Mason Construction, Re, (1996) 71 B.C.A.C. 104 (YukCA)

• Judge: Macfarlane, Rowles and Prowse, JJ.A.
• Court: Court of Appeal (Yukon Territory)
• Case Date: January 30, 1996
• Jurisdiction: Yukon
• Citations: (1996), 71 B.C.A.C. 104 (YukCA)

Mason Constr., Re (1996), 71 B.C.A.C. 104 (YukCA);

    117 W.A.C. 104

MLB headnote and full text

In The Matter Of Mason Construction and An Application by way of Interpleader and Pursuant to the Mechanics' Lien Act

Yukon Housing Corporation (petitioner/appellant)

(YU00318)

Indexed As: Mason Construction, Re

Yukon Court of Appeal

Macfarlane, Rowles and Prowse, JJ.A.

February 9, 1996.

Summary:

An owner petitioned under the Mechanics' Lien Act and the interpleader provisions of the Rules of Court for a declaration that its liability to all lien claimants be extinguished upon payment into court of a specified sum. At the hearing of the petition, argument centred on whether the owner was entitled to set off money paid to the general contractor's bank on the owner's guarantee of the con­tractor's indebtedness in priority to the lien claimants. A Chambers judge ruled that the owner was not entitled to set off the money paid to the bank in priority to the lien claimants. The owner appealed.

The Yukon Court of Appeal dismissed the appeal.

Mechanics' Liens - Topic 3345

The lien fund - Reductions - Set-off - An owner guaranteed the general contrac­tor's credit - The guarantee agreement provided that should the bank demand payment, the owner could deduct the pay­ment from the amount owing on the con­tract - Until demand was made, the owner was not obligated to pay anything to the bank - The owner received notices of lien claims, then the bank demanded payment under the guarantee, which the owner made - The Yukon Court of Appeal affirmed that the owner was not entitled to set off, in priority to the lien claimants, the sum paid to the bank against monies due to the contractor - The providing of a guarantee was not a "payment" to the contractor within s. 8 of the Mechanics' Lien Act.

Mechanics' Liens - Topic 1378

The owner - Duties of an owner - Gen­eral - Re payments under contract - An owner guaranteed the general contract­or's credit - The guarantee agreement pro­vided that should the bank demand pay­ment, the owner could deduct it from the amount owing on the contract - The Yukon Court of Appeal held that the word "payment" in s. 8 of the Mech­anics' Lien Act, R.S.Y. 1986, c. 112, included more than actual payments to the contractor by the owner and included a set off of money paid against indebtedness incurred - The pay­ment must be on account of the con­tract price - The word included the exer­cise of the set off right, with the time of the exer­cise being the time of pay­ment - The payment was not the execution and deliv­ery of the guaran­tee, but the exer­cise of the right of set off - See paragraphs 22 to 27.

Words and Phrases

Payment - The Yukon Court of Appeal discussed the meaning of the word "pay­ment" in s. 8 of the Mech­anics' Lien Act, R.S.Y. 1986, c. 112 - See paragraphs 22 to 27.

Cases Noticed:

Jennings v. Willis (1892), 22 O.R. 439 (Ch.), consd. [para. 14].

Western Tractor and Equipment Co. v. Milestone School Unit No. 12 (1960), 33 W.W.R.(N.S.) 249 (Sask. C.A.), consd. [para. 14].

Statutes Noticed:

Mechanics' Lien Act, R.S.Y. 1986, c. 112, sect. 8(1), sect. 9 [para. 10].

Counsel:

Richard Buchan, for the appellant;

Murray Leitch, for the respondent, Yukon Building Supplies Ltd.

This appeal was heard in Vancouver, British Columbia, on January 30, 1996, before Macfarlane, Rowles and Prowse, JJ.A., of the Yukon Court of Appeal. The decision of the court was delivered by Rowles, J.A., on February 9, 1996.