Lessons Learned
- Do not assume that because a closely-related matter is working its way through the appellate courts that the limitation period in your own matter is frozen. If you are legally capable of making a claim according to the law as it currently exists, the clock is running.
- In the case of filing a lien, “making a claim” requires fulfilling all of the requirements of the governing statute unless there is an agreement or order specifically to the contrary. Making a claim may include not just the filing of the lien but the filing of a supporting statement of claim. Only once those requirements are satisfied is it appropriate to tuck the matter away sine die.
Construction
When Capital Steel Inc. filed for bankruptcy in 2016, it claimed approximately $150,000 in unpaid invoices for structural and miscellaneous steel supplied to Chandos Construction Ltd., the general contractor responsible for developing a luxury riverside condominium in St. Albert.
Litigation
Deloitte Restructuring Inc., acting for the estate of Capital Steel, filed a builders’ lien, which was removed by payment into court by Chandos of a lien fund in the amount of Capital Steel’s claim.
There the matter rested for the next five years – adjourned sine die by consent order – until 2021, while the parties litigated a related question of contractual interpretation all the way to the Supreme Court of Canada. The outcome favoured Deloitte and, so armed, it renewed its lien claim.
Chandos protested that (i) any claim on the lien fund was barred by a limitations period unaffected by the appeal to the Supreme Court of Canada, and furthermore that (ii) section 49 of the Builders’ Lien Act required Deloitte to have filed a statement of claim for which the related bankruptcy proceedings were no substitute.
The Application Judge agreed with Chandos. Its victory in the contract dispute at the Alberta Court of King’s Bench had created a legitimate bar to Deloitte proceeding with the lien claim, which prevented the limitation period from running. However, when the Alberta Court of Appeal reversed in favour of Deloitte, that bar was removed. The Application Judge held that the limitation period began to run from the date of the Alberta Court of Appeal’s ruling, not the date when the Supreme Court of Canada affirmed that ruling.
Deloitte also argued, to no success, that the ongoing bankruptcy proceedings had amounted to the seeking of a “remedial order” (as defined by the Limitations Act) commenced within the limitations period. The Application Judge conceded that this was likely true, but of no relevance: a remedial order sought in a bankruptcy application had no effect on a lien application, however closely related the underlying facts.
Chandos prevailed, the lien was declared invalid, and the matter was appealled to the Alberta Court of King’s Bench, which affirmed the decision below.
Analysis
On appeal, it was mutually agreed that circumstances may align such that a statement of claim need not be filed to satisfy s. 49 of the Builders’ Lien Act, but the devil lay in the details.
Deloitte sought to rely on Driden, an ancient Alberta decision which holds that where parties have paid money into court (obviating the need for a lien), it’s open to the parties to ask the court to establish a suitable procedure for the dispute, which need not involve a statement of claim. Here, though, Deloitte did not actually make any such request of the court – the 2016 consent order merely punted on all questions of procedure via sine die adjournment.
Nor did the Court find that the consent order itself contained the provisions necessary to act as a substitute for a statement of claim: it neither explicitly expressed a claim, fulfilled the alternative requirements of s. 48 by establishing a process or procedure for resolving the dispute, nor contained any sort of explicit agreement regarding waiver or limitation of the parties’ rights under the BLA.
The Court concluded that a statement of claim pursuant to s. 49 was necessary in the circumstances – where there was no other agreement or order effectively dispensing with its application – and declared Deloitte’s lien invalid.