Digest: Prestige Commercial Interiors (1992) Ltd. v Suderman, 2018 SKCA 95

• Date: December 06, 2018

Reported as: 2018 SKCA 95

Docket Number: CA18094 , CACV 3238

Court: Court of Appeal

Date: 2018-12-06

Judges:

• Ottenbreit
• Caldwell
• Whitmore

Subjects:

• Builders� Lien � Appeal
• Builders� Lien � Privity of Trustee and Beneficiary
• Statutes � Interpretation � Builders� Lien Act, Sections 6, 7, and 8

Digest: The question on appeal was whether a plaintiff has to have a direct contractual relationship with the trustee to claim as a beneficiary of a trust constituted under ss. 6, 7, or 8 of The Builders� Lien Act. The chambers judge interpreted the Act to require privity of contract and, therefore, dismissed the appellant�s claims against the respondents. The appellant had been subcontracted by one of the respondents who had a contract with another respondent, P.G. There was no privity of contract between the appellant and P.G. The chambers judge concluded that there was no genuine issue for trial based on the appellant�s claim of breach of trust by the P.G. directors because there was not privity of contract and because the appellant did not put forward any evidence that the P.G. directors committed a breach of trust.
HELD: The appeal was dismissed. The Act refers to trust funds being established in ss. 6, 7, and 8. Pursuant to s. 6(4), the owner is declared to be the trustee of the trust fund. The trustee (owner) is required to pay all amounts owing to the contractor by him or her prior to using the funds for any other use. Section 7 also establishes a similar trust situation where the contractor is the trustee to subcontractors that have contracted with the contractor. Section 8 further creates a trustee relationship another step down the construction pyramid where the subcontractor is the trustee. The appeal court found the language of the Act to be unambiguous with an intention to create three distinct and separate trusts. The trust provisions adopt the principle of privity of contract and privity of trust. The privity requirement was found to keep the construction process running smoothly. The trust provisions ensure that third parties to the improvement, such as judgment creditors, cannot interfere with the flow of funds down the construction pyramid. The requirement of privity of contract was found to read harmoniously with the scheme of the Act. Academic writings on the Act are consistent with the appeal court�s interpretation. The appeal court also found support and opposition to its position in case law. Most...