HIRNINDER SINGH v. OM DRYWALL & INSULATION LTD., 2023 SKKB 36

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 36 Date: 2023 02 14 Docket: QBG-SA-00093-2018 Judicial Centre: Saskatoon ___________________________________________________________________________ BETWEEN: HIRNINDER SINGH and OM DRYWALL & INSULATION LTD. PLAINTIFFS/RESPONDENTS - and - GEORGE DEVELOPMENT CORP., MERIDIAN DEVELOPMENT CORP. and INTER PROVINCIAL DRYWALL LTD. DEFENDANTS/APPLICANTS Counsel: Ling Ma for the plaintiffs/respondents Turner M.

Ralston for the defendants/applicants George Development Corp. & Meridian Development Corp. ___________________________________________________________________________ FIAT CROOKS J.

February 14, 2023 ___________________________________________________________________________ Introduction [ 1 ] The applicants, George Development Corp. [George] and Meridian Development Corp. [Meridian], seek an order pursuant to s. 55(1) and s. 55(3) of The Builders’ Lien Act , SS 1984-85-86, c B-7.1 [ Act ], declaring that the Claim of Lien registered by Hirninder Singh [Singh] in QBG-SA-01764-2017 [Singh Action] is cancelled, discharged and vacated. George seeks a similar order in relation to a Claim of Lien registered by OM Drywall & Insulation Ltd. [OM] in QBG-SA-01855-2017 [OM Action].

[ 2 ] Further to these orders, George and Meridian also seek an order pursuant to s. 56(4) of the Act that the funds paid into court in the Singh Action and the OM Action be paid in trust to “MLT Aikins LLP in Trust” on behalf of George. [ 3 ] By way of background, these legal proceedings arise from a dispute over the construction of the Holiday Inn Express and Staybridge Suites built on land owned by the University of Saskatchewan, civically known as 1850 College Drive [Land]. As with any major project, a number of contractors and trades were required for construction.

The history of the construction project and the subsequent dispute between the parties will not be reviewed in detail, other than to summarize that a series of commercial disputes arose between the parties to this litigation. [ 4 ] The series of events that followed are significant to this application: • Singh Action: o October 27, 2017: Singh registered a Lien in the amount of $154,844.50 against the Land. o November 20, 2017: George paid into court $193,555.63 in the Singh Action. o December 1, 2017: Amended order issued by the Court, stating in part: 1.

The Claim of Lien … [respecting the Land] and any associated Claim of Lien or Written Notices of Lien, shall be and are hereby cancelled, discharged and vacated, and replaced by a Claim upon the monies placed in Court , reserving unto [George] and/or any other person the right to contest and challenge the validity and/or quantum of such lien claim(s). [emphasis added] • OM Action: o November 29, 2017: OM registered a Lien in the amount of $43,587.50 against the Land. o December 7, 2017: George paid into court $54,484.38 in the OM Action. o December 15, 2017: Amended order issued by the Court, stating in part: 1.

The Claim of Lien … [respecting the Land] and any associated Claim of Lien or Written Notices of Lien, shall be and are hereby cancelled, discharged and vacated, and replaced by a Claim upon the monies placed in Court, reserving unto [George] and/or any other person the right to contest and challenge the validity and/or quantum of such lien claim(s). [emphasis added] • QBG-SA-00093-2018: o January 17, 2018: Statement of Claim issued. o February 21, 2018: Statement of Defence and Crossclaim filed by George and Meridian. o March 16, 2018: Statement of Defence and Counterclaim filed on behalf of Inter Provincial Drywall Ltd. [Inter Provincial]. o June 11, 2018: mandatory mediation held. o August 16, 2019: Singh and OM file an application for

summary judgment, returnable September 19, 2019, seeking judgment in the amounts of the Singh Lien and the OM Lien as well as a declaration that the funds paid into court are holdback funds. o September 4, 2019: counsel for Inter Provincial files a Notice of Withdrawal of Lawyer of Record. ▪ Inter Provincial has not participated in the action since. o September 19, 2019: the application for

summary judgment was adjourned, by consent, sine die returnable on 14 days’ written notice. o November 15, 2019: Singh and OM served with numerous affidavits in response to the application for

summary judgment on behalf of Meridian and George. o March 3, 2020: OM served a reply affidavit. o October 26, 2022: the within application was filed. [ 5 ] While the plaintiffs sought for the application for

summary judgment to proceed at the same time as the

within application, I declined to hear the

summary judgment application as it is subject to the requirements of this Court’s “General Application Practice Directive #9: Scheduling of

Summary Judgment, Set Aside, and Judicial Review Applications”, which mandates that the initial appearance in chambers is for the purpose of managing the application. Issues [ 6 ] The issues in this matter are: 1. Does ss. 55(1) of the Act apply when the lien is discharged by the payment of money into court? 2. Should the court consider an extension of time under s. 55(2) of the Act ? 3. Does the filing of a

summary judgment application have the same effect as setting the matter down for trial? 4. Should the funds be paid to George Development Corp.? [ 7 ] Counsel for George suggests the payment of funds into court, as permitted under s. 56, requires the same strict compliance with the obligation to set a matter for trial within two years of commencing the action.

They request the action be dismissed and the funds held in court be paid to George. [ 8 ] Counsel for Singh and OM invite me to conclude that s. 55(1) applies only to the registration of a lien against a land title and that a payment into court does not require the same strict measures. Counsel also suggests that the filing of the application for

summary judgment meets the requirement to set the action down for trial within two years. The plaintiffs request that the money remain in court and the application for

summary judgment be allowed to proceed. Issue 1: Does ss. 55(1) of the Act apply when the lien is discharged by the payment of money into court? [ 9 ] Subsection 55(1) requires that a lien expires if an action is not set down within two years of the day the action was commenced; however, this time may be extended. The relevant provisions of the Act include: 55

(1) Subject to subsection (2), a lien, for which an action has been commenced, expires where an action in which that lien may be realized 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 Land Titles 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 other registered claim of lien at the time of the application, otherwise the court shall make whatever order it deems appropriate for continuation of the action. [emphasis added] [ 10 ]

Section 56 of the Act addresses the payment of money into court equal to the claimed amount, along with a set amount for costs, which allows for the lien to be vacated: 56

(1) Any person may apply ex parte to the court for an order vacating any registered claim of lien or written notice of a lien, and where the person making the application pays into court, or posts security in an amount equal to, the total of: (

a) the full amount claimed as owing in any registered claim of lien or written notice of a lien to be vacated; and (

b) the lesser of $50,000 or 25% of the amount described in clause (a), as security for costs; the court shall order that the registration of the claim of lien or written notice of a lien be vacated and give directions for service of the order on the person whose registered claim of lien or written notice of a lien is ordered to be vacated. …

(4) Where an amount has been paid into court or security has been posted with the court, the court, on application and on notice to such persons as it may direct, may order:

(

a) the reduction of the amount paid into court, and the payment of any part of the amount paid into court to the person entitled; or (

b) the reduction of the amount of security posted with the court, and the delivery up of the security posted with the court for cancellation or substitution, as the case may be.

(5) Money paid into court or security posted under this

section does not reduce the amount required to be retained by the owner under

section 34.

(6) Where an order is made under subsection (1) or (2); (

a) the lien: (

i) ceases to attach to the holdback and to the other amounts subject to a charge under

section 33; (ii) in the case of a claim of lien registered pursuant to

section 50, ceases to attach to the land; and (iii) becomes instead a charge on the amount paid into court or security posted ; and (

b) the owner or payer shall be, in respect of the operation of sections 34, 37 and 40, in the same position as if the claim of lien had not been registered or written notice of a lien had not been given.

(7) Where an order is made under subsection (1) or (2), the lien claimant whose registered claim of lien or written notice of a lien has been vacated may proceed with an action to enforce his claim against the amount paid into court or security posted in accordance with the procedures set out in

Part VIII, but no certificate of action with respect to that action shall be registered against the land. … [emphasis added] [ 11 ] Counsel for Singh and OM points to s. 22 of the Act to suggest that a lien applies to land and therefore, the reference to “lien” in s. 55(1) of the Act does not extend to a charge on funds paid into court.

Section 22 of the Act provides: 22

(1) A person who provides services or materials on or in respect of an improvement for an owner, contractor or subcontractor, has, except as otherwise provided in this Act , a lien on the estate or interest of the owner in the land occupied by the improvement, or enjoyed therewith, and on the materials provided to the improvement for as much of the price of the services or materials as remains owing to him. … [ 12 ] However, the Act specifically contemplates the impact on a lien when there is a payment of funds into court.

Section 56 is clear that when the court makes an order vacating a registered claim of lien or written notice of a lien, the lien “becomes instead a charge on the amount paid into court.” Pursuant to ss. 56(6)(a)(iii), when the OM Lien and the Singh Lien were discharged, they became a charge on the funds held in court.

The Amended Orders in the Singh Action and the OM Action clearly contemplated this change in security and specifically stated that the claim of lien was “ replaced by a Claim upon the monies placed in Court”. [ 13 ] While vacating a lien may free up the title to the land, it has a corresponding effect of tying up valuable cash flow. In this case, that amount is nearly $250,000.00 in cash for over five years.

To be clear, the discharge of the lien by payment of funds into court does not alleviate the obligation to proceed to trial expeditiously . [ 14 ] I conclude that where an order is issued vacating any registered claim of lien or written notice of a lien by payment of funds into court pursuant to s. 55 of the Act , the charge on those funds is subject to the same expiry in the event the action is

not set down for trial within two years of the day the action was commenced. Of course, this is subject to the extension offered under s. 55(3) of the Act .

Issue 2: Should the court consider an extension of time under s. 55(2) of the Act ? [ 15 ] If the matter is not set down for trial within two years, as contemplated by ss. 55(1) , there remains an option to apply for an extension of this two-year period pursuant to ss. 55(2) which would require an explanation of the delay. [ 16 ] In 101050094 Saskatchewan Ltd. v Terramax Sitework Ltd. , 2007 SKCA 123 at para 18 , 304 Sask R 179, the Saskatchewan Court of Appeal provided obiter comments on the need for strict compliance with the Act given the extraordinary remedies available: 18 Given the extraordinary nature of the remedies granted by The Builders' Lien Act , strict compliance with that Act is required.

The provision 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 a plaintiff who commences action on a lien and then drags its heels in pursuing the claim. Accordingly, on an application for extension of the 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 not unreasonable or unjustified. If such explanation is forthcoming, the chambers judge is then to consider the prejudice to each party that would result from granting or refusing the extension sought.

No such explanation was offered in this case. Rather, the chambers judge relied upon his conclusion "that neither party has been motivated to move this action forwarded [ sic ] very quickly." With respect, the defendant in 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 the expiration of the lien if the remedy is not expeditiously pursued.

This reflects the extraordinary nature of this remedy, which is for the benefit of the claimant and is, in its very nature, prejudicial to the defendant. [ 17 ] In Axcess Capital Partners Inc. v Allsteel Builders(2) Limited , 2015 SKCA 33 , 457 Sask R 131 , the Saskatchewan Court of Appeal confirmed that the court has jurisdiction pursuant to s. 55(2) of the Act to extend the time period after the expiration of the two-year period set forth in s. 55(1) .

No such application has been filed. [ 18 ] In Caldwell v Rhode, 2016 SKQB 193 , 62 CLR (4th) 70, Justice Danyliuk went on to consider whether the circumstances warranted an extension of time despite no application being filed requesting such. Noting that the wording of s. 55(2) of the Act did not expressly require an application be filed, he assessed the delay absent an application.

I will follow the same approach even though there is no application before the court. [ 19 ] In considering the evidence, I am satisfied there is no reasonable explanation that justifies the delay or would support an extension of this time period. The evidence indicates that Singh has not provided response or direction in this action for some time now, nor did he provide any evidence to explain the delay.

While OM did file evidence through the December 23, 2022 affidavit of Manjot Singh Gill, the suggestion is that counsel for the defendants delayed the litigation by not providing their position on certain inquiries. [ 20 ] The evidence also states that OM is in financial distress and requires judgment in this matter to compensate for their loss, yet offers no explanation as to why they have not moved this action forward toward a judgment.

To be clear, not only was it incumbent on the plaintiffs to ensure the matter moved ahead given the timelines set out in the Act , but the evidence also does little to explain the delay, which I assess to be unreasonable and unjustified. Issue 3: Does the filing of a

summary judgment application have the same effect as setting the matter down for trial? [ 21 ] Subsection 55(1) of the Act requires that an action to enforce a claim of lien be set for trial within two years of the day the action was commenced. In this case, that deadline would have been prior to January 17, 2020. [ 22 ] In considering the facts of this case, the action was commenced January 2018. The application for

summary judgment was filed in August 2019 and adjourned sine die. The evidence filed in response to the within application, filed on behalf of OM, suggests that OM intended to proceed with the

summary judgment application and places the responsibility for the delay on George. [ 23 ] After the application for

summary judgment was adjourned sine die , counsel exchanged some correspondence. For example, an email exchange in April 2021 acknowledges the need to address Inter Provincial’s statement of defence and subsequent lack of involvement prior to proceeding with the

summary judgment application. While counsel also makes inquiries of George’s position on the amount of the holdback, any delay in providing this information would not prevent the

summary judgment application from proceeding as the issue of the holdback was raised for adjudication in the application for

summary judgment. [ 24 ] In Iron Bridge Estates Inc. v Somerset Farms Ltd. , 2019 SKQB 164 , 2 CLR (5th) 46 , Justice Megaw commented: 19 I am mindful of the Court of Appeal's direction in Terramax that there is no obligation on the defendant in a lien action to take steps to move the matter forward. Rather, s. 55 of The Builders' Lien Act puts the responsibility of moving the action forward on the plaintiff.

A failure to do so exposes the plaintiff to the risk of having the lien claim dismissed due to the passage of time. … 21 The use of a lien claim and registration in this fashion is one of the very reasons why s. 55 imposes a time constraint on the plaintiff. The lien is an extraordinary remedy and is intended to be "pursued expeditiously" ( Terramax , para 18). It is not intended to provide long term security to a party in the position of the plaintiff. [ 25 ] Filing an application for

summary judgment is one step a party may contemplate in an effort to bring finality to the action; however, it remains within the discretion of the judge hearing the application for

summary judgment to determine whether

there is a genuine issue which requires a trial. If the application for

summary judgment is dismissed, the action may still have to proceed to trial in the ordinary way (see: Rule 7-5(7) of The Queen’s Bench Rules ). As such, while filing an application for

summary judgment does not necessarily dispense with a trial, it may assist in explaining or justifying delay in the event an extension of time is sought under ss. 55(2) . [ 26 ] In the event an application for

summary judgment is brought as an alternative to a trial, any delay beyond the two years within which a matter must be set for trial requires an application for an extension pursuant to ss. 55(2) of the Act . In fact, it may be prudent to incorporate such a request into the application for

summary judgment itself. No such application is before the court. [ 27 ] Aside from the filing of the application for

summary judgment, the action has sat dormant with this Court. Effectively, the funds paid into court have been sitting for over four years. It has been over three years since the application for

summary judgment was adjourned sine die . No productive steps have been taken to move the matter toward trial since that time. [ 28 ] In this case, the mere filing of the

summary judgment application does not equate to the setting the matter for trial. The Singh Lien and the OM Lien stand expired pursuant to s. 55(1) of the Act . Subsection 55(3) requires me to dismiss the action. [ 29 ] However, there may remain a claim independent of the lien claim. I note the comments in Livingston (Hi-Cam Builders) v Span West Farms Ltd. , 2016 SKCA 33 at para 43 , 476 Sask R 158 , regarding the severance of an action based on a lien: [43] Third, s. 55 is found in

Part V of the Act , which deals solely with the expiry, registration and discharge of liens. None of the provisions in that Part refer to the trust remedies created by the Act or to a supplier’s common law rights in contract. The trust remedies created by the Act and a supplier’s common law right to sue for breach of contract are both remedies, which exist separate and apart from the lien remedies created by the Act . They are not dependent upon the lien for their existence and, thus, the lien’s expiration or discharge should have no effect on the pursuit of those claims.

Absent clear language, a supplier’s right to pursue those remedies should not be tied to the enforceability of the lien. [ 30 ] Although the portion of the action directed to the claim and enforcement of the builder’s liens is dismissed, this can be severed from the remaining claims in the original action. As the contract claim is independent, that action remains.

Issue 4: Should the funds be paid to George Development Corp.? [ 31 ] I am satisfied, given the expiry of the lien and the related charge against the funds held in court, the funds should be returned to George. [ 32 ] Subsection 56(4) of the Act provides that when funds have been paid into court to vacate a claim of lien, a party can apply to have any portion of those funds paid to an entitled party. The Singh Lien and the OM Lien have expired.

There are no other charges on the funds paid into court. [ 33 ] Pursuant to ss. 56(4) of the Act , I direct that the funds paid into court in QBG-SA-01764-2017 and QBG-SA- 01855-2017 for the purposes of vacating the Singh Lien and the OM Lien shall be paid out to George. I would have exercised my discretion and made this order regardless of my findings above based on the unreasonable delay in pursuing this action. Conclusion [ 34 ] The Singh Lien and the OM Lien, including any charge over the funds paid into court, are expired.

As the result, there shall be an order dismissing the plaintiffs’ claim pursuant to s. 55(1) of the Act . The portion of the action in QBG-SA-00093- 2018 directed to the claim and enforcement of the Singh Lien and the OM Lien is dismissed. [ 35 ] I decline to order that the plaintiffs’ claim be struck in its entirety as there remains a claim for damages arising from the allegations of breach of contract. That part of the claim is unaffected by orders arising from application of the Act .

However, I make this order without prejudice to any further application to strike the remainder of the claims in the action. [ 36 ] The funds paid into court in QBG-SA-01764-2017 in the sum of $193,555.63 plus any interest earned, shall be paid out to George Development Corp. by way of a cheque payable to MLT Aikins LLP in Trust. [ 37 ] As well, t he funds paid into court in QBG-SA-01855-2017 in the sum of $54,484.38 plus any interest earned, shall be paid out to George Development Corp. by way of a cheque payable to MLT Aikins LLP in Trust. [ 38 ] The applicants have been entirely successful.

I award costs of $1,000 payable jointly and severally by the respondents to the applicant, George Development Corp. J. N.D. CROOKS