Alspan Wrecking Limited v. Dineen Construction Limited, [1972] SCR 829

Supreme Court of Canada

Alspan Wrecking Limited v. Dineen Construction Limited, [1972] S.C.R. 829

Date: 1972-03-30

Alspan Wrecking Limited Appellant;

and

Dineen Construction Limited Respondent.

1971: November 9; 1972: March 30.

Present: Abbott, Maryland, Judson, Pigeon and Larkin JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR MANITOBA

Mechanics’ liens—Subcontract for demolition of municipal bridge cancelled by general contractor—Claim for lien filed by subcontractor—Lien on public bridge invalid—The Mechanics’ Liens Act, MRS. 1954, c. 157 [now MRS. 1970, c. M80].

The respondent, as general contractor, entered into a contract with the Metropolitan Corporation of Greater Winnipeg, as owner, for the replacement of a bridge. The respondent then entered into a contract with the appellant, as subcontractor, for the demolition of the bridge. The subcontract was later cancelled by the respondent and thereafter the appellant registered a mechanics’ lien, claiming a lien on the estate of the Corporation and a private person in certain described land. Upon the lien being

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filed, the Corporation refused to release the progress payments owing by it to the respondent until the lien was removed from the title. In consequence, the respondent obtained an order for the vacation of the registration of the lien, upon posting, with the Court, a lien bond, as security, in place of the lien. Two days later the appellant commenced an action in Ontario against the respondent for damages for breach of contract.

The respondent later brought an application to have the lien bond rescinded. This application, initially, was dismissed. The Court of Appeal allowed an appeal and the bond was discharged. The Court based its decision on the ground that a lien could not be registered against a public bridge, and relied upon the case of Shields v. City of Winnipeg (1964), 49 I.E. 530, which it approved. The lien claimant then appealed to this Court.

Held (Larkin J. dissenting): The appeal should be dismissed.

Per Abbott, Maryland and Judson JJ.: Shields v. City of Winnipeg, supra, was correctly decided. It was there pointed out that, under s. 683 of the Winnipeg Charter, 1956 (Man.), c. 87, the freehold title to every street in Winnipeg is vested in the Crown, only the possession of such streets being vested in the City. (A bridge is included in the definition of a “street” in that statute.) It was held that the City had an estate or interest in the streets within the meaning of s. 5(1) of The Mechanics’ Liens Act, MRS. 1954, c. 157, but that such estate or interest could not be made subject to a mechanics’ lien in view of the paramount right of the public to passage over such streets. The sale of a street under a mechanics’ lien would be contrary to the public interest.

In the case of Anthers Imperial Ltd. et al. v. Village of Earl Grey (1970), 75 I.E. 566, the proposition upon which the attack on the lien had to be based, i.e., that a lien could not be claimed in respect of municipal property, was too broad. The question of whether or not a lien can be filed on municipal property may well depend, as was suggested in Western Canada Hardware, Ltd. v. Farrell

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Brothers Ltd., [1922] 3 I.E. 1017, on the usage and purpose for which the property is held.

Per Pigeon J.: While not disagreeing with the majority concerning the invalidity of a mechanics’ lien on a public bridge, agreed with Larkin J. that the Court was faced with an uncontradicted assertion of a private interest in land on which the lien was claimed. It was not shown that all this land had been dedicated to public use for a bridge.

However, the appellant’s only claim was for damages for breach of its subcontract and such a claim could not give rise to a lien.

Per Larkin J., dissenting: The application by the Court of Appeal of the principle of Shields v. City of Winnipeg, supra, to a public bridge involved issues of fact and of law or of mixed fact and law, and these made a summary disposition premature.

But apart entirely from the principle of the Shields case, there was in the present case a claim of lien against the municipality and a private person in respect of certain land in which they were said to have estates. The respondent’s affidavit did not challenge this assertion. Even in terms of Shields v. Winnipeg there was an important legal issue here as to whether its principle applies to exempt as well a concurrent interest (if that be the case) of a private person. If the respondent was seeking a summary determination of a claim of lien on the basis of Shields v. Winnipeg, it ought to have come forward with an explanation of the private person’s interest.

APPEAL from a judgment of the Court of Appeal for Manitoba[1], allowing an appeal from a judgment of Molloy Conc. Appeal dismissed, Laskin J. dissenting.

WALL. Ritchie, O.K., for, the appellant.

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GO. Jewers, for the respondent.

The judgment of Abbott, Maryland and Judson JJ. was delivered by

MARTLAND J.—This is an appeal from the unanimous judgment of the Court of Appeal for Manitoba[2], which allowed an appeal by the present respondent from a judgment in the County Court of Winnipeg. The proceedings in that Court had been commenced by notice of motion for an order to discharge a lien bond in the sum of $101,000 made by the respondent as principal and the Great American Insurance Company as surety, which stood in lieu of a mechanics’ lien filed by the appellant.

On or about April 15, 1969, the respondent, as general contractor, entered into a contract with the Metropolitan Corporation of Greater Winnipeg, hereinafter referred to as “the Corporation”, as owner, for the replacement of the Maryland Bridge, in the City of Winnipeg. On or about May 2, 1969, the respondent entered into a contract with the appellant, as subcontractor, for the demolition of the then existing Maryland Bridge, which was a concrete arch bridge.

The subcontract was cancelled by the respondent by letter dated August 28, 1969, sent by it to the appellant. That letter read as follows:

Alspan Wrecking Limited 196

Parkdale Avenue, North

Hamilton, Ontario

ATTENTION: MR. S. KEPIC

Dear Sir:

RE:	MARYLAND BRIDGE REPLACEMENT WINNIPEG, MANITOBA

We make reference to your sub-contract covering demolition of the above contract, and

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to Appendix “A”, wherein the Bank of Nova Scotia were to acknowledge and agree to certain arrangements respecting credit and a performance deposit.

No such written commitment has been received.

In addition, you have not met the insurance requirements of the above contract.

In view of the foregoing, we have no alternative but to cancel this sub-contract and make other arrangements for completion of the work. In addition, you will be held liable for all loss, cost, damage and expense as a result of your failure to meet the terms and conditions of this sub-contract.

Yours truly

DINEEN CONSTRUCTION LIMITED

J.E. Franklin, P. Eng.

Vice-President

JEF: lg

There is nothing in the material before us to indicate that any reply was made to this letter. Instead, the appellant, on October 24, 1969, registered a mechanics’ lien dated September 25, 1969, claiming a lien on the estate of the Corporation and David Alexander Robertson, of the City of Winnipeg, mechanic, upon Lot 9, shewn on a plan of survey of part of Lot 71 of the Parish of St. James, registered in the Winnipeg Land Titles Office as No. 2221. The claim was for work done, that is to say, demolition of garage buildings and bridge, the work being done for the credit of Dineen Construction Limited. The amount of the claim was for $100,000 (the full subcontract price) and it was stated that the work was done on or before September 25, 1969. The supporting affidavit was that of Stephen Kepic, president of Alspan Wrecking Limited, which said that he had full knowledge of the facts stated in the claim and that the claim was true.

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Upon the lien being filed, the Corporation refused to release the progress payments owing by. it to the respondent until the lien was removed from the title. In consequence, the respondent, on December 2, 1969, obtained an order for the vacation of the registration of the lien, upon posting, with the Court, the lien bond, as security, in place of the lien.

On December 4, 1969, the appellant commenced an action against the respondent in the Supreme Court of Ontario. It referred to the contract between the parties made in May, 1969, for the payment by the respondent to the appellant of the sum of $100,000 in consideration of the appellant demolishing the existing Maryland Bridge and Robertson Motors Service Station.

It did not claim for the total consideration, as having become payable by completion of the work agreed to be performed, as alleged in the claim for lien. Instead, it claimed damages for wrongful repudiation of the contract by the respondent. The appellant’s factum, filed in this Court on March 30, 1971, stated that “the appellant has not as yet instituted an action in Manitoba.”

The affidavit of John E. Franklin, vice-president of the respondent, sworn on May 1, 1970, and filed in the present proceedings, after referring to the subcontract between the respondent and the appellant, stated categorically:

THAT Alspan Wrecking Limited did no work and supplied no materials, with respect to the said project.

The appellant filed no affidavit in reply and did not seek leave to cross-examine on the affidavit filed by the respondent. The affidavit of Stephen Kepic, in support of the lien, was before the Court only because the lien claim was annexed as an exhibit to the Franklin affidavit.

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The respondent sought the discharge of the lien bond on the ground that the appellant had no right to claim the lien, in lieu of which the bond was posted, because:

(1) the appellant had not done any work upon or supplied any materials to the lands and premises against which the lien was filed; and

(2) those lands and premises were used for the Maryland Bridge, in the City of Winnipeg, a part of a municipal street and thoroughfare.

The application, initially, was dismissed, without written reasons. The issues raised by the respondent were dealt with by the Court of Appeal as follows:

Concerning the first point, we must express surprise that the specific allegation in Mr. Franklin’s affidavit was not controverted by some affidavit filed by Alspan in answer thereto. But in any event, we believe that the matter can be summarily disposed of on the second ground.

In the case of Shields v. City of Winnipeg, (1964) 49 W.W.R. 530, Dickson, J. (as he then was) held that a lien could not be registered against a public street. The same reasoning would apply to a public bridge. In our view the decision in Shields, supra, was correct.

Since there was no right to a lien and since the Bond purported to replace the lien, it should be discharged.

With respect to the first issue, the position taken by the appellant is that the matter should not have been disposed of in a summary way “just because Mr. Franklin in his affidavit swears that Alspan’s affidavit was wrong.” This submission, however, does not summarize accurately what the situation was. The affidavit of Stephen Kepic supports a lien claim that the appellant had earned $100,000 (the full price under the sub-

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contract) by completing its demolition work on or before September 25, 1969, less than a month after the respondent had cancelled the subcontract. When the lien bond was posted on December 2, 1969, the appellant did not seek to enforce its claim for payment under the bond by a suit in Manitoba. Instead, two days later, it instituted proceedings in Ontario, not to recover the money earned by the completion of its subcontract, but for damages for wrongful repudiation of the subcontract by the respondent.

In the light of these circumstances, the failure of the appellant to file any reply to the allegation contained in Franklin’s affidavit, or to cross-examine upon it, assumes considerable significance. In my opinion the Court of Appeal would have been fairly entitled to decide not to direct an issue, but to deal with the matter summarily.

If the statement in the Franklin affidavit is accepted, the claim to a lien, as filed, must fail. While the lien claim refers to an estate of both the Corporation and David Alexander Robertson, mechanic, the material before us shows that the main contract was between the Corporation and the respondent, the subcontract related to demolition work in relation to that contract, and the subcontract included the demolition of Robertson Motors Service Station. It is clear that all the work involved in the subcontract was in preparation for the construction of the new Maryland Bridge, which was to replace the existing bridge. The land described in the lien claim was land on which that bridge was situate.

There is no suggestion of any basis on which the appellant could claim a lien as against any

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estate or interest of Robertson in the lands in question, as distinct from that of the Corporation. The demolition of the garage buildings of Robertson Motors Service Station was a part of the subcontract with the respondent, being part of the work required under the main contract between the respondent and the Corporation. It was commissioned by the Corporation alone. A lien, under s. 4(1) of The Mechanics’ Liens Act, R.S.M. 1954, c. 157, is limited to the sum justly owing by the owner. The only moneys justly owing by the owner of the lands in question were those owed by the Corporation. Robertson was not a party to the main contract, nor to the subcontract, under which the demolition work was to be done.

The Court of Appeal based its decision on the ground that a lien could not be registered against a public bridge, and relied upon the case of Shields v. City of Winnipeg[3], which it approved.

In the Shields case it was pointed out that, under s. 683 of the Winnipeg Charter, 1956 (Man.), c. 87, the freehold title to every street in Winnipeg is vested in the Crown, only the possession of such streets being vested in the City. It may be noted that a bridge is included in the definition of a “street” in that statute. It was held that the City had an estate or interest in the streets within the meaning of s. 5(1) of The Mechanics’ Liens Act but, after a careful review of the authorities, Dickson J. (as he then was) held that such estate or interest could not be made subject to a mechanics’ lien in view of the paramount right of the public to passage over such streets. The sale of a street under a mechanics’ lien would be contrary to the public interest.

A similar view had been expressed by Stuart J.A., who delivered the judgment of the Appellate Division of the Supreme Court of

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Alberta, in Western Canada Hardware, Limited v. Farrelly Brothers Limited[4].

In the case of Anthes Imperial Limited et ah v. Village of Earl Grey[5], a decision of the Court of Appeal for Saskatchewan, some reservation was expressed regarding the conclusions stated in the Shields case. However, in that case the mechanics’ lien which was claimed did not relate to a municipal street, but to lands owned by the village on which were located a sewage lagoon, a pumphouse and portions of a waterworks and sewage project. There was no question as to any public right to use the property on which the lien was claimed. The attack on the lien had to be based on the proposition that a lien could not be claimed in respect of municipal property. That proposition is too broad. The question of whether or not a lien can be filed on municipal property may well depend, as was suggested by Stuart J.A. in the Western Canada Hardware Company case, supra, at p. 1025, on the usage and purposes for which the property is held.

In any event, the Saskatchewan decision is not inconsistent with the judgment in the Shields case, relating to public streets in Winnipeg, which, in my view, was correctly decided.

In my opinion the judgment of the Court of Appeal was correct, and I would dismiss this appeal with costs.

PIGEON J.—I have had the advantage of reading the reasons written by my brothers Martland and Laskin. Although I do not disagree with the former concerning the invalidity of a mechanics’ lien on a public bridge, I agree with the latter that we are faced with an uncontradicted assertion of a private interest in land on which the lien has been claimed. In my opinion, it is not shown

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by proper evidence that all this land has been dedicated to public use for a bridge.

On the other hand, it does not appear to me that the affidavit filed in support of the lien claim can be considered as raising an issue. It states that Alspan has earned the full $100,000 subcontract price for work done, while the affidavit in support of the motion says that no work at all bas been done. In ordinary circumstances, this would raise an issue. However, Alspan has itself provided conclusive evidence that its affidavit should not be taken seriously by instituting in Ontario an action claiming, not the price of any work done, but damages for breach of its subcontract by cancellation. Such cancellation is an uncontradicted fact and there is no material tending to show that any work for which a lien can be claimed has in fact been done. Under such circumstances, it does not seem to me that there is any issue to be tried. The lien claim was filed on the basis that the work had been completed. This was clearly untrue. If Alspan claimed to be entitled to a lien for some part of the work, it should have raised that issue. On the basis of the record its only claim was for damages. Of course, such a claim cannot give rise to a lien.

I would dismiss the appeal with costs.

LASKIN J. (dissenting)—The effect of the judgment in appeal in this case is to wipe out summarily a properly filed claim for lien without giving the claimant an opportunity to prove it in an enforcement action. If it was fairly clear on the record that the claim of lien was untenable, it would be unthinkable to interfere with the summary disposition made by the Manitoba Court of Appeal. I do not find any such clarity; rather,

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the affidavit evidence—there was none other before the Courts of Manitoba—shows a conflict of material fact and gives rise also to an unresolved issue of law. In such circumstances, the lien claimant should be entitled to pursue his claim of lien in accordance with the prescriptions of The Mechanics’ Liens Act, R.S.M. 1954, c. 157 (now R.S.M. 1970, c. M80).

Alspan, the lien claimant, was a subcontractor of the respondent Dineen which had a contract with Greater Winnipeg to replace a certain bridge. The subcontract, made on May 2, 1969, was for the demolition of the existing bridge for a price of $100,000. On August 28, 1969, Dineen cancelled the subcontract because of Alspan’s alleged failure to meet certain commitments therein. On September 25, 1969, Alspan filed a claim for lien against the estate of Greater Winnipeg and David Alexander Robertson in certain described land, alleging that work was done thereon by way of demolition of garage buildings and bridge, and stating that $100,000 was owing therefor. The claim of lien was supported by an affidavit of the president of Alspan who swore that the claim was true.

Greater Winnipeg did not itself move against the lien claim, but forced Dineen to act by refusing to make progress payments until the lien was removed. Dineen invoked s. 25(2) of The Mechanics’ Liens Act which is as follows:

Upon application, a judge may receive security or payment into Court in lieu of the amount of the claim, and may thereupon vacate the registration of the lien.

It provided a bond in the sum of $101,000 and obtained an order on December 2, 1969, under this provision. As is obvious, this resulted merely

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in the substitution of security and was not an attack on the validity of the lien claim.

That attack came first in an application to have the bond rescinded, which was heard by Judge Keith on March 20, 1970, and dismissed with costs. On May 22, 1970, another such application brought by Dineen was heard by Judge Molloy and likewise dismissed with costs. An affidavit sworn by an officer of Dineen in support of this second application stated that Alspan did no work and supplied no materials for the project and yet filed a claim for lien against the estate of Greater Winnipeg and of David Alexander Robertson for work allegedly done with respect to the same property described in the claim of lien and “on which the Maryland Bridge was situate”. The affidavit also referred to the fact that Alspan had commenced an action in Ontario against Dineen (it was instituted on December 4, 1969) for damages for breach of contract and that Alspan had not taken any proceedings in Manitoba in respect of the subcontract either under The Mechanics’ Liens Act or otherwise. An appeal from Judge Molloy’s order was allowed and the bond was discharged on the ground that there was no right to a lien and hence no right to a bond in place of the lien.

The Court of Appeal, speaking through Guy J.A., referred to the two grounds upon which Dineen sought discharge of the bond, viz., that no work was done nor any materials supplied under the subcontract and that a lien could not be claimed against a public bridge. On the first point, the Court expressed surprise that Alspan had not answered the Dineen affidavit which asserted that nothing was done under the subcontract to support a claim of lien. However, there

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was before the Court—indeed, it was an exhibit to the Dineen affidavit—the claim of lien and the affidavit annexed thereto swearing that work was done as set out in the claim of lien. That was surely sufficient to raise a crucial issue of fact so as to preclude a summary disposition.

The Court of Appeal did not proceed on this point, but rather on the second point by adopting the view of Dickson J., as he then was, in Shields v. Winnipeg[6], that a lien cannot be registered against a public street, and by applying the principle to a public bridge. Issues of fact and of law or of mixed fact and law are involved here, and these also make a summary disposition premature.

The Mechanics’ Liens Act of Manitoba, unlike that, for example, of Ontario, does not expressly exclude claims of lien against public streets. The same is true of the Saskatchewan Mechanics’ Lien Act, R.S.S. 1965, c. 277. The Court of Appeal of that province refused, in Anthes Imperial Limited et al. v. Village of Earl Grey[7], to exempt from lien claims under the Act land owned by a municipality on which sewage and waterworks systems were installed. It is not necessary in this case to pass on the correctness of this decision or of that in Shields v. Winnipeg. I note only at this point was the term “owner” in the Saskatchewan Act does not expressly include a municipality but the Village of Earl Grey was found to be within the Act as a body politic and corporate, which is included in the definition of “owner”. By contrast, the definition of “owner” in the Manitoba Act includes (to quote part of the definition)

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“any… body corporate or politic, including a municipality”.

Apart entirely from the principle of Shields v. Winnipeg, there is in the present case a claim of lien against Greater Winnipeg and a private person in respect of certain land in which they are said to have estates. The Dineen affidavit does not challenge this assertion. It nowhere says anything about the nature of the estate or interest held by Greater Winnipeg or by Robertson, and, if anything affirms the co-existence of interests of the two in the specified land. Even in terms of Shields v. Winnipeg there is an important legal issue here as to whether its principle applies to exempt as well a concurrent interest (if that be the case) of a private person. If Dineen was seeking a summary determination of a claim of lien on the basis of Shields v. Winnipeg, it ought to have come forward with an explanation of the Robertson interest which is sworn to in the Alspan affidavit supporting the claim of lien. Nothing of this sort was even attempted, and we are left with an uncontradicted assertion of a private interest in land on which a lien has been claimed. It was not suggested that the narrative reference by Guy J.A. to a public bridge was enough to dispose of this factual issue on any doctrine of judicial notice.

In sum, the material before the Manitoba Courts falls far short of providing any basis for a summary discharge of the bond received in place of the lien. Nor is Dineen’s position improved by reason of the Ontario action; nothing turned on it

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in the Manitoba Courts. The fact that Alspan had taken no action on the lien claim up to the time of Dineen’s second application and, indeed, up to the time of the hearing of the appeal, is answered by s. 22 of the Manitoba Act under which the registered lien claimant has two years from the completion of the work in which to take proceedings to realize its claim. Moreover, s. 23 provides a means of forcing a lien claimant to take speedy realization proceedings and it does not appear that Dineen sought to have Greater Winnipeg invoke it.

I would, accordingly, allow the appeal, set aside the order of the Manitoba Court of Appeal and restore the order of Judge Molloy. The appellant should have its costs throughout.

Appeal dismissed with costs, LASKIN J. dissenting.

Solicitors for the appellant: Thompson, Dewar, Sweatman, Winnipeg.

Solicitors for the respondent: Fillmore, Riley & Company, Winnipeg.