Grey Owl Engineering Ltd. Appellant (Respondent) v. Propak Systems Ltd., 2015 SKCA 108

Court of Appeal for Saskatchewan Docket: CACV2680 Citation: Grey Owl Engineering Ltd. v Propak Systems Ltd. , 2015 SKCA 108 Date: 2015-10-14 Between: Grey Owl Engineering Ltd. Appellant (Respondent) And Propak Systems Ltd. Respondent (Applicant) Before: Jackson, Caldwell and Herauf JJ.A. Disposition: Appeal allowed Written reasons by: The Honourable Madam Justice Jackson In concurrence: The Honourable Mr. Justice Caldwell The Honourable Mr. Justice Herauf On Appeal From: 2015 SKQB 43 , Saskatoon Appeal Heard: 18 June 2015 Counsel: Paul J. Harasen for the Appellant Jared D. Epp for the Respondent Jackson J.A. I.

Introduction [ 1 ] This is an appeal from a decision of the Court of Queen’s Bench made pursuant to s. 56(4) of The Builders’ Lien Act , SS 1984-85-86, c B-7.1 [ Act ], declaring a lien to be invalid and ordering the payment out of funds held in court to secure the lien: see Propak Systems Ltd . v Grey Owl Engineering Ltd. , 2015 SKQB 43 [ Propak Fiat ]. The learned Chambers judge declared the lien invalid on the basis that it was not filed in relation to an “improvement” as defined in s. 2(1) (

h) of the Act . [ 2 ] Resolution of the appeal turns on whether the Chambers judge erred in his approach to determining what constituted the improvement in this case. In my respectful view, the lien claimant must succeed in this Court for the reasons that follow. II. Background [ 3 ] The dispute between the parties arose in the context of a classic builders’ lien pyramid of relationships, which may be described as follows: Onion Lake Cree Nation leased its mineral rights in a parcel of land to BlackPearl Resources Inc. [BlackPearl].

BlackPearl contracted with Propak Systems Ltd. [Propak] for engineering, procurement, and fabrication services connected to a modular oil extraction system that was to be provided by Propak for use on BlackPearl’s leased land. Propak entered into a subcontract with Advanced Metal Concepts and Fabrication Ltd. [Advanced Metal] for the construction of three storage tanks to be used on the land as part of the modular oil extraction facility. In its turn, Advanced Metal entered into a subcontract with Grey Owl Engineering Ltd. [Grey Owl] to provide engineering design services relating to those storage tanks.

Grey Owl, the lien claimant, filed its lien against the mineral parcel. [ 4 ] Each storage tank was designed to be 24 to 38 feet tall and to weigh between 34,000 and 43,500 pounds. Each tank was to sit on an engineered gravel pad. Piles would run through the gravel pad and extend about 20 feet into the ground. An anchor chair would be welded to the base of the tank and then bolted to the piles.

The three tanks would then be connected to the entire oil extraction facility through steel and fiberglass piping that would be bolted to the tanks. [ 5 ] Grey Owl materially completed the required services, but Advanced Metal abandoned the project before any of the tanks were built and failed to pay Grey Owl for any of the engineering services that were provided in relation to the tanks. The unpaid amount was $95,884.95.

Grey Owl then registered a lien against the leased land pursuant to the Act . [ 6 ] Propak applied to the Court of Queen’s Bench pursuant to s. 56(1) of the Act to vacate the lien registered by Grey Owl. This provision requires an applicant to pay into court the full amount claimed plus an extra 25% as security for costs. Propak did so; and, on November 6, 2014, Smith J. ordered that Grey Owl’s registered lien be vacated. As a result of this order, and by virtue of s. 56(6) of the Act , Grey Owl’s lien ceased to attach to the holdback or the land and became instead a charge on the amount paid into court.

I have not reproduced s. 56 as this appeal does not turn on the exact wording of that section. [ 7 ] Propak then applied to the Court of Queen’s Bench pursuant to s. 56(4) of the Act for an order releasing the entire amount

held in Court on the ground that Grey Owl was not entitled to register a lien under the Act. More particularly, Propak applied unders. 56(4) of the Act for an order paying out the funds on the basis that Grey Owl was not entitled to claim a lien as its engineering serviceswere not provided in relation to an “improvement” as defined in s. 2(1)(

h) of the Act:

Interpretation 2(1) In this Act: … (h) “improvement” means a thing constructed, erected, built, placed, altered, repaired, improved, added to, dug or drilled orintended to be constructed, erected, built, placed, altered, repaired, improved, added to, dug or drilled on or into, land, except a thing thatis not affixed to the land or intended to become part of the land and includes: (

i) landscaping, clearing, breaking, excavating, digging, drilling, tunnelling, filling, grading or ditching of, in, on or under land; (ii) the demolition or removal of any building, structure or works or part thereof; (iii) services provided by an architect, engineer or land surveyor; and “improved” has a corresponding meaning …. [8] Propak submitted that the improvement in question in this case is the storage tanks, which in its submission were notsufficiently affixed to the land to meet the definition in the Act. Propak argued that s. 2(1)(

h) of the Act should be given an “exhaustiveand restrictive”

interpretation, while Grey Owl argued for an “expansive”

interpretation. Propak argued that Saskatchewan’s legislationis similar to Ontario’s and Alberta’s, which (according to Propak) have been given so-called restrictive

interpretations: Kennedy ElectricLtd. v Dana Canada Corporation (2006), (ON SCDC), 208 OAC 156 (Sup Ct (Div Ct)), aff’d 2007 ONCA 664, 229OAC 156; Canada Inc. v 879115 Ontario Ltd. (2005), 42 CLR (3d) 220 (Ont Sup Ct); Rahco International Inc. v Laird Electric Ltd.,2006 ABQB 592, 398 AR 332; and Gauntlet Energy Corp., Re (2003), 49 CBR (4th) 219 (Alta QB) at paras 4–14, leave to appealdenied 2004 ABCA 20, 49 CBR (4th) 225. [9] Relying on Majestic Contractors Ltd. v N.C.L.

Contracting Ltd. (1993), (SK KB), 117 Sask R 12 (QB)[Majestic], Grey Owl met these arguments by saying that its lien could be vacated only if it were “plain and obvious” that the lien isinvalid. Grey Owl also resisted Propak’s arguments by insisting that the storage tanks were sufficiently affixed to the land to constitutean improvement. In support of its position, Grey Owl relied on other decisions such as Boomars Plumbing & Heating Ltd. v MarognaBros. Enterprises Ltd. (1988), (BC CA), 51 DLR (4th) 13 (BCCA). III.

Decision in the Court of Queen’s Bench [10] The Chambers judge issued a fiat granting Propak’s application (see Propak Fiat). After referring to s. 2(1)(

h) and s. 22(1),the Chambers judge began his analysis by stating the issues as follows: 1. Would the storage tanks constitute an “improvement” on the land, and thus be a thing capable of maintaining a builders’ lienpursuant to s. 22(1) of the Act? (

a) Is the statutory definition of “improvement” expansive in its meaning or exhaustive and restrictive? (

b) If exhaustive and restrictive, what was the parties’ intention for the tanks? (Propak Fiat, para. 6) [11] In answering these questions, the learned Chambers judge accepted Propak’s submissions. In the concluding paragraph of thejudge’s reasons, he wrote: [16] The Saskatchewan legislation can most likely be characterized as “exhaustive” within the meaning of the case law. It expresslycontains an exception to the definition of “improvement” and directs the Court to examine the intention of the parties in determining eachmatter.

In order to determine whether the tanks in the matter at hand are improvements and, thus, be a thing capable of maintaining abuilders’ lien, the Court must examine the intentions of the parties, including the degree of affixation and the ability of the tanks to bemoved. Upon considering all of the material before me in this context, I have concluded that the tanks are not improvements within themeaning of the Act. (Emphasis added, Propak Fiat) [12] The Chambers judge concluded that the storage tanks were capable of being moved, which he took as indicative of theparties’ intention.

The tanks were part of a modular system that could be relocated to any other heavy oil field in Saskatchewan once theywere no longer needed on the proposed site. They were not designed to be moved around the site, but they were capable of being movedbeyond that site once the project was finished. Since they were capable of being moved, the Chambers judge held that they were not animprovement. Since they were not an improvement, Grey Owl’s claim of lien was not valid. The Chambers judge accordingly grantedPropak’s application and ordered that all of the money paid by Propak into court be released to Propak. IV.

Positions of the Parties [13] In this Court, as often happens, the issues have become more refined. Grey Owl’s primary argument is that the appeal shouldbe allowed on the ground that it is not plain and obvious that the lien is invalid. Grey Owl also refers to this Court’s approach to lien

legislation as stated in Axcess Capital Partners Inc. v Allsteel Builders(2) Limited, 2015 SKCA 33 at paras 58–60, 457 Sask R 131[Axcess Capital], and the cases referred to therein, including Clarkson Company v Hansen (1983), (SK CA), 22 SaskR 126 (CA) [Hansen]. Grey Owl asks that the appeal be allowed, which would mean that Propak’s application under s. 56(4) in theCourt of Queen’s Bench would be taken as dismissed. [14] Propak reiterates the arguments it made before the Chambers judge, namely that s. 2(1)(

h) of the Act should be interpretedexhaustively and restrictively. Propak argues that Saskatchewan’s legislation has the most restrictive wording of any province’slegislation because it excludes all things that are not affixed to the land or intended to become part of the land. According to Propak,other provinces exclude things that are not affixed nor intended to become part of the land. Both of these requirements must be satisfiedin other provinces, while only one needs to be satisfied to trigger the exclusion in s. 2(1)(

h) of Saskatchewan’s legislation. Propak arguesthat the Chambers judge’s conclusions on intention were reasonable. [15] Propak says there is no need to adduce evidence of the subjective intention of the owner in order to prove intention. TheChambers judge’s decision on intention was reasonable and was consistent with the holdings in several similar cases from otherjurisdictions. The issue of intention is a question of fact or mixed fact and law, and it should be reviewed on a deferential standard.Finally, relying on Arthur Andersen Inc. v Merit Energy Ltd, 2002 SKCA 105, 220 DLR (4th) 351 [Arthur Andersen], Propak argues thatthis Court has endorsed a strict

interpretation of lien legislation when determining who is entitled to claim a lien. V. Analysis [16] In my respectful view, this appeal does not turn on whether s. 2(1)(

h) should be given an exhaustive or restrictiveinterpretation. The central issue is whether Grey Owl provided services “on or in respect of an improvement” and is thereby entitled toclaim a lien under s. 22 of the Act: Lien on land and materials and extension re minerals 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 enjoyedtherewith, and on the materials provided to the improvement for as much of the price of the services or materials as remains owing tohim.

(2) Where services or materials are provided: (

a) preparatory to; (

b) in connection with; or (

c) for an abandonment operation in connection with; the recovery of a mineral, then, notwithstanding that a person holding a particular estate or interest in the mineral concerned has notrequested the services or materials, the lien given by subsection (1) is also a lien on: (

d) all the estates or interests in the mineral concerned, other than the estate in fee simple in the mines and minerals, unless the personholding that fee simple has expressly requested the services or materials; (

e) the mineral when severed and recovered from the land while it is in the hands of the owner, and to the proceeds of the mineral and tothe amounts to be paid in lieu of the proceeds of the mineral to the owner by a person that operates the mine, oil well or gas well; (

f) the interest of the owner in the fixtures, machinery, tools, appliances and other property in or on the mines, mining claim or land, oilor gas well and the appurtenances thereto; but, in all other respects, this Act applies to the lien existing by virtue of this subsection notwithstanding that the lien extended by clauses(

e) and (

f) is a lien on an interest in personal property. (Emphasis added) On examination of s. 22, it can be concluded the Chambers judge fell into error when he asked whether the storage tanks were animprovement without giving effect to the other provisions of the Act. [17] In order to determine whether someone is validly asserting a lien, the first step is to begin with s. 22 read as a whole. It is anerror to consider the

definitions apart from the

section that creates the right being asserted. It is also an error to consider only one of thedefinitions referred to in the section, when others are relevant, notably the

definitions of “contractor,” “services,” “owner,” and“subcontractor” in conjunction with the definition of “improvement,” which I will repeat for ease of reference:

Interpretation 2(1) In this Act: … (b) “contractor” means a person contracting with or employed directly by the owner or his agent to provide services or materials to animprovement, but does not include a labourer … (h) “improvement” means a thing constructed, erected, built, placed, altered, repaired, improved, added to, dug or drilled orintended to be constructed, erected, built, placed, altered, repaired, improved, added to, dug or drilled on or into, land, except a thing thatis not affixed to the land or intended to become part of the land and includes:

(

i) landscaping, clearing, breaking, excavating, digging, drilling, tunnelling, filling, grading or ditching of, in, on or under land; (ii) the demolition or removal of any building, structure or works or part thereof; (iii) services provided by an architect, engineer or land surveyor; and “ improved ” has a corresponding meaning; … (k) “ owner ” includes a person having an estate or interest in land, other than an encumbrance, at whose request, express or implied, and: (

i) on whose credit; (ii) on whose behalf; (iii) with whose privity and consent; or (iv) for whose direct benefit; an improvement is made to the land; … (q) “ services ” means any labour done or service performed on or in respect of an improvement and includes the rental of equipment and the wages of any operator provided with the equipment … (t) “ subcontractor ” means a person, not contracting with or employed directly by an owner or his agent, but who provides services or materials to an improvement under an agreement with the contractor or under him with another subcontractor, but does not include a labourer …. (Emphasis added) [ 18 ] In short, it is a mistake to begin and end the inquiry with whether the storage tanks are the improvement.

The issue is whether Grey Owl provided “services” “on or in respect of an improvement for an owner, contractor or subcontractor” within the meaning of s. 22 and, as part of this analysis, identify the improvement in question. [ 19 ] The leading authority in this jurisdiction is Hansen , which outlines the method to determine whether a person has a claim for a lien relating to an improvement. In Hansen , these were the agreed facts (paraphrased): (

a) The Canadian National Railway [CNR] held a licence to remove gravel from certain pits belonging to McMillan Bros. Ltd. (

b) CNR retained Robert Brewster Construction (High River) Ltd. [Brewster] to excavate, crush and haul the gravel ballast to a stockpile. (

c) The digging and processing took place at or near the gravel pit site, but the stockpile was located some five miles distant and adjacent to a CNR right of way. (

d) Brewster rented equipment and hired independent truckers and others to supply services in the performance of its contract with CNR. (

e) All concerned were aware that CNR intended to incorporate the gravel ballast into its rail bed, and this was in fact done by CNR. (

f) The truckers, the equipment lessors, and others, including a number of drivers (all of whom were owed money by Brewster) claimed a lien for payment of their accounts on the footing they were entitled, under The Mechanics’ Lien Act , RSS 1978, c M-7 (repealed), to liens against the funds being held. [ 20 ] Thus in essence there were three sites in Hansen : (

i) the gravel pit where digging and processing took place; (ii) the stockpiling site; and (iii) the rail bed into which the gravel would be incorporated in some fashion. In Hansen , the trustee argued that that neither the stockpiling, nor the incorporation of the gravel ballast into the rail bed, constituted an improvement, since the definition of that term excluded “a thing that is not affixed to the land or intended to be or become part of the land” ( s. 2 (

h) of the Act ). It was submitted that the gravel ballast was merely stored, temporarily, upon the stockpiling site—there was never an intention to leave it there —and that when the ballast was used in the rail bed it did not become “affixed” to the land; an

article which is placed upon land and rests there only by force of its own weight is not a “fixture” within the meaning of the law. [ 21 ] Cameron J.A., speaking for the Court in Hansen , did not accept these contentions. He reviewed the

definitions of “materials,” “services,” “owner,” and “subcontractor” in conjunction with the definition of “improvement,” which are similar to the present

definitions. Since the gravel was intended to be affixed to and incorporated into the CNR land, there was no doubt (i) “the gravel ballast became part of the land upon which the rail bed was located” (para. 16) and (ii) “the land upon which the line was located was the subject of an improvement.” Specifically in relation to the stockpiling site, Cameron J.A. found it significant that Brewster had not only placed ballast there but had constructed the site, since Brewster had been required to clear and strip the topsoil, then to grade and slope the site, and finally to top it with gravel.

He noted that the definition of “improvement” includes clearing, digging, filling and grading— as it does under the present Act . [ 22 ] After making these comments, Cameron J.A. stated he was nonetheless not attracted to such an approach, preferring instead to consider whether the reconstruction of the rail line constituted an improvement to the land and then asking the question whether Brewster did any work upon that improvement or render any services for it:

[18] I may say, however, that I am not attracted to this fractured approach: it strikes me as overly technical and excessively abstract.From time to time such an approach will be desirable, indeed necessary, to ensure that the benefits contemplated by the Act are realizedin practice, as in C.N.R. v. Nor-Min Supplies Limited, (1977) (SCC), 1 S.C.R. 322. But in this case I doubt the proprietyof reasoning after that fashion. I prefer to think that the C.N.R. owns a narrow band of land, which falls within, and crosses the east halfof

section 25-44-17 W3, in a north-south direction; on part of this land is situated the rail bed and the track, next are the adjoiningditches, followed, on the east side, by a strip of land about 60 meters wide and just over one kilometre long, upon which the ballast wasstockpiled for use in rebuilding the line. The real issue, it seems to me, is whether the reconstruction of the rail line, constituted an“improvement” to this land.

And about this I have no doubt--there was an improvement to the C.N.R.’s property as contemplated by TheMechanics Lien Act …. (Emphasis added, Hansen) [23] This approach, which focuses on the main contract or contracts rather than its individual subcontracts and the work beingdone under them, has been consistently followed and applied in this jurisdiction.

In Pritchard Engineering Company v Coronach, (SK KB), [1983] 30 Sask R 137 (QB), the main contract was between the owner, the town of Coronach, and Wes-CanUnderground Ltd. and involved the construction of a water supply line and associated tasks within the water treatment plant. Wes-Canhired Ray’s Transport Ltd. to transport equipment to the job site at Coronach and upon termination of the work to return the equipment toSaskatoon.

Applying Hansen, Sirois J. found first that the construction work under the main contract was an “improvement” (para. 5) andsecond that Ray’s Transport had provided services “in respect of” that improvement (para. 16).

He concluded by saying, “The hauling ofthe equipment by Ray’s Transport to a point on the improvement site was solely to enable Wes-Can Underground Ltd. to carry out itscontract with the Town of Coronach.” [24] Similarly, in BWV Investments Ltd. v Saskferco Products Inc. (1993), (SK KB), 114 Sask R 306 (QB),MacPherson C.J.Q.B. applied Hansen to uphold a claim of lien for the rental of 29 trailers located on the building site and used in theconstruction of the Saskferco fertilizer plant.

As part of his reasoning, MacPherson C.J.Q.B. noted that neither the trailers, nor any part ofthem, were consumed by or integrated into the actual construction of the fertilizer plant, but that such a finding did not determine thevalidity of the lien (para. 14). He held that the supply of the trailers constituted a “service performed on or in respect of” the constructionof the fertilizer plant (para. 24).

This Court allowed an appeal from this decision (see BWV Investments Ltd. v Saskferco Products Inc.(1994), (SK CA), 125 Sask R 286 (CA) [Saskferco CA]) on the basis that the dispute was governed by Article 8(1) ofthe United Nations Commission on International Trade Law, UNCITRAL Model Law on International Commercial Arbitration 1985:with amendments as adopted in 2006 (Vienna: United Nations, 2008), as set out in the

schedule to The International CommercialArbitration Act, SS 1988-89, c I-10.2, but the Court was not required to consider MacPherson C.J.Q.B.’s application of Hansen. [25] Finally, in Royal Bank of Canada v Saskatchewan Power Corporation (1990), (SK KB), 84 Sask R 277(QB), counsel for the Bank argued that steel poles modified and delivered by subcontractors, for use in Saskatchewan Power’stransmission lines, could not be considered improvements because the poles were movable. MacLean J. rejected this argument, findingthat the improvement in question was not the poles but the transmission line itself.

This Court affirmed the decision in brief oral reasons(see (1990), (SK CA), 84 Sask R 275 (CA)). Neither the Court of Queen’s Bench nor this Court referred to Hansen,but both Courts appear to have taken it as self-evident that the improvement was the work the owner was performing on the land and notthe work performed by the various subcontractors and others contracting with them.[1] [26] In Hansen, Cameron J.A. stated, “the principal object of this Act is to better ensure that those who contribute work andmaterial to the improvement of real estate are paid for doing so” (para. 30).

This approach to builders’ lien legislation has a longprovenance in this jurisdiction.

In Galvin Luber Yards v Ensor, (SK CA), [1922] 2 WWR 15 (Sask CA), this Courtfollowed commentary describing the object of the legislation as being (i) “to prevent the owner of lands, whatever his estate in them,from getting the labor and capital of others without compensation” (p. 18, quoting Samuel Louis Phillips, A Treatise on the Law ofMechanics’ Liens on Real and Personal Property, 2d ed (Boston: Little, Brown, and Company, 1883) at 296); and (ii) to ensure “by acheap and expeditious method the payment for work and materials out of property upon which the work has been done, or for whichmaterials have been provided” (quoting William Bernard Wallace, Mechanics’ Lien Laws in Canada, 2d ed (Toronto: Canada Law BookCompany, 1920) at 10).[2] [27] Since the present Act was enacted in 1986, this Court has commented on its purpose on several occasions.

In Town-N-CountryPlumbing & Heating

(1985) Ltd. v Schmidt (1991), (SK CA), 93 Sask R 278 (CA) [Town-N-Country], Cameron J.A.for the Court mentioned two purposes, including that the statute is “concerned with the commercial interests of others, including theowner and the financier, if any, of the improvement” (para. 27); and he stressed that the “statute is primarily concerned with thecommercial interests of persons who, under contract and on credit, contribute service or material to the improvement of real property,whether under contract to the owner, to the contractor engaged by the owner, or to any subcontractor” (para. 26).

As to how the twopurposes interact with each other, he noted importantly that “both purposes may be seen to run through the scheme of the statute”(para. 28). [28] This Court also considered the purpose of the Act in Saskferco CA. Gerwing J.A., for the Court, reproduced the above quotedpassages from Town-N-Country. She also cited, with approval, a decision from the British Columbia Court of Appeal: DefazioBulldozing & Backhoe Ltd. v W.A. Stephenson Construction (Western) Ltd. (1986), (BC CA), 28 DLR (4th) 291(BCCA) [Defazio], which considered their Builders’ Lien Act, RSBC 1979, c 40.

In Defazio, the British Columbia Court of Appealcommented on the purpose of the statute: [4] Clearly, the purposive intent of the legislature in enacting the Act is to preserve, primarily through the trust provisions (s. 2) and theholdback provisions (s. 20), and to direct the contract moneys for the “improvement”, whether coming from the “owner” or a mortgageeadvancing a building loan, to “persons” entitled thereto as having contributed “work” and “material” to the making of the “improvement”and to prevent the “owner” from getting the benefit of “work” and “material” without paying for it. (Emphasis added, p. 293)

[29] See also D & K Horizontal Drilling

(1998) Ltd. (Trustee of) v Alliance Pipeline Ltd., 2002 SKCA 145 at para 14, [2003] 4WWR 29 and, most recently, Axcess Capital at paras. 58–60 and PCL Industrial Management Inc. v Agrium, 2015 SKCA 55 atparas 26–28, 457 Sask R 298, where the Court again emphasized the remedial nature of the Act. [30] Two factors dictate the Saskatchewan Legislature’s approach to its builders’ lien legislation.

The first factor is that, unlike anyother commercial endeavour, the work, services and materials supplied to an improvement are provided on credit in a pyramidalstructure, where payment often depends on whether the parties in the pyramid above the lien claimant are paid. The second factor is thatthe ordinary law of contract does not provide sufficient remedies to ensure that the contract funds flow from the top of the constructionpyramid to those entitled to receive them.

The statute supplements the law of contract and fosters the provision of credit in a complexpiece of legislation designed to assist and facilitate construction: see Gary G.W. Semenchuck Q.C., et al, Liens in the ConstructionIndustry: A Report Prepared for The Hon. J. Gary Lane, Q.C., Minister of Justice by The Special Advisory Committee to the Minister ofJustice on Builders’ Liens (Regina: Saskatchewan Justice, August 1984) at i–ii and referring to Hansen. [31] A restrictive reading of s. 22 does not serve the interests of those who provide services and materials on credit.

To do sowould not be in line with the protective purpose of the Act. Arguably, a restrictive reading of s. 22 does not serve the commercialinterests of the owner and financier of an improvement either in that uncertainty as to who is or who is not entitled to a lien can onlyincrease costs, either in the fixing of the contract price or in the litigation that will inevitably arise. [32] Propak relies on Arthur Andersen to argue that a strict

interpretation should be given to the definition of an “improvement”because this

interpretation dictates who will be entitled to claim a lien. In Arthur Andersen, this Court considered whether a contractconstituted a “single contract” for the purpose of s. 29 of the Act, which deals with general liens. The Court referred to ClarksonCompany Ltd. v Ace Lumber Ltd., (SCC), [1963] SCR 110 [Clarkson Company], where the Supreme Court held thatmechanics’ lien legislation must be given a strict

interpretation in determining whether any lien-claimant is a person to whom a lien isgiven by it. It would appear that the approach to statutory

interpretation articulated in Clarkson Company has been overtaken by suchauthorities as Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 SCR 27, Bell ExpressVu Limited Partnership v Rex, 2002SCC 42 at paras 28–30, [2002] 2 SCR 559; and Merk v International Association of Bridge, Structural, Ornamental and ReinforcingIron Workers, Local 771, 2005 SCC 70 at paras 32 and 33, [2005] 3 SCR 425 [Merk].

In Merk, the Supreme Court of Canada referred tothe need to determine the real intention of the Legislature. [33] That now brings me to the final issue that must be resolved on this appeal: whether Grey Owl is entitled to claim a lien. Theissue for this Court, however, narrows to whether it is sufficiently plain and obvious that Grey Owl’s lien should be declared invalid soas to permit the monies secured by its lien, and being held in court as security, should be paid out to Propak pursuant to s. 56(4). [34] In answering this question, some things are clear.

First, it is clear that Grey Owl provided “services.” The definition of“services” includes “any labour done or service performed,” including equipment rental. The definition of “improvement” in s. 2(1)(h)(iii) also demonstrates the clear legislative intent to extend rights to those who provide design services. Second, it is also incontestablethat Grey Owl contracted with a “subcontractor,” i.e., Advanced Metal. The only real issue is whether Grey Owl provided its services“on or in respect of an improvement.” [35] This question, however, is answered by Propak’s own evidence.

In support of its application under s. 56(4), Mr. Jeremy Stauthon behalf of Propak attested to the following: 2. Propak is in the engineering and fabrication industry. Propak specializes in providing engineering, fabrication, procurement,construction and field services with respect to the production and processing of oil and gas. 3. Propak has two different contracts (both of which were made effective March 21, 2014) with BlackPearl Resources Inc., an oiland gas company (“BlackPearl”). 4. The first contract is an Engineering, Procurement and Fabrication contract (the “EPC Contract”).

Under the EPC Contract, Propakis obligated to provide engineering, procurement and fabrication services to BlackPearl. 5. The second contract is a Field Construction contract. This contract governs the installation of the fabricated and procuredmaterials. 6. On October 20, 2006 BlackPearl executed a lease (the “Lease”) with the Onion Lake Cree Nation with respect to the mineralrights on the following mineral parcel located within Saskatchewan (the “Mineral Parcel”): Reference Land Description: BlklPar H PlanNo. 101766494 Ext. 0 As described on Certificate of Title BF1 00942755 … 8.

The Lease gives BlackPearl the right to extract oil from the Mineral Parcel using a form of oil recovery technology referred to inthe industry as Steam Assisted Gravity Drainage (“SAGD”). SAGD is an enhanced oil recovery technology that harnesses the power ofsteam to produce heavy crude oil and bitumen. 9. After the EPC Contract was executed, Propak retained Advanced Metal Concepts and Fabrication Ltd. (“Advanced Metal”) tobuild three storage tanks. These tanks were to be used by BlackPearl as part of their oil extraction system. 11.

Advanced Metal then retained Grey Owl Engineering Ltd. (“Grey Owl”) for the purposes of preparing some engineering drawingswith respect to the storage tanks. (Emphasis added, November 28, 2014, Affidavit, Appeal Book, p. 4) [36] As can be seen from the Stauth affidavit, Grey Owl was retained to provide engineering drawings with respect to storage tanksthat were to be used by the contractor or principal subcontractor “as part of their oil extraction system.” In such circumstances, it is an

error to ask whether the claimant claims a lien in the storage tanks as an “improvement.” Applying Hansen , the “improvement” with respect to which the legislation is concerned is the project that will lead to the extraction of oil. When this principle is understood, it is clear that Propak’s application could not be allowed.

It is not sufficiently plain and obvious that Grey Owl’s lien is invalid on the basis put forward by Propak: that Grey Owl did not provide services “on or in respect of an improvement for an owner, contractor or subcontractor” in accordance with s. 22 . [ 37 ] Having found error in the decision of the Chambers judge, it is necessary to determine the next step. As I have indicated, Grey Owl did not ask this Court to go on to make any other order, if we were to allow the appeal.

Grey Owl maintains the position it took in the Court of Queen’s Bench that Propak’s application should be dismissed leaving the parties to pursue the usual remedies under the Act . [ 38 ] In the end, the appeal must be allowed. The Chambers judge erred by not dismissing Propak’s application under s. 56(4). The effect of allowing the appeal is that the parties resume the same positions they occupied before the application was made.

Grey Owl’s lien continues to be a charge on the funds in court according to s. 56 until further steps are taken by the parties dealing with the funds and until further order of the Court of Queen’s Bench. VI. Conclusion [ 39 ] The appeal is allowed with costs to Grey Owl in this Court and in the Court of Queen’s Bench. “Jackson J.A.” Jackson J.A. I concur. “Caldwell J.A.” Caldwell J.A. I concur. “Herauf J.A.” Herauf J.A.