Norson Construction Ltd v Clear Skies Heating & Air Conditioning Ltd, 2017 ABQB 188

Court of Queen’s Bench of Alberta Citation: Norson Construction Ltd v Clear Skies Heating & Air Conditioning Ltd, 2017 ABQB 188 Date: 20170320 Docket: 1710 00321 Registry: Red Deer Between: Norson Construction Ltd. Applicant - and - Clear Skies Heating & Air Conditioning Ltd. Respondent _______________________________________________________ Reasons for Judgment of J.T. Prowse , Q.C., Master in Chambers _______________________________________________________ [ 1 ] The following statement is contained in the CED (Western) Builders’ Liens IV.3,

section 162: It has been held, however, that omitting to name or incorrectly naming the owner of the land to be charged will not vitiate the lien if no one is prejudiced by the error or omission. [ 2 ] This case involves a builders’ lien which contains an incorrect name for the owner. The issue is whether the statement quoted above correctly expresses the law in Alberta. [ 3 ] For the reasons which follow, I conclude that the statement is correct. The facts

[4] In July 2016, the Respondent Clear Skies Heating & Air Conditioning Ltd. (“Clear Skies”) was hired by a sub-contractorWhitemud Mechanical Ltd. (“Whitemud”) to carry out installation work for three HVAC systems on a project in Edmonton, Alberta. [5] Whitemud in turn had a contract with the general contractor, the applicant Norson Construction Ltd. (“Norson”), who wasconstructing the project for the owner, Jim Pattison Developments Ltd. (“Pattison”). [6] Clear Skies was unpaid and so one of its principals attended at the Land Titles Office on November 1, 2016, where hecompleted and filed a builders’ lien for $131,798.10.

The lien was filed against the fee simple title to the land but the principal of ClearSkies mistakenly inserted the name of Whitemud for the owner, and not Pattison. [7] Pattison regularly did lien searches on the title because it did not want to issue progress payments to Norson in the face ofregistered liens.

Pattison thus located the Clear Skies lien and advised Norson that it would have to remove the lien before it couldreceive its next progress payment. [8] Norson accordingly applied to court on November 18, 2016 and obtained an order that the Clear Skies lien be dischargedupon paying the amount of the lien plus an allowance for costs into the trust account of Norson’s lawyer. The lien was discharged atLand Titles, pursuant to this order, on November 21, 2016.

Prejudice [9] Clear Skies misnomer (inserting Whitemud rather than Pattison as owner) did not cause any prejudice to anyone. [10] There is no suggestion that anyone relied on the misnomer, or that any different steps would have been taken by anyone if thelien had listed Pattison rather than Whitemud as the owner. [11] The lien was placed on the fee simple title, which is where it belonged. This is not a case where there was a mix-up on thenature of the legal interest against which the lien was placed (i.e. fee simple instead of leasehold).

Statutory provisions – the Builders’ Lien Act 34(1) A lien may be registered in the land titles office by filing with the Registrar a statement of lien in the prescribed form.

(2) The statement of lien shall set out (

a) the name and residence of (

i) the lienholder, (ii) the owner or alleged owner, and (iii) the person for whom the work was or is being done or the materials were or are being furnished, ... (

e) a description, sufficient for registration, of the land or interest in the land to be charged, ... (emphasis added) 37(1) A substantial compliance with

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

section 34 unless, in the opinion of the court, the owner, contractor, subcontractor, mortgagee or some other person isprejudiced by the 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. Alberta case authority [12] In Fred H. Blanchard & Son v Poetz Construction Co., (AB KB), 1953 CarswellAlta 33, 8 W.W.R. (N.S.)225, a lien named the registered title holder only, and not the purchasers under an agreement for sale. The purchasers were in possessionwhen the work was completed. The relevant legislation provided: A substantial compliance with

section 19 shall be sufficient and no lien shall be invalidated by reason of failure to comply with any of therequisites of the

section unless, in the opinion of the judge, the owner, contractor or sub-contractor, mortgagee or other person, isprejudiced thereby, and then only to the extent to which he is thereby prejudiced. [13] The Court upheld the validity of the lien against the purchasers’ interest under the Mechanics’ Lien Act, RSA, 1942, ch. 236,notwithstanding that the lien did not name them. It determined that the lien was in ‘substantial compliance’ with the requirements of theMechanics’ Lien Act. [14] In Tarsands Machine & Welding Co., 1982 CarswellAlta 477, [1982] A.W.L.D. 948, 42 A.R. 321, the land was owned byfive persons.

Only one owner, Her Majesty the Queen (whose interest was clearly not lienable) was named in the lien. The Court upheldthe lien, noting that no one was prejudiced by the failure to name all five owners, and that there was substantial compliance sufficient topreserve the lien.

[15] In Cdn. Patent Scaffolding Co. v Capton Holdings Ltd., (AB KB), 1985 CarswellAlta 515, 63 A.R. 106, awater reservoir project was undertaken by the City which was in the process of purchasing the land, but had not yet obtained title. Theliens named the vendor, rather than the City, as ‘owner’. Although the City was clearly the ‘owner’ under the Builders’ Lien Act, theliens were upheld as nobody was prejudiced. The liens were upheld pursuant to the equivalent of

section 37, quoted earlier in thesereasons. [16] In LT Interior & Drywall Ltd. v Sota Centre Inc., 2003 CarswellAlta 918, 2003 ABQB 552, the lienholder registered againstthe fee simple, when in fact it was the leasehold interest which should have been liened.

The lien was held to be invalid. [17] In Canadian Helicopters Ltd. v Udo Stephen Building Materials Ltd., 2003 ABQB 322 , 2003 CarswellAlta 500,the Court refused to validate a lien which had been filed against a fee simple title instead of the correct leasehold title. [18] In Arres Capital Inc. v Graywood Mews Development Corp., 2011 CarswellAlta 1082, 2011 ABQB 411, the liens were filedagainst the fee simple, and not, as they should have been, against the interest of the mortgagee who was eventually alleged to be the‘owner’ for the purposes of the builders’ lien legislation. The liens were held to be invalid.

What is ‘substantial compliance’ with

section 34 of the BLA? [19] In my view, the issue of prejudice should be considered when considering whether there is substantial compliance withsection 34. [20] The lien in question was filed by a business person, the principal of Clear Skies, who clearly made an error on the form oflien. [21] As nobody was misled by the error, why should the error in the form be classified as substantial? [22] The error in question prejudiced nobody. The lien was filed against the fee simple.

Everyone involved in this project wouldknow that Pattison, not Whitemud, owned the fee simple. [23] To me, it is overly formulistic to eliminate the lien of a party who has improved land because of a slip in the form which wasfiled. [24] In that regard, I note the following passage from the decision of the Alberta Court of Appeal in Canbar West Projects Ltd. vSure Shot Sandblasting & Painting Ltd., 2011 ABCA 107, where the Court stated, at paragraph 14: The general interpretive directives set out in Rizzo and Bell are subject to modification when builders' lien statutes are being interpreted.Specifically, courts are required to adopt a strict

interpretation in determining whether a lien claimant is entitled to a lien, and a liberalapproach with respect to those to whom the statute applies: Ace Lumber Ltd. v Clackson Co., (SCC), [1963] S.C.R. 110 at114, 36 D.L.R. (2d) 554; Hett v Samoth Realty Projects Ltd.. (1977), (AB CA), 4 A.R. 175 at para. 13, 76 D.L.R. (3d)362 (C.A.). Builders' liens are business oriented statutes with practical, as opposed to formulistic, goals; their overall intent is to ensurethat "the land that receives the benefit shall bear the burden": Scratch v Anderson (1909), (AB CA), [1917] 1 W.W.R.1340 at 1342, 33 D.L.R. 620 (Alta.

C.A.); aff'd (SCC), 44 S.C.R. 86, 1910 CarswellAlta 98; Schubert v A-S4 Steel Ltd.,2010 ABCA 62, 474 A.R. 340 at para. 26. (emphasis added) [25] I refer to the portion of the above passage which says that “courts are required to adopt a strict

interpretation in determiningwhether a lien claimant is entitled to a lien”. [26] And so, the question becomes, did the Builders’ Lien Act make the fee simple answer of Pattison lienable in thecircumstances of this case? The answer to that question is clearly ‘yes’. [27] What has happened is that the principal of Clear Skies erroneously listed someone else as the owner in the form of lien filed.This does not cause the lien to fail under the ‘strict

interpretation’ doctrine. The lien already existed. It was not created when the lienform was filed at Land Titles. [28] This approach is confirmed in the decision of Waisman, Ross & Associates v Crown Trust Co., (SCC),[1970] S.C.R. 553, 1970 CarswellAlta 140. In that case, the lien was filed in the name of a non-entity i.e. a partnership, instead of beingfiled as it should have been in the name of the partners. Because of this, the Supreme Court of Alberta, Appellate Division, applied the‘strict

interpretation’ doctrine and ruled the lien to be invalid. This ruling was overturned by the Supreme Court of Canada which statedas follows, at para 11 of its ruling, with respect to the ‘strict

interpretation’ doctrine: I agree that this passage [dealing with strict

interpretation] is applicable to the circumstances of the case at bar but I respectfully differfrom the view of the appellate division as to the result of its application. In the view of both Greschuk, J. and the appellate division, withwhich I agree, the statute, however strictly construed, did give the right to a lien to Allan H. Waisman and Jack M. Ross.

The ground onwhich the appellate division has rejected their claim is that the form in which the statement of lien was filed was fatally defective. (emphasis added) [29] Applying this quote to the facts at hand, the Builders’ Lien Act, strictly interpreted, did give Clear Skies the right to lienPattison’s fee simple interest. It was only the form of the statement of lien filed by Clear Skies which was problematic. The error in thatform does not prevent it from being in substantial compliance with the Act. Nobody was misled by that mistake.

Conclusion [30] I find that the lien of Clear Skies is in substantial compliance with

section 34 of the Builders’ Lien Act and that the error madein the form of lien by naming the wrong owner does not vitiate the lien as no one was prejudiced by that error.

Costs [ 31 ] If the parties cannot agree on costs, they may seek a ruling from me in that regard. Heard on the 14 th day of March, 2017. Dated at the City of Calgary, Alberta this 20 th day of March, 2017. J.T. Prowse, Q.C. M.C.C.Q.B.A. Appearances: Taylor D. Kapusianyk Gowling WLG (Canada) LLP for the Applicant Norson Construction Brett A. Bothwell Johnston Ming Manning LLP for the Respondent Clear Skies