Terra Services Inc. PLAINTIFF (RESPONDENT) And: Her Majesty the Queen First defendAnt And: Pomerleau Inc. Applicant (Second defendant), 2018 NLSC 221

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Terra Services Inc. v. Her Majesty the Queen 2018 NLSC 221 Date : November 6, 2018 Docket : 200901T4059 Between: Terra Services Inc. PLAINTIFF (RESPONDENT) And: Her Majesty the Queen First defendAnt And: Pomerleau Inc. Applicant (Second defendant) Before: Justice Frances J. Knickle Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: April 27, 2018 Appearances: James MacNeil Appearing on behalf of the Applicant (Second Defendant) Gerlinde C. van Driel, Appearing on behalf of the Respondent

Q.C. (Plaintiff) Philip W. Osborne Appearing on behalf of the First Defendant Authorities Cited: CASES CONSIDERED: Brook Construction

(2007) Inc. v. Blackwood Contractors Ltd., 2015 NLCA 18; Fairview Investments Ltd. v.J.D. Irving Ltd. (1999), (NL SC), 566 A.P.R. 175, 49 C.L.R. (2d) 58 (Nfld. S.C.(T.D.)); W.M. Fares & AssociatesInc. v. 3035605 Nova Scotia Ltd., 2006 NSCA 120; Pennecon Energy Ltd. v. Metal World Inc., 2013 NLCA 67; Westeel-Rosco Ltd. v.South Saskatchewan Hospital Centre, (SCC), [1977] 2 S.C.R. 238, 11 N.R. 514; Canadian Pittsburgh Industries v.Crown Construction Ltd., (NL SC), 1979 107 D.L.R. (3d) 196, 24 Nfld. & P.E.I.R 391 (Nfld. Dist. Ct.); GlobalEavestroughing Ltd. v.

Astro Management Ltd. (NS SC), 1993, 134 N.S.R. (2d) 1, 16 C.L.R. (2d) 189; FisgardCapital Corp. v. Bond Street Properties Inc., 2012, NWTSC 11; E & J Electric Ltd. v. Littlejohn (1979), (NL SC), 23Nfld. & P.E.I.R. 520, 61 A.P.R. 520 (Nfld. Dist. Ct.); Vardy v. Dufour, 2008 NLCA 22; Western Regional Integrated Health Authority v.Marine Contractors Inc. 2016 NLTD(G) 41; Canada (Procureur général) c. Thouin, 2017 SCC 46; Fennelly v. Lloyd's Underwriters,2016 NLTD(G) 1; Aylward v. Reid 2007 NLTD 19 STATUTES CONSIDERED: Mechanics’ Lien Act, R.S.N.L. 1990, c. M-3; Mechanics Lien Act, R.S.N.W.T. 1988, c.

M-7; HydroCorporation Act, 2007, S.N.L. 2007, c. H-17 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sched. D TEXTS CONSIDERED: Newfoundland Law Reform’s Commission, Report on The Mechanics’ Lien Act: Certain Substantive Issues(The Commission, St. John’s, 1990) REASONS FOR JUDGMENT Knickle, J.: INTRODUCTION [1] This is an application under Section 26(2) of the Mechanic’s Lien Act, R.S.N.L. 1990, c. M-3 (the “Act”), by Pomerleau Inc.,for the return of security posted by Pomerleau in the form of a Bond under Section 26(2).

Pomerleau seeks to be released from itsobligation to maintain the Bond on the basis that Crown immunity applies to the land subject the lien claimed by Terra Services (theRespondent in this application). In the alternative Pomerleau asserts Terra Services has never perfected its lien claim as required by theAct. [2] For the reasons that follow, the application is allowed. BACKGROUND FACTS [3] In May 2009, Pomerleau was contracted by the Department of Works, Services and Transportation, Government ofNewfoundland and Labrador for the construction of a school in L’Anse Au Loup, Newfoundland and Labrador.

Pomerleau thensubcontracted certain work to be performed by Terra Services. In August 2009, a dispute arose between Pomerleau and Terra Services inrelation to the work performed. Terra Services claimed that it completed the work and was not properly paid by Pomerleau. TerraServices then registered a lien in relation to the dispute. The lien claim, as registered described the land as follows: Terra Services Inc. of 9 Cedar Dr, Box 422 Lewisporte, NL, A0G 3A0 … claims a lien upon the estate of Dept. ofEducation/Labrador School Board District, in St. John’s, NL, A1B 4J6 in the undermentioned land

And… The Land in question is approx. 150 meters by 150 meters, and is owned by the Dept of Education/Labrador School Board District , The site lies within the boundaries of the Town of L’Anse Au Loup, NL., and is being developed for a new K-12 School. [emphasis added] [ 4 ] In September 2009, a Statement of Claim was filed by Terra Services to enforce the lien. The Statement of Claim did not expressly seek a sale of the property under the Act , but it did plead for relief by way of payment of the amount registered in the lien of $576,434.07, plus interest.

The Statement of Claim made no reference to the Department of Education or the Labrador School Board District in the style of cause, but named “Her Majesty the Queen” (the Crown) as the First Defendant, and Pomerleau Inc. as the Second Defendant. The pleadings of the Statement of Claim, however at paragraph 2, stated: The First Defendant, Her Majesty the Queen, as represented by the Department of Education/ Labrador School Board District . The mailing address of the First Defendant is believed to be c/o 100 Prince Philip Drive, West Block, Confederation Building, St.

John’s, NL. [emphasis added] [ 5 ] In August of 2009, a Certificate of Action was filed by Terra Services. The certificate stated: … “commenced an action against the following land being ALL THAT SINGULAR piece or parcel of land and premises of Her Majesty the Queen, as represented by the Department of Education/Labrador School Board District, St. John’s, NL, A1B 4J6…” [ 6 ] In October 2009, a further Certificate of Action was registered by Terra Services. In that certificate, the Act was cited.

Like the registration of lien, and paragraph 2 of the Statement of Claim, the owner of the land was identified as “Her Majesty the Queen as represented by the Department of Education / Labrador School Board District.” [ 7 ] Neither Pomerleau nor the Crown in their Statements of Defence admitted paragraph 2 of Terra Services’ pleadings naming “Her Majesty as being represented by the Department of Education and/or the Labrador School Board District. ” Nowhere in any of the pleadings was the issue of Crown immunity raised. [ 8 ] An application was made by Pomerleau, and with the consent of all parties, on February 17, 2010, an Order was granted by this Court, to vacate the lien and in its place, a Bond for the amount claimed by Terra Services, plus $50,000, was posted by Pomerleau. [ 9 ] In the List of Documents filed by the Crown later that year, Document 13 identified an amendment to the parcel of land subject to the lien claim.

This amendment showed that the initial grant of land from the Crown to the Labrador School District, was transferred to the Western School District in April, 2009. This amendment was also confirmed by an Affidavit from Pomerleau’s Regional Manager, Lorin Robar, filed in support of the present application. At this hearing, the Defendants took no issue with the fact that Terra Services has consistently referenced this entity as the “Labrador School District”, even though the materials show that prior to the lien claim, that District was dissolved and reconstituted as the “Western School District”.

For ease of reference, I will refer to the entity as the “School District” hereon. [ 10 ] In January 2014, Pomerleau applied to have the Statement of Claim struck for want of prosecution. Although the hearing of that application was subsequent to the Newfoundland and Labrador Court of Appeal’s decision in Brook Construction

(2007) Inc . v. Blackwood Contractors Ltd ., 2015 NLCA 18 , neither Pomerleau nor the Crown raised the issue of Crown immunity. The application to strike was dismissed in November, 2016. [ 11 ] In December 2017, Pomerleau filed the present application to have the Bond set aside. In this application, both Pomerleau and the Crown raised the viability of the lien on the basis of Crown immunity; relying on the Newfoundland and Labrador Court of Appeal’s decision in Brook Construction . [ 12 ] No trial date has yet been set for this matter, and it has now been almost 9 years since the lien was first registered.

Pomerleau continues to maintain the Bond at a cost in excess of $6,000 dollars annually. THE POSITION OF THE PARTIES The Applicant [ 13 ] Pomerleau asserts the lien is invalid for two reasons. Firstly, notwithstanding the parties agree that the registered owner of the land is the School District, Pomerleau asserts that for the purposes of the Act , the “Crown” is the owner. Pomerleau submits that as per Brook Construction , the Crown enjoys immunity from the application of the Act . Given this, the lien must be declared invalid.

Alternatively, if the owner is not the Crown, but the School District, the lien is still invalid, because Terra Services has never commenced an action to enforce the claim against the School District, but only itself, Pomerleau, and the Crown. Pomerleau asserts the failure to name the School District in the Statement of Claim as the defendant owner, is fatal to the application of the Act . [ 14 ] Pomerleau submits that a finding that the lien is invalid and releasing Pomerleau from the requirement to maintain the Bond, does not prejudice Terra Services.

The Statement of Claim is still viable as a matter of an alleged breach of contract. To allow the application would simply put Terra Services on the same footing as any party in an alleged breach of contract claim. The Respondent [ 15 ] While Terra Services (who is now represented by counsel different from counsel who filed the lien and Statement of Claim)

concedes that the Act does not apply to lands owned by the “Crown”, it submits the determination of “owner” for the purposes of theAct, is a matter that must be resolved at trial. Terra Services submits there has always been an issue as to whether the owner, asunderstood by the Act, is the Crown or the School District. With the acknowledgement by the parties that the School District is theregistered owner, there is still a live issue as to whether Crown immunity insulates the School District from the Act.

Terra Servicesfurther submits that even if Crown immunity applies, it should not apply in this case as the Crown, by its conduct, has voluntarilysubmitted to the Act. [16] Finally, Terra Services submits, if Crown immunity does not apply to the School District, the failure to name the SchoolDistrict as a party to the proceedings is not fatal to the application of the Act, because the School District is referenced in the pleadings ofthe Statement of Claim. Terra Services relies on

Section 19 of the Act for support that the identification of the School District in thepleadings is sufficient for the purposes of compliance with the requirements of the Act. The Crown [17] The Crown agrees with Pomerleau that notwithstanding that the School District is the registered owner of the land, the Crownis the owner for the purposes of the Act, and the Act does not apply to the Crown.

The Crown submits that even if Terra Services iscorrect that Crown immunity does not extend to the School District (and it is not conceded by the Crown that this is correct), TerraServices’ failure to name the School District as a defendant in their Statement of Claim is fatal to the application of the Act. [18] The Crown further submits that the Crown has not voluntarily submitted to the Act, and cannot so do. The only way the Crowncould be subject to the Act would be through a legislative enactment with the express intent to remove Crown immunity. ISSUES 1.

What is the standard to be applied for the determination of the validity of the lien in an interlocutory application underSection 26 of the Act? 2. Is it clearest of cases that Crown immunity from the Act applies in these circumstances? 3. Is the failure by Terra Services to name the School District as a party in the Statement of Claim fatal to the application of theAct? 4. Has the Crown voluntarily submitted to the Act? 5. Should there be an Order for Case Management? ANALYSIS ISSUE 1.

What is the standard to be applied for the determination of the validity of the lien in an interlocutory application under Section26 of the Act? [19] Section 26(2) of the Act permits an interlocutory application to vacate a lien in lieu of security or, on another appropriateground, or to dismiss an action commenced to enforce the claim. Section 26(2) states: Section 26 (2) Upon application, the court may (

a) allow security for or payment into court of the amount of the claim of the lien claimant and the amount of the claims of otherexisting lien claimants, together with costs that it may fix, and order that the registration of the claim for lien and the registration of thecertificate of action be vacated; (

b) upon another appropriate ground, order that the registration of the claim for lien and the registration of the certificate of actionbe vacated; or (

c) upon appropriate grounds, dismiss the action. [20] In this case, although the lien was vacated by a previous Order from this Court in lieu of the Bond posted by Pomerleau, thereis no dispute that the validity of the lien now vacated, underpins the requirement for the Bond. As stated in Section 26(4) of the Act: …

(4) Money paid into court, or a Bond or other security for securing the amount and satisfactory to the court, takes the place of theproperty discharged and is subject to the claims of every person who has at the time of the application an existing claim for lien or givennotice of the claim under subsection 12(6) or under

section 15 to the same extent as if the money, Bond or other security were realizedby a sale of the property in an action to enforce the lien, but the amount that the court finds to be owing to the person whose lien has beenso vacated is a 1st charge upon the money, Bond or other security. [21] The combination of Section 26(4) and Section 26(2)(b), supports that if the lien was invalid at the outset, that invalidity wouldbe an “appropriate ground” to release Pomerleau from its obligation to maintain the Bond.

However, as submitted by Terra Services, theCourt’s discretion to vacate a lien for invalidity on an interlocutory application, should not be lightly exercised. This was expresslystated by Orsborn, J in Fairview Investments Ltd. v. J.D. Irving Ltd. (1999), (NL SC), 566 A.P.R. 175, 49 C.L.R.(2d) 58 (Nfld. S.C.(T.D.)), at para 13: Thus, on a

summary application such as this, while the court is given the jurisdiction by the Act to vacate a claim of lien prior to trial, the

consideration required starts from the position that the statute contemplates resolution of lien claim issues at trial, that interlocutory proceedings (at least in the enforcement action) are discouraged, and that a claim of lien should be vacated before trial only in the clearest of cases [ 22 ] This has also been the approach in other jurisdictions with respect to such applications. For example, i n W.M.

Fares & Associates Inc. v. 3035605 Nova Scotia Ltd., 2006 NSCA 120 , the Nova Scotia Court of Appeal, described the approach this way, at para 10: And so it is plain to see that the party seeking to vacate a lien faces a significant evidentiary hurdle. There is a “heavy burden” on the applicant to demonstrate that the remedy is “clearly” deserved. Those who seek the effective and immediate protection which a lien affords, must not be deprived of that important security “except on the clearest” of grounds.

Those prerequisites - as Judge O Hearn explained - must inform a judge’s determination as to whether or not the claim can be “safely . . . disposed of on a

summary application.” … [ 23 ] In assessing the validity of a lien under Section 26(2), the Newfoundland Court of Appeal in Pennecon Energy Ltd. v. Metal World Inc . , 2013 NLCA 67 at paragraphs 34-35, and 56 reminded judges that it is important to approach the issue keeping in mind the overall object of the Act , as stated under

Section 43 .

Section 43 of the Act states: 43. Rules 43(1) The object of this Act being to enforce liens at the least expense, the procedure shall be as far as possible of a

summary character, having regard to the amount and nature of the liens in question. 43(2) Except where otherwise provided by this Act , interlocutory proceedings shall not be permitted without the consent of the court, and then only upon appropriate proof that those proceedings are necessary. 43(3) The court may, for the purpose of determining a matter of fact in question, obtain the assistance of a merchant, accountant, actuary, building contractor, architect, engineer or other person, and the court may fix the remuneration of that person and direct payment of it by any of the parties. 43(4) Unless otherwise provided in this Act , the Rules of the Supreme Court apply to proceedings under this Act. [ 24 ] Keeping in mind the object of the Act under

Section 43 , and the above case law, the decision to declare a lien invalid should not be lightly undertaken at the stage of an interlocutory application. I agree that the lien should not be declared invalid unless it is the “clearest of cases.” ISSUE 2.

Is it clearest of cases that Crown immunity from the Act applies in these circumstances? [ 25 ] There is no doubt the majority in the Court of Appeal in Brook Construction confirmed that where the Crown is the owner of the land upon which a lien might be asserted, (subject to exceptions not applicable here), the Crown enjoys immunity from the Act (See para’s 31-34).

In this case, if it is clear that if the land is owned by the Crown, as per Brook Construction , the land is not subject to a lien. [ 26 ] At the hearing, while the Parties agreed that the School District was the registered owner; they disagreed what this meant for the applicability of Crown immunity. An owner under the Act is defined as follows:

Interpretation 2.

(1) In this Act … (i) "owner" includes a person having an estate or interest in the land upon which or in respect of which work is done or materials are placed or provided, at whose request, and (

i) upon whose credit, (ii) on whose behalf, (iii) with whose privity or consent, or (iv) for whose direct benefit work is done or materials are placed or provided and persons claiming under him or her whose rights are acquired after the work in respect of which the lien is claimed is begun or the materials placed or provided have started to be placed or provided; [ 27 ] Pomerleau submits by virtue of its relationship with the School District, the Crown is nonetheless the owner and as such Crown immunity applies.

The Crown agrees, although it submitted, it is a “debatable issue.” [ 28 ] In my view, if it is a debatable issue then this is not the clearest of cases that Crown immunity applies to the School District. I agree with Terra Services, this determination depends on whether or not the School District is an agent of the Crown. Whether a School Board District is an agent of the Crown, must have regard to the degree of control exercised by the Crown over the School District

(Westeel-Rosco Ltd. v. South Saskatchewan Hospital Centre, (SCC), [1977] 2 S.C.R. 238, 11 N.R. 514 and CanadianPittsburgh Industries v. Crown Construction Ltd., (NL SC), 1979 107 D.L.R. (3d) 196, 24 Nfld. & P.E.I.R 391 (Nfld.Dist. Ct.). See also Newfoundland Law Reform’s Commission, Report on The Mechanics’ Lien Act: Certain Substantive Issues (TheCommission, St.

John’s, 1990) at pages 79-81). [29] In the absence of more complete evidence and argument, this is a decision that is better left for a Trial Judge; where upon adetailed examination of the relationship can be considered; as, for example, in Pittsburgh Industries. Though it is likely Crownimmunity applies in these circumstances, I am not prepared to set aside the lien on the basis of Crown immunity. [30] However, that is not the end of the analysis.

Even if the School District does not enjoy Crown immunity, there is a live issueas to whether Terra Services has complied with the Act, by failing to enforce its claim specifically against the School District, as theowner of the land. ISSUE 3. Is the failure by Terra Services to name the School District as a party in the Statement of Claim fatal to the application of theAct? [31] Terra Services has never commenced proceedings against the School District in the enforcement of its claim.

If the SchoolDistrict was the owner who was to be the subject of the lien claim, and not the Crown, as Terra Services now asserts, it was incumbentupon Terra Services to commence proceedings against, or otherwise include the School District as a party in the proceedings. [32] In Brook Construction, it was fatal to the application of the Act; (notwithstanding the question of Crown immunity), that thelien claimant, Blackwood, failed to commence action against the “Crown” as the owner in asserting its particular claim.

At paragraphs29 and 30, Green, C.J.A. stated: Thus, even though Blackwood subsequently conceded that it has no lien claim against the land, it must continue to assert, as it does, thatit has a claim to holdback money in the hands of the Crown. Either way, it must seek relief from the Crown. Accordingly, even onBlackwood’s theory of the case, it must sue the Crown in order to maintain its claim.

Failure to do so, in my view, is fatal to Blackwood’s claim as a statement of claim asserting a claim or cause of action under theMechanics’ Lien Act against persons from whom the statutory remedies conferred by the Act are being sought. Of course, Blackwoodmay continue to proceed with its claim for breach of contract against Brook, as that is not dependent on the Act. See

section 38 of theAct. [33] Similarly, in Global Eavestroughing Ltd. v. Astro Management Ltd. (NS SC), 1993, 134 N.S.R. (2d) 1, 16C.L.R. (2d) 189, although the context was slightly different, the court held that the lien claimant must include all persons who “can beaffected by the lien” in the enforcement of a claim (see para 27). In that case, the lien claimant sought to gain priority over a mortgagee. The court was clear that to assert that claim, it was critical that the mortgagee be included as a defendant to the proceedings. [34] Terra Services asserts that the failure to name the School District in the enforcement of its claim is cured by

Section 19 of theAct.

Section 19 permits “substantial compliance” with

Section 17, 18 and 30 of the Act regarding lien proceedings.

Section 19 of the Actstates: Informality in registering liens 19.

(1) Substantial compliance with sections 17, 18 and 30 is sufficient, and a claim for lien is not invalidated becauseof failure to comply with the requirements of those sections unless, in the opinion of the judge, the owner, contractor or subcontractor,mortgagee or other person is prejudiced by that claim, and then only to the extent to which he or she is prejudiced.

(2) Nothing in this

section dispenses with the requirement of registration of the claim for lien. [35] Under

Section 19, “substantial compliance” will suffice for the purposes of compliance with

Section 17, 18 and 30 of the Act.Section 17 relates to the requirements for the registration of the lien and is not at issue here.

Section 18 is likewise irrelevant to thecircumstances. If there is any application of

Section 19 to the circumstances, it is under

Section

Section 30 states: How claim enforceable 30.

(1) A claim for lien is enforceable in a proceeding in the Trial Division.

(2) A proceeding under this

section shall be started by filing a statement of claim with the court.

(3) The statement of claim shall be served within 30 days after it is filed, but the court may extend the time for service.

(4) The statement of defence in the action shall be delivered within 10 days after the statement of claim has been served, butthe court may extend the time for delivery.

(5) It is not necessary to make any lien claimants parties defendant to the action, but all lien claimants served with the noticeof trial shall for all purposes be considered to be parties to the action.

(6) After the start of the action, a lien claimant or other person interested may apply to the court to speed the trial of theaction.

(7) Lien claimants claiming liens on the same land may join in an action, and an action brought by a lien claimant shall be considered

to be brought on behalf of himself or herself and all other lien claimants. [ 36 ]

Section 30 establishes that proceedings are to be enforceable by way of a Statement of Claim. However, in Brook Construction , the failure to sue the Crown, as against whom the lien claim might ultimately be enforced, was fatal to the application of the Act , not because of a failure to comply with

Section 30, but because of the failure to comply with

Section 24 of the Act , the

section that establishes the time frame within which the enforcement action must be commenced.

Section 24 states: 24. When lien stops 24(1) A lien for which a claim is registered stops existing on the expiration of 90 days after the work has been completed or the materials have been placed or provided, unless in the meantime an action is started to realize the claim or in which an existing claim may be realized, and a certificate is registered as provided by

section 23. 24(2) A claim asserted under subsection 12(5) for work done or materials placed or provided stops existing on the expiration of 90 days after (

a) the work has been completed or abandoned; or (

b) the materials have been placed or provided, unless in the meantime an action under this Act is started to realize the claim or in which an existing claim may be realized. 24(3) Subsection 23(2) does not apply to an action referred to in subsection (2) of this section, but sections 30, 32, 33, 34, 35 and 36 apply, with the necessary changes, to such an action. [ 37 ] At paragraph 26 of Brook Construction, Green, C.J., stated: Following the registration of a lien claim, the claimant is required to commence an action, within a limited time, “to realize the claim”: Act , subsection 24(1).

One cannot make a claim to “realize” a claim unless it is made against the person from whom relief can be obtained. Thus, if a lien is claimed against land, the claim must include the owner of the land as a party…. [ 38 ] In Global Eavestroughing , the lien claimant sought to add the new party to the enforcement action, well outside the time limits of their (equivalent) Act .

The court stated at paragraph 36: An application to add a party defendant, whether a mortgagee or some other person with an interest in the lands, must be made within the time limits provided by the Act for the commencement of an action. [ 39 ] Similarly, in Fisgard Capital Corp. v. Bond Street Properties Inc. , 2012, NWTSC 11 , Schuler, J. found that the failure to include a defendant in the action to enforce the claim was a substantive defect that offended the limitation period under the Mechanics Lien Act , R.S.N.W.T. 1988, c. M-7 and could not be saved by the similar curative section.

At paragraph 33, the court stated: The limitation period in s. 24 cannot be considered a mere procedural requirement. It is a statutory limitation period which, if not properly complied with, results in extinguishment of the lien: Cole v. Hall , [1889] O.J. No. 294 (Ont. C.A.) . Surely the purpose of s. 24 is to require prompt action by the lien claimant to enforce its lien against the land and any priority it claims over other encumbrances against the land.

By s. 25, that prompt action is to be taken in the Supreme Court according to its ordinary procedure, which is by commencing proceedings by a statement of claim. [ 40 ] The above supports that the failure to name a defendant against whom the lien is to be enforced, is not a procedural defect in compliance with

Section 30 (in that case the equivalent

section was

section 25), but a substantive failure to comply with the requirements of the Act to commence an action within the limitation period under

Section 24 . [ 41 ] On that reasoning, with which I agree, a failure to commence an action against the owner within the time limit of the Act , will be fatal, as the lien will have expired.

Section 19 has no application to cure a failure to comply with

Section 24 of the Act . [ 42 ] However, assuming

Section 30 has application to the sufficiency of how parties are named in the ensuing Statement of Claim, Terra Services has not “substantially complied” with

Section 30 . [ 43 ] Under

Section 43 of the Act , except to the extent otherwise stated, proceedings under the Act are subject to the Rule s of Supreme Court 1986 , S.N.L. 1986, c. 42, Sched. D . While

Section 30 abrogates the Rules in that the Statement of Claim must actually be served within 30 days; (a significantly more rigorous time requirement than under the Rules , which allows for service up to a year); there is nothing in

Section 30 that contemplates abrogation from the Rules with regards to naming the parties to an action.

[44] In the ordinary course, when a litigant learns he or she may have not properly identified a party, including a defendant, therecourse under the Rules is to apply to include, substitute, or correct the name of a party in the action (See Rule 15 and Rule 7). There isnothing in

Section 30 that suggests abrogation from either Rule 15 or 7 with regards to the substitution or addition of parties. If it wouldbe inadequate to name a party by reference to it in the pleadings, it cannot be “substantial compliance” with

Section 30 to name to a partyin the pleadings. Counsel pointed to no authority where reference to an owner in an action to enforce a lien, solely in the pleadings of theaction, was sufficient to have identified that person as a party to the action. As discussed above, the cases suggest otherwise. [45] One example of a procedural defect which was accepted as “substantial compliance” with the Act, is in E & J Electric Ltd. v.Littlejohn (1979), (NL SC), 23 Nfld. & P.E.I.R. 520, 61 A.P.R. 520 (Nfld. Dist. Ct.). There, the lien claimant hadfiled the Statement of Claim in the wrong judicial centre as required under the former version of

Section 30.

However, in my view, thefailure to file in the correct judicial centre in that case is far less serious a failure in compliance than the present failure to actuallycommence the action against the party of whom the action might ultimately be enforced. [46] In my view, if the School District is the owner, separate and distinct from the Crown, to whom no crown immunity attaches, itwas incumbent upon Terra Services to have named the School District as a defendant; or, upon learning of this inadequacy in theenforcement of its claim, to have in the very least applied to the Court for direction under the Act, or seek to have the School Districtadded as a party to the action. [47] Terra Services has never applied to have the School District added as a party or for any direction but has consistently behavedas if the Crown was the owner against whom the action might ultimately be enforced.

While it may have been open to Terra Services toamend its claim to include the School District within the limitation period of

Section 24, the requirements for an amendment now, arenarrowly construed: Vardy v. Dufour, 2008 NLCA 22; Western Regional Integrated Health Authority v. Marine Contractors Inc. 2016NLTD(G) 41. [48] Terra Service claims until this hearing, there has always been confusion as to whether the owner, for the purposes of the Act, isthe Crown or the School District. This assertion is not supported by the material that has been filed in this application. The SchoolDistrict was a corporate entity at the time the lien claim arose.

It could, but more likely should, have been apparent to Terra Services atthe outset that its lien claim may be as against the School District, if not the Crown. [49] Terra Services cannot have it both ways. Either the owner for the purposes of the Act is the Crown, to which it now concedesCrown immunity applies, or the owner is the School District: in which case there has been a failure to enforce its lien against the SchoolDistrict, and the lien has expired. It must be remembered the protections afforded a lien claimant under the Act are a derogation from thecommon law.

To that extent, the establishment of lien rights are strictly construed (Fairview Investments at para 9). [50] For the above reasons, whether or not Crown immunity applies to the School District as the owner, it is clear that the lien claimis nonetheless invalid. If the School District is the owner against whom the lien claim might ultimately be enforced, Terra Services hasnever commenced action against the School District, as required by the Act, and this failure cannot be saved by

Section 19 of the Act. ISSUE 4. Has the Crown voluntarily submitted to the Act? [51] Finally, it was also argued by Terra Services that even if the Crown is the owner and Crown immunity applied, the Crownvoluntarily submitted to the application of the Act in these circumstances.

In Brook Construction, at paragraph 35, Green, C.J.A.,referenced that the Crown might voluntarily submit to the Act; stating: …Neither the existence of a constructive trust, nor a voluntary submission by the Crown to the application of the Act has been pleaded orotherwise asserted in this case. [52] I do not take the above passing reference in Brook Construction to mean that despite the Crown being immune from theapplication of the Act, the Crown might voluntarily submit to the Act. The issue was not before the court in Brook Construction.

I agreewith the Crown, that in light of the Supreme Court of Canada’s decision in Canada (Procureur général) c. Thouin, 2017 SCC 46, it islikely not possible for the Crown to simply voluntarily waive its immunity. The Supreme Court stated that unless it can be inferred thatthe purpose of

an Act (that purports to bind the Crown), would be frustrated, it would take express language by a legislature to lift Crownimmunity at common law (see Thouin para 16-21). [53] As analyzed thoroughly in Brooks Construction, there is no such express language by the legislature with respect to liftingCrown immunity in relation to the Mechanics Lien Act (unlike for example as is the case with the Hydro Corporation Act, 2007, S.N.L.2007, c. H-17). I agree with the Crown, as per Thouin, the better view is that the Crown cannot voluntarily submit to the Act. ISSUE 5.

Should there be an Order for Case Management? [54] This matter has been in existence for almost nine years. The delay is hardly in keeping with the object of the Act to have suchdisputes resolved as quickly and summarily as the circumstances allow. Given the delay, counsel suggested this matter should bereferred to case management in order to ensure that the proceedings advance in a more timely fashion. [55] Rule 18A of the Rules of the Supreme Court, governs the circumstance under which it is appropriate for a matter to be referredto case management.

Under Rule 18A, case management is generally reserved for complex or lengthy matters. The presentcircumstances do not fall into either category. While proceedings under the Mechanics’ Lien Act may qualify as a complex trial wherethe dispute involves more than one claim, this is not such a case. There is only the claim by Terra Services against Pomerleau, securedby the lien claimed against the lands upon which the work was performed. Even a complex trial will not necessarily result in an orderfor case management (For example see, Fennelly v. Lloyd's Underwriters, 2016 NLTD(G) 1 and Aylward v.

Reid, 2007 NLTD 19.) [56] Nor is case management warranted because it would nonetheless be in the best interest of justice as a whole to make such anorder (Rule 18A.03(4)(b)). The main reason for the request here, is the delay; a consideration captured by Subsection (i):

(i): any other circumstance peculiar to the specific proceeding that may affect the management, supervision and direction of the proceeding. [ 57 ] I am not satisfied that the delay in proceedings have resulted in a need for case management over and above the tools already available in the Rules . Indeed, the Defendant has availed of no less than three interlocutory applications in relation to the matter, including this application.

I am not satisfied that case management is warranted; notwithstanding the delay. [ 58 ] Having said that, I would give leave to either party to apply to have strict timelines imposed for the remaining steps. CONCLUSION [ 59 ] The application to declare the lien invalid is allowed. I am satisfied this is the clearest of cases to allow the application.

While I am not satisfied that it is the clearest of cases that Crown immunity applies (although it likely does apply), I am satisfied that if Crown immunity does not apply because the owner is the School District, the Plaintiff has failed to properly bring the action, as required under the Act against the School District. [ 60 ] The failure to properly name the School District in its Statement of Claim in the enforcement of the Act is fatal to the application of the Act , and cannot be saved by

Section 19 of the Act .

Section 19 does not apply to

Section 24 of the Act , which is the

section that requires an action be commenced to enforce the claim. Even if

Section 30 applies, there is nothing in

Section 30 that abrogates the requirements under the Rule s to properly identifying the party in an action. [ 61 ] In finding that the Act does not apply to the circumstances, while removing the protections afforded by the Act , Terra Services can still validly pursue its claim for breach of contract against Pomerleau. That claim still stands (see Brook Construction above at paragraph 33 of this judgement, and

Section 38 of the Act ). [ 62 ] The application is allowed, the Act has no application to the circumstances and the Applicant is released from any further obligation to maintain the Bond posted pursuant to Section 26(2) (

a) the Act . COSTS [ 63 ] Although Pomerleau is the successful litigant on this application, as this is an interlocutory application, and the substantive contractual dispute must still be resolved, costs in this application will be in the cause. _____________________________ Frances J. Knickle Justice