Barry Homes Inc. v. Hounjet et al., (2015) 464 Sask.R. 28 (QB)

• Judge: Currie, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: April 22, 2015
• Jurisdiction: Saskatchewan
• Citations: (2015), 464 Sask.R. 28 (QB);2015 SKQB 118

Barry Homes v. Hounjet (2015), 464 Sask.R. 28 (QB)

MLB headnote and full text

Temp. Cite: [2015] Sask.R. TBEd. MY.021

Barry Homes Inc. (plaintiff/defendant by counterclaim) v. Clinton Hounjet and Katherine Hounjet (defendants/plaintiffs by counterclaim) and TCU Financial Group Credit Union, Pristine Counter Top Distributors Inc., Superior Millwork Ltd., Cornerstone Tile Ltd., MPA Foundations Ltd., Creo Interiors Ltd., David Harrison, Love's Interiors Ltd., Weldfab Ltd., Hanneson Construction Inc. and Steel-Craft Door Sales & Service Ltd. (defendants) and Jet Electric Ltd. (plaintiff by counterclaim) and Greg Barry (defendant by counterclaim)

(2014 QBG No. 1468; 2015 SKQB 118)

Indexed As: Barry Homes Inc. v. Hounjet et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

Currie, J.

April 22, 2015.

Summary:

The Hounjets contracted with Barry Homes to build a house on the Hounjets' property (the construction contract). A dispute arose. Barry Homes registered a lien against the property. The Hounjets caused a notice to lapse the lien to be delivered to Barry Homes (Builders' Lien Act, s. 58(1)). To preserve its registered lien, Barry Homes sued the Hounjets, the property's mortgagee, subcontractors and suppliers. The Hounjets filed a defence and counterclaim. The plaintiffs in the counterclaim were the Hounjets and Jet Electric Ltd., a corporation owned by one of the Hounjets. The defendants in the counterclaim were Barry Homes and Barry (Barry Homes's principal). The counterclaim related to two broad areas: the construction of the home and defamation. One of the subcontractors filed a counterclaim and a cross-claim. The cross-claim was for judgment against the Hounjets, for a direction that the Hounjets make payment from holdback funds, and for enforcement of the lien that it had registered against title to the Hounjets' lands. Barry filed a defence to the counterclaim. Barry Homes served on the Hounjets a notice to arbitrate pursuant to the construction contract. Barry Homes applied to stay the action pending conclusion of the arbitration proceedings pursuant to s. 8(1) of the Arbitration Act (a mandatory stay) or, alternatively, s. 37 of the Queen's Bench Act (a discretionary stay). The Hounjets asserted that Barry Homes, having commenced the action, had lost its right to insist on arbitration. They further asserted the involvement of other issues and parties in the action rendered arbitration the less favourable forum for resolving the issues. Section 91(2) of the Builders' Lien Act permitted the application to be brought with an order of the court or the parties' consent. The parties' consent was not before the court.

The Saskatchewan Court of Queen's Bench granted Barry Homes permission to apply for a stay and stayed the action pursuant to s. 37 of the Queen's Bench Act. The parties to the arbitration proceedings were to be Barry Homes, Barry and the Hounjets. The arbitration proceedings were to address (1) those issues identified in the notice to arbitrate; and (b) those issues identified in the pleadings in the action, as among the above three parties, with the exception of the defamation issues, provided that the arbitrator was not to give directions as to the disposition or enforcement of liens or holdbacks under the Builders' Liens Act.

Arbitration - Topic 2501

Stay of proceedings - General principles - A contractor applied under s. 37 of the Queen's Bench Act to stay its own action pending conclusion of arbitration pursuant to an arbitration clause in a construction contract - The Saskatchewan Court of Queen's Bench held that it was appropriate to consider the factors in s. 8 of the Arbitration Act when it was exercising its s. 37 discretion - However, in light of the broad provisions of s. 37, the court had the discretion to make whatever order and give whatever direction it deemed appropriate - See paragraphs 26 to 29.

Arbitration - Topic 2504

Stay of proceedings - Arbitration clause - Enforcement of - The Hounjets contracted with Barry Homes to build a house on the Hounjets' property - A dispute arose - Barry Homes registered a lien against the property - The Hounjets caused a notice to lapse the lien to be delivered to Barry Homes - To preserve its registered lien, Barry Homes sued the Hounjets and other interested parties - The Hounjets filed a defence and counterclaim - The plaintiffs in the counterclaim were the Hounjets and Jet Electric Ltd., a corporation owned by one of the Hounjets - The defendants in the counterclaim were Barry Homes and Barry (Barry Homes's principal) - The counterclaim related to two broad areas: the construction of the home and defamation - Barry Homes served on the Hounjets a notice to arbitrate pursuant to the construction contract and applied to stay the action pending conclusion of the arbitration proceedings pursuant to s. 37 of the Queen's Bench Act - The Hounjets asserted the involvement of other issues and parties in the action (duplicative proceedings) rendered arbitration the less favourable forum for resolving the issues - The Saskatchewan Court of Queen's Bench stated that, with the primacy of the parties' choice of arbitration in mind, it preferred to implement an arrangement by which the arbitration could proceed - Section 8(5) of the Arbitration Act provided that a stay might be appropriate where, inter alia, it was reasonable to separate the matters dealt with in the arbitration agreement from other matters arising in the action - Jay Electric's involvement was only in connection with the defamation claim which was easily dealt with separately from the other issues - Separating the defamation claims against Barry Homes and Barry would leave Barry involved in the dispute relating to the house's construction even though he was not a party to the arbitration clause - However, he and Barry Homes had consented to Barry participating in the arbitration to address the construction issues relating to him - They also agreed to the arbitration addressing all of the construction issues identified in the Hounjets' pleadings - The arbitration might lead to a more efficient and timely resolution of the Hounjets' dispute respecting the house's construction - If the action continued, the proceedings would be duplicative - The mere transfer of the forum from court action to arbitration would not cause the Hounjets any prejudice - Addressing the issues respecting Barry was consistent with the arbitration clause, which was aimed at resolving all the construction issues - Barry's connection, directly and through Barry Homes, to the construction, the Hounjets and the construction contract, justified including him in the arbitration - Similarly, the additional construction issues identified in the Hounjets' pleadings fell with the arbitration clause's purview - Including Barry in the arbitration and directing that the arbitration would address the expanded set of issues was reasonable and appropriate - Jet Electric's and Barry's presence as defendants was not an impediment to staying the action - See paragraphs 36 to 50.

Arbitration - Topic 2507

Stay of proceedings - When available - The Hounjets contracted with Barry Homes to build a house on the Hounjets' property - A dispute arose - Barry Homes registered a lien against the property - The Hounjets caused a notice to lapse the lien to be delivered to Barry Homes (Builders' Lien Act, s. 58(1)) - To preserve its registered lien, Barry Homes sued the Hounjets and other interested parties - It then served on the Hounjets a notice to arbitrate pursuant to the construction contract - Barry Homes applied to stay the action pending conclusion of the arbitration proceedings pursuant to s. 8(1) of the Arbitration Act - The Saskatchewan Court of Queen's Bench denied the request, stating that " The circumstances triggering a mandatory stay under s. 8(1) are not present in this case. In setting out the condition that an application for a stay may be brought by a party other than the party who commenced the subject proceeding, s. 8(1) is clear and unambiguous. In the absence of ambiguity, it is not appropriate to consider an interpretation of s. 8(1) that would permit a plaintiff to apply for a stay of its own action. The court is required to stay the proceeding only on the motion of another party to the arbitration agreement - in this case, a party who is not Barry Homes." - See paragraphs 21 to 25.

Arbitration - Topic 2513

Stay of proceedings - Bar to stay - Waiver - The Hounjets contracted with Barry Homes to build a house on the Hounjets' property - A dispute arose - Barry Homes registered a lien against the property - The Hounjets caused a notice to lapse the lien to be delivered to Barry Homes (Builders' Lien Act, s. 58(1)) - To preserve its registered lien, Barry Homes sued the Hounjets and other interested parties - It then served on the Hounjets a notice to arbitrate pursuant to the construction contract - Barry Homes applied under s. 37 of the Queen's Bench Act to stay its own action pending conclusion of the arbitration pursuant to the construction contract - The Hounjets asserted that Barry Homes waived its right to rely on the arbitration clause when it commenced the action - The Saskatchewan Court of Queen's Bench stated that "On a reading of the arbitration clause, and in particular its final sentence ('Nothing herein shall prevent the Builder from enforcing a claim under this Agreement in any matter enabled under the Builders' Lien Act.'), I am not inclined to this view." - A claimant did not waive its right to rely on an agreement to arbitrate by taking steps to protect its security such as a lien - There was no evidence of Barry Homes' intention to waive the arbitration clause - The court concluded that Barry Homes had not waived its right to rely on the arbitration clause by virtue of commencing the action - See paragraphs 30 to 35.

Arbitration - Topic 2514

Stay of proceedings - Bar to stay - Multiplicity of proceedings - [See Arbitration - Topic 2504 ].

Arbitration - Topic 2514

Stay of proceedings - Bar to stay - Multiplicity of proceedings - The Hounjets contracted with Barry Homes to build a house on the Hounjets' property - A dispute arose - Barry Homes registered a lien against the property - The Hounjets caused a notice to lapse the lien to be delivered to Barry Homes (Builders' Lien Act, s. 58(1)) - To preserve its registered lien, Barry Homes sued the Hounjets, the property's mortgagee and others - Barry Homes served on the Hounjets a notice to arbitrate pursuant to the construction contract - Barry Homes applied to stay the action pending conclusion of the arbitration proceedings pursuant to s. 37 of the Queen's Bench Act - The Hounjets asserted that the involvement of other issues and parties in the action (duplicative proceedings) rendered arbitration the less favourable forum for resolving the issues - The Saskatchewan Court of Queen's Bench stated that Barry Homes named the mortgagee as a defendant pursuant to the requirement of s. 88(2) of the Builders' Lien Act - There was no dispute with the mortgagee and the mortgagee was not participating in the dispute's resolution - The mortgagee's presence was not an impediment to the action being stayed and matters being dealt with by arbitration - See paragraphs 51 and 52.

Arbitration - Topic 2514

Stay of proceedings - Bar to stay - Multiplicity of proceedings - The Hounjets contracted with Barry Homes to build a house on the Hounjets' property - A dispute arose - Barry Homes registered a lien against the property - The Hounjets caused a notice to lapse the lien to be delivered to Barry Homes (Builders' Lien Act, s. 58(1)) - To preserve its registered lien, Barry Homes sued the Hounjets, and others, including subcontractors and suppliers - One of the subcontractors (Steel-Craft) filed a counterclaim and a cross-claim - The cross-claim was for judgment against the Hounjets, for a direction that the Hounjets make payment from holdback funds, and for enforcement of the lien that it had registered against title to the Hounjets' lands - Barry Homes served on the Hounjets a notice to arbitrate pursuant to the construction contract - Barry Homes applied to stay the action pending conclusion of the arbitration proceedings pursuant to s. 37 of the Queen's Bench Act - The Hounjets asserted that the involvement of other issues and parties in the action (duplicative proceedings) rendered arbitration the less favourable forum for resolving the issues - The Saskatchewan Court of Queen's Bench stated that Barry Homes named the subcontractors and suppliers as defendants pursuant to the requirements of s. 88(2) of the Builders' Lien Act - The issues raised by Steel-Craft's cross-claim were not among the arbitration issues - Further, only the court could direct the disposition of holdback funds and the disposition of a registered lien under the Builders' Lien Act - There was no basis for imposing the arbitration on Steel-Craft - There was no reason to believe that there would be duplicative proceedings if the arbitration proceeded - The issues relating to construction deficiencies, delays and the like would be addressed in the arbitration - Barry Homes did not allege any construction deficiencies or delays against the subcontractors or suppliers - Addressing the matter of payment to Steel-Craft after the arbitration would not involve relitigating any of those issues - As to potential delay, whether the arbitration issues were resolved through arbitration or litigation, Steel-Craft had to wait for that resolution before its claims for payment could be addressed by the court - A stay presented itself as a reasonable separation of the Steel-Craft issues because it could be expected to result in a resolution for Steel-Craft no later and perhaps sooner than would occur if the action were not stayed - The presence of Steel-Craft and other subcontractors and suppliers as defendants was not an impediment to staying the action in favour of arbitration - See paragraphs 51 to 62.

Mechanics' Liens - Topic 8092

Practice - Stay of action - Arbitration - [See Arbitration - Topic 2507 ].

Mechanics' Liens - Topic 8092

Practice - Stay of action - Arbitration - The Hounjets contracted with Barry Homes to build a house on the Hounjets' property - A dispute arose - Barry Homes registered a lien against the property - The Hounjets caused a notice to lapse the lien to be delivered to Barry Homes (Builders' Lien Act, s. 58(1)) - To preserve its registered lien, Barry Homes sued the Hounjets and other interested parties - It then served on the Hounjets a notice to arbitrate pursuant to the construction contract - Barry Homes applied to stay the action pending conclusion of the arbitration proceedings pursuant to s. 8(1) of the Arbitration Act (mandatory stay) or, alternatively, s. 37 of the Queen's Bench Act (discretionary stay) - Section 91(2) of the Builders' Lien Act permitted the application to be brought with an order of the court or the parties' consent - The parties' consent was not before the court - The Saskatchewan Court of Queen's Bench stated that it would exercise its discretion under s. 91(2) with reference to the Builders' Lien Act object as described in s. 91(1): to enforce liens at the least expense and to use a procedure that, as far as was possible in the circumstances, was of a summary character - Barry Homes' goal in requesting permission was to reach a more efficient resolution of the matters in dispute, by sorting out the two competing proceedings - If the application went ahead, the court would have the opportunity to direct the procedure that would permit the lien to be dealt with at the least expense, and that would most favour a summary procedure - The application fell within the broader range of s. 91 - The court granted permission to apply for a stay - See paragraphs 12 to 20.

Statutes - Topic 1201

Interpretation - Construction where meaning is plain - General principles - [See Arbitration - Topic 2507 ].

Cases Noticed:

Advanced Construction Techniques Ltd. v. OHL Construction Canada et al., [2013] O.T.C. Uned. 7505; 27 C.L.R.(4th) 213; 2013 ONSC 7505, refd to. [para. 14].

Alberici Western Constructors Ltd. et al. v. Saskatchewan Power Corp. et al., [2015] 464 Sask.R. 1; 2015 SKQB 74, refd to. [para. 27].

Statutes Noticed:

Arbitration Act, S.S. 1992, c. A-24.1, sect. 8(1) [paras. 21, 28]; sect. 8(2) [para. 28].

Builders' Lien Act, S.S. 1984-85-86, c. B-7.1, sect. 91(2) [para. 12].

Queen's Bench Act, S.S. 1998, c. Q-1.01, sect. 37 [para. 26].

Counsel:

James H. Gillis, for Barry Homes and Greg Barry;

Andrew R. Heinrichs, for Clinton Hounjet, Katherine Hounjet and Jet Electric Ltd.;

Robert F. Thornton, Q.C., for Steel-Craft Door Sales & Service Ltd.

This application was heard by Currie, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saskatoon, who delivered the following fiat on April 22, 2015.