In Livingston v. Span West Farms Ltd, the Saskatchewan Court of Appeal recently held that, when a lien claimant includes a claim for contract monies owing and remaining unpaid, but fails to set the lien action down for trial within the statutory period – so that the lien portion of the action must be dismissed – the claimant may still proceed with the contract portion of the claim.
The Saskatchewan Court of Appeal arrived at this conclusion even though section 55 of the Saskatchewan Builders’ Lien Act (the Act) refers to “the action” in relation to the lien claim and requires the action to be set down for trial within two years of being commenced.
Section 55 of the Act reads as follows:
“Subject to subsection (2), a lien, for which an action has been commenced, expires where an action in which that lien may be realized is not set down for trial within two years of the day the action was commenced.
(2) The court may extend the time mentioned in subsection (1).
(2.1) An order pursuant to subsection (2) extending the time for commencing an action may be registered as an interest in the Land Titles Registry.
(3) Where a lien has expired under subsection (1), the court shall, on application, make an order dismissing the action if there is no other registered claim of lien at the time of the application, otherwise the court shall make whatever order it deems appropriate for continuation of the action.” (underling added)
Decision of the Saskatchewan Court of Appeal
The court noted that an application to extend the time to set the action down for trial pursuant to s. 55(2) may be made after the two year period has expired. That issue had been decided by the same court in Axcess Capital Partners Inc. v. Allsteel Builders(2) Ltd., 2015 SKCA 33, 383 D.L.R. (4th) 334.
In the present case, the court concluded that the contract or debt claim did not fall within Section 55 for the following reasons:
- The Act should be interpreted in a broad and liberal fashion in favour of lien claimants.
- Section 55 is within the part of the Act dealing with lien claims. It should be interpreted to apply to the claim for the lien itself, not to the portion of the action dealing with the claim for the amount owed to the claimant arising from the contract itself, nor to trust fund claims. The court said:
“Third, s. 55 is found in Part V of the Act, which deals solely with the expiry, registration and discharge of liens. None of the provisions in that Part refer to the trust remedies created by the Act or to a supplier’s common law rights in contract. The trust remedies created by the Act and a supplier’s common law right to sue for breach of contract are both remedies, which exist separate and apart from the lien remedies created by the Act. They are not dependent upon the lien for their existence and, thus, the lien’s expiration or discharge should have no effect on the pursuit of those claims. Absent clear language, a supplier’s right to pursue those remedies should not be tied to the enforceability of the lien.”
- The claimant could have brought the contract claim in a separate action, in which case section 55(3) of the Act would not apply to that claim. Section 89 of the Act allows the contract claim to be brought in a lien claim. Accordingly, the claimant should not be prejudiced, in respect of its contract claim by bringing it in the lien claim.
In concluding, the court said:
“Section 55(1) refers to a lien “for which an action has been commenced,” thus the entire section easily lends itself to the word “action” being interpreted to mean a cause of action relating only to a lien.”
Accordingly, the Court of Appeal set aside the motion judge’s dismissal of the debt claim.
This decision is consistent with decisions in some but not all of the provinces. The decision appears to apply to both contract claims and trust fund claims and clarifies the law in Saskatchewan and perhaps for other provinces having similarly worded lien statutes.
Livingston v. Span West Farms Ltd., 2016 CarswellSask 152, 2016 SKCA 33, 263
Construction and builders liens – contract claim– time for setting action down for trial
Thomas G. Heintzman O.C., Q.C., FCIArb August 28, 2016
This article contains Mr. Heintzman’s personal views and does not constitute legal advice. For legal advice, legal counsel should be consulted.