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LIENS - Holdback - When payable

Monday, November 30, 2020 @ 9:21 AM  


Lexis Advance® Quicklaw®
Appeal by CP from a decision dismissing its application to stay the respondent’s Holdback Action with the proviso that, should the appellant wish to challenge the jurisdiction of the court with respect to that action, it had 15 days to reply. The respondent entered into a contract in 2015 with CP to provide construction services on a railway line in Saskatchewan. The respondent was responsible for construction of the earthworks, including the embankments. A significant part of the earthwork embankment collapsed requiring CP to redesign the affected segment and reconstruct the damaged earthworks.  The Holdback Monies became due and owing by February 2018. In August 2017, the respondent filed a Saskatchewan Action against CP for damages caused by CP’s delays in performing its duties under the contract and the redesign of the earthworks. In December 2017, CP commenced an action in Alberta against the respondent and others for damages resulting from the earthworks collapse. In March 2018, after CP advised it would be retaining the Holdback Monies, the respondent commenced the Holdback Action. It applied by way of originating application for an order under ss.17 and 38 of the Builders’ Lien Act, directing CP to pay out the Holdback Monies to it immediately. CP sought to strike the Holdback Action on the basis that it was an inappropriate second action against CP, the subject matter of which could be properly addressed as part of the Alberta Action or, alternatively, on the basis it could not be commenced by originating application. The chambers judge determined the Saskatchewan Action and the Holdback Action did not engage identical issues or request identical relief. He declined to exercise his discretion to stay the Holdback Action on the basis that it was multiplicitous and an abuse of process.

HELD: Appeal allowed in part. The chambers judge did not err by finding that the Holdback Action was not multiplicitous and not an abuse of process. Neither the Alberta Action nor the Saskatchewan Action as pleaded explicitly mentioned the Holdback Monies. Neither action claimed relief under the Builders’ Lien Act nor on the basis the monies were characterized as a holdback. The respondent’s decision to commence the Holdback Action rather than amend the Saskatchewan Action was not a misuse of the court’s process. The respondent was entitled to commence the Holdback Action by originating notice pursuant to both s. 17 of the Act and Rule 3-49. The judge hearing the claim asserted in the Holdback Action pursuant to Rule 3-49 would not be required to determine the validity of CP’s claim for damages against the respondent. The Rule 3-49 aspect of the Holdback Action related solely to questions of statutory and contractual interpretation that fell within the scope of Rule 3-49. The claim for relief pursuant to s. 17 in the Holdback Action was a claim for immediate payment of the Holdback, which were statutory trust funds. The meaning of the trust provisions of the Act and the relationship between those provisions and the holdback provisions of the Contract were central to that aspect of the application. The judge would not be called upon to adjudicate the claims for damages. The chambers judge erred in allowing only 15 days for CP to file further material. A period of 15 days gave CP insufficient time to respond. CP was given 60 days to respond.

Canadian Pacific Railway Co. v. Kelly Panteluk Construction Ltd., [2020] S.J. No. 405, Saskatchewan Court of Appeal, R.K. Ottenbreit, N.W. Caldwell and B. Barrington-Foote JJ.A., October 28, 2020. Digest No. TLD-November302020002