Propak Systems Ltd. v. Grey Owl Engineering Ltd., (2015) 467 Sask.R. 160 (CA)

• Judge: Jackson, Caldwell and Herauf, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: June 18, 2015
• Jurisdiction: Saskatchewan
• Citations: (2015), 467 Sask.R. 160 (CA);2015 SKCA 108

Propak Systems v. Grey Owl Eng. (2015), 467 Sask.R. 160 (CA);

    651 W.A.C. 160

MLB headnote and full text

Temp. Cite: [2015] Sask.R. TBEd. OC.046

Grey Owl Engineering Ltd. (appellant/respondent) v. Propak Systems Ltd. (respondent/applicant)

(CACV2680; 2015 SKCA 108)

Indexed As: Propak Systems Ltd. v. Grey Owl Engineering Ltd.

Saskatchewan Court of Appeal

Jackson, Caldwell and Herauf, JJ.A.

October 14, 2015.

Summary:

Onion Lake Cree Nation leased its mineral rights in a parcel of land to BlackPearl Resources Inc. BlackPearl contracted with Propak Systems Ltd. for engineering, procurement, and fabrication services connected to a modular oil extraction system that was to be provided by Propak for use on the leased land. Propak entered into a subcontract with Advanced Metal Concepts and Fabrication Ltd. for the construction of three storage tanks to be used on the land as part of the modular oil extraction facility. Advanced Metal entered into a subcontract with Grey Owl Engineering Ltd. to provide engineering design services relating to those storage tanks. Grey Owl materially completed the required services. Advanced Metal failed to pay Grey Owl. Grey Owl registered a lien against the leased land pursuant to the Builders' Lien Act. Propak applied pursuant to s. 56(1) of the Act to vacate the lien. That provision required an applicant to pay into court the full amount claimed plus an extra 25% as security for costs. Propak did so. Smith, J., ordered that Grey Owl's registered lien be vacated. Propak applied pursuant to s. 56(4) of the Act for an order releasing the entire amount held in court on the ground that Grey Owl was not entitled to claim a lien as its engineering services were not provided in relation to an "improvement" as defined in s. 2(1)(h) of the Act.

The Saskatchewan Court of Queen's Bench, in a decision reported at (2015), 468 Sask.R. 308, granted Propak's application. Grey Owl appealed.

The Saskatchewan Court of Appeal allowed the appeal. Grey Owl's lien continued to be a charge on the funds in court according to s. 56 of the Act until further steps were taken by the parties dealing with the funds and until further order of the Court of Queen's Bench.

Mechanics' Liens - Topic 4

General principles and definitions - General principles - Interpretation of mechanics' lien legislation - [See first Mechanics' Lien - Topic 2306 ].

Mechanics' Liens - Topic 255

Lienable interest - Improvements, buildings, etc. - What constitutes an "improvement" - [See both Mechanics' Lien - Topic 2306 ].

Mechanics' Liens - Topic 2306

Lienable claims - General principles - Requirement that work done or materials supplied in respect of an improvement - The central issue on appeal was whether the appellant provided services "on or in respect of an improvement" and was thereby entitled to claim a lien under s. 22 of the Builders' Lien Act - The Saskatchewan Court of Appeal stated that "A restrictive reading of s. 22 does not serve the interests of those who provide services and materials on credit. To do so would not be in line with the protective purpose of the Act. Arguably, a restrictive reading of s. 22 does not serve the commercial interests of the owner and financier of an improvement either in that uncertainty as to who is or who is not entitled to a lien can only increase costs, either in the fixing of the contract price or in the litigation that will inevitably arise" - See paragraphs 30 to 31.

Mechanics' Liens - Topic 2306

Lienable claims - General principles - Requirement that work done or materials supplied in respect of an improvement - A dispute arose in the context of a classic builders' lien pyramid of relationships - Propak Systems Ltd. applied for an order paying out the funds currently held in court as security for a lien registered against the land by Grey Owl Engineering Ltd. - Pursuant to a subcontract, Grey Owl had provided engineering design services with respect to three storage tanks that were to be used on the land as part of a modular oil extraction facility - Propak argued that Grey Owl was not entitled to claim a lien as its engineering services were not provided in relation to an "improvement" as defined in s. 2(1)(h) of the Builders' Lien Act - Propak submitted that the improvement in question was the storage tanks, which in its submission were not sufficiently affixed to the land to meet the definition of an improvement in the Act - The chambers judge granted Propak's application, holding that the storage tanks were not improvements within the meaning of the Act - Grey Owl appealed - The Saskatchewan Court of Appeal allowed the appeal - Grey Owl was retained to provide engineering drawings with respect to storage tanks that were to be used by the contractor or principal subcontractor "as part of their oil extraction system" - In such circumstances, it was an error to ask whether the claimant claimed a lien in the storage tanks as an "improvement" - The "improvement" with respect to which the legislation was concerned was the project that would lead to the extraction of oil - It was not sufficiently plain and obvious that Grey Owl's lien was invalid on the basis put forward by Propak, i.e., that Grey Owl did not provide services "on or in respect of an improvement for an owner, contractor or subcontractor" in accordance with s. 22 - See paragraphs 16 to 36.

Cases Noticed:

Kennedy Electric Ltd. v. Rumble Automation Inc. et al. (2006), 208 O.A.C. 156 (Div. Ct.), affd. (2007), 229 O.A.C. 156; 2007 ONCA 664, refd to. [para. 8].

3726843 Canada Inc. v. 879115 Ontario Ltd. et al., [2005] O.T.C. 253; 42 C.L.R.(3d) 220 (Sup. Ct.), refd to. [para. 8].

Rahco International Inc. v. Laird Electric Ltd. (2006), 398 A.R. 332; 2006 ABQB 592 (Master), refd to. [para. 8].

Gauntlet Energy Corp., Re - see Orban Industries Ltd. v. Gauntlet Energy Corp.

Orban Industries Ltd. v. Gauntlet Energy Corp. (2003), 49 C.B.R.(4th) 219 (Alta. Q.B.), leave to appeal denied [2004] A.R. Uned. 3; 49 C.B.R.(4th) 225; 2004 ABCA 20; refd to. [para. 8].

Majestic Contractors Ltd. v. N.C.L. Contracting Ltd. et al. (1993), 117 Sask.R. 12 (Q.B.), refd to. [para. 9].

Boomars Plumbing & Heating Ltd. v. Maronga Bros. Enterprises Ltd. (1988), 51 D.L.R.(4th) 13 (B.C.C.A.), refd to. [para. 9].

Axcess Capital Partners Inc. v. Allsteel Builders(2) Ltd. - see RGR Enterprises Ltd. v. Allsteel Builders (2) Ltd. et al.

RGR Enterprises Ltd. v. Allsteel Builders (2) Ltd. et al. (2015), 457 Sask.R. 131; 632 W.A.C. 131; 2015 SKCA 33, refd to. [para. 13].

Clarkson Co. v. Hansen - see Hansen et al. v. Canadian National Railway Co. et al.

Hansen et al. v. Canadian National Railway Co. et al. (1983), 22 Sask.R. 126 (C.A.), appld. [para. 13].

Andersen (Arthur) Inc. v. Merit Energy Ltd. (2002), 227 Sask.R. 44; 287 W.A.C. 44; 220 D.L.R.(4th) 351; 2002 SKCA 105, refd to. [para. 15].

Pritchard Engineering Co. v. Coronach (Town) and Wes-Can Underground Ltd. et al. (1983), 30 Sask.R. 137 (Q.B.), consd. [para. 23].

BWV Investments Ltd. v. Saskferco Products Inc. (1993), 114 Sask.R. 306 (Q.B.), consd. [para. 24].

BWV Investments Ltd. v. Saskferco Products Inc. et al. (1994), 125 Sask.R. 286; 81 W.A.C. 286 (C.A.), refd to. [para. 24].

Royal Bank of Canada v. Saskatchewan Power Corp. et al. (1990), 84 Sask.R. 277 (Q.B.), affd. (1990), 84 Sask.R. 275 (C.A.), consd. [para. 25, footnote 1].

Blackhawk Diamond Drilling Inc. v. Uranerz Exploration and Mining Ltd. et al. (1990), 82 Sask.R. 169 (Q.B.), refd to. [para. 25, footnote 1].

Northern Industrial Carriers Ltd. v. TransGas Ltd., [1996] S.J. No. 37 (Q.B.), refd to. [para. 25, footnote 1].

Galvin Luber Yards v. Ensor, [1922] 2 W.W.R. 15 (Sask. C.A.), refd to. [para. 26].

Town-N-Country Plumbing & Heating (1985) Ltd. et al. v. Schmidt et al. (1991), 93 Sask.R. 278; 4 W.A.C. 278 (C.A.), refd to. [para. 27].

Defazio Bulldozing & Backhoe Ltd. v. W.A. Stephenson Construction (Western) Ltd. (1986), 28 D.L.R.(4th) 291 (B.C.C.A.), refd to. [para. 28].

D & K Horizontal Drilling (1998) Ltd. (Bankrupt) v. Alliance Pipeline Ltd. et al., [2003] 4 W.W.R. 29; 227 Sask.R. 250; 287 W.A.C. 250; 2002 SKCA 145, refd to. [para. 29].

PCL Industrial Management Inc. et al. v. Agrium et al. (2015), 457 Sask.R. 298; 632 W.A.C. 298; 2015 SKCA 55, refd to. [para. 29].

Clarkson Co. v. Ace Lumber Ltd., [1963] S.C.R. 110, refd to. [para. 32].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 32].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1; 2002 SCC 42, refd to. [para. 32].

Merk v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771 - see R. v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771.

R. v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771, [2005] 3 S.C.R. 425; 341 N.R. 357; 275 Sask.R. 1; 365 W.A.C. 1; 2005 SCC 70, refd to. [para. 32].

Statutes Noticed:

Builders' Lien Act, S.S. 1984-85-86, c. B-7.1, sect. 2(1)(b), sect. 2(1)(h), sect. 2(1)(k), sect. 2(1)(q), sect. 2(1)(t) [para. 17]; sect. 22 [para. 16].

Counsel:

Paul J. Harasen, for the appellant;

Jared D. Epp, for the respondent.

This appeal was heard on June 18, 2015, before Jackson, Caldwell and Herauf, JJ.A., of the Saskatchewan Court of Appeal. The following judgment of the Court of Appeal was delivered by Jackson, J.A., on October 14, 2015.