VC STONEWORK LTD. PLAINTIFF (DEFENDANT BY COUNTERCLAIM) - v. -, 2022 SKKB 228

KING’S BENCH FOR SASKATCHEWAN Citation: 2022 SKKB 228 Date: 2022 10 18 Docket: QBG-PA-00128-2020 Judicial Centre: Prince Albert BETWEEN: VC STONEWORK LTD. PLAINTIFF (DEFENDANT BY COUNTERCLAIM) - and - RALLY MOTORS LTD. DEFENDANT (PLAINTIFF BY COUNTERCLAIM) - and - GO FIRST INVESTMENTS LTD. DEFENDANT Counsel: Peter A. Abrametz for the plaintiff (defendant by counterclaim) Barry W. Wilcox, K.C. for the defendants and plaintiff by counterclaim ___________________________________________________________________________ FIAT ELSON J.

October 18, 2022 ___________________________________________________________________________ Introduction [ 1 ] There are two applications in this matter. The first application, by the defendants, is for an order: (1) dismissing the plaintiff’s action; (2) discharging the lien claim; (3) vacating the certificate of pending litigation; and (4) vacating the certificate of action. As grounds for this application, the defendants assert that the plaintiff did not set the claim down for trial within the two-year time limit stipulated in s. 55(1) of The Builders' Lien Act , SS 1984-85-86, c B-7.1 [ BLA ].

The second application, filed by the plaintiff, seeks an order extending the time for setting the action down for trial, pursuant to s. 55(2) of the BLA .

[ 2 ] There is no doubt that the two-year time limit has expired. The question for the Court is to determine whether the plaintiff has met the burden of demonstrating a reasonable explanation for not having met the time limit. [ 3 ] For the reasons that follow, I am satisfied that the plaintiff’s application must be dismissed. As for the defence application, it must be allowed, but only to the extent that it pertains to the plaintiff’s claim for a remedy under the BLA . The plaintiff may continue to pursue its action for breach of contract.

Background [ 4 ] This litigation arises from the plaintiff's claim that it provided construction goods and services to the defendant corporations in August and September 2019. Particulars of the services are said to include installation of ceramic tile and grout, as well as cutting and installing baseboards at property owned by the defendant, Go First Investments Ltd., at the civic address of 235 - 38th Street East in Prince Albert, Saskatchewan. The plaintiff asserts that the work was performed pursuant to a contract, but the claim does not identify the parties to the contract.

The amount claimed consists of the principal amount of $28,723.88 plus interest at the rate of 2% per month (24% per annum) from September 22, 2019. [ 5 ] The plaintiff asserts that the services it provided constitutes an improvement within the meaning of the BLA . On January 8, 2020, the plaintiff caused a written notice of lien to be filed against the subject property for the principal amount of the claim. The chronology of the litigation since then is as follows: a.

May 22, 2020 – The plaintiff issued a statement of claim against the then named defendants, Go First Investments Ltd. and Prism Holdings Ltd., doing business as “Rally Motor Group”, which claim was later amended, as of right, on June 2, 2020. b. June 4, 2020 – The plaintiff obtained from the Local Registrar’s office a Certificate of Action to enforce the claim of lien. c. July 15, 2020 – The then named defendants filed a statement of defence. d. October 9, 2020 – The parties attended mandatory mediation pursuant to s. 42 of The Queen’s Bench Act, 1998 , SS 1998, c Q- 1.01 . e.

March 10, 2021 – With the consent of the defendants, the plaintiff amended the statement of claim a second time to substitute the name “Rally Motors Ltd.” [Rally Motors] in place of “Prism Holdings Ltd., doing business as Rally Motor Group”. f. March 29, 2021 – Rally Motors filed its statement of defence and counterclaim, in which it admits the contract between the plaintiff and Rally Motors, but alleges, inter alia , deficient work and damages arising from the deficiencies. g. April 1, 2021 – The plaintiff requested particulars of Rally Motors’ counterclaim and received a reply dated April 14, 2021. h.

May 17, 2021 – Dissatisfied with the reply, the plaintiff filed an appearance day notice in which it sought an order that Rally Motors provide the particulars requested. i. May 25, 2021 – The appearance day notice was heard and dismissed by Zuk J. in a brief fiat. In that fiat, my learned colleague quite properly concluded that the matters sought in the request for particulars pertained to evidentiary matters, as opposed to particulars of the nature of the case the plaintiff is expected to meet. j.

July 5, 2021 - The plaintiff served and filed another appearance day notice, returnable July 20, 2021, seeking an order directing the defendants to provide their affidavit of documents. k. July 16, 2021 – The plaintiff’s appearance day notice was adjourned, by consent, to August 3, 2021, on which date the plaintiff’s counsel advised the Local Registrar’s office that the matter was withdrawn. l. August 31, 2021 – The plaintiff caused an appointment to be issued for the proper officer of Rally Motors to attend questioning on September 23, 2021. m.

September 23, 2021 – Questioning of Rally Motors’ proper officer was conducted. n. November 3, 2021 – The transcript of the questioning of Rally Motors’ proper officer was filed, in a sealed package, with the Local Registrar’s office. o. May 6, 2022 - The Local Registrar scheduled a pre-trial conference in the action for June 30, 2022. p. May 27, 2022 – The defendants served and filed their application for an order to, inter alia , dismiss the action and discharge the plaintiff’s claim of lien. q.

June 8, 2022 – The plaintiff served and filed its application for an order to extend the time for setting the action down for trial. r. June 28, 2022 – The June 30, 2022 pre-trial conference was adjourned and returned to the pre-trial list. [ 6 ] In the affidavit filed on behalf of the plaintiff, its principal officer deposed that he had tried to keep the matter moving with requests for affidavits of documents, mandatory mediation and examination dates for Rally Motors’ proper officer to answer questions.

He also deposed that he had to repeatedly request the defendants’ answers to undertakings, the last of which was provided by the defendants on February 11, 2022. Beyond this, no further details are set out in the affidavit. Applicable Law

[7] I will first address the law related to the plaintiff’s application. This application is brought pursuant to s. 55 ofthe BLA, which reads as follows: 55(1) Subject to subsection (2), a lien, for which an action has been commenced, expires where an action in which that lien may berealized is not set down for trial within two years of the day the action was commenced.

(2) The court may extend the time mentioned in subsection (1).

(2.1) An order pursuant to subsection (2) extending the time for commencing an action may be registered as an interest in the LandTitles Registry.

(3) Where a lien has expired under subsection (1), the court shall, on application, make an order dismissing the action if there is no otherregistered claim of lien at the time of the application, otherwise the court shall make whatever order it deems appropriate forcontinuation of the action. [8] In Saskatchewan, s. 55 has been the subject of almost 100 reported decisions.

Of these decisions, the threeleading authorities from the Saskatchewan Court of Appeal are 101050094 Saskatchewan Ltd. v Terramax Sitework Ltd., 2007 SKCA123, 304 Sask R 179 [Terramax]; Axcess Capital Partners Inc. v Allsteel Builders(2) Limited, 2015 SKCA 33, 457 Sask R 131 [AxcessCapital]; and Livingston (Hi-Cam Builders) v Span West Farms Ltd., 2016 SKCA 33, 476 Sask R 158. [9] Meanwhile, notable decisions of this Court dealing with s. 55 include Caldwell v Rhode, 2016 SKQB 193, 62CLR (4th) 70 [Caldwell]; Double K Excavating Ltd. v Aspen Village Properties Ltd., 2018 SKQB 181, 81 CLR (4th) 202; BoydExcavating Ltd. v First Venture Holdings Inc., 2019 SKQB 28, 97 CLR (4th) 227; Iron Bridge Estates Inc. v Somerset Farms Ltd., 2019SKQB 164, 2 CLR (5th) 46; Cogswell v Thompson, 2019 SKQB 184, 3 CLR (5th) 270; and CNS Development Inc. v Lee, 2019 SKQB296, 7 CLR (5th) 103. [10] Most of the above authorities are cited in connection with applications, pursuant to s. 55(2) of the BLA, to extendthe two-year time limit.

That said, it is significant to note that, at para. 18 of the Terramax decision, Smith J.A. made a passing butsignificant reference to the need for “strict compliance” with the BLA. In her view, the need for strict compliance is made necessary by“the extraordinary nature of the remedies” set out in the statute. It necessarily followed that, in an extension application, an applicantmust provide an explanation for the delay to show that it was not unreasonable or unjustified.

In the event such an explanation isprovided, the chambers judge must then consider the prejudice to the parties from a decision either to grant or refuse the requestedextension. The entire passage in this respect is as follows: 18 Given the extraordinary nature of the remedies granted by The Builders’ Lien Act, strict compliance with that Act is required. Theprovision of a time limit on a lien claim is to protect the defendant in relation to the claim from being held to ransom, in effect, by aplaintiff who commences action on a lien and then drags its heels in pursuing the claim.

Accordingly, on an application for extension ofthe time pursuant to s. 55(2), the applicant for such an extension must provide an explanation of the delay to show that the delay was notunreasonable or unjustified. If such explanation is forthcoming, the chambers judge is then to consider the prejudice to each party thatwould result from granting or refusing the extension sought. No such explanation was offered in this case.

Rather, the chambers judgerelied upon his conclusion “that neither party has been motivated to move this action forward very quickly.” With respect, the defendantin a lien action has no obligation to move the action along. That burden is imposed by the Act on the claimant of a lien, on penalty of theexpiration of the lien if the remedy is not expeditiously pursued.

This reflects the extraordinary nature of this remedy, which is for thebenefit of the claimant and is, in its very nature, prejudicial to the defendant. [Emphasis added] [11] The decision in Axcess Capital stands primarily for the conclusion that, under s. 55(2), a chambers judge hasjurisdiction to extend the two-year time limit after it has expired, subject to a balancing of the parties’ respective interests. At the sametime, the Court of Appeal affirmed the continued vitality of the general direction given in Terramax as to the proper approach under s.55(2).

In this regard, Jackson J.A. stated as follows: 70 As this Court recognized in Terramax, s. 55(2) does not require that an application to extend the time be granted. As Maurice J.indicated in Howden [(1993), (SK KB), 114 Sask R 263], s. 55(2) requires a balancing of the interests of the lienclaimant and the owner of the property.

The remedy of extending the time limitation requires that the applicant “provide an explanationof the delay to show that the delay was not unreasonable or unjustified” and that the judge “consider the prejudice to each party thatwould result from granting or refusing the extension sought” (Terramax, para. 18). 71 This is not an insignificant burden for a lax lien claimant.

Because the judge is not required to grant an extension, s. 55 as a wholeserves its function of ensuring that lienholders pursue their claims quickly and reflects the second purpose of The Builders’ Lien Act,which is to protect the commercial interests of property owners and financiers. [12] The reference in Terramax, to the extraordinary remedies and the need for “strict compliance”, was cited byDanyliuk J. in Caldwell.

There, he commented on the rationale behind s. 55, at para. 13: 13 The rationale behind these statutory provisions was explored and explained by the Saskatchewan Court of Appeal in 101050094Saskatchewan Ltd. v Terramax Sitework Ltd., 2007 SKCA 123, 304 Sask R 179 (Sask CA), in particular at para. 18. The Builders’ LienAct affords claimants extraordinary remedies. As a result strict compliance with those statutory provisions is required.

The very purposeof s. 55(1) was found to be to protect persons in the position of the within defendants from a plaintiff who launches an action based on alien “and then drags its heels in pursuing the claim”. It was also specifically noted that in this type of action defendants do not have anobligation to move the action along, because the legislation imposes that obligation on the party commencing the litigation.

[Emphasis added] [ 13 ] The facts in Caldwell deserve mention. In that case, the lien claimant had issued a statement of claim in November 2010 but, over a period of approximately five and a half years, had taken no steps to set the matter down for trial. Moreover, it had not brought a formal application to extend the time limit, even after the defendants brought an application to dismiss the action.

Danyliuk J. was satisfied that, given the expiry of the time limit, the defendants were ostensibly entitled to a dismissal of the action. [ 14 ] The plaintiff resisted the application and, in doing so, asked the Court to extend the time limit. Danyliuk J. noted two problems with the defendants’ request. First, there was no formal application to extend the time limit; something Danyliuk J. acknowledged may not have been insurmountable. [ 15 ] The second problem was more significant. The plaintiff had provided no reasonable explanation for the delay.

He had only given evidence of a vague understanding that the litigation should be delayed in order to permit the defendants to pursue a claim against their former solicitor in negligence. This understanding was not confirmed by the plaintiffs in their evidence. Danyliuk J. found the plaintiff’s explanation lacking and concluded that the delay was both unreasonable and unjustified. Accordingly, no extension could be granted, even if a formal application to extend had been brought. Analysis [ 16 ] In the present case, there is no issue about the expiry of the two-year limit.

The limit expired on May 22, 2022, and no application to extend the time was filed before that date. It follows that the defendants are entitled, prima facie , to a dismissal of the action in respect of the lien claim. [ 17 ] As to whether an extension should be granted, there are two notable gaps in the chronology. The first gap is between the mandatory mediation on October 9, 2020, and the second amendment of the statement of claim on March 10, 2021, a period of five months.

No explanation for this gap is disclosed in the evidence, nor does the court file reveal any other discernible reason for it. [ 18 ] The second notable gap is between the questioning on September 23, 2021 and May 6, 2022, when the June 30, 2022 pre-trial conference was scheduled, a period of slightly more than seven months. The plaintiff’s principal tries to explain this by referencing Rally Motors’ failure to answer all their undertakings until February 11, 2022. That said, he gave few meaningful details about the efforts taken to press for the answers.

He also did not explain why it was necessary for all the undertakings to be answered before taking steps to set the matter down for trial. In this respect, it has been the Court’s experience that, where there is some degree of urgency in setting an action down for trial (as there is here), a party will do so as long as the most substantive undertakings have been answered. It has also been the Court’s experience that unanswered undertakings are firmly and resolutely addressed at pre-trial conferences.

Even so, if the undertakings were answered by February 11, 2022, there is no explanation in the evidence for the remaining three-month delay to May 22, 2022. [ 19 ] From the evidence, I find there is at least an eight-month unexplained delay in setting the action down for trial. That finding is probably generous to the plaintiff as it does not account for the delay associated with the meritless application for particulars or the absence of a meaningful explanation for the plaintiff to wait on all the undertakings being answered.

If those factors were added to the mix, the period of unexplained delay could increase to as much as 10 to 12 months. [ 20 ] In the context of a relatively modest lien claim, which could easily have been pursued and set down for trial within the stipulated two years, I am not persuaded that the plaintiff has been as diligent as the law demands. In this regard, the eight- month unexplained delay speaks for itself. It shows that the plaintiff has fallen short of the strict compliance expected under the BLA .

It necessarily follows that the plaintiff’s application must be dismissed, and that the defence application, insofar as it pertains to the plaintiff’s claim for a remedy under the BLA , must be allowed. Conclusion [ 21 ] In the result, there shall be an order dismissing the plaintiff’s claim pursuant to s. 55(1) of the BLA , as well as a further order, pursuant to s. 60 of the BLA , vacating the claim of lien registered as Interest Register No. 123809924.

It also follows that both the Certificate of Pending Litigation, registered as Interest Register No. 123914213, and the Certificate of Action, issued by this Court, must also be vacated. [ 22 ] I note that the defendants also sought dismissal of the plaintiff’s claim in its entirety. I decline to make such an order. In my view, the plaintiff is still able to pursue its claim for damages arising from a breach of contract. That part of the plaintiff’s claim is unaffected by the orders that arise from application of the BLA .

In saying this, I acknowledge that the claim for breach of contract against the defendant, Go First Investments Ltd., may be suspect for lack of privity. That issue, however, must be left to be addressed at the pre-trial conference and a subsequent trial. [ 23 ] The defendants shall have their costs with respect to both applications calculated pursuant to Column 1,

Schedule I “B” of the Tariff of Costs in The Queen’s Bench Rules . [ 24 ] Rule 10-4 of The Queen’s Bench Rules is not waived. ___________________________J. R.W. ELSON