The Saskatchewan Court of King's Bench decision in Singh v George Development Corp., 2023 SKKB 36, confirms that the discharge of a lien, by payment of the claim amount into court, does not negate the statutory obligation of a lien claimant to move to trial, an action seeking to realize the lien, within two years of the action's commencement.
The action arose from a dispute over the construction of a hotel on land owned by a public institution. Two contractors, George Development Corp. and Meridian Development Corp., applied to discharge the liens registered by two subcontractors, Singh and OM Drywall, and to payout the funds they had deposited with the Court in order to discharge the liens against the land. Further to s. 56 of the Builder's Lien Act (the "Act"), the liens had become a charge against the funds paid into court.
The respondents, Singh and OM Drywall, argued that the requirement to move the action to trial within two years, under s. 55 of the Act, applies only to liens registered against land titles and not to liens which have become a charge against funds paid into court. Alternatively, they argued that an application for summary judgment they had filed almost 1½ years after the commencement of the action satisfied any requirement to move the action to trial within two years of commencement. The Court addressed these issues in its decision.
Requirement to set matter for trial within two years
The Court found that the lien against the funds paid into court had expired. Under s. 56 of the Act, a lien discharged from a land title by payment into court becomes a charge against the funds. While this process frees up title to the land, it then ties up valuable cash flow – approximately $250,000 in the present case, which had been tied up for over five years. Accordingly, the discharge of a lien by payment into court does not alleviate the obligation to move the action to trial within two years of the action being commenced.
The filing of a summary judgment application, the Court noted, does not equate to setting the matter for trial within the required two-year period. Although summary judgment is one step a party could contemplate in order to bring finality to an action, a dismissal of the application usually results in the action having to proceed to trial in the ordinary way. However, filing an application for summary judgment could help explain or justify delay – in the event that an extension of time is sought for moving an action to trial.
Although the Act permits the Court to grant an extension of the two-year limit for setting down for trial an action to realize on a lien, a reasonable explanation for the delay and consideration of the prejudice to the opposing party is required. In the present case, the Court found that there was no reasonable explanation for the delay. The delay had not been caused by the defendants. The plaintiffs had failed to provide responses or direction in the action for quite some time. It had been over three years since the summary judgment application was adjourned, and no productive steps had been taken to move the matter towards trial since that time.
Given the expiry of the lien claims, the court dismissed the subcontractors' lien claims and ordered the funds held in court to be paid out to the defendants. However, the claim was not entirely struck. The plaintiffs could still pursue their claim for damages arising from breach of contract, but without prejudice to any further application to strike these remaining claims (presumably for want of prosecution).
KEY TAKEAWAYS
The decision in Singh v George Development Corp. confirms the prevailing law in Saskatchewan that the lien charge against funds paid into court, in order to discharge the lien against a land title, is subject to the two-year statutory timeline for moving lien-related claims to trial. The decision also delineates the consideration and treatment to be afforded to a summary judgment application, in the context of an application to discharge the lien against funds paid into court. Finally, the decision is consistent with the increased emphasis in Saskatchewan courts on the timely advancement of litigation – failing which applications to strike claims and actions are much more likely to succeed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
