2012 MBCA 73, 2012 MBCA 73

Citation: NVR Holdings Ltd. et al. v. Action Concrete Ltd., Date: 20120925 2012 MBCA 73 Docket: AI 11-30-07661 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Freda M. Steel Madam Justice Holly C. Beard Mr. Justice Marc M. Monnin BETWEEN : NVR HOLDINGS LTD. and ) T. W. Turner and NVR CONSTRUCTION LIMITED ) N. D. M. Hamilton ) for the Appellants (Applicants) Appellants ) ) F. E. Bortoluzzi and ) K. A. Burwash ) for the Respondent - and - ) ) Appeal heard: ) March 5, 2012 ACTION CONCRETE LTD. ) ) Judgment delivered: (Respondent) Respondent ) September 25, 2012 BEARD J.A. I.

THE ISSUES 1 This is an appeal from the dismissal of the appellants’ (NVR) motion to a judge under s. 55 of The Builders’ Liens Act , C.C.S.M., c. B91 (the Act ), for the release of money being held in trust pursuant to a lien filed by the respondent (Action) under the Act . The basis of the motion is that Action failed to commence an action to realize its claim and has not sought or obtained a pending litigation order as required under s. 49(2) of the Act . 2 The grounds of appeal raised by NVR are as follows: 1.

Did the motion judge err in holding that the counterclaim constitutes a sufficient “action” to satisfy s. 49(2) of the Act ? 2. Did the motion judge err in holding that the lien or charge on the funds held in trust by Pitblado LLP continues to exist? II. THE FACTS 3 NVR Holdings Ltd. was the owner and NVR Construction Limited was the developer of a condominium project at 111 Bond Street in Winnipeg, Manitoba. NVR Construction Limited and Action entered into a contract on or about July 21, 2008, whereby Action was to complete the concrete work for the building, including the foundation and parkade.

Action began the work almost immediately and worked through to December 2008, although there were some problems along the way for which each party alleges the other was responsible. NVR Construction Limited had stopped making the progress payments, so, in December, Action said that it would walk off the job-site if it was not paid. Payment was not forthcoming and, in January 2009, NVR sent a letter to Action to remove its equipment, which it did. 4 The following steps were then taken: February 12, 2009 - Action filed a claim for lien against the property under the Act for $54,986.50;

March 23, 2009 - the parties obtained a consent order to vacate the lien against the property upon NVR paying the sum of $54,986.50 into its lawyer’s trust account to stand as security in lieu of the land with respect to the lien; May 18, 2010 - NVR filed a statement of claim against Action alleging breach of contract and negligence related to the alleged failure of Action to meet its obligations under the contract, including the cost of having the work completed by other contractors; June 28, 2010 - Action filed a statement of defence and counterclaim denying that it owed anything to NVR, alleging that NVR failed to meet its obligations, which led to the delays and additional costs, and further, that it failed to make the progress payments; in the counterclaim, it sued for the unpaid progress payments; and February 17, 2011 - NVR filed this motion under s. 55 to have the lien vacated.

III. THE LEGISLATION 5 The relevant sections of the Act are as follows: Lien expires if registered and not proceeded upon 49(2) Every lien that has been duly registered under this Act ceases to exist after the expiration of two years after the date of registration unless in the meantime an action is commenced to realize the claim under this Act or an action is commenced in which the claim may be realized under this Act, and a pending litigation order in Form 9 in the Schedule, in respect of the action, issued from the court in which the action is brought, is registered in the proper land titles office.

Effect of order to vacate under sec. 55 51 Notwithstanding sections 49 and 50, if the court orders that a lien be vacated under subsection 55(2) or (3), (

a) the lien, as a charge against the money paid into court or against any security given, does not cease to exist because a pending litigation order is not registered; but (

b) the lien ceases to exist if no action is commenced within the time allowed for bringing an action under

section 49 or 50. Vacating lien upon payment into court, etc. 55(2) Upon application, a judge may order security or payment into court in an amount equal to the holdback required by this Act as it applies to a particular contract and any additional money payable with respect to that contract but not yet paid but not exceeding the total amount of the claims for liens then registered against a parcel of land and may then order that the registration of those liens be vacated.

Vacating registration on other grounds 55(3) Upon application, a judge may order, upon proper grounds, that the registration of a lien be vacated upon any other grounds other than those mentioned in subsection (2). Money paid into court, etc., in place of land 56(1) Any money paid into court or any security given under subsection 55(2) stands in place of the land against which the lien was registered and is subject to the claims of (

a) the persons whose liens have been vacated; and (

b) every person who (

i) both at the time of filing the application under subsection 55(2) and at the time of filing application for payment out under

subsection (3), has a subsisting claim for lien, and (ii) has registered a claim for lien prior to the time of filing the application for payment out under subsection (3); but the persons whose liens have been ordered vacated have a first charge on the money or security to the extent of any amount,including costs, found by the judge to be owing to them. IV.

THE MOTION JUDGE’S DECISION 6 The motion judge’s reasons are concise, and state as follows (at paras. 9-10, 13-14): The applicants argue that the action referred to in the Act needs to specifically ask for enforcement of the lien and should follow acertain format. There is no explicit requirement in the Act as to contents of the action nor is action defined. This distinguishes [AuroraQuarrying Ltd. v. Lynngold Resources Inc. et al. (1992), (MB KB), 82 Man.R. (2d) 113 (Q.B.), aff’d (1993), (MB CA), 83 Man.R. (2d) 212 (C.A.)]. The requirement for registration of a pending litigation order specifies an explicittime.

The respondent argues that a counterclaim is an action. While this is true, in my view it is not sufficient. The sufficiency of the actionhas to be assessed in the context of the Act and its intent. It is quite clear that the initial placing of the lien is a unilateral action. The Act then builds in notice requirements and time limits toallow resolution of the underlying dispute. The action referred to in the Act should therefore identify the dispute and the lien and lead toa resolution.

In my view, the counterclaim filed by the respondent meets this test and constitutes a sufficient action to satisfy the Act’s requirement. The initial claim identifies the lien, the statement of defence admits the identification of the lien, and the counterclaim incorporates thereferences to the lien into the counterclaim. It is quite clear that the matter being addressed is in fact the dispute underlying the lien. V.

THE POSITIONS OF THE PARTIES The Appellants’ Position First Ground of Appeal – Section 49(2) of the Act 7 Section 49(2) – “an action is commenced in which the claim may be realized” – NVR takes the position that, whilethe words “an action is commenced in which the claim may be realized” in s. 49(2) permit a lien claimant to avoid commencing its ownaction if one has already been commenced, that action must be one commenced by another lien claimant with respect to the same matter.

It argues that the action that was commenced in this case by the party that is subject to the lien, i.e., NVR, does not constitute an actionwithin this provision, and that the motion judge erred in law in holding that the counterclaim satisfied s. 49(2). In support of thisposition, it relies on David I.

Bristow, Q.C. et al., Construction Builders’ and Mechanics’ Liens in Canada, 7th ed., loose-leaf (Toronto: Thomson Reuters Canada Limited, 2005) vol. 2 at para. 7.2.1. 8 Section 49(2) – “an action is commenced to realize the claim” – NVR takes the position that, because there was noother “action … commenced in which the claim may be realized” in this case, Action was required to commence its own action to realizethe claim under the Act in order to comply with s. 49(2). 9 NVR argues that, to properly perfect the lien, the action of the lienholder must specifically state that it is brought toenforce the lien; anything less is not sufficient.

That action must include reference to the lien at issue, a request to enforce that lien andan indication that the action is based on the Act. In support of this position, it relies on Bristow et al., at pra. 7.2 and the Ontario case ofM & S Roofing and Sheet Metal Ltd. v. Arthur J. Fish Ltd. (1988), 32 C.L.R. 148 at 152-53 (Ont. S.C.). 10 NVR states that Action’s counterclaim is an action to collect unpaid invoices. While it references the Act, it is notspecifically made pursuant to the Act, no relief is pled pursuant to the Act and there is no allegation or claim purporting to enforce orrealize the lien.

It argues that the motion judge erred in holding that the action was “an action to realize the claim” under the Act. Second Ground of Appeal –

Section 56 11 NVR acknowledges that the lien against the property was vacated by consent order, to be replaced by payment of theamount claimed by the lien into a trust account, after which Action had a lien against those funds instead of against the property. 12 NVR argues that, while the lien against the funds was not subject to the requirement in s. 49(2) to file a pendinglitigation order, it was subject to the requirement regarding the commencement of an action within two years from the date of registrationof the lien, failing which the lien would cease to exist.

Further, it argues that Action must comply strictly with the provisions of thelegislation, as substantial compliance will not suffice. For this proposition, it relies on Aurora Quarrying Ltd. v. Lynngold ResourcesInc. et al.( 1992), (MB KB), 82 Man.R. (2d) 113 at para. 17 (Q.B.), aff’d (1993), (MB CA), 83Man.R. (2d) 212 (C.A.).

It argues that, because Action did not commence an action in accordance with s. 49(2), the motion judge erredin holding that Action’s lien against the funds continued to exist. 13 NVR argues that, because Action did not commence an action as contemplated under s. 49(2) of the Act within two

years, the lien against the funds ceased to exist. As a result, the motion judge erred in holding that Action’s lien continued to exist. The Respondent’s Position 14 Action states that the issue to be determined is whether the motion judge was correct in finding that its counterclaim constituted an action sufficient to prevent the expiration of the lien under the Act . This involves both a consideration of the

interpretation of s. 49(2) of the Act and a review of the facts to determine whether the requirements of the legislation have been met. 15 Dealing first with the legislation, Action argues that, in applying s. 49(2) to the facts of this case, there are two key terms at issue: “action” and “realize the claim.” 16 Action argues that, while the type of “action” is not defined in the Act , the information to be included is that set out in s. 38(1), being as follows: Contents of claim for lien 38(1) A claim for lien shall state (

a) the name and residence of the person claiming the lien and of the owner of the land to be charged (or of the person whom the person claiming the lien, or his agent, believes to be the owner of the land to be charged) and of the person for whom and upon whose credit the work was or is to be done, the services were or are to be provided or the materials were or are to be supplied; (

b) the time or period within which the work was or is to be done, the services were or are to be provided or the materials were or are to be supplied; (

c) a short description of the work done or to be done or the services provided or to be provided or the materials supplied or to be supplied; (

d) the sum claimed as due or to become due; (

e) a description of the land to be charged, sufficient for the purpose of registration; and (

f) where credit has been given by the lien claimant for payment for his work or services of [ sic ] materials, the date of expiry of the period of credit. 17 It further argues that, while the phrase “realize the claim” is also not defined in the Act , s. 60 of the Act supports the position that the “claim” is the lien. That provision states as follows: Action to realize lien 60 A lien for any amount may be realized by an action in the court and the ordinary procedure of the court, except where varied by this Act , applies to the action. 18 It argues that the lien is the lien created by s. 13 of the Act , which states as follows: Creation of lien 13 Any person who (

a) does any work; or (

b) provides any services; or (

c) supplies any materials to be used; in performance of a contract or sub-contract for any owner, contractor or sub-contractor has, by virtue thereof, a lien for the value of the work, services or materials which, subject to

section 16, attaches upon the estate or interest of the owner in the land or structure upon or in respect of which the work was done or the services were provided or the materials were supplied, and the land occupied thereby or enjoyed therewith. 19 It takes the position that the essence of what a “lien” is and what has to be sought or enforced in any action is a claim “for the value of the work” performed.

The action that must be filed under s. 49(2) must relate to or be a claim for the value of the work or services provided by the lienholder and must contain the specific information set out in s. 38 of the Act . 20 Dealing secondly with the pleadings in this matter, Action takes the position that reading its counterclaim together with the statement of claim and statement of defence confirms that all of the requirements have been met.

As a result, the counterclaim qualifies as an action under s. 49(2) and is sufficient to perfect its lien, such that the funds being held in trust should not be released. 21 It argues that a review of the motion judge’s reasons shows that he reviewed the legislation and the pleadings in their totality. His decision is reasonable and stands up to “probing examination.” No error is “plainly seen” and his decision should be given due deference.

VI. STANDARD OF REVIEW 22 The Supreme Court of Canada set out the standard of review to be followed by appellate courts in civil cases in Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235 . In

summary, Iacobucci and Major JJ., for the majority, found the standard to be as follows: - where the error involves a pure question of law, an appellate court is free to replace the opinion of the trial judge with its own; thus, the standard of review is that of correctness (at para. 8); - where the error involves a question of fact, including an inference of fact, the findings are entitled to deference and are not to be reversed unless it can be established that the trial judge made a “palpable and overriding error” (at paras. 10, 25); and - where the error involves a question of mixed fact and law, which includes the application of a legal standard to a set of facts, the applicable standard of review is that of palpable and overriding error unless the question relates to an extricable question of law, including the characterization of the legal standard, to which the applicable standard is that of correctness (at paras. 33, 36-37). 23 The test of “palpable and overriding error” has been explained in many decisions.

In Housen , Iacobucci and Major JJ. described a palpable error as one that is “clear to the mind or plain to see” (at para. 5). In H.L. v. Canada (Attorney General) , 2005 SCC 25 , [2005] 1 S.C.R. 401 , Fish J., for the majority, explained this standard as follows (at para. 55): …. … [A]n appellate court will not interfere with the trial judge’s findings of fact unless it can plainly identify the imputed error, and that error is shown to have affected the result. See also Young v. Ewatski et al. , 2012 MBCA 64 at paras. 32-35 . VII.

ANALYSIS AND CONCLUSION First Ground of Appeal – Did the motion judge err in holding that the counterclaim constitutes a sufficient “action” to satisfy s. 49(2) of the Act ? 24 The main issue on this appeal is whether Action has complied with the requirements of s. 49(2) of the Act regarding the filing of an action. This first ground of appeal raises two issues: the first being what constitutes “an action [that] is commenced to realize the claim” and the second being whether the counterclaim filed in this matter satisfies those requirements.

First Issue: What constitutes “an action [ that ] is commenced to realize the claim under [the] Act ”? 25 This first issue involves the

interpretation of the legislation and is a question of law, which is to be determined on the standard of correctness. 26 Neither “action” nor “claim” is defined in the Act , and the Act does not set out any specific requirements for “an action to realize a claim.”

Section 60 of the Act is of some assistance, as it states that “[a] lien for any amount may be realized by an action in the court and the ordinary procedure of the court, except where varied by this Act, applies to the action.” Section 1(1) of the Act states that “court” means Her Majesty’s Court of Queen’s Bench for Manitoba. 27

Section 1 of The Court of Queen’s Bench Act , C.C.S.M., c. C280, defines “action” as meaning a civil proceeding, other than an application, that is commenced in the court and includes a counterclaim. This is confirmed by Rule 27.01(1) of the Queen’s Bench Rules , which states that “[a] defendant may assert, by way of counterclaim in the main action, any right or claim including a set- off which that defendant may have against the plaintiff.” For the proposition that a counterclaim as defined in the statute and the rules is a separate and independent action, see also I.H.

Jacob, Bullen and Leake and Jacob’s Precedents of Pleadings , 12th ed. (London: Sweet & Maxwell Limited, 1975) at 96-100, and W.B. Williston, Q.C. & R.J. Rolls, The Law of Civil Procedure (Toronto: Butterworth & Co. (Canada) Ltd., 1970) vol. 2 at 717. Thus, although Action did not file a statement of claim, its counterclaim is sufficient to constitute an action within s. 49(2) of the Act . 28 Likewise, the phrase “an action … to realize the claim under this Act ” in s. 49(2) is not defined in the Act . A review of the Act shows that several different wordings are used to describe what is the same action.

The phrase “action to realize the claim for lien” appears in s. 50(1) , which deals with a mortgagee’s right to require a lienholder to commence an action, being an action under s. 49(2) . Section 55(6) of the Act deals with vacating a pending litigation order following the discontinuance or dismissal of “an action to realize a lien,” relating to the action that was commenced under s. 49(2) and gave rise to the pending litigation order.

Section 57(3) of the Act deals with a lienholder who had extended time for payment of the claim, and requires that he still “commence an action to enforce the lien within the time limited by this Act.” This, again, relates to an action under s. 49(2) . Finally, s. 60 states that “[a] lien … may be realized by an action in the court.” 29 From this it is clear that the “action to realize the claim” in s. 49(2) is an action to realize/enforce a claim for lien.

A claim for lien is embodied in the document that must be filed by the lienholder pursuant to s. 38 to preserve the lien, the contents of which are set out in s. 38(1) (see para. 16 herein). 30 In support of its position, NVR relies on the decision in M & S Roofing ; however, that decision is of questionable precedential value. 31 M & S Roofing did not file its own action; it was relying on the action commenced by another lienholder. While the decision does not set out the particulars of the statement of claim, it appears to have been deficient in more than one way. The master stated as follows (at p. 149):

…. This action is styled “In the matter of the Construction Lien Act, S.O. 1983,” however the only defendant in the action is Arthur J.Fish Limited [the general contractor].

The owner of the lands … is not a named defendant in this action, and there is no claim beingmade in the statement of claim against any interest in land owned by [the owner], nor is there a claim being made to enforce the lien filedby [the lienholder]. 32 The master also noted that the only reference to the registered lien was a statement in para. 20 of the statement of claimthat “in December a new lien was filed” (at p. 153). 33 The master found that that action was not an action to enforce a lien because it was commenced only against the generalcontractor and not against the owner of the property, as well as because there was no claim to enforce the lien.

Other than thesestatements, there was no analysis as to what would be required to have a valid claim to enforce a lien or, more importantly, why aparticular form of wording was required. 34 Also in support of its position, NVR is relying on the following statement from Bristow et al., (at para. 7.2): …. The action commenced must be an action to enforce the lien.

Where nothing in the action indicates that the action is actuallybrought to enforce the lien, it has been held that the lien was not properly perfected. …. 35 While it is noted in Bristow et al. in fn. 22.1 that the authors are relying on the M & S Roofing decision for thisproposition, they also note that there are two contrary decisions to the effect that “where, although the statement of claim did notspecifically state that the action was to enforce a lien, the claim made it clear that the action was to enforce a lien and the lien was held tobe properly perfected.” These two cases, 1610898 Ontario Inc. [c.o.b.

Max Pies Home Improvements] v. Dinardo (2006), 54 C.L.R. (3d)221 (Ont. S.C.J.) and C.M. & D. Drilling & Tunnelling Inc. v. McNally Construction Inc. (2008), 70 C.L.R. (3d) 296 (Ont. S.C.J.), wereboth decisions of higher court authority than M & S Roofing. Further, the judges in both of those cases considered and declined to followM & S Roofing, yet the authors give no reason for preferring M & S Roofing over those decisions. 36 Howard M. Wise comes to a different conclusion in his text, The Manual of Construction Law, loose-leaf(Toronto: Thomson Reuters Canada Limited, 1994) vol. 1. Based on C.M. & D.

Drilling, Wise states (at p. 5-16.1): Neither the construction lien legislation nor the case law suggest that specific language be used in the statement of claim in pursuing alien action. There is no authority suggesting that form should trump substance in a construction claim. …. There was no basis to strikethe claim for any deficiency in its wording as there was no ambiguity in the statement of claim.

On an objective reading of the statementof claim, the subcontractor sought judgment in the amount of the claim, in compensation for work which entitled it to a claim for lien,and which claim was registered and vacated. There was no suggestion that the general contractor was not aware the statement of claimwas to enforce the lien, or that the general contractor was prejudiced by the wording of the statement of claim.

Moreover, theConstruction Lien Act contained a curative provision so that minor irregularities could not be grounds to defeat lien claims. 37 In Max Pies, the defendant argued that the plaintiff/contractor’s action was not sufficient to perfect its lien becausethere was nothing in the prayer for relief that alleged that it was an action to enforce its lien.

The judge noted that the defendant’scounsel argued, following M & S Roofing, that, despite specific references to the lien, in order to comply with the strict language of theOntario legislation, the statement of claim must also seek enforcement of the lien in the prayer for relief. She noted that there was nosuggestion in M & S Roofing that anything in the body of the claim in that case conveyed it was an action to enforce a lien. She thenstated (at para. 7): By contrast, in this case the statement of claim makes it abundantly clear that it is an action to enforce a lien.

Paragraph 7 sets out thedetails of the lien and paragraph 11 expressly states that it is an action pursuant to the Act. The only rational conclusion from reading theclaim in its entirety is that it is “an action to enforce the lien,” as required by s. 36 of the Act. 38 Hennessy R.S.J. considered the argument that an action had to contain specific wording that it was to enforce a lien inC.M. & D. Drilling, and she stated as follows (at paras. 18, 20): The basis of this motion is an argument for form over substance.

There is nothing in the statute or the law which suggests that formshould trump substance in construction claims, particularly when the Act is specifically structured to provide for an expedited process toresolve construction claims. The Act includes a curative provision so that minor irregularities in the certificate, the declaration or claimfor lien cannot be the grounds to defeat lien claims.

Similarly, the Rules of Civil Procedure, which apply to most pleadings, state that theRules are to be construed liberally, “to secure the just, most expeditious and least expensive determination of every civil proceeding onits merits.” (Rule 1.04(1)) [Rule 1.04(1) in the Queen’s Bench Rules contains the same wording.] Clearly, legislative trends call for a generous and liberal reading of pleadings.

In the absence of specific language in the ConstructionLien Act, specifically dictating the language to be used to enforce a claim, there is no basis to strike a claim for an alleged deficiency inthe wording of the claim. 39 A flexible approach to interpreting the Act was adopted by this court in Pro-Plan Construction Services Ltd. et al. v.71194 Manitoba Ltd. et al. (1991), (MB CA), 75 Man.R. (2d) 241. In that case, the lienholder did not register anyclaim for lien under s. 38; rather, it filed a statement of claim and certificate of lis pendens within the time for filing a claim for lien.

Theissue was whether the lienholders had lost their lien for failing to register a claim for lien as required in the Act. Huband J.A., for themajority, acknowledged that the statement of claim and certificate of lis pendens did not meet the requirements for the content of a claimfor lien under s. 38(1), but found that they constituted substantial compliance sufficient to maintain the lien. In making this finding, themajority disagreed with Lyon J.A., who found that there had to be strict compliance with the formalities of the Act, at least to the extentof filing a claim for lien.

40 NVR is also relying on the following statement by Morse J., the motion judge in Aurora Quarrying Ltd. , to argue that compliance with all aspects of s. 49(2) is mandatory and does not permit substantial compliance (at para. 17): I am of the opinion that the clear wording of s. 49(2), as well as the authorities to which I have referred, leave no room for a lien claimant to rely on substantial compliance with the statutory provisions. 41 It is, however, necessary to distinguish between the contents and/or form of a document to be filed under the Act , on the one hand, and the time by or within which it must be filed, on the other.

In Aurora Quarrying Ltd. , Aurora, the lienholder, filed the statement of claim within time, but was five days late in filing the pending litigation order. It argued that s. 49(2) only required substantial compliance, that filing the pending litigation order five days late constituted substantial compliance, and that there was no prejudice to Lynngold. Morse J. did not agree that substantial compliance with the time limits was sufficient, and he ordered that the lien be vacated. That his comments were intended to apply to the time limit requirements is found from his following statement (at para. 9): ….

The requirement to give notice of an action within a certain period of time is, in my opinion, mandatory and not a mere matter of procedure or form. 42 Further, the authorities on which Morse J. relied all deal with the requirement to meet time limits and not content requirements. Thus, it is clear that the decision in Aurora Quarrying Ltd. deals with the requirement to meet the legislated time frames in the Act , not the content requirements. 43 There is no issue in this case about Action not meeting any time limits, as all of the required documents were filed within the statutory time limits.

Thus, the Aurora Quarrying Ltd. decision is of no assistance to NVR. 44 The Act sets out requirements for the content of certain of the documents that must be filed, but it requires only substantial compliance with those requirements.

Section s 38 and 39 set out what is to be included in a claim for lien, but s. 41(1) states that substantial compliance with those sections is sufficient and that no lien is invalidated by the failure to comply unless that failure causes a prejudice to another person, in which event the lien is invalid only to the extent of the prejudice. In a similar vein, substantial compliance is sufficient under s. 45(8) regarding the requirements of the notice of a lien that does not attach to land and under s. 48 regarding the contents of a certificate of substantial performance.

This points to a flexible approach to the content of documents that are required to be filed to enforce a lien under the Act . 45 When one looks at s. 49(2) , one sees that the Act does not in any way regulate the contents of an action, providing less direction than for the contents of the other documents, such as the claim for lien under s. 38(1) . It is only necessary that an action meet the requirements of s. 60, being the ordinary procedure of the court. The Queen’s Bench Rules provide for great flexibility in compliance with the rules, particularly as set out in Rules 1.04(1) and 2.

For example, Rule 2.01(1) states as follows: Not a nullity 2.01(1) A failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court, (

a) may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute; or (

b) only where and as necessary in the interests of justice, may set aside the proceeding or a step, document or order in the proceeding in whole or in part. 46 I find that the content of an action under s. 49(2) is not mandated by the Act . The decisions in Max Pies, C.M. & D. Drilling , Pro-Plan Construction Services and the

interpretation of the law contained in Wise all support a flexible approach to the application of the content requirements under the Act and are to be preferred over the strict and formal approach in Bristow et al. and in M & S Roofing . Thus, it is not necessary to specifically state that one is seeking to enforce a lien or a claim for lien; it is sufficient if, on an objective reading of the statement of claim, it is clear that the plaintiff, or the plaintiff by counterclaim, was applying to enforce its lien. 47 This raises the question of what should be included in the statement of claim.

Wise states as follows (at p. 5-16): The statement of claim should set out concisely the facts giving rise to the action. The statement of claim sets out the nature and parameters of the claim. In many construction lien actions, the issue, vis-à-vis the contractor or subcontractor, is simply a claim for the balance of monies due under the construction contract. However, that may be complicated where priority issues or holdback deficiency issues arise. The relief claimed in the statement of claim should include: 1.

The amount being claimed, which amount will represent the amount due and owing for work performed on the specific premises to which the claim for lien attaches. A lien claimant may not, in its statement of claim, assert a claim for monies owing on other projects (the exception is the general lien). This is significant because the owner is permitted, in defending the action, to raise issues and claim setoff in relation to work performed by the plaintiff on other projects. 2. A claim for interest. …. 3.

Additionally, the plaintiff to the action is permitted to join with its claim a claim for breach of contract or subcontract (section 55(1)). This would include a claim for lost profit on the project arising out of the breach of contract. The Court has jurisdiction to award a personal judgment for this head of damages.

4. Further, the statement of claim should request that if the owner does not pay monies found due and owing by him, the lands and premises be sold. 5. [Not applicable] 6. A claim for costs against the defendants. 48 Item 4 relates to the statement of claim including a request that the land be sold if the owner does not pay any amounts found due. This provision was not included in the statements of claim filed in Max Pies and C.M. & D. Drilling , and is not included in s. 38(1) of the Act .

I find that it is not a required provision for an action under our legislation. 49 Section 38(1) of the Act sets out the contents of the claim for lien, which, in fact, describe “the nature and parameters of the claim.” Thus, if the statement of claim discloses the filing of the claim for lien under the Act and includes the information set out in s. 38(1), it should be sufficient, on an objective basis, to disclose to the other parties that the plaintiff or plaintiff by counterclaim is enforcing its lien and thus constitutes compliance, or substantial compliance, with s. 49(2). 50 In his decision, the motion judge in this case found that there was no specific requirement in the Act regarding the contents of an action (at para. 9), that a counterclaim is an action (at para. 10) and that the action referred to in the Act should identify the dispute and the lien and lead to a resolution (at para. 13).

He also noted the distinction between the content of an action and the requirement in Aurora Quarrying Ltd. to register a pending litigation order within a specific time (at para. 9). I am satisfied that the motion judge was correct in his

interpretation of s. 49(2) of the Act and, therefore, did not commit any error of law regarding the requirements for the contents of an action to realize a claim under the Act .

Second Issue: Does the counterclaim filed in this matter satisfy the requirements for “an action … to realize the claim under the Act ”? 51 This second issue involves the application of the law to the facts, which is a question of mixed fact and law, and is to be determined on the standard of palpable and overriding error. 52 The counterclaim includes a provision incorporating the allegations in the statement of defence (at para. 14), which, in turn, includes a provision admitting certain paragraphs of the statement of claim (at para. 2).

Thus, these pleadings must be read together to determine the contents of Action’s action under s. 49(2).

Those documents, taken together, set out the following: - that one of the plaintiffs, NVR Holdings Ltd., was the registered owner of the land at issue, which is identified sufficiently to permit registration; - that the second plaintiff, NVR Construction Limited, was the construction manager of a condominium development on the land; - that Action is claiming the lien and that it is a Manitoba corporation, with its registered office in Winnipeg, Manitoba; - that Action entered into a contract with NVR Construction Limited on or about July 21, 2009, to provide services related to the development as described in the statement of defence, according to the tentative

schedule set out in the statement of claim; - that the plaintiffs breached the contract when they failed to pay the submitted invoices in a timely fashion, or at all, as a result of which the plaintiffs owe the sum of $54,986.50 to Action; - that, on February 12, 2009, Action filed a claim for lien under the Act against the lands as instrument No. 3735595 in the Winnipeg Land Titles Office; - that, on or about March 13, 2009, the plaintiffs filed an application to vacate the builder’s lien; - that, on March 23, 2009, the parties entered into a consent order to vacate the lien and upon NVR paying the sum of $54,986.50 into a trust account pending payment out by consent or court order; and - that Action is claiming judgment in the sum of $54,986.50, plus interest and costs. 53 When looked at in total, Action’s counterclaim discloses the filing of the claim for lien under the Act and includes the information set out in s. 38(1) of the Act .

This is sufficient information to constitute compliance, or at least substantial compliance, with s. 49(2). 54 The motion judge in this case found as follows (at para. 4): In my view, the counterclaim filed by the respondent meets this test and constitutes a sufficient action to satisfy the Act ’s requirement. The initial claim identifies the lien, the statement of defence admits the identification of the lien and the counterclaim incorporates the references to the lien into the counterclaim.

It is quite clear that the matter being addressed is in fact the dispute underlying the lien. 55 Clearly, he not only made no palpable and overriding error in coming to this conclusion, but his decision was correct. Thus, the motion judge made no error on a question of mixed fact and law in coming to his decision that Action’s action by counterclaim was sufficient to meet the requirements of s. 49(2) of the Act . Second Ground of Appeal ̶ Did the motion judge err in holding that the lien or charge upon the funds held in trust by Pitblado LLP continues to exist?

56 This ground of appeal is tied to the question of whether Action has filed an action in compliance with s. 49(2) . 57 The Act permits a court to order that the registration of a lien against a property be vacated upon the payment into court or the giving of security for the amount secured by the lien. In this case, the parties consented to such an order.

In that event, it is not necessary for the lienholder to file a pending litigation order, but it must still commence its action in accordance with s. 49(2) . (See ss. 51, 55(2) and 56(1).) 58 NVR’s position is that the motion judge erred in holding that the lien or charge on the funds continued to exist, which is based on its argument that the counterclaim that was filed by Action does not constitute an action within s. 49(2) .

The motion judge having correctly found that the counterclaim did constitute such an action was also correct in finding that the lien or charge against the funds continued to exist. 59 NVR also argues that Action cannot take advantage of the provision in s. 49(2) that a lien can be sheltered where “an action is commenced in which the claim under this Act ,” that sheltering action being the action commenced by NVR.

Action did not argue on this appeal that this part of s. 49(2) applied and, given the decision regarding its counterclaim, it is not necessary to consider whether the NVR action could shelter Action’s lien in this case. VIII. DECISION 60 For the above-noted reasons, the motion judge did not commit any of the errors raised by NVR. I would dismiss NVR’s appeal with costs to Action. _______________________ J.A. I agree: _______________________ J.A. I agree: _______________________ J.A.