

Consequently MJ Trucking’s lien is invalid.

The facts [6] MJ Trucking provided trucking services (hauling of gravel and earthmoving) as a subcontractor of Prairie Mountain at theEast Calgary Landfill. [7] Prairie Mountain was itself a sub-contractor of the Defendant Govan Brown Ltd. (“Govan"). [8] Govan was under contract with the City of Calgary to construct an administration building known as the East CalgaryLandfill Depot Project (the "project"). [9] When MJ Trucking was not fully paid by Prairie Mountain for the work it had done, it needed to ascertain the legaldescription of the land upon which it had worked in order to file a lien. [10] The principal of MJ Trucking, Mohamed Jeha, attended at the East Calgary Landfill.

He obtained a municipal address froman employee at the entranceway building to the East Calgary Landfill, a building (the only building) which was immediately adjacent tothe place where the MJ Trucking work had been done. He confirmed the municipal address by a Google search. [11] Mr. Jeha also contacted the City by telephone and obtained confirmation of the municipal address of the East CalgaryLandfill. He was advised to obtain the legal description from the municipal tax office at City Hall. [12] Mr.

Jeha then attended at the Calgary City Hall municipal building and requested the legal description for the municipaladdress of the East Calgary Landfill.

He was provided with the legal description of three certificates of title, which he then provided tohis legal counsel, who then registered a builder's lien against those three titles. [13] Govan has since determined that the liened land is reflected on a different certificate of title from the land upon which Govanwas constructing the administration building. [14] Accordingly Govan applies to have the MJ Trucking lien declared invalid on the basis that it was registered against the wrongland, and to obtain back the security which it posted in lieu of the lien. [15] MJ Trucking now understands that the East Calgary Landfill encompasses a large un-demarcated tract of land involving manymore than the four certificates of title in question (that is, more certificates than the three liened titles and the one “project” title).

The position of the parties [16] Govan submits that the MJ Trucking lien, formerly registered on only the three liened titles and not on the project title, isinvalid. It submits that the security posted into Court by Govan for the lien should be ordered returned to Govan. [17] MJ Trucking asks that Govan’s application be dismissed and that the Court declare that the MJ Trucking lien is valid againstthe three liened titles, and therefore constitutes a valid claim against the security posted in Court by Govan. Case law regarding the curative

section of the Builders’ Lien Act [18] I will review in chronological order previous decisions where the Court has been asked to use

section 37 of the Builders’ LienAct to correct the legal description contained in a lien. [19]

Section 37 states:

(1) A substantial compliance with

section 34 is sufficient and a lien shall not be invalidated by failure to comply with any requirementsof

section 34 unless, in the opinion of the court, the owner, contractor, subcontractor, mortgagee or some other person is prejudiced bythe failure.

(2) When, in the opinion of the court, a person is prejudiced by a failure to comply with

section 34, the lien shall be invalidated only tothe extent that the person is prejudiced by the default.

(3) Nothing in this

section dispenses with the requirement of registration of a lien. [20] This review concludes that

section 37 cannot be used to correct the registration of a lien against a wrong parcel. [21] In Wayne’s Electric Ltd. v. Carpathian Hotels Ltd., 1981 CarswellAlta 474 (Master) the Court declined to use the curativesection of the Builders’ Lien Act to validate a lien filed on land adjacent to land where a motel was being constructed. [22] In 304034 Alberta Ltd. (Tyro Contracting & Developments) v. Cox Brothers Contracting & Associates Ltd., 1987

3366 (AB KB), 1987 CarswellAlta 61, 51 Alta. L.R. (2d) 82 (Master) the Court used the curative

section of the Builder’s Lien Act, nowsection 37, to validate a lien filed on land adjoining the land where the work was done, relying on the Ontario Court of Appeal decisionof In Nor-Min Supplies Ltd. v. C.N.R.,(1979), (ON CA), 27 O.R. (2d) 390, 106 D.L.R. (3d). [23] In South Side Woodwork

(1979) Ltd. v. R.C. Contracting Ltd. et al, 1989 CarswellAlta 516 (Master) the Court declined touse the curative provision of the Builders’ Lien Act to broaden the description of the land being liened to encompass the land on whichthe improvement was actually constructed. [24] In Electric Furnace Products Co. v. Quality Rentals, 1991 ABCA 130 the Court of Appeal declined to correct use thecurative provision of the Builders’ Lien Act to validate a lien registered against the wrong land, putting to rest the conflicting decisionson that point cited above.

Case law regarding the ‘common purpose’ doctrine [25] I will now review in chronological order previous decisions which lead up to the ‘common purpose’ doctrine. [26] This review supports the conclusion that a builders’ lien under current Alberta legislation can be validly registered on land,even though the improvement was not made on that land, provided that there is a common purpose between the site where the work wasdone and the land upon which the lien was registered, and at least some geographic proximity. [27] The previous wording of legislation in Alberta provided that a lien arising from the construction of an improvement extendedto land “occupied thereby or enjoyed therewith”.

This language was in force until 1960, at which time it was changed to say that the lienextended to “land in respect of which the improvement is being made”. The latter language was in force when the MJ Trucking lien wasregistered. [28] In Jackson Water Supply Co. v. Bardeck,1915 CarswellAlta 16 (Alberta Supreme Court, Appellate Division) the Courtvalidated a lien even where no work was done on the liened land. [29] The defendant in this case owned four contiguous quarter sections and had contracted for a water system to be constructed onthe NE ¼.

The plaintiff filed a lien arising from that construction on the other three quarter sections but not on the NE ¼. [30] The Court noted that the plaintiff was entitled to a lien "upon such building ... and the land, premises, and appurtenancesthereto, occupied thereby or enjoyed therewith." It noted that the plaintiff’s failure to file a lien on the NE ¼ resulted in the lien beinglost against that quarter section, but held that the other three quarter sections were “enjoyed” with the NE ¼ and held the lien to be validagainst those three quarter sections. [31] In Crown Lumber Co. v.

McTaggart Motors Ltd.,1961 CarswellAlta 15 (Alta.S.C.) the Court validated a lien where no workwas done directly on the liened land. [32] The lienholder supplied building materials for construction of a large commercial garage on leasehold lands held byMcTaggart Motors. McTaggart also owned freehold land immediately adjacent to the leasehold lands.

When the lienholder was unpaid itmistakenly filed a builders’ lien against the freehold lands. [33] The leasehold and freehold lands were separated by an unfenced lane which was leased by McTaggart Motors from the townof Stettler and used for the storage and sale of new and used cars. [34] The relevant legislation at the time stated that the lien applied to land occupied by the improvement “and the land occupiedthereby or enjoyed therewith”. [35] The court upheld the validity of the lien on the following basis: As the signs on all of the properties indicated, McTaggart Motors was one business operated as a single unit.

All of the lands, includingthe freehold lands, were operated together for a common purpose. The construction of the new building was calculated to facilitate thatcommon purpose and was intended to benefit the whole business. Having regard to the facts and circumstances of the present case, I amsatisfied that the freehold lands were an integral part of the main operations of the company of which the main building on the leaseholdlands was its nerve centre.

The freehold lands, in my opinion, were enjoyed with the improvement on the leasehold lands, and the claimregistered against the freehold lands was valid and proper. The B.A. property and the freehold lands, in common with the leaseholdlands, were all subject to the right of the plaintiff to have its lien enforced. Accordingly, although the building materials were suppliedfor the construction of a building on the leasehold lands, the plaintiff has a valid and subsisting lien on the freehold lands ... [36] In Wayne’s Electric Ltd. v.

Carpathian Hotels Ltd., supra, the Court declined to validate a lien filed on land adjacent to landwhere a motel was being constructed. [37] The Court specifically commented on the change in language to the lien legislation, as follows: Counsel for the plaintiff submits that lot D, against which the lien is filed, is land enjoyed with lot 3, and accordingly the lien should bevalid as against lot D. There is an evidentiary dispute as to whether lot D is enjoyed with lot 3. Whether it is is irrelevant.

The concept of land "enjoyed with" other land went out of vogue in this province with the coming into force of the Mechanics' Lien Act,S.A. 1960, c. 64. Prior to that time the Act gave a lien "in the improvement and the land occupied thereby or enjoyed therewith". Thatlegislation is discussed by Greschuk, J., Crown Lumber Co. v. Saulsberry, (AB KB), [1961] 34 W.W.R. 370

(Alta.T.D.).

Section 4 of the present Act gives the lien claimant "a lien upon the estate or interest of the owner in the land in respect of which theimprovement is being made". It cannot be clearer. Only the land upon which the improvement is made is subject to the lien. No otherland, even though owned by the same person, is subject to the lien. The lien is solely a creature of statute and extends only to that whichthe statute provides.

The statute is unequivocal as to which land is subject to the lien. [38] In my view, the passage quoted above is not consistent with subsequent case authority, outlined below. [39] In Prairie Roadbuilders Ltd. v.

Stettler, 1983 CarswellAlta 147 (Master), the Court upheld a lien on a sewage lagoon, eventhough the work was physically done on adjoining streets, not on the lagoon itself. [40] The headnote describes the situation as follows: A small village in the defendant county contracted with the defendant K. for the construction of a sewage system, consisting of agathering system running under the village streets connected to a trunk sanitary line running along a public highway road allowance to alagoon site.

When the contractor abandoned the project, builders' liens were registered by the plaintiff and other creditors against thelagoon site alone, since the streets were not lienable. An application was brought to determine if the lagoon was lienable and if so, whatlien claimants had a right to lien it. [41] It was held that the liens filed against the lagoon were valid, even for creditors who only did work on adjacent lands i.e. underthe adjoining streets (which were not themselves lienable).

The court commented at paragraphs 98 through 100: In my view the critical question is: What is the improvement for the purpose of the Act? If the collecting system can be regarded as animprovement, by itself, those persons who performed work or provided materials only in relation to the collecting system are not entitledto a lien on the lagoon land. In my view, in this case the improvement is the total project, which is the entire sewage disposal system. The collection system and thelagoon system cannot be regarded as separate improvements. They go together. Neither serves a purpose without the other.

Neither isfunctional without the other. The lagoon land is "enjoyed with" the streets land in relation to the sewage system.

At one time that alone would have been sufficient toallow those persons who did work or provided material for that part of the improvement situate under the streets land to claim a lien onthe lagoon land. [42] And further at paragraph 104: That being the case, is there any reason why work and material which physically go into a part of the improvement situate on one parcelof land cannot also be considered as work and material "in respect of" or "for" that part of the improvement situate on another parcel ofthe land? Conceptually, I see no difficulty.

Why cannot work done on one side of a building be considered a work directly related to thetotal building, even though the building occupies two or more parcels of land. Why cannot windows supplied for one side of a buildingbe considered as material directly related to the total building, even though the building occupies two or more parcels of land? Is thereany logic in saying the lien claimants in those cases must be restricted to the parcel of land on which the particular side of the buildingstands? [43] In Wyo-Ben Inc. v. Wilson Mud Canada Ltd., (1985) 1985 ABCA 310 41 Alta.

L.R. (2d) 289, 1985 CarswellAlta244 (C.A.) the Court decided that a supplier can claim a lien on a mineral interest in a parcel tapped by a well if the well-head is locatedon adjoining lands and the supplies were delivered to the adjoining lands. [44] The Court cited favourably the following passage based on American authority: The labor for which a lien may properly be claimed must be directly, rather than indirectly or remotely, connected with the constructionwork.

However, it is not essential that the work or labor for which a lien may properly be claimed should be performed on the premiseswhere the building or structure is being erected or the improvement is being made, provided it is necessarily connected with theconstruction or improvement on the premises. [45] In South Side Woodwork

(1979) Ltd. v. R.C. Contracting Ltd. et al, supra, the Court discussed the Wyo-Ben Inc. decision,supra, as follows: 92 Counsel for the applicant also relies on Wyo-Ben Inc. v. Wilson Mud Can. Ltd., (1985), 1985 ABCA 310 41 Alta. L.R.(2d) 289 (C.A.). That decision is not of assistance to the problem before me. Wyo-Ben has nothing to do with ss. 25, 27 or 31. 93 The issue in Wyo-Ben was whether the lien claimant had improved the land it had liened. That is a s.4 issue. Was the lien claimantable to bring itself within that charging section?

The Court said yes. 94 Wyo-Ben merely stands for the proposition that it is not necessary for a lien claimant to actually do a "hands-on" job on the landliened to be able to fit himself within s.4. 95 Something which is physically done off the land liened may still constitute an improvement to the land liened. Wyo-Ben citescases on that. 99 What tied the lien claimant into s.4, in Wyo-Ben, was the fact that there was a "common project" on the two parcels of land, thecommon project being the extraction of a pool of oil under both parcels of land.

A lien on either parcel was sufficient. [46] In Re: Smoky River Coal Ltd., 1999 ABQB 492, 1999 CarswellAlta 598 (Q.B.), the Court applied the common purpose test to

uphold a lien filed on land adjacent to the land where the work was done.

The question posed, and answered in the affirmative, was as follows: Is the mine site, as an operation, sufficiently integrated so as to permit all of the Lienholders to claim a lien against the whole of the mine site so Lienholders who performed work outside of the titled land may also claim a lien against the titled land and vice versa? [ 47 ] After considering the decisions in Prairie Roadbuilders , supra , and Wyo-Ben , supra , the Court stated, at paragraphs 29 and 30: The evidence has satisfied me that the mine and the mine site is an integrated operation in which no part exists purely for its own sake.

The operation exists as a whole and work done in one

section of it is necessarily done to improve the effectiveness of the whole operation. Can it really be said, for instance, that a road through the mine site to a facility on a different part of the mine site did not improve that facility such that the corresponding Builder's Lien should be limited to the land under the road? Surely not, for the facility would be inaccessible without the road. In short, the mine site was an integrated operation in which work done on specific areas of the mine site was performed for the common purpose of improving the mine and the mine site as a whole.

The Lienholders who performed work within the area of the surface leases comprising the mine site are entitled to assert their lien claim against all the areas of the mine site including the two quarter sections covered by the certificates of title and vice versa. [ 48 ] In Re: Anvil Range Mining Corp. , 1999 CarswellYukon 89, [1999] Y.J.

No. 129, 1 C.L.R. (3d) 292 (S.C.) , the Court ruled that, in order for a lien to be valid notwithstanding that mining work was done elsewhere “there must be some connection, either in purpose or geographical, which approaches a necessary connection” between the site where the mining work was done and the land upon which the lien was registered. [ 49 ] This decision was based on the Miners Lien Act , R.S.Y. 1986, c. 116.

The wording of that Act is similar to the wording of Alberta’s builders’ lien legislation prior to 1960, as follows: The lien shall attach upon the estate or interest of the owner and of all persons having any interest in the mine or mining claim and all appurtenances thereto, the minerals or ores produced therefrom, the land occupied thereby or enjoyed therewith and the chattels, equipment and machinery in, upon or used in connection with such mine, mining claim or land. (emphasis added) [ 50 ] The question then was whether the lien in question, having arisen with respect to work done on the Anvil mine, also applied to:

i) houses owned by the respondent Anvil Range in Faro, Yukon Territory, available for housing of management staff; ii) one house in Whitehorse, Yukon, 200 kilometres away from the mine, used by the Chief Executive Officer, and described in an affidavit filed June 16, 1999; iii) a truck service depot leased to Anvil Range on which buildings have been constructed and are owned by Anvil Range, which terminal was used by the transport contractor, Lomak North Corporation, which lands and premises are referred to as the "Lomak Terminal"; iv) Skagway equipment situated in Skagway, Alaska, owned by Anvil Range and used and kept at the Skagway Terminal at the port of Skagway in Alaska. [ 51 ] The Court noted that the Whitehorse house, the Lomak terminal, and the Skagway equipment were geographically well separated from the Faro mine and lacked a clear nexus with "mining".

They were held not to be subject to the lien. [ 52 ] The Court found that the houses located Faro were subject to the lien, based on the following factors, discussed at para 52 of the decision: With respect to the Faro housing, I consider the following circumstances:

a) the houses on the evidence were used by management in the mining and milling processes;

b) there is no way to distinguish which of any of the houses was occupied in mining, which in milling and which in both;

c) I take judicial notice of the fact that the Town of Faro is in close proximity to the Anvil Mine and mill;

d) I take judicial note of the relatively isolated nature of the Town of Faro and its necessary connection to the mine and mill; and

e) the dependence of the mine on the existence of the mill and vice versa. I am, therefore, satisfied that there is a sufficient nexus for me to conclude that the Faro houses are enjoyed (therewith) with the mine and its appurtenance, the mill. Analysis [ 53 ] In my view, the case law reviewed above supports the proposition that a builders’ lien under current Alberta legislation can be validly registered on land, even though the improvement was not made on that land, provided that there is a common purpose, including at least some geographical proximity, between the site where the work was done and the land upon which the lien was registered.

[ 54 ] Applying that principle to the MJ Trucking lien, I find the evidence presented by MJ lacking as to whether there was a common purpose between the project site where the administration building was being constructed, and the nearby land upon which the lien was placed. [ 55 ] The evidence before me does not show how the improvement being constructed was connected to the land which was liened.

Is the present plan for the liened lane to be used eventually for landfill purposes (it is bare unused land at the present), or is it intended for other uses? [ 56 ] Likewise, the evidence before me does not establish whether the workers operating out of the newly constructed administration building are doing work related to the operations of the East Calgary Landfill site, and specifically how? [ 57 ] In my mind it is not sufficient for MJ Trucking to simply establish that both the administration building and the liened land are located in a geographical area which has been labelled as the “East Calgary Landfill Site” by its owner the City of Calgary. [ 58 ] Consequently, I find that the MJ Trucking lien is invalid and I order the Clerk of the Court to return to Govan the security it posted with respect to the MJ Trucking lien.

Costs [ 59 ] If the parties cannot agree on costs they may seek a ruling from me in that regard. Heard on the 16 th day of June, 2016. Dated at the City of Calgary, Alberta this 13 th day of July, 2016. J.T. Prowse M.C.C.Q.B.A. Appearances: Clive O. Llewellyn Llewelllyn Law for the Plaintiff MJ Trucking Andrew W. Wilkinson Field LLP for the Defendant Govan Brown Ltd.