Van T Holdings Inc. v. KCS Equipment Ltd., 2012 ABQB 335

Court of Queen ’ s Bench of Alberta Citation: Van T Holdings Inc. v. KCS Equipment Ltd., 2012 ABQB 335 Date: 20120522 Docket: 1103 01321 Registry: Edmonton Between: Van T Holdings Inc., Van T Holdings Inc.

Carrying on Business as Van T Holdings and Thomas Van Tetering Carrying on Business as Van T Holdings Plaintiff - and - KCS Equipment Ltd., 1186044 Alberta Ltd., Contrac Equipment Ltd., AFD Petroleum Ltd., Bonus Rentals Inc., Paradox Access Solutions Inc., Liquid Capital Exchange Corp. and Minister of National Revenue (Canada) Defendants Corrected judgment: A corrigendum was issued on June 21, 2012; the corrections have been made to the text and the corrigendum is appended to this judgment.

Corrected judgment: A corrigendum was issued on June 5, 2012; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision

of W. S. Schlosser, Master in Chambers _______________________________________________________ [ 1 ] This is a contest between a Factor, the MNR and some Lien holders to a fund of money in Court. The intriguing problem is that the decided cases appear to say that the Factor takes priority over the Crown, the Crown takes priority over the Liens, but that the Liens take priority over the Factor. Facts [ 2 ] Van T Holdings Inc. agreed to provide excavation and grading work for Lewis Estates in West Edmonton.

The land was owned by Lewis Estates Community Inc., which is not a party to this application. [ 3 ] Van T hired KCS Equipment Ltd. KCS, in turn, hired Agritrac Equipment Ltd. operating as Contrac Equipment (“Contrac”), AFD Petroleum Ltd., Bonus Rental Inc. operating as Volvo Rentals and Paradox Access Solutions Inc. Paradox supplied materials for a temporary roadway. Contrac and Bonus supplied rental equipment and machinery. AFD supplied the diesel. KCS is now insolvent and there isn’t enough money to pay everyone. [ 4 ] KCS issued ten invoices to Van T as follows: Date Inv. No.

Gross GST (5%) Payable 31-May-10 490 $145,874.25 $7,293.71 $153,167.96 30-Jun-10 491 213,573.60 10,678.68 224,252.28 30-Jun-10 492 13,710.54 685.53 14,396.07 30-Jul-10 494 275,256.35 13,762.82 289,019.17 31-Aug-10 496 272,058.75 13,602.94 285,661.69 31-Aug-10 497 420,840.90 21,042.05 441,882.95 30-Sep-10 498 270,764.80 13,538.24 284,303.04 1-Nov-10 501 357,116.42 17,855.82 374,972.24 1-Dec-10 511 365,565.55 18,278.28 383,843.83 15-Jan-11 513 136,125.00 6,806.25 142,931.25

TOTAL: $2,470,886.16 $123,544.31 $2,594,430.47 [ 5 ] Van T issued ten cheques as follows: Date Cheque No. Amount 1 June 2010 13 $137,851.17 2 July 2010 20 216,643.11 30 July 2010 29 260,116.66 31 August 2010 49 271,711.82 30 September 2010 74 60,000.00 30 September 2010 75 114,000.00 1 October 2010 76 192,424.08 28 October 2010 27 75,000.00 2 November 2010 111 255,872.73 2 December 2010 135 337,475.03 TOTAL: $1,921,094.60 [ 6 ] The following liens were filed against the Lewis Estate land: Subcontractor/supplier Amount of claim Date filed at LTO Agritrac Equipment Ltd o/a Contrac Equipment $839,026.18 10 Dec 2010 Agritrac Equipment Ltd. o/a Contrac Equipment 100,000.00 23 Dec 2010

AFD Petroleum Ltd. 190,420.74 23 Dec 2010 Bonus Rentals o/a Volvo Rentals 25,453.58 31 Dec 2010 Paradox Access Solutions Inc. 90,941.50 6 Jan 2011 KCS Equipment Ltd. 698,390.65 19 Jan 2011 1186044 Alberta Ltd. 802,240.00 19 Jan 2011 Total: $2,746,472.65 [ 7 ] Van T applied by Originating Application, pursuant to s. 48 of the Builder’s Lien Act , R.S.A. 2000, c. B-7 , to have funds paid into court and the liens discharged from title. On February 15, 2011, Master Wacowich ordered that $673,335.88 be paid into Court. The Minister of National Revenue (Canada) was added as a party Respondent. This application is to determine priority to the funds paid into Court. [ 8 ] The

section 48 payment does not affect the amount to be retained under

section 18, or the

section 23 Minor lien fund (section 48(2)). The Lien Fund [ 9 ] Van T’s counsel argued that there had been an overpayment into court and sought a refund of that overpayment. However, this is not justified. First of all, a

section 48 payment is discretionary. Also the amount paid in closely matches what the lien fund would be. [ 10 ] The first portion lien fund would be 10% of the value of the work done. This figure, pursuant to 18(3)(

a) of the Act, totals $193,610.56. There is a dispute about invoice 497, which would have resulted in a small reduction in this part of the lien fund. [ 11 ] Section 18(3)(

b) of the Act also requires that the owner retain ‘any sums due and owing but unpaid.’ Taken at face value, this would be the sum of unpaid invoices 511 and 513. There is a dispute about invoice 513, which Van T argues should be $116,064.90, rather than $136,125.00. [ 12 ] Master Wacowich ordered $673,335.88 paid into court, being the difference between the invoices issued by KCS to Van T: $2,594,430.47 (including GST) as set out in paragraph 4, and the total payments of $1,921,094.60, as set out above in paragraph 5. The amount paid into Court is almost exactly what it would be if it had been calculated pursuant to

section 18 of the Act, giving the benefit of the doubt about invoices 497 and 513. The Crown Claim [ 13 ] The Crown’s claim arises from KCS’s obligation to deduct and remit employees’ source deductions and GST for the 2009 and 2010 taxation years. Her Majesty’s total claim is $326,188.74 for Goods and Services Taxes pursuant to the Excise Tax Act, and for source amounts arising from employees’ salaries pursuant to the Income Tax Act , the Alberta Income Tax Act , the Canada Pension Plan and the Employment Insurance Act . This figure includes interest and penalties levied pursuant to that legislation.

[14] On January 14, 2011 and February 8, 2011, four ‘Enhanced Requirements to Pay’ were served upon Van T pursuant to s.224(1.2) of the Income Tax Act and s. 317(3) of the Excise Tax Act. The Enhanced RTP is a form of garnishment. It allowed the Crownto intercept funds owed by Van T to KCS. As such, it would appear to attach invoice 511 and 513 to the extent of KCS’s tax liability forsource deductions and GST. Crown v. Liens [15] There is no doubt that an Enhanced RTP takes priority over a lien: South Rock Ltd. v. Omni General Construction Ltd.,2007 ABCA 115; Japan Canada Oil Sands Ltd. v.

Stoney Mountain Steel Corp., (AB KB), [2001] 8 WWR 284Alta QB; Montreal Trust Co. of Canada v. Powell Lane Investments Ltd., (1994) (BC SC), 7 BCLR (3d) 235(BCSC); Canada (M.N.R.) v. W. Mullner Trucking Ltd., 2010 BCCA 90. So, there is no doubt that the Crown beats the Liens. Crown v. Factor [16] The obligation to deduct and remit gives rise to a deemed trust to the extent of the source deductions and unremitted GST.The deemed trust arises at the time of the obligation and acts as a floating charge over the tax debtor’s assets.

It attaches to the assets ofthe tax debtor for the time being and it includes after-acquired property. Invoices 511 and 513 would fall into the category of after-acquired property and be subject to the deemed trust. First Vancouver Finance v. Canada (M.N.R.) 2002, SCC 49, [2002] 2 SCR 720. [17] In First Vancouver, the M.N.R. had collected funds that Canada Safeway owed to the tax debtor, Great West. The fundswere collected pursuant to Enhanced RTP’s served by the M.N.R. upon Canada Safeway. First Vancouver, a Factor, claimed priorityover the funds so collected.

There did not appear to be any other competing creditors - at least none was mentioned by the Court - so thecase was about the contest between the Crown and the Factor to funds actually in the hands of the Crown. [18] The Supreme Court of Canada dealt with the priorities issue on the basis of the deemed trust arising pursuant to s. 227(4) and(4.1) of the Income Tax Act. Iacobucci J., writing for the court said: 4. For the reasons set forth below, I find that the s. 227(4.1) deemed trust is similar in principle to a floating charge over all the taxdebtor’s assets in favour of her Majesty.

The trust arises the moment the tax debtor fails to remit source deductions by the specified duedate, but is deemed to have been in existence from the moment the deductions were made. As long as the tax debtor continues to be indefault, the trust continues to float over the tax debtor’s property. Thus, at any given point in time, whatever property then belonging tothe tax debtor is subject to the deemed trust. 5. Viewed in this way, it is clear that, as property comes into possession of the tax debtor, it is caught by the trust and becomessubject to Her Majesty’s interest.

Similarly, property which the tax debtor disposes of is thereby released from the deemed trust. Thismutuality of treatment between incoming and outgoing property relating to the deemed trust is supported by both the plain language ofthe provisions as well as their purpose and intent. Most importantly, Her Majesty’s interest in the tax debtor’s property is protectedbecause, while property which is sold to third party purchasers is released from the trust, at the same time, the proceeds of disposition ofthe alienated property are captured by the trust.

Moreover, commercial certainty is promoted owing to the fact that third party purchasersare free to transact with tax debtors or suspected tax debtors without fearing that Her Majesty may subsequently assert an interest in theproperty so acquired. (emphasis added) [19] The deemed trust in this case (which arose in the 2009 - 2010 time frame) would have attached to invoice 511 as after-acquired property but it would have been released from invoice 511 when it was factored to Liquid Capital. The trust instead attached tothe proceeds which Liquid Capital paid to KCS.

By extension, this would appear to have the consequence of putting factored invoice 511beyond the reach of the Enhanced RTP. If factored invoice 511 is beyond the reach of the Enhanced RTPs the Factor would havepriority over the Crown with respect to the funds in Court. However, it is this

interpretation that starts the priorities triangle because itwould allow the Liens to compete for the ‘exempt’ funds claimed by the Factor.

[20] If the First Vancouver case is authority for the proposition that the Enhanced RTPs made invoice 511 the property of theCrown in a custodial sense, for which the Factor had priority, this might have the effect of sheltering the factored funds from the otherclaimants. In other words, the Crown would take $326,188.74 (the face value of invoice 511) of the funds in court pursuant to theEnhanced RTPs. Liquid Capital would take the $276,367.56 it claims. The Crown would take the difference. This would leave$374,147.14 for the Lien claimants to fight over.

This result would be the easy way out as it prevents the priority triangle from beinggenerated in the first place and it avoids having to deal with the difficult question of priorities between the Factor and the Liens. Theproblem is that the First Vancouver case does not go that far. First Vancouver does not determine whether a factored invoice is beyondthe scope of an Enhanced RTP. [21] The decision of the Supreme Court of Canada in First Vancouver is limited to the effect of the Factoring Agreement on thedeemed trust.

The Court does not consider whether the language of s. 224(1.2) of the Income Tax Act, (or s. 3l7(3) of the Excise Tax Act),which provide for garnishment and Enhanced Requirements To Pay, prevail over the interest of a Factor. [22] First Vancouver would be consistent with a conclusion that the factored invoice is beyond the reach of an Enhanced RTPbut the case itself does not go that far. Instead, we have to apply the reasoning in Canada Trustco Mortgage Corp. v.

Port O’Call HotelInc., (1996) 1 SCR 63. [23] In First Vancouver, the Court considered sections 227(4) and (4.1) of the Income Tax Act but not explicitly s. 224(1.2) of theIncome Tax Act or s. 317(3) of the Excise Tax Act which gives rise to the Enhanced RTPs. These sections were directly considered by theSupreme Court of Canada in the Port O’Call case, in the context of a General Assignment of Book Debts. Simply stated, the question inthat case was whether a General Assignment of Book Debts was beyond the grasp of an Enhanced RTP.

Since we are dealing here with afactored invoice and not an Assignment of Book Debts, the ratio of that decision is not directly applicable. However, the reasoning is. [24] There were three cases that formed that appeal. Perhaps the best place to pick up the thread is in the decision of Forsyth, J.who decided two of the three cases that ultimately reached the Supreme Court of Canada. In Canada Trustco Mortgage Corp. v.

PortO’Call Hotel Inc., (1992) (AB KB), 134 AR 124, Forsyth, J. somewhat prosaically described the issue in the twocases under consideration as: Whether or not those who perfected the security in the sense of crystallizing same can have their property, in effect, expropriated byRevenue Canada without compensation. (para. 13.) [25] The starting point, in Alberta, under the old wording of the Income Tax Act (and the parallel

section of the Excise Tax Act),was that RTPs achieved custody of the funds so intercepted but not necessarily priority to them. The BCCA agreed with the approachtaken in Alberta. The Courts of Appeal of Saskatchewan and Nova Scotia did not. The Federal Government’s response was to re-wordthe Acts. [26] Mr. Justice Forsyth reviewed the authorities, saying: [16] I will note here that both Acts [the Excise Tax Act, s. 317 and the Income Tax Act, s. 224] were amended in 1990 followingcontradictory decisions on the

interpretation of s. 224 of the Income Tax Act in several courts in Canada, including our own Alberta Courtof Appeal. [17] In Lloyds Bank Canada v. International Warranty Co. Ltd. et al. (1989), 1989 ABCA 155 , 97 A.R. 113; 68 Alta. L.R.(2d) 356, the Alberta Court of Appeal was considering s. 224(1.2), as it then read. The court referred to two of its previous decisions,namely, University of Calgary v. Receiver General of Canada and Estate of Dr. Charles Jules Lamarre (Bankrupt), 1978ALTASCAD 50 , [1978] 2 W.W.R. 465; 8 A.R. 533 (C.A.) and Royal Bank of Canada v.

Canada (Attorney General), 1978ALTASCAD 354 , [1979] 1 W.W.R. 479; 13 A.R. 318 (C.A.), following which Stratton, J.A., who delivered the judgment ofthe court stated at p. 362: “Following the decisions in Lamarre and Royal Bank I am of the view that the proceedings under s. 224(1.2) are at the most a form ofextra-judicial attachment which could bring the funds in question into the custody of Revenue Canada. The

section falls short ofeffecting the transfer of property in the funds or establishing priority of Revenue Canada’s claim. Something further is required toaccomplish either purpose.”

[18] That decision was followed by the British Columbia Court of Appeal in Concorde International Travel Inc. v. T. I. Travel Services (B.C.) Inc. et al (1990), (BC CA), 72 D.L.R. (4th) 405 (B.C.C.A.). In that decision, Hinkson, J.A., afterreferring to the decision of the Alberta Court of Appeal in Lloyd’s Bank Canada, supra, went on to state at p. 409: “In my opinion, s. 224 styled as it is ‘Garnishment’ deals in subs. (1) and (1.2) with the mechanics of garnishment. The Minister inserving a demand pursuant to that

section must be proceeding upon the basis that he asserts a tax debtor’s liability to him. That justifiedgarnishing the funds in the hands of a creditor of the tax debtor. But, I am unable to see in that

section any provision that would have theeffect of transferring the property in the funds to the Minister or establishing a priority of Revenue Canada’s claim. That was the pointdealt with by the Alberta Court of Appeal.” [19] On the other hand, the Saskatchewan Court of Appeal expressly did not follow the Alberta Court of Appeal’s decision in Lloyd’sBank in the case of Royal Bank of Canada v. Saskatchewan Power Corp. et al (1990), (SK CA), 86 Sask. R. 259; 73 D.L.R. (4th) 257.

The position taken by the Saskatchewan Court of Appeal was followed in a Nova Scotia trial decision Century 21-Crown Real Estate Ltd. (Bankrupt), Re (NS SC), [1991] 1 C.T.C. 505; 99 N.S.R. (2d) 19; 270 A.P.R. 19 (T.D.). Inshort, it can be seen that there have been conflicting judicial

interpretations of the identical

section of the Income Tax Act prior to itsamendment. [20] Turing back to the Excise Tax Act, which is the statute in question in these proceedings, the first issue I propose to deal with iswhether or not the amendment to that

section which followed these conflicting decisions had the effect of clarifying the situation.

Theamendment in question was the addition to the sub-section of the following words: “... and on receipt of that letter by the particular person, the amount of those moneys that is required by that letter to be paid to theReceiver General shall, notwithstanding any security interest in those moneys, become the property of Her Majesty in right of Canadaand shall be paid to the Receiver General in priority to any such security interest.” [21] I am satisfied that the secured lenders as I have labelled them fall within the definition of secured creditor with security interestsas defined in s. 317(4) of the Excise Tax Act (supra).

I am accordingly satisfied that the words “something further” as set out in the quotefrom Stratton, J.A., that was required to accomplish the purpose apparently intended, has been met by the amendment to the section. [27] The Court, at first instance, decided that the wording of the amended sections of the Excise Tax Act and the Income Tax Actwere sufficient to capture, and give priority over even crystallized interests. The re-worded legislation giving rise to the Enhanced RTPswas enough to expropriate a crystallized asset belonging to a third party, without compensation. [28] Our Court of Appeal disagreed.

Côté, J. A., writing for the Court, held that the vested assignment in a General Assignment ofBook Debts prevailed over the M.N.R.’s garnishment power. The problem was set out as follows: For some years, the Income Tax Act and the Excise Tax Act have let the M.N.R. garnish debts payable to persons who owe certain kindsof tax. The Act allows the M.N.R. to issue his own garnishee summons without having to go to any court or get any kind of courtjudgment. (The Act calls it a “letter” but it works like a garnishee summons.) The wording of the two statutes on this point is verysimilar.

If A owes money to B, who owes income tax to the M.N.R., then the M.N.R. can serve such a garnishee summons on A. After that, if Ahas not yet paid B, he has to pay the M.N.R. instead of paying B. However, if B assigns this debt (or all his receivables) to a Bank beforethe garnishee summons arrives, is A to pay the M.N.R. or to pay the Bank? That was the question in Lloyds Bank and the question inthese three appeals. If the two statutes said nothing about priority, the answer would be obvious.

Garnishee summonses are always presumed to attach onlywhat the (tax) debtor could honestly assign, and so the Bank would prevail over the M.N.R. That would also follow from the working of

the two statutes, for after the debt is assigned, A no longer owes anything to B. A owes the debt to the Bank alone. Alberta Treasury Branches v. Minister of National Revenue, (1994) 1994 ABCA 11 , 16 Alta. L.R. (3rd) 1 at p. 4, para. 2, 3,and 4. [29] These three cases (two decided by Forsyth, J. at first instance and a third, all of which I have been referring to as the PortO’Call case) then went to the Supreme Court of Canada. Our Court of Appeal was over turned by a 3 to 2 majority.

Iacobucci, J., (whowould later write for the Court in First Vancouver), was in dissent along with Major, J. [30] The majority in the Supreme Court of Canada held that a General Assignment of Book Debts was not an absolute transfer of aproperty interest. Accordingly, it was a “security interest” as defined in the Income Tax and Excise Tax Acts. An assignee of book debtswas a secured creditor subject to the garnishment provisions of the Excise Tax Act and the Income Tax Act. [31] However, Mr.

Justice Cory, writing for the majority, contrasted a General Assignment of Book Debts with the factoring ofaccounts saying: [31] A factoring of accounts receivable is based upon an absolute assignment of them. It is in effect a sale by a company of itsaccounts receivable at a discounted value to the factoring company for immediate consideration. In my view, s. 224 ITA does protectthose engaged in the factoring business and those lending institutions that have succeeded in perfecting their security interest prior toany intervention by the MNR.

However, I cannot accept the submission that Parliament, by this section, intended to create an interestwhich was both conditional as a security interest and at the same time unconditional as an absolute assignment. There cannot have beenan intent to combine such incompatible concepts. [32] Clearly a GABD does not meet the standard required for a factoring arrangement which requires an absolute transfer of theproprietary interest of the assignor in the book debts. Pursuant to the instruments presented in this case the borrower retains the right toredeem the book debts once the debt is paid off.

This right of redemption irrefutably demonstrates that the assignment is something lessthan absolute. (Emphasis added). [32] A factored account is a sale, not a loan. The factored receivable is not given as security for repayment. While a GeneralAssignment of Book Debts may be a security interest for the purposes of the garnishment provisions of the Income Tax Act and ExciseTax Act, a factored account is not. [33] In our case, the factoring arrangement of invoice 511 was perfected prior to the Enhanced RTPs.

Liquid Capital could compelKCS to repurchase a factored receivable under certain circumstances but there is no express right to redeem. [34] First Vancouver decides that if the funds were actually in the hands of Her Majesty, she would have to pay them over to theFactor. If we apply the logic of these cases a factored invoice would not be caught by an Enhanced RTP. Such a finding appears to beconsistent with both the majority and the dissenting reasons in the Port O’Call case. It is also consistent with an extension of theprinciple in the First Vancouver case.

Whether we attach any legal weight to the funds being in the Crown’s possession or not, the resultis the same. So much for the easy way out. Factor v. Liens [35] If the factored invoice is beyond the grasp of an Enhanced RTP, the question becomes whether those funds represented byinvoice 511 are subject to a superior claim by the Lienholders. [36] There are two issues governing the priorities between a Factor and Lien claimants. First of all, Lien claimants are said to havean in rem claim. The Factor’s claim is sometimes said to be an “assignment” even though the assignment is absolute.

The Factorpurchases a chose in action as one of the means to enforce its claim. As such, the Factor obtains an in personam right. If the Lien

claimants have an in rem right and the funds in Court stand in place of the land, the in rem claim of the Lienholder would, in theory,trump the in personam right of a Factor. [37] In Genstar Limited v. D. Lindon Construction Limited (1982) 48 A.R. 395, Master Funduk said: [8] A builder’s lien is a charge on the land. That is the context in which s. 9 [now s. 11] operates. Section 9(1) does not have theeffect of giving an assignee of book debts, whose assignment precedes the lien, a priority over the rights of the lien claimant, whateverthey are. One is an in rem claim. The other is a chose in action.

There can be no question of priorities between them because they do notconflict. [38] There is mixed authority about the exact nature of a lien (note, for example, S.C. Richert Co. Limited v. Registrar of LandTitles, (AB KB), [1936] 2 W.W.R. 473 at 478 at SCC per Ewing, J. and the cases cited there.) However, it is well toremember a lien is purely a creature of statute. Lien rights are intended to supplement the usual remedies available to contractors andsubcontractors.

The purpose of the Act is to give protection against unscrupulous, or impecunious contractors, and owners. [39] With the greatest respect to the Learned Master, it may be an overly broad generalization to say that because a lien confers anin rem right this is, in and of itself, is conclusive, or determinative of priorities. A lien is a qualified or contingent right against realproperty. Note: Japan Canada Oil Sands Ltd. v. Stoney Mountain Steel Corp. (2001) (AB KB), 93 Alta LR (3d) 54at para. 11 et seq per Murray J. The Act fully defines the liens creation and enforcement, including priority.

Electric Furnace Prod. Co.v. Quality Rentals,

(1991) AD Alta. L.R. (2d) 382( CA). As such, lienholder’s rights must be viewed through the lens of the Act and, forour specific purposes,

section 11of the Act. It is the wording of the Act, rather than a description of the right, that is determinative ofpriorities. Section 11(1) of the Builders Lien Act provides: 11(1) A lien has priority over all judgments, executions. assignments, attachment, garnishment or receiving orders recovered, issued ormade after the lien arises. [40] Section 11(1) is qualified by subsections 11(2)-(6). It is further qualified by subsequent sections of the Act. [41] Even though a factoring of accounts receivable in some sense an assignment, the assignment is absolute and it is bestdescribed as a sale.

It is a sale by a company of an account receivable at a discounted value to the factoring company for immediateconsideration. (Port O’Call, above). The rights of a Factor to a factored invoice is absolute, whether or not the factor retains recourseagainst the seller. As such, it is outside s. 11 of the Builders Lien Act as it is not caught by the term “assignment”, as a GeneralAssignment of Book Debts has been held to be. [42] In the result, the liens do not take priority over the factored invoice.

The fact that an owner might be obliged to retain the facevalue of invoice 511 (for example) as part of the lien fund is neither conclusive nor determinative of priority. Moreover, the policy of theAct is to some extent preserved by analogy to the position of the Crown with respect to a factored invoice, which attaches to theproceeds of sale of the invoice, rather than the face value of the invoice itself. To find otherwise, would indirectly give the Lien holderspriority over the Crown. Disposition 1.

Of the funds in Court, the Factor’s claim of $276,367.56, being the amount of the consideration paid by Liquid Capital to KCSincluding the factoring fee, is to be paid to Liquid Capital Exchange Corp.

2. Invoice 513 is to be paid to the Crown. There is a dispute about the amount. It is either $136,125.00 or $116,064.90 plus GST, (which would be the Crown’s in any event). If the parties cannot agree, they may return for a determination of this point. 3. The funds paid into Court included a GST component. The face value of invoice 511 is $383,843.83, which includes GST of $18,278.28. The GST component should go to the Crown. 4.

The unclaimed residue of invoice 511,in the amount of $89,197.99, (being the difference between the net amount of invoice 511 if the GST is deducted and the Factor’s claim) will be added to the funds available for distribution to the Lien claimants. As there is a dispute about the value of some of the liens, the actual distribution should be left for a further application, unless the parties can agree. [ 43 ] Costs may be addressed if there is no agreement. I am grateful to counsel for the very clear presentation of this difficult problem. Heard on the 29 th day of February, 2012.

Dated at the City of Edmonton, Alberta this 22 nd day of May, 2012. W. S. Schlosser M.C.C.Q.B.A. Appearances: Vince Ng Hajduk Gibbs LLP for the Plaintiffs Dennis Schmit and Ryan Quinlan Fraser Milner Casgrain LLP for the Defendant, Paradox Access Solutions Murray Engelking Engelking Wood for the Defendant, KCS Equipment Ltd., 1180644 Alberta Ltd. George Bódy

Department of Justice (Canada) for the Minister of National Revenue Lyle Brookes Fraser Milner Casgrain LLP for the Defendant, Liquid Capital Exchange Corp. Greg Properzi Properzi Tims LLP for Contrac Equipment Ltd. Scott W. Caine for Bonus Rentals Inc. _______________________________________________________ Corrigendum of the Memorandum of Decision of W. S. Schlosser, Master in Chambers _______________________________________________________ In the Appearance

section at page 13 of the Memorandum of Decision the following appears: King NG Hajduk Gibbs LLP for the Plaintiffs That appearance has been amended to read: Vince Ng Hajduk Gibbs LLP for the Plaintiffs The Appearance

section has also been amended to add the following appearances: Greg Properzi Properzi Tims LLP

for Contrac Equipment Ltd. Scott W. Caine for Bonus Rentals Inc. _______________________________________________________ Corrigendum of the Memorandum of Decision of W. S. Schlosser, Master in Chambers _______________________________________________________ Paragraph [37] contains a quote from Genstar Limited v. D. Lindon Construction Limited on line three of that quote the word ‘proceeds’ has been amended to read ‘precedes’. Paragraph [42] Disposition 1. on the last line the word ‘Liquor’ has been amended to read ‘Liquid’.