Whitson Contracting Ltd v Pacific West Systems Supply Ltd, 2023 ABKB 309

Court of King’s Bench of Alberta Citation: Whitson Contracting Ltd v Pacific West Systems Supply Ltd, 2023 ABKB 309 Date: 20230525 Docket: 1403 03895 Registry: Edmonton Between: Whitson Contracting Ltd Applicant - and - Pacific West Systems Supply Ltd Respondent _______________________________________________________ Reasons for Decision of Judge W.S. Schlosser _______________________________________________________ [ 1 ] This is an application to dismiss a lien claim for delay. The procedural history requires some comment.

Cases Cited Applicant Covey v Devon Canada Corporation, 2020 ABCA 445 ; Ursa Ventures Ltd v Edmonton (City) , 2016 ABCA 135 ; Weaver v Cherniawsky , 2016 ABCA 152 ; 1406998 Alberta Ltd v Dorbandt, 2017 ABQB 321 ; Davenport Homes Ltd v Cassin, 2015 ABQB 138 . Defendant

1361556 Alberta Ltd v Ristorante Cosa Nostra Inc , 2021 ABQB 157 ; Heron Building Company v Sunset Diesel Services Ltd , 2006 ABQB 137 ; Primewest Energy Inc v Texacana Turbines Inc, 2016 ABQB 715 ; Edinburgh Tower Development Ltd v Curtis, 2021 ABQB 239 ; Casman Building Ltd v Weir-Jones, 2021 ABQB 761 ; Ursa Ventures Ltd v Edmonton (City) , 2016 ABCA 135 ; Sutherland v Brown, 2018 ABCA 123 ; Ro-Dar Contracting Ltd v Verbeek Sand & Gravel Inc , 2016 ABCA 123 ; Morrison v Galvanic Applied Sciences Inc , 2019 ABCA 207 ; Ma v Kwan , 2019 ABQB 89 ; Darby v Citifinancial, 2022 ABQB 9 ; L.C. v Alberta (Metis Settlements Child & Family Services, Region 10) , 2011 ABQB 12 ; Le v 1055168 Alberta Ltd, 2013 ABQB 431 ; Precision Label Ltd v Milburn, 2016 ABQB 481 ; Gardner v Peace Hills General Insurance, 2004 ABQB 804 ; Kehew Construction Ltd v Kehewin Cree Nation , 2017 ABQB 561 ; Kehew Construction Ltd v Kehewin Cree Nation , 2017 ABQB 763 ; TRG Developments Corp v Kee Installations Ltd , 2014 ABQB 482 .

By the Court Rahmani v 959630 Alberta Ltd, 2021 ABCA 110 ; Song v Her Majesty the Queen in Right of Alberta , 2021 ABCA 361 ; Driden Industries Ltd v Sieber , [1974] 3 WWR 368 , 1974 ALTASCAD 14 ; Edmonton Gold's Gym Corp v Complete Concrete Cutting Ltd , 2012 ABQB 638 . Procedural History [ 2 ] Pacific West supplied materials to Excel Wall Systems Inc for a project owned by Condominium Corporation 0427067.

When Pacific West was not paid, (and Excel ran into financial difficulties) it filed a lien, on February 24, 2014, and started an action (in Calgary) against Excel and the Condominium Corporation. [ 3 ] Meanwhile, the general contractor, Whitson Contracting Ltd initiated proceedings by way of a s 48 application in Edmonton. Whitson was the Applicant. Pacific West was the Respondent. [ 4 ] On March 14, 2014, the sum of $257,325.84, representing the face value of the lien and an allowance for costs ($233,932.58 and $23,383.26, respectively), was paid into court by way of a lien bond. The lien came off title.

The order went by consent. The lien bond in the Edmonton action represented more than the owner’s maximum liability under the (then) Builders’ Lien Act . [ 5 ] December 1, 2015, the Condominium Corporation applied in the Calgary action to have that action against it dismissed. Excel did not participate. [ 6 ] Calgary Action 1401 08772 was dismissed against the Condominium Corporation. It remained alive against Excel, apparently only for document production. [ 7 ] The order dismissing the action provided, in part: ... 3.

Pacific West will proceed to prove its Lien in Court of Queen’s Bench Action No. 1403-03895. [the Edmonton action] ... 5.This Order shall not excuse any party from its rights or obligations arising by virtue of the Builders’ Lien Act , RSA 2000, c B-7 . ... [ 8 ] Nothing further appears to have happened in that action.

Excel, the remaining Defendant, is apparently insolvent. [ 9 ] On February 25, 2016 a consent order in this action reduced the security to $165,000.00. [ 10 ] Whitson had filed an application on May 2, 2014 in this action, seeking a “declaration that the relevant lien fund has been paid out, that the lien is invalid as it was registered out of time and against the wrong lands, and dismissing the lien claim on such other grounds as the court deems appropriate”. Whitson did not pursue this application.

Pacific West then took out its own application, about three years later on March 24, 2017, to validate its lien. [ 11 ] This application is brought under r 4.33 and s 46 of the Prompt Payment and Construction Lien Act , RSA 2000, c P-26.4 ( PPCLA ). [ 12 ] The s 48 order absolved the lienholder from having to take enforcement proceedings. [ 13 ]

Section 44 provides: 44 Notwithstanding

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

section 27 or 48(1) the lien, as a 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. [ 14 ] Section 46(2) provides: 46(2) Notwithstanding subsection (1), if no trial has been held within 2 years from the date of the registration of the certificate of lis pendens, any interested party may apply to the court to have the certificate of lis pendens vacated and the lien to which it relates discharged.

[ 15 ] Security has been provided. There is no lis pendens to vacate. In these circumstances we are really within r 4.33 territory or, to the extent that s 46 is to be applied like r 4.31, r 4.31 territory. Lien actions are supposed to be dealt with summarily and expeditiously, which has greater relevance for whether delay is inordinate for the purposes of r 4.31. [ 16 ] In the Edmonton proceedings, the s 48 application was the commencing document. The Rules do not provide for an action to be started with a s 48 application (r 3.2), though it is not uncommon when pleadings are to follow.

Section 49(1) of the PPCLA contemplates enforcement proceedings by way of Statement of Claim. [ 17 ] One of three things should have happened following Pacific West’s February 24, 2014 lien. Pacific West should have taken out enforcement proceedings by way of a Statement of its Claim, the Whitson application should have proceded, or a parallel application such as the one Pacific launched in March 2017 under s 53 of the Act , should have been before the Court for directions.

This likely would have resulted in a ‘Statement of Pacific's Claim’ with Pacific as plaintiff, Whitson as a defendant, with Whitson directed to file a ‘Statement of its Defence’. [ 18 ] This would have permitted the Court to define the issues (and the parties) and to give procedural directions. The issues could have been framed by way of a s 53 application and r 3.12, 1.4 and 1.5. The Court might also have ordered that the Edmonton and Calgary actions be consolidated.

Definition of the issues stalled after the s 48 order, the setting of the lien fund, and Whitson’s abandonment of its May 24, 2014 application to get rid of Pacific West’s lien. [ 19 ] The way things now stand, and in the absence of pleadings, specific issues (as opposed to the usual suspects in this type of dispute) are largely a matter of conjecture; to be pieced together from the cross applications: Whitson’s in 2014 and Pacific’s in 2017, together with the affidavits generated by those applications cross examination and the correspondence between the parties.

Rule 4.33 [ 20 ] The absence of pleadings; in particular Statements of Claim, or Defence, reveal a more fundamental problem. The starting point in any delay application is to measure progress against the issues defined in the lawsuit. It is only once that has been done that events in the lawsuit can be assessed to determine whether there has been a significant advance. [ 21 ] But that is not the only problem.

Rule 4.33 provides: 4.33(1) In this rule, (a) “applicant” means a party to an action who makes an application to dismiss the action for delay as set out in this rule; (b) “respondent” means a party who has filed a commencement document; (c) “suspension period” means, in subrules (5) to (9), a period that ends on (

i) a specific date, or (ii) the happening of a specific event.

(2) If 3 or more years have passed without a significant advance in an action, the Court, on application, must dismiss the action as against the applicant, unless [ 22 ] Here, Whitson is the Applicant but it is not, a ‘party to an action’ in the conventional sense. Pacific West has not filed a ‘commencement document’. In effect, and if we treat Whitson’s s 48 application as a commencing document, Whitson is applying to strike out its own application to have the lien declared invalid. [ 23 ] Rule 4.33(2) speaks of a ‘significant advance in an action’.

But there really is no action here as that term is used either by the PPCLA or the Rules of Court. [ 24 ] Pacific’s counsel has attempted to overcome this issue by framing the issues in its brief (at para 6); construing them from Whitson’s generic and apparently abandoned application to have the lien declared invalid, Pacific West’s 2017 cross application, the affidavits, the examinations on the affidavits and the dealings between the parties. [ 25 ] Pacific West defines one of the issues as one raised by Whitson in examining Pacific West: “PacWest misapplied monies received from Excel to other projects so as to preserve its claim against the Project;”. [ 26 ] This issue was the subject of an undertaking, which was answered with a denial July 25, 2017 without back-up documents.

It is the only candidate for a significant advance if r 4.33 has any direct application to the circumstances. [ 27 ] If this were an action, the last uncontroverted step was the provision of answers to undertakings on July 25, 2017. If we look forward from this uncontroverted significant advance (as the Court of Appeal bids us to do in Rahmani v 959630 Alberta Ltd, 2021 ABCA 110 , at para 16 ) and add 3 years and 75 days, the time was up in early October 2020.

This application was taken out October 20, 2020. [ 28 ] The only event that could count as a significant advance after July 25, 2017, is the provision by Pacific West of documents and an accounting, on December 10, 2018, that is said to support the answer to undertaking #2. They show that all but approximately $14,000.00 was properly applied and go some distance to supporting the lien claim.

[ 29 ] I note that there was also a formal offer in February 2019 that went unanswered and an unsworn Affidavit of Records October 2020, listing records already produced.

An application of the functional approach tells us that these last two events will not count as significant advances. [ 30 ] In my view, the provision of supporting documents should be measured in terms of an ‘ancillary step’, as that term is used in 1406998 Alberta Ltd v Dorbandt , 2017 ABQB 321 (at para 11 ). [ 31 ] Applying the functional approach to the provision of documents supporting one of the answers to the undertaking requires asking whether these documents significantly help determine one or more issues ‘raised in the pleadings’.

In other words, if we use the test for relevance and materiality described in r 5.2, this will help us determine whether the documents provided constitute a significant advance if they significantly assist in determining a central issue. [ 32 ] However, there are no issues raised in the pleadings. There are no pleadings.

Setting up something as a ‘central issue’ when there are no pleadings, and then saying that the issue can be proved, or resolved by the documents provided and therefore constitutes a significant step, seems to be the procedural equivalent of pulling yourself up by your bootstraps. [ 33 ] There is properly no ‘action’, no conventionally defined issues against which to judge whether events constitute a significant advance. Rule 4.33 has no direct application in the circumstances. To the extent that it does apply, the Applicant insisted on proof that funds were properly allocated and applied.

They got what they asked for with detailed proof of that in December 2018; within the three year gap.

Section 46 PPCLA [ 34 ] I acknowledge that s 46 is permissive and discretionary. In that respect, it is more like r 4.31 (requiring prejudice), than r 4.33; which requires only advances.

Section 46 is not absolute. I acknowledge that s 46 should be approached pragmatically and that prejudice and an explanation for the delay should be considered ( Davenport Homes Ltd , Ristorante Cosa Nostra Inc, Heron Building Co). [ 35 ] The Applicant was responsible for a large part of the delay by failing to advance its own application to determine the validity of the lien. Pacific West picked up the ball later on but what should have happened was a s 53 application.

There is good reason for s 53, not the least of which is that it would have enabled us to steer clear of the procedural morass this lien claim now finds itself in. A procedural direction is always a good idea after a s 48 application: Driden [at paras 13, 14) and Gold’s Gym. [ 36 ] To the extent that the convoluted procedural history makes this a borderline delay case, the default should be to let it continue: Song v Her Majesty the Queen in Right of Alberta , 2021 ABCA 361 (at para 63 ). Disposition [ 37 ] The delay application is dismissed.

A s 53 application is to be launched within 30 days, or a consent procedural order is to follow within the same time period. [ 38 ] The parties may address costs if they are not agreed. Heard on the 31 st day of March, 2023. Dated at the City of Edmonton, Alberta this 25 th day of May, 2023. W.S. Schlosser A.J.C.K.B.A. Appearances: Nicole A. Pepin Bryan & Company LLP for the Applicant

Bryan Kwan McLennan Ross LLP for the Respondent