APM Construction Services Inc. v. Caribou Island Electric Ltd., 2012 NSCA 105

NOVA SCOTIA COURT OF APPEAL Citation: APM Construction Services Inc. v. Caribou Island Electric Ltd. , 2012 NSCA 105 Date: 20120926 Docket: CA 406600 Registry: Halifax Between: APM Construction Services Inc. and Travelers Guarantee Company of Canada Applicants/Appellants v. Caribou Island Electric Limited, 3104607 Nova Scotia Limited, carrying on business as Advanced Cabling Systems, Canada Revenue Agency and Her Majesty the Queen in Right of the Province of Nova Scotia as represented by the Minister of Transportation and Infrastructure Renewal Respondents Judge: The Honourable Justice David P.S.

Farrar Motion Heard: September 13, 2012, in Halifax, Nova Scotia, in Chambers Held: Motion for a stay dismissed. Counsel: Ezra B. Van Gelder, for the applicants/appellants John Kulik, Q.C. and Ian Dunbar, for the respondent Advanced Cabling Systems Deanna M.

Frappier, for the respondent Canada Revenue Agency Duane Eddy, for the respondent Minister of Transportation and Infrastructure Renewal Fraser Miller, for the respondent Caribou Electric Limited not appearing Decision: [ 1 ] On September 13, 2012, the appellants appeared before me in Chambers seeking an order staying the decision and order of Nova Scotia Supreme Court Justice Peter Rosinski dated July 19 and August 30, 2012, respectively. At the conclusion of submissions

from counsel I dismissed the motion with reasons to follow. These are my reasons. Background [ 2 ] The facts of this matter are straightforward. ACS was a subcontractor for Caribou Island Electric Ltd. (“Caribou”), who was in turn a subcontractor for the appellant APM Construction Services Inc. (“APM”). APM had been hired by the Province of Nova Scotia (“the Province”) to carry out certain renovations to the Bridgewater Provincial Building in Nova Scotia (“the Project”).

ACS performed its work on the Project and says it is owed $86,201.64 inclusive of HST by Caribou for work performed from October, 2011 – January, 2012. [ 3 ] Caribou failed to pay ACS. On March 2, 2012, ACS claimed a lien pursuant to the Builders’ Lien Act , R.S.N.S. 1989, c. 277 with respect to work it performed on the Project.

Then, on March 7, 2012, ACS notified the appellant Travelers Guarantee Company of Canada (“Travelers”) that it was demanding payment of the monies it was owed under a payment bond obtained by APM Construction from Travelers as a condition of its contract with the Province (the “Bond”). [ 4 ] As of March 6, 2012, APM owed Caribou $94,441.36. ACS claimed these funds in order to satisfy Caribou’s outstanding account.

ACS’s entitlement to payment from these funds was complicated by an earlier demand that had been issued by the respondent Canada Revenue Agency (“CRA”) with respect to certain debts it was owed by Caribou in the amount of $183,351.41. Under the terms of the Requirement to Pay, CRA demanded that APM pay any monies payable to Caribou to the Receiver General of Canada. [ 5 ] APM was placed in a position of having conflicting claims from both ACS and CRA to the amount it owed Caribou.

APM and Travelers accordingly made an Application in Chambers on April 2, 2012 seeking to discharge the lien by paying the amount of $94,441.36 into Court.

APM and Travelers also sought a discharge of their obligations under Travelers’ Bond. [ 6 ] Although not altogether clear on the record before me, on the application APM and Travelers appeared to have conceded CRA was entitled to a super priority over ACS with respect to the funds APM proposed to pay into Court. [ 7 ] Both APM and Travelers took the position that APM, by payment of the funds into Court, had met its obligation under the Bond and, accordingly, Travelers (as APM’s surety) need not respond to any claim by ACS under the Bond. [ 8 ] The application judge determined that ACS was entitled to claim the outstanding sum it was owed under the Bond and found that Travelers must pay $86,201.64 to ACS before being discharged of its obligations.

The application judge also accepted that CRA was entitled to $94,441.36, the amount APM sought to pay into Court. [ 9 ] APM and Travelers filed a Notice of Appeal on September 5, 2012. Only one of the grounds of appeal is relevant for the purposes of this stay motion; that is the application judge erred in determining the quantum of the amount owed to ACS when that issue was not before him. In particular, they say that there were unresolved inconsistencies in the evidence before the application judge relating to the quantum of ACS’s claim.

Issue [ 10 ] There was one issue before me on this motion: Should the decision and Order of the application judge be stayed with respect to the quantum of ACS’s claim, and in the outcome of this appeal? Analysis [ 11 ] The parties agree that the test that must be met in order to obtain a stay of execution pending appeal is set out in Fulton Insurance Agencies Ltd. v. Purdy , [1990] N.S.J. No. 361 (Q.L.) (C.A.), ¶ 28 : In my opinion, stays of execution of judgment pending disposition of the appeal should only be granted if the appellant can either (1) satisfy the Court on each of the following: (

i) that there is an arguable issue raised on the appeal; (ii) that if the stay is not granted and the appeal is successful, the appellant will have suffered irreparable harm that it is difficult to, or cannot be compensated for by a damage award.

This involves not only the theoretical consideration whether the harm is susceptible of being compensated in damages but also whether if the successful party at trial has executed on the appellant's property, whether or not the appellant if successful on appeal will be able to collect, and (iii) that the appellant will suffer greater harm if the stay is not granted than the respondent would suffer if the stay is granted; the so-called balance of convenience.

OR (2) failing to meet the primary test, satisfy the Court that there are exceptional circumstances that would make it fit and just that the stay be granted in the case. [ 12 ] The appellants do not rely upon the primary test in Fulton , but rather, say that the stay is justified due to exceptional circumstances. The exceptional circumstances in this case, the appellants say, are: 1. this case is analogous to Fulton Insurance, supra ; or. 2. the decision contains errors so egregious that it is “clearly wrong on its face”. I will deal with each of these submissions separately.

Analogous to Fulton Insurance [ 13 ] The appellants argue that this case fits squarely within the reasons of Hallett, J.A. in Fulton . It says the declaration by the application judge with respect to the amount owed to ACS was granted summarily without the appellants having been given the opportunity to contest the quantum of ACS’s claim. [ 14 ] In Fulton , the corporate respondent had obtained

summary judgment of $45,700 on a fraud claim brought against the appellant in his personal capacity. The appellant has filed his own claim against the respondent in respect of an alleged wrongful dismissal. The wrongful dismissal claim had not yet been heard. The evidence before this Court established that the appellant had an annual income of $20,000 and that his spouse was unemployed. The appellant, in that case, argued that an order for the immediate payment of the judgment with costs would create financial hardship for him and his family. Hallett, J.A. determined that “exceptional circumstances” had been established because: 1. the judgment was obtained in a

summary proceeding rather than trial against the appellant; 2. Of the arguable issues raised by the appellant on the appeal from the

summary judgment; and 3. the counterclaim for wrongful dismissal and a claim for set-off had not been adjudicated. [ 15 ] The appellants argue (and it is conceded by the respondents) that they have an arguable issue on the appeal and the determination of the quantum owed to ACS was done summarily. They say, like Fulton , this gives rise to exceptional circumstances warranting a stay. [ 16 ] With respect, I do not agree.

It is clear from the decision of Hallett, J.A. in Fulton that it was a constellation of factors which led him to grant the stay, including his concern with the fact that the set-off proceeding had not yet been concluded and as a result it would be premature to execute on the judgment. [ 17 ] I am unable to find that the circumstances in this case are such that they can be considered to be “exceptional”. The proceedings below have been concluded.

Unlike Fulton , there is nothing outstanding to be adjudicated which may impact on the issues in this appeal. [ 18 ] The circumstances are not analogous to Fulton Insurance, supra , and a stay is not warranted on that basis. Egregious Errors on the Face of the Decision [ 19 ] The appellant argues, in the alternative, that the decision contains errors so egregious that it is “clearly wrong on its face”. In particular, it says it is clearly wrong for the application judge to have determined the quantum of the amount owing to ACS based on “inconsistencies” in the evidence.

The application judge had before him an affidavit of the principal of ACS, Rick Murphy, setting out, what he said, was the work ACS had done in the project and the amounts it was owed. Mr. Murphy was not cross-examined on his affidavit. The appellant says the reason he was not cross-examined on his affidavit is evident: that the issue of quantum was not before the application judge. They point to inconsistencies between the amounts set forth in the affidavit and correspondence of counsel for ACS and a builder’s lien action also filed by ACS.

The alleged inconsistency is somewhere in the range of $1,000. [ 20 ] I am not satisfied that the determination of the amount owing to ACS by the application judge was an error let alone an error so “egregious” that it warrants the granting of a stay in these circumstances. By saying this I am in no way opining on the merit of the appellant’s argument on this issue. But rather, the determination of whether the application judge erred is best left to the panel hearing the appeal with a full record.

It is not a determination I can make, nor should I make, on the limited information before me. [ 21 ] In conclusion, I am not satisfied that the appellants have shown exceptional circumstances that would warrant a stay in this matter. The motion is dismissed with costs to the respondent, ACS, in the amount of $750. Caribou Island Electric Ltd. did not appear on the motion. Revenue Canada and the Province both appeared on the motion but did not seek costs. As such, no other costs will be awarded to any other party. Farrar, J.A.