Benchmark Construction & Developments Ltd v Brennan, 2017 ABQB 633

Court of Queen ’ s Bench of Alberta Citation: Benchmark Construction & Developments Ltd v Brennan, 2017 ABQB 633 Date: 20171018 Docket: 1103 01312 Registry: Edmonton Between: Benchmark Construction & Developments Ltd Plaintiff - and - Gareth Brennan and Carolyn Brennan Defendants - and between - Gareth Brennan and Carolyn Brennan Plaintiffs by Counterclaim - and - Benchmark Construction & Developments Ltd, and Kevin Koshman, Darren Wight and Curtis Quigley Defendants by Counterclaim _________________ ______________________________________ Reasons for Decision

of the Honourable Madam Justice D.L. Shelley In Relation to an Appeal of the Order of Master Schultz Pronounced June 24, 2016 _______________________________________________________ I Nature of the Appeal [ 1 ] The Respondents (who are some of the Defendants by Counterclaim) applied for dismissal of the Appellants’ (the Defendants’) Counterclaim against them pursuant to R 4.33 of the Alberta Rules of Court, commonly referred to as the “drop dead rule”. On June 24, 2016, the Master granted the application.

The Appellants appeal that decision, maintaining that the Master erred in concluding that there had been no significant advance in the action for three years. II Steps in the Action [ 2 ] The main steps related to this Action are: - The Plaintiff provided work and materials in the completion of the Defendants’ home. A dispute arose between those parties and the Plaintiff filed a builders’ lien (the “Lien”) against title to Defendants’ property on January 5, 2011. - On January 25, 2011, the Plaintiff commenced this Action.

The next day, it filed a Certificate of Lis Pendens (“CLP”) against title to the property. - On September 19, 2011, the Defendants filed a Statement of Defence and a Counterclaim, alleging fraudulent actions on the part of the Plaintiff and one of its directors (Koshman). The Plaintiff’s other two directors (Wight and Quigley) were added as Defendants in the Counterclaim on December 20, 2012, on the basis of alleged breach of contract and negligent performance of services under the contract. These directors filed their Statements of Defence to the Counterclaim on February 5 and 6, 2013.

One served his Affidavit of Records on April 11, 2013. - On May 28, 2013, documents were provided to the Defendants’ counsel. - In September 2013, unknown to the Defendants, the Plaintiff was dissolved. - There were a number of unsuccessful attempts to

schedule questioning. - On December 11, 2013, the Defendants made a settlement offer in respect of their Counterclaim. The offer was not accepted. - Further attempts were made between 2013 and 2016 to

schedule questioning, but it never occurred. - On April 22, 2015, the Defendants brought a successful application to have the Lien vacated pursuant to s 46(2) of the Builders’ Lien Act , RSA 2000, c B-7 (“ BLA ”). As a result, the Lien and the CLP were discharged pursuant to the Order of Master Schlosser (the “Schlosser Order”). - In September 2015, the Defendants served a Notice of Appointment to attend questioning on two of the director Defendants by Counterclaim; the third (Koshman) could not be located. The questioning did not proceed. - Toward the end of 2015 and into 2016, further attempts were made to

schedule questioning. On December 2 nd , 2015, the parties agreed to hold questioning on June 1, 2016. When one of the directors became unavailable on that date, the questioning was rescheduled to August 24, 2016. - On June 17, 2016, Wight and Quigley filed an application to dismiss the Counterclaim against them on the ground of long delay. [ 3 ] The Master granted the application and dismissed the Counterclaim on the basis that neither discharge of the Lien nor scheduling of questioning significantly advanced the action.

III Positions of the Parties [ 4 ] The parties agree that the outcome of this appeal depends on whether or not the application to discharge the Lien, and the Schlosser Order discharging it, significantly advanced the action. [ 5 ] The Appellants (Defendants in the original claim) argue that the Lien was an important aspect of the Plaintiff’s claim and determining its validity was a significant advance in the action. Therefore, resolution of the validity of the Lien, which occurred within the relevant three year period, significantly advanced this action.

[ 6 ] The Respondents (Wight and Quigley) argue that resolving the validity of the Lien did not materially advance the action, which was and remained throughout a debt claim. While they concede that resolving the validity of a lien might in some circumstances narrow the issues or promote settlement, they submit that it did not do so in this case. IV Standard of Review [ 7 ] On all issues, the standard of review on appeal from a Master to a judge is correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 , [2012] AJ No 540 at para 30 .

V Issue [ 8 ] The sole issue before the Court is whether the Master erred in concluding that three years had passed without a significant advance in the action. VI Law [ 9 ] It is clear from the authorities cited by the parties that Rule 4.33, the “drop dead rule”, requires a functional approach.

Our Court of Appeal (in Ro-Dar Contracting Ltd v Verbeek Sand & Gravel Inc , 2016 ABCA 123 , [2016] AJ No 400) reiterated this approach and further clarified the law: 11 ...Whether an action has been “significantly advanced” involves an assessment and measurement of the effect of what happened in the action during the period of alleged delay, measured in light of the facts and the objectives of the Rules of Court ... [ 10 ] The Court of Appeal in Ro-Dar accepted the appellant’s argument that an action can be significantly advanced without the action being settled or set down for trial.

The Court also reiterated that steps that serve to narrow the issues, complete the discovery of documents and information, or clarify the positions of the parties might well significantly advance the action. [ 11 ] The Court of Appeal also made it clear that “outcomes” should not be over emphasized. It cited Nash v Snow , 2014 ABQB 355 at para 30 , 590 AR 198 for the proposition that a court must “view the whole picture of what transpired in the three-year period, framed by the real issues in dispute, and viewed through a lens trained on a qualitative assessment”.

This requires an assessment of various factors such as the nature, value, quality, genuineness, timing, and in certain circumstances, the outcome of what occurred. [ 12 ] In Ursa Ventures Ltd v Edmonton (City) , 2016 ABCA 135 , [2016] AJ No 471, the Court of Appeal confirmed again that the functional approach requires consideration of whether the step in question moves the lawsuit forward in an essential way considering its nature, value, importance and quality. The Court also made it clear that the analysis must be done in the context of each lawsuit, focusing on substance and effect rather than form (citing St.

Jean Estate v Edmonton (City) , 2014 ABQB 47 , at para 19 , 585 AR 81). The Court observed that each piece of litigation is unique and that, when determining whether an advance is significant, the Court must look at that particular lawsuit. VII Analysis [ 13 ] It is clear from the provisions of the BLA that pursuit of a debt claim, where a builders’ lien has been registered, can be affected by the provisions of the BLA – that is, the lien can affect the procedures which must be followed and may impact the scheduling of the trial.

If a lien claimant takes steps to prove its lien claim, additional steps are required and a finding of invalidity of the claimant’s lien can have consequences in the debt litigation, both procedural and substantive. [ 14 ] However, in this case, the lien claimant (Plaintiff) did not take action, pursuant to s 46 of the BLA , to prove the Lien within two years of filing it. That was the basis upon which the Defendants (Appellants) obtained the discharge. Discharge of the Lien did not advance this action, because the Lien was not in any way affecting the conduct of the action.

The ability of the Lien to affect the action ended in January 2013. Having the Lien discharged was a mere formality, given the Plaintiff’s failure to pursue its remedies under the BLA in a timely fashion. In other words, there was no determination of the validity of the Lien on its merits; it was discharged due to the Plaintiff’s inaction.

The application to dismiss the Lien did not, in these circumstances, constitute a significant advance in the action. [ 15 ] Therefore, I find there has been no significant advance in the action since May 2013 at the latest. [ 16 ] The Master did not err, on the evidence that was before her, in dismissing the Counterclaim against the Respondents, which the parties agreed had, in the circumstances, the effect of dismissing this action. VIII Conclusion [ 17 ] The appeal is dismissed.

IX Costs [ 18 ] The Respondents are entitled to their costs in relation to the appeal. If the parties are unable to agree on the amount, a time can be arranged for that purpose by contacting my assistant. Heard on the 7 th day of April, 2017 Dated at the City of Edmonton, Alberta this 18 th day of October, 2017. D.L. Shelley J.C.Q.B.A. Appearances: E.C. Duffy Parlee McLaws LLP for the Appellants (Gareth Brennan and Carolyn Brennan) D. MacDermid Snyder & Associates LLP for the Respondent (Darren Wight) M.L. Engelking Engelking Wood for the Respondent (Curtis Quigley)