Nelson Lumber Co. Ltd. v. Integrated Building Corporation Ltd. et al., [1973] SCR 456

Supreme Court of Canada

Nelson Lumber Co. Ltd. v. Integrated Building Corporation Ltd. et al., [1973] S.C.R. 456

Date: 1973-01-31

Nelson Lumber Company Ltd. (Plaintiff) Appellant;

and

Integrated Building Corporation Ltd., Belvedere Developments Ltd., A. Brudnitzki Construction Ltd., Huron & Erie Mortgage Corporation, and The City of Edmonton (Defendants) Respondents;

and

A. Brudnitzki Construction Ltd. Third Party.

1972: October 17; 1973: January 31.

Present: Martland, Ritchie, Hall, Spence and Laskin JJ.

ON APPEAL FROM THE SUPREME COURT OF ALBERTA, APPELLATE DIVISION

Mechanics’ liens—Registration—Claim of lien in respect of materials supplied for subcontractor—Part of material picked up at materialman’s premises and brought to building site by subcontractor—Determination of date as of which prescribed time for filing lien begins to run—The Mechanics Lien Act, 1960 (Alta.), c. 64.

Material to the value of $8,473.23, for which it was not paid, was supplied by the appellant to the order of a subcontractor for the finishing work on a certain building. This material was supplied during the period November 6, 1969, to February 14, 1970, and part of it was delivered to the land upon which the building was being erected and part of it was picked up at the appellant materialman’s premises by the subcontractor. The latter brought some of this material to the building site between March 16 and March 28, 1970, during which period an employee of the subcontractor was employed at the site.

A claim of lien, registered on April 3, 1970 was declared invalid by Greschuk J. by reason of late filing, and this view was sustained by a majority in the Alberta Appellate Division. With leave, the materialman then appealed to this Court.

Held: The appeal should be allowed.

There is no distortion of The Mechanics Lien Act in recognizing a materialman’s right to lien upon the

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delivery to the site by the subcontractor of material ordered from the materialman for the subcontractor’s use in carrying out its work on the site. So long as the materials are intended for the site in pursuance of the subcontractor’s arrangement with the materialman, the particular date of arrival there, whether brought directly by the materialman or its agent or carrier, or indirectly by the subcontractor, is not material to the subsistence of the materialman’s lien, so long, at least, as they do arrive during the performance by the subcontractor of its contract with the general contractor or, if brought directly by the materialman, are so brought pursuant to its contract with the subcontractor. Hence, the time for registration by the materialman will run from the date that the last of the materials are so brought on to the site.

Board of Trustees of Rocky Mountain School Division No. 15 v. Atlas Lumber Co. Ltd., [1954] S.C.R. 589; Hectors Ltd. v. Manufacturers Life Insurance Co., [1967] S.C.R. 153, followed.

APPEAL from a judgment of the Supreme Court of Alberta, Appellate Division[1], dismissing an appeal from an order of Greschuk J. declaring a claim of lien invalid. Appeal allowed.

J.A. Matheson, for the plaintiff, appellant.

B.A. Crane, for the defendants, respondents.

The judgment of the Court was delivered by

LASKIN J.—This appeal arises out of a materialman’s claim of lien under The Mechanics Lien Act, 1960 (Alta.), c.64, in respect of materials supplied to the order of a subcontractor which required them to perform its contract for the finishing work on a certain building. The claim of lien, registered on April 3, 1970, was declared invalid by Greschuk J. by reason of late filing, and this view was sustained by a majority in the Alberta Appellate Division.

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The central question for this Court is the determination of the date as of which the prescribed time for filing a materialman’s claim of lien begins to run. This is not to be confused with either the date of the making of the contract with the subcontractor for the supply of the designated materials or the date of the full or substantial performance of the contract by the materialman. It is the general rule that a lien must arise before the time within which it must be filed begins to run. Section 4(1) of the Alberta Mechanics Lien Act expresses this general rule as follows:

4. (1) Unless he signs an express agreement to the contrary and subject to subsection (2), a person who

(a) does or causes to be done any work upon or in respect of an improvement, or

(b) furnishes any material to be used in an improvement,

for an owner, contractor or sub-contractor has, for so much of the price of the work or material as remains due to him a lien upon the estate or interest of the owner in the land in respect of which the improvement is being made.

It is amplified by s.8 which states that “the lien created by this Act arises when the work is begun or the first material is furnished”.

In the case of a contractor, subcontractor or workman, the work is done on the land which is the subject of the lien claim. A materialman, unlike any of those, is a person who sells or provides materials which are intended for the building or the improvement on the land, but without performing on the land any work of installation or incorporation. To put him in an equivalent position of being able to claim a lien upon the owner’s estate, s.7 of the Alberta Act extends the ordinary meaning of the words “furnishes material to be used”, found in s.4(1), as follows:

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7. (1) Material shall be considered to be furnished to be used within the meaning of this Act when it is delivered either on the land upon which it is to be used or on such land or in such place in the immediate vicinity thereof as is designated by the owner or his agent or by the contractor or sub-contractor.

(2) Notwithstanding that any material to be used in an improvement may not have been delivered in strict accordance with subsection (1), where the material is incorporated in the improvement the person furnishing the material has a lien as set out in section 4.

The facts of the present case are that the appellant, under its contract with the finishing subcontractor, supplied material to the value of $8,473.23 for which it was not paid. This material was supplied during the period November 6, 1969, to February 14, 1970, and part of it was delivered to the land upon which the building was being erected and part of it was picked up at the appellant materialman’s premises by the subcontractor. The latter (it was so held by the Alberta Appellate Division) brought some of this material to the building site between March 16 and March 28, 1970. During this period, an employee of the subcontractor was employed at the site. There is no direct evidence as to when the subcontractor had fully or substantially performed its finishing work pursuant to its contract with the general contractor for the project, but in the absence of any countering evidence I am of opinion that the inference is warranted that the subcontractor’s employee was lawfully on the site to carry out finishing work.

Since there is no suggestion here that any land or other place in the immediate vicinity of the building site was designated for the deposit of the materials supplied by the appellant, and since the record is silent on whether any of the materials were incorporated in the improvement, neither the concluding part of s.7(1) nor s.7(2) is available in aid of the appellant. Its case must depend on the effect of the opening words in s.7(1) (“Material shall be considered to

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be furnished to be used… when it is delivered… on the land upon which it is to be used”), words which must be read back into s.4(1) to support a claim of lien.

No lien can arise in favour of a materialman if its material, supplied pursuant to a contract with a subcontractor, never reaches the building site. I am hence unable to understand any submission that the time for filing a claim of lien can begin to run merely upon the last supply of material, even if the material is picked up by the subcontractor or is delivered, on its instructions, to its premises by the materialman. In the present case, some of the material supplied as of February 14, 1970, was in fact delivered to the building site. Sections 27 and 32(2)(a) of the Alberta Act make it clear, however, that the maintenance of a lien is associated with the date when the last materials are furnished; and so the question that is raised is whether the materialman’s right to enforce a lien depends on the running of the prescribed filing time from the last date that the materialman itself or its agent made a delivery to the building site. Behind this question is the relationship of materialman to its subcontractor and the latter’s control over the pace and place of deliveries, which may, of course, be affected by procurement exigencies and building progress, among other things.

Section 32 of the Alberta Act prescribes the time for registering or filing a claim of lien, and in setting out its terms I emphasize the obvious that it presupposes that a right to lien has arisen. It is in these words:

32. (1) A lien in favour of a contractor or a subcontractor in cases not otherwise provided for, may be registered at any time up to the completion or abandonment of the contract or sub-contract, as the case may be, and

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(a) within thirty-five days after completion or abandonment, or,

(b) where the improvement in respect of which the lien arises is an oil or gas well or an oil or gas pipe line, within one hundred and twenty days after completion or abandonment.

(2) A claim of lien for materials may be registered at any time during the furnishing of the materials and

(a) within thirty-five days after the last of the materials is furnished, or

(b) where the improvement in respect of which the lien arises is an oil or gas well or an oil or gas pipe line, within one hundred and twenty days after the last of the materials is furnished.

(3) A lien for the performance of services may be registered at any time during the performance of the services and

(a) within thirty-five days after the performance of the services is completed, or

(b) where the improvement in respect of which the lien arises is an oil or gas well or an oil or gas pipe line, within one hundred and twenty days after the performance of the services is completed.

(4) A lien for wages may be registered at any time during the performance of the work for which the wages are claimed and

(a) within thirty-five days after the completion of the work, or

(b) in the case of a lien for wages owing for work in, at or about a mine, within sixty days after the completion of the work.

(5) Where, in respect of work done on or material furnished for an improvement,

(a) something is improperly done, or

(b) something that should have been done is not done,

at the time when the thing should have been done and if at a later date the thing improperly done is put right or the thing not done is done, the doing of the thing at the later date shall not be deemed to be the completion of the work or the furnishing of the last materials so as to enable a person to extend the time limited by this section for registering a lien.

Although s.32(2)(a), which is the relevant provision here, speaks only of “the furnishing

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of the materials” and the prescribed number of days “after the last of the materials is furnished”, in contrast to the formula of “furnished to be used”, it does not, in my opinion, reduce or qualify the effect of ss.4(1) and 7(1), which deal with the creation of a materialman’s lien. That this is so is evident from s.8, to which I have already referred, which also uses the bare word “furnished”. Nothing turns on the fact that s.32 speaks of “a lien”, when referring to a contractor, subcontractor or workman but speaks of “a claim of lien” for materials. The difference perhaps takes account of the fact that, in the case of the former, work is performed upon the subject land, and this is not so in the case of a materialman.

In the Alberta Appellate Division both Johnson J.A. and Clement J.A. were of the opinion that the delivery envisaged by s.7(1) was delivery by the materialman itself or by its agent (who, in the view of Johnson J.A., may be the subcontractor if it picks up the material and immediately takes it to the building site). Clement J.A. buttressed his separate opinion by reliance on s.7(2) as indicating that unless the materialman is the deliveror to the building site, it can only claim a lien if the material has been incorporated in the improvement. In my opinion, this view is self-serving; s.7 is concerned with the place of delivery and not with either the person delivering or the time thereof.

I do not regard the position taken by the majority in the Alberta Appellate Division as compelled by the language of the Act. As McDermid J.A. pointed out in his dissenting reasons, “there is no restriction on who may deliver the materials”. There must therefore be good reason, consistent with promoting the purpose of the Act, to limit the materialman’s right to lien in the way proposed by Johnson and

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Clement JJ.A. I am in accord with the view expressed by Rand J. in Board of Trustees of Rocky Mountain School Division No. 15 v. Atlas Lumber Co. Ltd.[2], at p. 593, that the Alberta Mechanics Lien Act “undoubtedly is to be interpreted to further its purposes which are to provide security for those who contribute work or materials to the construction of an improvement”. Certainly there must be due regard for time limitations, but this does not mean that their application should be viewed narrowly.

I do not see any distortion of the Mechanics Lien Act in recognizing a materialman’s right to lien upon the delivery to the site by the subcontractor of material ordered from the materialman for the subcontractor’s use in carrying out its work on the site. A subcontractor may well have to collect or assemble materials before using them on the site, or the site may be, at a particular time, too limited in size or too congested with equipment to permit direct delivery thereto of supplies by a materialman. So long as the materials are intended for the site in pursuance of the subcontractor’s arrangement with the materialman—and that is conceded in the present case—the particular date of arrival there, whether brought directly by the materialman or its agent or carrier, or indirectly by the subcontractor, is not material to the subsistence of the materialman’s lien, so long, at least, as they do arrive during the performance by the subcontractor of its contract with the general contractor or, if brought directly by the materialman, are so brought pursuant to its contract with the subcontractor. The time for registration by the materialman will run then from the date that the last of the materials are so brought on to the site.

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Both in the Atlas Lumber Co. Ltd. case, cited above and in the more recent case of Hectors Ltd. v. Manufacturers Life Insurance Co.[3], this Court emphasized the dependence of the materialman’s lien on the contract that it had for the supply of materials. In the last-mentioned case, Judson J. for the Court referred with approval to a statement in 13 C.E.D. (Ont. 2nd) at p. 347 that “Where material is supplied under a prevenient arrangement or under a continuing or entire contract, it makes little difference how long a time elapses between deliveries so long as the lien is filed within [the prescribed number of days] after the furnishing… of the last material”. The italics are mine.

Of course, the materialman is at the risk of the subcontractor if the latter diverts or simply fails to use the materials before completing or substantially performing or abandoning its subcontract. This is not a consideration which militates against recognition of a materialman’s lien where materials “furnished to be used” on the site are in fact brought to it. There is no reason to deny a materialman its lien in respect of materials which it supplied for and which are brought to the land by the subcontractor, if the latter is then still in the course of performing its subcontract and hence entitled to assert a lien for unpaid work. To hold otherwise would be to put materialmen in the position of insisting on direct delivery of materials to the site—which, in my opinion, is not commercially feasible—or of employing a contractual subterfuge of constituting their co-contracting subcontractors their agents for the delivery of the materials to the site. I regard the latter as an empty form when the presupposition of a materialman’s lien is that the materials ordered from it are supplied “to be used” for the improvement on the site. They are to be used by (in this case) the subcontractor, and the expectations of owner, general contractor and materialman alike are that the materials will be brought to the land. It is,

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hence, artificial, where the language of the statute is not compelling, to make the materialman or his agent the only proper deliveror of its materials to the site. Functional considerations should govern where they are consistent with the scheme of the Act. That is the case here.

I would, accordingly, allow the appeal, set aside the judgments below and declare that the appellant has a valid lien upon the subject land in respect of the subcontractor’s unpaid debt of $8,473.23. The appellant is entitled to its costs throughout.

Appeal allowed with costs.

Solicitor for the plaintiff, appellant: J.A. Matheson, Edmonton.

Solicitors for the defendants, respondents, Belvedere Developments Ltd. and Integrated Building Corporation Ltd.: Cooke, Shandling & Company, Edmonton.