2005 BCSC 62 W. Mullner Trucking&Others v. Baer Enterprises Ltd.&Others

Before: The Honourable Mr. Justice Parrett

Reasons for Judgment

In Chambers

Counsel for the plaintiff A. Fehr and Mat-Han Trucking:

G. Petrisor

Appearing on their own behalf and/or on behalf of the various plaintiff companies:

R. Tiani, D. Tiani, L. Frederick, D.E. Gratton, G. Cartie, W. Mullner Trucking Ltd., R. Blanchette, D. Parke for Denver Logging Ltd., Bid Right Contracting Ltd., Brad’s Trucking Ltd., R. Schweder

Counsel for the defendant/applicant Minister of National Revenue:

K.J. O’Brien

Appearing for Baer Enterprises Ltd.:

K. Wickjord

Counsel for the defendant Canadian Forest Products:

K. Bourchier

Counsel for the defendant Director of Employment Standards:

M. Alman

Date and Place of Hearing:

November 23, 2004

Prince George, B.C.

INTRODUCTION

[1] There are two applications before the court. In the first the defendant Canadian Forest Products Ltd. (“Canfor”) seeks the dismissal of nine of the plaintiffs’ actions for want of prosecution. At the conclusion of submissions on that application, the application was dismissed with reasons to follow. The first part of these reasons addresses that application.

[2] The second application is brought by the Minister of National Revenue and seeks judgment against Baer Enterprises Ltd. for $17,822.25, representing unremitted GST and $117,708.23 in unremitted payroll deductions. Secondly, they seek a declaration that the judgments in favour of the Minister rank in priority to the claims of the other parties pursuant to s. 317(3) of the Excise Tax Act; ss. 224(1.2), 227(4) and 227(4.1) of the Income Tax Act; ss. 57(2) and 57(3) of the Unemployment Insurance Act; and ss. 86(2) and 86(2.1) of the Employment Insurance Act.

[3] Finally, the Minister seeks an order for costs and an order that the sum of $135,531.48, plus costs, be paid out to the Minister of National Revenue from the monies in court.

BACKGROUND

[4] The nine claims which Canfor sought to have dismissed for want of prosecution were in each case a claim arising from lien claims filed pursuant to the Woodworker Lien Act, R.S.B.C. 1996, c. 491. The nine lien claims in question were all brought in the spring of 2000 and include liens claimed by:

(a)	W. Mullner Trucking Ltd.
(b)	Brad’s Trucking Ltd.
(c)	Rocco Tiani and Darcy Tiani carrying on business as Tiani Trucking and the said Tiani Trucking
(d)	Les Frederick
(e)	Robert Schweder carrying on business as Interior Highlead and the said Interior Highlead
(f)	Gerald Cartie carrying on business as Lifetime Trucking and the said Lifetime Trucking
(g)	Darryl Eugene Gratton
(h)	Roy Blanchette doing business as Virotrack Systems and the said Virotrack Systems
(i)	Anthony Fehr doing business as Mat-Han Trucking and the said Mat-Han Trucking

[5] The lien claimants were all subcontractors or employees of Baer Enterprises Ltd. who were owed money by Baer and sought to obtain security for the money they were owed by registering their liens against the logs which had been delivered to Canfor.

[6] On November 22, 1999, Canfor merged with Northwood Inc. and assumed their contractual obligations which included a Non-Replaceable Harvesting Agreement between Northwood Inc. and Baer which was dated November 1, 1999.

[7] Under that agreement Baer delivered logs to Canfor at its Prince George operation. In particular, those deliveries continued during January 2000 and into February of that year, concluding on February 17, 2000, when the Baer employees and subcontractors left the job site because they had not been paid.

[8] On February 22, 2000, Canfor terminated its contract with Baer. At the time Canfor terminated its contract with Baer, it was obliged to pay them a contractual price of $190,491.30 for the wood delivered, of which $25,000.00 were holdbacks required in favour of the Workers Compensation Board, by the Forest Practices Code and clean up. As time passed, competing claims, including the present liens, surfaced totalling some $636,961.05.

[9] On April 3, 2000, Canfor was granted an order by Master Baker vacating the present liens upon Canfor paying into court, to the credit of this action, $197,497.72, being $174,997.72 in respect of the lien claims and an additional $22,500.00 in respect of costs of those claims. The order of Master Baker also directed that there be a summary determination of the rights of the lien claimants pursuant to the Act.

[10] Since that order was made some 4½ years ago, no steps have been taken by the lien claimants to move their lien claims forward for hearing by summary means or any other.

THE APPLICATION TO DISMISS FOR WANT OF PROSECUTION

[11] The applicant, Canfor, submits that the passage of time in this case alone will have affected “. . . the respective memories of the lien claimants along with the relevant Canfor employee’s memories . . .” and that “. . . Canfor’s ability to tell its side of the story and to put forward a defence to the claim has been prejudiced by the passage of time . . .”.

[12] While this position is, on the surface, appealing and the court is, of course, concerned about the passage of time and how it may impact the quality of evidence available at trial, it is necessary to examine the whole of the circumstances in assessing the possibility of prejudice.

[13] In the present case, Karen Whyte, Prince George Woodland’s Analyst for Canfor, swore an affidavit in support of their application before Master Baker that led to the order of April 3, 2000. In that affidavit she confirms some of the details of Canfor’s employees’ recollection of events when the lien claimants left the job site and provides a summary of data in the possession of Canfor detailing the load numbers, the truck numbers and the net weight of the logs delivered which were subsequently the subject of the liens in questions.

[14] More importantly, for the purposes of this application, she goes on in para. 11 of her affidavit to testify that:

11. Provided the logs are free and clear of all liens and claims, Canfor has no beneficial interest in the amount it owes Baer under the contract, namely, $175,491.30.

[15] In para. 13, the position is clarified even further:

13. Canfor is unable to determine the priority of the claimants and seeks to pay into Court the money it acknowledges as being due to Baer, provided that it receives clear title to the logs, presently the subject to the woodworker lien claims, in a proceeding binding on all present and potential claimants to the logs in exchange for the sum it is required to pay into Court.

[16] The test to be applied in an application to dismiss for want of prosecution is well known. The authorities[1] establish that the court must consider –

(a) whether the defendant has proven inordinate delay;

(b) whether the defendant has proven inexcusable delay and, if so,

[17] I have little doubt in the circumstances of this case that there has been inordinate delay. The question is whether that delay is inexcusable and, if so, whether it has been established (by the plaintiffs) that the defendant has not suffered prejudice.

[18] Each of the lien claimants present at this hearing gave, essentially, the same version of events. With the assistance of counsel, each filed their lien and commenced action. As they became aware of the other competing claims and, in particular, that of the Minister of National Revenue, each was advised that they had to find out if the Minister’s claim had priority because if they proceeded and failed they could be assessed the whole costs of the proceeding in addition to the losses they had already suffered.

[19] Canfor’s own material and their application makes it clear that there were competing claims of some $636,961.05 and that their interest was to clear title to the logs so they could process them and, presumably, earn their profit from them. Their application and the order of April 3, 2000, obtained precisely the relief they wished.

[20] In my view, the position taken by the lien claimants is both reasonable and understandable. Having taken advantage of the lien rights proved by statute, they commenced action within the limited time provided by the Act. Having done so they became aware of the competing claims, the potential priority issue and their potential exposure for costs on top of their significant losses. The advice they received was to do nothing to risk additional costs in the circumstances.

[21] I conclude that, given all of the circumstances, the delay in this case was not inexcusable.

[22] In the event I am incorrect in that conclusion, I am nevertheless satisfied that in this case the evidence as a whole establishes that the defendant Canfor has not suffered prejudice.

[23] On their own evidence, Canfor has demonstrated that the necessary evidence is available and has been preserved. Of more importance, however, are the admissions made within their material that they had established the amount of Baer’s contractual entitlement and that they (Canfor) had no beneficial claim (“interest”) in those funds.

[24] In my view, the position taken by Canfor to obtain the relief it did from the court in the form of the release of the logs precludes any finding of prejudice to their interests.

[25] For these reasons the application by Canfor was dismissed.

THE APPLICATION BY THE MINISTER OF NATIONAL REVENUE

[26] The applicant on this second application seeks a variety of relief set out in the amended notice of motion dated August 1, 2004 and filed on September 1, 2004. For reasons that will become apparent, I will set out the relief sought as it appears in that notice of motion:

TAKE NOTICE that an application will be made by the Defendant, Minister of National Revenue on behalf of Her Majesty the Queen in Right of Canada (hereinafter called the “Defendant Minister”) to the presiding judge or master at the courthouse at, 250 George Street Prince George, B.C., at a date and time to be set for:

(a) Judgment in favour of the Defendant Minister for:

(i) $17,823.25 representing unremitted GST; and

(ii) $117,708.23 in unremitted payroll deductions;

(b) a Declaration that the Judgments in favour of the Defendant Minister rank in priority to the claims of the other parties herein, pursuant to Section 317(3) of the Excise Tax Act; Sections 224(1.2), 227(4) and 227(4.1) of the Income Tax Act; Sections 57(2) and 57(3) of the Unemployment Insurance Act; Sections 86(2) and 86(2.1) of the Employment Insurance Act;

(d) an Order that the sum of $135,531.48 be paid to the Defendant Minister from the monies in Court plus costs.

The applicant will rely [on] Rule 18A of the Rules of Court.

[27] I presume, although it is not specified in the notice of motion, that the judgment sought in para. (a) is a judgment against Baer Enterprises Ltd. I presume this from the material filed in support of the application which specifies that Baer is indebted to Canada Customs and Revenue Agency (“CCRA”) for (a) $17,823.25 for unremitted GST and (b) $117,708.23 for unremitted source deductions from employee wages including Federal Tax, Provincial Tax, CPP and Employment Insurance deductions.

[28] It can be seen from para. (b) of the notice of motion that the applicant also seeks a declaration that the judgment sought in (a) ranks in priority to the claims of the other parties.

THE PLEADINGS

[29] The genesis of the present action lay in the filing of various liens under the Woodworker Lien Act, R.S.B.C. 1996, c. 491, and the commencement of various actions in this court to enforce those liens. On April 3, 2000, on an application brought by Canfor, Master Baker ordered the consolidation of 10 actions into what was described as the Woodworker Lien Action and became the present action. He also ordered two further actions, described as “debt actions”, consolidated into the same action.

[30] At the same time, the Master made the following order:

AND THIS COURT FURTHER ORDERS that Canadian Forest Products Ltd., the Minister of National Revenue, and the Director of Employment Standards be added as Defendants to the Consolidated Action.

[31] Some six months later the Minister of National Revenue filed a statement of defence in this action. I have reviewed the file in preparation of these reasons. I can find no sign that any further pleadings, and, in particular, a counter-claim, was ever filed on this defendant’s behalf.

[32] A review of that defence demonstrates that it neither complies with R. 21(1) nor the required compliance with Form 14.

[33] This is readily apparent from the final page of the defence which includes what amounts to a prayer for relief which reads:

WHEREFORE the Minister claims against all other parties herein for:

(a) an Order that the following sums be paid to the Minister in priority to the claims of all the other parties herein:

(i) $134,616.13 representing unremitted payroll deductions;

(ii) $41,256.31 representing GST payments;

(b) interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79;

(d) such further and other relief as this Honourable Court deems just.

[34] The form and structure of proper pleadings is not some minor inconvenience to be ignored in the presentation of claims to be determined by this court. I am well aware that over recent years the strict requirements of proper pleadings have been much relaxed. One of the consequences that flow from this is the fact that it is more and more difficult to properly identify issues and determine the admissibility of evidence.

[35] What lies at the root of proper pleadings, however, is a system that is designed to ensure that parties receive proper notice of claims made against them prior to adjudication by the court, and that all parties be afforded an opportunity to respond to and plead to any such claim.

[36] From the outset, the present litigation appears to have been more of a ‘happening’ than a structured exercise of proper pleadings.

[37] The Minister of National Revenue, essentially by consent, was added as a defendant to this action in an action where they neither disputed nor challenged the lien claims advanced by the plaintiffs advancing them. Instead, the Minister of National Revenue, as emerges both from the requirements to pay filed by his department and the statement of defence eventually filed on its behalf, advances a separate cause of action against a co-defendant, Baer Enterprises Ltd., based upon its failure to remit GST and employee deductions, and seeks a finding that its claim has priority over all other claims advanced in the consolidated action against Baer.

[38] The problem, as I perceive it, is that these claims are not and cannot constitute defences to the claims advanced by the plaintiffs, but rather, are substantive and discrete causes of action being advanced by the applicant within what purports to be a defence.

[39] I leave aside the question of whether the applicant should have been joined as a defendant without draft pleadings being placed before the court to allow that issue to be properly considered. Instead, I must say that what should not happen is that substantive and different claims be advanced by a defendant against a co-defendant within the bounds of a statement of defence.

[40] Such a process precludes an orderly exchange of pleadings that properly frames the issue to be addressed by the court.

[41] On a substantive level, in my view, a defendant cannot seek substantive relief in a statement of defence without incorporating that relief within a counterclaim or a third party notice.

[42] What further complicates the present procedural morass is the fact that the applicant now seeks to invoke R. 18A to seek judgment against the co-defendant and then, on the basis of that judgment, a declaration that it has priority over all other claims and a payment out of the greater part of the funds in court to the applicant.

[43] The applicant seeks all of this relief on the basis of its filing a statement of defence to an unrelated series of claims, never having commenced its own action or invoked one of the other methods of initiating its own substantive claim. I say the applicant filed a defence to an unrelated series of claims because that is precisely what has occurred. The Minister of National Revenue does not seek to attack any of the lien claims filed, but rather, only seeks to claim the money paid into court by claiming priority. This is not and cannot constitute a defence to the plaintiffs’ claims.

[44] The pleadings on which this application is based are misconceived, and, in my view, cannot form a basis for the relief sought under R. 18A.

DISPOSITION

[45] One of the troublesome features of the present application is the fact that the affected lien claimants/plaintiffs are self-represented. While they have done their best to articulate their positions and the equities of it, this is a highly technical area of the law which they are ill equipped to address in terms of the legal nuances.

[46] Nevertheless, I am satisfied that, even if the issues advanced by the applicant were properly framed by the pleadings, there is a real issue as to how the priorities fall in the present case. I am not satisfied, having examined the material with some care, that the court has had the benefit of full and complete submissions on the underlying issues.

[47] I am troubled by the length of time this matter has been outstanding and the potential costs which may flow from further delay and additional proceedings. I have determined that, in order to expedite the final determination of the underlying issues, this court should take a role in directing that process. I am therefore exercising the powers contained in R. 18A (13)(p) and directing that all parties appear before me within 30 days of the date these reasons are released for the purpose of holding a pre-trial conference to consider proper directions for this matter to proceed.

[48] At the time of the pre-trial conference, the parties should be prepared to address the following issues –

1. What steps are necessary to regularize the pleadings;

2. How the summary determination of the lien claims should proceed;

3. What the various parties’ positions are with respect to the $22,500.00 paid into court by Canfor as security for costs; and

4. The form of evidence and proof at the subsequent hearing, including the production and proof of the Non-Replaceable Harvesting Agreement between Northwood Inc. and Baer, dated November 1, 1999.

“W.G. Parrett, J.”
The Honourable Mr. Justice W.G. Parrett

[1] Busse v. Robinson Morelli Chertkow (1999), 63 B.C.L.R. (3d 174 at 181 and Tundra Helicopters Ltd. v. Allison Gas Turbine (2002), 98 B.C.L.R. (3d) 238.

Citation:	*W. Mullner Trucking & Others v. Baer Ent. Ltd.& Others*
	2005 BCSC 62