RITE-WAY FENCING (2000) INC. PLAINTIFF - v. -, 2022 SKKB 205

KING’S BENCH FOR SASKATCHEWAN Citation: 2022 SKKB 205 Date: 2022 09 13 Docket: QBG-SA-01794-2019 Judicial Centre: Saskatoon ___________________________________________________________________________ BETWEEN: RITE-WAY FENCING

(2000) INC. PLAINTIFF - and - CITY OF SASKATOON DEFENDANT CORRECTED FIAT: The text of the original fiat has been changed per the corrigendum released November 18, 2022. (A copy of the corrigendum is appended to this corrected fiat.) Counsel: William P. Langen for the plaintiff Brett A. Stevenson for the defendant ___________________________________________________________________________ FIAT GERECKE J. September 13, 2022 ___________________________________________________________________________ A. INTRODUCTION [ 1 ] The defendant, the City of Saskatoon [City], applies for an order striking the statement of claim [Claim] of the plaintiff, Rite-Way Fencing

(2000) Inc. [Rite-Way] on the basis that the applicable limitation period has expired such that the plaintiff’s Claim is an abuse of process pursuant to Rule 7-9(2)(

e) of The Queen’s Bench Rules . [ 2 ] The City also asks for an order releasing to it a lien bond of $187,229.65 [Lien Bond] paid into court by the City under a separate court file, QBG-SA-00160-2019. [ 3 ] In May 2016, the City awarded a contract to Rite-Way to construct decorative fencing in the neighborhood of Aspen Ridge [Project]. [ 4 ] The City points to deficiencies, and to multiple extensions of the completion date that became necessary because Rite-Way did not complete its work on time. [ 5 ] The pleadings and materials on this application contain considerable detail as to matters that occurred between the parties that need not be discussed here, as the only real issue is the proper

interpretation of s. 307(1) of The Cities Act , SS 2002, c C- 11.2 [ CAct ], which provides a special one-year limitation period with respect to claims “for recovery of damages”. [ 6 ] Rite-Way says that its Claim is not for the recovery of damages but instead is to enforce a claim of lien under The Builders’ Lien Act , SS 1984-85-86, c B-7.1 [ BLAct ]. Rite-Way alternatively characterizes its Claim as being for a trust claim, a claim against the holdback, a claim for debt or liquidated demand, or as one for unjust enrichment. [ 7 ] It is undisputed that the Claim was issued on December 5, 2019, and that Rite-Way had fully discovered its cause(

s) of action by no later than November 1, 2018, being the date that Rite-Way was permanently removed from the job site and knew that the City would not pay its final invoice rendered in July 2018. [ 8 ] This application turns entirely on what piece of legislation governs the limitation period. [ 9 ] If the limitation period is the basic two-year period under s. 5 of The Limitations Act , SS 2004, c L-16.1 , the Claim was issued and served in time.

Section 307(1) of the CAct statute-bars any action against a city for the recovery of damages if it is not served on the city within one year of when the damages were sustained. If s. 307(1) applies, then the Claim is statute-barred. [ 10 ] For the reasons that follow, I find that the causes of action in the Claim fall within the ambit of s. 307(1). The

Claim was issued after the relevant limitation period expired, and should be struck in its entirety as an abuse of process. I further find it appropriate to grant the order sought concerning the release of the Lien Bond. B. FACTS [ 11 ] Rite-Way says that its work was done to the specifications set out in the agreement. That is disputed by the City but need not be discussed by me in any detail. [ 12 ] The following matters are uncontroverted, and I find them as facts. [ 13 ] It is undisputed that Rite-Way provided its final invoice on July 31, 2018 for $67,492.84 [Final Invoice Amount].

It is also undisputed that the amount of the holdback the City was required to maintain pursuant to the BLAct was $82,290.88 [Holdback Amount], and that the City paid no portion of the Final Invoice Amount or the Holdback Amount. [ 14 ] On December 10, 2018, Rite-Way registered builders’ liens in the amount of $149,783.72 against several parcels of land on which it had worked and served a claim of lien and written notice of lien on the City. In January 2019 the City sought and obtained an order vacating the aforementioned liens [Liens], which entailed the City posting a lien bond in the amount of $187,229.65.

The Lien Bond represented the amount of the Liens plus 25% as security for costs. The City’s January 2019 application was brought in QBG-SA-00160-2019. [ 15 ] On November 1, 2018, having provided multiple notices to Rite-Way to complete its work, the City gave notice in writing to Rite-Way [Termination Notice] of termination of Rite-Way’s involvement in the Project.

The Termination Notice was sent by email on November 1, 2018. [ 16 ] The City asserts, and I find as fact, that November 1, 2018 is the date on which Rite-Way discovered that the City would not be making further payments to it concerning the Project. [ 17 ] The Claim was issued on December 5, 2019. It was served on the City on December 6, 2019. C. ISSUE [ 18 ] The only issue is whether s. 307(1) of the CAct applies to the Claim. D. ANALYSIS [ 19 ] A statement of claim may be struck as an abuse of process pursuant to Rule 7-9(2)(

e) of The Queen’s Bench Rules if it is plain and obvious that it is outside the applicable limitation period. See Walker v Mitchell , 2020 SKCA 127 , [2021] 4 WWR 555 and GHC Swift Current Realty Inc. v BACZ Engineering

(2004) Ltd. , 2022 SKCA 38 . [ 20 ]

Section 307 of the CAct states as follows: 307

(1) Notwithstanding The Limitations Act , no action is to be brought against a city for the recovery of damages after the expiration of one year from the time when the damages were sustained, and no action is to be continued unless service of the statement of claim is made within that one-year period.

(2) If a defendant in a legal action institutes a third party claim against a city for contribution or indemnity arising out of that legal action, the day on which the defendant was served with the claim for the legal action is deemed to be the day on which the act or omission on which that defendant’s third party claim is based took place. (3) Subsection (2) applies whether the right to contribution and indemnity arises with respect to a tort or otherwise. [ 21 ] Rite-Way did not attempt to dispute that the Claim is statute-barred if s. 307(1) of the CAct applies.

Rather it argues that s. 307(1) encompasses only claims for damages, and that the Claim is not one for damages. [ 22 ] Essentially, Rite-Way seeks to have a narrow

interpretation placed on “damages” in s. 307(1), so that it would not encompass a trust claim, a claim against the holdback, a claim for debt or liquidated demand, or as one for unjust enrichment. [ 23 ] The specific issue that Rite-Way raises in opposing the City’s application to strike, of whether claims under the BLAct fall within “damages” in s. 307(1), has not been previously decided. Rite-Way relies on Cheyne’s Plumbing & Heating Ltd. v Cheyne , 2015 SKQB 318 [ Cheyne ], Hope v R.M. of Parkdale #498 , 2015 SKQB 194 , 437 Sask R 15 [ Hope QB ], and Luby v 101144734 Saskatchewan Ltd. , 2019 SKQB 279 [ Luby ].

I will address below whether those decisions assist Rite-Way, but they are not the starting point for this analysis. 1. Platana (Litigation Guardian of) v Saskatoon (City) [ 24 ] The appropriate starting point is the Court of Appeal’s decision in Platana (Litigation Guardian of) v Saskatoon (City), 2006 SKCA 10 , 275 Sask R 242 [ Platana ]. Platana concerned the

interpretation of s. 314(1) (

a) of The Urban Municipality Act , 1984 , SS 1983-84, c U-11 (since rep), which established a limitation period that was functionally identical to that in s. 307(1). [ 25 ] In Platana , a City of Saskatoon employee was involved in a traffic collision in which the plaintiffs were injured. The plaintiffs commenced their action within a year but failed to serve their statement of claim until after the year had elapsed. In analyzing the scope of claims caught by s. 314(1)(a), though the Court asked whether it applied to “all causes of action”, but it was essentially a two-alternative question: “Does s. 314(1)(

a) of The Urban Municipality Act, 1984 , as amended, apply to all causes of action or is it confined to those causes of action arising out of

an act or omission by a municipality in relation to a statutory duty?” The Court was primarily focused on whether only acts that were the subject of a statutory duty were covered by the special limitation period. There

was a second question of whether that provision would prevail over a

section of The Highway Traffic Act, SS 1986, c H-3.1 (since rep),which also provided for a one-year limitation period but did not also require that the statement of claim be served within the year. [26] Thus, it was a fundamentally different question before the Court of Appeal in Platana than here.

Nonetheless,the discussions from Platana form an important piece of the puzzle to understanding the scope of actions covered by s. 307(1). [27] Cameron J.A. dissented from the majority in Platana but commented in respect of the words “no action” asfollows: “In their literal sense, these words encompass all manner of actions for the recovery of damages, including actions in contractand tort”. He then set out a lengthy contextual analysis in which he sought to ascertain the Legislature’s intent, particularly as it pertainedto The Highway Traffic Act. He dissented from the majority view that s. 314(1)(

a) would prevail over the Highway Traffic Act provision. [28] Jackson J.A., writing for the majority, reviewed the legislative history of the special limitation period in s.314(1)(

a) and stated: [86] We must, therefore, conclude … that the words in s. 314(1) “[n]o action is to be brought against an urban municipality for therecovery of damages” are sufficiently broad to encompass a claim for damages arising out of every conceivable legal relationship thatcould exist between a municipality and a claimant who is seeking damages which in some way arose out of that legal relationship. In light of the similarities between s. 314(1)(

a) of The Urban Municipality Act, 1984 and s. 307(1), that excerpt represents the leadingstatement by our Court of Appeal as to the scope of actions covered by s. 307(1) of the CAct. Notably, Cameron J.A.’s dissent did notrelate to that scope. [29] The Court of Appeal’s view in Platana was confirmed in Herle v Lalonde, 2013 SKCA 131, 427 Sask R 98[Herle], to which I will return below. 2. Ly v Regina (City) [30] Recently, in Ly v Regina (City), 2021 SKQB 80, 14 MPLR (6th) 69 [Ly], Robertson J. considered the ambit of s.307(1), conducting a detailed review of jurisprudence considering that provision.

The plaintiff sued the city for damages for trespass tohis property along with other claims. [31] Robertson J. cited the following passage from Des Champs v Conseil des écoles séparées catholiques de languefrançaise de Prescott-Russell, (SCC), [1999] 3 SCR 281, which opened with the following explanation of the policybasis underpinning such special limitation periods: 1. BINNIE J. – Many if not most public authorities in this country are shielded from litigants to some extent by special statutorylimitation periods.

The public policy underlying these limitations is that public authorities ought not to be unduly prejudiced by thepassage of time. Timely notice will promote the timely investigation and disposition of claims in the public interest. After the expiry ofa limitation period, the public authority can consider itself free of the threat of legal action, and need not preserve or seek out pertinentevidence.

Its fiscal planning can proceed free of the disrupting effect of unresolved claims against the public purse. … [32] Next Robertson J. set out a thorough case-by-case review of the types of claims that Saskatchewan courts hadtreated as barred by s. 307(1). See para. 77.

As Robertson J. helpfully summarized, s. 307(1) has been applied in cases of breach ofcontract, negligence, negligent misrepresentation, flooding of farmland and other injuries to real property, loss of building demolished bymunicipal order, motor vehicle collision, breach of privacy, repayment of taxes paid in respect of the wrong property, and economic lossfrom contaminated water supply, among others. 3. Hope v R.M. of Parkdale #498 [33] The only exception to s. 307(1) that Robertson J. identified in Ly was claims for restitution.

That arose in ZukJ.’s decision in Hope QB, the appeal from which was dismissed by the Court of Appeal in Hope v Parkdale (Rural Municipality #498),2016 SKCA 19, 476 Sask R 10 [Hope CA], without discussing the portion of Zuk J.’s analysis on which Rite-Way relies. [34] In Hope QB, the municipality had levied service fees against the Hopes. The Hopes brought an action under TheSmall Claims Act, 1997, SS 1997, c S-50.11 (since rep), to recover those fees, as they believed that the municipality had no authority tolevy those fees under The Planning and Development Act, 2007, SS 2007, c P-13.2 [PDAct].

The small claims judge dismissed theirclaim on the ground that the PDAct combined with The Municipal Board Act, SS 1988-89, c M-23.2, to form a complete statutory codegoverning servicing fees. The learned judge held that the Hopes’ only option was to bring an appeal to the Saskatchewan MunicipalBoard, such that the small claims court had no jurisdiction. Further, the small claims court has no jurisdiction to grant equitable reliefsuch as restitution. [35] Hope QB was the appeal of that decision to this Court. Zuk J. upheld the finding that the Court had nojurisdiction because of the complete code.

On that same basis, Hope CA dismissed the Hopes’ appeal. [36] The discussion relied on by Rite-Way from Hope QB is Zuk J.’s analysis in the alternative of whether the claimthat the Hopes framed as unjust enrichment would be barred by s. 344(

a) of The Municipalities Act, SS 2005, c M-36.1. [37] The Municipalities Act is the very similar counterpart to the CAct that governs most Saskatchewanmunicipalities other than cities.

Section 344(

a) and s. 307(1) of the CAct are identical. [38] In obiter, Zuk J. held that: [111] Section 344(1) of The Municipalities Act provides for a limitation period of one year in damage claims. In Platana, the Court ofAppeal provided a very broad definition for the term “damages”. However, the word “damages” is not sufficiently broad to encompass

restitution. Restitution is an equitable remedy intended to return monies to a claimant that had been paid in error. Therefore, I find that the one year limitation contained in s. 344(1) does not apply to a claim for mistake or unjust enrichment as the remedies for those claims are restitution and not damages. [Emphasis added] [ 39 ] In arriving at that view, Zuk J. considered and distinguished Platana , but solely on the basis of restitution being a remedy not caught by s. 307(1) . It is not necessary for me to determine whether this is a case for restitution.

Unlike in Hope QB , Rite- Way does not allege it made any payments to the City. What Rite-Way seeks is payment of an invoice that it says was rightfully rendered. Although Rite-Way attempts to characterize its claim as potentially being for unjust enrichment, I am unpersuaded as to that. This is a claim for breach of contract (failure to pay an invoice), for which damages is the normal remedy. [ 40 ] In my opinion, it was not the Legislature’s intent that a plaintiff could simply plead itself out of s. 307(1)’s special limitation period by also tacking on an ill-fitting claim of unjust enrichment.

I also see nothing here to suggest that this is a case where restitution would be an appropriate remedy. [ 41 ] Accordingly, Zuk J.’s analysis concerning restitution in Hope QB is distinguishable. Hope QB does not assist Rite-Way, nor does it assist the Court in determining the scope of s. 307(1) for the purpose of this application and the claims asserted by Rite-Way. 4. Cheyne’s Plumbing & Heating Ltd. v Cheyne [ 42 ] Rite-Way cites Cheyne , which involved an application for

summary judgment. Cheyne involved application of the BLAct . First, I would note that Turcotte J.’s analysis concerning the nature of claims under the BLAct was obiter , as he determined that the factual record did not enable him to make the factual findings to dispose of the action on its merits. That led him to dismiss the

summary judgment application. His analysis included the following: [28] As all or part of the funds paid into Cheyne’s counsel’s trust account to obtain a discharge of Cheyne’s claim of lien appear to be derived from the sale proceeds of the “improvement”, being the co-defendants’ home, those funds may constitute a trust under The Builders’ Lien Act (see: s. 6 of The Builders’ Lien Act ).

No evidence has been presented as to the value obtained by Travis and Michelle on the sale of their home, what expenses were incurred by them in such sale or what amounts were paid by them to discharge any other encumbrances in relation to the home to permit me to determine the extent to which the funds paid into the plaintiff’s counsel’s trust account, or any other funds received by Michelle and Travis from the sale of the home, may be subject to a trust arising in these circumstances under s. 6(3) of The Builders’ Lien Act . [29] Moreover, given the registration of Cheyne’s claim of lien, the funds paid into trust may also be subject to the holdback trust provisions under The Builders’ Lien Act (see generally: ss. 22 , 27 , 33 and

Part IV of The Builders’ Lien Act ). Again, no evidence has been presented with respect to whether a holdback trust account was maintained, when construction of the home was completed, whether any certificates of substantial completion were provided, or the extent to which the “voluntary discharge” of Cheyne’s claim of lien was made in contemplation of

Part IV of The Builders’ Lien Act such that the payment of the sum of $137,577 paid into trust was intended to act as a discharge of Cheyne’s lien, to the extent of the amount paid (see: s. 48 ), or otherwise was intended to stand as security in place of the lien. [30] The applicable limitation period with respect to a trust claim under The Builders’ Lien Act may differ from that of a claim for breach of contract, or a claim for payment of a debt or liquidated demand under The Limitations Act .

Although the plaintiff has not specifically pled a claim on a trust in its statement of claim, ss. 86 and 89 of The Builders’ Lien Act , allow for an action to enforce a claim of lien or trust and for joinder of that action with a claim for breach of contract or subcontract. As noted by Jackson J.A. in Deloitte & Touche Inc. v Merit Energy Ltd. , 2004 SKCA 124 , 254 Sask R 161, at paras 32-34 , a claim on a trust arising under The Builders’ Lien Act exists independent of the right to a claim of lien arising under that Act. The Supreme Court of Canada recently confirmed this

interpretation of similar builders’ lien legislation in Manitoba in Stuart Olson Dominion Construction Ltd v Structal Heavy Steel , 2015 SCC 43 . Whether Michelle having raised the issue of the characterization of the funds held in trust by Cheyne’s counsel is sufficient to raise a claim on a trust for the purposes of The Builders’ Lien Act or whether an amendment to the existing proceeding would be required, was not a matter that was argued during the Chambers hearing.

Accordingly, I make no ruling with respect to the same. [ 43 ] Stuart Olson Dominion Construction Ltd. v Structal Heavy Steel , 2015 SCC 43 , [2015] 3 SCR 127 , which Turcotte J. cited, did not address characterization of lien claims in a manner relevant to the instant case. It primarily stands as authority that trust and lien provisions under builders’ lien legislation are two separate remedies that exist independently but may be pursued concurrently. [ 44 ] In Cheyne Turcotte J. made no findings as to the nature of claims made under the BLAct , nor whether that would alter the applicable limitation period.

Rather, he raised possibilities as to the nature of a trust claim. Then he found that the parties had not provided sufficient evidence to determine the merits on a

summary judgment application. See paras. 33-37 of Cheyne . [ 45 ] Rite-Way has not pleaded a trust claim, nor did it apply to amend its pleadings to assert a trust claim. The Claim alleges a debt, and unjust enrichment for which damages would be the appropriate remedy in these circumstances if proven. It might be able to establish a trust under s. 6(2) of the BLAct , but this application must be determined on the pleadings as they stand, not on what Rite-Way could potentially plead.

Also notable is that s. 19 of the BLAct establishes a two-year limitation period to commence an action to enforce a trust, commencing when the contract is abandoned or completed. That two-year period has elapsed. [ 46 ] Rite-Way argues that Turcotte J. referred at paras. 8 and 43 of Cheyne to a lien claim being a debt claim. There may be something to that. Any lien claim will arise from a debt. But that relationship would not help to take Rite-Way’s claim outside of s. 307(1), for the reasons I set out in

section 6 below. [ 47 ] Cheyne does not assist Rite-Way, nor does it assist in interpreting s. 307(1).

5. Luby v 101144734 Saskatchewan Ltd. [ 48 ] Luby was a decision by Elson J. in respect of a without notice application for default judgment. The plaintiff framed its claim as one for debt or liquidated demand. Elson J. determined that the statement of claim contained inadequate detail for him to determine how the sum claimed had been determined, such that the pleading was insufficient to support a claim for debt or liquidated demand.

Though Elson J. considered the nature of a debt or liquidated demand, he did not do so in a way that would bear on Rite-Way’s application. [ 49 ] Luby does not assist Rite-Way, nor does it assist me in interpreting s. 307(1). 6. Appropriate treatment of debt and lien claims under s. 307(1) [ 50 ] My comments in the preceding

section are not intended to suggest that a lien or trust claim under the BLAct is not a debt claim. In my view, Rite-Way pleaded what (subject to determination on the merits if that were to occur) appears to be a valid debt claim against the City. [ 51 ] However, the genesis of that debt claim is in the contract between the City and Rite-Way.

To reiterate, in Platana Jackson J.A. stated that the special limitation period covered “every conceivable legal relationship that could exist between a municipality and a claimant who is seeking damages which in some way arise out of that legal relationship” and Cameron J.A. stated, “these words encompass all manner of actions for the recovery of damages, including actions in contract and tort.” [ 52 ] In Herle , the Court of Appeal held that s. 307(1) makes “no distinction respecting the kind of acts which might give rise to the damages covered by the section.” [ 53 ] I interpret Platana and Herle as focusing not on remedies but on actions (in the sense of legal proceedings), relationships and acts.

The majority decision in Platana stands as authority that, in interpreting s. 307(1), the Court is to focus on whether there was a legal relationship between the plaintiff and the defendant municipality (“every conceivable legal relationship”) that results in a claim. Cameron J.A.’s minority analysis focused not on remedies but on the concept of “all manner of actions … including actions in contract and tort”. [ 54 ] Rite-Way sought to argue that there is in law a distinction between claims for debt and claims for damages. I cannot accept that argument in light of the analysis in Platana and Herle .

In my opinion, s. 307(1) is properly interpreted to include debt claims, as they would arise under legal relationships between a claimant and a city. [ 55 ] Further, although liens may have an independent existence under the BLAct , and that Act sets out certain limitation periods, in light of the approach taken by the Court of Appeal in Platana , nothing in the BLAct can be taken to override the special limitation period in s. 307(1). 7. Disposition [ 56 ] Accordingly, the one-year limitation period applies to all claims asserted in the Claim, which was issued and served after that limitation period had elapsed.

I find that the Claim was statute-barred, and therefore must be struck in its entirety as an abuse of process. [ 57 ] I further direct that the Lien Bond of $187,229.65 paid into court by the City in QBG-SA-00160-2019 be paid out to the City. E. CONCLUSION [ 58 ] Each party asked for costs in its favour fixed at $4,500.

The City explained that it considered $4,500 to be a “slightly enhanced award of costs” to reflect that it was without the Lien Bond for several years, and that Rite-Way did not provide pre- mediation disclosure. [ 59 ] This application could have been brought by the City before now, and there has been no conduct by Rite-Way brought to my attention that should attract enhanced costs. The City filed cost calculations under the three columns of the tariff set out in The Queen’s Bench Rules , with which Rite-Way took no issue. For column I of the Tariff, the calculations amounted to approximately $2,500.

The City shall have costs fixed at $2,500. “D.G. Gerecke” J. D.G. GERECKE KING’S BENCH FOR SASKATCHEWAN Citation: 2022 SKKB 205 Date: 2022 11 18

Docket: QBG-SA-01794-2019 Judicial Centre: Saskatoon ___________________________________________________________________________ BETWEEN: RITE-WAY FENCING

(2000) INC. PLAINTIFF - and - CITY OF SASKATOON DEFENDANT Counsel: William P. Langen for the plaintiff Brett A. Stevenson for the defendant ___________________________________________________________________________ CORRIGENDUM TO Fiat of September 13, 2022 (2022 SKKB 205) GERECKE J. November 18, 2022 ___________________________________________________________________________ [1] In paragraph 7 of my fiat dated September 13, 2022, the date of the issuance of the statement of claim was corrected from December 5, 2022 to December 5, 2019. Paragraph 7 should read: [7] It is undisputed that the Claim was issued on December 5, 2019, and that Rite-Way had fully discovered its cause(

s) of action by no later than November 1, 2018, being the date that Rite-Way was permanently removed from the job site and knew that the City would not pay its final invoice rendered in July 2018. ________________________J. D.G. GERECKE