IN THE SUPREME COURT OF NOVA SCOTIA
Citation: Select Ceramic Tile Centre Inc. v. Qualtech Building Solutions; Install A Flor Ltd. v. Dean; Kent Building Supplies v. Dean; Genuine Exteriors Ltd. v. Qualtech Building Solutions., 2006 NSSC 300
Date: 20061016
Docket: SH No. 264391
Registry: Halifax
Between:
Select Ceramic Tile Centre Incorporated, a body corporate
Plaintiff
v.
Qualtech Building, Solutions Limited, a body
corporate and Jonathan Dean and Miriam Dean
Defendants
Docket: SH No. 264932
Registry: Halifax
Between:
Install A-Flor Limited, a body corporate having its head office at 31 Sterns Court, Dartmouth, Halifax Regional Municipality, Province of Nova Scotia; and Expert Electric & Alarm Limited, a body corporate having its head office at 44 Martyn Drive, Fall River, Halifax Municipality, Province of Nova Scotia; and Dynamic Glass and Upholstery, sole Proprietorship having its head office at Lower Sackville, Halifax Regional Municipality, Province of Nova Scotia
Plaintiffs
v.
Jonathan G. Dean and Miriam Lynn Dean, owners of lands known as Lot 22, Collins Road, Hammonds Plains, Halifax Regional Municipality, Province of Nova Scotia; and Qualtech Building Solutions Limited, a body corporate with a registered office at 1495 Cobequid Road, Suite 101, Waverley, Halifax Regional Municipality, Province of Nova Scotia
Defendants
Docket: SH No. 265296
Registry: Halifax
Between:
Kent Building Supplies, a division of J.D. Irving Limited,
a body corporate
Plaintiff
v.
Jonathan G. Dean and Miriam Lynn Dean, and Qualtech
Building Solutions Limited, a body corporate
Defendants
Docket: SH No. 265460
Registry: Halifax
Between:
Genuine Exteriors Limited, a body corporate
Plaintiff
v.
Qualtech Building Solutions Limited, a body corporate and
Jonathan Dean and Miriam Lynn Dean
Defendants
Judge: The Honourable Justice M. Heather Robertson
Heard: June 6, 2006, in Halifax, Nova Scotia
Written Decision: October 16, 2006
Counsel: Mary Jane McGinty, for the Dean’s and Qualtech
Michael J. O’Hara, for Select Ceramic and Genuine Exteriors
David Barrett, for Install A-Flor, Expert Electric and Dynamic Glass
Don MacKenzie, self-represented, for Eastwing Products Limited
Robertson, J.:
[1] Jonathan G. Dean and Miriam Lynn Dean the owners of a property at Kearney Lake Estates by an application for release of lien claims against their property sought to pay monies into court in the amount of $51,994.28, representing a 10% holdback, pursuant to s. 29(4) of the Builders’ Lien Act. The applicants say the calculation was made on the basis of the contract price (inclusive of HST).
[2] The respondent lien claimants resist the application, disagreeing with the calculation of the holdback, arguing that the calculation does not represent the value of the work done by them.
[3] I have reviewed the affidavit evidence of the applicant Lynn Dean. It sets out the total contract price of $673,912 plus HST. The contract provided for three payments to be made by the owners: 40% when the property was roof tight, 30% when the property was drywall taped and 30% upon substantial completion.
[4] The contractor was paid $519,942.82 for the work completed before abandonment of the contract.
[5] The builder Qualtech is bankrupt. Qualtech and its Receiver have released the Dean’s from any further payment under the contract. The applicants further identified a list of deficiencies shown as Exhibit “C” to Lynn Dean’s affidavit and say that the approximate price to complete the contract will be $397,284 as per the list shown as Exhibit “B” to Exhibit “D” in her affidavit.
[6] Section 29(4) of the Builders’ Lien Act. RSNS 1989 c. 277 as amended provides:
29(4) Upon application, the court or judge having jurisdiction to try an action to realize a lien, may allow security for or payment into court of the amount of the claim, and may thereupon order that the registration of the lien be vacated or may vacate the registration upon any other proper ground and a certificate of the order may be registered.
[7] Section 11 of the Act provides:
11 Save as herein otherwise provided, the lien shall not attach so as to make the owner liable for a greater sum than the sum payable by the owner to the contractor. R.S., c. 277, s. 11.
[8] Section 12 of the Act provides:
12 Save as herein otherwise provided, where the lien is claimed by any person other than the contractor, the amount which may be claimed in respect thereof shall be limited to the amount owing to the contractor or subcontractor or other person for whom the work or service has been done or the materials placed or furnished. R.S., c. 277, s. 12.
[9] Section 13(2) of the Act sets out the amount of the holdback:
13(2) In all cases the person primarily liable upon any contract under or by virtue of which a lien may arise shall, as the work is done or materials are furnished under the contract, deduct from any payments to be made by him in respect of the contract, and retain for a period of sixty days after the contract is substantially performed, ten per cent of the value of the work, service and materials actually done, placed or furnished as mentioned in Section 6, and such value shall be calculated on the basis of the contract price, or if there is no specific contract price, then on the basis of the actual value of the work, service or materials.
[10] The respondents suggest that the Deans have produced insufficient evidence to meet the statutory burden and say that there is no value established for the actual work supplied. I respectfully disagree.
[11] I accept, based on the evidence before me, that the maximum amount owing by the owners to release the lien has been properly calculated. The owners held back 10% of the total amount paid to the contractor. They owe nothing further to the contractor. I am satisfied that the owners complied with s. 13 of the Act. The applicant properly relies on HMW Industries Ltd. v. E.E. McCoy Co. Ltd. et al, NSSC Appeal Div, 43 NSR (2d) 564 and Re Coverlawn Investments Ltd. 24 NSR (2d) 563 and Otis Elevator Co. v. Commonwealth Holiday Inns of Canada Ltd., [1972] 2 OR 536.
[12] The respondent however suggests that in that the HMW case stands for the proposition “any doubt on such an application should be resolved in favour of the lien claimants and against the owners.” However, the issue for the court in HMW was quite distinct from this case. In HMW, the court was determining if direct payments made to subcontractors by the owner should have in fact been deducted in a calculation of the amount to be paid into court.
[13] The Receiver of the general contractor Qualtech has settled with the owners. However, there is no evidence before me to suggest that this agreement would defeat or prejudice the statutory claims of the subcontractors.
[14] The Dean’s did not have specific information as to the actual value of the work and materials placed on the land by the sub contractors, the respondents herein. To require in the circumstances of this case that the owner was obligated to determine the value of the work and materials placed by each contractor and inquire as to all payments previously made to them by the contractor would defeat the purpose of the Act, particularly where the owners were entitled to use the contract itself as a yardstick for the calculation of the 10% holdback.
[15] It is interesting to note that a re-assessment of the property after the contract was abandoned showed a total value of $539,400. Further there is no disagreement as to the amount paid by the owner to the contractor pursuant to the terms of the contract.
[16] I am satisfied on the evidence before me that the security to be posted is the “highest amount that the owner could reasonably be foreseen to be liable” to their contractor. HMW Industries Ltd., supra, at para. 15. I have reviewed the cases cited by the respondents. In particular, TRAX Construction Ltd. v. United Gulf Developments Ltd., [2003] N.S.J. No. 311 is distinguished from this case. This is not a case where there is no contract price. There was a fixed contract price of $673,912.
[17] I do not find that the lien claimants are prejudiced by this calculation of the security required. The claimants have failed to bring forward any evidence to the contrary. Their rights arise by statute. They enjoy no privity of contract with the owner. Section 11 of the Act is quite clear. The claimants are guaranteed the right to 10% of what was paid and owing to the contractor. It cannot exceed that amount. I am satisfied that the owners’ obligations under s. 11 have been met. Nor am I of the view that any provision for costs should be made beyond the s. 11 obligation.
[18] Failing agreement by counsel as to the costs of this application, I am prepared to hear from them.
Justice M. Heather Robertson