1361556 Alberta Ltd v Ristorante Cosa Nostra Inc, 2021 ABQB 157
In 1361556 Alberta Ltd v Ristorante Cosa Nostra Inc, 2021 ABQB 157 [Cosa Nostra], the Court of Queen's Bench of Alberta addressed the test for dismissal for delay under section 4.31 of the Alberta Rules of Court ("Rules of Court") and section 46 of the Alberta Builders' Lien Act (the "Act")1.
The underlying lawsuit in the Cosa Nostra case concerned the construction of a restaurant in Fort McMurray, Alberta (the "Project"). In January 2016, 1361556 Alberta Ltd. ("136"), the contractor for the Project, commenced an action to recover unpaid amounts for its work on the Project. Builders' liens had been previously registered against the land pursuant to the Act. At the time of filing the claim, certificates of lis pendens ("CLP") were filed and registered against the land on which the restaurant had been built.
The action started at a reasonable, if not quick, pace. The last steps taken, at the time the application for delay was brought, were the following:
1) In August 2017, questioning for discovery was conducted;
2) On June 25, 2018, answers to undertakings were finalized;
3) On March 17, 2020, as a result of the COVID-19 Pandemic, the parties entered into a tolling agreement; and
4) On June 30, 2020, the Plaintiff, 136, served the defendants with a supplementary affidavit of records including 736 additional records which had not previously been disclosed, which lifted the stay of proceedings pursuant to the tolling agreement.
Two of the defendants – the owner of the land, Haxton Holdings Ltd., and its representative, Keith D. Haxton – subsequently brought an application under rule 4.31 of the Rules of Court and subsection 46(2) of the Act to dismiss the action, vacate the CLPs, and discharge the builders' liens. The defendants alleged that the death of Mr. Collins, a potential witness for the defendants, prior to delay occurring in the action, in April 2018, created prejudice warranting dismissal of the action and discharge of the liens.
Though the defendants' application was dismissed in its entirety, the following discussion only relates to Master A.R. Robertson's application and interpretation of section 46 of the Act.
Delay and the Builders' Lien Act
Section 46(2) of the Act allows an interested party to apply to Court to have a CLP vacated and the lien to which it relates discharged if no trial has been held within two years from the date of registration of the CLP in an action.
In this case, five years had passed since the registration of the CLPs, and no trial had occurred nor been scheduled.
Master Robertson started his analysis by noting that subsection 46(2) of the Act is intended to ensure a speedy determination of builders' lien claims. Accordingly, where lien claims are not determined promptly and trial has not occurred in two years, "...the Court is entitled to ask why it has not."
The Master specifically noted that subsection 46(2) of the Act is not mandatory. The provision merely states that an application may be brought after two years.
The onus is on the lien claimant to explain why there has been delay. The case law does not require much in the way of explanation. There just must be "some explanation."
In this case, the Court found that 136 had demonstrated sufficient explanations for the delay, such as having to locate one of the defendants, Mr. Hobson, who had left the province and relocated to Quebec. Mr. Hobson was the only individual in possession of the material records included in the supplemental affidavit of records served in August 2020.
Interestingly, Master Robertson also noted that personal knowledge of counsel as to the progress of a file, though not in evidence, may be taken into consideration in responding to this type of application for delay.
The applicants argued that steps taken in the action that do not relate to the Act should not be considered in the computation of delay under subsection 46(2) of the Act. The Court dismissed this argument on the basis that relief outside of the Act had also been plead. Consequently, the action would continue even if the lien portion was dismissed.
Master Robertson also noted that there had been no evidence of prejudice in this case. Specifically, the witness died before the period of delay, and there were enough surviving witnesses with knowledge of the relevant facts to speak to it at trial.
Consequently, the defendants' application under section 46(2) of the Act was dismissed.
The Court in Cosa Nostra outlined the circumstances in which a lien may be discharged and CLP vacated under section 46(2) of the Act. As set out in this case, in the event of delay in an action, the Court will review the steps taken in the action as a whole and determine whether there is prejudice, whether the action will continue even if the lien and CLP are extinguished, and whether the lienholder has an explanation for the delay – no matter how unmomentous.
1 Alta Reg 124/2010; RSA 2000, c B-7.
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