Glasswall Ltd. et al. v. 2009861 Nova Scotia Ltd. et al., (1994) 130 N.S.R.(2d) 241 (SC)

• Judge: Stewart, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: March 29, 1994
• Jurisdiction: Nova Scotia
• Citations: (1994), 130 N.S.R.(2d) 241 (SC)

Glasswall Ltd. v. 2009861 N.S. (1994), 130 N.S.R.(2d) 241 (SC);

  367 A.P.R. 241

MLB headnote and full text

Glasswall Limited, A.E.A.D. Management Limited (McConnell Construction Services), Municipal Contracting Limited, Pinaud Drywall & Acoustical Limited, Metro Foundation Specialists Limited, David Vaughan, c/o/b as Action Plumbing & Heating, Burnside Sheet Metal Limited, and Joannis Giannoukakis, c/o/b Olympus Marble and Ceramic Tile (plaintiffs) v. 2009861 Nova Scotia Limited (defendant) and Independent Capital Incorporated (intervenor)

(S.H. Nos. 93-1036, 93-1450)

(C.H. Nos. 79554, 79021, 79251, 79354 and 80491)

Indexed As: Glasswall Ltd. et al. v. 2009861 Nova Scotia Ltd. et al.

Nova Scotia Supreme Court

Stewart, J.

March 29, 1994.

Summary:

A mortgagee loaned money to 2083763, which in turn transferred part of the money to 2009861, which applied the money towards the acquisition of certain property. 2009861 contracted to have units built on the property. An issue of priority arose between the lienholders and the mortgagee.

The Nova Scotia Supreme Court held that the mortgagee had priority.

Mechanics' Liens - Topic 6305

Priorities - Between lienholder and mort­gagees - Mortgage advances prior to construction - A mortgage was registered before the deed to land - The lienholders claimed that the mortgage was void and that they, as registered lienholders, had priority over the unregistered mortgage - The Nova Scotia Supreme Court held that a prior mortgage does not have to be registered under the Mechanics' Lien Act and a registered lienholder does not have priority over a prior unregistered mortgage - See paragraphs 7 to 22.

Mechanics' Liens - Topic 6305

Priorities - Between lienholder and mort­gagees - Mortgage advances prior to construction - A mortgagee loaned money to 2083763, which transferred part of the money to 2009861, which applied the money towards the acquisition of certain property - Construction was later done on the property - The lienholders claimed that because the funds were not advanced directly to 2009861 it did not qualify as a "prior mortgage or other charge" - The Nova Scotia Supreme Court held that s. 8(3) of the Mechanics' Lien Act did not prevent a collateral mortgage from being a "prior mortgage", even if provided as collateral security for the debts of a differ­ent corporate entity - There was no re­quirement that the money be advanced for construction on the liened lands - See paragraphs 23 to 27.

Mechanics' Liens - Topic 6312

Priorities - Between lienholder and mort­gagees - Consent by mortgagee to per­formance of work - Lienholders claimed that the mortgagee consented to the per­formance of work and as a result surren­dered its priority on a prior mortgage pursuant to s. 8(3) of the Mechanics' Lien Act - The lienholders claimed that the mortgagee knew there would be construc­tion and that was sufficient to establish consent - The Nova Scotia Supreme Court held that there were no direct dealing between the mortgagee and the lienholders to constitute consent - The court also held that mere knowledge by the mortgagee that work would be carried on by someone was not sufficient to establish consent - See paragraphs 28 to 37.

Mortgages - Topic 988

Priorities - Mechanics' liens - Registered subsequent to mortgage - [See first Me­chanics' Liens - Topic 6305 ].

Words and Phrases

Consent - The Nova Scotia Supreme Court discussed the word "consent" as used in s. 8(3)(b) of the Mechanics' Lien Act, R.S.N.S. 1989, c. 277 - See para­graphs 28 to 37.

Cases Noticed:

Royal Bank of Canada v. Madill (1981), 43 N.S.R.(2d) 574; 81 A.P.R. 574 (C.A.), refd to. [para. 9].

Dorbern Investments Ltd. v. Provincial Bank of Canada, Lentini and Caparello, [1981] 1 S.C.R. 459; 37 N.R. 74, refd to. [para. 12].

Riviera, The Home of Siding et al. v. Chalker Properties Ltd. (1982), 55 N.S.R.(2d) 424; 114 A.P.R. 424 (Co. Ct.), refd to. [para. 15].

Cook v. Belshaw (1893), 23 O.R. 545 (C.A.), refd to. [para. 15].

Marshall (John A.), Brick Co. v. York Farmers Colonization Co. (1916), 54 S.C.R. 569, refd to. [para. 15].

Cook v. Koldoffsky (1916), 35 O.L.R. 555 (C.A.), refd to. [para. 15].

Burns v. Zelco Enterprises Ltd. and EAC International Ltd. et al. (1983), 58 N.S.R.(2d) 387; 123 A.P.R. 387 (C.A.), refd to. [para. 17].

Silver et al. v. R.R. Seeton Construction Ltd. (1977), 34 N.S.R.(2d) 460; 59 A.P.R. 460; 74 D.L.R.(3d) 212 (Co. Ct.), refd to. [para. 19].

Burns v. Zelco Enterprises Ltd. and EAC International Ltd. (1982), 54 N.S.R.(2d) 573; 112 A.P.R. 573 (Co. Ct.), refd to. [para. 29].

Atlantic Trust Co. of Canada v. Warm and Cosy Renovations and Development Ltd. et al. (1988), 33 C.L.R. 313 (N.S.T.D.), refd to. [para. 30].

Northern Electric Co. v. Manufacturers Life Insurance Co. et al. (1974), 10 N.S.R.(2d) 97; 2 A.P.R. 97 (C.A.), refd to. [para. 31].

MacDonald Estate v. Martin and Rossmere Holdings (1970) Ltd., [1990] 3 S.C.R. 1235; 121 N.R. 1; 70 Man.R.(2d) 241; 77 D.L.R.(4th) 249; [1991] 1 W.W.R. 705, refd to. [para. 36].

Statutes Noticed:

Mechanics' Lien Act, R.S.N.S. 1989, c. 277, sect. 8(1), sect. 8(3), sect. 9, sect. 15(1), sect. 23(1), sect. 23(2) [para. 7].

Registry Act, R.S.N.S. 1989, c. 392, sect. 18 [para. 8].

Authors and Works Noticed:

Macklem, Douglas, and Bristow, David, Construction Builders and Mechanics' Lien in Canada (6th Ed. 1990), p. 5-1, refd to. [para. 17].

Counsel:

Michael J. O'Hara, for the plaintiffs, Glasswall Ltd. et al.;

Srinivasen Pillay, for the plaintiff, Olympus Marble and Ceramic Tile, John Nikolaou;

Ritchie Wheeler, for the plaintiff, K.B.I. Door Services Limited;

Alan Trenholm, for the defendant;

James Musgrave, for the intervenor.

This case was heard in Halifax, Nova Scotia, on February 1, 2, 3 and 9, 1994, before Stewart, J., of the Nova Scotia Supreme Court, who delivered the following judgment on March 29, 1994.